An oil and gas sector logistics expert has said the government’s proposed tariff regime to apply temporarily in the event of a no-deal Brexit is 'a mixed bag' for the industry’s EU traders.
Adam Johnson, director of Leeds-based Tudor International Freight, said the structure was undoubtedly well-intentioned and would cause some UK oil and gas businesses to breathe sighs of relief. However, it also contained potentially significant weaknesses which could well grow to haunt the industry and the government.
Mr Johnson explained the current official position was that unless the UK agreed an alternative arrangement with the EU and this was given legal force before the Article 50 period expired, the country would then leave the bloc without a withdrawal agreement.
He said, however: “If, in these circumstances, we maintained the current zero tariffs on all imports from the EU, World Trade Organisation rules say we’d have to extend them to every other country. Although that would minimise disruption to our trade with the EU – by far our largest commercial partner – it would also open the door to other imports, including from nations with unfair trading practices, potentially in quantities highly damaging to UK industry.
“But, on the other hand, if we just extended the tariffs currently applying on imports from other countries to goods from the EU, the results would include many immediate, and in some cases sharp, price rises for UK companies, including oil and gas businesses. These would probably be exacerbated by a drop in the value of sterling which would follow a no-deal departure.”
Mr Johnson said the government had therefore come up with an essentially hybrid plan, which would apply for up to 12 months, while a full consultation and review of a permanent approach to tariffs took place.
He said: “Under the proposals, 87% of all UK imports by value will qualify for zero-tariff access, up from the current 80%. The plans also represent a shift, favouring products from non-EU countries. That’s because they’d see the overall proportion of EU goods exempt from tariffs dropping from 100% to 82%, while the share of imports from the rest of the world in this category would rocket from 56% to 92%.”
He added that the plans were not perfect, however.
Mr Johnson said: “The government has been criticised for developing its proposals without consulting business, the public or Parliament, for example.
“Its plans also include tariffs not being charged on any goods entering Northern Ireland from the Republic. While maintaining the open border is a perfectly laudable intention, for its effects on cross-frontier trade and the peace process, this proposal could also provide an invitation for people wanting to evade UK tariffs or smuggle undesirable goods into the country.”
Mr Johnson said the proposals would also do little to ameliorate the much-publicised long delays and traffic congestion expected in the Dover area if the UK left without a deal and the EU’s agriculture commissioner had even suggested the plans were illegal under World Trade Organisation rules.
He said: “For all these reasons, the government’s proposals are at best a mixed bag for the UK’s oil and gas businesses trading with the EU.
“Their weaknesses merely underline that the current arrangements are ideal for these companies. In our view, a no-deal departure would still be highly complex, costly and damaging for such organisations and should be avoided at virtually any cost.”
Read the article online at: https://www.oilfieldtechnology.com/special-reports/22032019/logistics-expert-says-no-deal-brexit-tariff-plans-a-mixed-bag-for-industrys-eu-traders/