PARLIAMENTARY DEBATE
No-deal Brexit: Schedule of Tariffs - 7 October 2019 (Commons/Commons Chamber)
Debate Detail
On 13 March, the Government announced that they would implement a temporary tariff regime in the event of a no-deal Brexit. This regime would apply equally to all imports that are not subject to alternative trade arrangements and would apply for up to—I stress, up to—12 months while a full public consultation takes place to inform long-term tariff arrangements. The Government would prefer to leave with a deal and will continue to work energetically and with determination to get that better deal. This will require the European Union to show the same spirit of compromise that my right hon. Friend the Prime Minister is demonstrating in his engagement with our European friends and allies.
As the UK leaves the EU, the Government are stepping up their preparations to get the UK ready to trade if there is no deal. The temporary tariff regime will maintain open trade on the majority of UK imports, helping to support consumers, business supply chains and sensitive sectors of the UK economy. Due regard has been given to the five principles set out in the Taxation (Cross-border Trade) Act 2018: the interests of consumers in the UK; the interests of producers in the UK; the desire to maintain and promote external trade of the UK; the desire to maintain and promote productivity in the UK; and the extent to which these goods are subject to competition. It reaffirms our commitment to become a free-trading nation. It realises the benefits of an independent trade policy to support increased trade and investment with partners new and old around the world and increased choice for British shoppers.
At the same time, Her Majesty’s Government recognise the importance of retaining some tariffs. Tariffs would therefore apply on just over 10% of imports, supporting sectors facing unfair global competition, mitigating otherwise significant adjustment costs for the agricultural sector, supporting the strategically important automotive sector and maintaining our commitments to developing countries. Preferential access to the UK market is important for our developing country partners, and tariffs are being retained on a set of goods, including bananas, raw sugar cane and certain kinds of fish, to demonstrate the Government’s ongoing commitment to countries in the developing world. During the article 50 extension, the Government have remained responsive to the concerns of business and have reviewed the tariffs that would come into effect if the UK left the EU without a deal.
To answer the hon. Member for Nottingham East (Mr Leslie), the Government will publish the final tariffs shortly. It would not be appropriate for me to comment on any amendments being considered prior to that announcement. As he will understand from his former guise as shadow Chancellor, to do so would be irresponsible. The Government will ensure that Parliament is informed as soon as is practically possible once a final decision has been made.
At present, we can import from and export to the EU without any customs duties applying, but that could be about to end. The consequences for so many sectors of our economy, including farming, manufacturing and engineering, are massive. I ask the Minister: how are businesses supposed to “get ready”, as the £100 million advertising campaign suggests, if Ministers still cannot tell us the tariffs that will be imposed and seem incapable of even the most basic competent level of preparation?
The CBI director general Carolyn Fairbairn rightly asks why there is no time to consult industries about what tariffs will be applied. Even if we put aside the enormous non-tariff barriers of veterinary inspections, border checks and certification, are businesses to assume that the draft tariffs that were put out in March will still apply? Some of the import tariffs that Ministers are rumoured to be planning are really high. For example, if a British haulage company needs to buy an HGV truck from abroad, should it plan to pay an additional 22% on the cost or 10% because of the Government’s tariff plan? Will my constituents have to add 10% to the cost of buying a new car? What about the UK energy and bioethanol sector? Will customers have to pay the 4.7% tariff on fuel imported from the EU, as they currently do for fuel from beyond the EU? If not, will that not push the British energy sector into a competitive disadvantage when the 4.7% is imposed on its exports? There are container ships full of goods, components, textiles and clothing that have already been dispatched from the far east and elsewhere, heading for arrival at our shores at the end of the month. Will they face tariffs when they get to Britain, or not?
If British businesses suddenly have to start paying tariffs to export into Europe, what will the reciprocal tariffs be on goods imported into our country? How will British farmers compete with foreign produce when, for example, their lamb will face a 48% tariff when selling into Europe, their cheddar 57%, their poultry 37%, their wheat 53% and their beef 84%? The National Farmers Union is deeply concerned about the risk of foreign producers undercutting domestic production. So can the Minister at least do us the courtesy of setting out the rationale and strategic logic behind his decisions? Where is the parliamentary authority for imposing these tariffs and taxes? When will there be a vote in the House of Commons as the customs legislation requires?
Given that the Government now want a customs frontier in Ireland, will the Minister confirm that goods coming from the Republic into Northern Ireland will have tariffs added on? How does he think people and businesses in Northern Ireland will respond to the imposition of a tariff border in that way?
Would it not be far better to accept that erecting reciprocal tariffs between the UK and the EU is a fool’s errand—an endless cycle of costs and bureaucracy where everyone loses out in the end? Will the Minister at least have the good grace to acknowledge that, by leaving the single market and the customs union, British businesses and customers will be worse off, and for no good reason?
I thought the hon. Gentleman’s subsequent questions underlined the desirability of there being a deal between the United Kingdom and the European Union as we seek to leave. I hope that in the days ahead the EU will respond in the same spirit that my right hon. Friend the Prime Minister has demonstrated and show flexibility and compromise to get a deal that will pass the House. Then the tariff announcements might become redundant. That is very much our hope. The hon. Gentleman said that he found it extraordinary that so long had passed and we had yet to publish this. Many people in my constituency and around the country find it equally astonishing that it is more than three years since the UK voted to leave the EU and still people in this House are determined to thwart that democratic decision.
The hon. Gentleman asked specifically about the situation on the island of Ireland. I am happy to confirm, as I think he will know, that there will be no tariffs on goods coming from the Republic of Ireland into Northern Ireland. On parliamentary process, he will know exactly how that works. The House will have the opportunity to have its say within 60 days of the tariff regime coming into place.
The Government failed to consult properly with business organisations or with trade unions before publishing these tariff measures, ignoring the very producers whose jobs and livelihoods would be most affected. Their refusal to listen and their inability to compromise are now posing grave dangers to our country.
The Government told us that EU manufacturers would be demanding a deal with us. They did not. The Government said that a trade deal with the EU would be the easiest in human history. It is not. The Government told us that they would have 40 trade agreements ready to be signed one second after midnight on Brexit day. They do not. Far from our seeing other countries
“champing at the bit to strike trade deals with a post-Brexit Britain”,
as the Secretary of State claimed, many of those countries already have a trade agreement with us by way of the EU, but it is a trade agreement that will fall away if we leave the EU without a deal. The Government have failed to roll over all the existing deals with approximately 70 countries. That is why, earlier this year, the Government announced emergency proposals to reduce up to 87% of UK tariffs to zero, and to expand our tariff rate quotas in the event of a no deal. As new tariffs are imposed on our exports, damaging jobs, this is a desperate attempt to keep import costs down for British consumers.
So may I ask, first, whether the Minister will publish the Government’s assessment of the price rises that they anticipate would hit UK consumers in default of these tariff rates? The Government advise businesses that, in a no-deal scenario, we would trade under World Trade Organisation rules. However, the Government have yet to have our WTO schedules formally ratified owing to challenges over our tariff rate quotas—challenges that are likely to require substantial compensation to resolve. So, secondly, when does the Department believe that such a challenge may crystallise, and what contingency funds have they laid aside to pay compensation to any complainants?
The lunacy of the Government’s position has been exposed by a country that they previously regarded as a friendly model for their future free trade agreement with Europe. Canada has walked away from trade talks with the UK precisely because these measures would mean free access for Canadian exporters without requiring them to open up access to our goods and services in return. So, thirdly, can the Minister tell us what progress has since been made with respect to Canadian trade talks, and whether any other countries have similarly refused to negotiate as a result of the announcement of zero tariffs by the UK? Under this regime, UK companies will face competition from a flood of cheap imports, undercutting them and putting thousands of UK jobs at risk, without any reciprocal right of free access to their markets for our manufacturers and businesses.
Just about every single major trade body and trade union in the UK has decried the lack of engagement with it, and, in particular, the Department’s lack of understanding in respect of trade defence measures. So, fourthly, I ask the Minister what assessment he has made of the diversion of goods originally destined for other markets at a time when those other markets are increasing tariffs and taking substantive action to tackle the issue of dumping. These are existential threats to our industrial heartlands. The steel sector, the ceramics sector and the automotive sector are all greatly at risk from the proposed measures.
The EU has introduced stringent new safeguard measures to tackle dumping, and is due to set out its approach to tackling circumvention shortly. So, fifthly, does the Minister recognise that this could add further tariffs to our EU exports in the event of a no-deal Brexit, and could drive even more dumped goods to our markets? If so, sixthly, can he explain why the Government have sought to establish the weakest Trade Remedies Authority in the world, and to do so without proper legal authority?
The hon. Gentleman talks about a lack of interest. [Interruption.] If the hon. Member for Kirkcaldy and Cowdenbeath (Lesley Laird) stopped chuntering and listened, she might hear something. The shadow Secretary of State said there was no interest in trade agreements. What does he think is going on with the United States? With Australia? With New Zealand? Everywhere that I have travelled in this role, I have discovered an enormous interest in what our withdrawal from the European Union means not just for the United Kingdom, but for our ability to do bilateral trade agreements with other countries. As I said in reply to my right hon. Friend the former Secretary of State, we have transitioned over 72% of UK trade in continuity agreements, which will protect us in the event of a no-deal Brexit—which is something that the hon. Gentleman seems determined to advocate, given his lack of support for the Prime Minister.
The hon. Gentleman talks about the Trade Remedies Authority. There is not a single member of the civil service working today who was working in the civil service the last time the United Kingdom had her own independent trade body. The fact that we have established the Trade Remedies Authority, which I visited several weeks ago—[Interruption.] If the hon. Gentleman took a bit of time to understand his brief, he would understand very clearly—[Interruption.] The hon. Gentleman laughs. He should be laughing at himself, because he does not understand the very policy that he shadows. The body is created. The body can function temporarily without the passage of the Trade Bill in the event of a no-deal Brexit, as he should know, and then we will put it on a statutory footing when we introduce a new trade Bill in a new Session of Parliament.
The shadow Minister talked about all the things that we have not done. Let us talk about some of the things that he said he would do. He said that he would respect the referendum. He did not. He said that he would implement the decision of the British people. He will not. What we will do is take the opportunities of having an independent trade policy—the opportunity to sign bilateral trade agreements and the opportunity of free trade—to deliver prosperity to our citizens.
Given new tariffs from the US and the EU, has the schedule in the temporary tariff regime changed and, if so, by how much? Has the list of 43 trade remedies to be kept and 66 to be abandoned changed and, if so, by how many? Most importantly, with barely three weeks to go to a potential no-deal Brexit—although the Benn Act should protect us from that—I say to the Minister that it is not irresponsible to publish the new schedule. It is absolutely necessary to publish it, not least to allow businesses—importing and exporting businesses alike—at least a little certainty and to ensure that they can continue to operate within the law. The Minister is having a great time teasing us about when the schedule will be published, so may I ask him to publish it today so that businesses understand precisely what they are dealing with?
We have our own advisory body, which we set up within the Department, and that has multiple employer groups, business and representatives of the regions and nations of the UK. We seek to inform ourselves as much as possible before these decisions are made.
“If we don't get a Brexit deal and cannot transport raw milk south, without significant delays and/or certification requirements, then our industry is facing a crisis of epic proportions”.
How will the Minister attempt to reassure dairy farmers in Northern Ireland?
I hope the predictions of doom and gloom and bankruptcy that the hon. Gentleman makes again today prove as ill-founded as those he has made over the past three years.
By the way, recent surveys indicate that the behaviour of this House has made it more likely that businesses will not put in place the necessary measures to prepare for the event of a no deal, because this House continues to send a signal that it intends to do all it can to thwart that.
By the way, the best way to have effective government in Northern Ireland is for all the parties in Northern Ireland to get back together and get back into government. Let us get a functioning Executive and a functioning Assembly that can truly speak at a local level for the people of Northern Ireland.
“As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I’ve done before!).”
So I wonder whether the Minister can tell my constituents who are producing and bottling fine Scotch whisky—this is especially in relation to the next urgent question—whether these arrangements are to be used as leverage against the unmatched wisdom of the President of the United States in a future trade agreement of a no-deal Brexit?
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