Technical note: renegotiated post-Brexit tariff quotas

Original volume: the UK and EU want to keep the combined quotas the same, but some disagree

This technical note accompanies
What’s really happening on tariff quotas and Britain’s WTO commitments?

By Peter Ungphakorn
POSTED MARCH 25, 2021 | UPDATED AUGUST 21, 2021

From September 2020, the 27-member post-Brexit European Union (the “EU27”) started to reach agreement with various countries over its WTO commitments on tariff quotas following the UK’s departure. This followed complaints about the way the EU and UK had proposed to split pre-Brexit quotas for the whole EU28, described here.

But it wasn’t until March 2021 that information about this came to public attention, when the EU and US announced publicly that they had reached agreement. The EU’s announcement said it was negotiating with 21 counties and had also reached agreement with “Argentina, Australia, Norway, Pakistan, Thailand, Indonesia and others”.

In the WTO, these talks come under GATT Article 28, which deals with negotiations to modify “schedules” or lists of commitments on trade in goods. The commitments range from tariffs to agricultural subsidies but in this case the talks focus on tariff quotas — where import duties on limited quantities are low or zero, instead of much higher tariffs outside the quotas.

As far as the WTO is concerned, all information on these negotiations stays secret until the talks are over, no objections remain, and the modified commitments can be certified. Occasionally members do refer to the talks in meetings, but no documents are made public.

However, the EU has its own transparency requirements. The agreements have to be approved by the EU Council. They then have to be public.

Searching the EU Council’s database of documents confirms that talks have been concluded with all the countries in the EU’s list plus (at the time of writing) Cuba.

In 2021, the EU published updated information on all its tariff quotas here, including how the post-Brexit quotas were calculated.

So far details of eight EU agreements have been published — out of a potential 21 — following approval by the EU Council. They are with Cuba, Norway, Thailand, Indonesia, Australia, Pakistan, Argentina and the US.

Some of the adjustments are for quotas that are shared among all exporters. So far they appear in agreements with Argentina and the US. According to one document on the deal with Argentina, at least some of the changes are the result of the EU (and probably the UK) agreeing to the exporting countries demands for different base periods to be used.

The information is only from the EU’s side. The British government has released no information at all, even though UK and EU27 quotas are supposed to be linked, particularly under the principle that the split quotas should add up to the original quota for the EU including the UK (EU27+UK = EU28). EU officials are quoted saying the UK was in these talks.


No change

Two countries accept the EU27 quotas originally proposed in 2018 (details here) without any changes: Cuba (September 2020) and Pakistan (March 2021).

The agreement with Pakistan contains two additional points:

  • The EU confirms that Pakistan has negotiating rights under GATT Article 28 for husked brown rice
  • It also acknowledges that Pakistan is negotiating separately with the UK “on the remainder of the quantity taken on by the United Kingdom of the original EU’s [tariff quotas]”

That last point is intriguing. The original proposal was for the UK and EU27 quotas post-Brexit to add up to the original EU28 quotas — a straight split leaving the total unchanged. But the EU seems to be acknowledging that Pakistan could be seeking a larger quota than the UK and EU proposed, raising the possibility that in this case the two quotas add up to more than the original EU28 quota.


Changed quotas

So far six countries have reached agreements with the EU that would change the originally-proposed EU27 quotas.

Norway (September 2020) secured 1 change:

  • herring: out of the original EU28 quota of 34,000 tonnes, the EU27 takes 33,496 tonnes, up from the originally proposed 31.888 tonnes.

Thailand’s (February 2021) interests are narrow, mainly about poultry meat. In this case, out of 31 tariff-quotas, 25 were as originally proposed and 6 were changed (details here, pdf), presumably in response to Thailand’s objections about the data and method used; 4 were expanded, some substantially; 2 were reduced substantially, which brings in the UK.

If the UK and EU27 quotas are to add up to the original EU28 volumes, then changes in the EU27 post-Brexit quotas would be matched by opposite changes in the UK’s post-Brexit quotas, effectively shifting portions of the quotas between the EU27 and the UK.

Thailand would not have agreed to a 55,000-tonne decrease in the EU27 quota for cooked chicken meat if the UK had not agreed to match it with at least a 55,000-tonne increase in its quota.

Indonesia (February 2021) has 1 adjusted quota, a response to the more generic complaint that in some cases the method and data that the UK and EU used to split quotas resulted some zero quotas:

  • cassava (also called manioc or tapioca) the quota would increase from zero to 165,000 tonnes.

Australia (February 2021) secured 6 adjusted quotas — 3 increased, 2 decreased and 1 tweaked. As with Thailand, it’s unlikely that Australia would have agreed to smaller EU27 quotas without at least an equivalent expansion in UK quotas:

  • beef, up from 2,481 to 3,389 tonnes
  • sheep and goat meat, up from 3,837 to 5,851 tonnes
  • processing cheese, down from 500 to 150 tonnes) — the original allocation had zero for the UK, so presumably this is now at least 350 tonnes
  • cheddar, down from 3,711 to 1,113 tonnes — again, presumably the UK increased its share of the quota
  • semi- and wholly-milled rice, a sub-allocation tweaked
  • raw cane sugar for processing, up from 4,961 to 9,925 tonnes

Argentina (March 26, 2021) has 5 adjusted quotas, 1 quota with a reduced in-quota tariff, 1 quota with adjusted seasonal portions, and 2 new quotas specific to Argentina created within existing quotas open to all countries.

Several of these are quotas open to all countries. They have been negotiated with at least some other exporting countries: the figures for these quotas are the same in the Argentina and US agreements.

One document explains that the quota changes are based on using trade data in base periods that are more recent than the 2013–15 used in the joint UK-EU approach: 2015–2017 or 2016–2018. It’s unclear what the UK’s adjustment would be.

  • sheep or goat meat: up from 17,006 to 19 090 tonnes
  • barley (open to all): up from 306,812 to 307 105 tonnes (also in the US agreement)
  • maize (open to all): up from 269,214 to 276,440 tonnes (also in the US agreement)
  • broken rice (open to all): up from 26,518 to 28,360 tonnes (also in the US agreement)
  • grape juice (open to all): up from 0 to 2,525 tonnes (also in the US agreement)
  • garlic: Argentina’s 19,147-tonne quota access to the EU–27 is as proposed but with new distributions for the third and fourth quarters of the marketing year
  • the ad valorem portion of the in-quota duty on frozen beef is cut from 20% to 15% (also in the US agreement)
  • frozen chicken: Argentina receives a new sub-allocation of 2,080 tonnes from the 13,471 tonnes previously available to all countries, based on historical trade
  • salted poultry meat: Argentina receives a new sub-allocation of 456 tonnes from the 824 tonnes previously available to all countries, again based on historical trade

United States (April 12, 2021) has 27 adjusted quotas, 1 on the in-quota duty. Some changes are remarkably small. Several of them involve quotas open to all countries or countries without specific quotas. They have been negotiated with at least some other exporting countries. Where relevant to both Argentina and the US, the figures for the quotas are the same in the two agreements.

The US says it understand the EU has to negotiate with other countries and the EU confirms it will consult the US on any further changes. Several of these changes are reductions, indicating the UK has agreed to increase its quotas by at least the same amount:

  • beef (US/Canada quota) down from 11,481 to 10,500 tonnes
  • the ad valorem portion of the in-quota duty on frozen beef is cut from 20% to 15% (also in the Argentina agreement)
  • pork, various cuts (quota 015) down from 6,133 to 4,786 tonnes
  • pork, boneless loins and hams (quota 017, open to all countries) down from 12,680 to 5,720 tonnes
  • pork, boneless loins and hams (quota 018, US only) scrapped from 1,698 tonnes to 0
  • skimmed-milk powder (open to all) down from 68,536 to 62,917 tonnes
  • potatoes (open to all), up from 4,292 to 4,295 tonnes
  • tomatoes (open to all): up from 464 to 472 tonnes
  • carrots and turnips (open to all): up from 1,192 to 1,244 tonnes
  • cucumbers (open to all): up from 500 to 647 tonnes
  • dried onions (open to all): up from 9,696 to 9 770 tonnes
  • almonds (open to all): up from 85,958 to 86,223 tonnes
  • fresh sweet cherries (open to all): up from 105 to 151 tonnes
  • common wheat: up from 571,943 to 572,000 tonnes
  • barley (open to all): up from 306,812 to 307,105 tonnes (also in the Argentina agreement)
  • maize (open to all): up from 269,214 to 276,440 tonnes (also in the Argentina agreement)
  • paddy rice (open to all): up from 5 to 7 tonnes
  • semi- or wholly milled rice (US sub-allocation of quota 076): adjusted to 25,772 tonnes (original allocation not found)
  • semi- or wholly milled rice (US sub-allocation of quota 077): adjusted to 1,910 tonnes (original allocation not found)
  • broken rice (open to all): up from 26,518 to 28,360 tonnes
  • grape juice (open to all): up from 0 to 2,525 tonnes (also in the Argentina agreement)
  • food preparations (quota 112, open to all): up from 702 to 783 tonnes
  • food preparations (quota 113, US only): up from 831 to 1,286 tonnes
  • other preparations for animal feeding, low/no milk (quota 121, open to all): up from 2,746 to 2,800 tonnes
  • other preparations for animal feeding, low/no milk (quota 122, open to all): up from 2,670 to 2,700 tonnes
  • dog and cat food (open to all): up from 1,393 to 1,732 tonnes
  • processed shrimp, Pandalus borealis (open to all): up from 474 to 500 tonnes

Meanwhile, on March 19, 2021, the EU and UK proposed extending the six-month deadline for concluding negotiations with other WTO members from July 1, 2021 to January 1, 2022.


Updates:
August 21, 2021 — adding links to updated EU pages on tariff quotas
June 16, 2021 — correcting the figures for Australia, cheddar
May 6, 2021 — adding Argentina and US, and adding information on revised base periods
March 26, 2021 — adding Indonesia

Photo credits: Sliced pie | Henry Be via Unsplash CC0, manipulated

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