Brexit deal lets EU hit UK with unilateral tariffs

Tom Belger
·Finance and policy reporter
European Union flags fly outside the European Commission headquarters in Brussels June 15, 2005. The EU budget battle and salvaging the proposed constitution will top the summit agenda for the 25-nation bloc when it meets on June 16-17 at its Brussels headquarters. UNICS REUTERS/Thierry Roge THR/CCK
The EU and UK could impose unilateral tariffs if they suspect the other of unfairly granting subsidies. Photo: UNICS REUTERS/Thierry Roge THR/CCK

The European Union (EU) can immediately impose tariffs if it believes UK government handouts give British firms an unfair advantage under the Brexit trade deal, according to an expert.

The full implications are only gradually becoming clear of the 1,246-page deal, agreed and published only in late December and described as “fiendishly complex” by experts.

Members of Parliament (MPs) heard evidence from legal, financial and logistics industry figures about its impact at a virtual hearing on Monday.

Prime minister Boris Johnson had said after striking the deal there will be “independent third party arbitration” if either side felt it was being “unfairly undercut” by the other.

The deal includes such dispute mechanisms, but one witness made clear Brussels or the UK would not always have to wait for arbitration to be completed before striking back over certain issues. Retaliation could include EU states slapping certain extra taxes on products imported from Britain, hitting UK exporters, or vice versa.

READ MORE: What does the Brexit deal mean for me?

Lawyer George Peretz QC of Monckton Chambers told MPs there was “certainly room for parties to act unilaterally first and then argue about the extent of the reaction later” in some cases.

Subsidies are one area of potential controversy where either side is allowed to impose such immediate duties on the other’s products if they suspect the other is distorting competition through unfair business support, according to the lawyer.

Arbitration over the dispute, the rules and proportionate responses allowed under the treaty could follow afterwards, Peretz said.

WATCH: Expert says Brexit trade problems ‘just tip of the iceberg’

He said Labour MP Angela Eagle was correct to say that duties could be used “almost as a tactic” and dispute mechanisms could be “quite slow” while the taxes cut into trade. But he said such disputes had to be dealt with more quickly under the deal, likely to stop tactical usage of tariffs.

Rules over state aid were a key sticking point in negotiations, with the UK government keen to give itself greater freedom to support businesses than allowed under EU law. State aid can takes the form of government grants, tax relief, or preferential contracts for struggling, up-and-coming or cost-intensive industries.

READ MORE: Pound falls as lockdown and Brexit disruption hit firms

Monckton said the UK had secured a “much freer hand” over regional state aid use compared to its rights as an EU member, however.

The UK government will be more able to choose which regions it provides support for, and what kind of aid it provides to “left-behind” regions. It could likely go beyond what EU rules would allow “without that irritating the EU too much,” he said.

Britain could also develop a much quicker clearance process on state aid decisions than under EU rules, he added, saying such rules could be “maddeningly constraining.”

Johnson’s speech after completing the trade agreement acknowledged that while either side could take unspecified steps to “protect our consumers,” the treaty said it should “only happen infrequently.”

Latest Stories

  • Maryland Democrat Jamie Raskin turns from his son's funeral to managing Trump's impeachment

    Maryland Democratic Rep. Jamie Raskin was grieving on the morning of Jan. 6, having just experienced the most painful of tragedies: burying his 25 year-old-son, Tommy, a gifted student at Harvard Law School, who had taken his own life on New Year’s Eve after a bout of deep depression. Raskin was insistent. “We wanted to be together,” Raskin said in an interview on the Yahoo News “Skullduggery” podcast.

  • Biden and Boris to 'decide destiny of the world' as they bury hatchet over double visit to the UK

    Joe Biden believes a patched-up relationship with Boris Johnson will help to decide the "destiny of the world" as the president-elect is set to head to the UK for his first foreign visit outside of North America, sources have told the Telegraph. A close friend of Mr Biden said the leaders will bury differences over Brexit as British officials said they expected the UK to be one of the first foreign destinations, in what would be a major diplomatic coup for Mr Johnson. Mr Biden is due to be sworn in on Wednesday. Sources who would be closely involved in any visit have circled the G7 summit in June, hosted in the UK, as the potential date for the new president’s trip across the Atlantic. Mr Biden opposed Brexit, and feels strong loyalties to his ancestral home in Ireland. He warned repeatedly last year, including directly to Mr Johnson, that the Good Friday Agreement must not become a "casualty of Brexit". But a friend of Mr Biden told The Telegraph: "Boris is a conservative, Joe's a moderate [Democrat] so I think they can get over it. I think they'll end up getting along. "Joe's view will be that they'll have the destiny of the world on their shoulders so he'll want to overcome any political differences. "I think there'll be more empathy than there was between Boris and Donald Trump. Boris seemed to get along with Trump, but I don't know if he really did."

  • Rand Paul Warns One Third of Republicans Will Leave Party if GOP Senators Back Impeachment

    Senator Rand Paul (R., Ky.) warned Friday that one third of Republican voters could leave the party if GOP senators vote in impeachment proceedings to convict President Trump. Paul made the comments in an interview on Fox News’s The Ingraham Angle. The senator’s remarks come amid an increasing divide between congressional Republicans who oppose impeaching the president, and a smaller number who support the measure following the riots at the Capitol on January 6. Senate Majority Leader Mitch McConnell (R., Ky.) is reportedly hopeful that Republicans can use impeachment to purge Trump from the GOP, although he would need the support of at least 16 additional Republican senators to vote to convict. “Look, I didn’t agree with the [Capitol] fight that happened last week, and I voted against overturning the election, but at the same time, the impeachment is a wrongheaded, partisan notion, [and] if Republicans go along with it, it’ll destroy the party,” Paul said during the interview. “A third of the Republicans will leave the party,” Paul continued. “This isn’t about, anymore, the Electoral College, this is about the future of the party, and whether you’re going to ostracize and excommunicate President Trump from the party. Well, guess what,? Millions of his fans will leave as well.” While a majority of Americans believe Trump should be removed from office immediately, just 17 percent of Republicans support expelling Trump from the presidency, according to an Axios–Ipsos poll released on Thursday. Support for Trump among Republicans has fallen since the Capitol riots, however 60 percent believe the party should continue to follow Trump once he leaves office, an ABC News/Washington Post poll found.

  • MAGA protester punched by Black woman security guard fired by UMass Hospital

    The white woman caught on tape getting into a physical altercation with a Black female security guard the evening before the Capitol riots lost her job at UMass Hospital. The termination occurred after her daughter went viral for exposing her identity on social media. On January 5th, Therese Duke and a group of pro-Trump protesters that included other family members were filmed harassing Ashanti Smith, a security guard working at Black Lives Matter Plaza in Washington D.C.

  • House arrest plan for invader of Pelosi's office halted

    A federal judge in Washington on Friday night halted a plan to release and put on house arrest the Arkansas man photographed sitting at a desk in House Speaker Nancy Pelosi's office during last week's riot at the U.S. Capitol. Richard Barnett will instead be brought to Washington, D.C., immediately for proceedings in his case, Chief U.S. District Judge Beryl Howell ordered Friday night, staying a decision by another judge to confine Barnett to his home in Gravette, Arkansas, until his trial. Howell's ruling came hours after U.S. Magistrate Judge Erin Wiedemann in Arkansas set a $5,000 bond for Barnett and ordered that a GPS monitor track his location.

  • Fort Bliss Soldier Charged with Raping Fellow Soldier a Year Before Her New Year's Eve Death

    A 1st Armored Division soldier at Fort Bliss, Texas has been charged with sexually assaulting three women over the past year, including a fellow soldier who was found dead a year on New Year's Eve.

  • Georgia's First Vietnamese American State Rep Wears Áo Dài to Swear-In

    Bee Nguyen, Georgia's first Vietnamese American state representative, donned an áo dài to her swearing-in ceremony on Tuesday. Regarded as the most popular national costume of Vietnam, the áo dài for women is a long dress with a contoured top that flows over loose-fitting trousers that reach the sole of the feet. Nguyen, 39, decided to wear the garment in response to the Capitol siege on Jan. 6, in which rioters carried the South Vietnamese flag.

  • Trump reportedly began 'choreographing' premature victory speech weeks before election

    President Trump is known for going off script, but his premature presidential election victory declaration in the early hours of the morning on Nov. 4 wasn't a completely spur-of-the-moment decision, Axios' Jonathan Swan reports.In the first installment of a reported series on Trump's final two months in office, Swan writes that Trump began "choreographing election night in earnest" during the second week of October following a "toxic" debate with President-elect Joe Biden on Sept. 29 and a bout with COVID-19 that led to his hospitalization. At that point, Trump's internal poll numbers had reportedly taken a tumble, Swan notes.With that in mind, he reportedly called his first White House chief of staff, a stunned Reince Priebus, and "acted out his script, including walking up to a podium and prematurely declaring victory on election night if it looked like he was ahead." Indeed, in the lead up to Election Day, Trump reportedly kept his focus on the so-called "red mirage," the early vote counts that would show many swing states leaning red because mail-in ballots had yet to be counted. Trump, Swan reports, intended to "weaponize it for his vast base of followers," who would go to bed thinking he had secured a second-term, likely planting the seeds of a stolen election. Read more at Axios. > As I've been writing, the plan was to steal the election all along. Fantastic reporting here. https://t.co/k8C73o8vH7> > -- Jonah Goldberg (@JonahDispatch) January 16, 2021More stories from theweek.com 5 more scathing cartoons about Trump's 2nd impeachment GOP officials are reportedly worried controversial pro-Trump House members could run for Senate, governor Trump's vaccine delay is getting suspicious

  • More Inside Artist Jorge Pardo's Transformed Bushwick Carriage House

    When it came to the lighting in his home, Pardo drew inspiration from the insides of fruits, nuts, and seeds, as well as sea creatures and machine parts.Originally Appeared on Architectural Digest

  • Biden nominates Atlanta Mayor Keisha Lance Bottoms to DNC post

    Bottoms is set to be vice chair in charge of the campaign organization’s civic engagement and voter protection. Atlanta Mayor Keisha Lance Bottoms has been nominated by President-elect Joe Biden as a vice chair of the Democratic National Committee. In the role, Bottoms would be in charge of civic engagement and voter protection.

  • Some 9,000 Honduran migrants cross north into Guatemala

    Guatemalan authorities estimated Saturday that as many as 9,000 Honduran migrants had crossed into Guatemala as part of an effort to form a new caravan to reach the U.S. border. Guatemalan President Alejandro Giammattei issued a statement calling on Honduran authorities “to contain the mass exit of its inhabitants.” The migrants pushed past about 2,000 police and soldiers posted at the border Friday and Saturday, and most entered without showing the negative coronavirus test that Guatemala requires.

  • Trump administration accused of deception in pledging release of vaccine stockpile

    The governors of several states accused the Trump administration on Friday of deception in pledging to immediately distribute millions of COVID-19 vaccine doses from a stockpile that the U.S. health secretary has since acknowledged does not exist. Confusion over a vaccine supply windfall that was promised to governors but failed to materialize arose as scattered shortages emerged on the frontlines of the most ambitious and complex immunization campaign in U.S. history, prompting at least one large New York healthcare system to cancel a slew of inoculation appointments. Just 10.6 million Americans have received a shot since federal regulators last month granted emergency approval to two vaccines, one from Pfizer Inc and BioNTech and a second from Moderna Inc, the Centers of Disease Control and Prevention (CDC) reported.

  • Kudlow says he's "very disappointed" in Trump's treatment of Pence

    White House economic adviser Larry Kudlow criticized President Trump’s response to last week's U.S. Capitol siege and his treatment of Vice President Mike Pence in the aftermath of the 2020 election, in an interview with The Wall Street Journal on Friday. The big picture: Trump has lost support from a number of top aides and allies since a mob of his supporters stormed the Capitol building on Jan. 6, resulting in five deaths. Kudlow is the latest to publicly speak out against the president.Get smarter, faster with the news CEOs, entrepreneurs and top politicians read. Sign up for Axios Newsletters here.What he’s saying: “I was hoping that he would come out quickly and make statements calling everybody back and stopping the violence," he said. * The White House National Economic Council director praised the video that Trump released the day of the riot, but said he wished Trump put out a statement sooner. * Kudlow said he considered resigning after the Capitol violence, but spoke with other senior White House officials and decided that “we needed to do the work of the country in the last 10 days or so.” * Kudlow was also “very disappointed” with Trump’s public criticism of Pence. The president turned on his VP after Pence said he would certify Biden’s win. “[V]irtually, except for a few extremists, the entire legal profession agreed with Pence,” Kudlow said. * “Once the electoral college declared Mr. Biden to be president-elect, we would have been better advised to acknowledge that and to pivot toward talking about our positive achievements and the policies that generated those policy achievements.”What to watch: Trump plans to leave the White House the morning of Inauguration Day, according to multiple reports. He will then face his second impeachment trial in the Senate.Be smart: sign up FREE for the most influential newsletter in America.

  • Armed man arrested near Capitol with unauthorized inauguration pass, 500 rounds of ammo

    The suspect, Wesley Allen Beeler, 31, was stopped in a Ford pickup truck with gun-related decals.

  • Government must 'get a grip' of what is now a full-blown crisis in the fishing industry, say fishermen

    Scotland's fishermen have told Boris Johnson his Brexit trade deal leaves them with the "worst of both worlds" amid export delays and collapsing market prices. In a letter to the Prime Minister, the Scottish Fishermen's Federation (SFF) said the industry was facing "mounting financial losses" and the only way to ensure a fair price was a 72-hour round trip to land catch in Denmark. Elspeth Macdonald, the trade group's chief executive, said there was "huge disappointment and a great deal of anger about your failure to deliver on promises made repeatedly to this industry." She accused him of having "spun a line" about a 25 per cent uplift in the UK's quota and demanded urgent details of promised compensation for the disruption. Her concerns were echoed by Scotland's seafood processors, who said ministers in both London and Edinburgh need to "get a grip" of the long delays exporters are facing. A third of fishing boats in Scotland are tied up at harbours and the industry is estimated to be losing £1 million per day. Exporters warned they face possible bankruptcy amid a suspension of road deliveries due to border delays. Transport company DFDS stopped exports last week after delays in getting new paperwork introduced following the expiry of the Brexit transition period for EU border posts in France. It aims to resume the service on Monday. Paperwork has to be approved before consignments can be sent to DFDS's warehouse in South Lanarkshire and then on to English Channel ports. In her letter to the Prime Minister, Ms McDonald said: "Many fishing vessels are tied to the quay wall.” She added: "This industry now finds itself in the worst of both worlds. Your deal leaves us with shares that not only fall very far short of zonal attachment, but in many cases fail to ‘bridge the gap’ compared to historic catches, and with no ability to leverage more fish from the EU, as they have full access to our waters. "This, coupled with the chaos experienced since 1st January in getting fish to market means that many in our industry now fear for their future, rather than look forward to it with optimism and ambition."

  • Pfizer temporarily reduces COVID vaccine deliveries to Europe

    Pfizer will temporarily reduce its deliveries to Europe of its vaccine against COVID-19 while it upgrades its production capacity, the company and the Norwegian Institute of Public Health (FHI) said on Friday. The reduction in deliveries is due to Pfizer limiting output so that it can upgrade production capacity to 2 billion vaccine doses per year from 1.3 billion currently, the FHI said. "It is as yet not precisely clear how long time it will take before Pfizer is up to maximum production capacity again."

  • GOP officials are reportedly worried controversial pro-Trump House members could run for Senate, governor

    Georgia and Arizona were two of the most crucial states in this election cycle, and it looks like they'll remain at the forefront of the coming battle within the Republican Party, The New York Times reports.Things have grown tense in the Sun Belt states, where mainstream Republicans are hoping to fend off President Trump's allies. In Arizona, for instance, the state GOP is trying to censure Republican Gov. Doug Ducey — as well as former Sen. Jeff Flake (R-Ariz.) and Cindy McCain — in part because he has been "deemed insufficiently beholden to Trump," Politico reports. In Georgia, there's a faction on the right that wants to defeat Gov. Brian Kemp (R), who has faced Trump's wrath for not supporting his election conspiracy theories, in a gubernatorial primary in 2022.Both situations reportedly have the more traditional half of the Republican Party concerned — privately, the Times reports, GOP officials are concerned some high-profile members of the House that are considered staunch Trump loyalists who have "propagated fringe conspiracy theories," like Rep. Marjorie Taylor Greene (R-Ga.) and Rep. Andy Biggs (R-Ariz.), as well as Rep. Lauren Boebert (R-Colo.), could launch campaigns for Senate seats and governorships in their states in 2022. So, even as, per USA Today, Republican senators ponder whether to vote to convict President Trump in his upcoming impeachment trial, and then potentially vote to bar him from future public office, their fight against him is seemingly far from over. Read more at The New York Times, Politico, and USA Today.More stories from theweek.com Trump reportedly began 'choreographing' premature victory speech weeks before election 5 more scathing cartoons about Trump's 2nd impeachment Trump's vaccine delay is getting suspicious

  • White veteran charged in shooting Black girl at Trump rally

    A white military veteran shot and wounded a 15-year-old girl when he fired his gun into a car carrying four Black teens during a tense confrontation at a Trump rally near the Iowa Capitol last month.

  • Suspect seen crushing police officer during Capitol riot is wanted by the FBI

    “I thought, ‘This could be the end,’” the D.C. police officer said.

  • NRA declares bankruptcy, says it will reincorporate in Texas

    The National Rifle Association said Friday it has filed for Chapter 11 bankruptcy and will seek to reincorporate in Texas, calling New York, where it is currently registered, a "toxic political environment." The big picture: The move comes just months after New York Attorney General Letitia James filed a lawsuit to dissolve the NRA, alleging the group committed fraud by diverting roughly $64 million in charitable donations over three years to support reckless spending by its executives.Be smart: sign up FREE for the most influential newsletter in America. * The NRA then sued James in federal court, accusing her of violating its right to free speech. * Karl Racine, attorney general for Washington, D.C., filed a separate lawsuit in August against the gun lobby and its foundation "for misusing charitable funds to support wasteful spending by the NRA and its executives."What they're saying: "Today, the NRA announced a restructuring plan that positions us for the long-term and ensures our continued success as the nation’s leading advocate for constitutional freedom – free from the toxic political environment of New York," the NRA's Wayne LaPierre said in letter to members and supporters Friday. * "The plan can be summed up quite simply: We are DUMPING New York, and we are pursuing plans to reincorporate the NRA in Texas," LaPierre added. * "Under the plan, the NRA will continue what we’ve always done – confronting anti-gun, anti-self-defense and anti-hunting activities and promoting constitutional advocacy that helps law-abiding Americans." * "Our work will continue as it always has. No major changes are expected to the NRA’s operations or workforce. " LaPierre also claimed Friday that the NRA is "as financially strong as we have been in years," despite the organization laying off or furloughing dozens of employees, canceling its national convention and cutting salaries last year due to the coronavirus pandemic, per AP. * A spokesperson for the NRA said in May that like "every other business and nonprofit, we are forced to make tough choices in this new economic environment," per AP. * In its bankruptcy petition filed in Texas, the NRA listed assets and liabilities of as much as $500 million each, Bloomberg reported. Go deeper: The NRA's dwindling political influenceEditor's note: This story has been updated with additional details. Get smarter, faster with the news CEOs, entrepreneurs and top politicians read. Sign up for Axios Newsletters here.