Cost of living crisis: People are 'skipping meals' says Danker
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Downing Street has asked the Department for International Trade to assess the impact of cutting base-rate duties meaning duties on goods coming from nations that don’t have trade deals with the UK amid soaring inflation and pressure on household budgets. However, business groups have urged Brexit Opportunities Minister Jacob Rees-Mogg, who first proposed the idea and has been making the case for it to Chancellor Rishi Sunak, to stand officials down.
Two trade associations argued such a move would have only a “negligible” impact on soaring household bills while reducing British negotiating leverage in trade deals and potentially putting food supplies at risk.
Others warned that the idea which would only cover products not made in the UK could have knock-on consequences for goods Brits do produce and could open the floodgates to damaging wider tariff cuts.
Downing Street tasked the Department for International Trade to assess the impact of cutting base-rate duties – meaning duties on goods coming from nations that don’t have trade deals with the UK amid soaring inflation and pressure on household budgets.
Dominic Goudie, head of international trade at the Food and Drink Federation (FDF), said a unilateral tariff cut right now would “do little to address the cost of living issues but it would severely undermine the UK’s ambitious trade negotiations and could have damaging impacts for the UK’s food security”.
He said base-rate tariff tweaks should be considered in the long term, and noted that the FDF plans to put forward its own proposals.
But firms fear that a knee-jerk move could have a dangerous impact on British imports at a time when food suppliers are under pressure.
Other experts with experience in Government and academia are divided about whether cutting base-rate tariffs would affect British negotiating leverage.
But most agree it would have a minimal impact on prices.
There is also a split in the British Cabinet over whether the proposal should go ahead, with Rees-Mogg in favour and International Trade Secretary Anne-Marie Trevelyan sceptical, as she made clear in a recent committee hearing.
Nick von Westenholz, head of trade at the National Farmers Union, said tariff cuts on goods not produced in the UK might help consumers, but could mean “indigenous food items get elbowed out by imports of food we can’t produce here”.
Mr von Westenholz is also concerned about a possible slippery slope toward unilateral tariff removals on goods produced in the UK.
He told Politico: “That would not only heap enormous pressure on UK farmers and food producers in what is already a tough trading environment.
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“It would also throw away the opportunity to win market access overseas for UK producers in trade negotiations as a direct quid-pro-quo for access to the enormously valuable UK food market.”
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