Ministers are secretly planning to unilaterally cut tariffs on all imports to zero in the event of a no-deal Brexit, in a move that could flood the market with cheap goods and “ruin” industry, HuffPost UK has learnt.
Trade Secretary Liam Fox wants to use executive powers – reserved only for ministers – to make a last-minute change to the Trade Bill which would allow the government to dramatically slash tariffs on all foreign goods.
It has been described by manufacturing union the GMB as “the ultimate Brexit betrayal”.
Fox revealed his strategy to industry leaders in behind-closed-doors meetings this week, blaming fears that inflation could see prices sky-rocket if Britain crashes out of the EU on March 29.
Business and chiefs are “deeply concerned” the Brexiteer minister risks “wrecking” homegrown industry, including farming and potteries, in one fell swoop, but Fox claims consumers will benefit.
Labour, meanwhile, said unilaterally switching all tariffs to zero would be an act of “sheer lunacy” which would give Brussels no motive to negotiate a future trade deal with the UK.
Industry leaders’ only hope of protecting firms from being undercut by competition from emerging economies, such as China and Brazil, was to demonstrate a “special case” by lobbying the trade secretary personally, it was also claimed.
The Prime Minister’s official spokesman confirmed HuffPost’s exclusive on Tuesday.
“We are currently considering all options for how to balance our interests effectively in the event of no-deal before making a final decision in the interests of UK industry and consumers,” he said.
“All the way through the process, we have been consulting with industry, including farmers.”
Potteries industry leader Dr Laura Cohen disclosed details of the “foolhardy” plan as she feels British ceramics firms, most of which are in the Brexit heartland city of Stoke, will suffer.
“We are deeply concerned about the possibility of the UK unilaterally removing import tariffs on our foreign competitors’ goods,” said Cohen, chief executive of the British Ceramic Confederation, who met Fox in London on Monday.
“Liam Fox is concerned about the inflationary impact of Brexit, but this sort of foolhardy action in response could ruin British ceramic manufacturing by wrecking our home market
“Moreover, it would massively weaken the UK’s hand in making free trade deals with other countries, including a lasting settlement with the EU.”
It comes just days after Prime Minister Theresa May and Fox visited Stoke in January.
“It is the ultimate Brexit betrayal that just weeks after Theresa May visited Stoke her cabinet ministers are preparing to sell such an industry here down the river”
- John Brimble, GMB union
“I think the British people are ready for us to move on; to move beyond division and come together; to move beyond uncertainty into a brighter future,” the PM said in a speech in the Leave-backing city, where nearly 70% of voters opted for Brexit.
Jude Brimble, national secretary for manufacturing with the GMB union, said: “Liam Fox’s plot risks smashing the UK ceramics sector into pieces.
“It is the ultimate Brexit betrayal that just weeks after Theresa May visited Stoke her cabinet ministers are preparing to sell such an industry here down the river.”
She added: “The Tories are so desperate to slash tariffs and sign trade deals with China and the USA that they will sell out our ceramics workers in the process. Ministers wants to slash tariffs left, right and centre but instead they will be ripping the heart out of our industry and communities. We need parliament to halt this ideologically-driven industrial sabotage.”
Describing the move as “sheer lunacy”, shadow trade secretary Barry Gardiner said: “Reducing all tariffs on imports to zero would undermine our domestic producers in their home markets and risk serious job losses in key industries from ceramics to farming.
“That is bad enough. But the secretary of state appears not to understand the basic logic of trade negotiations: your side wants the other to liberalise their markets and reduce tariffs on the goods you export to them. If you have already reduced all your tariffs to zero you have nothing to negotiate with.”
Gardiner said the proposal would “drive job losses and undermine the UK’s bargaining power in any trade negotiations including with the EU”.
“He is not just shooting himself in the foot, he is shooting himself in both feet,” he added.
The president of the National Farmers’ Union, Minette Batters said in an interview on Sunday that it would be “absolutely savage” if Britain’s market was flooded with cheap imports post-Brexit.
“I cannot imagine how bad it will look,” she said, as she warned as she said the NFU had not been reassured in writing that the government would curb imports which could destroy British farming.
“It is a question that absolutely must be answered before we leave on march 29,” she said.
Labour peers in the House of Lords, meanwhile, have said they plan to resist any last-dash changes to the Trade Bill.
Baroness Smith, Labour’s leader in the Lords, said: “Ministers have long insisted that the Trade Bill is just a technical piece of legislation. But at this late stage, with a bizarre proposal to try to remove all import tariffs, they have revealed an ulterior motive that would flood Britain with cheap imports and decimate our businesses.
“If the government intends to pursue this course of action, it should have revealed it to MPs first. But be very clear, such efforts to betray British industries will be met with resolute opposition in the Lords.”
A spokesperson for Fox said: “No decision has been taken and the government is currently considering all options in the event of a no-deal with the EU.”