Temporary no-deal tariff regime published

Following the rejection last night of a revised version of the EU Withdrawal Agreement, the government has this morning published details of the UK’s temporary tariff regime under a no-deal scenario.

It says British businesses would not pay customs duties on the majority of goods when importing into the UK if we leave the European Union without an agreement.

Trade policy minister, George Hollingbery said: “Our priority is securing a deal with the European Union as this will avoid disruption to our global trading relationships. However, we must prepare for all eventualities.

“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.”

This balanced approach, he said, would help to support British jobs and avoid potential price spikes that would hit the poorest households the hardest. “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.”

This regime is temporary, and the government would closely monitor the effects of these tariffs on the UK economy. It would apply for up to 12 months while a full consultation and review on a permanent approach to tariffs is undertaken.

Tariffs cannot be left as they are, as if the UK maintained its current external tariff regime and applied it to the EU, this would impose new tariffs on EU imports, driving up prices for consumers and disrupting business supply chains. Additionally, if the UK were to fully maintain zero tariffs with the EU, it would also have to extend this to the rest of the world due to WTO rules. This would minimise disruption to EU trade but would open the UK to competition from other countries including those with unfair trading practices.

The government has also confirmed today that it will take a temporary approach to avoid new checks and controls on goods at the Northern Ireland land border if the UK leaves the EU without a deal. The UK’s temporary import tariffs will therefore not apply to goods crossing from Ireland into Northern Ireland.

These tariffs would apply equally to all other trading partners, except for those where the UK has a free trade agreement in place and around 70 developing countries that will benefit from preferential access to the UK market.

No-deal Brexit temporary tariff regime (Source: Department for International Trade)

Under the temporary tariff, 87% of total imports to the UK by value would be eligible for tariff-free access. Tariffs would still apply to 13% of goods imported into the UK. This includes:

• a mixture of tariffs and quotas on beef, lamb, pork, poultry and some dairy to support farmers and producers who have historically been protected through high EU tariffs;

• retaining a number of tariffs on finished vehicles in order to support the automotive sector and in light of broader challenging market conditions. Car makers relying on EU supply chains would not face additional tariffs on car parts imported from the EU to prevent disruption to supply chains.

In addition:

• There are a number of sectors where tariffs help provide support for UK producers against unfair global trading practices, such as dumping and state subsidies. Tariffs would be retained for these products, including certain ceramics, fertiliser and fuel

• To meet a commitment to reducing poverty through trade, the government currently offers preferential access to the UK market for developing countries. To ensure that access for developing countries is maintained, it would retain tariffs on a set of goods, including bananas, raw cane sugar and certain kinds of fish.

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