The Government needs to secure ‘roll-over’ of EU free trade agreements so they apply to the UK after Brexit (for more information see background, below). Each time it rolls over such an agreement, it reports this to Parliament with detailed information, including an assessment of the impact on UK trade.
Committee analysis of the information laid before Parliament to date has uncovered a notable gap in the Government’s impact assessments – regarding the ‘no-deal’ tariffs that it would, in the event of a no-deal Brexit, apply to imports from countries with which the UK has no agreement.
Impact of maximum tariffs highlighted, not actual tariffs
A letter sent today ( PDF 197 KB) by Mr MacNeil to the new Secretary of State, Elizabeth Truss MP, highlights that the Government has only outlined the impact of maximum tariffs (set out in undertakings that it has given to the World Trade Organization). It has not detailed the impact of the actual tariffs which it intends to implement under its temporary tariff regime in case of a no-deal Brexit (which was published in March). The letter calls upon Ms Truss to explain why the Government has chosen to omit this crucial information, to confirm if the full information will be given in future, and asks whether the impact assessments so far submitted to Parliament will be revised to include reference to the no-deal tariff.
Commenting on the letter, Mr MacNeil said:
“The Government has stated that, in the case of a no-deal Brexit, 87% of all UK imports will be subject to zero tariffs. This could adversely affect a number of UK industries, not least agriculture and several manufacturing sectors.
“If Parliament is to effectively scrutinise roll-over agreements, and the wider public is to be properly informed of the potential economic impacts, the Government must lay before us all relevant information – including a full analysis of the implications of its post-Brexit tariff policy. Not providing such important information is either a concerning oversight or, more concerningly, an intentional omission.
“I look forward to receiving Ms Truss’s explanation of why her Department is not setting out the full facts, and to hearing whether she intends to rectify this information gap in the future.”
The UK is currently party to 40 or so FTAs that the EU has with some 70 countries, which together account for over 14% of UK trade. If these are not ‘rolled over’ (i.e. replicated as deals with the UK) by the time Brexit occurs, and the UK departs on a ‘no deal’ basis, their benefits will cease to apply to UK businesses. This means that UK companies trading with those countries will face trade barriers that currently do not apply to them under the EU agreements. So far, only 12 roll-over agreements have been signed, with countries accounting for about 6% of UK trade.
On 13 March Liam Fox announced the Government’s temporary tariff regime in case of a no-deal Brexit, which would see 87% of imports from countries with which the UK has no trade agreement subject to zero tariffs.
The Committee has previously heard that the no-deal tariff regime could give away the UK’s bargaining position for future agreements with the countries concerned. The plan for zero tariffs after Brexit has already adversely affected the Government’s attempts to roll over EU trade agreements, with the Canadians declining to replicate their EU agreement since they know their exports to the UK will not face tariffs anyway. These concerns were discussed in the Committee’s sessions with the former Secretary of State, Dr Liam Fox, on 6 March and 3 July 2019.
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