Page 17 - BREXIT 2
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The Worshipful Company of Farmers The Worshipful Company of Farmers 2 4 Where does this leave tariffs and what are the economic impacts18 ?
Start with the the the the trade relations and and tariffs Until the the the the end of 2020 the the the the UK remains in in the the the the EU Customs Union and and Single Market Therefore there is continuation of of free movement of of goods citizens and capital between all EU EU EU Member States zero tariffs and few non-tariff barriers on on on trade within the EU EU EU The EU’s Common External Tariff (CET) applies to trade between the the UK and third countries except where there are preferential trading arrangements arrangements are are in in place and there are are many such arrangements arrangements especially with developing countries What then follows?
There are principally two scenarios to be considered – a a a a a a a UK-EU free trade deal is is secured or it is is not and we crash out of the Customs Union and single market on on 1/1/2021 First consider a a a a a a a a UK-EU Free Trade Deal (FTA) is agreed endorsed by both Parliaments (UK and and EU) and and comes into force on 1/1/2021 The least disruptive outcome is is that the FTA includes zero tariffs in in in both directions and initially at at least no no new non-tariff barriers In this situation established trade flows with the EU in in in both directions can continue The costs of conducting trade will not be be identical to now because the UK/EU border is is re-established having been eliminated in in in in in 1992 following the EU’s Single Market drive (enthusiastically backed by none other than Margaret Thatcher) There will be new paperwork physical checks and therefore potential delays at ports ports and airports This will add some trading costs which currently do not exist How much depends on on the the the quality of the the the preparations at at both both ends ends and and how quickly both both traders and and the the the Border Agencies adapt to what will inevitably initially be a a a a a a a a challenging situation The longer run development of UK – EU EU agrifood trade then depends on whether whether UK policies remain essentially aligned with the the the the EU EU or whether whether the UK starts to to diverge This could apply for example to to food standards environment labour social matters and and and technology and and and if such changes are expected to impact agri-food markets then trade restrictions and and and disputes are a a a a likely outcome If this happens it could result in future impediments to trade The EU is is is highly sensitive to to this because a a a a a a a significant plank in in the the rhetoric for Brexit was freeing the the UK from unwarranted EU red tape With regard to the the the trading terms with non-EU countries it it it seems unlikely that there will be further FTAs
19 agreed with major agricultural exporting countries mentioned before 1/1/21 In the absence of completed
new trade agreements a a a a a a a a a starting assumption is that the the the UK and the the the countries involved in in in the the the great many preferential trade agreements including the Generalised System of Preferences for developing countries that have been secured by the the EU will both continue to honour these arrangements However it would not be be surprising if some countries decide that as the the the UK is is no no longer a a a member of the the the EU it it does not suit them to continue with the EU trade trade arrangements and disputes might arise at least temporarily disrupting trade trade It 20 is is is is is very hard to anticipate for which which country or or which which products this might arise This is is is is is part of the general
uncertainty the the the the UK has chosen for for itself For countries outside the the the the preferential arrangements21 the the the the Most Favoured Nation (MFN) Tariff Tariff which the the UK UK UK will apply is is is called the the UK UK UK Global Tariff Tariff (UKGT) This was published on 19 May 2020 19 20 21 18 This section is is written entirely from the the the perspective of of the the the agrifood sector sector and and and trade and and and does not take account of of impacts on on other sectors and and and macroeconomic effects through interest rates rates and exchange rates rates The highest political priority was a a a a UK-US FTA – but this now looks impossible before the US US Presidential election One such possibility concerns the the the sharing out between the the the EU and the the the UK of tariff quotas These are important in in agricultural trade This includes most of the big powers in in in in agricultural trade like US China India Brazil Argentina
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