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Senior Researcher at the Institute for Government, Georgina Wright, spoke to the Future Relationship with the European Union Committee on Wednesday. During the meeting, Ms Wright highlighted the key reasons why the EU is fearful of a no deal Brexit. This comes after both the UK and EU Brexit trade deal negotiators have insisted a no deal is becoming more likely.
Ms Wright said: “The reason why the WTO subsidy scheme won’t satisfy the EU is for three reasons.
“One reason is that it relies on state-to-state enforcement.
“That means that you only tackle the big subsidies but it is much harder to stop smaller subsidies and that distortion to competition.
“The second is because the enforcement mechanism is not effective.
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“That is why if we want to try and resolve that we need to think creatively and constructively about governance, about how you manage disputes.”
Ms Wright closed by listing the third issue and the importance of it being resolved.
She said: “The third is because the WTO subsidy machine doesn’t cover subsidies and services, it is mostly on goods.
“That is why the EU is also pushing for something more robust as a lot of the trade will be in services and that needs to be covered as well.”
She also noted that the EU was not vindictively attempting to shackle the UK to the EU.
She said: “I think that is why we need to look at these things.
“It is not just the EU trying to impose its rules and try to manage competition.
“It is really because the WTO subsidiaries are quite limiting.”
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The Duchy of Lancaster, Michael Gove, warned businesses need to prepare for a no deal Brexit for the end of the year.
Mr Gove told the Commons a Cabinet committee charged with making preparations for the end of the Brexit transition meets “almost daily” and has met a total of 136 times so far.
He said: “We also need businesses to prepare. The consequences of a lack of business preparedness will be not just economic opportunities missed for those companies that don’t prepare, but potentially much wider disruption.”
Mr Gove added: “It is important that we as parliamentarians all understand that and that we all take action to prepare.”
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