Getting It Wrong On Car Servicing - WTO Terms Do Not Mean British Import Tariffs

Getting It Wrong On Car Servicing - WTO Terms Do Not Mean British Import Tariffs

Nota de Opinión

We have another organisation to add to our list of shame--the Society of Motor Manufacturers and Traders is the latest grouping which believes, wrongly, that World Trade Organisation terms post-Brexit will mean the necessary imposition of tariffs upon imports into the UK. This is simply untrue. There are no rules about what import tariffs we must impose upon the things that we ourselves want to buy--other than that we must treat everyone out there equally. That's it, really, most favoured nation rules mean that we need to charge all other members of the WTO the same rates we charge to anyone we don't have a free trade agreement with. And that's it.

This is thus wrong:

British motorists face a 10% rise in the cost of their annual car service and repair bills if the UK leaves the EU without a trade deal, an industry body has warned.

The UK’s collective car repair bill could rise by more than £2bn due to tariffs and other barriers arising from a hard Brexit, according to a report published by the Society of Motor Manufacturers and Traders (SMMT), which assumes the UK is forced to fall back on World Trade Organisation (WTO) rules.

They really are assuming that tariffs must be imposed:

Repair and service costs could increase by 10% if tariffs and other barriers to trade are imposed, the report commissioned by automotive trade association the Society of Motor Manufacturers and Traders (SMMT) warned.

The research estimated a 2.5%-4.5% World Trade Association tariff on imported car parts may cost the typical car owner an extra £21 a year for replacement components.

There is no requirement at all to impose tariffs upon imports under WTO rules. Sadly this is an exceedingly common Remoaner argument. Nick Clegg used it to talk about food imports:

To insist, meanwhile, that we must raise tariffs on the imports we desire is to misunderstand the WTO system. As a source in Geneva explains, Britain is a WTO member in its own right and will still be so even after Brexit happens. This means that we have promised not to charge higher than the allowable ceilings in tariffs upon imports from other WTO members. The Most Favoured Nation clause also states that whatever we do decide to charge ourselves, we must apply the same rate to the same products from all different WTO countries.

But not charging higher than the allowable ceilings does not commit us to charging anything at all. We can apply a 0 per cent rate (yes, I checked) if we so wish.

His wife, Miriam, herself a former EU trade negotiator and therefore one who should know better, also used it:

Lang's report insists that reversion to WTO terms means we must impose import tariffs, Lang is wrong. Given that it is this error which leads to his prediction of higher food prices Ms. Gonzalez Durantes is also wrong. Not that this is unusual in her circles as Mr. Clegg also suffers under the same delusion.

Brexit will not increase food prices, it will reduce them as we will be able to buy the best and cheapest food from the world, not have to cower behind the EU's protective barriers to trade.

What worries here of course is that these people, both Cleggs, Tim Lang and pals, various others, they insist that they are the Great and the Good who really know this stuff and we should just shut up and do as they say. The problem being that they're simply wrong, they believe things which ain't so.

KPMG even used it to tell us that the cost of breakfast would rise:

“WTO tariffs could have a significant impact on both consumers and retailers alike – totting up consumer price tags and further squeezing retail margins,” Bob Jones, director and Brexit customs and indirect tax lead at KPMG UK, said.

This is quite simply flat out wrong. WTO tariff schedules are the maximums that we can apply to other WTO members. We must also treat all WTO members we do not have a free trade agreement with equally, that's the most favoured nation idea. And that's it. We can impose any lower level of tariff we like. And why would we impose such tariffs, why would we tax ourselves for the very things that we wish to buy? Quite so, unilateral free trade is the only logical trade policy to have.

Brexit on WTO terms does not mean that we have to charge tariffs upon imports. It simply does not, it is factually incorrect--and it's about time that everyone, including the SMMT, managed to get this right.