UK Government pledges to set zero tariff regime on some imports in no-deal Brexit

UK – The UK government has pledged to set the majority of import tariffs to zero while maintaining tariffs for the most sensitive industries within the food, beverage and agricultural space.

If the case that UK leaves the European Union with no deal, the government has said it will cut tariffs on a range of imports from outside the EU and introduce measures to avoid a hard border in Northern Ireland.

The announcement by the government comes after lawmakers in the House of Commons voted against Prime Minister Theresa May’s Brexit deal.

This is despite the earlier reports by the government that it had secured “legally binding” changes to its withdrawal agreement with the European Union.

May had indicated that the changes were designed to avoid a hard border in Ireland, something she thought could help push for the backing needed on the Withdrawal Agreement which sets out an orderly exit from the EU.

The food industry to be among the hardest hit

If a no-deal Brexit scenario occurs, experts say the food industry would be among the hardest hit.

Among the devastating effects expected to occur in case Theresa May’s deal is rejected include higher food prices, food availability, tariffs and delays caused by border control.

Leaders across the industries have been lobbying for clarity on Brexit, amid serious concern over a multitude of issues that would come with a “catastrophic” no-deal.

Food and Drink Federation Chief Executive, Ian Wright claimed that the new changes by the government, including the temporary zero tariff regime was confusing and complex.

The new rules include some zero tariffs, some new tariffs and some quotas, in that while some foodstuffs qualify for partial protection, others may not qualify to any protection.

“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,” said Ian Wright to FoodIngredientsFirst.

“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.

“This is yet another reason why Parliament must, this evening, act decisively to remove the threat of exiting the EU without a deal on 29 March.”

He says that the second defeat by Theresa May was “another body blow” for the country and the UK’s largest manufacturing sector.

What the temporary tariff regime is all about

According to the government, the temporary tariff regime for a no-deal scenario is designed to minimize costs to business and consumers while protecting vulnerable industries.

Under the agreement, imports into the UK would not attract a tariff in the event of a no-deal Brexit.

The government will also take a temporary approach to avoid new checks and controls on goods at the Northern Ireland in the case of no-deal Brexit.

Based on the arrangement, tariffs would still apply to 13% of goods imported into the UK through 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.

Speaking on the development, Trade Policy Minister George Hollingbery said: “Our priority is securing a deal with the EU as this will avoid disruption to our global trading relationships. However, we must prepare for all eventualities.

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

It represents a modest liberalization 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.”

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