A Conservative donor that was one of the only large UK businesses publicly to back leaving the European Union will get a tariff break worth up to £73m next year in one of the government’s first post-Brexit trade reforms, an Unearthed investigation has found.
Tate & Lyle Sugars (T&L) stands to be the sole beneficiary of a government decision to allow tariff-free imports of up to 260,000 tonnes of raw cane sugar next year, when the UK’s post-Brexit ‘transition’ arrangements with the EU come to an end.
The US-owned company’s refinery in Silvertown, East London, is the country’s only importer of raw cane sugar – the UK’s other sugar producers use sugarbeet, grown domestically or in the EU.
The government move has provoked fury from British farmers, who say it is “offshoring legitimate environmental concerns” by forcing them to compete with sugarcane grown to lower environmental standards than the UK’s.
T&L aims to increase imports from major cane producers like Brazil and Australia, which allow intensive use of hazardous and bee-killing pesticides that are banned in the UK. Brazil last year cancelled a 10-year-old ban on sugarcane growing in the Amazon rainforest.
The trade reform comes after years of aggressive campaigning by T&L for a Brexit that removes import tariffs on sugarcane.
Ministers need to come clean on what lobbying took place prior to this decision
Unearthed found the company met with government ministers to discuss trade policy and Brexit at least 10 times between 2017 and mid-2019, and sponsored the lanyards at the 2017 Conservative Party conference. That sponsorship was recorded by the Electoral Commission as a donation of £8,287.
Labour shadow environment secretary Luke Pollard said the government had “serious questions to answer” about the zero tariff quota.
“Not only is the government refusing to protect British farmers from being undercut by cheap imports, it is now striking sweetheart deals with Tory donors in big business,” he said.
“Tate & Lyle’s connections into the Conservative Party run deep. Ministers need to come clean on what lobbying took place prior to this decision.”
But Tate & Lyle Sugars’ senior vice president Gerald Mason said the company had been “quite transparent” about its issues with the EU.
“Yes, we have ministers visit the refinery to talk about the issues,” he told the Observer newspaper. “We have Labour Party politicians, we have Lib Dem politicians. Anybody that can help us secure the future of our business in the UK, we will speak to very openly and transparently.”
The Department for International Trade was approached for comment, but had not responded by time of publication.
‘Golden Opportunity’
T&L has always seen Brexit as a “golden opportunity” to get rid of what it considers discriminatory tariffs imposed on sugarcane by the EU. This led it to become one of the only significant UK employers to back a ‘hard Brexit’, leaving even the EU customs union.
But T&L’s Gerald Mason said it was “just wrong” to see the new tariff-free allowance as “Tate & Lyle’s quota”.
“Anybody can import [raw cane sugar],” he continued. “Anybody can refine it if they want to get into the industry.
“It’s not us that are going to get any money from this. It’s our competitors that have been subsidised by the EU all these years. What it will do is allow us to buy from some extra countries that we can’t buy from today. It is not a cash subsidy. We would never buy from suppliers where we have to pay the full tariff, because it’s uneconomic.”
Under the UK Global Tariff that comes into force next year, imports of raw cane sugar outside the tariff-free quota would cost T&L £28 per 100kg, a similar rate to the €33.90 tariff currently in force under EU rules. This means if the company makes full use of next year’s 260,000 tonne quota it will save £72.8m on the standard rate. According to the Grocer magazine, T&L imported 447,000 tonnes of raw cane sugar in 2018-19.
T&L can and does already import some raw cane sugar tariff-free under EU rules, but this has to come from low-income countries like Mauritius and Belize that have higher production costs than Brazil or Australia. It can also import some raw cane sugar from Brazil under an EU quota for the country that gives a discount on the full tariff.
T&L says the EU’s tariff restrictions on its imports from the biggest producers have resulted in its business running at a loss.
