EU firms could pay higher tariffs to export to UK than vice versa, says thinktank

Civitas finds that if Britain turned to WTO terms after Brexit it would pay £5.2bn a year in tariffs versus £12.9bn for EU firms

EU car manufacturers would pay a theoretical £3.9bn in tariffs.

EU car manufacturers would pay a theoretical £3.9bn in tariffs.
Photograph: Christiane Raatz/EPA

EU firms exporting goods into the UK face a potential tariff bill two-and-a-half times more than the equivalent for British firms sending goods the other way, if there is no new trade bill in place at Brexit, according to a thinktank.

EU firms would have to pay £12.9bn a year in tariffs to the UK if Britain turned to World Trade Organisation terms after it left the bloc, the report by Civitas said. The most affected sector would be car manufacturers, who would pay a theoretical £3.9bn.

In return, British exporters to the EU would, under WTO terms, have to pay £5.2bn a year in tariffs.

The author of the study, Justin Protts, said the figures showed how much both sides had to lose if they did not reach a trade arrangement during the two-year process begun by the triggering of article 50 next year.

However, he said, the UK could have something of an easier time, both in terms of the lower overall total and being able to alter its tariff schedule in a way that would help British businesses.

“These figures highlight the importance of securing a post-Brexit trade deal not just for the UK but also for the EU,” he said. “European exporters have a great deal to lose without free trade across the continent.”

The study found that 22 of the 27 remaining EU members would face more tariffs on exports to the UK than UK exporters would face on sales to them, with the biggest differentials for major trading partners such as Germany and France.

On Sunday, the transport secretary, Chris Grayling, a leading ministerial voice in the leave campaign, argued that the deadlock in EU-Canada trade talks was not a bad omen for a future British deal given the EU’s huge incentive to reach arrangements with a post-Brexit UK.

Grayling said he did not fear a British trade deal with the EU would be frustrated by Wallonia, because the French-speaking region of Belgium sold a lot of agricultural produce to Britain.

“We are their most important export market. If you look at the issue of Belgium this week, which has been at the heart of the debate over the Canadian deal, we are a huge market for Belgian agriculture,” he told BBC1’s Andrew Marr Show. “Nobody in continental Europe benefits from a reduction in the ability to trade with the United Kingdom.”

Grayling said he did not fear the Wallonia parliament blocking a deal, as it has done with the comprehensive economic and trade agreement (Ceta) between the EU and Canada, which has taken seven years of negotiations and would eliminate tariffs on most goods between them.

“We buy a whole load of produce from Walloon farmers, and so therefore it is not going to be in their interests to see tariffs imposed,” Grayling said. “This is why I have always been convinced that we will have tariff-free trade, we will have sensible trading arrangements, because it is in both of our interests that should happen.”

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