Trade (Chap 4)
Globalisation
Trading with Trump
UK Doing Deals Elsewhere
EU Deals
Embedded Files
Ministers have been warned that "the UK’s efforts to strike a US trade deal after Brexit could 'severely limit' Britain’s ability to negotiate an equivalent agreement with the EU." The UK is "expected to come under pressure from the US to allow more imports by American agrifoods companies by relaxing rules governing animal welfare and pesticide residue levels, among other things", according to a leaked Defra document, prepared for environment secretary Theresa Villiers. Oct '19. “Weakening our (Sanitary & Phytosanitary) Standards regime to accommodate one trade partner could irreparably damage our ability to maintain UK animal, plant and public health, and reduce trust in our exports.” This is happening because the Dept for International Trade (DIT) will be pushing Defra to drop standards. More from Unearthed.
Government (Oct '19) tweaks March plan (below) which means "the vast majority of foods entering the UK will be tariff-free, a move the government hopes will help mitigate the negative effects of disruption...British farm exports will face tariffs on exports to the EU of up to 60 per cent while food travelling the other way will be charged nothing in many cases" 0% import tariffs for eggs, grain, dairy, fruit & veg.
The government said honey from New Zealand will see its tariff fall from 17% to zero and grapes from Brazil will reduce from around 15% to zero. Minette Batters tweeted that this is "a monumental day in the Brexit process and one that I bitterly disagree with. There is NO excuse for Govt not to apply a reciprocal tariff for grains. 99.8% of households eat bread made with 85% British wheat. And we have a huge harvest surplus of grain."During the Referendum, all the food and farm talk was about what would happen to 'subsidies' - ie the role of the £3.3b of EU (now UK) money. Nobody talked about doing away with the tariffs..nobody
In a 1,477 page document, oultines how tariffs will be removed post No Deal Brexit. They propose to slash tariffs on a range of food & farm imports from outside the European Union. SoS Villiers says (Oct 1 '19) there will be little change this schedule, despite industry bodies like the NFU, National Pig Association (NPA) and British Egg Industry Council (BEIC) calling for the tariffs on cereals, fruit and vegetables, pork products and eggs to be amended.
Neil Parish chair of EFRA said: "You cannot tie the hands of farmers behind their backs so we are having to take imports at no tariff and then export with tariff. We will destroy the industry.”
These imports will continue to be subject to tariffs: Beef, lamb, pork and poultry and some dairy products, in order to protect UK farmers and producers from cheap imports - but the rates are lowered to varying degrees. Only sheep will maintain 100% of present tariff. But that is after the quota for NZ sheep will have risen - to about 50% of present EU quota.
These figures are a % of MFN = Most Favoured Nation = amount EU imposes on 3rd countries - which UK would become. Rates include beef (53%) poultry meat (60%), sheep meat (100%), pig meat (13%), butter (32%), Cheddar-like cheese (13%), protected fish and seafood products (100%) and milled and semi-milled products (83%). It is completely opaque as to how these figures were arrived at - yet they will have a monumental impact on economy and the country. It is intended that this is a temporary position while taking 12 months to consult and review.
In 2018, 99.8% of UK dairy import volumes came from the EU and were therefore tariff-free. Under a no-deal scenario, approximately 18% of total dairy imports would be subject to a tariff. This tariff would on average be €622/tonne for butter (inc. butteroil) and €214/tonne for tariffed cheeses.
National Farmers Union of Wales threaten court action to stop imports of 'tariff free' farm products. Their President said:"“Since draft import tariff rates Irish imports. and the proposal to allow tariff-free imports from the Republic of Ireland to Northern Ireland were published in March (above), we have written repeatedly to secretaries of state underlining the damage that those low rates would cause to Welsh agriculture. "
Goods where tariffs are being kept include bananas, raw cane sugar and certain kinds of fish. There is talk that these may be lowered if food prices generally go up (because of a fall in the value pound) - in order to reduce fruit prices - except bananas. The present EU tariffs on bananas only apply to those coming from S America. Those coming from Commonwealth countries are exempt. That is one of the things we persuaded the EU to do. I wouldn't be surprised that post Brexit, the EU change these banana tariffs and our 'old friends' in the Commonwealth wont be very happy about that.
Spot the problem.
Current tariffs on our farm/food exports to EU: Beef 0% Cheese 0% Wheat 0% Butter 0% Lamb 0% Pork 0% Potatoes 0% Fish 0%
No-deal Brexit / WTO tariffs paid by importers (in 'MFN' countries) of UK farm/food exports: Beef 84% Cheese 57% Wheat 53% Butter & Lamb 48% Pork 30% Potatoes 11.5% Fish 9.6%.
Trade Deals will be worse than current EU Deals - says ex-International Trade Minister Fox.
"Japan and the USA have indicated that they will seek tough concessions from the UK in trade talks because it is a relatively small trading partner. "
Leading Brexit economist Patrick Minford, oft quoted by Rees-Mogg as the best economist, wants "no tariffs, no barriers, no regulations, open free trade with the world. That, he claims, cuts 20% off food prices in tariffs and roughly the same again in removing all regulatory barriers. What of food quality? As long as it’s labelled, let the consumer decide. What of farmers bankrupted by cheap imports? Big farmers will do more efficient biotech farming (GM, etc); small inefficient farmers will go to the wall or be paid to protect the environment." The Adam Smith Institute agrees with Polly Toynbee's analysis ..
'No Deal' Tariffs
2018. "Theresa May is braced for “howls of rage” as ministers finalise tariffs that would apply if there is no 'Deal'. Liam Fox, the international trade secretary, wants a move to zero tariffs in as many areas as possible, but other ministers are demanding protection for producers, including farmers, who would struggle to compete with cheaper imports from outside the EU....Michael Gove, the environment secretary, is said to have won a promise that agriculture would be protected at least in the short term. " (That may have cost him his Agriculture Billl in Sept 2019, when avid free marketeers in the ascendancy of the cabinet).'No Deal' Tariffs
Food & Farm products coming from the remaining 27 EU member states, which are currently imported free of tariffs, face levies for the first time. How much has to be decided, although we know what we face exporting to EU.
EU Agricultural Commissioner says UK 'No Deal' tariff plan would "ignite dispute between UK and WTO". "It is not compatible with WTO rules and it’s the start of a process where they’ll have to get approvals,” said Mr Hogan, Ireland’s member of the EU executive. This is just when UK is joining the body as an independent member - as - remember, it is not yet a member.
Worries over the return of battery eggs Compassion in World Farming have warned that the Government’s plans to reduce tariffs on overseas egg imports to 0% could see eggs from battery-caged hens back on our menus. We could potentially open the door to the import of eggs (mainly as powder) produced in cages that have been banned in the UK (as part of EU) since 2012. In the EU, egg producers have to comply with European legislation covering environmental protection, animal welfare and food safety. The total costs of European legislation based on the situation in 2012 is estimated to be more than 15% of the total production costs to produce eggs at farm level. In Argentina, India and Ukraine there is no legislation on animal welfare and laying hens are housed in conventional cages with a space allowance of 300 to 400 cm2 per hen.
In special arrangements for Northern Ireland, the UK’s temporary import tariffs will not apply to EU goods crossing the border from the Republic. ..and 'intelligence checks' will be installed to stop movement from Ireland into NI going straight onto the mainland. Government Details.
2019 (March) Government plans re f&f Tariffs spelled out. Proposed tariff rates on a range of food products were announced as a proportion of the so-called “most favoured nation” (MFN) currently imposed by the EU on imports from countries which do not have a free trade agreement. Rates include beef (53% of MFN), poultry meat (60%), sheep meat (100%), pig meat (13%), butter (32%), Cheddar-like cheese (13%), protected fish and seafood products (100%) and milled and semi-milled products (83%). Details in Farmers Guardian, with reactions from NFU leaders of 4 nation states. NFU summary
What happens to the other 15,000 tariffs on foodstuffs?? It sounds as if they are going!
What happens to the other 15,000 tariffs on foodstuffs?? It sounds as if they are going!
Free Traders
Wetherspoon's beer mat manifesto The boss says: “there is absolutely no doubt that food prices will be cheaper without a deal, if the UK chooses the free trade option..to do away with tariffs would make food cheaper." Do away with Tariffs to make food cheaper says leading right wing 'think tank'. This all sounds like a major replay of the 'Corn Laws' (p13 in Book) - only more so as it involves 2,000 agricultural products and 15,000 Processed Agricultural products (PAPs).A major push by 'Free traders' among the Brexiteers is for us to go round the world 'doing deals' to avoid paying taxes on goods - either coming in or going out. The main thrust for these deals are not to sell our foodstuffs, but sell our financial services and white goods. The other partner in these deals will usually want to sell us food - without taxes.The Taxpayers Alliance are such a group. In their Farming Tomorrow Today, they say "the agricultural sector is shielded from the true impact of the market. This has allowed the sector to become ineffective and sluggish which has led to higher food prices for consumers." I must say I don't know any 'sluggish' farmers.Free Traders
The Initiative for Free Trade have produced a 'Left Wing Case for Free Trade'. quoting the famous farmworker leader Joseph Arch in the 1870's saying protectionism meant less of everything for working class - see ‘Free Breakfast Table’. He was speaking just before British agriculture went into a 40 year decline, when the ships we built, in Belfast and Glasgow, after the Repeal of the Corn Laws bought in food from all over the world ruining British Agriculture until after WW2. The Chartists were far less trustful saying that while the free marketers may make more money, that wont be passed on to workers . Is this what Lexiteers want - free markets???
Trade Bill introduced 7 Nov 2107 "By tabling this dog's breakfast of a trade bill, Fox is making a mockery of democracy, and giving the lie to the pledge that Brexit would restore parliamentary sovereignty. A UK-US trade deal could give Liam Fox a free hand to introduce TTIP on steroids." says Global Justice. Since then, amendments have ensured that there wont be any Henry 8th stuff (Ministers deciding ), and that the final 'deal' will come before the Houses of parliament - the 'mother' of all parliaments.
Tim Martin(Wetherspoon's boss) said food price rises due to Brexit are a myth, but there will be some price rises in his bars - due to other things.....
Here is detailed response to Tim Martin's letter to MPS. making the points that in terms of 'protectionist, where 1 is the most, EU nations occupy positions 143 through to 170 out of 177 nations, and that by reducing our tariffs we remove our bargaining chip when trying to make free trade deals..duh!
John Gapper goes on a pub crawl with Wetherspoons’ Tim Martin : ‘If there’s a no-deal Brexit I’ll bring the price of beer down’
Trade Bill introduced 7 Nov 2107 "By tabling this dog's breakfast of a trade bill, Fox is making a mockery of democracy, and giving the lie to the pledge that Brexit would restore parliamentary sovereignty. A UK-US trade deal could give Liam Fox a free hand to introduce TTIP on steroids." says Global Justice. Since then, amendments have ensured that there wont be any Henry 8th stuff (Ministers deciding ), and that the final 'deal' will come before the Houses of parliament - the 'mother' of all parliaments.
Tim Martin(Wetherspoon's boss) said food price rises due to Brexit are a myth, but there will be some price rises in his bars - due to other things.....
Here is detailed response to Tim Martin's letter to MPS. making the points that in terms of 'protectionist, where 1 is the most, EU nations occupy positions 143 through to 170 out of 177 nations, and that by reducing our tariffs we remove our bargaining chip when trying to make free trade deals..duh!
John Gapper goes on a pub crawl with Wetherspoons’ Tim Martin : ‘If there’s a no-deal Brexit I’ll bring the price of beer down’
UK food exports up, particularly strawberries and ice cream and BBQ food. China has lifted its BSE ban on beef, so trade likely to increase there. Without any Brexit
Financial Times research reports the UK will have to negotiate at least 759 separate treaties just to replace EU membership and 295 bilateral Trade Agreements PLUS more multilateral agreements
Free Trade Agreements (FTAs)
There isn’t much evidence that signing new free trade agreements (FTAs) will deliver an economic boost anything like enough to compensate for the hit from leaving the EU single market and customs union. There are various estimates but an average one says that the UK will loose around 2%GDP by coming out of the Customs Union, and replace that with around 0.6% with other FTAs - by around 2030. The Institute for Fiscal Studies says “simple arithmetic” and “a basic understanding of trade” show the gains from such FTAs are likely to be small. They go on to say that we are a service dominated economy - and we do not pay any taxes on those. Different households buy different amounts of food from abroad, so may be differentially affected. Those buying mainly home produced food will not be affected. Free Trade Agreements (FTAs)
There are some who argue that the EU food tariffs push up prices for UK consumers, so we should do away with them - like the 16% tariff on oranges (to protect Spanish growers). Other say 'Let them eat prawns' and save 40+% tariff on Thai prawns. The idea is that we can set up FTAs that do away with these tariffs - in exchange for goods we want to promote in the other country. The clear implication is that food will cost less.. There are thousands of these tariffs - which could be altered by the UK should we come out of the EU. Free traders claim that getting rid of these tariffs will help the poor. No! What helps the poor - is not being poor. Nor is it that straightforward, as these tariffs are there for a reason. See Coffee in Favourite Foods as an example
'We could import cheaper food without tariffs and it may mean a drop in standards for food we buy in shops and it may be bad for farmers'. As they say - 'from the horses mouth Farage on LBC
'Protectionism'
This word is spat out when there is any talk against 'free trade'. The Director for Policy Studies (Robert Colville) is one who says that shoppers would 'be forced to pay higher prices in the supermarket and be unable to buy foods that are out of season'. He adds that a nasty blight would mean empty larders, claiming it is a recipe for richer farmers but not for happy shoppers. Private Eye No 1477. Or do we mean 'localism' ?'Protectionism'
Government moves
Government moves
Arising from the 'Chequers Pan', the White Paper for our proposed relationship with the EU "looks more like a wish list of future food trade with the EU rather than anything the remaining 27 members states are ever likely to accept. The suggestion, for example, that the EU would allow 'no tariffs' on any food goods traded between the UK and EU but at the same time leave the UK free to 'control its own tariffs for trade with the rest of the world' fanciful, verging on fantatist" Private Eye Bio-Waste Spreader
The Trade bill (July 18) was a major victory for the 'free marketeers (as distinct from Brexiteers). The Trade Bill applies to those deals which the EU has already made with other countries and involves us 'copy/pasting' those to us. There is a presumption that the 50+ countries with EU trade deals will want to just 'copy/paste' their EU deal to a UK deal. They may just want to change the deal.
The governments amendments killed off Chequers plan and laid the road for a Brexit based on deregulation and liberalisation. Basically Trump's threat, that there would not be a US deal with the UK if we stuck to the Chequers plan, caused government to retreat in face of free marketers. They stamped on attempts to give parliament sovereignty over trade policy, to make sure no MP could get in the way of their plans for a free-market “Singapore-on-Thames”.
Liam Fox lost no time in launching consultations on joining the TransPacific Partnership (TPP) as well as a trade deal with the US. The TPP is the one Trump withdrew from, and - it is a long way away!
More on our possible deals - that don't add up to a 'bag of beans'.
Farming and Tariffs
The Green Alliance (an independent think tank backed by Sainsbury's, Co-op Nestle and Tesco) investigates how future UK agriculture and trade policy will interact. In the UK, "We import half of the food we eat. After Brexit, depending on which new trading relationships the UK pursues, we may end up importing much more of our food from countries outside the EU with demonstrably lower production standards, or which are exposed to significant environmental risk factors like water stress."Farming and Tariffs
Farmers' unions call for 'frictionless' tariff-free access with the EU to safeguard sales of beef & sheep (particularly important for Northern Ireland) to European markets. "They are concerned that a cheap food policy could lead to imports of produce from around the world." And so they should be worried - but why haven't we heard this before?Quotas
Quotas
Washington has teamed up with Brazil, Argentina, Canada, New Zealand, Uruguay and Thailand to reject Britain’s proposed import arrangements for crucial agricultural goods such as meat, sugar and grains after Brexit. U.K.’s opponents include the U.S., Canada and New Zealand, just as Brexit Britain is trying to style its former colonies as natural strategic and commercial allies after it has quit the EU. The argument from Britain and the EU is that the rest of the world will be “no worse off” after Brexit if the EU’s quotas are simply reduced, and Britain takes a share of them. The seven countries dispute the legal defense that the proposed post-Brexit arrangement would leave them “no worse off. None of these arrangements should be modified without our agreement.” The big food exporters argue that two fixed quotas — a U.K. quota and an EU27 quota — make markets less easy to sell to than one big quota.Quotas
Since August, Britain and the EU have repeatedly insisted that they had reached an agreement on the terms about food quotas (ie amounts of imports that do not face full tax/tariff) under which Britain would buy in food from around the world after Brexit.
WTO concerns about EU plan on dealing with quotas post No Deal Brexit. (Mar '19)
Nov '19. Australia wants compensation from EU & UK over Brexit confusion .Britain’s departure from the EU takes a portion of the “tariff rate quotas” available to Australian companies, but the two sides cannot agree on how meat should be carved. Australia have tried 3 times to sort, so are now going to WTO - with support of 14 other countries.
Fox's attacks War on Want, saying it is ironic that their "website asks members to 'join forces with us against the root causes of global poverty'" when "Free trade creates prosperity, increases consumer choice and creates jobs."
Trade War US and ChinaIn response to Trump putting tariffs on Chinese steel, China are threatening retaliation in the form of a 25% tax on US soya. Tis accounts for about 1/3rd of all US soya and would threaten many mid west farmers - Trump voters. It could lead to 20% job losses in Mississippi County - one of the tight Senate races later this year. China says it can get soya from elsewhere Trump subsiding farmers for lost sales.
Food imports from EU
Food imports from EU
Possible tariffs on food coming from the EU - which previously had no tariffs, would now attract the tariffs here on breakfast food. This presumes a 'no deal' where all previous tariffs remain in place and the UK would be treated as a third country - rather than member.
There would be the same tariffs either way - the difference is we import a lot more of the EU food, than they buy of ours. So the tariffs hit us more. It may of course lead to producing more British food - as exemplified by what has happened with eggs - many manufacturers switched to UK dried eggs soon after the Referendum because of drop in the value of the pound being able to buy EU eggs.
They're Off!
Unilever have decided to base their world headquarters, not in its iconic building on the Thames London, but in Amsterdam The £150b company has commited to continue spending nearly £1bn a year in the UK — including significant investment in research, development and Marmite. The jobs stay where they are. It makes it easier and more tax efficient for Unilever to buy other companies, notably in the US. Watch this space.They're Off!
EU Consultation on making Food Chain Fairer
The BRC recently published research acknowledges forecasting the consequent impact on food costs is complex and a range of other factors would have to be taken into account.
How and why food prices may rise
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