Thread by @Jim_Cornelius

@hereburgher @panmisthropist @OwenPaterson Ok. Let's be clear on one thing. Every country in the world has tariffs on imports. Singapore has virtually none, but they are a major exception.

Country X protects a, b, & c and country Y will protect d, e &f. You can't necessarily do a direct comparison on individual items.

@hereburgher @panmisthropist @OwenPaterson When a country is a member of the WTO the have to present their tariffs schedule to WTO. There are two sorts of tariffs that relate to WTO membership. There's the bound tariff and the MFN applied tariff. We'll come to preferential later.

wits.worldbank.org/wits/wits/wits…

@hereburgher @panmisthropist @OwenPaterson The bound tariff is the the upper limit that a country has legally commuted itself to not exceed. The MFN tariff is the rate actually applied under the GATT Most Favoured Nation rule.

Th MFN rule is the cornerstone of GATT/WTO. It's actually the core part of Article I.

@hereburgher @panmisthropist @OwenPaterson Members of the WTO have to abide by Article I of GATT which states that that each member must treat every other member of the WTO exactly the same, with no favourites, or as if all were the most favoured.

But there are exceptions, which I'll come to.

@hereburgher @panmisthropist @OwenPaterson If there were no exceptions, the MFN rule would mean that the USA would have to treat Rwanda exactly the same as China. any tariff applied to China would also have to apply to Rwanda, and relief applied to Bangladesh would have to apply to Germany.

@hereburgher @panmisthropist @OwenPaterson So under the original GATT drawn up in 1947 two main exceptions were written into the treaty under Article XXIV.

1. Customs Unions, where tariffs are eliminated between members.

2. Free Trade Areas (Agreements), where a substantial number of tariffs must be eliminated.

@hereburgher @panmisthropist @OwenPaterson Now these exceptions don't help developing countries in the world in their exports. to a developed country. The developing countries would still subject to the MFN rule unless there's an FTA with the importer. This problem was highlighted by UNCTAD in the 1960s.

@hereburgher @panmisthropist @OwenPaterson So in 1971 the UNCTAD came up with the idea of Generalised System of Preferences (GSP) alloying an exception to that GATT MFN rule to be adopted as part of GATT offering tariff reductions/eliminations by developed countries for developing countries, but no individual exceptions.

@hereburgher @panmisthropist @OwenPaterson So under GSP developed countries can offer tariff reductions to developing countries as an exception to the MFN rule, but it cannot be targeted as such, it has to apply to countries on a basis of development, not individual favour.

@hereburgher @panmisthropist @OwenPaterson The EEC created the first GSP scheme in 1971 with 178 countries on the list.

Today 75 countries currently benefit from widespread tariff elimination & reductions. EBA (total elimination of tariffs for the least developed countries) is part of GSP.

unctad.org/en/Publication…

@hereburgher @panmisthropist @OwenPaterson So that's the general picture regarding tariffs

Everyone has them. The MFN rule means that an importer has to apply to same rate all exporting countries, bar FTA & CU exceptions, and there are also exceptions for developing countries.

Let's now see how the EU compares to others

@hereburgher @panmisthropist @OwenPaterson This site from the WorldBank compared average tariffs ( applied, weighted mean, all products on this table) of 177 countries. There are 131 countries more protectionist that the EU. That leaves only 18 less protectionist.

indexmundi.com/facts/indicato…

@hereburgher @panmisthropist @OwenPaterson So as I said earlier you can't compare directly individual products. So lets do a comparison of the USA and the EU (before Trump trade war) across the 21 sections of the Harmonised System. That's the World Customs Organisation's nomenclature used by all countries.

Red is higher.

@hereburgher @panmisthropist @OwenPaterson So as you can see the USA is higher in 15 out of 21 sections. The area where the EU is highest is in agricultural products, which should be no surprise. But how do the EU's agricultural tariffs compare to Canada for example?

Well Canada's Ag tariffs are much higher

Switzerland?

@hereburgher @panmisthropist @OwenPaterson Well the EU slightly higher in most sections, but Swiss agricultural tariffs are much much higher.

Here's the data source by the way so you can check these stats for yourself.

Remember it's the applied not the bound rate that's important.

macmap.org/CountryAnalysi…

@hereburgher @panmisthropist @OwenPaterson Broadly speaking it's certainly better to have no tariffs. High tariffs were a blight before WWII. But like nuclear weapons, we've got them, we'd prefer to get rid of them, but not while other countries have not removed theirs. Unilaterally lowering/removing them is senseless.

@hereburgher @panmisthropist @OwenPaterson Since 1947 GATT has come a long way in removing and lowering tariffs through multilateral negotiations but it has kind of stalled now. Relative to where they were before GATT tariffs are very low and NTBs are a bigger issue.

Further reductions are only likely through FTAs.

@hereburgher @panmisthropist @OwenPaterson To illustrate that here's a WTO graph of the timeline of all the FTAs and CUs in the world (collectively called regional trade areas or RTAs by the WTO). As you can see they didn't really get going till the 1990s near the end of the the Uruguay round of WTO talks.

@hereburgher @panmisthropist @OwenPaterson Lets now look at the same graph filtered for the EU. I picked Belgium as they were one of the 6 original EEC members, So from 1957 it represents he EEC/EU.

Here's the link so you can check for yourself. rtais.wto.org/UI/PublicMaint…

@hereburgher @panmisthropist @OwenPaterson And now let's look at the same graph but filtered for the USA. I think it's pretty clear that the EU has been more proactive in making trade deals. Remember FTAs mean the elimination of virtually all tariffs.

But what about the actual trade partners in these deals?

USA first.

@hereburgher @panmisthropist @OwenPaterson So this is the USA's list. 20 countries in all. You can confirm this on the WTO page here.

rtais.wto.org/UI/PublicSearc…

Some big names, Canada, Korea &Australia and a bunch of much smaller economic powers. But then most of the would falls into that category.

What about the EU?

@hereburgher @panmisthropist @OwenPaterson Here's the list for the EU and the relevant trade arrangement also shown This is not including EU members or their overseas territories obviously.

That's 70 countries on this list. Not including Japan which has just been ratified & deals with Vietnam & Singapore near completion.

@hereburgher @panmisthropist @OwenPaterson Then on top of that are the preferential arrangements under GSP. There are three levels of GSP in the EU

Standard GSP for low to low-middle income countries.

GSP+ (GSP countries showing commitment to sustainable development)

And EBA for the least developed countries (LDCs).

@hereburgher @panmisthropist @OwenPaterson Here's a list showing the countries who benefit from GSP, GSP+ and EBA who were not already on the FTA list I posted earlier.

Red and yellow are on complete tariff elimination (bar for armaments) through EBA or GSP+.

@hereburgher @panmisthropist @OwenPaterson So in terms of imports the share of imports into the UK from these various markets looks like this. USA and China are obvious behemoths. But a good portion of out imports are through FTAs (30% of non-EU imports)) and preference deals (9.5% of non-EU imports).

@hereburgher @panmisthropist @OwenPaterson And for imports of agricultural products including processed food into the UK the share of non-EU imports via FTAs and Preference deals is even more important accounting for 57% of those.

Only 12.3% of all food/Ag imports into the UK is non-preferential.

@hereburgher @panmisthropist @OwenPaterson And here's a direct example. 55% of the UK's leguminous vegetable imports (peas and beans) comes in from Africa all on a 0% tariff Mostly from Kenya. 20-25% from the rest of the EU and the most of remainder from countries where we have an FTA.

trademap.org/Country_SelPro… …

@hereburgher @panmisthropist @OwenPaterson So now I want to turn to some of the misinformation about this.

You linked to this (iea.org.uk/the-eus-thousa…) article on BrexitCentral by Kevin Dowd. He's defending an earlier article and saying his source is tariffs "Expert" Dan Lewis. That's not a plus, as we'll see.

@hereburgher @panmisthropist @OwenPaterson This is Dan Lewis's website. eutariffs.com

He makes you pay for publicly available information. The ESSENTIAL GUIDE TO EU IMPORT TARIFFS 2016 with the annex containing a list of tariffs.

@hereburgher @panmisthropist @OwenPaterson The same information is available on the UK Government website here - gov.uk/trade-tariff or on a similar page on the EU's website.

The main difference the UK and EU's databases are up-to-date. While's Dan's website's DB is scrapped periodically.

@hereburgher @panmisthropist @OwenPaterson Here' the EU's website. The EU's site is more comprehensive, but not so easy to navigate as the UK's site. On the UK site you can display the tariff for a particular product across a range of countries at the same time, so I tend to use it more.

ec.europa.eu/taxation_custo…

@hereburgher @panmisthropist @OwenPaterson But anyway back to Dan Lewis. The annex of his "Essential Guide" with the list of tariffs is what you have to pay for. You can downloaded the main document without the annex without paying. Here's a direct link eutariffs.com/system/assets/…

@hereburgher @panmisthropist @OwenPaterson You don't have to go far before there's a problem But I'll skip to the executive summary on page 6..

"The number of tariffs .. has risen substantially since 2009, from 11,157 on .. to 12,651 .. [in] 2016".

This shows his fundamental misunderstanding of tariffs schedules.

@hereburgher @panmisthropist @OwenPaterson When he says the number of tariffs has risen he's misleading you with an irrelevant statistic.

The nomenclature for the codes for customs are defined to the 6-digit level by the World Customs Organisation. Here is the 2017 edition.

wcoomd.org/en/topics/nome…

@hereburgher @panmisthropist @OwenPaterson You'll note every kind of goods item is classified here. Either specifically, or under an "Other" category.

Every country in the world uses the Harmonised System as a basis for their tariff schedule. Here's part of Japan's schedule, for instant coffee.

customs.go.jp/english/tariff…

@hereburgher @panmisthropist @OwenPaterson Now the important thing to note is the "Other" categories. Anything that isn't specifically listed comes under an "Other" category. So when he says he tariff lines increased from 11,157 to 12,651 he's not explaining that the extra items were previously covered by an "Other".

@hereburgher @panmisthropist @OwenPaterson So if we use fruit juice as an example it might be initially be categorised as:

Fruit Juice
-- Citrus Fruit Juice
-- Other

.. and then it gets updated to be

Fruit Juice
-- Citrus Fruit Juice
---- Orange Juice
---- Other
-- Other

No new duties have been added.

@hereburgher @panmisthropist @OwenPaterson In his executive summary Dan uses the example of coconut water as a new duty added in 2016.

Here is it CN code 2009899996.

Check for yourself with this link: trade-tariff.service.gov.uk/trade-tariff/c…

@hereburgher @panmisthropist @OwenPaterson And here's the apparent duty on it. 17.6% that he reported on.

Note it says "unless subject to other measures.". Dan stopped looking at this point. He didn't bother checking the "other measures". This kind of thing is important!

@hereburgher @panmisthropist @OwenPaterson Here are those other measures. It says "Autonomous tariff suspension".

The duty code was carved out specifically so that it could be excluded from the duty for the category it previously belong to.

Dan got this backwards. A duty he said was added was actually being removed.

@hereburgher @panmisthropist @OwenPaterson The reason why this duty was carved out an suspended is interesting in itself and I explain it in detail here.

Worth re-emphasising Dan's choice example of a tariff being added was actually a tariff being removed.

https://twitter.com/Jim_Cornelius/status/1006875718536564737

@hereburgher @panmisthropist @OwenPaterson Now, in that article from Kevin Dowd article you linked to where he complained that the "Remain side" said he was wrong and how he checked with Dan Lewis to confirm he was right? Well guess what - Dowd was still wrong and Lewis got it badly wrong again, as we'll see next.

@hereburgher @panmisthropist @OwenPaterson It's all about oranges form South Africa.

Lewis and Dowd say that Spanish growers objected to low tariffs for South African oranges, lobbied the eU and got their way with an increase in duties.

This is a totally untrue.

@hereburgher @panmisthropist @OwenPaterson Let's explain what actually happened and how they got it so wrong.

Here's a table showing the seasonality of oranges grown in the northern hemisphere and South Africa in the Southern hemisphere.

The two sources are only in potential competition during a brief overlap period.

@hereburgher @panmisthropist @OwenPaterson I forgot the link in the last tweet. researchspace.ukzn.ac.za/bitstream/hand…

@hereburgher @panmisthropist @OwenPaterson This graph here shows when South Africa exports oranges to the rest of the world including the EU.

By the time we get to November we're talking about late season poorer quality produce. kzndard.gov.za/images/Documen…

@hereburgher @panmisthropist @OwenPaterson Now the EU and South Africa had a previous trade deal called Trade, Development and Co-operation Agreement that had been in place since the 1999 that eliminated 90% of tariffs but as far as I can tell oranges weren't part of the deal. dirco.gov.za/foreign/saeubi…

@hereburgher @OwenPaterson But in 2016 South Africa signed an Economic Partnership Agreement along with other members of the SADC (Botswana, Lesotho, Mozambique, Namibia, and Swaziland)

This eliminates 100% of duties for other SADC countries and over 98% for south Africa.

trade.ec.europa.eu/doclib/docs/20…

@hereburgher @OwenPaterson And as part of the deal oranges went to 0% for the whole of the exporting season including the overlap in November (the latter phased in). tralac.org/discussions/ar…

@hereburgher @OwenPaterson It was the overlap that the Spanish MEPs were concerned about. So a couple of them asked questions in the EU Parliament. europarl.europa.eu/sides/getDoc.d… …

There was no "lobbying" as such. Just MEPs asking questions in Parliament.

And what was the result of this "lobbying"?

Nothing.

@hereburgher @OwenPaterson It is absurd to think that the terms a free trade agreement signed between the EU and South Africa and the other SADC countries could be overturned because of a couple of questions in the EU Parliament.

I'ts utter, ignorant, stupid nonsense. 2+2 =27.

@hereburgher @OwenPaterson So why did Dan and Kevin Dowd think that the lobbying had an effect?

Because the MFN tariff applied to non-FTA partners changes seasonally. It has done since at least 1995 when the current Entry Price system was introduced and possibly since before then.

tradebetablog.files.wordpress.com/2017/02/1220-0…

@hereburgher @OwenPaterson Dan saw the change on his scraped DB and assumed it must be because of this question in Parliament. Again Dan Lewis is no tariff expert. He's a con man charging people to download publicly available information from his website. A website with of ads on it.

@hereburgher @OwenPaterson Now what about those season tariffs during the EU growing season, how does that affect imports from outside the EU?

Well the biggest exporters of oranges to the EU are Morocco and Tunisia.

Both countries have Association Agreements with the EU.

ec.europa.eu/trade/policy/c…

@hereburgher @OwenPaterson Well look today and you'll see the 0% tariffs for South Africa, Morocco and Tunisia and many other countries on FTAs.

trade-tariff.service.gov.uk/trade-tariff/c…

@hereburgher @OwenPaterson Let's wind the clock back, set the date to March during the height of the EU growing season, when the MFN tariff is at its highest.

Here's the tariff for Morocco. You have to click on the conditions link to see the tariff.

Please note the Standard Import Value is NOT the tariff

@hereburgher @OwenPaterson Just to re-emphasise this. the Standard Import Value is not the tariff.

Here's an explanation of the Standard Import Value, Produce prices vary daily. So if a tariff is 10% and there's no price per kilo on the invoice the SIV is used to work out how much in Euros 10% is.

@hereburgher @OwenPaterson This shows you current market prices across European markets. The SIV is calculated from these market prices and as I said the SIV is used as a representative price in order to calculate the tariff if not specified on the invoice upon import.

circabc.europa.eu/sd/d/e1a6bbb8-…

@hereburgher @OwenPaterson So clicking on the conditions link to gets you to the tariff.

On the Entry Price System a tariff only applies when the invoice price falls below the figure shown under Requirement. Then the tariff on the right applies.

Note: this is 0% until the price drops to dumping levels.

@hereburgher @OwenPaterson Just to be clear a tariff of 50 cents would only apply if the price fell below €25.90, which is less than half the SIV of €54.90. this. A lower price would bring the import price up to €26.40, just above the first tariff.

How often does this sort of thing happen?

@hereburgher @OwenPaterson Well this research from 2007 suggests never.

No tariff on Moroccan oranges observed during the period researched at all.

uni-hohenheim.de/qisserver/rds?…

@hereburgher @OwenPaterson So that was for Morocco. What about Tunisia?

Well again winding the clock back to the height of the EU growing season in March the tariff shows this, Note the SIV (which is NOT the tariff) for Tunisia is higher than from Morocco at over 70 Euros.

There's a quota here though.

@hereburgher @OwenPaterson The order no. for the quota is 091207. Click the link or go to the EU's website to check the details. Doing the latter gives you this page.

The quota is for 39338 tonnes. They have 27102.853 tonnes remaining for when the season starts again October.

ec.europa.eu/taxation_custo…

@hereburgher @OwenPaterson Now I've been emphasising about this SIV thing for a reason.

You'll recall the original article you posted was from Kevin Dowd writing for the IEA. iea.org.uk/tag/kevin-dowd/

@hereburgher @OwenPaterson Well he also writes at BrexitCentral, and there's an article there on the top right where he repeats the Dan Lewis stuff about oranges again.

But note the Article on the top left in defence of Lord Ridley attacking Lord Hannay.

brexitcentral.com/author/kevin-d… …

@hereburgher @OwenPaterson This article concerns an intervention Lord Hannay made in the Hs. of Lord a couple of months ago.

Ridley was claiming that African countries face huge tariffs. Hannay stood up to say "Zero tariffs on all Arican countires". He should have said virtually.

@hereburgher @OwenPaterson Lord Ridley picks Nigeria because it is one of the very few exceptions. The exception that proves the rule in fact.

The only reason it’s not on 0% is because the President has yet to sign an EPA agreement that would give its export 0% access to the EU.

edition.cnn.com/2018/04/06/afr…

@hereburgher @OwenPaterson This map shows the state of play with African nations and their relationship with the EU.

All of those on EBA or an an Economic Partnership Agreement (EPA) ,except SA, are on 0% duties for everything they export apart from Arms and Ammunition.

@hereburgher @OwenPaterson Gabon and Nigeria are yet to sign up to EPAs, Western Sahara and Libya have no functioning government. So it was disingenuous of Lord Ridley to make it seem otherwise in the house of Lords, and if only Lord Ridley had said virtually there would have been non argument.

@hereburgher @OwenPaterson But instead Lord Ridley wrote to Lord Hannay pointing out the Nigeria exception and Kevin Dowd wrote this article in Ridley's defence.

But, here's the important thing...

Kevin Dowd writes about the SIVs thinking they are the the tariffs!

He's clueless.

brexitcentral.com/remainer-lord-…

@hereburgher @OwenPaterson One final point on this Africa thing. As I said with Economic Partnership Agreements the EU-partner country is on zero duties and zero quotas, bar South Africa.

South Africa for obvious reasons is not a typical Sub-Saharan country,

@hereburgher @OwenPaterson Instead of 100% elimination (bar guns) as for other partners, Its 98.7% elimination for South Africa.

This is as part of the SADC (Botswana, Lesotho, Mozambique, Namibia, Swaziland and South Africa) EPA deal. trade.ec.europa.eu/doclib/docs/20…

@hereburgher @OwenPaterson Here is part of the text of the EPA for the East African Community (EAC) states (Burundi, Kenya, Rwanda, Tanzania, Uganda) Like EBA it is tariff free quota free for Everything but Arms.

trade.ec.europa.eu/doclib/docs/20…

@hereburgher @OwenPaterson Now through EBA and EPA and the AA's for the North African countries. African nations export more than twice as much to the EU as is accounted for by intra-African trade. More exports to the EU than to China or the USA combined.

trade.ec.europa.eu/doclib/docs/20…

@hereburgher @OwenPaterson But it's not just Africa.

Bangladesh is and EBA country that benefits greatly from being able to export under the preferential arrangement.

The EU accounts for over 50% of Bangladesh's total export and nearly 60% of exports for apparel. EBA allows Bangladesh to compete.

@hereburgher @OwenPaterson That excerpt in the last tweet was from this report by the Executive Director of the Centre for Policy Dialogue in Bangladesh.

un.org/en/development…

@hereburgher @OwenPaterson Bangladesh is on 0% tariffs through EBA and it is of vital importance to them. Especially so as they were suspended from the USA's GSP in 2013. thedailystar.net/business/bangl…

@hereburgher @OwenPaterson Even if they had not been suspended from the USA's GSP they would have still be on full MFN tariffs for apparel exports to the USA. Relief from tariffs for LDCs for apparel exports to the USA are only available through AGOA so limited to African countries.
un.org/en/development…

@hereburgher @OwenPaterson So AGOA is the USA's preferential trading arrangement, above GSP, so in theory similar to EBA but it is not complete tariff elimination like EBA. The main benefit is that tariffs are eliminated for most items of apparel.

Also it is limited to African countries.

@hereburgher @OwenPaterson One of those countries is Rwanda.

Rwanda wants to develop a clothing industry and rely less on second-hand clothes from USA. So it has banned those imports.

The USA have reacted by suspending Rwanda from AGOA meaning it falls back to the US's GSP.

agoa.info/news/article/1…

@hereburgher @OwenPaterson And that, I think covers most things. although, one further pop at Dan Lewis's Tariff guide thing. He talks about coffee tariffs.

Now, is he right here do you think?

eutariffs.com/system/assets/…

@hereburgher @OwenPaterson Kenya is an EPA country. Tariffs are all 0%

Guatemala is party to the EU-Central America Association Agreement tariffs are 0%

Vietnam is GSP. Coffee is 1/3rd the tariff. The zero-duty FTA negotiations are in final stages.

We have an FTA with Colombia. Tariffs are 0%

/Done.

@hereburgher @OwenPaterson Addendum.

This document "How Preferential Is Preferential Trade?" was published recently by the World Bank.

There's a nice graph on page 10 showing average MFN and applied tariffs rates. I took the liberty of annotating it to highlight EU countries.

documents.worldbank.org/curated/en/655…