Key Intertrade report on cross-border tariffs (2)

Potential impact of WTO tariffs on cross-border trade

South to North trade in goods was valued at €1.65 billion in 2016 (down from €1.73 billion in 2015) and North to South trade was €1.05 billion (down slightly from €1.108 billion in 2014).

The tariffs registered by the EU at the WTO (World Trade Organisation) are  applied to external trading partners who have not negotiated a specific trade treaty. “They can therefore be regarded as the default or fall-back arrangement if the negotiations for a post-Brexit trade treaty are not complete by the date of the UK’s exit from the EU.” They are levied as a percentage of the value of an item for import, a charge per unit or kilogram,or a combination of both.

There are more than 5000 product categories in the WTO lists and tariffs on them range from zero to over 80%, so the product mix is crucial. Paper products, pharmaceuticals, iron and steel are zero-rated, while food and textiles sectors face rates ranging from 10.2% on footwear to 73.4% on meat products.  About 10% of products traded between these islands incur tariffs of between 0 and 2.5%;  a further quarter have tariff rates between 2.5% and 5%. At the top end, around 5% incur tariffs of over 15%. The mix is not good:

“The 2% of products that would incur tariffs of over 35% contributed 12% of exports from Ireland in 2016 (to both Northern Ireland and Britain). From Northern Ireland, the share of trade falling into the highest tariff category was 19% in 2016.” One figure leaps out of the tables: dairy products going from north to south will be rated at 64.1%.

Our troubles do not end there. Where tariffs are applied, non-tariff barriers to trade (NTBs) are simply inevitable. These can include quantity limits, subsidies to domestic production and technical requirements such as licensing, labelling, standards and above all for agri-food, health, safety and food standards. All the evidence indicates that small companies are at a serious disadvantage in coping with NTBs.