On 19 May, the Government announced the UK’s new MFN (Most Favoured Nation) tariff regime — the UK Global Tariff (UKGT); this will replace the EU’s Common External Tariff on 1 January 2021 at the end of the ‘Transition Period’.
The Government said: “Our new tariff will support the economy by making it easier and cheaper for businesses to import goods from overseas. It is a simpler, easier to use and lower tariff regime than the EU’s Common External Tariff, and it will be in pounds sterling — not euros. It will scrap red tape and other unnecessary barriers to trade, reduce cost pressures and increase choice for consumers and it will back UK industries to compete on the global stage.”
The Government added that the new tariff will streamline and simplify nearly 6,000 tariff lines and cut costs for businesses by reducing ‘administrative burdens’; for example, by scrapping unnecessary tariff variations, rounding
tariffs down to standardised percentages, and getting rid of all ‘nuisance tariffs’ (those below 2%). It will also get rid of the EU’s “complex Meursing table, allowing us to scrap thousands of unnecessary tariff variations.
The UKGT also expands tariff-free trade by eliminating tariffs on a wide range of products, thereby ensuring that 60% of trade will come into the UK tariff-free on WTO terms or through existing preferential access — and successful FTA negotiations will increase this figure.”
The Government said that the UKGT was designed after widespread engagement with businesses across the UK, and it will back industry by: maintaining tariffs on agricultural products such as lamb, beef and poultry; maintaining a 10% tariff on cars; maintaining tariffs for the vast majority of ceramic products; removing tariffs on imports worth £30 billion entering UK supply chains; and having 0% tariffs on products used in UK production.
There will also be zero tariffs on a wide range of consumer goods, including dishwashers, freezers and cooking products. In addition, the Government says it will promote a sustainable economy by cutting tariffs on over 100 products that back renewable energy, energy efficiency, carbon capture and the circular economy.
Josh Hardie, deputy director general of the CBI, said: “The new tariff scheme will give businesses much-needed clarity on post-Brexit trade. Simplifying the system, scrapping tariffs under 2% and reducing duties on sustainable products are all things that firms can work with. Sticking closely to many existing tariff levels will give other countries incentive to agree trade deals with the UK.”