Agri-food tariff threat to Scottish consumers and producers

Rural Economy Secretary Fergus Ewing has written to Secretary of State Michael Gove, impressing on the UK Government the need to deal sensibly and sensitively with the setting of applied tariffs for imports to the UK, particularly in relation to agri-food products.

In the absence of a trade agreement between the UK and European Union, the same tariffs would apply to imports to the UK from the EU as from third countries. For agri-food products, these tariffs could be considerable with potentially significant consequences for both consumers and producers.

As a result, Mr Ewing has put forward a proposal for the targeted use of tariff rate quotas to achieve a balance in protecting both consumer and producer interests.

Full text of the letter below.

As the prospects of a no-deal Brexit come ever closer, I write to impress upon you the need for the UK Government to deal sensibly and sensitively with the setting of applied tariffs for imports to the United Kingdom, particularly in relation to agri-food products.

In the absence of a trade agreement between the UK and European Union, it is well understood that imports to the UK from the EU would be liable for tariffs up to the levels set in the Schedule of Commitments which your Government has lodged with the World Trade Organisation. Similarly, UK exports to the EU would be liable for the tariffs set out in the EU’s Schedule of Commitments. For agri-food products, these tariffs can be considerable.

A range of respected commentators, including the Governor of the Bank of England, have highlighted the consequences of this for food prices in the UK, with Mark Carney identifying potential rises of 5-10%. This would have a significant effect, particularly on the more vulnerable sections of our population who spend a larger proportion of their household income on food.

I know that your officials have been looking at options, including the application of lower tariffs using the powers in the Taxation (Cross-border Trade) Act 2018. However, as I am sure you are aware, any such lower tariffs need to be applied to all trading partners, not just the EU. While lowering tariffs in this way could mitigate the effect on consumers, by opening the floodgates it risks considerable harm to our domestic producers. It also gives away much of the negotiating capital for the future trade agreements which you prize.

I understand that your officials have been considering a “wide spectrum” of options to deal with this issue, although there has been little clarity to date on precisely which options are being considered. To assist in this process, my officials have provided to yours a proposal for the targeted use of tariff rate quotas to achieve a balance in the protection of both consumer and producer interests, as well as maintaining negotiating capital. I understand that similar thoughts on the use of TRQs has also come forward from a number of stakeholders.

I would therefore urge you to give urgent and serious consideration to this proposal. Time is now short for the necessary Regulations to be put in place under the 2018 Act and for systems to be established. However, as the issue has been known about for some time by your Government, shortage of time cannot be a reason to excuse inaction.

Yours sincerely,

FERGUS EWING