Who trades with the EU under WTO rules?

Published: 9th Jan 2019

In brief

Claim

Most of the world trades with the EU on WTO terms.

Conclusion

Incorrect. Of 135 non-EU full members of the World Trade Organisation, 58 currently trade with the EU under negotiated trade terms, and another 47 have preferential access to EU markets.

 

Israel, Singapore, India, Hong Kong and the U.S. trade with the EU under WTO terms.

 

Incorrect. Israel has a trade agreement with the EU. Also, while Singapore currently trades with the EU under WTO terms, it has reached a trade agreement with the EU that now needs approval by the European Parliament and Council.

Claim 1 of 2

“Most of the world trades with the EU on WTO terms. Do Israel, Singapore, India, Hong Kong and the U.S. really look like they are suffering as a result?”

James Delingpole, 3 January 2019

This is incorrect. Most countries in the world have either a trade agreement with the EU or are part of a preferential trade arrangement with the EU, and this means they don’t trade on World Trade Organisation (WTO) terms.

In particular, it’s wrong to say that Israel trade on WTO terms with the EU; Israel has a free trade agreement with the EU (Mr. Delingpole corrected this after we contacted him). Also, Singapore has negotiated an agreement which now has to be ratified (and at the time the claim was made still had to be agreed by the European Council and European Parliament).

Putting precise numbers on how many countries trade with the EU under different arrangements is difficult, and not altogether meaningful. For example, some countries have reached agreements on trade with the EU, but haven’t necessarily signed and enacted them yet. But it’s possible to come to broad conclusions.

At the time the claim was made, there were 135 non-EU member countries of the WTO and 23 non-EU observer countries of the WTO. Of those countries 58 members and 6 observers had a trade agreement in place with the EU.  

In addition, at the time the claim was made Syria’s trade agreement with the EU was suspended, and trade agreements with Japan, and Singapore were ratified or close to being ratified but had not yet taken effect.  The EU is also negotiating free trade agreements with various other countries.

The EU also has “preferential trade arrangements” with various developing countries. This is where one country or body like the EU grants preferential tariffs on imports from developing countries. Another 47 WTO countries   who don’t have free trade agreements with the EU appear to have preferential access instead, along with another seven WTO observers.

Of the remaining countries, it’s broadly correct to assume they trade with the EU on WTO terms, although there are some exceptions based on technicalities. The EU told us that it has trade defence measures in force for trade with China, for example, so while it doesn’t have any form of trade agreement or preferential access in place, these mean it also doesn’t trade on WTO terms with the EU. 

Comparing the trade arrangements of the UK and other countries doesn’t tell us much

There's a more fundamental problem with comparing how the UK could trade with the EU post-Brexit with how other countries currently trade with the EU.

That’s because the EU is not a local market for the countries mentioned in the claim. 

A more appropriate comparison would be to look at what trading arrangements different countries have with their neighbours. 

For example, while the USA doesn’t have a trade agreement with the EU, it does have trade arrangements with nearby Canada and Central America. So in some cases, countries that trade with the EU on WTO terms still have agreements in place with their immediate neighbours.

 

Update 9 January 2019

We contacted Breitbart, who have since removed the reference to Israel.

Correction 2 August 2019

We originally concluded the claim was correct because most non-EU members of the WTO have no free trade agreement with the EU.

But many of these countries still have preferential access to EU markets because of special arrangements in place to keep tariffs down, under what are called “preferential trade arrangements”. This means that they don’t trade on WTO terms with the EU. These weren’t included in our original calculation, and we now agree it was wrong to exclude them. We’ve changed our conclusion to account for this.

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