January 16, 2019 / 8:30 PM / 10 months ago

Taiwan objects to Britain's post-Brexit WTO services trade arrangement

GENEVA (Reuters) - Taiwan objects to Britain’s proposed rules for managing its trade in services after it leaves the European Union and has requested negotiations at the World Trade Organization, according to a document seen by Reuters on Wednesday.

FILE PHOTO: A military honour guard holds a Taiwanese national flag as he attending flag-raising ceremony at Chiang Kai-shek Memorial Hall, in Taipei, Taiwan March 16, 2018. REUTERS/Tyrone Siu

Britain voted in a referendum in 2016 to leave the EU, which has spoken for Britain on trade matters ever since the WTO was founded in 1995. As part of the Brexit divorce, Britain needs its own WTO membership texts, known as schedules, to set out how it will treat its trading partners in goods and services.

Last month, Britain formally submitted its proposed new services schedule to the WTO. Trade Minister Liam Fox said the process would replicate existing arrangements as far as possible and was “only a technical exercise”.

In a document circulated to other WTO members on Wednesday, Taiwan raised objections, saying the new text made more than purely technical changes.

Taipei looked forward to “entering into consultations expeditiously with the United Kingdom in order to reach a satisfactory resolution to this matter”.

It cited eight sections where it had objections, mainly clauses that were no longer relevant or necessary.

But in financial services and aircraft leasing and rental, Taiwan said the new schedule would leave it with less market access than it had previously.

“Current European Union commitments require European Union Member States to allow airlines to lease aircraft registered anywhere in the European Union. However, the United Kingdom has changed this obligation to require United Kingdom airlines to lease aircraft registered in the United Kingdom,” it said.

“This appears to reduce market access, as the scope of where aircraft may be registered has been reduced. The United Kingdom should delete this limitation.”

Similarly, in financial services, there were several areas where the EU schedule included a requirement for establishment in the EU, Taiwan said.

“The United Kingdom changed ‘EU’ to ‘UK’ for these entries in its draft schedule. This would appear to reduce market access, as it reduces the geographical scope of establishment.”

If Taiwan and potentially other WTO members press Britain for improvements to the text, Fox may need to offer them compensation by opening up trade in other areas, although any such liberalization would apply across the WTO.

Britain is facing similar objections to its goods schedule, with widespread dissatisfaction among agricultural suppliers.

Failing to reach rapid agreement may be a bureaucratic headache and add to criticism of the Brexit process, but it will not affect the Brexit timetable; many WTO members trade without finalised schedules, on the understanding that they are trying in good faith to reach an agreement in the meantime.

Reporting by Tom Miles; Editing by Kevin Liffey

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