UK sets out trade plans to limit no-deal Brexit damage – Financial Times


The price of food and cars imported from Europe would jump steeply under a no-deal Brexit, UK officials revealed on Wednesday in a bid to pressure Tory MPs to back a showdown vote in parliament to prevent Britain leaving the EU without a withdrawal agreement.

The UK government set out its long-awaited plans for tariffs under a no-deal Brexit after Theresa May’s administration suffered a humiliating second defeat for its main EU divorce plan on Tuesday. The defeat left Downing Street adrift with barely two weeks left before the country is due to leave the EU.

While the House of Commons is expected to back a vote on Wednesday evening to prevent a no-deal Brexit, there are likely to be scores of Tory MPs voting against it despite warnings from the Treasury that it would lead to deep economic damage for the UK.

Philip Hammond, the chancellor, will also set out details at midday in a Spring Statement on the UK finances for billions of pounds of spending if Britain can agree a deal with the EU.

The trade plan for a no-deal Brexit would see full-scale liberalisation of 87 per cent of import duties while keeping protections for certain industries such as ceramics, automotives and farming.

The plan will be controversial because it would mean a 10 per cent rise in the cost of European cars and a jump in the price of beef, chicken and pork from the continent.

Britain’s new tariff system would only apply for 12 months after a no-deal rupture while the government consulted on a new, permanent approach to tariffs. Products with zero tariffs would include: aluminium, steel, machinery, arms and ammunition, footwear, paper and wood products.

Tariffs would apply to products including beef, lamb, pork, poultry, some dairy, finished vehicles, ceramics, fertiliser and fuel.

At the same time the government announced there would be no checks or customs declarations at the Irish border in the event of no-deal Brexit.

However, there would be new checks away from the border to protect the biosecurity of the island of Ireland. That will involve the setting up of a new “designated entry point” in Northern Ireland where animals and animal products from outside the EU would require certification and pre-notification before arriving in the UK.

Whitehall officials concede that this would have a potentially negative impact on the competitiveness of industry and agriculture in Northern Ireland. “However these are the only steps the UK government can unilaterally take to deliver on our absolute commitment to avoid a hard border in the event of no-deal,” the government said.

There would also be new import requirements on a “very limited” set of goods such as endangered species and hazardous chemicals.

The government said the new “temporary import tariff” schedule would not apply to goods crossing from Ireland into Northern Ireland.

That would leave farmers in Northern Ireland at a competitive disadvantage to their Irish rivals.

Also the system would mean that products brought into Northern Ireland across the land border would not have any tariffs imposed. But many products shipped across the Irish Sea from Ireland to Wales or England would have tariffs slapped on them.

Officials acknowledged that this could be vulnerable to abuse by the unscrupulous.

One official played down the idea that smugglers could bring European cars or other expensive goods across the land border — and then into England — to escape tariffs. “That’s the kind of thing we would be monitoring closely,” he said.

Carolyn Fairburn, director general of business lobby group the CBI, said the trade plans underlined the risks of a no-deal Brexit.

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

“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. This is a sledgehammer for our economy.”

Officials said that the new tariff schedule could have a small positive impact on GDP although this would be dwarfed by the wider damage to the economy from leaving the EU without a deal. At present the UK enjoys tariff-free access to EU markets.



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