What will happen if UK walks away from Brexit negotiations ?

Former WTO chief Pascal Lamy explained to Nick Ferrari what UK-EU trading would look like without a deal.

« This Australia-like deal is a nice way of saying this is WTO terms. Because as you rightly said a moment ago, Australia and the EU do not have a trade agreement.

« So for the moment Australia and EU trade together under WTO rules, i.e. the trade commitments the EU has with the WTO and the ongoing commitment Australia has with the WTO. »

Mr Lamy said at the beginning of a negotiation as both sides « put on their war paints », however it must be acknowledged that « no deal is better than a bad deal. »

He continued that the key issue for the UK in the Brexit negotiations is whether there will be a divergence from EU regulatory standards.

Both negotiating parties have different but equally logical perspectives, he said; the UK have sovereignty so are within their right to diverge from regulatory standards but the EU does not want unfair competition « at their door. »

Brexit is the capacity for the UK to diverge, he said, but the crux of the matter is it is unclear « how much it will diverge and when. »

If the UK and EU do not negotiate a deal, the two parties will trade under WTO regulations; Nick asked the former WTO chief what this would look like.

The trading agreement would be « much less open » than it is currently, he said, and new tariffs that would be introduced, such as 10% on cars and 20% on cheese, would « hurt both sides. » « It will be a big impediment. »