By Kylie MacLellan and Elizabeth Piper
LONDON (Reuters) – The United Kingdom announced a new post-Brexit tariff regime on Tuesday to give it leverage in trade talks, maintaining the European Union’s 10% duty on cars but cutting levies on tens of billions of dollars of supply chain imports.
The new tariff regime, which would come into effect from January 2021, aims to simplify what some UK officials call an overly complex EU system and help Britain negotiate trade deals with the United States, the Brussels-based bloc and others.
But it will mean that if Britain and the EU fail to reach a free trade deal by the end of the year, the price of some food, cars and some chemical inputs imported from the bloc would rise sharply.
Britain said the regime would apply to countries with which it has no agreement and removes all tariffs below 2%.
“Our new Global Tariff will benefit UK consumers and households by cutting red tape and reducing the cost of thousands of everyday products,” International Trade Secretary Liz Truss said.
It will maintain tariffs on imported products competing with UK industries such as agriculture, automotive, ceramics and fishing, and remove levies on 30 billion pounds ($37 billion) worth of imports entering UK supply chains.
The British Chambers of Commerce welcomed the clarity provided by the announcement but said it showed a trade deal with European Union by year end was vital “to avoid substantial increases in costs for businesses on both sides of the Channel”.
Talks on a future relationship between London and Brussels have reached an impasse, with both sides trading barbs before a crunch meeting next month. Britain published its draft legal text on Tuesday, described by a spokesman for Prime Minister Boris Johnson as “a constructive contribution”.
The EU’s chief negotiator, Michel Barnier, welcomed the publication, but added: “We must make tangible progress” in the June talks.
To help meet the government’s environmental commitments, the UK will also remove tariffs on products which support energy efficiency and introduce a temporary zero tariff on goods being used to fight COVID-19 such as personal protective equipment.
The new regime did not meet all expectations.
A representative from one chemical company who declined to be identified said the firm had been promised an elimination of tariffs on inputs for the sector. “It’s disappointing across the board,” the person said.
($1 = 0.8183 pounds)
(Additional reporting by Guy Faulconbridge; editing by Philippa Fletcher)