UK facing ‘horribly complex’ and costly Brexit warns ex-WTO chief

Britain faces a “costly and complex” exit from the EU, the former chief of the World Trade Organisation has warned, as he laid out the scale of the administrative task facing the government in agreeing new trade terms with the bloc in just two years.

Pascal Lamy, a former EU trade commissioner who left the WTO in 2013, said even the “greatest” Brexit deal would impose costs on the UK economy.

“I am pitching for the best deal, the most open, the most pragmatic”, said Mr Lamy at an even hosted by the Institute for Government in London.

“[But] the greatest deal we can have is going to be complex and costly”.

“In trade, there is no way switching from an internal market to any other regime, including the best, will not be costly”.

Mr Lamy, a Frenchman who led the EU’s trade talks between 1999-2004, said he was “sure” a comprehensive trade deal could not be concluded within the two year window provided by the Article 50 process. He touted five to six years as a more realistic timeframe to conclude trade talks.

Touching on areas such as nuclear standards, VAT, environmental regulation and research and development funds, Mr Lamy stressed the UK was “entering a race with time” to complete the outlines of an agreement by 2019. It would be “horribly complex”, he said.

His comments come after the head of the EU council Donald Tusk said a “no deal” outcome – which has been touted by prime minister Theresa May – would hurt the UK far more than the EU.

Without a trade deal, Britain would have to fall back on the WTO’s trade terms. The resort to WTO would be “worse than an agreement”, added Mr Lamy.

The former EU official said the economic costs entailed in Brexit were still “invisible” but would make themselves felt over the coming years as Britain begins its talks.

This could well precipitate a “shift” in popular opinion which places “reason above passion”, said Mr Lamy, adding:

The biggest question in 10 years’ time for Europeans is whether it is good or not for the UK after 10 years? This is very important for us [Europeans].

We keep trying to integrate in the name that we do better together than alone. If a UK exit is proof a country does it better alone, that will probably trigger reflection on the continent. But it won’t be clear before 10 years.

In the meantime, any cost for the UK has a cost for the continent because of the deep integration for our systems.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.