Source: Getting to know the WTO tariffs
We might all start with “A Beginner’s Guide to Trade Data” published by the Wall Street Journal. Next comes an article in the Economist Magazine outlining some of the many difficulties Britain will face in a transition from trading as an EU member to building up its independent membership of the World Trade Organisation.
From an Irish viewpoint the clearest exposition of the tariff threat remains Working Paper 550 from the Economic and Social Research Institute, which we covered when it was issued in November last year.
According to the Institute for Government, it is likely the UK will leave the EU without having agreed new WTO commitments, “The UK’s current WTO schedules (which apply to all EU members) specify tariff levels for more than five thousand categories of goods, from apples to zinc oxide. Each of these agreements could, in principle, need to be re-visited and renegotiated, depending on policy decisions taken by the UK Government and the attitude taken by other countries.”
Working through those 5000 tariffs will be the responsibility of Liam Fox, the UK’s Secretary of State for International Trade. However, his grasp of the subject or even of the WTO has been questioned.
Next step on the learning curve is “Brexit, Trade and Tariffs” from the London School of Economics. Its core point, believed to reflect Fox’s short-term strategy, is that “he only practical course for the UK is, at the point of Brexit, to submit to the WTO national schedules that replicate the EU’s current tariff.” Firstly, there is an assumption that the WTO, and indeed the EU, will simply accept some sort of cut’n’paste trade policy. Secondly and probably more importantly, there will be political counter-arguments that the UK should favour this or that sector or this or that trading partner to gain international competitive advantage. Indeed, much of the Leave side’s campaign was based on the notion that Britain could trade more cleverly and flexibly on its own in the world. There probably will be a brief period of parallel tariffs, but it may be very brief.
As for tariffs on our own border, for now BBB will focus on the two numbers that we have been highlighting for months: 54% of cross-border trade is in agri-food and related products, where tariffs average 42%.