Committees

Government agrees to inform Parliament on potential impact of no-deal Brexit tariffs

9 September 2019

The Secretary of State for International Trade has acceded to a call by the Chair of the International Trade Committee for the Government to publish more information on the impact of its planned trade policy after a no-deal Brexit.

‘Roll-over' agreements

The Chair, Angus Brendan MacNeil MP, wrote to the Secretary of State, Rt Hon Liz Truss MP, regarding information provided to Parliament about so-called ‘roll-over' agreements. Through these, the Government is seeking to continue the terms of EU trade agreements with a wide range of countries, since the EU agreements will immediately cease to apply to the UK in the event of a no-deal Brexit (for more information see background, below).

No-deal tariffs

In March, the Government stated that, if there is a no-deal Brexit, 87% of all UK imports will be subject to zero tariffs in the first instance. However, this has not been reflected in the impact analyses that the Department for International Trade has been giving to Parliament in respect of roll-over agreements. Mr MacNeil argued that this information should be laid out for the sake of effective parliamentary scrutiny of roll-over agreements – and to inform the wider public of the potential economic impacts of Government policy.

Government response

Ms Truss has responded that impact assessments regarding the effect of the planned no-deal tariffs:

‘could be of some interest in terms of understanding the short-term impact of successfully transitioning EU trade agreements. Therefore, as and when secondary legislation is made enshrining the temporary tariff regime, this information will be provided on GOV.UK in respect of each agreement for which Parliamentary Reports have already been published, and put into Reports published after this time.'

Chair's comments

Mr MacNeil said:

‘I am very pleased that the Government has agreed to remedy this gap in the information being provided to Parliament – but I should not have had to ask for it in the first place. I hope that the Secretary of State will continue to accede to any requests for further information.'

Background

The UK is currently party to 40 or so FTAs that the EU has with some 70 countries, which together account for over 14% of UK trade. If these are not ‘rolled over' (i.e. replicated as deals with the UK) by the time Brexit occurs, and the UK departs on a ‘no deal' basis, their benefits will cease to apply to UK businesses. This means that UK companies trading with those countries will face trade barriers that currently do not apply to them under the EU agreements. So far, only 13 roll-over agreements have been signed, with countries accounting for about 7% of UK trade.

On 13 March Liam Fox announced the Government's temporary tariff regime in case of a no-deal Brexit, which would see 87% of imports from countries with which the UK has no trade agreement subject to zero tariffs.

The Committee has previously heard that the no-deal tariff regime could give away the UK's bargaining position for future agreements with the countries concerned. The plan for zero tariffs after Brexit has already adversely affected the Government's attempts to roll over EU trade agreements, with the Canadians declining to replicate their EU agreement since they know their exports to the UK will not face tariffs anyway. These concerns were discussed in the Committee's sessions with the former Secretary of State, Dr Liam Fox, on 6 March and 3 July 2019.

The Chancellor of the Duchy of Lancaster, Rt Hon Michael Gove MP, who is now responsible for no-deal Brexit planning, has indicated that the Government intends to publish a revised schedule of no-deal tariffs by mid-October – although this will be broadly similar to the one published in March.

Read the correspondence

Further information

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