Unveiling the ignorance of so-called tariff experts — and why we should ignore them.

First published in June 2018.

Here is an article on the Brexit Central website by so-called tariff expert Dan Lewis (Chief Executive of the Economic Policy Centre), from 2016, complaining about EU tariffs. There are a number of problems, but I am not sure if this has been pointed out before.

Dan has got the whole thing backwards as we will see.

Brexit Central

The first thing the author picks on is a 17.6% tariff on coconut water, enacted from 1 July 2016. Unfortunately, Dan demonstrates here that he has little understanding of the subject he is proclaimed as being an expert in.

Coconut water code is 2009899996.

Trade Tariff / Gov.uk

If you simply look at the Overview page  you will see the 17.6% tariff that Dan has pointed out, but there are some important words there:

“unless subject to other measures”.

We will look at that, but first it is interesting that the new code was added on 1 July 2016.

Trade Tariff / Gov.uk

Before that date, it would have come under 200989999, which is for the same category of fruit juices but “Other”. So, even before July 2016 it would have been liable for a 17.6% Most-Favoured-Nation (MFN) tariff.

So why was the new category created?

Well, if you look the import page you will see this: an “Autonomous tariff suspension”.

There is a link to a Council Regulation on the right, but this is to a renewal of an earlier regulation. The original regulation is (EU) 2016/1051 from 24 June 2016.

Trade Tariff / Gov.uk

Here is that regulation from June 2016: 140 products not already under autonomous suspension were added to the existing list as of suspended duties.

Official Journal of the European Union

Including, crucially from our point of view, coconut water!

So, far from adding a duty to coconut water in June 2016, it was actually being removed!

This is the EXACT opposite of what Dan Lewis was suggesting!

But why was duty suspended?

Official Journal of the European Union

Here is a page explaining a little bit more about autonomous tariff suspensions, giving three reasons, among others, for doing so.

Might one of these have something to do with it?

Autonomous tariff suspensions and quotas (EUR-Lex)

You may have seen this in your supermarket recently. There has been a real fad for coconut water.

Sales have gone through the roof.

But what you see here is a processed product made by Genuine Coconut in Europe. Not processed in Thailand where the coconuts are sourced.

Coconuts are on 0% tariff from everywhere, but until July 2016 Thailand’s exports of coconut water would have been subject to the tariff as we have no Free Trade Agreement with them and the are not one of the countries benefiting Everything But Arms (EBA), etc.

But the African, Caribbean and Pacific Group of States (ACP) countries (many Commonwealth) were on 0% tariffs at this time. As were the Philippines, who are on Generalised Scheme of Preferences + (GSP+) (awarded before current President Duterte was elected.)

So, they benefited from a preference over countries with no preference with the EU.

But the demand for coconut water couldn’t keep up with supply.

Coconut and coconut exports all over the world are booming.

So, the tariff was suspended to liberalise the trade increase exports of coconut water into the EU.

This is not protecting EU processing of coconuts.

Global consumption of coconut water, 2009-2015. (Food and Drink Innovation Network)

At some point in the future, the tariff may be re-imposed so that ACP, GSP+/EBA countries and other countries with a Free Trade Agreement regain their advantage over other countries processing coconuts into coconut water.

In short, Dan Lewis got this whole issue arse about face!

Instead of a new tariff being on coconut water it was the opposite.

A tariff line was carved out of the existing schedule for coconut water so that a suspension could be set on it, making it for 0% for everywhere!🔷

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[This piece was first published as a Twitter thread and turned into the above article on 13 June 2018, with the author’s consent, with the purpose of reaching a larger audience. It has been minorly edited and corrected. | The author of the tweets writes in a personal capacity.]

(Cover: Pixabay.)