New 16% import tariffs on oranges show why we must leave the Customs Union

New 16% import tariffs on oranges show why we must leave the Customs Union

Can we have faith that the EU Customs Union is moving in the right direction and try to retain our membership? I would argue no and nothing better illustrates this than the latest sorry tale over oranges. Last month, the EU quietly increased eight tariffs on imported oranges from third party countries from 3.2% to 16.0% – a staggering fivefold increase. But why?

Well it seems the world’s fifth largest producer of citrus fruits, Spain, has taken very badly to the removing of import tariffs on citrus fruits from South Africa. And questions were raised by Spanish MEPs in the European Parliament on what do about it like;

  1. Does the Commission undertake to monitor on a monthly basis the export and sale of South African citrus fruit in the EU during the European harvesting season?
  2. What safeguards are provided for in the agreement to protect European citrus fruit production?
  3. Does the Commission intend to introduce measures benefiting European citrus fruit growers to offset the effects of concessions to South Africa?

I suppose you could say they are just doing their job and defending their constituents’ vested interests. They got their “safeguards” and “measures”. And to be fair, some tariffs also fell during the last month as well. (You can always run a report here to look at the changes, new tariffs between different dates and many others).

What troubles me, however, is how well this illustrates the primacy of producer interests given by the Commission over consumer ones. This is a trend. Why else have the total number of tariffs in force increased by nearly 1,500 since 2009 and with annual tariff revenues increasing from £2.6 to £3.1 billion?

I don’t suppose for a moment, any EU consumers were consulted about whether they wanted to pay more to subsidise Spanish orange farmers. And I doubt even more that British consumers would choose to either.

Naturally it helps that we don’t have the climate and no one has tried to grow oranges here since the repeal of the window tax in 1851 led to a boom in orangeries. But these tariffs do matter on at least two levels.

Firstly, oranges are a component of CPI inflation compiled by the Office of National Statistics. Prices are going to go up. Secondly and more profoundly, wouldn’t it be better trade development economics for us to buy more oranges from poorer nations?

Instead through this action, we seem to be impoverishing them and raising their barriers to entry for access to the Single European Market. What this episode really shows is the ongoing cost, rising bureaucracy and unpredictability of belonging to the Customs Union.

Staying in the Customs Union is emphatically not a vote for the status quo. If we must have tariffs in the post-Brexit world, supply chains need tariff level stability. But as this latest change shows, the Customs Union doesn’t give you that. Clearly with dozens of tariffs like these changing and even being added every month, that is not on the agenda. All of which make it much harder for both suppliers and importers to build a trade business case with this kind of unpredictable, ever-changing tariff wall.

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.

That’s why on Day one of Brexit, all tariffs on oranges must be “repeeled”. As and until we leave the Customs Union, with these orange tariffs and many others, it’s bitter lemons for consumers.