The Government has announced the UK’s new MFN tariff regime, the UK Global Tariff (UKGT)

The Government has announced the UK’s new MFN tariff regime, the UK Global Tariff (UKGT)

The UK Global Tariff  (UKGT) has been released today. UKGT will be the UK’s new most-favoured nation (MFN) tariff regime (replacing the EU’s Common External Tariff) on 1 January 2021, unless an exception applies. For example, the goods you’re importing:

– are from a developing country that pays less or no duty because it’s part of the Generalised Scheme of Preferences;

– are from a country that has a trade agreement with the UK; or

– have a relief or tariff suspension that’s operated by the UK.

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Changes

UKGT is broadly in line with EU tariff schedule, though it introduces a number of changes, including:

– removing tariffs on products which are used in UK production, not made in the UK or are a nuisance tariff of below 2%;

– rounding tariffs down (to the nearest 2% below 20%, 5% between 20-50%, and 10% for tariffs over 50%) and moving complex agricultural tariffs to a single percentage; and

– removing the EU’s Meursing table of tariffs to allow the scrapping of thousands of tariff variations on products.

– UKGT also removes tariffs on £30 billion worth of imports entering UK supply chains.

Continuity

The UKGT also provides a level of continuity and protection, maintaining tariffs to a number of UK sectors and industries, including:

– tariffs on agricultural products such as lamb, beef, and poultry to be maintained;

– 10% tariff on cars to be maintained;

– tariffs for the vast majority of ceramic products to be maintained; and

– maintaining some tariffs which support imports from the world’s poorest countries who have preferential access to the UK market.

Coronavirus

– Almost all pharmaceuticals and most medical devices (including ventilators) are tariff free in the UKGT.

– While some products used to fight Coronavirus maintain a tariff, the UK has introduced a temporary zero tariff rate on these products. This relief waives the tariff and VAT for PPE, medical devices, disinfectant and medical supplies from non-EU countries.

Key takeaways

– The UKGT is estimated to ensure that around 60% of trade will come into the UK tariff free on WTO terms or through existing preferential access from January 2021. Future trade agreements will increase this proportion.

– The UKGT will provide important leverage in future trade talks with EU, US, New Zealand, Japan and other key trading partners.

– The UKGT increases the importance of getting a trade deal with the EU to avoid an increase in business costs and a negative impact on the wider economy.

Commenting on the publication of the UK Global Tariff that will apply to imported goods from 1 January 2021, British Chambers of Commerce director general Adam Marshall said: 

“The publication of the UK Global Tariff provides welcome clarity for businesses as they prepare for life outside of the EU.

“While the new tariff regime will provide the government with some leverage in future trade talks, it also demonstrates the importance of reaching a UK-EU agreement to avoid substantial increases in costs for businesses on both sides of the Channel.

“With any tariff changes, there are both winners and losers. Support will be required for the industries, places and people affected by tariff changes at what is already a difficult time.”

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