GATT 24 is Article 24 of the General Agreement on Tariffs and Trade, and is a piece of World Trade Organisation (WTO) law which allows for tariff-free trade for up to 10 years while a permanent trade agreement is negotiated. It only applies to goods and has no impact on the trade in services or on issues such as regulations and standards. Now Mr Duncan Smith has joined prominent Brexiteers including Boris Johnson, Nigel Farage and Jacob Rees-Mogg in touting GATT 24 as a means to safely deliver a no deal Brexit.
Writing for website Brexit Central, the former Conservative Party leader makes clear Britain is not seeking to change the withdrawal agreement by the October 31 deadline.
He argues: “This is not a deal based on the Withdrawal Agreement under EU law such as the Lisbon Treaty’s Article 50, nor is it a trade deal conducted under the EU’s ‘Future Relationship’ or ‘Political Declaration’ provisions either with its binding legislation – it is a separate deal done under World Trade Organisation rules.
Mr Duncan Smith said the WTO, and not the EU, make the rules on trade, and most EU free trade agreements incorporate WTO level agreements like GATS.
The Brexiteer added Article 24 is contained within these global GATT rules which all individual WTO members agree to implement.
Brexit news: Iain Duncan Smith claimed GATT 24 represents a ‘Clean Managed Brexit’ by October 31
He said: “The whole point of the WTO is to promote free trade around the world. The WTO does not like tariffs (taxes on goods entering), quotas (a certain quantity of goods entering at a certain tariff) or barriers to trade.
“So the WTO will not like it if the UK and EU return to imposing £13billion tariffs on EU goods and £5billion on British goods into the EU. It goes against the grain.”
Mr Duncan Smith added the main point of GATT Article 24 is to allow two countries or blocs to move closer to a free trade area or customs union, enabling them to level lower lower tariffs and quotas that what is called ‘Most Favoured Nation Rules’ (MFN).
He argued by offering one country a better trade deal than other WTO members, “you are discriminating – you are offending the rule that everyone must be treated the same – so you must levy the same MFN tariffs to all”.
The Brexiteer claimed the WTO “hates tariffs”, so is amendable to ways of avoiding them without putting its other members at any disadvantage.
Mr Duncan Smith said: “If the UK and EU go to the WTO jointly and say that we have agreed to move to a full and comprehensive Free Trade Agreement (what we term ‘SuperCanada’ – that is better than the EU-Canada FTA) – that keeps tariffs at zero with no real change to other members, the WTO is happy to allow us a period of time to keep tariffs and quotas at preferential rates.
“GATT 24 allows what are called ‘standstill’ arrangements – much remains the same and this is essentially a WTO form of a transition – but is not an interim arrangement as is often claimed.
“We can keep tariffs at zero for as long as the two partners need to negotiate the full works: that comprehensive FTA. Legally this could be up to ten years, but most are two to three years to negotiate. That is GATT 24.
Mr Duncan Smith said Article 24 is a “basic deal” or “temporary FTA”, but is “entirely manageable and legally sound”.
He argued without a basic GATT 24 deal, the EU would suffer a massive blow by having tariffs up to £13billion imposed on its goods, adding: “They would suffer far more than the UK simply because they sell more to us than we do to them.
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“The EU – particularly Germany, which accounts for nearly a quarter of all EU trade to the UK – does not like the idea of this. Better for everyone surely to keep on an even keel?”
Mr Duncan Smith said GATT 24 will need an “accompanying flotilla” of mini deals, but makes clear the EU has already agreed most of these through emergency legislation.
He said: “The reality is that much of the non-controversial elements of the Withdrawal Agreement can be agreed as separate ‘mini deals’ in exactly the same way – for example, the elements on citizens’ rights – but can be done outside the provisions of the European Court of Justice.
“This is the case with other EU free trade deals including Canada and Switzerland.”
Brexit news: Liam Fox has spoken out against GATT 24
Mr Duncan Smith concluded: “What GATT Article 24 represents is a Clean Managed Brexit – and what’s more it is deliverable by 31st October.”
But Liam Fox has spoken out against GATT 24, claiming it would not allow the UK to keep tariff-free trade with the EU in place of a negotiated agreement.
The International Trade Secretary said: “In order to benefit from the terms of Article 24, there must be an agreement between two WTO members.
“Therefore, Article 24 would not, by itself, allow the UK to maintain tariff-free trade with the EU in the absence of a negotiated agreement.”