How Britain and the EU Would Trade Under WTO Rules

The U.K. is no longer a member state of the European Union and negotiators have until Dec. 31, 2020, to strike a trade deal to govern Britain’s future commercial relationship with the trade bloc. If they fail, Britain could lose frictionless, duty-free access to the EU and the two sides would immediately revert to commercial rules negotiated in 1995 by members of the World Trade Organization. That means new tariffs on British exports to the EU and traffic-snarling customs controls at ferry terminals. It’s been compared to “downshifting a car at full speed from fifth gear to first.”

The U.K. is an original member of the WTO and will remain so after its withdrawal agreement with the EU expires at year-end. If there’s no new trade agreement in place then, trade in both directions will revert to WTO terms. The Geneva-based body oversees a set of baseline tariffs for global trade in goods and services. All 164 members agree to deal with each other equally according to a principle known as most-favored nation treatment. There’s been a raging debate among U.K. lawmakers about whether this would decimate British industry and destroy jobs, or provide an opportunity for an unshackled Britain to pursue better trade terms with other nations.