DHAKA: The European Union’s top trade official says the UK cannot begin negotiating terms for doing business with the bloc until after it has left.

“First you exit then you negotiate,” Cecilia Malmstrom told BBC Newsnight.

After Brexit, the UK would become a “third country” in EU terms, she said - meaning trade would be carried out based on World Trade Organization rules until a new deal was complete.

A recent trade deal with Canada took seven years to negotiate.

The Canadian agreement will also require ratification by all EU countries, adding another one to two years before it takes effect.

WTO rules restrict the circumstances in which countries discriminate in favor of each other in trade. Otherwise, they must apply to each other the tariffs they apply against the rest of the world.

the EU Trade Commissioner Malmstrom underlined that detailed talks to shape the UK’s new trading relationship with the EU should not start until after the process of leaving politically, under an Article 50 process lasting up to two years.

“The referendum - which of course we take note of and respect - has no legal effect. First there has to be notification, which the next prime minister will do, I hope swiftly. And then that process can start.”

There is concern in the City that having to do business for years under WTO rules could be disastrous for the UK’s service industries.

BDST: 0843 HRS, JULY 1, 2016
BD