LONDON – Business groups warn the Johnson government to cut food import tariffs in an effort to alleviate the UK’s cost-of-living crisis.
Two trade associations argued that such a move would only have a “negligible” impact on soaring household accounts, while reducing the impact of British negotiations on trade agreements and potentially jeopardizing food supplies.
Others warned that the idea – which would apply only to products not made in the United Kingdom – could have domino consequences for British-produced goods and could open the floodgates to harmful wider tariff reductions.
Downing Street has commissioned the Department of International Trade to assess the impact of reductions in base tariffs – tariffs on goods from countries that do not have trade agreements with the UK – amid soaring inflation and pressure on household budgets.
However, business groups urged Brexit Minister Jacob Rees-Mogg, who first proposed the idea and pushed it to Chancellor Rishi Sunak to dismiss officials.
Dominic Goudie, head of international trade at the Food and Beverage Federation (FDF), said the current unilateral tariff cuts “would little to address the cost of living, but would seriously undermine the UK’s ambitious trade negotiations and could have detrimental effects.” for Food Safety in the United Kingdom. “
He said base rate adjustments should be considered in the long term, and noted that the FDF plans to submit its own proposals. However, companies fear that this careless move could have a dangerous impact on British imports at a time when food suppliers are under pressure.
Other experts with experience in government and academia disagree as to whether a reduction in base rates would affect British leverage in negotiations. But most agree that this would have minimal impact on prices. There is also disagreement in the British cabinet as to whether the proposal should continue, Rees-Mogg is in favor, and International Trade Minister Anne-Marie Trevelyan is skeptical, as she made clear at a recent committee hearing.
Nick von Westenholz, head of trade at the National Farmers’ Union, said a reduction in tariffs on non-UK goods could help consumers, but could mean “indigenous food will be pushed out by imports of food we can’t produce here.” If imports of oranges become cheaper and this is reflected, for example, in store prices, consumers could choose them over other home-grown fruit.
But von Westenholz is also concerned about the possible slippery trend towards unilateral elimination of tariffs on goods made in the United Kingdom.
“This would not only put enormous pressure on British farmers and food producers in an already tough business environment,” he explained. -pro-quo for access to the extremely valuable British food market.
Rees-Mogg believes that mutual free trade is a better choice, but unilateral free trade is a good second option, according to a government official. However, the reduction in food tariffs is expected to end as a short-term measure that could reassure some critics.
“Playing with tariffs”
The British Retail Consortium (BRC) and the Small Business Federation (FSB) have said elsewhere that the move will have too little impact on consumer prices to be worth continuing.
In fact, about three quarters of the food sold in the UK is made or produced at home. Approximately 80 per cent of food imports to the UK come from the EU and are therefore duty free. A large part of the remaining imports will also be duty free under existing trade agreements or preferential access for developing countries.
This means that, overall, only a small percentage of food sold in the United Kingdom could qualify for a reduction in import duties, and it is not clear that the reduction would be passed on to the workshop.
“Playing with tariffs in this regard would not change food prices too much,” said Andrew Opie of the BRC, adding that price changes would be “negligible.”
FSB’s Craig Beaumont said reducing import duties was a “simplified idea” and that price changes could, at best, take too long to help with the immediate crisis. He called on the government to consider reducing taxes and adjusting its spending plans instead. The Ministry of International Trade declined to comment.