Thread by @Jim_Cornelius

I have a number of issues with this report by @BBCSimonJack that was broadcast on the BBC News at 10pm, and possibly on other bulletins.

Can you guess what they are?

1. Tariffs are not charged to countries or exporters bringing goods to the UK/EU. Tariffs are paid by importers.

2. The report does nothing to indicate that most tariffs are eliminated for exports from developing countries or the 70 free-trade partner countries outside the EU.

3. "Setting tariffs on oranges, jam, carpets, TVs to zero will potentially drive down prices."

Is this realistic? Well let's find out.

Due to free trade agreements with 70 countries tariffs on oranges are mostly entirely irrelevant. We import oranges from Morocco, Algeria, Tunisia, Israel and Egypt almost entirely tariff-free.

The current Morroccon tariff is 0% until the import price drops below €26.40/100kg.

The table in the previous tweet shows the Entry Price System (EPS) used for some fresh produce. If the price falls below the trigger of €26.40/100kg then a tariff brings it up to that price.

This hardly ever happens. The current import price is €42.80.

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

This research paper from 2007 suggests that the Entry Price thresholds are hardly ever breached (at least for oranges), meaning higher EPS tariffs are almost never charged. No observations of it occurring for Morocco and Israel at all during the study.

uni-hohenheim.de/qisserver/rds?…

For our FTA partners the EPS operates for some of the year and at other times it's a flat 0%.

South African oranges are produced out of season with Europe but are likewise virtually always on a 0% tariff due to the free trade agreement.

So oranges, which for EU consumers are already very cheap compared with say Florida, California, Canada, New Zealand, Switzerland or Norway, are almost certainly not going to get much cheaper on a no-deal zero tariff.

numbeo.com/cost-of-living…

What about Jam? Well, we produce a lot ourselves of course, but 94.6% of imports come from the rest of the EU. How realistic is it to believe that we're going to swap our Bonne Maman jam for some Chinese brand?!

Jam is not going to be any cheaper!

trademap.org/Country_SelPro…

What about Carpets?

My first thought was that many would come from Turkey on a 0% tariff due to the Customs Union, but I was surprised to find that Belgium is the world's 2nd biggest exporter after China. I suspected this might be an anomaly or re-exporting, but apparently not.

So for the UK, 40% of carpet imports come from Belgium and 83.7% from the EU as a whole. So we're not going to get much of the existing supply of carpet any cheaper by setting the MFN to 0%,

Could we, and would we source them cheaper from China etc?

Comparing the unit price using the TradeMap table from earlier suggests that the Belgian carpets are about 9.4% costlier than Chinese carpets and with the tariff competitive with Belgium ones. But there are many factors to think about in costing it, transport among them.

What about TVs?

As of Feb 2019 we have an FTA with Japan. We've had one with Sth Korea for several years, but more importantly, what was until recently the biggest TV Factory in the world is actually in Slovakia.

Built by Sony and now owned by Foxconn.

gongchao.org/2013/04/01/fox…

It still produces TVs for Sony.

But there's more to Slovakian TV manufacture than this.

foxconnslovakia.sk/en/20-milliont…

Samsung also has a massive factory in Slovakia too. In Galanta near Bratislava. They used to have another one in Voderady but this one closed down due to lack of skilled workers.

invest-in.sk/en/referencie/…

spectator.sme.sk/c/20735124/sam…

This means that the biggest supplier of TVs to the UK is Slovakia at 29%. Oh, and a fair few are imported from the rest of the EU too it seems.

76.8% came from the EU in 2017 in fact.

So again the potential for saving by setting the tariff to zero is ... not so much.

What's this Simon says here?

"And remember, UK farmers will have to pay to export into the EU".

Sorry, no. Remember, it's the importer that pays the tariff, often, but not always passed on to the customer, but rarely as the same percentage at retail. There are other costs.

I appreciate that these kinds of reports need to be brief and to the point, but they shouldn't mislead viewers about potential benefits when they're actually small to non-existent.

It's just not right. Please get it right!

Summarising my main gripes:

1 Confused statements about who pays the tariff.
2 No mention of FTAs and developing countries market access to the EU.
3 Not being aware of or clear about the very low actual potential for the zero tariffs to make any difference in retail prices.