The UK would scrap 80-90 per cent of tariffs on imported goods if it leaves the European Union without a deal, but would keep them for sensitive sectors such as cars and some agricultural products, according to reports.
The government intends to publish details on the tariff cuts if MPs reject prime minister Theresa May's Brexit deal in a vote due next week, according to a report on Sky News.
The imposition of tariffs – or special taxes on imports – after a no-deal Brexit is a key concern for Irish exporters selling into the UK market. The absence of tariffs on many items could mean companies in many sectors will not face this problem after Brexit, though in some sectors they could face new competition from outside the EU.
Heavy uncertainty remains the key food sector, where the UK is set to impose tariffs in key areas like beef and dairy, according to the reports. Tariffs are highest in food and would pose a significant threat for Ireland’s beef sector and parts of the dairy industry.
Quota system
The UK may also allow a certain amount of food imports in tariff-free under a quota system, though depending on how this is arranged it could leave Irish exporters facing competition from lower cost countries in South America and elsewhere.
In response to the latest reports, Britain’s Department for International Trade said that no final decision had been made on tariffs, but there had been discussion across government about the right level of tariffs following a no-deal Brexit.
The UK currently has tariff-free access to EU markets and it benefits from EU trade deals with other countries. But its exports will automatically face tariffs if it leaves on March 29th without a transition deal.
The country will then have to decide if it wishes to impose reciprocal tariffs on imports from the EU.
Without tariffs, some British factories and farms would struggle to compete with imports, and Britain would lose leverage to persuade other countries to reduce tariffs on goods they import from Britain.
Sensitive items
However, freedom to set an independent trade policy – including cutting tariffs – was a key reason for leaving the EU given by Brexit supporters, including trade minister Liam Fox.
Mrs May's cabinet of senior ministers have reportedly approved the tariff plan, after environment and farming minister Michael Gove argued to keep food tariffs and business minister Greg Clark insisted car imports should still face a 10 per cent tariff.
“According to government sources the 10-20 per cent of more sensitive items which will retain their protection includes cars, beef, lamb, dairy and some lines of textiles,” it said.
Car parts, cereals and some finished food products would be among the areas where tariffs would be scrapped, it added.
Trade experts pointed out last night that tariffs in many sectors are low in any case and that the vital decisions will be what happens to higher-tariff sectors such as food.
The Department for International Trade said the government’s priority remained avoiding a no-deal Brexit.
“If we leave the European Union without an agreement, our tariffs will need to strike a balance between protecting consumers and businesses from possible price rises and avoiding the exposure of sensitive industries to competition,” a spokeswoman said.
The UK’s government is due to hold a series of parliamentary votes next week asking lawmakers to approve a modified version of a Brexit plan they previously rejected, and if not, to vote on a no-deal or a delay to Brexit. – Reuters