America's use of "smart tariffs" has made the EU return to the negotiating table and make concessions - Britain should follow suit.
Source - Daily Telegraph - 22/03/21
MATTHEW LYNN
Vials will be stopped at the ferry ports. Factories will be monitored to check where products are going. And customs officers, presumably accompanied by sniffer dogs trained to detect whatever it is a Covid-19 vaccine smells like, will patrol the borders.
Ursula von der Leyen, President of the European Union Commission, is threatening to escalate the growing vaccine war between Britain and the rest of Europe over supplies of the Oxford-AstraZeneca jab. At a meeting of ministers on Thursday she may well invoke emergency powers to block exports from the continent.
But hold on. It is surely impossible for any British government to accept that without retaliating. We shouldn’t block the shipment of vaccines or their ingredients to Europe. That will simply cost lives on the continent, and two wrongs never make a right.
Instead, the UK should borrow a trick from the United States. Smart tariffs. We should unveil, by Thursday morning, a list of immediate, emergency levies that will be applied on EU exports to the UK, such as cars, foods, wine, clothing and machinery. With luck, they won’t have to be imposed - but the threat of "smart tariffs" may well be enough to ensure vaccine supplies keep flowing.
The vaccine row between Britain and the EU grows worse with every day that passes. The EU is furious that the UK appears to have secured more supplies of the Oxford vaccine than it has, even though it was, after all, created in Britain, and has been widely - and unfairly - criticised across the continent.
The EU has already blocked the shipment of 250,000 doses to Australia at the request of the Italian government. Now it is threatening to block exports of vital ingredients for the manufacture of the jab from a plant in the Netherlands. A final decision will be made at a meeting of heads of government on Thursday.
In the background, of course, the UK has been rolling out its vaccination programme with stunning success. In Britain, 30m doses have been delivered, with half the adult population now on one jab, compared with only 8m in France and 10m in Germany, amid delays to authorisation, misjudged suspensions, and a blizzard of paperwork and bureaucracy that seems to ignore the urgency of the situation.
If export controls are imposed by the EU, it will be impossible for the British Government to accept that. It won’t make much difference to the rest of Europe, especially given that the continent’s leaders have gone out of their way to undermine trust in the vaccine. But it may well hold up the rollout of the inoculation programme in this country, and potentially delay the exit from lockdown, inflicting terrible damage to our economy. Reasonable? Proportionate? Not really.
If the EU wants to go down that route it can, but the UK should make it clear it will retaliate. We could impose a blockade of vaccines or their ingredients to the EU, yet that would be descending to their level. It would cost lives across Europe, and slow down the fight against Covid-19, and no one wants to do that. Instead, we should opt for "smart tariffs".
The US has shown the way. Over the last five years, it has responded to the EU’s belligerence on trade with a series of selective tariffs on products ranging from automobiles to wine and spirits to aircraft and metals. And guess what? It worked. Over a whole range of issues, the EU came back to the negotiating table and started to make concessions. We should do the same.
Even better, we could apply tariffs to products from the home regions of particular EU leaders (a tactic Brussels pioneered in 2018 when it imposed tariffs on products such as Harley-Davidson motorbikes to change the minds of specific Republican Congressmen) Such as?
The French Prime Minister Jean Castex made his career in the Pyrénées-Orientale, a region that sells a huge amount of wine to the UK. A 300pc tariff would be interesting. Ursula von der Leyen represented Lower Saxony in the Bundestag for many years. Its biggest company happens to be Volkswagen. Again, a 300pc tariff on VW’s might focus a few minds at Thursday’s meeting.
Targeting specific companies and regions might seem extreme, but in reality it would simply be borrowing tactics the EU itself uses to up the pressure in negotiations.
Across the board we could threaten to impose emergency tariffs across a range of EU products. It would not do any significant damage to the British economy. We run a vast trade deficit with the EU, and that is especially concentrated in manufactured goods, and food. Everything targeted for tariffs could easily be sourced elsewhere, and often more cheaply.
If a new VW suddenly costs £100,000 rather than £30,000 because of the tariff, people can buy a Nissan or Toyota instead. If French wine is suddenly £20 a bottle at Majestic the Chilean or Australian alternative will still be the same price. In truth, we will hardly notice. Smart tariffs are widely used around the world as a weapon in trade negotiations, so it would not break World Trade Organisation rules. It is robust - but it is hardly unfair.
Of course, it would be far better if it never reached that point. But the UK could easily unveil a list of smart tariffs by Thursday morning to be imposed in the event that vaccine shipments are blocked.
A 300pc tariff on VWs, and 100pc on all EU cars. A 300pc tariffs on wines from Pyrénées-Orientale, with a 100pc on any alcohol from the EU. A 100pc on cheese, and another 100pc on clothing.
In truth, it would be an instant and proportionate response. Vaccines should not be held up at borders, and supply chains should not be interrupted. Vaccination is the only effective way to fight Covid-19 and bring the crisis to and end.
But if the EU insists that is its choice - and the UK should make it clear that while it won’t impose controls on vaccines it will retaliate with tariffs on other products.
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