The Department for International Trade (DIT) presented the UKGT as “tailored to the needs of the UK economy”, claiming that the tariff will ensure that 60% of trade will come into the UK tariff-free, either on World Trade Organisation (WTO) terms of through existing preferential access agreements.
This tariff will only apply to goods from countries which the UK does not have a preferential trading relationship with. The new tariff is expected to streamline and simplify nearly 6,000 tariff lines, lowering costs for businesses by reducing administrative burdens.
The revised UKGT is welcomed
Director-general of the UK Petroleum Industry Association (UKPIA), Stephen Marcos Jones said; “It is encouraging that government has listened to industry. We hope to see reciprocal tariffs delivered through Free Trade Agreements, particularly for our trade with the EU, but the changes delivered by the UK Global Tariff should facilitate continuing and hopefully growing international trade in the fuel sector.
“By government supporting the UK’s manufacturing base as well as reducing import tariffs from WTO levels, UKPIA is hopeful that the sector will continue to adapt and work with government to realise our shared vision of delivering a low carbon economy that includes a significant role for the downstream oil sector.”
UKPIA members, which supply 33% of the UK’s energy needs annually, including most of its petroleum products, trade internationally, reflecting integration in a highly optimised supply chain and the need to balance domestic supply and demand. Any change to tariff rates can be expected to impact companies differently, the revisions following consultation will mean that the UK refineries will be protected, while future trade negotiations will look to secure reciprocal tariffs at even lower rates to provide a competitive fuel supply chain for both importers and manufacturers that, historically, has been “good for energy resilience, good for the economy and good for jobs”.
Government listens to sector
In response to the news, Peter Davidson, executive director of the Tank Storage Association, said: “The UK’s bulk liquid storage sector supports growth and prosperity by importing, exporting, storing and blending liquid products that are integral to our daily lives, from transport and heating fuels to chemicals, agricultural and food-grade products. It is good to see the government listen to sectors, such as ours, that play a significant and leading role in international trade. Looking ahead, we will continue working closely and constructively with the government on behalf of our sector to ensure that we can continue to deliver and thrive.”
Draft Free Trade Agreement is ‘A good starting point’
While the UKGT will apply to those countries with which the UK does not have a preferential or free trade agreement with Sarah Laouadi, European policy manager at FTA, the business organisation representing the logistics sector, was similarly encouraged by the draft Free Trade Agreement provided by the UK government on 18 May for discussion with the EU negotiating team.
“The draft Free Trade Agreement published today by the UK’s Brexit negotiators is very positive and takes into account all the areas of international trade which FTA has been asking government to prioritise over the past three years.” Sarah commented.
“It is a good starting point for UK negotiators to engage with the EU. As always, the devil is in the detail, and we look forward to working closely with government in the coming months on the areas of the Agreement which still need work, to ensure that our members can have sufficient time to prepare for whatever the final outcome of the UK/EU negotiations may be.”
The government says that the new tariffs will be much simpler with the scrapping of unnecessary tariff variations and rounding down to standardised percentages. Other tariffs will be eliminated, to expand tariff-free trade to 60% of UK imports from January 2021.
For example, the tariff for light oils will be rounded down from 4.7% to 4%. Tariffs for most fuel oils will fall from 3.7% to 2%. So-called nuisance tariffs, those under 2%, have been scrapped altogether, such as the 0.7% tariff on propane and butane from non-EU countries. Some imports, such as non-EU jet fuel and diesel, will continue to have a 0% tariff.
The current proposals go some way to alleviating the industry’s post-Brexit concerns.