b'2.2. The WTOThe exception on lowering Bound tariffs for free trade agreements or customs unionsTariffs are the customs duties imposed onis quite narrow. The exception allows only imported goods by the importing country.agreements which reduce tariffs on ALL (or Since World War 2, tariffs have beenalmost all) trade between the parties to zero. negotiated down dramatically. The averageThe reduction in tariffs cannot be selective. trade weighted tariff in 2018 was only 2.8%.3One of the reasons a trade agreement isIf a Member State leaves the EU, then not essential is because of the fall in globalregardless of European law, its obligations tariffs. Another is the development of WTOunder GATT/WTO continue unaltered. It Codes on non-tariff barriers. These havecannot increase its bound tariffs; i.e. the also reduced the necessity for bilateral tradetariffs it currently applies under the EUs agreements.Common External Tariff (CET), in trade with one another as well as with third country WTO members.2.2.1. WTO - Basic Facts For simplicity, the UK and EU have chosen to Let us review and restate the WTO basics.maintain the CET as it stands on 29 March. Neither the EU nor the UK would have an The post-Brexitalternative of tradingalternative to maintaining CET tariff rates, under the WTO is far more appealing thanexcept: remaining in the EU. Under the GATT/WTO Most Favoured Nation (MFN) principle,1.The choice whether or not to conclude a countries have the obligation to treat allfree trade agreement. nations equally, apart from those in a2. The opportunityto unilaterally reduce free trade or Customs Union agreement, atariffs to all WTO members on certain safeguard which prevents the 27 fromitems discriminating against the departing member. To consider some important specifics:The EU27 retain their obligations not to increase their Boundtariffs4with otheri. In the absence of a Trade Agreement, what WTO members. Other WTO members willis the average level of tariff that the UK include a departing Member State. Thuswould face on its exports to the EU 27? This fears that the EU would impose punitivehas to take into account the range of goods tariffs on the UK are completely unfounded.we actually sell there. The average figure Similarly, the Technical Barriers to Tradeacross that range is about 3% (more precise and other WTO Agreements preventestimates say 2.7%). There are some outlier vexatious non-tariff barrier actions by the EU.rates - one of which is cars at 10%.Whilst increases in Bound tariffs are not permitted, reductions are allowed. In particular, the WTO would not prevent the UK from reducing or eliminating the duties which it currently pays to the EU on items of which it is a net importer (notably food and footwear). 62'