No-deal Brexit: Schedule of Tariffs

(Urgent Question): To ask the Secretary of State for International Trade if she will set out the final schedule of import tariffs proposed in the event of a no-deal Brexit.

I am grateful to the hon. Gentleman for his question.

On 13 March, the Government announced that they would implement a temporary tariff regime in the event of a no-deal Brexit. This regime would apply equally to all imports that are not subject to alternative trade arrangements and would apply for up to—I stress, up to—12 months while a full public consultation takes place to inform long-term tariff arrangements. The Government would prefer to leave with a deal and will continue to work energetically and with determination to get that better deal. This will require the European Union to show the same spirit of compromise that my right hon. Friend the Prime Minister is demonstrating in his engagement with our European friends and allies.

As the UK leaves the EU, the Government are stepping up their preparations to get the UK ready to trade if there is no deal. The temporary tariff regime will maintain open trade on the majority of UK imports, helping to support consumers, business supply chains and sensitive sectors of the UK economy. Due regard has been given to the five principles set out in the Taxation (Cross-border Trade) Act 2018: the interests of consumers in the UK; the interests of producers in the UK; the desire to maintain and promote external trade of the UK; the desire to maintain and promote productivity in the UK; and the extent to which these goods are subject to competition. It reaffirms our commitment to become a free-trading nation. It realises the benefits of an independent trade policy to support increased trade and investment with partners new and old around the world and increased choice for British shoppers.

At the same time, Her Majesty’s Government recognise the importance of retaining some tariffs. Tariffs would therefore apply on just over 10% of imports, supporting sectors facing unfair global competition, mitigating otherwise significant adjustment costs for the agricultural sector, supporting the strategically important automotive sector and maintaining our commitments to developing countries. Preferential access to the UK market is important for our developing country partners, and tariffs are being retained on a set of goods, including bananas, raw sugar cane and certain kinds of fish, to demonstrate the Government’s ongoing commitment to countries in the developing world. During the article 50 extension, the Government have remained responsive to the concerns of business and have reviewed the tariffs that would come into effect if the UK left the EU without a deal.

To answer the hon. Member for Nottingham East (Mr Leslie), the Government will publish the final tariffs shortly. It would not be appropriate for me to comment on any amendments being considered prior to that announcement. As he will understand from his former guise as shadow Chancellor, to do so would be irresponsible. The Government will ensure that Parliament is informed as soon as is practically possible once a final decision has been made.

Thankfully, the Benn Act will safeguard Britain from a no-deal Brexit, but with the Minister still insisting that, in only 24 days’ time, we might somehow crash out on a World Trade Organisation basis, does it not beggar belief that the Government have still not got around to publishing the final schedule of import tariffs for that eventuality? The Chancellor of the Duchy of Lancaster has said that what we have had is not the final word, and he has repeated that today.

At present, we can import from and export to the EU without any customs duties applying, but that could be about to end. The consequences for so many sectors of our economy, including farming, manufacturing and engineering, are massive. I ask the Minister: how are businesses supposed to “get ready”, as the £100 million advertising campaign suggests, if Ministers still cannot tell us the tariffs that will be imposed and seem incapable of even the most basic competent level of preparation?

The CBI director general Carolyn Fairbairn rightly asks why there is no time to consult industries about what tariffs will be applied. Even if we put aside the enormous non-tariff barriers of veterinary inspections, border checks and certification, are businesses to assume that the draft tariffs that were put out in March will still apply? Some of the import tariffs that Ministers are rumoured to be planning are really high. For example, if a British haulage company needs to buy an HGV truck from abroad, should it plan to pay an additional 22% on the cost or 10% because of the Government’s tariff plan? Will my constituents have to add 10% to the cost of buying a new car? What about the UK energy and bioethanol sector? Will customers have to pay the 4.7% tariff on fuel imported from the EU, as they currently do for fuel from beyond the EU? If not, will that not push the British energy sector into a competitive disadvantage when the 4.7% is imposed on its exports? There are container ships full of goods, components, textiles and clothing that have already been dispatched from the far east and elsewhere, heading for arrival at our shores at the end of the month. Will they face tariffs when they get to Britain, or not?

I said in reply to the hon. Gentleman’s first question that it would be irresponsible to go through the entire list of proposed tariffs prior to the formal announcement by the Government, which, as I indicated to him, he may not have to wait all that long to see. He spent the majority of his subsequent questions asking me to do that which I had said it would be irresponsible to do and I will not be drawn down that road, however tempting it is.

I thought the hon. Gentleman’s subsequent questions underlined the desirability of there being a deal between the United Kingdom and the European Union as we seek to leave. I hope that in the days ahead the EU will respond in the same spirit that my right hon. Friend the Prime Minister has demonstrated and show flexibility and compromise to get a deal that will pass the House. Then the tariff announcements might become redundant. That is very much our hope. The hon. Gentleman said that he found it extraordinary that so long had passed and we had yet to publish this. Many people in my constituency and around the country find it equally astonishing that it is more than three years since the UK voted to leave the EU and still people in this House are determined to thwart that democratic decision.

The hon. Gentleman asked specifically about the situation on the island of Ireland. I am happy to confirm, as I think he will know, that there will be no tariffs on goods coming from the Republic of Ireland into Northern Ireland. On parliamentary process, he will know exactly how that works. The House will have the opportunity to have its say within 60 days of the tariff regime coming into place.

This is the second of five urgent questions I have granted today. There is a premium upon time and therefore I reiterate what I said in respect of the last urgent question. People who came into the Chamber after the question began should not expect to be called. I have a list of about half a dozen people who beetled into the Chamber after the question began. Please do not stand. It is not the right thing to do.

The day one tariffs were set to produce price stability, protect businesses that took time to make adjustments and ensure there were not additional costs for British importers, who then add value and re-export. Given that it is a good policy and that the assumption of a sterling depreciation of 7% to 13% in the event of a no deal has not changed, can the tariffs be published as soon as possible? Will my hon. Friend also make it very clear that, if we have to introduce the day one tariffs as they are at the present time, the responsibility will lie not with the Government but with those who refused to accept a deal of any sort in the House?

My right hon. Friend has put that argument extremely effectively and powerfully. May I use this opportunity—my debut at the Dispatch Box—to thank him for all the work that he did in the Department? The fact that, in the last couple of weeks, we now have more than 72% of trade agreed in continuity agreements is largely due to the enormous efforts that he put in during his time at the Department. He is absolutely right: the day one tariff regime is determined to protect British consumers in the event of a no-deal Brexit. Those who can avoid a no-deal Brexit are our friends in Europe coming to terms with the Prime Minister in a deal that will be passed by the House and implement the democratic decision in the referendum of 2016.

I welcome the Minister to the Dispatch Box.

The Government failed to consult properly with business organisations or with trade unions before publishing these tariff measures, ignoring the very producers whose jobs and livelihoods would be most affected. Their refusal to listen and their inability to compromise are now posing grave dangers to our country.

The Government told us that EU manufacturers would be demanding a deal with us. They did not. The Government said that a trade deal with the EU would be the easiest in human history. It is not. The Government told us that they would have 40 trade agreements ready to be signed one second after midnight on Brexit day. They do not. Far from our seeing other countries

“champing at the bit to strike trade deals with a post-Brexit Britain”,

as the Secretary of State claimed, many of those countries already have a trade agreement with us by way of the EU, but it is a trade agreement that will fall away if we leave the EU without a deal. The Government have failed to roll over all the existing deals with approximately 70 countries. That is why, earlier this year, the Government announced emergency proposals to reduce up to 87% of UK tariffs to zero, and to expand our tariff rate quotas in the event of a no deal. As new tariffs are imposed on our exports, damaging jobs, this is a desperate attempt to keep import costs down for British consumers.

So may I ask, first, whether the Minister will publish the Government’s assessment of the price rises that they anticipate would hit UK consumers in default of these tariff rates? The Government advise businesses that, in a no-deal scenario, we would trade under World Trade Organisation rules. However, the Government have yet to have our WTO schedules formally ratified owing to challenges over our tariff rate quotas—challenges that are likely to require substantial compensation to resolve. So, secondly, when does the Department believe that such a challenge may crystallise, and what contingency funds have they laid aside to pay compensation to any complainants?

Well, goodness me! We heard not a single word about what the Opposition would do to support the Government in trying to get a deal. We heard no word of compromise. We heard flip-flop after flip-flop, with not a single constructive suggestion from the shadow Secretary of State. Why am I not remotely surprised by that?

The hon. Gentleman talks about a lack of interest. [Interruption.] If the hon. Member for Kirkcaldy and Cowdenbeath (Lesley Laird) stopped chuntering and listened, she might hear something. The shadow Secretary of State said there was no interest in trade agreements. What does he think is going on with the United States? With Australia? With New Zealand? Everywhere that I have travelled in this role, I have discovered an enormous interest in what our withdrawal from the European Union means not just for the United Kingdom, but for our ability to do bilateral trade agreements with other countries. As I said in reply to my right hon. Friend the former Secretary of State, we have transitioned over 72% of UK trade in continuity agreements, which will protect us in the event of a no-deal Brexit—which is something that the hon. Gentleman seems determined to advocate, given his lack of support for the Prime Minister.

The hon. Gentleman talks about the Trade Remedies Authority. There is not a single member of the civil service working today who was working in the civil service the last time the United Kingdom had her own independent trade body. The fact that we have established the Trade Remedies Authority, which I visited several weeks ago—[Interruption.] If the hon. Gentleman took a bit of time to understand his brief, he would understand very clearly—[Interruption.] The hon. Gentleman laughs. He should be laughing at himself, because he does not understand the very policy that he shadows. The body is created. The body can function temporarily without the passage of the Trade Bill in the event of a no-deal Brexit, as he should know, and then we will put it on a statutory footing when we introduce a new trade Bill in a new Session of Parliament.

The shadow Minister talked about all the things that we have not done. Let us talk about some of the things that he said he would do. He said that he would respect the referendum. He did not. He said that he would implement the decision of the British people. He will not. What we will do is take the opportunities of having an independent trade policy—the opportunity to sign bilateral trade agreements and the opportunity of free trade—to deliver prosperity to our citizens.

I congratulate my hon. Friend on his clear command of his brief. Will he take this opportunity to update us on the progress that he is making on seeking continuity of some of the other EU trade agreements, particularly those with Canada and Africa, many of which the Opposition opposed?

This Government take great pride in the number of those agreements that we have transitioned into continuity agreements. There are many more on the cusp of being agreed. We are dealing with some technical issues and there is ongoing engagement all the time. I was recently in Algeria and Morocco, where we are making substantial progress, and I returned yesterday evening from Vietnam—you might say that I am in another time zone, Mr Speaker, while the hon. Member for Brent North (Barry Gardiner) is on another planet. Even in Vietnam there is significant interest in coming to a continuity agreement with the UK. We will continue to work to deliver those. Of course, as my right hon. Friend and I will both agree, it would be much better if we did not have to go to continuity agreements but instead got the best continuity agreement, which would be a new agreement between ourselves and the European Union, which I hope the Opposition will finally support.

When the temporary tariff regime was announced this March, the UK Government argued that if they maintained the current external tariff regime, there would be new tariffs on EU imports. They said that if zero tariffs were maintained with the EU, even though that would minimise trade disruption, that would be required to be extended to the rest of the world due to WTO rules. The Government also said that they would keep 43 of the existing trade remedy measures that were in place, but much has changed since then. There has been another round of US tariffs and there is the potential for another round of EU tariffs in response to the US action, so let me ask the Minister this.

Given new tariffs from the US and the EU, has the schedule in the temporary tariff regime changed and, if so, by how much? Has the list of 43 trade remedies to be kept and 66 to be abandoned changed and, if so, by how many? Most importantly, with barely three weeks to go to a potential no-deal Brexit—although the Benn Act should protect us from that—I say to the Minister that it is not irresponsible to publish the new schedule. It is absolutely necessary to publish it, not least to allow businesses—importing and exporting businesses alike—at least a little certainty and to ensure that they can continue to operate within the law. The Minister is having a great time teasing us about when the schedule will be published, so may I ask him to publish it today so that businesses understand precisely what they are dealing with?

Of course, I did not say that it would be irresponsible to publish it. I said that it would be inappropriate and irresponsible to comment on what is in it before it is published.

High-value manufacturing and engineering are key to our economy, including in my constituency. Will my hon. Friend assure me that as we develop our independent trade policy he will take action to ensure our vital industries are protected from unfair trading practices?

I can absolutely give my hon. Friend that assurance. We are determined that the trade remedies body will be one of the most innovative and strong bodies in protecting not just free trade but fair trade.