Food would be cheaper outside the customs union

Our Campaign Manager, Chloe Westley, appeared on BBC Andrew Marr show on Sunday and talked about the benefits to consumers of leaving the customs union. On the programme, she referenced a statistic about how much cheaper food could be outside the EU customs union, referencing a book written by our policy analyst, Ben Ramanauskas, called 'Why the Cost of Living is so High'. 

The Cost of Living book made the point that the tariffs placed on food imports as a result of the Common Agricultural Policy of the EU increases food prices for UK consumers. As part of this, it cited a paper written by Halligan & Lyons for Policy Exchange which calculated that food prices in the UK is approximately 17 per cent more expensive as a result of the common external tariff.[1]

This figure is corroborated by Dr Kristian Niemietz of the Institute of Economic Affairs who found that food prices inside the EEA were 17 per cent higher than the market price.[2] Furthermore, an examination of the data provided by the World Trade Organisation reveals that there are high tariffs placed on certain food products which are imported from outside of the EEA.[3]

These tariffs, combined with farming subsidies, and the EU’s food standard regulations, increase food prices for UK consumers substantially.[4] [5] [6] [7]

If you would like to read more about this, Ben has also written a piece for CapX on this point. In it, Ben says:

"There is a cost of living crisis in the UK. One of the main drivers of this is the high price of food which is caused by the Common Agricultural Policy. Leaving the Customs Union would allow the UK to abolish tariffs on food products and to remove other barriers to trade which increase the price of food."

 

 

[1] Halligan, L., & Lyons, G., Clean Brexit, January 2017.

[2] Niemietz, K., Abolish the CAP, let food prices tumble, January 2013.

[3] WTO, Tariff Profiles: European Union, http://stat.wto.org/TariffProfiles/E28_e.htm.

[4] OECD, Agricultural Policies in OECD Countries: At a Glance, (Paris: OECD Publishing, 2006), p. 69, Table 2.12.

[5] Agriculture & Horticulture Development Board, Poultry Pocketbook, May 2016.

[6] United States Department of Agriculture, Retail prices for beef, pork, poultry cuts, eggs, and dairy products, 2017.

[7] Brookes, G., & Barfoot, P., ‘GM crops: global socio-economic and environmental impacts 1996-2014’, PG Economics Ltd, 2016.