March 6, 2019 / 7:38 AM / 7 months ago

MPs demand clarity on tariffs in case of no-deal Brexit

LONDON (Reuters) - Britain’s government should urgently unveil its plans for tariffs in the case of a no-deal Brexit, MPs said on Wednesday after media reports that levies could be slashed for up to 90 percent of imports.

Trade minister Liam Fox told MPs earlier in the day that senior ministers had reached a “basic agreement” on the extent to which it would impose reciprocal tariffs on European Union goods if it leaves the bloc without a deal on March 29.

Tariffs would push up costs for consumers, but without them some British farms and factories could struggle to compete.

However, with the details not finalised, Fox said there was no agreement on whether to tell parliament before it must decide on March 12 whether to accept an unpopular exit agreement negotiated with the EU by Prime Minister Theresa May.

Nicky Morgan, a Conservative lawmaker who chairs parliament’s Treasury Committee, said it was unacceptable to keep parliament in the dark and called on the finance ministry to divulge full details before next week’s vote.

“At present, members of parliament are expected to vote blindly,” she said.

Britain’s finance ministry said it would “communicate a decision on what is market sensitive information ... as soon as possible” but did not commit to releasing the information before the vote.

Broadcaster Sky News reported on Tuesday that the government plans to slash tariffs on 80-90 percent of imports under a no-deal Brexit, which may benefit consumers but sharpen competition for many British factories and farms.

Britain currently has tariff-free access to EU markets, and benefits from EU trade deals with other countries. But its exports will automatically face EU tariffs if it crashes out of the bloc without transition arrangements.

FILE PHOTO: Britain's Secretary of State for International Trade Liam Fox arrives at Downing Street in London, Britain, January 22, 2019. REUTERS/Toby Melville

CARS, COWS OR CONSUMERS?

Businesses want to know if Britain, the world’s fifth-largest economy, will slap reciprocal tariffs on imports from the EU. If not, tariffs would have to be lifted on imports from most other countries under World Trade Organization rules.

Sky News said senior ministers had privately agreed to scrap tariffs on almost all goods other than the most sensitive areas such as cars, beef, lamb and dairy products.

“There is a very difficult set of choices that have to be made if we were to leave without a deal,” business minister Greg Clark told the BBC earlier on Wednesday.

“Either you are making things more expensive that previously came in tariff-free from the EU, or, in some cases ... undermine the industry,” Clark said, giving ceramics as an example of where he thought there was unfair competition from China.

Unilaterally scrapping tariffs would also reduce Britain’s leverage to encourage other countries to lower tariffs on British exports, he added.

Ross Denton, a trade lawyer at law firm Baker McKenzie, said removing import tariffs would be “devastating” for British farmers. Warwick Business School professor Nigel Driffield said the plans looked rushed, with no detailed cost-benefit analysis.

Clark said MPs would only be told about proposed tariffs if a majority vote next week in favour of leaving the EU without a deal - which analysts see as unlikely. Fox said he would prefer to inform MPs before such a vote.

The government’s priority is to ensure that on Tuesday MPs support an amended version of a Brexit withdrawal plan which they overwhelmingly rejected on Jan. 15, Clark added.

FILE PHOTO: Britain's Secretary of State for Business Greg Clark is seen outside of Downing Street in London, Britain, March 5, 2019. REUTERS/Peter Nicholls

Sky said Clark had lobbied colleagues in favour of tariffs on car imports to protect Britain’s automotive industry, while environment and farming minister Michael Gove had made the case for agricultural tariffs.

Brexit supporters like Fox view regaining the ability to set an independent trade policy as one of the main advantages of leaving the EU, arguing that Britain will have more success negotiating trade deals with other regions on its own.

Reporting by David Milliken and Kylie MacLellan; Editing by Mark Heinrich

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