Brexit divorce plan to be sent to WTO next week

GENEVA (Reuters) - Britain and the European Union plan to send a letter to the rest of the World Trade Organization’s 164 members next week, setting out Brexit plans that have already been rejected by seven key agricultural exporters, trade officials said on Thursday.

An umbrella with EU and British flags attached to it is held ahead of a speech by Britain's Prime Minister Theresa May in Florence, Italy September 22, 2017. REUTERS/Max Rossi

Britain is a member of the WTO in its own right but it has to establish its own distinct membership terms as part of its withdrawal from the European Union.

Reuters reported in July that Britain and the EU would put forward a joint proposal by October, explaining how they planned to disentangle the United Kingdom from the EU.

“In leaving the EU, we will need to update the terms of our WTO membership where, at present, our commitments are applied through the EU as a whole,” a spokeswoman for Britain’s Trade Ministry said.

“The UK wants to ensure a smooth transition which minimizes the disruption to our trading relationships with other WTO members.”

There are three main issues: the division of agricultural import quotas and of farm subsidy rights and - for Britain - continued membership of the WTO’s government procurement agreement, which it is not a member of in its own right.

The thorniest is the planned sharing-out of import quotas, which has already been rejected by the United States, Argentina, New Zealand, Brazil, Canada, Thailand and Uruguay.

In a letter first published by the Financial Times, their representatives at the WTO said they would not accept the plan to split those quotas on the basis of historical averages.

They want to keep the flexibility they enjoy now, suggesting Britain should duplicate the EU import quotas, doubling their potential exports into the region.

A British official called their letter a negotiating tactic and an attempt to put a shot across the bows of the British-EU offer before it went to the wider WTO membership.

With the Brexit clock counting down to a divorce in March 2019, British officials say they have a year to sort out the WTO negotiation before submitting Britain’s new membership terms.

The British-EU proposal is expected to be debated during the WTO’s week of agricultural talks later this month and at the WTO ministerial conference in Buenos Aires in December.

Editing by Andrew Roche