Walpole commentary | UK announces post-Brexit trade tariffs
While attention has rightly been turned to combating the global Coronavirus crisis, it is easy to overlook the topic that occupied UK news and political landscape for a number of years – Brexit. Yesterday, the UK government announced plans that duties on £30 billion of imports would be be reduced to zero.
Following the UK’s departure from the European Union on 31st January this year, which marked the beginning of the period of transition through to the end of 2021, during which time negotiations to define a future trading agreement between Britain and the EU have continued albeit, reportedly, slowly. Simultaneously, the Department for International Trade (DIT) has also started planning and negotiations with several other nations, including the USA and Japan, to agree international trade policies to come into effect post-transition.
Yesterday, the DIT published its post-Brexit tariff policy known as the UK Global Tariff which cuts import duties by £30 billion on thousands of products while protecting industries such as automotive, ceramics and agriculture – all of which will retain tariffs – in global trade beyond Europe. Many thanks to the Walpole members who responded to the public consultation on this topic earlier this year.
The UKGT which replaces the EU’s Common External Tariff (EU CET) and comes into effect from 1st January 2021, expands tariff free trade by eliminating tariffs on a wide range of products. Under the UKGT 60% of trade will come into the UK tariff free on WTO terms or through existing preferential access and successful Free Trade Agreement (FTA) negotiations will increase this figure.
In the announcement, Secretary of State for International Trade, Liz Truss said: “Our new tariff is tailored to the needs of the UK economy. It will support the economy by making it easier and cheaper for businesses to import goods from overseas”.
The new tariff schedule will remove tariffs on products which are used in UK production, not made in the UK or are a so-called nuisance tariff of below 2% and further simplify the current tariff schedule by rounding tariffs down to the nearest 2% below 20%, 5% between 20-50%, and 10% for tariffs over 50%.
The announcement provides some welcome clarity on what post-Brexit trade will look like for UK luxury, particularly high-end automotive, and the reduction in duties on sustainable products may help British luxury businesses accelerate their sustainability journey. However, given the deeply integrated nature of luxury supply chains across Europe, the UK/EU FTA remains the main concern for Walpole’s members and with an extension to the transition period looking increasingly unlikely and the significant headwinds created by Coronavirus, some positive news from the negotiations would be a significant boost to the sector.
Businesses are encouraged to familiarise themselves with the new tariff regime ahead of January 2021 and can check the UK Global Tariff that will apply to goods they import from that date here.