Monday, 31 July 2017

... thus neatly disproving her own point.

From City AM:

As a member of the Customs Union, Britain applies the same import duties on goods as all the other members of the union, and we trade freely with our allies in the bloc.

When we exit this arrangement, our tariffs will change overnight. Importers will have to start paying extra for goods coming in from the EU, which make up 70 per cent of our food imports, according to the Institute for Fiscal Studies.

Yes, 70% of food imports, but food imports in turn are just under 40% of all food we eat by value i.e. less than 30% of food we eat by value. most of that is fancy stuff not necessary to sustain life, i.e. luxuries. Nice to have but costly, if it ends up costing a bit more, so be it.

If we don’t negotiate a new trade agreement by March 2019 (the “no deal” scenario), then the new tariffs will be those we have lodged with the World Trade Organisation (WTO)...

Yes, but we decide our own tariffs, they are not imposed by the WTO, as she then says herself:

It is possible for the UK to eliminate tariffs on goods coming from the bloc, however, under WTO rules, it would have to extend this tariff-free access to all members of the WTO.

Which would be a very good thing indeed, overall, the price of food (and pretty much anything else) would be slightly lower.

And, if we removed all tariffs, we would have no basis on which to negotiate new free trade deals with the likes of the US and Australia.

Maybe, maybe not, but these free trade deals are a contradiction in terms. If a country unilaterally abolishes tariffs, quotas and all but a sensible bare minimum of domestic regulations (like cars having to pass an MOT, rechargeable batteries not being liable to explode etc), that is about as free as trade will ever get. Trade between people in two such countries is vastly freer that trade between people in two countries with a free trade agreement (which is just thousands of pages of detailed rules to shut out people in third countries).

Then the author resorts to this statistical flourish:

The British Retail Consortium has warned that if Brexit secretary David Davis walks away from talks with “no deal”, the effective tariff rate on some items could rise by as much as 80 per cent. Tariffs on Italian mozzarella and Irish cheddar cheese will jump by 46 per cent and 44 per cent respectively.

1. Hang about here. Isn't the current tariff on Irish cheese imported into the UK precisely zero? Have I missed something? So any new tariff would be an increase of infinity per cent.

2. We need absolute not relative figures. If a tariff goes up from 1% to 1.5%, that's no biggie - it's not an increase of 50%, it's an increase of 0.5%.


Sobers said...

Its all just Remain scaremongering. There is absolutely no reason for import prices to rise in a 'No deal' situation unless we expressly decide that has to happen. The power will be entirely within the remit of the government of the day.

James Higham said...

Gosh, we might have to start producing some of our own food.

Mark Wadsworth said...

S, exactly.

JH, the UK is just about self sufficient in the basics, we import the fancy stuff.

mombers said...

That's a peculiar thing about the WTO. You can only set tariffs at a mutually agreed level, i.e. not unilateral. Isn't that just a cartel?

Mark Wadsworth said...

M, no, you can reduce them unilaterally, that is undisputed.

Lola said...

And now Timmy wades in...