Business, Forwarding, Freight News, Logistics

Brexit tariff plan is a mixed bag, says forwarder

[ March 21, 2019   //   ]

Leeds-based Tudor International Freight director Adam Johnson has described the government’s the government’s proposed temporary tariff regime in the event of a no-deal Brexit as “a mixed bag” for traders.

He says that maintaining current zero tariffs on all imports from the EU would mean that, under World Trade Organisation rules they would have to be extended to every other country. However: “Although that would minimise disruption to our trade with the EU – by far our largest commercial partner – it would also open the door to other imports, including from nations with unfair trading practices, potentially in quantities highly damaging to UK industry.

“But, on the other hand, if we just extended the tariffs currently applying on imports from other countries to goods from the EU, the results would include many immediate, and in some cases sharp, price rises for UK businesses and consumers. These would probably be exacerbated by a drop in the value of sterling which would follow a no-deal departure.”

Mr Johnson said the government had therefore come up with an essentially hybrid plan, which would apply for up to 12 months, while a full consultation and review of a permanent approach to tariffs took place.

He said: “Under the proposals, 87% f all UK imports by value will qualify for zero-tariff access, up from the current 80%. The plans also represent a shift, favouring products from non-EU countries. That’s because they’d see the proportion of EU goods exempt from tariffs dropping from 100% to 82%, while the share of imports from the rest of the world in this category would rocket from 56% to 92%.”

Mr Johnson said the plans contained sensible proposals for tariffs protecting some UK industries vulnerable to cheap imports, such as certain areas of agriculture and ceramics. They also sought to make car parts from the EU – including engines – tariff-free, to avoid disruption in complex supply chains and help UK plants, many of which relied on just-in-time production processes.

However, Mr Johnson said: “The government has been criticised for developing its proposals without consulting business, the public or Parliament, for example.

“Its plans also include tariffs not being charged on any goods entering Northern Ireland from the Republic. While maintaining the open border is a perfectly laudable intention, for its effects on cross-frontier trade and the peace process, this proposal could also provide an invitation for people wanting to evade UK tariffs or smuggle goods, perhaps including contaminated food or weapons, into the country.”

Mr Johnson said the proposals would also do little to ameliorate the much-publicised long delays and traffic congestion expected in the Dover area if the UK left without a deal and the EU’s agriculture commissioner had even suggested the plans were illegal under World Trade Organisation rules.