Tax-News.com: UK Consumers Would Bear Brunt Of 'Hard Brexit'
by Jason Gorringe, Tax-News.com, London
10 October 2016
The price of foreign goods sold to British consumers after the UK leaves the European Union could be as much as 27 percent higher as a result of new trade taxes, the British Retail Consortium has said.
In a new report, the BRC said failure to strike a good Brexit deal by 2019 would have a disproportionately severe impact on retailers and their customers, because if the UK fell back on to World Trade Organisation (WTO) rules, the new tariff rates that the UK would apply to imports from the EU would be highest for consumer staples like food and clothing. For instance, clothing and footwear would attract tariffs of 11-16 percent versus the current zero-rating for all EU imports, the BRC said.
Falling back on to WTO rules would also increase the cost of sourcing from beyond the EU. The import cost of women’s clothing from Bangladesh would be 12 percent higher, while Chilean wine would be 14 percent dearer for importers, it said. This contrasts with duty rates that would apply to raw materials and semi-finished products, many of which would be zero-rated or attract rates of duty of below 10 percent.
BRC Chairman Richard Baker said: “We will be supporting the Government through this complex and difficult process, helping [it] analyze how increased cost pressures on retailers could mean higher shop prices, and identifying any opportunities for new trade deals that could benefit individuals and families. The retail industry is the UK’s biggest importer, and has huge experience of importing from every corner of the world. We will be engaged in a constructive dialogue with government that will bring our experience to bear on the Brexit talks to the benefit of everyone in the UK.”
The BRC said that, while free trade deals typically take five to six years to negotiate, other opportunities to liberalize trade could be realized more quickly. For example, the UK would be free to adopt its own scheme of trade preferences (GSP) for developing countries as soon as it leaves the EU.
“In adopting a national version of the GSP, the UK could look to expand the number of countries that could benefit, it could make it easier for goods to comply with the rules-of-origin that allow access to the tariff preferences, and it could reduce the number of products that are currently exempted from the scheme,” the BRC said. “Not only would this be good for UK consumers, it would provide a great boost to economic development in countries like Bangladesh, Kenya, and Sri Lanka.”