Retail industry trade body the BRC has urged the next Government to make tariff-free trade a top Brexit negotiating priority.
Preserving the existing benefits of EU preferential trade agreements is more important than striking new trade deals, the organisation maintained.
It also argued that a transitional arrangement affecting all goods in free circulation should be sought.
The BRC made its plea two days after Prime Minister Theresa May called a snap general election in which the contentious issue of Brexit and its terms are likely to be a dominant campaign theme.
‘Fair Brexit for consumers’
The retailers’ association set out its position in a study entitled The Tariff Roadmap for the Next Government, part of its Fair Brexit for Consumers campaign.
The BRC believes that consumers’ interests should be at the heart of Brexit negotiations, because that “will lead to the fairest settlement for our country as a whole”.
As the UK and its retailers reshape trading relationships with the EU and the wider world, opportunity beckons from deals with new partners but threats loom.
Threat of higher prices
Failure to find common ground with the EU on a transitional arrangement accompanying or following soon after Brexit would result in the UK defaulting to World Trade Organisation (WTO) rules, which would result in shoppers face higher prices.
Failure to agree a ‘me too’ approach for trade deals with existing EU partners would have the same effect, while success would allow the UK to negotiate its own new deals and deliver “greater choice and lower prices for consumers”, the BRC said.
So far as trade with the rest of the world is concerned, a new UK trade policy and WTO membership – at present the UK is a member through the EU – would be essential, otherwise “there would be a legal void and an uncertain trading environment”.
“Over three quarters of our imported food comes from the EU. The future of this trade relationship is therefore of paramount importance”
Helen Dickinson, BRC
Food supply – amounting to £5bn of direct imports by retailers and £15bn indirectly – is at greater tariff risk at present than general merchandise, the BRC study found. The EU accounts for 79% of food imports.
The report stated: “Beverages, fruit, vegetables, meat and fish are the UK’s biggest imports from the EU and without continuation of tariff-free trade, tariffs could be as high as 46% for cheese or 21% for tomatoes.
“The weighted average tariff, if the UK were to default to WTO tariffs on UK food imports from the EU, would be 22%. Such a scenario would put upward pressure on consumer food prices.”
BRC chief executive Helen Dickinson said: “Over three quarters of our imported food comes from the EU. The future of this trade relationship is therefore of paramount importance, particularly as tariffs that could be applied are very high.
“So for a fair deal for consumers it’s critical that the Government secures continued tariff-free trade with the EU to avoid upward pressure on food prices.”
In general merchandise, the EU only accounts for 12% of imports, of which clothes represent more than half. In this case, there is a big opening for retailers.
The BRC reported: “New partners in the rest of the world present a big opportunity as nearly half the UK’s non-food imports come from countries where there is no pre-existing EU trade arrangements.
“The first step is to mitigate the risks by securing the continuation of tariff-free trade with the EU”
Helen Dickinson, BRC
“If new deals were negotiated with these countries, UK retailers could see for example, reductions in tariffs on clothes of 12% and leather handbags at 3%.”
Dickinson concluded: “Ensuring the journey ahead is positive for both retailers and consumers requires an orderly and sequenced Brexit process.
“The first step is to mitigate the risks by securing the continuation of tariff-free trade with the EU, to avoid further upward pressure on food prices.
“Next, is the need to replicate the EU’s existing deals with developing countries.
“Only then, should the Government look to realise the opportunities presented by new trading relationships with the rest of the world.”
As the UK goes once again and for the third time in three years following the Scottish independence referendum, the 2015 general election and the 2016 EU membership poll, retailers are determined to ensure that their interests – and those of the shoppers they serve – feature in the national conversation.