Sugar Quota
Sugar Quota
Embedded Files
Tate & Smile
Tate & Smile
The first tax/tariff change this government made, within a week of Brexit, was to gift over £120 million to an American Sugar Refining Company. Instead of the EU having the money from import tax on raw sugar cane, that we thought we would get as a result of Brexit, it has gone West. This government has introduced a quota so the first quarter of a million tons of sugar cane does not now attract a tax - or rather 'UK Global Tariff'. This saves the American Sugar Refining Inc over one hundred million pounds. The money that went to the EU has gone straight to the US.
The ‘GOV.UK’ image below looks pretty dull. But this shines a light on what is going on, and what will go on under the cover of Brexit. To find any tariff you use this new government page, and search for ‘raw cane sugar’. However you have to click ‘see details’ for this box to appear. Inthis newly named ‘UK Global Tariff rate box we find some tricks of the trade to come.
"NFU Sugar has criticised the government’s decision to extend its 260,000 tonne tariff-free quota for raw cane sugar imports for another three years.
This extension, coupled with the liberalisation of sugar in the UK-Australia trade deal, could lead to the permanent decline of the UK sugar beet industry, NFU Sugar warned.
Legal Challenge
Legal Challenge
British Sugar to mount legal challenge to government July '21
They lost.
"In submissions seen by the FT, British Sugar argued that the decision amounted to a state subsidy for its rival, US-owned Tate & Lyle Sugars, because it is the only main refiner of cane sugar in the UK".
Now the High Court has agreed that the government's decision could be subject to a judicial review, according to The Financial Times.
The case is being taken against Liz Truss
While many people are now worried about the future of our food Standards, a result of coming out of the EU’s Single Market (Will Hutton Observer), there is also the matter of coming out of the Customs Union. The standards of safety health and welfare are called in WTO-speak ‘non-tariff barriers, which means there are also real Tariff Barriers - taxes on food imports. Previously, these were decided as part of the EU Customs Union, which we have now left. This means ‘we’ can now begin to set our own tariffs (hence new grandiose ‘Global Tariff') on imported food.
As we Brexit, we will have control of 15000 food and 2000 farm tariffs, where many decisions will be vital to the future of this country. Virtually all the present EU tariffs have been left as they are during the transition period till end of 2020. Each tariff can be renegotiated with any other country, this being part of our negotiating hand.
Just one agricultural tariff has changed already. Have you heard about it?
Leaving the EU means the UK now receives the income from tariffs previously imposed on non-EU countries that went to Brussels. The UK currently collects around £3 billion from tariffs on behalf of the EU - less a 20% ‘collection’ fee. This arrangement will continue until 31 December 2020. From 1 January 2021 whatever tariff arrangements that the UK agree with the EU and/or WTO and/or separate trade deals will determine the amount of duty the UK will collect for itself instead. That is a crucial part of what Brexit is about.
When saying ‘All’, there are a few food tariffs that have been changed - before any trade deals are made. These are referred in the food press as ‘ingredients for cooking’, and they include baking powder, thyme and yeast. But there was one other much more important ‘ingredient’ that has been altered. It is for cane sugar, or to be exact raw ‘cane sugar for refining’ (Commodity Code–170114(or 3)10). There is only one place in this country which refines raw cane sugar.
“Tate & Lyle’s behemoth sugar refinery was opened on the banks of the Thames River by Henry Tate & Son in 1878. At the time, it was one of 75 English sugar refineries, that was supported by the booming colonial sugar trade. Since then, the sickly smell of hot sugar has wafted across East London’s docks.
In 2016, the plant stands alone as the UK’s only cane sugar refinery; it now displays a large banner that reads “Save Our Sugar”, which towers over the streets of the East London suburb of Silvertown.” When it says ‘Our’ this refers to Tate & Lyle Sugars, part of American Sugar Refiners, Inc. Tate & Lyle PLC sold its European Sugars business in 2010 to American Sugar Refining, Inc. This sale included the UK’s Tate & Lyle consumer sugar brand and Lyle’s Golden Syrup. The remaining Tate & Lyle – still uses that brand name ‘helping our customers make food healthier and tastier’, but based on corn products..
Mr Mason (In picture as Senior Vice President ofTate & Lyle Sugars. This is ‘the British based multinational agribusiness’ according to Food Navigator) argued that leaving the EU will put an end to the cheques the sugar-refinery business has to pay to Brussels before being allowed to sell its products. He said: "On some of the ships we buy, we face a tariff of around 35%. "The ship will arrive here at the dock in East London and as we are unloading it, before we are allowed to sell the sugar in the market to consumers, we have to send a cheque of around €3 million to Brussels."
We are looking forward to those cheques coming now to our Chancellor. Yet, somehow this agricultural tariff has changed dramatically, by introducing an element called a ‘quota’. This may sound quant and curious but is powerful part of many trade deals, especially when they say ‘the devil is in the detail’. It is the amount of food goods that can be imported before any tax kicks in. Negotiators love ‘quotas’.
The new arrangement that came in on Jan 31stis to have a new ‘quota’ for raw ‘cane sugar for refining’, going to the only UK cane refinery. Instead of every tonne being taxed, the new quota is 260,000 tonnes. That is what it says in that innocuous box at the beginning! With this quota, the first 260k tonnes comes in – TAX FREE! That is a lot of ships. Previously each tonne used to be taxed (in EU) at E339 (and tax prices still in Euros). So,doing the sums, this quota – of non-taxed ‘cane sugar for refining’–means a tax of around E339X 260k = a total of about £80 million (translated from Euros to pounds) will not now be collected for the UK coffers
AND! According to ‘The Grocer:
“In addition to the 260k tonne quota, the UK’s rollover of EU trade agreements includes an additional 142k tonnes set to be exempt from duty, bringing the total to 402k of raw cane sugar able to enter the UK tariff free.” The sums again: this means ASR Group does not now have to pay the UK government £122 million pounds, and so saves the US company $153m
402,000 tons
@ £307/ton
= £122,340,000
UBP – USD 1.2338
$153,000,000
Poor poor
Poor poor
So, 400+k @ E340/tonne means we have just stopped collecting revenues of about £122 million.
T&L have got their rewards already for being a big Brexit company! This change in quota went virtually unreported. Not even the Daily Mail has carried the story of how Brexit was used to fund an American company – and compete with our lads and lasses in the fields of beet – to ship the ‘pure white and deadly’ stuff to us cheaper.
Wait a moment – there is something about that sum of money! The government – only after much pressure – found £120 million to keep hunger at bay for several million children, many new to relying on food parcels. It was only thanks to Marcus & Sustain “with Conservative MPs threatening to rebel against the government”, that Downing Street retreated and announced a new £120m‘Covid summer food fund’.
Yet without any shouting, the government is giving backhanders to the American rich – ASR the owners of Tate & Lyle Sugars.Why were we not told?All that fuss to get the government to part with money to help food poverty – they have just written a cheque for the same amount to ASR for doing absolutely nothing; other than encouraging obesity.
Done Deals
Done Deals
Many thought a main aim of Brexit was about getting our hands on these taxes. Remember the big red bus and all that Brussels money to come here. Somehow much of that sugar tax has gone straight down the Thames and out across the Atlantic. It has gone straight from the EU (minus collection 20% fee) to the USA (no deduction).
Part of any trade deal involves negotiations about many of these tariffs. And it will take years, as there are thousands of tariffs, hundreds of countries, so they are not going to disappear overnight. Well most wont. But a quarter of a million tonnes of this one has.
Quotas
Quotas
In many negotiations it easier to talk about the quotas – the amount allowed before tax, rather than the actual tax arrangements themselves as these can be interrelated in complicated ways with different countries. For instance, there is a quota arrangement with the amount of lamb allowed in from New Zealand before tax kicks in. Australia wants - as part of any trade deal with us - some quota for exporting its raw ‘cane sugar for refining’ here. Now it doesn’t need to negotiate – we have just given them that. We have given it away, for the benefit of the refiner – not the growers - the American Sugar Refiners Group.
Philip de Pass the chair of the ACP/LDC sugar industries group, which includes countries round the Atlantic, Caribbean and Pacific ACP (ie our former colonies and LDC are less developed countries) had been asking for sustainable independent sugar policy post Brexit. He is clear about the new quota and who will benefit. “It’s a straightforward subsidy to Tate & Lyle. The costs will not only be shouldered by British producers but those in low income countries”. Those ACP countries have seen their trade into the EU decline in last 10 years, despite preferential access, but this is most noticeable in the UK – since ASR took over.Their preferential treatment now competes with tariff free cane sugar from developed countries - like Australia. We have just kicked ‘our old friends’ in the teeth.
Tate a tete
Tate a tete
What have Tate & Lyle Sugars done to deserve such treatment?
OK they sponsored the Tory Party Conference when it came to Manchester in 2016.
One of the first places DEFRA Minister George Eustice visited was to get his boots on at the Silvertown Refinery.
T&L have always had Tory friends. Many of us were bought up withMr. Cube attacking the Labour Party. They objected to the possibility of the government nationalising the sugar industry
In this they were helped by their man David Davis, an employee of T&L for 17 years. (But something doesnt add up)
From my book Bittersweet Brexit Pluto Press 2017 p31:“After leaving Tate & Lyle, David Davis wrote a management book entitled How to Turn Round a Company. There he says: ‘A general air of visible determination and activity is extremely important to the perception-shaping exercise.’ No worries there then for our negotiations with the EU.”
DD was to later get the job of Brexit Secretary in Mrs May’s government, presumably because of his book on negotiating skills. From there he was able to continue to make the case for getting rid of tariffs on sugar cane imports. Although he wasn’t often ‘there’ in Brussels.
Tate & Lyle are the most outspoken company campaigning for Brexit. Gerald Mason said he is not telling the 800 staff how to vote, but say jobs will be more secure outside the EU. "Leaving the EU will be the biggest opportunity in our lifetime"
Who made this decision to introduce a tax free quota - how and when? I have asked my MP, a deputy speaker, who pointed me to a general consultation document which did not mention sugar once.
Beet out that rhythm
Beet out that rhythm
This comes when the interest in our old slave trade was re-ignited – as here with that history coming back. Listen – again - to the Rolling Stones ‘Brown Sugar’ – as to what was going on ‘just around midnight’. Cane sugar is still produced in plantations – now all round the world – but it is still badly paid, awful work. Claims against T&L plantations in Cambodia
‘Beet’ versus ‘Cane’ is at the heart of Brexit. ‘Beet’ sounds very British, with mainly British farmers growing sugar beet producing British sugar – called Silver Spoon’. Beet was originally developed by Napoleon, when we stopped cane sugar reaching his army. This sugar plot has history. You can see why the EU supports beet, included ours,so much. But we are now adrift of that support and the EU is producing more for export. And the US does not like that. Nor do UK beet farmers. This quota for raw sugar cane is more than a gift of money. It is handing it to the US on a plate.
T&L Sugars have achieved what they wanted. Before any trade deal has been done. Now the rest of us have to take the pain and suffer the consequences in every aspect of our lives. Who is for this? I suspect there is many a good Brexiteer who did not vote for this. When taking back control, many voted believing we were going to have more control over our lives, and our communities and in the wider picture wanted investment in British food and farming.But this has happened right under our noses – the money has moved straight from Brussels to Washington.
We are now more than ever adrift of Europe. For what?
National Farmers Union
NFU Sugar stated their position, believing "that the need for a zero tariff raw sugar ATQ in the UK tariff schedule is unjustified and unnecessary. There are sufficient quantities of sugar available for the UK market via domestic production and existing preferential partners. The opening of a zero tariff ATQ for raw sugar will distort competition in the sugar market and lead to unfair competition for UK growers by failing to uphold environmental standards for imported product, off-shoring legitimate environmental concerns."
" Ditching tariffs will boost imports from countries which use harmful pesticides banned in the UK." Mason responds “In Australia and Brazil, which are two countries we’d love to buy more from, they have the highest numbers of sugar producers who are certified for the highest ethical environmental standards in the world." That's my point - ASR wants to buy sugar cane from Australia rather than our poorer 'old friends' in the other colonies, which previously had the preferential tariff - now over ridden.
British Sugar
British Sugar
Paul Kenward, managing director of British Sugar, which refines beet sugar, said: “The UK has the opportunity to decide its own post-Brexit international trade policy – balancing the interests of all players in the market, including those of the homegrown beet sugar industry, developing countries and the refining sector. We simply do not understand how this policy squares with stated trade objectives, and we are asking the government serious questions about the policy and its implementation.”
MP Responses
MP Responses
From my Ribble Valley MP Nigel Evans “In light of the concerns you have raised, I have written to the Secretary of State for International Trade, the Rt Hon Lady Lizz Truss MP, to highlight these issues and I have asked her to provide any comments she may have on the matter.”
I have replied saying I look forward to her response – better not to mention Stilton cheese to her.
Pendle MP Andrew Stephenson said:
"On this issue, the EU put heavy tariffs on raw sugar cane many years ago to protect European beet sugar producers. British sugar companies were entirely reliant on sugar cane and therefore lost out. Many jobs in this country were lost and factories closed. Joining the EU made a major British industry loss-making, because of the EU’s protectionist policies. We could, in theory, see some of these jobs return in future by allowing sugar cane companies to compete on a fair basis."
Lets wait for a shred of evidence for that theory.
Christian Wakeford - Bury South wrote:
First line - 'government has established an autonomous quota for set volume'. That is the 240k tax free raw 'sugar cane for refining worth over 120 million pounds.
2nd line 'this will balance support for UK farmers'. ie because we subsidise UK beet farmers we should subsidise cane sugar too.
Do not know how much they subsidise beet farmers, but relatively easy to work out - number of hectares X £200. But it is like saying we are going to pay New Zealand farmers to produce lambs - as we pay Welsh farmers to do so..3rd 'Maintain preferential trade with developing countries'. It does not - Many developing countries already have preferential treatment.
As part of APC deal with EU, the UK persuaded EU to reduce tariffs on for our old colonies along Atlantic, Caribbean and Pacific - hence ACP. As the Director of that organisation says - it benefits only Tate & Lyle - and hence American Refining Sugar Inc. They can choose to pass on savings to ACP or whoever they like - say Australia.4th 'Commitment to promoting development' How? You have just kicked our old colonies in the teeth - details below. The reduced tax does not go to those developing countries but to ASR.
They were not relying on aid - but trade - but now on same level with rich sugar producing countriwes - inc Australia! AND it is an interesting point whether EU will continue this practice of preferential treatment for our old colonies. There is a similar arrangment between EU and ACP countries re bananas - all ACP countries tax free, but South American countries get charged.Last line - This quota 'reduces poverty and improves prosperity'.
The tax savings go to the very rich ASR ONLY.
From Dept International Trade. UKGT = UK Gloabl Tariff
ATQ = 'The Quota'
If you can translate this from gobbledegook to English, please contact.
Sugar Tariff.pdfHigh Court dismisses Challenge (by British Sugar plc)
Mr Justice Foxton today dismissed a claim for judicial review brought by British Sugar plc against the Secretary of State for International Trade challenging the legality of an autonomous tariff quota for raw cane sugar (“the ATQ”). Under the ATQ, 260,000 tonnes of raw cane sugar may be imported into the UK tariff-free each year for refining. The ATQ is available to all importers on a first-come, first-served basis.
By its first ground, British Sugar alleged the ATQ was an unlawful State aid to Tate & Lyle Sugars in breach of Article 10(1) of the Northern Ireland Protocol. Tate & Lyle is the only substantial refiner of raw cane sugar in the UK and imported over 99% of the raw cane sugar which benefited from the ATQ in 2021. By its second ground, British Sugar alleged that the ATQ was an unlawful subsidy to Tate & Lyle granted in breach of Article 366 of the Trade and Cooperation Agreement between the UK and the EU (“the TCA”).
On the first ground, Mr Justice Foxton rejected British Sugar’s submission that the ATQ was by its nature selective. The Judge concluded that, while the Government’s expectation when introducing the ATQ was that the overwhelming majority of the ATQ would be used by T&L, this was not because of any term of the ATQ which was designed or in fact had this effect, but because T&L was the only raw cane sugar refiner operating in the UK. As such, the Judge held that it was necessary to apply the three stage World Duty Free test for determining whether a tax measure is de facto selective. Applying the three stage test, he held that the ATQ formed part of the normal taxation regime for imports of raw cane sugar and did not discriminate between undertakings in comparable factual and legal situations. Accordingly, it did not confer a selective advantage on Tate & Lyle. Had the issue arisen, however, he would have rejected the Secretary of State’s case that the ATQ was justified by the general principles of the UK’s system of import duty.
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