Thread by @Jim_Cornelius

Professor Dowd is an idiot!

Those are not the tariffs! Those are the Import prices used to calculate the tariffs!

Here's the link. trade-tariff.service.gov.uk/trade-tariff/c…

For Morocco the tariffs are found when you open up the conditions box.

Do you see lots of zeros?

A tariff is applied only when the import price drops below €26.40. On that it's 50 euro cents!

Economist For Brexit. You're a joke!

Meanwhile, Gabon, Nigeria and the Republic of Congo are subjected to the EU’s general orange tariff of 64.40 Euros/100kg."

No that's the "Standard Import Value (SIV)"

Does he know anything about tariffs at all?

The MFN tariff is under "ERGA OMNES Third country duty". 10.4%.

Let's see how that's affecting Nigerian orange growers shall we? How big were their orange exports to the rest of the world over the least 3 years?

As you can see it's a massive part of their export market!

What about the doughty citrus growers of Gabon?

Surely the persistence of the Congon orange farmers has paid off?

Remember it was “Economists for Brexit/Free Trade” that endorsed this rubbish in The Sun.

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Lord Ridley picks Nigeria because it is one of the very few exceptions. It’s the 6th biggest oil exporting country in the world. Not a typical sub-Saharan country. The only reason it’s not on 0% is because it has yet to sign an EU agreement to that effect. edition.cnn.com/2018/04/06/afr…

All of the other countries in the Economic Community of West African States (ECOWAS) currently receive the benefits of tariff free access into EU markets via an Economic Partnership Agreement EPA with the EU.

guardian.ng/business-servi…

Nigeria is one of a small number of African countries which do not currently benefit from tariff free access to EU markets, either through the EU's EBA programme for the least developed countries, or through regional and bilateral deals with the EU. eeas.europa.eu/sites/eeas/fil…

If Lord Hannay had merely inserted the word 'virtually' before 'all'. Lord Ridley would have been equally incorrect in his statements, but would not have been able to pretend to be otherwise. He is generalising from the specific, using the exception and suggesting it is the rule.

Nigeria has the highest GDP of any African country (or second highest - see link). This is because of its oil exports.

This means it falls outside of the scope of EBA which is designed to give an advantage to the countries on the far right of this table.

cnbcafrica.com/zdnl-mc/2017/1…

In fact according to the ITC (the same source used by Lord Ridley) over 90% of Nigeria's export revenue comes from petroleum products. trademap.org/Product_SelCou…

And again according to Lord Ridley's source they come into the EU tariff free.

trademap.org/Bilateral.aspx…

Despite Nigeria's petroleum exports it is still ranked as a lower-middle income country by the World Bank. data.worldbank.org/?locations=XN-…

This means it qualifies for tariff reductions under the EU's GSP scheme.

WTO members have to abide by the rule that all other members should be treated with equal favouritism (MFN).

But there are three basic exceptions, 1. Customs Unions; 2. Free Trade Areas; 3. A special provision for developing countries - Generalised System of Preferences (GSP).

The EEC created the first GSP scheme in 1971. 75 countries currently benefit from widespread tariff elimination & reductions. EBA (total elimination of tariffs for the LDCs) is part of GSP, but Nigeria is on standard GSP. Over 6000 tariff lines are listed

unctad.org/en/Publication…

Countries on EBA (Everything But Arms) benefit from total elimination (bar guns) while those on standard GSP see partial elimination and a reduced of tariff on other products.

Now there's a problem with some of Lord Ridley's numbers and I explained a little bit about this in this thread.

It's complicated, but what it means is that the % shown on TradeMap virtually never applies, certainly in the case of tomatoes.

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But with the numbers he quotes in his letter it's even more complicated. There are certainly high MFN tariffs on certain products, but the numbers he's using span a wide range of products using a weighted average based on the importing country's general level of imports.

Goods are classified by the World Customs Organisation using a system known as Harmonised Commodity Description and Coding System, also known as the Harmonised System (HS).

wcoomd.org/en/topics/nome…

Lord Ridley is using the values from TradeMap for the first 2-digits level HS2.

So 01 is "Live Animals" and TradeMaps weighted average figure for HS2 as quoted by Lord Ridley is 15%.

Side note: Are we really talking about the possibility of importing live animals (it's all live animals but predominately for livestock) from Nigeria all the way to the UK?

So let's now look at Lord Ridley's list. The first item is 12% on vegetables.

This does not mean that every carrot and tomato (fruit?) and cabbage has 12% tariff slapped on it. It's using an average. Perhaps we should delve into the schedule beyond HS2.

Going to HS4 the products listed with the highest tariffs are onions and tomatoes.

Tomatoes.

I already explained how the the tariff shown for tomatoes is averaging out the Entry Price Systems tariffs so that the 25% figure is not really valid. What about the onions at 30%?

If you drill into that you find that it shows Leeks at 7% and Garlic at 85%. Not shown is the 3rd HS6 Fresh or chilled onions and shallots (which is 6%) so the 30% average shown in the level above is predominately from the garlic at HS6.

85% though, what's going on there?

Well, garlic is a bit of an issue. China produces 80% of the world's garlic. and it;s level of exports has grown massive over the last 20 years. gro-intelligence.com/insights/the-e…

China's garlic has become a bit of a problem, not just for the EU.

Both the USA and S. Korea imposed a 300% tariff on garlic to cope.

The 85% seems relatively modest. But why does this potentially affect Nigeria?

Because of the WTO MFN rules. Garlic isn't on the GSP list.

The EU tariff is €1200 per tonne +9.6%. At the time the Trademap snapshot of the schedule was taken this would presumably have been 85% ad valorem,

But that's not the end of the story. The 85% doesn't apply under quota

Under quota garlic is imported at only 9.6%.

That list of garlic quotas is from the UK Government website. assets.publishing.service.gov.uk/government/upl…

Nigeria has access to that quota as a 3rd country. SO that 85%, which is used on TradeMap to calculate that 30% for veg isn't really representative of the tariff burden for Nigeria.

So if garlic is the major contributor to the onion tariff as shown on TradeMap, and onions and tomatoes are the major contributors to the veg tariff. Is that 12% a good representation of the tariff burden or not?

Are Nigeria garlic exports muzzled EU tariffs anyway?

If you're not bored of this by now, I am.

In summary. The tariffs on Lord Ridley's letter are often distortions because of the way the averages are calculated. Nigeria isn't exporting this stuff anyway and Nigeria could avoid them altogether by signing an EPA tomorrow.

/END

Addendum.

I've found this research on oranges and the Entry Price System which shows that for oranges at least the Entry Price is hardly ever breached. So the top-line EPS tariff almost always applies. This makes the Trademap averaging even worse.

uni-hohenheim.de/qisserver/rds?…