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Tue 21st Aug 2018 - Tim Martin – free trade deal will not hike food prices

Opinion Special: Free trade deal will not hike food prices, argues Tim Martin

Like Arnold Schwarzenegger’s Terminator, the cyborg assassin, fictional scare stories about food price rises post-Brexit refuse to die. For example, the Sunday Times front-page headline on 12 August said: “No deal will hike food prices by 12%.”
The article itself said “tariffs on imports from the EU could include cheese, up by 44%, beef up by 40%, and chicken, up 22%”. It quoted the chairman of a “leading supermarket” who “warned food products imported from the EU would be hit by an average tariff of 22%” and reported “senior executives from the big four supermarkets” had made these predictions in “briefings to the Treasury”.
The “big four” are Tesco, Sainsbury’s, Asda and Morrison’s, so the reports of Treasury briefings, which haven’t been denied, have clearly been authorised at the top level.
The briefings echo the misleading 2016 statement of Richard Baker, then chairman of Whitbread, who told the Evening Standard “failure to reach a trade deal would see tariffs... of 12% on clothes... and up to 27% on meat” and of David Tyler, then chairman of Sainsbury’s, who told the Sunday Times in 2017 “if we don’t get a deal and (instead) move to World Trade Organisation (WTO) rules, we could face an average tariff of 22% on foodstuffs we import from Europe”. As Malcolm Walker, founder of food chain Iceland, said last week, these stories are rubbish.
In fact, the only way in which prices for EU imports can rise post-Brexit is if the UK government itself decides to impose taxes, also known as tariffs, on them – a sure way to lose an election. The EU has no say in the UK’s import taxes after we leave.
Provided the government takes the sensible decision to opt for free trade, there would be no extra taxes/tariffs on EU imports. And by deciding not to impose taxes on the EU, there would be no taxes either on non-EU imports – WTO rules require all countries are treated in the same way, in the absence of a “deal”.
The result of the free trade option would be a reduction in prices in shops and pubs, since the EU today charges these invisible taxes on wine, rice, coffee, oranges and more than 12,000 other non-EU products.
Lower prices boost living standards, but in this case they do so without affecting government income, since taxes on non-EU products today are collected by the UK and are paid to Brussels – price reductions in shops would cost the Treasury nothing.
In taking the free trade path, the UK would not be conducting a wild experiment. It would be following the successful approach of dynamic economies such as Singapore, Switzerland, Israel, Canada, Australia and New Zealand, which have slashed import taxes.
Other important benefits of free trade, disparagingly called “no deal” by Remain spin doctors, are we regain control of the UK’s fishing waters, where 60% of fish are today landed by EU boats, and we avoid the payment of £39bn to Brussels, which government lawyers have said there is no legal obligation to pay.
So why are the supermarkets making false claims about price rises and why are they not fighting to reduce prices? Pro-Remain ideology and ignorance are probably the answer.
John Allan, chairman of Tesco, like Private Frazer of Dad’s Army, is renowned for his gloomy views. He said before the referendum “Brexit would ruin small firms” and, more recently, leaving the EU “too quickly would be a mess”. And Allan is now president of the CBI, the employers’ organisation, which strongly advocated the UK’s participation in the disastrous exchange rate mechanism, the euro and staying in the EU. And Martin Scicluna, current chairman of Sainsbury’s, was previously chairman of Deloitte UK, which, along with fellow accountants PWC, implored the public to vote Remain. Indeed, Deloitte Digital, part of the same company, is today urging a second referendum.
But the big supermarkets are playing a dangerous game, since the public implicitly expects companies to do their best for customers, by lowering prices when opportunities arise.
By participating in inaccurate scare stories, supermarkets appear keener on maintaining close ties to the EU, an obsession of the elite, rather than on low prices. “Pay more at the big four” is the subliminal message.
This approach is bad news for shareholders and customers of the big four, but is great for Aldi, Lidl, Iceland, Amazon and other “disruptors”, since they see the benefits of free trade as opportunities, not threats.
Once again, elite Remainers fail to understand the public is collectively far more intelligent than they are, which is why democracy works, after all.
Tim Martin is founder and chairman of JD Wetherspoon

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