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Hear, hear for suspended food tariffs

food price list
Written by Catherine McBride

The UK has finally suspended its tariffs on tropical fruit and nuts, citrus fruit juices, and even on tofu. But the key question is why did we keep these tariffs after Brexit – they were designed to protect EU manufacturers but they harmed UK consumers and as we don’t have the climate to grow these foods, didn’t protect UK farmers. My only complaint is why is this suspension temporary and why aren’t the many other foods we can’t grow or don’t manufacture also on this list?

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It is welcome news that the government has decided to suspend tariffs on a selection of goods including many foodstuffs that cannot be grown in Britain such as manioc starch, tropical fruits and nuts, concentrated fruit juices, tropical fruit purees, ambient tofu, dried onions, Dhal flour, freeze-dried currants and berries and fresh cut flowers. Not all of the goods would appear in most people’s shopping baskets, but they are often used in manufactured foods that are part of our regular purchases.

The suspension of these tariffs was timed to coincide with the introduction of import checks of goods from the EU. Something that the UK has been putting off since Brexit primarily because we have been buying EU products for many years and generally trust their import systems and most EU products. Although these tariffs have been suspended until 2026 to speed up the flow of goods into the country, lowering tariffs should also help lower some food prices in the UK.

There were applications for 245 tariff suspensions by various companies and trade associations, but only 162 suspensions were granted and some apply to different tariff classifications of the same underlying product. For example, there are 6 different orange juice suspensions and 2 orange concentrate suspensions.  The main criteria for selecting which tariffs would be suspended was that ‘the same or similar products, should not be produced in the UK or Crown Dependencies, not be produced in sufficient quantities, or production should be temporarily insufficient.’   The many applications to suspend the tariffs on various types of cheese, cod and bananas were not accepted. Effectively – no UK farmers or fishermen were harmed by these tariff suspensions although that is unlikly to prevent the re-joiners from complaining.

A German insurance company, Allianz, believes the tariff suspension will lower UK CPI dramatically, I am less sure about this. The suspended tariffs are mostly by 10-digit Harmonised System tariff codes – that is they are very specific to particular imports and are not a general tariff suspension. For example,  tariffs have been suspended on tomato paste provided it is imported in commercially sized containers holding between 1,250 kg to 1,350 kg. This won’t lower the cost of anyone’s weekly shop, but it could lower the costs of most pizza restaurants.

There are similarly specific tariff suspensions on chemicals, metals, plastic seals, leather for making shoes but not finished shoes and car parts but not finished cars etc. This may have some effect on the cost of manufactured goods, but in general, these goods are only a small part of the cost of the finished product and the suspended tariffs are generally lower than food tariffs.

But I don’t want to disparage these tariff suspensions. They are definitely a step in the right direction. My main criticism would be why is this only a temporary suspension and why aren’t the many other foods not produced in the UK also on the list?

The List

Reading the list of suspended tariffs, which is sorted by application reference number rather than tariff code so food and drink imports are mixed in with chemicals, metals and car parts, many people will be surprised to know that the UK ever had a tariff on coconut milk or banana puree. Other people will be intrigued to know that our tariffs vary not only by product but also by their sweetness (brix value), their packaging size and their value per unit of weight.

What is not shown on the list, is that our tariff rates also vary between countries as many suppliers of tropical fruit and tropical fruit juice already have tariff-free access to the UK under one of the UK’s many trade agreements such as with the CARIFORUM countries, the Central American countries and the Developing Countries Trading Schemes. So, will these suspensions really lower costs for UK food manufacturers and shoppers?

Lowering the cost of food and flowers

The tariff suspensions that could help some weekly shopping bills would be the removal of tariffs on orange juice, almonds, tofu, coconut milk and cut flowers. Most of the other foods on the list are primarily used by food manufacturers: tropical fruit concentrates and purees; corn and wheat glutens; cassava starch; tomato paste; yeasts; vegetable protein; powdered milk and whey; freeze-dried berries and currants; dried onions, frozen garlic and wild leek. And many of the tariff suspensions only apply to imports in commercially-sized containers. However of those products that could be sold directly to UK consumers:

Orange Juice

Depending on its value, sweetness (brix) and container size, the UK’s MFN orange juice tariffs range from 12% for not from concentrate orange juice to 30% plus £170 per tonne for frozen orange juice with a brix value of over 67 and a value of less than £25 per 100kg. (25p per kilo). (Yes, you read that correctly – cheaper and sweeter orange juice is charged with the highest tariff.) But we are not suspending the tariffs on cheap, sweet orange juice, only on less sweet non-frozen orange juice and concentrate, with a brix value below 67, or below 20, or for use by the drinks industry, or in containers of more than 2 litres.

Our largest supplier of orange juice is Brazil, supplying over 90% of UK orange juice in these suspended tariff codes. As we don’t have a trade agreement with Brazil, this will mean a 12% tariff reduction which will help reduce the cost of orange juice and other mixed fruit drinks for consumers.

Tropical fruit and nuts

The UK’s largest suppliers by quantity in this tariff code (08119085) are Vietnam, Peru, India and Ecuador. All of these countries’ tropical fruit imports are already tariff-free due to their various trade agreements except for India which has a reduced tariff rate of 3.1% under a Developing Country Trading Scheme (DCTS). Only about 1% of UK tropical fruit imports are hit with the full 8% import duty, those from Brazil or the US, so this suspension will have little effect on consumer prices.

Other nuts

While I welcome the suspension of tariffs on almonds why did the UK ever impose a 4% MFN tariff on almonds in the shell and a 2% MFN tariff on shelled almonds? The UK doesn’t grow almonds commercially, and our labour and energy costs mean we can’t de-shell almonds more cheaply than any other country. Although we inherited this tariff from the EU, I doubt such a low tariff would have even protected Spanish almond producers, who despite having more land used for almond production than the US, produce only about one-tenth of the almonds produced by the US n. As the US is the UK’s largest supplier of almonds, supplying about two-thirds of our imports, and many almonds are sold with little additional inputs, this will be a small saving.

The UK also imports other nuts that aren’t grown commercially in the UK  –  why cut the 2% to 4% tariffs on almonds but not the 2% to 4% tariffs on hazelnuts, walnuts, chestnuts, macadamia nuts or pine nuts? Surely, collecting these small tariffs is more trouble than they are worth?

Tofu

The suspension of the 12% tariff on Tofu will please many people, especially vegetarians and vegans, but why did we ever have this tariff? Tofu is made from soybeans, the UK can’t grow soybeans and we have zero tariffs on imported soybeans – so why not also have zero tariffs on tofu? We imported about 18,000 tonnes of tofu in 2023, half of which came from the US and China. Neither country has a trade agreement with the UK so would have paid 12% tariffs. Now, imported tofu will be tariff-free, a saving for vegetarians and vegans if not for everyone.

Cut flowers

The UK has 8% to 10% MFN tariffs on cut flowers which are mainly sold to the public with few additional inputs so technically this tariff suspension should lower the cost of flowers immediately. However, almost all chrysanthemums, carnations, and cut flowers for use in bouquets are already imported tariff-free from the Netherlands, Kenya, Turkey or Columbia. The majority of the UK’s cut rose imports are also imported tariff-free from Kenya, Columbia, Ecuador, Ethiopia or the Netherlands. The few roses that are not imported tariff-free come from India, the US, Israel and Iran although they only account for about 0.3% of imports by quantity. Only a few dried flowers imported from China and India would benefit from this tariff suspension. Almost all cut flowers are imported via the Aalsmeer flower market in the Netherlands regardless of where they are grown. Unfortunately, this is unlikely to lower the cost of cut flowers.

Manufactured foods

Food manufacturers will benefit from the suspension of tariffs on cassava starch, wheat gluten, dried onion, frozen garlic and the many tropical fruit purees used to sweeten manufactured food products. But why have we not also suspended the tariffs on the many other ingredients we import such as corn starch or rice starch?

The UK doesn’t grow corn and imported corn is tariff-free so why do we have a £138 per tonne tariff on corn starch?  This tariff adds over 12% to the price of corn starch imports from the US, Turkey and Brazil – all countries that grow corn. Are we still trying to protect German starch manufacturers and Polish corn farmers?

Weirder still are the UK’s tariffs on rice even though, like corn and soy, the UK cannot grow rice.  The UK also adds high tariffs on rice starch, rice flour, rice meal and rice pellets even though they are used in many manufactured food products.

There are some welcome tariff reductions in the government’s latest announcement. But it also raises an important question – why do we still have most of these tariffs and why is this suspension only for 2 years until 30 June 2026?

How we got here

The UK inherited this tariff structure from the EU where the higher up the value chain the higher the tariff. This tariff system encouraged EU countries to import raw materials tariff-free and then refine or manufacture them in the EU to avoid the much higher tariffs on higher-value products. While this may have been good for employment in the EU, it was not good for development in tropical countries that were stuck with the production of the cheapest raw materials.

For example, while coconuts can be imported to the UK tariff-free, coconut milk (21069092) imports have a 12% Most Favoured Nation (MFN) tariff and coconut juice concentrate (20098979) imports have a 16% MFN tariff.

In 2023 the UK imported 9,814 tonnes of fresh coconuts mostly from Costa Rica, India, Thailand, Ivory Coast and Sri Lanka: unsurprisingly all countries that grow coconuts. The UK also imported 5,521 tonnes of coconut juice concentrate (20098979) in 2023, but over a quarter of this came from that tropical paradise – Poland.  While only a mere 20 tonnes came directly from Thailand and 16 tonnes from India. Thailand does not have a trade agreement with the UK so Thai imports would have been hit with a 16% tariff, while Indian coconut juice concentrate has a DCTS reduced tariff of 12.5%. But Polish coconut juice concentrate would have been imported tariff-free. So the suspension of the tariffs on coconut juice concentrate won’t make much difference to import costs and will mainly affect the 15% of imports that come from the US.

Juices, concentrates and purees made in the EU, even with imported tropical fruit and nuts, are tariff-free because we have a tariff-free and quota-free trade agreement with the EU and because the products have gone through a change of state from fruit to fruit juice or food preparations.

It would be nice if the present tariff suspension created a level playing field for juices and purees between EU manufacturers and  MFN manufacturers and allowed the countries that grow tropical fruit to move up the value chain and export more fruit juices and purees. However, UK manufacturers are unlikely to move their supply chains while these tariff suspensions are only temporary.

Misleading stsistics – The Rotterdam Effect

One unexpected benefit of Brexit is a much better understanding of where UK food imports come from. For example, Costa Rica supplies between 88% and 96% of the UK’s imported fresh or dried pineapples but until Brexit most of the UK’s pineapple juice imports appeared to come from the EU. Before Brexit, the Netherlands appeared to be the UK’s largest supplier of pineapple juice (20094199) supplying between 40% and 60% of UK imports. But in 2022 and 2023 pineapple juice imports from the Netherlands dropped to only 4% and 1% as Costa Rica became our largest supplier, supplying 71% and 67% respectively.

So what happened to the Netherlands pineapple juice producers? Nothing. The Netherlands was merely the distribution centre for Europe. Fruit juice made in Costa Rica but landed in the Netherlands was counted as an export of the Netherlands by Intrastat. This is known as the Rotterdam effect. The Rotterdam effect has massively distorted EU trade statistics as well as the opinions of many UK policymakers who mistakenly believe that the UK must continue to rely on the EU for food. One of the great benefits of Brexit is that such exports are now recorded by their real country of origin.

Orange juice is another import distorted by the Rotterdam effect. Before Brexit, Belgium apparently provided 62% of the UK’s orange juice imports even though Belgium is Brazil’s largest orange juice export destination.  Unsurprisingly, since Brexit the UK’s orange juice imports from Belgium have now dropped to zero while Brazil supplies 92% of UK imports. Orange Juice may still be imported via Belgian ports, but it is now recorded correctly as a Brazilian import, not a Belgian one.

Trade efficiencies

It will always be more cost-efficient to import the products you want – for example, orange juice, than to import the whole orange, extract the juice in the UK and discard the pulp and skin. However, the EU’s tariff structure tried to keep higher-value processes in the EU regardless of these inefficiencies. Leaving the EU has given the UK the chance to change this. Why have we continued to rely on the EU for processed foodstuffs made from raw materials imported into the EU, when we could import them directly from the countries that also produced the raw ingredients?

It is easier to drop our tariffs unilaterally on goods that we don’t produce, or in the case of tropical fruit can’t produce, than it is to negotiate a full trade agreement. We dropped tariffs on 260,000 tonnes of sugar in 2021 and immediately imported more sugar from Brazil and less from France. In 2019 the UK imported over 400,000 tonnes of sugar from France and only 14,000 tonnes from Brazil. In 2023 the UK imported 357,656 tonnes of cane sugar from Brazil and only 155,257 of beet sugar from France. This was an import substitution and not a Rotterdam effect. Brazil exports very little sugar to the EU due to their massive tariffs that add about 50% to the price. This allows EU sugar producers to be considerably less efficient and still compete with imported sugar, to the detriment of EU consumers.

Food security

Although these tariffs were suspended to coincide with the imposition of the UK’s border inspections, the UK has also suffered one of the wettest winters and springs in recent memory. Many UK farmers were unable to harvest crops in the autumn while others were unable to sow winter crops. This will hit UK domestic food supplies and prices and many of our EU suppliers have had similar wet and cold weather. That makes removing tariffs on alternative suppliers even more important for food security.

The UK supplied 58% of the food it consumed in 2022, imported 23% from the EU and 19% from the rest of the world, according to DEFRA based on the farm-gate value of raw food. While ONS SITC figures believe that the EU supplies about 70% of the UK’s imported food and live animals. In either case, this is not good for UK food security.  Although this reliance on EU imports is the result of the EU/UK tariff system that gives preference to EU suppliers, we should not allow it to continue. Moving away from EU suppliers, suppliers with effectively the same or similar weather problems as the UK, by permanently lowering tariffs and quotas on non-EU suppliers will improve UK food security. Although food security is likely to be an even greater problem if UK farmers take up the Government’s Rewilding payments causing our domestic food production to fall even further below UK domestic demand.

Going forward

The UK’s entire tariff structure requires a fine-tooth comb, to eliminate tariffs and quotas on the goods that we don’t or can’t produce in the UK. There are literally hundreds of products: rice, buckwheat, millet, quinoa, cocoa butter, cocoa powder, roasted coffee, green tea,  ground pepper, vanilla, cloves, pineapples, mangoes, avocados, dates, figs, bananas, oranges, lemons, grapes, watermelons,  apricots, peaches, kiwifruit, yams, sweet peppers, asparagus, olive oil, palm oil, sunflower oil, coconut oil, soy oil, linseed oil, sesame oil, fruit juices, preserved vegetables, I could go on, but I am sure you get the idea. We add tariffs to imports of all of these foods.

This will not greatly alter our negotiating position in any new trade agreements, as is often stated as a reason for retaining EU-style tariffs. Any country on the other side of the negotiating table will know that we don’t produce these goods and need to import our requirements. If they are relatively efficient producers and can supply our needs, we would only be hurting ourselves by retaining tariffs on these goods.

I welcome the suspension of tariffs but why not permanently cut the tariffs on foods that we don’t produce or can’t produce?

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About the author

Catherine McBride