Outcome of the UK Global Tariff Consultation

Background
In February 2020, the UK Department for International Trade launched an online consultation process to inform the UK’s future most favoured nation (MFN) tariff schedule (i.e. UK Global Tariff, UKGT) following the effective UK’s withdrawal from the EU customs union and single market. The UKGT will be effective as from 1st January 2021.

There was an intense debate in the UKGT regime between free market liberalises and trade policy pragmatists, with a specific emphasis on the zero production-zero tariff approach. This approach was a source of considerable concern to COLEACP horticultural exporters. Given the structure of the currently applied MFN tariffs, any move over to such an approach could have led to a severe erosion of existing margins of tariff preferences for ACP exporters.

Indeed, this initially foreseen approach would not only have impacted on trade with MFN suppliers to the UK market but would also have carried implications for Standard GSP suppliers, and even in some instances, where only reduced tariff-quota restricted access is granted, free trade agreement (FTA)-based exporters.

It was estimated that out of the total value of ACP horticultural exports to the UK (i.e. EUR 1 117 million in 2019), at least 36% could have been adversely affected by the adoption of a zero production-zero tariff approach. For most ACP countries, this would have had a severe negative impact, given the predominant weight the affected products play in total exports to the UK and the criticality of these products to employment and rural development.

Against this background, COLEACP supported, throughout January, February and beginning of March 2020, an active process of engagement with ACP business associations and competent authorities (including ACP embassies in Brussels – in close collaboration with the ACP Group of States Secretariat – and in the UK) in order to facilitate their active participation to the UKGT consultation process. This engagement process resulted in a number of private business associations, ACP governments and regional bodies, engaging in informational and representational work with UK officials, parliamentarians and Ministers on areas of concern to ACP exporters.

Main outcomes of the consultation
The UK government publicly announced its UKGT on the 19th May 2020. The announcement explicitly mentioned that the new MFN scheduled maintained in place some existing tariffs where this supports imports from the world’s poorest countries that benefit from preferential access to the UK market while preserving the UK’s commitment to deepening trade with developing countries in order to reduce poverty and improve prosperity.

This has seen many of the concerns raised by COLEACP’s constituency have been fully accommodated within the UKGT as many import tariffs on major horticulture export products of interest to ACP exporters remain unchanged or will be only slightly reduced for suppliers subject to the MFN schedule.

Significantly, this leaves unaffected the trade taking place under FTAs where reduced tariff import quotas are applied (most notably for bananas). For example, any move over to a zero production-zero tariff policy would have profoundly impacted on the basis for the majority of UK imports of bananas, since exporters subject to reduced tariff quota restricted access under rolled-over UK-only FTAs would simply have exported under standard zero tariff MFN conditions which such a profound policy shift would have entailed.

The principal area of concern arising from the UKGT relates to those products which are currently covered by EU minimum entry price or standard import value requirements. The UK proposal removes these requirements, replacing them with ad valorem tariffs.

A critical question now faced relates to the knock-on effects of this UK policy change on tariffs charged under the UK’s future Standard GSP and GSP+ schemes, for products currently covered by such minimum entry price or standard import value requirements.

Access the document and its annexes

Links: 
Public consultation: MFN Tariff Policy (The UK Global Tariff) – Government response & policy
Detailed guide to UK tariffs from 1 January 2021
The UK Global Tariff Tool