What Is Gatt 24? Can Article XXIV Be Used To Trade After Brexit?

26 June 2019, 13:42 | Updated: 28 October 2019, 15:53

Boris Johnson on LBC
Boris Johnson on LBC. Picture: LBC

As the battle to be the next Conservative leader, and Prime Minister, heated up a new piece of Brexit jargon was on the lips of the public - Gatt 24.

But what does it mean?

Gatt is an abbreviation for the General Agreement on Tariffs and Trade, which came into being after the Second World War. Basically, it is a legal agreement that forms the basis for the trade in goods around the world today.

Gatt 24 is a piece of World Trade Organization law that allows tariff-free trade for up to 10 years while a permanent trade agreement is negotiated.

It applies to goods only - it has no effect on the trade in services or on issues such as regulations and standards.

Gatt 24 has been applied to interim agreements on rare occasions since the WTO was established in 1995, but never for anything as complex at the EU-UK relationship.

Can Gatt 24 be used for Brext?

Tory leadership frontrunner Boris Johnson told LBC Gatt 24 offers a possible "way forward" with "agreement on both sides".

However, International Trade Secretary Liam Fox, a Brexiteer who is backing Jeremy Hunt for the Tory leadership, warned Brussels has made clear no such agreement would be forthcoming.

"In order to benefit from the terms of Article 24, there must be an agreement between two WTO members as to the elimination of duties and other restrictive regulations on substantially all trade," he said in an article posted on LinkedIn. 

Gatt 24 part of the General Agreement on Tariffs and Trade
Gatt 24 part of the General Agreement on Tariffs and Trade. Picture: PA

"Therefore, Article 24 would not, by itself, allow the UK to maintain tariff-free trade with the EU in the absence of a negotiated agreement.

"A 'no deal' scenario, by definition, suggests that there would be no mutual agreement between the UK and the EU on any temporary or permanent arrangement. In those circumstances Article 24 cannot be used. The European Union has made it clear on a number of occasions that full tariffs will be applied to the United Kingdom in the event of 'no-deal'."

International Trade Secretary Dr Liam Fox
International Trade Secretary Dr Liam Fox. Picture: PA

And, against all this, Gatt 24 only applies to the trade in goods.

According to figures, services accounted for 40% of the UK's exports to the EU in 2017. A separate agreement under the WTO's General Agreement on Trade in Services (GATS) would be needed for that.

Finally, such a move would be unusual to say the least, because it is the reverse of a normal Gatt 24 application.

WTO expert Peter Ungphakorn explained in a blog post: "The UK and EU have a single market arrangement and are withdrawing some or all of its features. Here the notification will be needed almost at the start of the negotiations, not at the end.

"Knowing the final destination so early in the process might not be so easy."

Read More:

Who will be the next Prime Minister.

Brexit Timeline: What are the key dates as the UK leaves the EU.