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The EU’s maddening, opaque, confusing and illogical import tariffs must be scrapped

Dan Lewis
Grapes
Does anyone know why the import duty on grapes has risen to 17.6 per cent from 14.4 per cent since 23 June? (Source: Getty)

As you sit down to read City A.M. today over a perfectly smooth coffee from one of London’s ubiquitous coffee shops, you’re probably well aware that we don’t grow coffee in this country, never will and don’t care either. So why does coffee need seven different types of import tariffs set by the EU?

Today we publish The Essential Guide to EU Import Tariffs 2016 and an accompanying interactive website (www.eutariffs.com) that examines in detail the growth in tariffs and tariff revenue since 2008. There are now 12,561 of them, costing UK consumers over £3bn a year.

I think I’m alone in wishing that the referendum had gone on a bit longer so that we could have debated the EU Customs Union. That time, however, has now come. Marmitegate and the falling pound simply make it unavoidable.

With import costs set to rise, the one quick way to bring them down again is by eliminating EU import tariffs on day one of Brexit. For the UK, unlike the EU, with less than 1 per cent of the world population and 2.3 per cent of world GDP, has no serious pretensions to produce everything it consumes and shouldn’t try to either.

So it’s odd the British Retail Consortium (BRC) got the wrong end of the stick last week, by forecasting big hikes in prices in stores. It completely overlooked how the cost of import tariffs is mostly met by consumers on the high street. According to data released to us by HMRC which we have published, in 2015, just over a third of the £3bn collected in tariffs came from clothing and footwear, with the next largest sector electrical goods. Is the BRC really in favour of that?

Read more: Brexit: Unequivocally good for the UK economy in the short and long term

Surprisingly, the more sensitive protected sectors like food and drink, steel and cars don’t add up to very much at all because very few of them are imported from outside the EU to the UK.

The more I look at the growing range and scope of the import tariffs, from unicycles at 15 per cent – hardly a mass market – to Suborbital Spacecraft at 4.2 per cent, of which there are none available for sale, the more I ask myself: is this a Single European Market or a Single Crowding-Out Protectionist Bloc?

What troubles me most is the total opacity in the design, setting, increase and decrease in these tariffs. Are they for revenue, commercial dissuasion, special strategic concerns, in response to lobbying or just a throwback to a bygone era when making tennis rackets was critically important (4.2 per cent import tariff)?

And does anyone know why the import duty on grapes, fresh or dried, has increased to 17.6 per cent from 14.4 per cent since 23 June?

Read more: Forget trade deals: Unilateral free trade can be our Berlin Wall moment

In fact, since 23 June, 266 new import tariffs have been brought in, including a 20 per cent tariff on frozen prawns. So as a Europe-loving EUsceptic, I just don’t agree that we should accept this for the remainder of our membership years or indeed after.

Britain should start today by calling for an inquiry into how these tariffs are set and bring some democratic accountability into the process. Equally, on the UK’s side, we need to have much more transparent and regular data from HMRC to more precisely locate the real impact. And we should push for the EU to adopt a one in 10 out rule for tariffs, modelled on the one in two out rule that has worked well with regulations in the UK.

Liberal democracies should have economies that put the consumer first. In the EU, we have paid over the odds for too long to protect producer interests, virtually none of which are in the UK. Now is the time to lock in the consumer gains from Brexit and repeal these twenty-first century corn laws.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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