Nuts, bolts and bay leaves: UK trade after Brexit

Scissors and screwdrivers will be a little cheaper in Brexit Britain. Importers of fresh flowers or oranges will no longer pay higher tariffs during the European growing season. Manufacturers will see tariffs cut on some materials and machinery. Climate-friendly goods such thermostats and turbine blades will be waved across the border duty-free.

While the UK government boasts that its post-Brexit tariff plans will cut costs and complexity for businesses and consumers, the most striking aspect of the UK global tariff — which will apply from 2021 to imports from any country with which Britain does not have a preferential trade deal — is how little has changed.

Britain plans to eliminate or round down the tariff charged on more than half of some 12,000 products, but most of the changes will be mere tweaks. Researchers at the UK Trade Policy Observatory, based at the University of Sussex, note that the weighted average tariff charged on goods imported from “most favoured nations” will fall only from 2.1 per cent to 1.5 per cent.

This is much less liberal than the government’s plans last year for a no-deal Brexit. Back then, it proposed slashing almost all tariffs on imports from MFN to zero, partly to avert a big rise in food prices if the UK had suddenly to apply the same rates to the EU. The new regime will not please libertarians who thought Brexit would lead to a new era of untrammelled trade beyond the EU. Dmitry Grozoubinski, a former Australian trade negotiator, says the UK looks “as protectionist as the EU”, in the sectors where it has domestic production.

Instead, the government is trying to exercise new-found freedom while balancing consumers’ interest with those of local industry. The ability to set external trade policy was to be one of the big prizes of Brexit. For Eurosceptics who despise the complexities of Brussels regulation, getting rid of the Meursing code — which sets thousands of tariffs for biscuits, baked goods and confectionery, based on their dairy, starch or sucrose content — is a sweet victory.

At the same time, it plans to shield UK farmers and carmakers from global competition. Ceramics producers in the Potteries and bicycle makers such as Brompton will no longer have to go head to head with cheaper Chinese imports.

The UK government will cut tariffs on the nuts and bolts — in the most literal sense — that go into British-made machinery, helping manufacturers compete. Leaving most tariffs on clothing unchanged will protect developing countries that have preferential access to the UK market.

But the new policy is also a negotiating gambit. Many tariffs remain in place, even where there is no British production, to conserve ammunition for trade talks with the EU and others. Why offer market access upfront to Spanish apricot growers or Finnish reindeer herders, if the threat of tariffs might help the UK secure better terms?

There are two big risks to this approach. One is that British consumers will face steep price rises — for cars and food in particular — if the UK fails to secure a trade deal with the EU by the end of the year. The second is that, in tweaking so many tariffs by small degrees, the UK has needlessly complicated the already fraught debate over checks on trade involving Northern Ireland. There are now thousands more products where a small tariff differential could put goods moved from Great Britain to Northern Ireland “at risk” of being sold on into the EU.

For consumers, the effects will be barely perceptible at the checkout. Scrapping a 7 per cent duty on bay leaves, or an 8 per cent tariff on cocoa powder, pales into insignificance next to the effects of oil prices or the lockdown. But in this, as in other aspects of Brexit, that may be just what ministers are hoping for.

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