Last Updated on Saturday, 17 June, 2023 at 10:47 am by Andre Camilleri
The Maltese consumer should not pay higher prices due to Brexit. In talks with Labour MEP Alex Agius Saliba, local importers and consumers raised their concerns about increases in prices following the withdrawal of the United Kingdom from the European Union in January 2020. In open dialogue with stakeholders, MEP Agius Saliba acknowledged their concerns about the impact of the increase in prices and the technicalities which led to such increases.
The free trade agreement reached between the European Union and the United Kingdom should – in theory – allow for the free movement of goods and services without any hindrance or added cost. The actual realities faced by local importers are however much different, and many end up paying a tariff of 16.9% – even on products that were made in the EU, exported to the UK and then imported to Malta. Imported goods must satisfy strict criteria on rules of origin to be eligible for the tariff waiver. The exporter must prove that a sizeable share of the value of the product (usually around 50%) was produced in the EU or in another country with which the EU has a free trade agreement, such as the UK. Malta’s small size does not make it viable for importers to source the goods involved directly from the country of origin, hence long-standing ties with UK suppliers are used to procure the small quantities needed for the local market.
Determining rules of origin may be a complex and bureaucratic process in some instances. It is estimated that around 32% of UK firms do not know whether their products meet these rules or not. Manufacturers may sometimes deem that the added bureaucracy required to prove that their products are eligible for tariff waiver is not worth the hassle. This is especially the case for manufacturers without a broad export clientele across the EU. Malta may be the sole export client in some cases, particularly foodstuffs. UK products are sometimes preferred over similar products made in the EU due to long-standing customs from Malta’s colonial past, and our shared language which makes it much easier for the Maltese consumers to understand a label written in English than one written in another EU language.
This matter will soon repeat itself for electric cars, which as from next year must be 45% made in the EU to be eligible for the tariff waiver. In this case Malta’s preference for UK cars derives from the shared driving side of the road.
As MEP Alex Agius Saliba explained, “This anomaly is leading to what I call a Brexit tax, which is not being paid by those who chose to exit the European Union but by the Maltese consumer, including the most vulnerable in our society”. Labour MEP Agius Saliba has requested the European Commission to find a just solution for the unique circumstances faced by Malta to ensure that Brexit does not become a burden on Maltese consumers.