The government is preparing to reverse plans put forward last year to cut import tariffs on most goods coming to the UK under proposals for post-Brexit trade agreements.
The Department for International Trade has opted to simplify the current regime rather than abolish large parts of it, as Theresa May’s government planned under a temporary scheme to follow a no-deal Brexit.
The trade secretary, Liz Truss, said she would consult business groups on whether the government should simplify its tariff policy, which she said would ensure greater choice and lower prices for consumers.
Truss said the purpose of the review was to simplify and tailor tariffs to suit UK businesses and households, “such as removing tariffs of less than 2.5% and rounding tariffs down to the nearest 2.5%, 5% or 10% band”.
Goods such as fire extinguishers, pencils, bicycle pumps and some household fridges currently have tariffs below 2.5%, which might, under the proposal, be removed.
Ministers are also seeking views on whether to remove tariffs on components used in factory production to try to reduce costs for UK manufacturers.
Last year the government said 87% of imports into the UK would not attract a tariff once the UK was outside the EU’s single market and customs union, leaving large parts of the agricultural sector facing being undercut by cheaper foreign imports.
Truss called on UK businesses to help shape Britain’s import tariff policy, which will apply from next year as the country prepares for life outside the EU. She said she wanted to hear from businesses during a four-week consultation from 5 March before replacing EU tariffs that remain in force for the rest of this year.
Import tariffs on goods under the latest scheme will apply to countries where the UK government has so far failed to put alternative trade arrangements in place.
But Truss immediately ran into criticism from the Institute of Directors for reviewing trade policy while the government and business groups were involved in trade negotiations with the EU and the US.
Allie Renison, the IoD’s head of trade policy, said: “The consultation comes at a fraught time as we seem headed for simultaneous negotiations with both the US and EU. This will leave business scrambling to work out how one set of negotiations will affect terms of trade with the other, and underscores the need for maximum clarity across all negotiating objectives to allow firms any hope of preparing in advance.”
Truss said submissions from business groups would help shape the government’s new “most-favoured nation” tariff regime, which would be known as the UK global tariff. This could include simplifying tariffs and removing them entirely on goods where Britain has no domestic production.
“It is vitally important that we now move away from complex tariff schedule imposed on us by the European Union,” she said. “This is our opportunity to set our own tariff strategy that is right for UK consumers and businesses across our country.”
The Department for International Trade wants to radically simplify the tariff system inherited from the EU, which has mushroomed over the past 50 years.
The UK is party to approximately 40 free trade agreements that the EU has with about 70 countries, which together account for more than 14% of UK trade.
If these are not replicated as deals with the UK by the time Brexit occurs, their benefits will cease to apply to UK businesses. So far, 20 rollover agreements have been signed with 48 countries, accounting for about 8.5% of UK trade.
In a separate written statement to the Commons, Truss said the UK would “drive a hard bargain” in its trade negotiations and was “prepared to walk away if that is in the national interest”.
She said it was one of the government’s key priorities to deepen trade and investment relationships with “like-minded partners, starting with the US, Japan, Australia and New Zealand”.
