TARIFFS AND QUOTAS IN THE EVENT OF A NO DEAL WITH THE UK

If a deal can’t be agreed with the EU, then the UK will default to World Trade Organization (WTO) terms from 1 January 2021. The UK would have to apply tariffs and quotas to goods coming into the country from the EU, and the EU would apply its “third-country” tariffs and quotas to the UK. That means the UK would be hit by big taxes when it tried to sell products to the EU market. The bloc’s average WTO tariffs are 11.1% for agricultural goods, 15.7% for animal products and 35.4% for dairy. British car makers would be hit with a 10% tariff on exports to the bloc, which could amount to €5.7bn per year. That would increase the average price of a British car sold in the EU by €3,000.

Currently, trade between the UK and EU is tariff-free. But the Confederation of British Industry (CBI) predicts that no-deal would mean that 90% of the UK’s goods exports to the EU would be subjected to tariffs.

WTO “most favoured nation” (MFN) rules mean that the UK couldn’t lower its tariffs for any specific country or bloc, such as the EU, without agreeing a trade deal. Without a deal, it would have to trade with every WTO member in the world on the best terms it offered any member, including the EU.

In the event of no-deal, the EU would begin imposing border checks on UK products from 1 January 2021, even if the UK hadn’t changed any of its rules and regulations.

The UK government has admitted it expects massive border queues and persistent delays for six months or longer in the UK if it leaves without securing a deal. France has said it plans to immediately implement post-Brexit border controls at its ports in the event of no-deal. The UK government has estimated that 50% to 85% of lorry drivers would not have the necessary documentation to enter the EU via France.

British businesses would spend £15bn extra a year on paperwork in the event of a “no deal” Brexit.

British and EU companies would face  significant new and ongoing administrative burden. Crashing out and trading on WTO terms would be damaging for the British economy, hitting the service, manufacturing and agriculture industries hard. WTO terms will impose a number of adjustments and those can be painful, particularly for some sectors. The UK exports nearly half (46%) of its goods to the rest of the European Union, making it by far the largest UK export market. And over half (53%) of all UK imports came from the EU in 2018.

The UK’s economy relies heavily on its service industry, with British service providers making up 79% of the UK economy and accounting for 45% of exports. London’s position as a global financial hub would be threatened.