POLITICS
13/03/2019 07:39 GMT | Updated 13/03/2019 12:03 GMT

Plan To Slash Nearly All Tariffs To Zero In Event Of No-Deal Brexit Confirmed

But farming, car industry and ceramics will be protected from cheap imports, ministers say.

Britain will slash tariffs on the vast majority of imports from outside the EU if MPs vote to crash out of the bloc – but farmers, the car industry and ceramics will get some protection from cheap imports.

In a bid to stave off a feared explosion in inflation, and a feared £9bn shock to the economy, 87% of all imports (up from 80%) would see levies cut to zero or severely reduced, trade secretary Liam Fox has revealed.

It came as MPs were set to vote to block no-deal on Thursday, after Theresa May’s Brexit deal was defeated for a second time in parliament. 

Part of the government’s emergency no-deal plan, first revealed by HuffPost UK, the tariffs proposal will attempt to protect UK producers from being exposed to competition from cheap imports. 

But businesses and trade unions who fear the UK market will be flooded with foreign rivals have reacted with fury, with CBI director-general Carolyn Fairbairn describing the move as taking a “sledgehammer to the economy” and the TUC saying it would be a “a hammer blow to our manufacturing industries”. 

“This tells us everything that is wrong with a no-deal scenario,” she told BBC Radio 4′s Today programme.

“What we are hearing is the biggest change in terms of trade this country has faced since the mid-19th century being imposed on this country with no consultation with business, no time to prepare.”

Labour said the plan would lead to thousands of job losses, while the National Farmers’ Union said it was “appalling” British farmers would have just two weeks to get to grips with the changes.

Among the 13% of imports which will be subject to tariffs from outside the EU will be:

  • Beef, lamb, pork and poultry and some dairy products

  • Finished vehicles (tariffs will not apply to car parts imported from the EU in order to prevent disruption to supply chains)

  • Certain ceramics, fertiliser and fuel, in order to shield UK producers against unfair practices like dumping and state subsidies

  • Goods including bananas, raw cane sugar and certain kinds of fish, where tariffs are used to permit preferential access to the UK market for developing countries.

If the UK leaves the EU without a deal on March 29, the temporary schedules will apply for up to 12 months while the government consult on a permanent plan. 

Ministers also announced some products coming from the remaining 27 EU member states will face levies for the first time.

In special arrangements for Northern Ireland, the UK’s temporary import tariffs will not apply to EU goods crossing the border from the Republic.

Fairbairn added: “This is no way to run a country. What we potentially are going to see is this imposition of new terms of trade at the same time as business is blocked out of its closest trading partner.”

PA Wire/PA Images
CBI director-general Carolyn Fairbairn

Minette Batters, NFU president, said: “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.  

“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.”

Anabel Hoult, chief executive of the consumer group Which?, said while it was important consumers were offered choice between high-quality British products and competitively priced goods from abroad, the organisation would be monitoring the changes “extremely carefully”.

“We will stand up for consumers to ensure that their concerns are heard loud and clear by the government,” she added.

The new rates on food from outside the EU were announced as a proportion of the so-called “most favoured nation” (MFN) rate – imposed on imports from countries with no free trade agreement with the bloc.

Rates include beef (53% of MFN), poultry meat (60%), sheep meat (100%), pig meat (13%), butter (32%), Cheddar-like cheese (13%), protected fish and seafood products (100%) and milled and semi-milled products (83%).

The Food and Drink Federation said the government’s announcement just two weeks before the scheduled exit date was “disgraceful” and suggested food and drink manufacturers would leave the country under the regime.

FDF chief executive Ian Wright described the new system as “confusing and complex” because some foods qualify for partial protection while others get none at all, “with little logic to explain the difference”.

Meanwhile there will be “massive trade distortions” due to the special arrangements for Northern Ireland.

FDF chief executive Ian Wright CBE said:  “Today’s announcement on tariffs underlines why the UK is not ready to exit the EU on March 29. 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.

“We were promised that business would only have to adapt to one new change of rules; it’s now clear that promise has not been kept.

“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 March 29 2019.”

Tariffs on finished cars and trucks will be set at 10.6%, down from the EU MFN rate of 11.3%, while for finished buses the rate will remain unchanged, at 12.6%.

Barry Gardiner, shadow international trade secretary, said the plan was rushed, adding: “We now see the consequences of the government’s failure to negotiate a workable agreement with the EU. UK companies will now face competition from a flood of cheap imports that undercut them putting thousands of jobs here at risk.

“It is extraordinary that the government has instituted these measures without consulting business and giving no time for them to prepare or adjust.” 

But trade policy minister George Hollingbery said ministers must prepare for all eventualities, adding: “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 will 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.”

May has offered Tory MPs a free vote on blocking no-deal, with several of her remain-backing ministers thought to be ready to rebel. 

The PM told MPs on Tuesday night she had “personally struggled with this choice” over no-deal but said the best way to leave was “in an orderly way” with a deal. 

She said: “This is an issue of grave importance for the future of our country.

“Just like the referendum there are strongly held and equally legitimate views on both sides.

“For that reason, I can confirm that this will be a free vote on this side of the House.”

Chancellor Philip Hammond is expected to give his spring statement in the Commons this afternoon.