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UK trade minister defends tariff-quota stance, talks due to start a week before Brexit

Liam Fox insists UK proposals have been "clear and consistent" from the outset

Britain’s proposal for taking up a share of the EU’s tariff quotas is designed to ensure other countries continue with the same access to the UK’s market, prevent surges in imports and maintain a suitable balance, UK International Trade Secretary Liam Fox insisted yesterday (March 7).

He was speaking to journalists at the end of a day visiting the World Trade Organization (WTO) during which he met the organisation’s Director-General Roberto Azevêdo and ambassadors and other delegates from WTO members.

Fox’s aides said his visit could be the last before the UK leaves the EU.

Tariff quotas allow limited quantities of a product to be imported duty-free or at considerably lower duty than the normal tariff rates.

The latest onslaught against the method the UK and EU have agreed for splitting the quotas after Brexit came at a WTO Agriculture Committee meeting late last month.

New Zealand led the charge, supported by the US, Canada, Russia, China, Uruguay, Thailand, Brazil, Australia and others. Many of them first raised objections against the joint UK and EU approach in September 2017. Despite waiting for over a year, there was no sign of movement on this issue, New Zealand reportedly said.

The UK and EU propose taking the present EU28 quotas and splitting them between the UK and EU27 after Brexit in proportion to the shares of imports ending up in each according to EU data for 2013-15.

The critics say the method reduces the value of present market access by limiting exporters’ freedom to choose to sell to the most profitable part of the EU28. New Zealand also said the data is “bedevilled by discrepancy and errors”.

Asked about the criticism, Fox said the UK’s position had been clear and consistent from the outset.

Negotiations phase

The WTO procedures chosen by the UK for its proposed WTO commitments on tariffs, tariff quotas, and farm subsidy limits — its “schedules” of commitments on goods — mean that negotiations with other WTO members will not begin officially until March 21 (barely a week before the UK is due to leave the EU), the UK’s WTO ambassador Julian Braithwaite confirmed.

This is because it was only on December 21 that the UK agreed to switch procedures from a technical correction to full negotiation.  March 21 is the end of the phase for countries to raise objections and seek negotiations.

Some 685 pages of the 715-page draft goods schedule consists of tariff ceilings copied and pasted from the present EU28’s. Most if not all of these are expected to be accepted since they do not affect exporters’ access to the UK market. The tariff quotas are on 25 pages and are where most of the hard bargaining can be expected. The farm subsidy limits may see some technical discussion but are thought unlikely to cause problems.

The UK has already passed one hurdle in its bid to establish itself as a WTO member independent of the EU. It was accepted as a new signatory to the WTO Government Procurement Agreement on February 27 after only a few months of discussion, leaving only a few steps, including ratification within the UK before it can be a party to the agreement in its own right.

A third task is for the UK’s schedule of commitments on services to be approved. This is largely a technical exercise for converting the UK’s commitments as an EU member into is own. Sources confirm that only one objection remains — from Russia.

No answer on applied tariffs

Meanwhile, Fox dodged a question on why the UK’s planned applied tariffs (which can be lower than the ceilings committed in the WTO) in the event of no deal with the EU have not been published and whether this created uncertainty for business.

He simply said the approach would have to balance a number of interests, allowing users and consumers supplies that are not too expensive, while protecting vulnerable producers.

He also declined to say what tariffs would confront goods en route to the UK that would arrive after Brexit day if it is March 29.

Asked what plans the UK has for rescuing the WTO from its present crises, particularly with the appeals stage of dispute settlement, Fox simply said the UK had to listen to other countries, to learn what the US’s objections are in blocking the appointment of Appellate Body judges, and to the concern of other countries that want the problem resolved.

He declined to say whether the UK would support the EU’s proposals, which are among the more detailed efforts to break various WTO deadlocks.

For several years, the US has blocked the appointment of new judges or reappointment of judges whose terms have expired. By the end of this year only one judge will be left and the Appellate Body will be unable to function, depriving dispute settlement of one of its key features.

 
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