Food sector slams ‘confusing and complex’ no-deal Brexit tariffs
The proposals were unveiled today (13 March) after Prime Minister Theresa May’s Withdrawal Agreement faced another defeat in the House of Commons last night. In the second so-called ‘meaningful vote’ on the exit deal, Parliament again refused to ratify her vision of the 'divorce' settlement, rejecting May's proposal by a bruising 149 votes.
Brexit backing Tory MPs and Northern Ireland's DUP have ruled out supporting a proposal that would see the so-called 'backstop', a customs arrangement aimed at avoiding a hard border with Ireland, implemented. Other factions want to see a softer Brexit that would ensure closer ties with the EU, a general election that could re-set negotiations, or, indeed, a second referendum that could potentially reverse the decision to leave entirely.
The UK is scheduled to leave the European Union on 29 March and, currently, if the Withdrawal Agreement fails to gain Parliamentary backing the current legal default will be a no-deal Brexit. MPs are, however, due to vote on whether to rule-out a no-deal Brexit or request an extension to Article 50, which triggers the country’s departure from the EU, later today.
Agriculture 'protected' by tariffs?
In a statement released this morning, the Department for International Trade said it was publishing details of the UK’s temporary tariff regime for no deal ahead of this evening’s vote “to ensure MPs are fully informed”.
The Department said the system was designed to “minimise costs to business and consumers” while “protecting vulnerable industries”.
The temporary arrangement would apply for up to 12 months while a “full consultation” and review on a permanent approach to tariffs is undertaken.
Under the temporary tariff, 87% of total imports to the UK by value would be eligible for tariff free access.
“If we leave without a deal, we will set the majority of our import tariffs to zero, whilst maintaining tariffs for the most sensitive industries,” Trade Policy Minister George Hollingbery said. “It represents a modest liberalisation of tariffs and we will be monitoring the economy closely, as well as consulting with businesses, to decide what our tariffs should be after this transitional period.”
In food a “mixture” of tariffs and quotas would apply for beef, lamb, pork, poultry and some dairy. This measure aims to support farmers and producers who have historically been protected through high EU tariffs, the Department explained.
Too little, too late?
Organisations representing the UK food sector have roundly condemned the government for sharing these details just two weeks ahead of Brexit and insisted that the system will fail to protect businesses from the worst consequences of no-deal.
National Farmers’ Union president Minette Batters said it was “appalling” that the proposals were kept under wraps until this late stage.
"Farmers and food businesses have no time to prepare for the implications, which will be exacerbated by the fact that we will face tariffs on our own exports on food into the EU and other countries with whom we currently enjoy free trade arrangements,” she stressed.
Food and Drink Federation CEO Ian Wright took a similar line, insisting that the timing of the announcement was “disgraceful”.
“Business cannot adapt to this new regime in just two weeks. It is disgraceful that we are, only now, getting to see these. There must be proper consultation with business before a change of this magnitude is introduced.”
Batters said the tariff regime does not go far enough to buffer UK food producers from the worst consequences of Brexit.
“Although we are pleased to see that the government has listened to our concerns and elected to treat many agricultural sectors sensitively, which may support farmers who are already facing disastrous disruption from no-deal, it is enormously worrying that some sectors will not have this protection – noticeably eggs, cereals, fruit and vegetables.
“Even those sectors that are treated sensitively will, in most instances, see worrying and large reductions in the tariff rates currently charged on non-EU imports. Furthermore, the approach taken by the government to lump products under the same high-level tariff code, for example whole carcases and high value cuts of fresh beef, means there is a high chance of market distortion for many sectors who are deemed to have been treated sensitively.”
She suggested that rather than keeping food prices down and protecting UK production, this policy could actually increase the country’s reliance on food imports. Potential negative consequences include “losing control” of animal welfare standards and increasing the environmental impact of the UK’s food production, the farming representative claimed.
'Massive' trade distortions
The FDF’s Wright also warned of trade distortions and flagged the burden this additional layer of complexity would add to businesses already under pressure.
“This new system is confusing and complex. It includes some zero tariffs, some new tariffs and some quotas. Some foodstuffs qualify for partial protection and some not for any protection at all; with little logic to explain the difference. 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. This is likely to result in massive trade distortions.”
In this scenario, Wright raised the prospect of business flight and depressed investment in the UK. “In a world where it is costly and complex to export finished goods to the EU, and costly and complex to import key ingredients, many food and drink manufacturers who trade with the EU will surely question whether the UK is the right place for them to be.”
Both the NFU and FDF have called on MPs to take a no-deal Brexit off the table and rule out exiting the EU without a deal on 29 March.
