The GATT with nine lives: revisiting Article 24 again

During the ITV Conservative leadership debate, the candidates clashed over the issue of Article 24 of the General Agreement on Tariffs and Trade. This is a topic we’ve covered quite a few times already, but it’s worth revisiting, because it provoked quite a bit of heated discussion.

Jeremy Hunt: Boris, last time we debated this, you said that in a no deal situation we would be able to avoid tariffs through something called, I think you called it Article 24 of GATT. Boris Johnson: Yes, Article 24 Paragraph 5(b) in fact, since I know you're a stickler for detail Jeremy. Jeremy Hunt: Yes well Geoffrey Cox, who is supporting you, says that that would not be possible. Boris Johnson: No he doesn't. Jeremy Hunt: Yes he does. Boris Johnson: No he doesn't, no he doesn't. Jeremy Hunt: What he says is that you could only get that agreement to waive tariffs if the other side agreed... Boris Johnson: Of course! Jeremy Hunt: ...and they have made it absolutely clear that they won't agree. ... Boris Johnson: Under the GATT 24 paragraph 5(b) arrangement… Julie Etchingham: Only if the EU agrees. Jeremy Hunt: Only if the EU agree, Boris, you know that, you know that. Boris Johnson: ...both sides would agree to suspend tariffs, and it would be manifestly—and I’ve never said anything different—it would be manifestly... Jeremy Hunt: You did, last time you said we wouldn’t face tariffs if there was a no deal situation. Boris Johnson: Yes, because I think it would be absolutely absurd for the EU to impose tariffs on produce coming from the [inaudible] UK... for the first time in two hundred years. Britain's Next Prime Minister: The ITV Debate, 9 July 2019

The General Agreement on Tariffs and Trade dates back to 1948. GATT was the precursor to the World Trade Organisation (WTO), and it still forms the basis of most of the WTO’s rules on the trade in goods today. Those WTO rules are the ones the UK and EU would trade under if the UK left the EU without a deal.

In general terms, Article 24 sets out the rules under which a customs union or free-trade area can be created between WTO members.

During the BBC’s Conservative leadership debate on 18 June Mr Johnson said: "There will be no tariffs, there will be no quotas because what we want to do is to get a standstill in our current arrangements under GATT 24, or whatever it happens to be, until such a time as we have negotiated the [free trade agreement]."

We wrote about this at the time. As we said then, the key point is that “Article 24 does not remove the need to strike a deal with the EU”—a point that was echoed in the ITV debate by both moderator Julie Etchingham and Mr Hunt, and which Mr Johnson accepted.

This is because an interim “plan and schedule” for a future free-trade area or customs union would need to have been agreed with the European Union before the UK leaves. This scenario is unlikely to come about.

We’ve already noted before that a range of government ministers and experts have explained the problems with GATT 24, including Bank of England governor Mark Carney, International Trade Secretary Liam Fox (a leading Brexit supporter), and trade experts such as Peter Ungphakorn. EU Trade Commissioner Cecilia Malmström has described the idea that Article 24 would prevent tariffs in a no deal scenario as “completely wrong”.

Since we last wrote about this topic, the Director General of the World Trade Organisation, Roberto Azevêdo, has also said in an interview with Prospect magazine: “Article XXIV of the GATT is simply the provision of global trade law under which free trade agreements and customs unions are concluded... If there is no agreement, then Article XXIV would not apply, and the standard WTO terms would.”

Mr. Hunt’s comments about the position of Geoffrey Cox, the Attorney General (the government’s chief legal adviser) and a supporter of Mr. Johnson, seem to stem from a Financial Times report on 23 June. It said that guidance from the Attorney General’s office in January said it would be a “prima facie breach of WTO law” for the UK to maintain zero tariffs for the EU whilst charging other countries import duties, which a “standstill” implies. Mr Cox did not comment on the report.