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The difficulty is that the UK will effectively be a new WTO member without any detailed schedules of Tariffs agreed with other WTO members. Thus, in the absence of any bilateral agreement to the contrary, there is nothing to prevent the EU applying the maximum tariffs permissible under WTO rules, even if it has given much greater concessions to other trading partners as part of bilateral trade deals.

The UK would then be trading with the EU at a disadvantage when compared to other nations which do have bilateral trade deals with the EU. Similarly there is no reason why other third countries like (say) India must give the UK the same concessions they have given the EU and every reason why they might not (size of market, history, geopolitical tensions etc.).

To get an idea of the effect of this I refer you to this paper.

Abstract: The UK exit from the European Union (Brexit) is likely to have a range of impacts, with trade flows likely to be most affected.  One possible outcome of Brexit is a situation where WTO tariffs apply to merchandise trade between  the  UK  and  the  EU.  By  examining detailed  trade  flows  between the UK and all other EU members, matching over  5200  products  to  the  WTO  tariff  applicable to  external  EU  trade this paper shows that such an outcome would result in significantly different impacts across countries. Our estimates of exposure at the country level show an extremely wide range with reductions in trade to the UK falling by 5% (Finland) to 43% (Bulgaria) taking into account the new tariffs and the elasticity of the trade response to this price increase.  Food and textiles trade are the hardest hit, with trade in these sectors reducing by up to 90%

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Aug 21st, 2017 at 05:36:12 PM EST
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