GENOA (Sputnik) – Internationally famous Italian “pasta al pomodoro” and wine may become much less affordable for consumers in the United Kingdom if UK and EU politicians do not reach a trade agreement and Brexit happens without a deal, chambers of commerce said on Tuesday.
He said this during the webinar entitled “The Future of Trade Relations Between UK and Italy.”
Earlier on Tuesday, the eighth round of post-Brexit talks between the United Kingdom and the European Union began in London, with UK Prime Minister Boris Johnson’s October 15 deadline to reach a free trade agreement pending. The round is due to conclude on Thursday. The possibility of a no-deal Brexit is looming ahead, as both sides have blamed each other for the lack of progress in the previous seven rounds of negotiations.
“Italy exports 130 million litres of wine per year into the UK, that is a particularly important sector for the Italian economy. On that we know that if there is no deal, 10 pounds [$13] will be applied in duty to every hectoliter of, should we say, red wine from Tuscany, and 26 pounds per hectoliter of prosecco. That is quite significant for the wine sector,” Tom Noad, the president of the British Chamber of Commerce for Italy, said.
If there is no agreement, the UK Global Tariff, published in May, is set to replace the EU’s Common External Tariff on 1 January, 2021, at the end of the transition period, the official explained.
“Good news for exports there is that 70 percent of goods have zero-percent of duties applied on them. For other sectors, in particular in the Italian economy, for example for export in automotive — 10 percent tariff will apply … and then the agrifood sector, which is very important for ‘Made in Italy,'” Noad said.
Alessandro Belluzzo, the president of the Italian Chamber of Commerce and Industry for the UK, echoed Noad’s concern over the difficulties that the Italian agrifood sector is going to face.
“We were used to getting everything or most of the things without tariffs, and we are going to see a steep of course talking about pasta and tomato. So, pasta al pomodoro will cost much more if there is no deal in place for duties that will be applicable in the UK. There is a list of products that will be affected by this,” Belluzo said.
Most likely the burden of the possible new tariffs on the Italian products will fall on the shoulders of consumers, Josh Hardie, the deputy director-general of Confederation of British Industry, noted.
“I suspect that one of the many effects of the pandemic is that resilience of business is less able to absorb those costs. So I think it is realistic in many areas to expect that cost to be passed on to consumers who are themselves dealing with challenges because of the pandemic,” he said.
According to Hardie, even a “thin deal” would bring significant benefits for businesses in comparison to no deal at all.
“With no deal, the relationship will be damaged, and it could take a very long time for us to get back … So a deal is absolutely essential. We expect politicians and negotiators to do that job. A deal is possible, it is achievable. If it is not achieved, it is a political failure,” he said.
In such conditions, exporters on both sides must prepare themselves for new market realities, study the global tariffs that can be applied and be ready to adjust supply chains, Belluzzo emphasized.
Diplomats who attended the webinar organized by the chambers of commerce in both countries sounded less alarmed than business organizations.
“We do share the desire, which was also expressed by Prime Minister Johnson, to reach a deal quickly. The EU and Italy will continue supporting the EU and chief negotiator [Michel] Barnier engaged constructively in the negotiations from the very beginning. The EU team is fully concentrated to make the most out of this week of negotiations. We hope that some good results will be achieved,” Raffaele Trombetta, the Italian ambassador to the UK, said.
Jill Morris, the UK ambassador to Italy and San Marino, noted that the two countries have important economic links, and in 2019, Italy was the UK’s eighth-largest trading partner.
According to Trombetta, bilateral turnover dropped by 15 percent in the first six months of 2020, but Italy retains its strong position as the UK’s trade partner.
This week, the UK House of Commons is planning to vote on the government’s new bill aimed at nullifying key parts of the Withdrawal Agreement with the EU that was signed by former Prime Minister Theresa May, which, in turn, hampers reaching a post-Brexit deal, set to be finalized by the end of this year. If adopted, the provisions that include agreements on state aid and Northern Ireland customs would be overridden.