The Department for International Trade (DIT) wants to hear from the business community about how it should run its new application system for tariff suspensions on goods entering the UK.
Tariff suspensions are used by governments to support domestic manufacturing by reducing production costs.
Under the new system, businesses will be able to appeal for duties on their goods to be temporarily removed. The suspension can then be used by any business in the UK and is not specific to the company which applied for it, according to gov.uk.
Goods receiving tariff suspensions are typically those that are crucial to a domestic industry but are not easily available in the home market.
An example of a product for which tariff suspensions could apply in the UK is sugar cane imports.
When the UK was a member of the EU, the plant attracted duties worth €33.90 for every 100kg. The UK, having left the EU, can now set its own tariffs and quotas for the sugar cane – and it has.
From the beginning of January, 260,000 tons of raw sugar cane can enter the UK in 2021 tariff-free. Imports after this will attract duties of £28 per 100kg, according to the DIT.
The DIT wants to hear from businesses and consumer groups who have previous experience of applying for a duty suspension or may apply in the future. It wants to know what they think about:
- the EU suspension application process
- how the UK’s independent suspension application process should look
- the timescales for application window cycles, including processing, objecting to and implementing suspension applications
- ·other relevant feedback
In December, the government launched legislation for the UK’s independent tariff policy.
As a member of the EU, the UK previously adopted the bloc’s Common External Tariff, but it is now able to specify which goods it wishes to be tariff-free.
The UK has, however, committed to rolling over existing EU suspensions that came into force as part of the EU’s July 2020 tariff schedule update.
The EU approach
According to the European Commission, the main purpose of tariff suspensions is to enable Union enterprises to use raw materials, semi-finished goods or components without having to pay the normal customs tariff.
Suspensions are proposed after a thorough examination of the economic reasons on which the requests are based and how they will benefit the EU economy.
For some economic sectors, low tariffs are used to stimulate competition, for example pharmaceutical and information technology sectors.
Suspensions are not granted for finished products and usually apply to:
- raw materials
- semi-finished goods
- components not available within the EU
In the US, the Trump administration used tariff suspensions to help protect the economy from the effects of the pandemic, the FT reported in April last year, lifting tariffs on apparel and light trucks for 90 days. Tariff exemptions were also applied to medical items.
The first suspension application window in the UK will open around May 2021.