Letter to the Prime Minister on zero tariff proposals

18th February 2019

Rt Hon Theresa May MP 
Prime Minister 
10 Downing Street

London 
SW1A 2AA

 

Dear Prime Minister

I am writing to you following the article in The Times this morning stating that 'Liam Fox, the international trade secretary, wants a move to zero tariffs in as many areas as possible' and that 'Industries such as ceramics, which fears annihilation without tariffs on non-EU goods, are still lobbying before a cabinet sub-committee meeting on Wednesday to sign off the regime.'

We and our members have been in discussion with officials for more than six months. At every opportunity we and our members have reiterated our concerns about removing import tariffs:

a)       Removing import tariffs gives a leg up to foreign competitors, thus threatening British manufacturing jobs.

b)      Our manufacturers would still be paying other countries’ import tariffs including, in the event of no deal, EU MFNs and other countries’ MFNs where we will have just lost our preferential access. The net effect across all sectors could be to increase imports at the same time as exports are being put under pressure with a resulting adverse effect on balance of payments.

c)       No tariffs makes the UK’s emerging trade remedies system ineffective from the outset by lowering the cumulative duty paid on the distorted imports, for example, by 12% in the case of dumped Chinese tableware.   

d)      It would weaken the UK’s hand in making free trade deals with other countries. If we give away access to Britain for free, why would anyone need to do a trade deal with us?

e)      Some members thought if we are importing, say, a raw material, that was not manufactured or quarried in the UK a liberalisation might be acceptable. Our members are clear this should be an exception rather than a general rule and comprehensive consultation would be needed.

We have supplied the commodity codes[1] where our members actively manufacture in the UK, and which must retain existing EU most favoured nation tariff rates. However, unlike agriculture, we have not had a promise that our sector would be protected even in the short term.  We need reassurance from you now.

I am very conscious that most other sectors have not had this level of discussion with officials and so are largely unprepared for the potential impact of a unilateral snap move to zero most favoured nation tariff rates. There has been no comprehensive formal consultation, no comprehensive impact assessment and no prolonged transition proposed. Such a significant decision would have far-reaching consequences for the UK economy and would demand full parliamentary scrutiny. In a no deal Brexit, already highly damaging and disruptive for our sector, the shock of zero tariffs would be devastating, affecting businesses, jobs and communities across the country as well as affecting UK manufacturing more generally.

I urge you to stop this proposal. We would welcome an opportunity to meet with you or your advisers at the earliest opportunity to explore these issues further.

Yours sincerely

Dr Laura Cohen MBE

Chief Executive

 


[1] Products with 0% MFN have been excluded from this list. Also, this an indicative and not exhaustive list as our members are always developing new products and markets. 

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