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UK publishes post-Brexit customs tariff – updated

[ May 20, 2020   //   ]

The Department for International Trade has published an outline of the new UK Global Tariff under which it would trade with the rest of the world after Brexit, including tariff reductions on many goods. The draft free trade agreement envisages that they would be abolished on around £30 billion-worth of current imports, although they would remain on some goods including cars and beef.

However, as import duties are relatively low – typically 5% – the impact on prices in the shops will be fairly small.

The UK is meanwhile continuing talks on signing a free-trade deal with the European Union.

Andrew Hood , international trade partner at legal firm Fieldfisher, said the new UK Global Tariff (UKGT) would be “a clear departure from the current EU tariff system and will be an important building block in the UK’s post-EU trading environment”.

UKGT would replace the European Union’s Common External Tariff from the end of the Brexit Transition Period on 31 December. However, the UK’s commitment to the ongoing Brexit process and ending the UK’s transition from EU membership by the end of 2020 throws up challenges for business, he warned.

He said the new MFN (most-favoured-nation) tariff regime, the UK Global Tariff would remove tariffs on 60% of imports entering the UK, streamlines nearly 6,000 tariff lines and removes all tariffs below 2%.

In manufacturing, the UKGT also cuts tariffs on products that support energy efficiency and a sustainable economy with products such as thermostats, vacuum flasks and LED lamps tariff free.

The UKGT also makes some specific provision for the life sciences sector. Pharmaceuticals and most medical devices (including ventilators) have been made tariff free.  Some medical products are set to maintain a tariff under the UKGT although there will be a suspension of tariffs on personal protective equipment used to fight COVID-19.

Products which have not been made tariff free by the UKGT may be covered by the new tariff-rate quota which would allow a limited amount to be imported at a zero or lower tariff rate, sometimes only applicable to products imported from a specified country. The government will publish further advice on tariff-rate quotas later in 2020, said Hood.

Hood said: “The simplification of tariffs is always welcome but the change in the tariff levels will see both winners and losers across the UK.

“Obtaining a comprehensive free trade agreement with the EU before the transition period remains the preference of nearly all businesses we speak to – ensuring no tariffs and no increased administration when continuing to trade with the EU.

“All manufacturing businesses in the UK and those that trade in goods with the UK will need to understand rapidly how this affects their long-term cost base and commercial contracts in the event these new tariffs (and the upcoming tariff quotas) come into effect on 1 January 2021.”

The Freight transport Association welcomed the document. European policy manager Sarah Laouadi, commented: “The draft free trade agreement published by the UK’s Brexit negotiators is very positive, and takes into account all the areas of international trade which FTA has been asking government to prioritise over the past three years. It is a good starting point for UK negotiators to engage with the EU. As always, the devil is in the detail, and we look forward to working closely with government in the coming months on the areas of the agreement which still need work, to ensure that our members can have sufficient time to prepare for whatever the final outcome of the UK/EU negotiations may be.”

 

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