Clegg warns of 22% EU food price tariffs

Britain will face average tariffs on 22 per cent on its food imports from the EU, unless it remains within the single market or strikes a bilateral trade deal following Brexit, the former deputy prime minister Nick Clegg has warned.

The analysis counters calls from Conservative backbenchers that Britain should fall back on World Trade Organisation rules to strengthen its bargaining position with the EU. The chairman of the foreign affairs select committee, Crispin Blunt, has said WTO rules would provide a “perfectly sound bottom line for the UK in the negotiations”.

Food prices hit the headlines last week, when Unilever products, including the spread Marmite, briefly disappeared from the website of retailer Tesco after dispute over which company should bear the cost of the falling pound.

“It’s clear that Marmite was just the tip of the iceberg,” says Nick Clegg © AFP

“It’s clear that Marmite was just the tip of the iceberg,” said Mr Clegg, a former EU trade negotiator. “A hard Brexit will lead us off a cliff edge towards higher food prices, with a triple whammy of punishing tariffs, customs checks and workforce shortages.”

Mr Clegg is calling for Britain to remain within the EU single market, and to seek an interim deal based on Norway’s status. Theresa May has not ruled out a transitional arrangement with the EU, or contributing to the bloc’s budget, as Norway currently does.

Without a trade deal or interim arrangement, the UK’s exports to the EU would be subject to the latter’s terms at the World Trade Organisation. Those specify average tariffs of 2 per cent on non-agricultural products, but 22.3 per cent on agricultural products, Mr Clegg said.

Applicable tariffs would include 40 per cent on cheese. An employee arranges wheels of cheese displayed on a shelf inside a Albert Heijn XL store, operated by Royal Ahold NV, in Leidschendam, Netherlands Photographer: Jasper Juinen/Bloomberg © Bloomberg

The same levies would apply to UK imports from the EU, assuming, as Liam Fox said next month, that the UK would “continue to uphold” the EU’s most favoured nation tariffs. Applicable tariffs would include 13 per cent on salmon, 14 per cent on wine, 40 per cent on cheese and 59 per cent on beef. The rates must apply to all countries outside the customs union, unless a free-trade agreement is in place.

In the short term, economists already expect an increase in food price inflation due to the fall in the pound. Mark Carney, the governor of the Bank of England, has said that inflation is likely to run “a bit” above the bank’s 2 per cent target. Ruth Lea, a Brexit-supporting economist, has said leaving the EU could lower prices in the medium term, on the premise that Britain will strike trade deals with third companies and the pound will recover.

Philip Hammond, the chancellor, has sought to keep open Britain’s membership of the single market, stoking tensions with pro-Brexit ministers who want a clean break with the EU. But his allies rejected one report on Sunday that he was considering resigning over being allegedly marginalised by Mrs May.

Britain’s farmers, a plurality of whom are estimated to have backed the Leave campaign, are likely to play a vocal role in negotiations with the EU. Mr Hammond has already promised to replace any lost EU funding until 2020, yet subsidies and market access in the following years remain key issues.

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