Tweaking tariffs: “Confusing and complex,” UK food industry slates no-deal regime

09 Oct 2019 --- Concerns are growing fast as Britain hurtles toward the Brexit deadline later this month with the UK government’s latest tariffs policy being branded as completely incoherent. The government has announced changes to UK tariffs on lorries and bioethanol in the event of a no-deal Brexit. These revisions are an attempt to keep down prices, according to the Department for International Trade, but the food and beverage industry has hit back claiming that this new schedule is both “confusing and complex for businesses.”

“This is not going to create a big win for consumers. The investment made right across the supply chain in preparing for a no-deal Brexit means prices will likely increase regardless of the government's tariff decision,” says FDF Policy Manager Dominic Goudie.

“New tariffs will apply to some foods that are currently imported tariff-free, yet no tariffs will be applied to goods that cross the border between Ireland and Northern Ireland. At the same time, UK exports to the EU will face the EU's prohibitively high most-favored-nation tariffs. These changes to tariffs facing both imports and exports will lead to massive trade distortions that will be bad for businesses and consumers alike.

“Many food and drink manufacturers who trade with the EU will now question whether the UK is the right place for them to be,” he adds.

“Government must avoid a catastrophic no-deal scenario that would result in these tariffs entering into force so that they can undertake an open and transparent consultation on future UK tariffs.”

The amendments include lower tariffs on HGVs entering the UK market, which the Department for International Trade says will strike a better balance between the needs of British producers and the small and medium enterprises (SMEs) that make up the UK haulage industry. This, it says, will also ensure that crucial fleet replacement programs that help to lower carbon emissions can continue. 

Another change relates to the adjustment of tariffs on bioethanol to retain support for UK producers, “as the supply of this fuel is important to critical national infrastructure.”

Lastly, to apply tariffs to additional clothing products to ensure preferential access to the UK market currently available to developing countries (compared to other countries) is maintained. 

“These three specific amendments to the tariff rates published in March will enable UK supply chains to continue to operate smoothly and keep prices down for consumers and ensure that we are fully prepared to leave the EU on October 31, whatever the circumstances,” says a government statement. 

Under the temporary tariff, 88 percent of total imports to the UK by value would be eligible for tariff-free access.

The government would closely monitor the effects of the temporary tariff regime on the UK economy. 

A balanced approach?
According to the government, the temporary tariff regime provides a “balanced approach on tariffs for both consumers and producers.”

It also stresses that British businesses would not pay tariffs on imports into the UK for the majority of goods if the country leaves the EU without an agreement. This will mean lower prices in shops for consumers and the opportunity to source the best goods from around the world, it says.

“For example, honey from New Zealand will see its tariff fall from 17 percent to zero, grapes from Brazil will reduce from around 15 percent to zero and other products, such as tennis rackets and wines will no longer face a tariff.”

The regime would apply for up to 12 months while a full consultation on a permanent approach to tariffs is undertaken from January, as part of work to develop the UK’s independent trade policy. All businesses, interest groups and consumers will be able to share their views about the permanent tariff regime with the government through this process.

By Gaynor Selby