I watched the unedifying spectacle of our sector being dragged into the binary debate between leavers and remainers this week. I thought we had got past that.
I am not so naïve to believe the post-Brexit solution will be easy and apolitical. EU policies on agriculture, and the tariffs that protect those policies, are some of the most complex, interventionist and protectionist in the world. But I had hoped the debate was moving on to a sensible, technical level.
Take, for example, the hypothesis put forward by Nick Clegg, as outlined in this piece. Clegg’s logic is clear: if the UK leaves the single market it will be required to apply ultra-high maximum WTO tariffs on food and drink imports from the EU and elsewhere. That will force UK food prices up.
But this is simply wrong. Exiting the EU customs union actually gives the UK Government the choice over setting import tariffs, and ends the requirement for them to apply prohibitively high EU tariffs. The UK government may inherit the right to apply the EU’s prohibitively high tariffs, but it certainly would not have an obligation.
Who says? The WTO itself – which is there to encourage trade, not stop it. The WTO tariff is the maximum import tariff a member is allowed to apply. If a member chooses to apply a lower tariff or no tariff, then fine. The WTO even has terms for the two scenarios: bound tariffs versus applied tariffs.
What that means in practice is the UK government would have a choice. Should it apply the maximum tariff the WTO allows, pushing up costs for consumers – who, by the way, are also the electorate? Or should it apply a lower or no tariff? That decision would, of course, be for elected politicians to make.
The report on Clegg’s speech goes on to highlight how dangerous these WTO tariffs are as 97% of our food and drink imports come from the EU or countries with which the EU has done a free trade agreement.
This is a circular argument. UK food manufacturers like us are forced to buy our imports from this limited list of countries because we cannot buy from anybody else without paying the massive EU tariff – around 100% in the case of raw cane sugar. And even when we do buy from these tariff-free suppliers, they jack up their prices safe in the knowledge our only other choice is to buy from suppliers who face tariffs. I know because these restrictions and tariffs added €40 million to my raw material bill last year.
I’d love the choice to buy from economic and sustainable cane sugar suppliers of my choice. Just like any normal business would have. But the EU’s tariffs don’t allow that. In the new world, the UK government could.
I have great respect for using real and practical examples to help people understand the political choices ahead of us. The referendum campaign would have been better for more of those. And I commend Nick Clegg for shining a light on our sector. I just wish the analysis was sound. Having a choice for the first time over if we apply a tariff, and what that tariff should be, actually gives us a chance to make a real and positive difference to the choice of food and drink available to consumers in the UK and the price they pay for it.
Gerald Mason is senior vice president at Tate & Lyle Sugars
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