Why GATT won’t break the Brexit deadlock

There has been a lot of talk about how Article XXIV of GATT can provide an alternative to the Withdrawal Agreement. But here’s the deal with Article XXIV of GATT: it is a solution to a problem which is not the problem. Let me try to illustrate this with a story.

Imagine a couple – let’s call them Joe and Angela – who are going through a divorce. After a long-drawn process, and hundreds of billable hours, their lawyers have at last produced a draft divorce settlement. The successful business that Joe and Angela have built will continue, but Joe will need to make a series of maintenance payments to Angela and the family home will be sold.

Joe finds this difficult to accept but he is also desperate to move on with his life. “I can’t stand even the sight of this thing.” he says to friends, looking disconsolate as he picks up the heavy ring-binder with legal documents and advice from the lawyers. Taking a deep sigh, he murmurs: “I wish I could have kept the house, but I think I will hold my nose and sign”.

But his friends step in and advise him not to. “Tear up that agreement mate!” they say. “There is a simple and better alternative. The family business can continue as it has done for all these years: you two simply carry on as normal. And as for the house, you just arrange for the remaining mortgage to be transferred to you. It can all be done very easily. It is literally just one form, and then you keep the house and are king in your castle!”.

“Will Angela need to sign this form though? And what about the payments?”

“She has to sign the form, but why would she object mate? The main thing she will want is for the business to continue. The rest can be sorted out later – and by the way you better tell her now that the payments will be nowhere near the ridiculous amounts your lawyers would want you to agree. If she realises you are playing hard ball, she will go along with this.”

Joe’s problem is of course that Angela will not agree to this. It may be reassuring to know that, if she did agree, the bank would be content with him taking over the mortgage. This may be a solution to a problem, but it is not a solution to the real problem Joe faces.

The “Believe in Article XXIV” movement makes similar errors . They contend that it provides a simple route for leaving the EU without a Withdrawal Agreement. My former colleague at Cambridge, Dr Lorand Bartels, tweeted that he sacrificed a lunch break to draft a one-page agreement that would do the trick. Many cheered: isn’t this so phenomenally simple and obvious that only those in the final stages of Brexit Derangement Syndrome would refuse to accept it?

Well, here’s why some of us, however we voted in 2016, are struggling. The point of Article XXIV of the GATT is to permit States to form customs unions or free trade areas without falling foul of the most-favoured nation (MFN) rule – the fundamental principle in trade law which prevents countries from discriminating between trading partners.

But the obstacle to an agreement between the UK and the EU on withdrawal has never been the MFN principle in GATT/WTO law. Correct me if I am wrong but did anyone hear the EU say: “Look guys, we really want a provisional deal with you but we just can’t square it with the MFN principle under the WTO”? And, by the way, if you want an Article XXIV-type agreement you need to look no further than the Northern Ireland Protocol – i.e. the backstop – which does mention Article XXIV of GATT in passing and is fully compliant with it.

To be fair, Dr Bartels did explain that there was no greater ambition behind his one-page agreement than to show the minimum that would be required under Article XXIV GATT. The main purpose of the Withdrawal Agreement is not however to ensure compliance with that provision in the GATT. Dr Bartels’s one-page agreement may perhaps be enough to make the WTO happy – just like the mortgage form in Joe’s story would be enough to make the bank happy.

But what will it take to get the other side to sign? In Joe’s case, I suspect Angela would insist on something close to the payments she was expecting from Joe and her equity in the house. And in the case of the EU? I imagine their starting position will be along the lines of £39bn – and a backstop.

Iain Duncan Smith’s proposed solution to the problem of money is to say that the UK should be prepared “to pay a fair contribution, if not anywhere near the £39bn associated with the Withdrawal Agreement, but this would be contingent on such a basic deal”. That surely would mean adding to the one-page draft so that the terms and conditions of the payment can be set out. And shouldn’t this basic deal say something on dispute settlement? And what will happen to the Northern Ireland border under the “basic deal”? Slowly but surely, you end up having to replicate every single aspect of the Withdrawal Agreement.

Everything is possible of course, but only some things are plausible. So it is possible in theory that, over two years since talks began, a new UK government might manage to force the EU into one of the biggest u-turns in the history of treaty negotiations, with the EU backing down from virtually all the points it insisted on before. But, seriously, what are the chances of this happening?

Conservatives must continue to be defined by the ability to govern in a no-nonsense, pragmatic and competent way. True, it is a good idea from time to time to inject a dose of idealism and optimism. But to switch wholesale to governing with one’s gaze permanently fixed on the stars is to forgo conservatism.

Guglielmo Verdirame QC is professor of international law at King’s College London