BY JAMIE FOSTER
In an excellent new article on Brexit Central Martin Howe QC explains how the UK leaving the EU on WTO terms would result in lower prices for UK consumers. The essential nature of the EU as a protectionist organisation is laid bare in the article. He explains that the stories in the press claiming food prices would rise if we left the EU with no deal are part of a tariff delusion. The stories claim huge price rises because they imagine that we will impose the maximum permitted tariffs when we leave – when, in fact, we will be able to impose lower than maximum tariffs or no tariffs at all. Whatever we decide, we must impose the same tariffs on the EU and the rest of the world.
Martin Howe is a leading barrister in the fields of intellectual property and EU law. He was called to the bar in 1978 and became a QC in 1996. He is Chairman of Lawyers for Britain.
Howe explains that the EU customs union was set up before we joined the EU in 1973. It was designed to protect the interests of EU producers, such as French farmers, German car manufacturers and Italian clothing and footwear producers. One of the downsides of joining the EU was that retail food prices in the UK were bound to rise. This was because the EU charged tariffs to protect their own growers. So for example oranges attract a 16% tariff. This means that Spanish orange producers can sell their oranges at the world price plus 16%. This means that UK consumers are subsidising Spanish producers by the extra 16% when they buy oranges from Spain and are unable to benefit from lower world prices for oranges. Economists have estimated that tariff and non tariff barriers have raised prices inside the EU by 20% above world prices.
Howe states that we could cut both tariff and non tariff barriers the day after we left the EU on a no deal basis. If we left on the terms set out in the Chequers deal we would not be able to lower tariffs until the ‘Facilitated Customs Arrangement’ can be made to work and we could never remove non tariff barriers. Howe sets out what the UK ought to do in the event of leaving on a no deal basis in regard to tariffs.
He divides up goods that we do not produce in the UK from those we do produce. For those we do not produce we should remove all tariffs as there is no producer interest to protect. This would lead to a Brexit dividend for lower income families who would be able to buy things like oranges at lower prices. This would also affect clothing and footwear items that we do not produce. On goods that we do produce there is a clear interest in our producers that the prices do not go down. Beef is an example Howe gives of this. We could set lower UK tariffs on beef imports from the EU and the rest of the world to ensure that our beef prices are not affected.
In regard to intermediate products like car components, Howe suggests a zero tariff on all imports to avoid affecting car manufacturers adversely. He suggests that a zero tariff could raise UK car manufacturer competitiveness by being able to source car components world wide to benefit from the cheapest available options.
Howe also suggests getting rid of all low level tariffs explaining that currency fluctuations that have benefited UK industry by 15% make it pointless to have 5% tariffs on goods. By removing low level tariffs we remove an overhead on businesses that is unnecessary.
Much of the hysteria surrounding claims of shortages of food and medicines after leaving the EU depend on a scenario where we impose non tariff barriers on the EU that we don’t have to. On leaving the EU we assimilate all EU law into UK domestic law including laws which make it lawful to import German medicines produced under the supervision of German authorities. It would require a change in the law to make it unlawful to import such medicines. Howe states that we would simply need to not do something which was criminally stupid in order to avoid the shortages that doomsayers are predicting. He goes on to suggest that we should be looking to remove non tariff barriers to imports from the rest of the world where we can.
Overall then Howe envisages a scenario where leaving the EU on WTO terms can be a very good thing for UK consumers with lower prices and greater access to world goods. This is before the added benefits f trade agreements are considered. It is a refreshing article which looks optimistically at the state of the UK post Brexit and highlights the fact that a lot of scare stories are baseless.