R British Sugar Plc v Secretary of State for International Trade
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 24 February 2022 |
| Neutral Citation | [2022] EWHC 393 (Admin) |
| Docket Number | Case No: CO/1034/2021 |
| Court | Queen's Bench Division (Administrative Court) |
and
[2022] EWHC 393 (Admin)
Mr Justice Foxton
Case No: CO/1034/2021
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Marie Demetriou QC, Tristan Jones and Malcolm Birdling (instructed by Herbert Smith Freehills LLP) for the Claimant
Aidan Robertson QC, Tim Johnston and Richard Howell (instructed by the Government Legal Department) for the Defendant
Kieron Beal QC (instructed by Ashurst LLP) for the Interested Party
Hearing dates: 1, 2 and 3 February 2022
Further written submissions: 8 February 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A INTRODUCTION
This application for judicial review seeks to challenge the decision, taken under Part 1 of the Taxation (Cross-border) Trade Act 2018 ( the 2018 Act) and given effect by the Customs (Tariff Quotas) (EU Exit) Regulations 2020 ( the Regulations), to provide for an autonomous tariff quota ( ATQ) for raw cane sugar, such that no import duty was payable on the first 260,000 metric tonnes (mt) imported for reg.
The challenge is brought by the Claimant ( British Sugar) against the Secretary of State for International Trade ( the Secretary of State). The application was originally brought on the basis that the decision to for the ATQ had been the Secretary of State's. The application was resisted on the basis that the decision had been taken jointly by the Secretary of State and Her Majesty's Treasury ( The Treasury). However, on 17 January 2022 the Government Legal Department ( GLD) wrote to British Sugar stating that it had come to GLD's attention in the course of preparing the Secretary of State's skeleton argument that the decision in question had not been taken by the Secretary State jointly with the Treasury, but by the Treasury on the Secretary of State's recommendation, with the decision as to the form of the ATQ (particularly as to whether it would involve licensing or be operated on a “first come, first served” basis) having been taken by the Secretary of State for the Environment, Food and Rural Affairs ( SSE). Sensibly, the parties were able to agree that the hearing would proceed on the basis that the challenge was brought to the Secretary of State's recommendation to the Treasury.
The Interested Party ( T&L) is the only refiner of raw cane sugar in the United Kingdom ( UK) on any appreciable scale. It is common ground that, to date, it has imported well over 99% of the raw cane sugar which has benefited from the ATQ.
British Sugar contends that the Secretary of State's decision to recommend the ATQ was unlawful on two grounds:
i) Ground 1 alleges that the ATQ constituted unlawful State aid to T&L, contrary to Article 10(1) of the Protocol on Ireland/Northern Ireland ( the Northern Ireland Protocol), a protocol to the Agreement on the withdrawal of the United Kingdom from the European Union of 24 January 2020 ( the Withdrawal Agreement).
ii) Ground 2 alleges that the ATQ constituted an unlawful subsidy to T&L, contrary to Chapter Three of Title IX of Part II ( the Subsidy Control Provisions) of the Trade and Cooperation Agreement between the UK and the EU ( the TCA).
It will be necessary to say a little more about these two regimes, and their interrelationship with each other, in due course. Before doing so, I will set out my findings as to the underlying facts.
B BACKGROUND AND FINDINGS OF FACT
B1 The refined sugar market
The UK is what is known as a “deficit country” so far as refined sugar is concerned, which is to say that it cannot meet the entirety of demand within the UK for this product from sugar refined domestically. In broad terms, the evidence before me established that:
i) 50% of the demand for refined white sugar was met by British Sugar, which refines sugar extracted from domestically-grown sugar beet at four sites in England. By virtue of being domestically-grown, no tariff applies to the sugar beet used by British Sugar.
ii) There is no market for imported sugar beet. However, sugar beet imported from the European Union ( EU) benefits from a zero tariff under the TCA.
iii) 25% of the demand is met by T&L, which is the only refiner of cane sugar in the UK of any appreciable scale, and produces refined sugar using raw cane sugar imported from tropical and semi-tropical countries outside the EU at a factory in London.
iv) The remaining 25% of the demand is met by importing refined sugar from the EU, where it is mostly produced by refining locally-grown sugar beet (on which no tariffs are paid by the refiners) but also from raw cane sugar originating in certain French départements and régions d'outre-mer.
B2 The legislative regime
S.1 of the 2018 Act provides for the imposition of import duty “by reference to the importation of chargeable goods into the United Kingdom”. S.8 provides for the Treasury to make regulations establishing and maintaining a customs tariff in force. S.8 provides:
“(5) In considering the rate of import duty that ought to apply to any goods in a standard case, the Treasury must have regard to—
(a) the interests of consumers in the United Kingdom,
(b) the interests of producers in the United Kingdom of the goods concerned,
(c) the desirability of maintaining and promoting the external trade of the United Kingdom,
(d) the desirability of maintaining and promoting productivity in the United Kingdom, and
(e) the extent to which the goods concerned are subject to competition.
(6) In considering the rate of import duty that ought to apply to any goods in a standard case, the Treasury must also have regard to any recommendation about the rate made to them by the Secretary of State.
(7) In considering what recommendation to make, the Secretary of State must have regard to the matters set out in subsection (5)(a) to (e).
(8) In this section ‘a standard case’ means a case other than one to which any of sections 9 to 15 or 19(4) apply (preferential rates, quotas, tariff suspension, safeguarding, etc).”
As is apparent, s.8(8) contemplates that there will be a standard case and a series of departures from that standard case.
The first departure, s.9, is for preferential rates which are lower than the standard tariff as a result of “arrangements with the government of a country or territory outside the United Kingdom.” There are zero rate tariffs in operation under this section by reason of arrangements between the UK and:
i) ACP countries (African, Caribbean and Pacific countries first given duty free access on sugar imported into the EU, subject to a quota limit, under the Lomé Convention 1975 and its successors); and
ii) the EU by virtue of the TCA; and if the UK-Australia Free Trade Agreement ( FTA) is ratified and has been in force for 8 years, there will be no tariffs on imports from Australia.
S.10 provides for preferential rates which the UK applies unilaterally to goods “originating from an eligible developing country”. Under this section, Regulations 3, 6 and 12 of the Trade Preference Scheme (EU Exit) Regulations 2020/1438 provide for a trade preference scheme to be known as the GSP or Generalised Scheme of Preferences for Least Developed Countries, and imports within this scheme are subject to a zero tariff.
S.11 deals with quotas and provides:
“(1) Regulations may make provision for determining the amount of import duty applicable to any goods that are subject to a quota.
(2) Goods are subject to a quota for the purposes of this section if—
(a) Her Majesty's government in the United Kingdom makes arrangements with the government of a country or territory outside the United Kingdom and the arrangements contain provision for the goods concerned to be subject to a quota, or
(b) the Treasury otherwise consider that it is appropriate for the goods concerned to be subject to a quota.
(3) Regulations may make any provision that the person making them considers appropriate for the purposes of this section, including (for example)—
(c) provision for a quota in respect of specified goods to be subject to a licensing or allocation system (see also subsection (4)) …
(6) The power to make regulations under this section providing for a quota in respect of specified goods to be subject to a licensing or allocation system is exercisable by the Secretary of State.
(7) The power to make regulations under this section containing any other provision is exercisable by the Treasury; and, in considering what provision to include in the regulations, the Treasury must have regard to any recommendation made to them by the Secretary of State.”
S.11(2)(a) addresses tariff quotas which result from bilateral or multilateral arrangements, and s.11(2)(b) addresses unilateral tariff quotas. If the UK-Australia FTA is ratified, then this will give rise to a tariff quota under s.11(2)(a) in its first 8 years of operation. It was agreed before me that the effect of s.11(7) is that it is for the Treasury to make ATQ regulations having regard to the recommendations of the Secretary of State, save that the decision whether the ATQ should be subject to a licensing or allocation system is a matter for the SSE or another Secretary of State.
S.19 provides for regulations making provision for full or partial relief from a liability to import duty. Under s.19(2)(c), such provision may be...
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