Murk Surrounding No-Deal Brexit Tariffs Confounds Business

(Bloomberg) -- Confusion around which goods will be subjected to U.K. import tariffs in a no-deal Brexit is exasperating companies as they seek to finalize preparations for the split.

The government will reveal details of the plan only if Prime Minister Theresa May’s deal to quit the European Union is rejected by Parliament next week, an official said Tuesday, without providing a timescale for publication.

The Freight Transport Association, which represents U.K. cargo firms and truckers who could face long lines at ports if a no-deal split triggers customs duties, said clients need clarity on tariffs now in order to evaluate the costs and consequences for their goods after the Brexit deadline on March 29.

“It is unfair and unreasonable for the government to claim it is business’s responsibility to prepare for a no-deal Brexit when ministers are unable to provide essential information for importers and exporters,” FTA Deputy Chief Executive Officer James Hookham said in an emailed statement.

The Department for International Trade intends to forgo the majority of tariffs in an effort to keep down consumer prices for products such as cereals and ease disruption to supply chains for items including auto-parts shipped from the EU, Sky News reported Tuesday. Others items such as beef, lamb and dairy products, finished cars and some textiles would retain tariffs to protect British producers and manufacturers from overseas competition, it said.

Bargaining Chip

The chances of a no-deal Brexit have receded after May promised Parliament a vote on whether to crash out of the EU without a negotiated settlement should her own proposals be defeated, though companies say they’re still having to plan for every possible scenario.

A survey of 273 businesses by the Confederation of British Industry suggests 90 percent of firms are concerned about the prospect of no-deal border delays, with close to three-fifths of respondents saying tariffs are a major worry.

Dropping U.K. tariff barriers unilaterally may not be wise as it would mean losing a key bargaining chip in future trade negotiations, said Ross Denton, a trade specialist at consultants Baker McKenzie in London.

Britain will also struggle to protect vulnerable industries while keeping consumer costs in check. “For U.K. farming, for example, scrapping tariffs would be devastating,” he said. “But if it is to be protected, the logic of keeping prices down through tariff cuts is problematic.”

The tariff regime won’t just affect imports from mainland Europe.

A U.K. trade deal with Japan to replace one agreed by the EU won’t be ready in time for a no-deal Brexit, Trade Secretary Liam Fox said last month. Goods arriving after March 29 -- and already in transit -- could therefore be liable to customs duties that might make them unsellable, according to the FTA.

Companies taking part in the CBI survey also said that, on balance, Brexit has hurt sales and investment while increasing costs and stockpiling.

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