Government warned not to streamline trade tariffs too much

The government is planning a trade policy with as few tariffs as possible, but the farming industry warns that must not allow the import of products which could put British farmers out of business.

In a consultation, the Department of International Trade is asking for views on removing tariffs that are less than 2.5 per cent and rounding down tariffs to the nearest 10 per cent, five per cent or 2.5 per cent band.

Key inputs used by British manufacturers would attract no import tariff, while products where there is little or no British competition could also have tariffs removed.

“High tariffs impinge on businesses and raise costs for consumers,” said DIT secretary of state Liz Truss. “This is our opportunity to set our own tariff strategy that is right for UK consumers and businesses across our country.”

But the NFU sounded a note of warning: “It is crucial that the UK’s global tariff schedule supports a thriving British agriculture,” said Gail Soutar, trade adviser with the NFU.

“It is vital the government sets our external tariffs at a level that prevents a flood of imports of food produced in ways that don’t meet the standards expected of our farmers here in the UK.”

The possible changes would be applied alongside any new free trade agreements with the EU, USA or others.

When no-deal Brexit was looming in March and October last year, the government published a list of 26 product categories where World Trade Organisation tariffs would be applied. It gives an indication of what might be protected in the future.

The list included all major meats plus butter and cheeses and fresh beans. No cereals, field vegetables (including potatoes and potato products) or salad crops were on the list. Some fertilisers, oils, vehicles and chemicals which are produced in the UK were included.

No major agricultural product category would be impacted by the abolishing of the 2.5 per cent tariff band, but the rounding down of tariffs rates would affect almost all products with most agricultural tariffs expressed as a duty per tonne or 100 kilograms rather than a straight percentage.

Currently 60 per cent of UK food exports and 70 per cent of imports by value are tariff-free because they are to and from the EU. That situation will remain for the rest of the post-Brexit transition period until the end of the year. The intention is for a trade deal which would see as few tariffs and customs checks as possible.

The consultation ends on the 5th March and can be found on the DIT website.

Source: FG Insights