A trade expert has warned that Jeremy Hunt's £6 billion farming pledge if the UK leaves the EU with no-deal is 'definitely illegal' as it would break WTO rules.
The Conservative leadership hopeful announced the Brexit package for the farming and fishery industries on Monday 1 July.
He said farmers and fishermen 'face uncertainty' if the UK exits the European Union with no-deal.
“If we could do it for the bankers in the financial crisis, we can do it for our fisherman, farmers and small businesses now,” Mr Hunt said.
But trade expert Dmitry Grozoubinski used his appearance on BBC Radio 4's Farming Today programme on Tuesday to warn the pledge could in fact be illegal under World Trade Organisation (WTO) rules.
He said: “Governments can do what they like, provided they are willing to break rules but if, as Jeremy Hunt said, he wants to stay within the WTO rules there are certain things he absolutely cannot do.
“The first and foremost is he can’t condition any subsidies on export performance past or present. The WTO members, including the UK, have all agreed not to do that anymore.
@BBCFarmingToday tomorrow - 6 billion to help farmers and fishermen? Jeremy Hunt says it’s OK - but it isn’t legal under WTO rules to specifically aid exporters and pay for their tariffs - @DmitryOpines explains 0545 tomorrow @BBCRadio4— Anna Hill (@HillFT) July 1, 2019
“He could not, for example, design a subsidy that explicitly went to someone who currently, or in the past, exported to the EU – it makes things a lot harder and a lot more expensive.
“If what you can’t do is say, ‘listen, our farmers and fishermen used to export to the EU but now they’re locked out by tariffs, and I’m going to give those farmers money in proportion to how much they exported to basically compensate them for a little while.’
“You can’t do that, that’s definitely illegal.”
However, Mr Grozoubinski said the potential future Prime Minister could stay within the law by designing 'higher level' support programmes for the farming industry.
“What you are forced to do is design programmes that are higher level,” he said.
“For example, in farming, there’s an extent to which Jeremy Hunt could spend billions of pounds on farming subsidies sector-wide, so support all lamb farmers or support the whole UK farming sectors.
“There are limits in the ways and extent in which he can do that but the rules are a bit more flexible there,” he said.
1/ Thread on subsidies, WTO Rules, and @Jeremy_Hunt's proposals, since I didn't phrase my questions clearly enough yesterday and inadvertently confused a lot of people on both sides.— Dmitry Grozoubinski (@DmitryOpines) July 2, 2019
Grateful if you could avoid quote tweeting this with any variation of "WTO EXPERT OWNZORS MP."
Defra farming minister Robert Goodwill, who backs Jeremy Hunt to become the next Tory leader and PM, said the UK is 'prepared for no-deal, but that is not the preferred option'.
Speaking to the programme , Mr Goodwill said: “He always has to keep that on the table but be in no doubt – the motor industry, the sheep industry, the fishing industry in terms of exports – would be very badly hit by a no deal situation.
“Probably, end of October is the worst time of the year for it to happen given the run-up to Christmas, the lack of cold storage and all those other problems – we are prepared for no deal, but that is not the preferred option.
“We need to leave in an orderly way, go into an implementation period and negotiate all those detailed things we need to negotiate before we leave fully at the end of that period,” he said.