What does ‘no-deal’ Australia-style Brexit mean?

By Chris Morris
Reality Check correspondent, BBC News

Publishedduration17 hours ago

image copyrightGetty Images

Remember how this time last year we were talking about a no-deal Brexit? Well, it’s back.

It is not exactly the same thing, because the UK left the European Union (EU) on 31 January.

The UK is now in a transition period with the EU until the end of the year, which means it is still following EU rules and trade stays the same. The transition was designed to give both sides a bit of time to negotiate a future trade agreement.

But if there is no trade deal by 31 December, the UK would automatically fall back on the rules of the World Trade Organization (WTO).

The government now refers to this outcome as an “Australia-style deal” (Australia trades with the EU largely on WTO rules) but – as Business Secretary Alok Sharma admits – the difference between no deal and an Australia deal is “a question of semantics at the end of the day”.

What is the WTO?

The WTO is the place where countries negotiate the rules of international trade – there are 164 members and if they don’t have free-trade agreements with each other, they trade under basic “WTO rules”.

Every member has a list of tariffs (taxes on imports of goods) and quotas (limits on the number of goods) that they apply to other countries with which they don’t have a deal. These are known as WTO schedules.

How does trade with the EU work now?

The EU is the UK’s biggest single trading partner. In 2019, it accounted for:

  • 43% of UK exports
  • 51% of UK imports

As an EU member, the UK was part of its trading system – the customs union and the single market. This meant there were no tariffs on goods traded between the two, and minimal border checks.

This arrangement continues until the end of the transition period.

media captionConfused by Brexit jargon? Reality Check unpacks the basics.

The two sides have been trying to reach a new free-trade agreement, which would get rid of tariffs and quotas but not new border bureaucracy. But the time to do that is fast running out.

Don’t other countries trade with the EU on WTO rules?

Yes, examples include the United States and China, Brazil and Australia.

In fact, it’s any country with which the EU has not signed a free-trade deal. That’s when WTO rules kick in.

But those big economies don’t just rely on basic WTO rules – they have all done other deals with the EU to help facilitate trade.

The US, for example, has at least 20 agreements with the EU that help regulate specific sectors,

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