Economic Theory

The EU’s thousands of senseless tariffs punish the poor

My report A Trade Policy for a Brexited Britain, published by the Institute of Economic Affairs last month, had a short section on EU tariffs. I gave the example of how in October last year EU tariffs on orange imports were quintupled from 3.2 percent to 16 percent. This example has been challenged by some on the Remain side, who have suggested that I got my facts wrong.

In fact, the source was Dan Lewis, a leading authority on EU tariffs, who wrote on precisely that subject on BrexitCentral last November: “New 16% import tariffs on oranges show why we must leave the Customs Union”. This example illustrates classic EU tariff policy in action. A bunch of producers elsewhere in the EU – in this case Spain – complained about competition from South African orange exporters and lobbied to increase tariffs. They got their way and the net result as it affected the UK was to increase the cost of orange imports to the UK. Lewis also provided some links (here and here) to the Spanish producers’ lobbying efforts and to one of the tariff schedules on his database.

One should note, however, that EU tariffs are subject to potential change on a daily basis, and as of August 24th this year, indicates that orange tariffs range up to 12 percent, and tariffs across the broader group ‘Edible fruit and nuts; peel of citrus fruit or melons’ range up to at least 17.6 percent. The tariff policy would appear to have a seasonal element.

Seasonal or not, this policy provided no benefit to the UK. Admittedly, it did provide some element of job protection to Spanish producers, but I would suggest that the primary concern of UK policymakers should be to promote the interests of UK consumers, not those of overseas producers. Elsewhere in my report I gave examples showing that tariffs can be an extremely expensive way to protect jobs. They also destroy jobs in non-protected sectors by making imports needlessly expensive.

The oranges tariff is far from unique. As Lewis continued:

“Sadly, producer interests are all too frequently the basis for so many of the 12,651 import tariffs that form part of the External Tariff Wall. Consumers – a disparate and diverse group at the best of times – are simply no competition for the concentrated lobbying power of companies in Brussels. But if Brexit is primarily about the democratic restoration of the country, we should clearly start setting a path that puts consumers first.”

The UK should therefore promote free trade and eliminate barriers to imports as soon as possible. As the then-Prime Minister Sir Robert Peel concisely put it in a Commons Debate in 1843: “I am bound to say that it is our interest to buy cheap, whether other countries will buy cheap or no.”

The tariff on orange imports is far from being the least justifiable of the EU’s many thousands of tariffs. Consider coffee. There are a number of different tariff schedules on coffee imports and the general idea underlying them is that raw materials get zero or very low tariffs, but the processed coffee imports that compete with EU coffee processors currently attract tariffs of up to 11.5 percent.

Remember that when you buy your next ‘fair trade’ coffee.

Then there are the high tariffs on clothes and footwear. In his report The Essential Guide to EU Import Tariffs 2016, Lewis reported that these tariffs accounted for 37 percent of total tariff revenue. These tariffs constitute a regressive tax, affecting the poor relatively more than the rich. They destroy retail jobs in the UK and destroy jobs in the countries that export these commodities – poor countries that the EU claims to wish to help. There is no good reason why importers of clothes and footwear should pay higher tariffs than other importers, and it is not even as if there is any significant domestic industry left to protect.

At the other extreme, the Lewis report lists many commodities that generate utterly trivial tariff revenues. Out of a grand total of just under £3 billion, ‘Live animals’ for instance collected just 0.01 percent or £200k of all tariffs across the UK in 2015, and ‘Paper and paperboard; articles of paper pulp, of paper or of paperboard’ raised a meagre £51 in revenue collected. What purpose do these tariffs serve?

There are plenty of other senseless tariffs too. There is a 4.7 percent tariff on umbrellas having a telescopic shaft, presumably designed by an Anglophobic EU bureaucrat to punish the UK for its weather, but why also punish Ireland? There is a tariff of 1.7 percent on swords, cutlasses, bayonets, lances and scabbards and sheaths therefor, but my all-time favorite in the dumb tariff category has to be the 15 percent tariff on unicycles. One wonders which clown set that.


This article was first published by BrexitCentral.

Kevin Dowd is Professor of Finance and Economics at Durham University.

8 thoughts on “The EU’s thousands of senseless tariffs punish the poor”

  1. Posted 21/09/2017 at 18:30 | Permalink

    Professor Dowd disguises the fact that these tariffs are overwhelmingly in the food sector. All developed countries protect their food sector in order to retain the ability to feed themselves during war. The EU has greatly reduced the risk of war but we are leaving now.

    Russia has exactly the same structures to encourage local processing of coffee as has the EU. There is no reason to think that the UK will change this post Brexit. There are jobs in processing. Brexit voters jobs. Admittedly we have a demographic crisis in terms of workforce size now the Baby Boomers (British Boom not US) are retired but there are no pressures to raise minimum wages in Liverpool, Glasgow or South Wales. Preservation of unskilled jobs is more important.

  2. Posted 22/09/2017 at 17:36 | Permalink

    “The EU has greatly reduced the risk of war”
    NATO reduced the risk of war, by pointing a very large number of nuclear weapons at the people who were pointing a very large number of tanks and troops (and a smaller but by no means insignificant number of nuclear weapons) at us, and providing a security umbrella which allowed the various nations of western Europe to disregard their own national defence, thereby having no ability to fight one another even if they had had cause.

    “All developed countries protect their food sector in order to retain the ability to feed themselves during war.”
    During WWII, both Britain and the Soviet Union were kept in the fight through convoys of grain from Canada and the (initially neutral) USA transported across the Atlantic and round the North Cape. Today Britain is barely 60% self-sufficient in food – under the law of comparative advantage, it should really be less. It doesn’t benefit Britain to grow food that could be grown more cheaply in the developing world, erect tariff barriers to prevent that food from coming in, then spend vast sums of money on ‘international aid’ projects in poor countries that otherwise could have enriched themselves (and us) through expanded trade. All developed countries protect their farming industries because farmers are a politically significant producer interest: a significant part of the electorate in most if not all rural seats and able to tap into public sympathy very easily.

    “Russia has exactly the same structures to encourage local processing of coffee as has the EU. There is no reason to think that the UK will change this post Brexit.”
    Unless articles like this can convince people that we should.

    “There are jobs in processing. Brexit voters jobs.”
    Jobs which represent an opportunity cost if they can be done more efficiently elsewhere. There were jobs at British Leyland but that didn’t justify keeping it in business with tariffs and later subsidies when the Germans were making much better cars.

  3. Posted 23/09/2017 at 21:11 | Permalink

    I didn’t “disguise” anything, and in fact explicitly pointed out that tariffs on clothes and footwear amount to 37 percent of total tariff revenue raised. This figure comes from Dan Lewis’s report on EU tariffs which I strongly recommend. Your war-strategic argument (whatever its merits) does not apply to footwear.

  4. Posted 26/10/2017 at 03:02 | Permalink

    Only a mad hatter could invest such a system. The complexity and bureaucratic overhead is beyond belief. Think..if import tariffs where abolished..customs and excise department could be abolished. Overall government expenditure would fall..leading to higher purchasing power for all.

  5. Posted 04/02/2018 at 08:20 | Permalink

    There are no duties on intra-EU trade so the issue is how self-sufficient the EU is for the products and how competitive those industries are. There are also no duties or quotas on the imports from the world’s poorest countries with the EBA – Everything But Arms trade agreement. EBA means that the 49 of the world’s poorest countries can export products to the EU free of the tariffs that the article is attacking. The developing countries beyond the EBA are in GSP or GSP+. Bangladesh is a well known clothing producer – as an EBA country it has no duties or quotas on its clothing exports to the EU.
    So the article is disingenuous by conflating tariffs intended for exports from rich countries whilst waving a flag for poor countries but failing to mention that the poor countries in the EBA see no such tariffs. The general drive globally is to reduce tariffs.
    It is interesting that you quote Peel from 1843 (regarding the Corn Law repeals) given that at that time, the UK domestic policies were causing the starvation of many thousands of UK citizens in Ireland even though Ireland was exporting food to feed the rest of the UK. The rest is history and much of Ireland is not part of the UK any more. Reduced tariffs are of little use if the ‘poor’ do not have any money to pay even the reduced price of goods. So lets be very clear here; when you say elimination of import duties you really mean the short term increase in importer margins because it is unlikely that the importers will pass on the duty reduction to the poor unless forced to do so. Unless the trade policies have a clear goal in mind of reducing the cost of living whilst reducing levels of poverty, those that use the ‘poor’ as an excuse for a particular action are duplicitous at best.

  6. Posted 06/03/2018 at 10:35 | Permalink

    I think this article presents a false picture. UK consumers would not suddenly find themselves surrounded with cheap South African oranges in December, even with no tariff. Once high quality, new season Spanish citrus is available, late season South African product loses most of its value. The Spanish cost chain is cheap and efficient, contrasting with high transport costs from Africa, making it largely uneconomic for producers to keep shipping. The tariff is an added incentive to get to market early.

  7. Posted 15/02/2019 at 10:28 | Permalink

    The fact that these “senseless” tariffs collect so little in revenue would suggest that they are effective and necessary. Tariffs are not meant to be for revenue, they are supposed to promote EU industry – if nearly 100% of UK paper comes from the EU – that would mean the tariff on paper is working.

  8. Posted 04/08/2019 at 12:15 | Permalink

    Brexit related inflation thus far, from a plummeting £, has led to an increase in food prices of the order of 25% post 2016 of core items, either through price rises or shrinkflation.

    Prof. Kevin Dowd takes a standard Brexit line of looking at gains, while ignoring Brexit losses:

    For example, EU tariffs in the event of No Deal, registrations costs of exports such as chemicals, losses to business and access and so on.

    This level of disingenuity is pitiful – and from an alleged “Academic”.

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