We almost gave this entry the title "BREXIT'S PRIMARY COLORS." That, however, might have been read as a reference to Joe Klein's marvelous book about Bill Clinton's first Presidential campaign in 1992, while all we really have in mind are the endless hues that can be generated from red, yellow, and blue. The issue of the interrelationships, for example, among the three challenges listed above came vividly to life in the closing portion of Ambassador Yerxa's remarks last week. In particular, he drew attention to how others in the WTO might use the UK's need to win WTO approval for its own, new tariff schedules and services commitments as leverage regarding any new arrangement between the UK and the EU. He explained the situation this way:
"[The UK is] part of a customs union. They have relied on ... the provision in the GATT which allows them to have a preferential, internal regime with the rest of the EU. They are now going to set up some other arrangement with the EU. I presume that what they're thinking is that that [new arrangement] will be like a free-trade agreement that fully fits within Article XXIV ...that enables them to have, basically, a preferential arrangement with the rest of the EU, similar to what they have as part of a customs union.
"But that's not a given for everybody else [in the WTO]. You know there are lots and lots of FTAs in the world. Many of them don't meet the requirements of Article XXIV, but nobody challenges them in dispute settlement.
"But here we have a situation where the leverage everybody else in the WTO has is not to challenge the UK in dispute settlement. The leverage is [to say], 'Well, I've got to agree to your new schedules as a separate entity. And if there are things I don't like about the way you have done your arrangement with the EU, I am going to use that leverage against you in my negotiations with you over your new WTO schedules."
In fact, it probably doesn't matter too much whether a particular trading partner of the UK is concerned more with an element in their WTO schedules or with something in a proposed new arrangement between the UK and the EU. Both will be issues within the WTO. That means that the two are linked, and so there are likely to be plenty of opportunities for WTO members to raise their own concerns (demands). Carrying that logic a step further, what today are mainly issues for the UK and the EU could in time turn into a major challenge for the World Trade Organization itself.
As noted, Ambassador Yerxa is now the president of the National Foreign Trade Council. He talked about the NFTC at the outset of his remarks, noting that its members are some of the "biggest [and] most globally integrated and active companies" and that they are major traders, with investments in Europe and UK.
What those companies really care about," he said, are
"stability, continuity, predictability, and, obviously, maintaining the kind of open trade-and-investment climate they have had."
No matter how the Brexit drama turns out, the June 23 referendum has had the effect of putting "stability, continuity, and predictability" on hold for a while. But we are optimists. Brexit - even a hard Brexit - could be a boon to the kind of open trade-and-investment climate favored by the members of the National Foreign Trade Council, especially if that goal is shared by the relevant actors: the UK, the EU 27, and all of the other members of the WTO.