On 19 May 2020, marking a major milestone in its independence from the European Union (EU), the UK published the "UK Global Tariff", its schedule of import duties for trading on a "most favoured nation" basis. The schedule would apply to imports from most countries with which the UK does not have a superseding trade agreement.
The new tariff is scheduled to come into effect on 31 December 2020, when the transition period for the UK's exit from the EU will end, unless the period is extended by mutual agreement of the UK and the EU. The current deadline for agreeing to an extension is the end of June, and the UK has signalled it does not plan to seek one, despite delays in the negotiation of a UK/EU trade agreement caused by the Covid-19 pandemic.
In introducing the new schedule, the UK Department for International Trade (DIT) set out the principles behind the tariff. The accomplishments DIT claims also serve to highlight what HM Government perceives to be the shortcomings of the current EU Common External Tariff. The DIT calls the UK Global Tariff "simpler, easier to use and lower," and says it will "scrap red tape and other unnecessary barrier to trade". Further distancing it from the existing EU regime, the UK Global Tariff will, DIT claims, "cut administrative costs for businesses by getting rid of needless tariffs"; it also "scraps... complex calculations which result in thousands of tariff violations".
Crucially, the UK Global Tariff "reflects the needs of UK business". It does so by "dropping tariffs to zero across a wide range of products used in UK production". It also retains tariffs in a number of areas, including many agricultural areas; imported automobiles will attract a 10% import duty.
Publication of the UK Global Tariff comes at a moment when we expect Brexit-related issues to emerge from a news cycle that has been dominated by Covid-19 for months. The most recent round of trade agreement negotiations between the UK and the EU, which concluded on 15 May, ended in acrimony, with each side blaming the other. An extension of the transition period seems very unlikely, and its end is only seven months away. On the other side of the Atlantic, there are significant impediments to a free trade agreement with the United States, including agricultural standards and access to medical markets, to name only two. The failure of negotiations with Washington or Brussels would result in damaging tariffs being imposed on trade going in all directions, and the publication of the new UK tariff regime serves as a reminder that the clock is ticking. Companies with interests in the UK and EU that might be affected will be designing and deploying their trade strategies in the coming months.
Originally published May 20, 2020
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