UK faces very difficult tariffs choices after no-deal Brexit: business minister

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Britain's Secretary of State for Business Greg Clark is seen outside of Downing Street in London, Britain, March 5, 2019. REUTERS/Peter Nicholls

By Kate Holton and David Milliken

LONDON (Reuters) – Britain will face very difficult choices over trade tariffs if it leaves the European Union without a transition deal on March 29, business minister Greg Clark said on Wednesday.

Broadcaster Sky News reported late on Tuesday that Britain’s government was planning to slash tariffs on 80-90 percent of goods if it left with no deal, which would benefit consumers but damage the competitiveness of many British factories and farms.

Britain currently has tariff-free access to European Union markets, and benefits from EU trade deals with other countries. But its exports will automatically face EU tariffs if it crashes out of the EU on March 29 without transition arrangements.

Businesses want to know if Britain, the world’s fifth largest economy, will impose reciprocal tariffs on imports from the EU. If not, tariffs would have to be lifted on imported goods from most other countries under World Trade Organization rules.

“There is a very difficult set of choices that have to be made if we were to leave without a deal,” Clark told the BBC.

“Either you are making things more expensive that previously came in tariff-free from the EU, or in some cases … undermine the industry,” Clark said, citing the need for tariffs on what he described as unfairly cheap Chinese ceramics exports.

Unilaterally scrapping tariffs would also reduce Britain’s leverage to encourage other countries to lower tariffs on British exports, he added.

Sky said Prime Minister Theresa May’s senior ministers had privately agreed to scrap tariffs on almost all goods other than the most sensitive areas such as cars, beef, lamb and dairy products.

Britain’s Department for International Trade said no final decision had been made, and Clark said lawmakers would only be told about proposed tariffs if a majority vote next week in favor of leaving the EU without a deal.

“Work is continuing on developing and finalizing those tariff schedules but they will be published … once we knew that we were leaving without a deal on March 29,” he said.

The government’s priority was to ensure that on Tuesday lawmakers supported an amended version of a Brexit withdrawal plan which they overwhelmingly rejected on Jan. 15, he added.

Clark had lobbied colleagues in favor of tariffs on car imports to protect Britain’s automotive industry, while environment and farming minister Michael Gove had made the case for agricultural tariffs, Sky said.

Brexit supporters view regaining the ability to set an independent trade policy as one of the main advantages of leaving the EU, arguing that Britain will have more success negotiating trade deals with other regions on its own.