Mars warns of supply chain job cuts under WTO rules

Tariffed trade barriers would push Mars’s costs up, and would threaten the supply chain and jobs that came with it, Mars global president Fiona Dawson warned the American Chambers of Commerce to the EU today (March 10).

“The absence of hard borders with all their attendant tariff, customs and non-tariff barriers allows for this integrated supply chain, which helps to keep costs down,” Dawson said.

“The return of those barriers would create higher costs which would threaten that supply chain and the jobs that come with it.”

Consumers would inevitably end up paying the price if Prime Minister Theresa May failed to strike an adequate trade deal with the EU, she said.

“If Britain ends up trading with the EU on the basis of WTO rules, ‘Most Favoured Nation’ rates would come into force,” Dawson said. “In the area of confectionery, that alone would mean tariffs of around 30%.

‘Higher prices’

“Unfortunately there is no way that those costs could be absorbed without flowing through to consumers in the form of higher prices.”

A return to trade barriers would undermine integrated supply chains, which are crucial to distribution in the food sector, Dawson said.

Dawson’s warning came after CBI president Paul Drechsler claimed that without an EU trade deal, the UK would have to rely on WTO rules. That would “hurt both sides of the Channel”. Businesses across Europe were concerned about added tariff costs should the UK fail to agree a trade deal, he added.

Drechsler said: “We should be under no illusions about what this would really mean. A ‘no deal’ scenario would open a Pandora’s Box of economic consequences.

‘Worst-case scenario’

“Firms are worried about this ‘worst-case scenario’. Some are getting ready for it to reduce economic damage, but in reality many firms can’t prepare because the cost of change is simply too high to even consider it.”

Both Drechsler and Dawson believed agreeing a deal that worked in everyone’s best interest was the way forward.

“An ambitious, comprehensive deal covering every sector is what’s best for Britain, it’s what’s best for Europe and we’ll do everything we can to get it,” Drechsler said.

Theresa May outlined her 12-point Brexit plan in January. See the box below for more.

Meanwhile, last month fellow confectionery firm Mondelēz International blamed Brexit for its £2.9bn drop in last year’s revenue.