Thread by @Jim_Cornelius

Dear Lord Ridley (@mattwridley) during the Customs Union amendment debate on 18-04-2018 you stated a number of tariffs applied to African countries, when in fact the vast majority are exempt all tariffs. You dispute this, but what about the numbers?

20% on tomatoes?

To which countries (you specified African, Caribbean and Asian but I'd settle for any), does a 20% tariff on the importation of tomatoes into the EU apply?

This is the UK Government website for import tariffs trade-tariff.service.gov.uk/trade-tariff/c…

I looked up tomatoes, (cherry tomatoes, harmonised code 0702000007, but the same applies for other tomatoes under code 0702000099).

I see lots of zeros.

This is page 1.

Page 2

Page 3

Page 4

Page 5

And finally page 6.

Throughout each page I see lots of zeros

So 0% is explicitly stated for many countries (particularly African, Caribbean and Asian countries). This is due to the EU's many FTAs but also due to GSP/EBA/GSP+ preference schemes for developing countries.

What about where 0% is not explicitly stated? e.g. South Africa?

Or Tunisia.

There's a conditions button/link for these countries and a few others. If you open up Tunisia you get this:

This is the Entry Price System explained in the next tweet.

If the Standard Import Value (SIV) falls below the figure in the "requirement" column it triggers the tariff indicated on the far right. In each case here this will bring the price up to the initial trigger €112.6/100kg and add an additional percentage (0% for Tunisia).

So the tariff only applies should the price fall below that trigger and then the tariff brings it up to the trigger value. I've clicked most countries where there's a condition link and they all appear to be 0%+(Euros up to the trigger price).

The exception is "ERGA OMNES".

ERGA OMNES applies to all countries not specifically mentioned elsewhere on the page, e.g. USA, China.

So for these countries, and these countries only the following tariff applies.

Again using the Entry Price System the price is brought up to the trigger price should it fall below it and then a percentage is applied. The percentage is 8.8%.

This percentage is seasonal and the trigger price is adjusted weekly according to market conditions.

The seasonal variation in the percentage part of the EPS for tomatoes can be seen in the following document pages 707-709

For part of the year it's 8.8%, for the remainder 14.4%. At no point 20%.

eur-lex.europa.eu/legal-content/…

Theoretically, if the import price of tomatoes from one of the countries where a 0% tariff does not apply, fell to a sufficiently low level, so that the ad valorem tariff through the EPS reached 20% of the import price, then and only then would you be correct.

Claiming that there is a 20% tariff on tomatoes coming into the EU is almost like seeing 5mph speed limit sign on a private road and concluding that the national speed limit in Britain is 5mph.

And for those who missed it ...

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I think I have worked out why Lord Ridley claimed a 20% tariff for tomatoes.

Earlier on he used the TradeMap tool on the ITC website to show tariffs on Nigerian goods exported to France. If you use this tool to look at tomato imports to the UK, trademap.org/Country_SelPro… you get:

If you look at the tariff column for Morocco, it says 20. The column for Ukraine says 25.3.

If you click the number it takes you to the MacMap tool and the tariff for exports from Morocco or Ukraine to the rest of the world. Here's the one for Ukraine.

Here's the one for Morocco. If you look at the row for Austria, you can see the EU tariff showing a tariff of 25.27% for Ukraine and 19.97% for Morocco.

So that's the ad valorem tariff right? Wrong!

Click on the info/question mark on the column and you get a pop-up window.

The pop-up says:

"For HS4 and HS2 products, average tariffs are weighted by reference group imports. For HS6 products, average tariffs are calculated through a simple average."

Ok so it's doing an average. What's the problem?

The problem is what it's actually averaging.

This is a little tricky to explain.

If you recall, there is an Entry Price System for tomatoes, so there is a range of tariffs that could potentially be applied.

To figure this out use the menu to change the MacMap tool to "find tariffs" instead of "compare tariffs".

Now select the UK as Importer and Morocco as exporter. Make sure that the middle field for the product is set to National Tariff Line Code and type in tomatoes.

You'll see that in the drop box it will list the Entry Price criteria similar to that on the UK Tariff webpage.

There are in fact 11 options listed for tomatoes. Note the database used here is not current like the one on the UK Govt Tariff website so the numbers are different.

If you selected the first one the page will look like this.

It shows the tariff for Morocco for in quota and out of quota and also the default MFN tariff (which applies for Ukraine).

Now I hadn't mentioned before that some of the exporters have a quota.

Under quota the tariff is zero, except it appears when the price drops very low, as you can see from the last page in the sequence here.

The last one will look like this.

You can see the quota listed under Morocco o the UK Tariff page.here.

If you open up the quota for Morocco you get this: The unit for the quota is KGM which is metric tones (tonnes), or 1000kg. So the quota is 8400000*1000kg = 8.4 million tonnes of tomatoes. Sound like a lot to me. So under this it's almost always tariff free.

So MacMap pages. It's listing all of the Entry Price rows e.g. "Tomatoes, fresh or chilled : Cherry tomatoes. If the declared price is higher than or equal to 45.2 EUR/100 kg" and treating them as separate tariffs,

It then calculates the average tariff by averaging these.

I confirmed this to be the case by doing the sum myself.

For the MFN tariff: (8.8+10.21+11.52+12.92+14.23+36.72+36.72+36.72+36.72+36.72+36.72)/11= 25.27

So for the Morocco tariff: (3.5+4.91+6.22+7.62+8.93+31.42+31.42+31.42+31.42+31.42+31.42)/11=19.9727

In summary, the ad valorem tariff on TradeMap is not a true representation of the tariff applied in both cases.

This is because it is is just averaging all the potential tariffs when the SIV drops below the trigger price for MFN.

And for Morocco it's also ignoring the quota!

So whoever did the research or these figures didn't do their job properly!

I'm not sure what to say about that!

Addendum.

I've just found some research that suggests that TradeMAP tariff is even more inaccurate.

Although this research is on oranges it shows that the Entry Price is hardly ever breaches. So only the top-line EPS tariff almost always applies.

uni-hohenheim.de/qisserver/rds?…

Extra:

Just adding this explanation of the history of preferences for LDC and ACP countries, to put the current situation in context.

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And hopefully lastly - this on @BrexitCentral own economist's inability to read a tariff schedule and Ridley's letter to Lord Hannay.

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