Commons statement on Trade Remedy Measures: UK Interests - Feb 25

As part of the Government’s preparations for leaving the European Union, the Department for International Trade has been determining which existing EU trade remedy measures should be transitioned once the UK operates its own independent trade policy. From the outset, in the October 2017 trade White Paper, the Government made a commitment to maintain those trade measures currently applied by the EU that matter to UK interests. The subsequent call for evidence published in November 2017 sought to establish which goods covered by EU anti-dumping and anti-subsidy duties are produced in the UK and whether UK production met the criteria to be transitioned. Provisional findings were published in July last year, with interested parties given further time over the summer to respond. Having completed their analysis of those responses, the Government will publish their final findings today.

 

Of 109 existing EU measures, we will maintain 43 where they are directly applicable to the UK and have met the criteria to be maintained. Those measures cover a wide range of goods, from ironing boards to aluminium foil, to ensure continued protection from known unfair trading practices for important industries such as steel and ceramics. The measures will be in place and take effect from either 29 March, in the event of a no-deal UK exit from the EU, or at the end of the implementation period with the EU. That will also apply to any definitive safeguard measures that are in place on exit either on 29 March or at the end of an implementation period.

 

At the same time, the UK will not transition the remaining 66 EU measures that currently apply, because the measures did not meet our criteria as set out in the call for evidence. I remind the House that those criteria were: first, that the Department received an application from UK businesses; secondly, that the application was supported by a sufficient proportion of the UK businesses that produce those products; and thirdly, that the market share of the UK businesses that produce those products is at least 1%.

 

This is not about picking favourites. As I said previously, we will provide UK industry with a level playing field, enabling businesses to trade fairly with their international competitors. As I just set out, our decision about whether to maintain measures was based on whether those measures mattered to the UK. We cannot, for example, transition measures where there is no UK production, as that is not compliant with our World Trade Organisation obligations, nor is it in the UK’s wider economic interests. Where measures are not transitioned, that will reduce costs for UK users of these products, lead to lower prices for UK consumers and benefit related industries such as food and construction. To provide just a couple of examples across different sectors, the final findings will see the removal of a 34% tariff on imports of solar glass from China, which is used to produce solar panels, and a 10% tariff reduction on imported sweetcorn from Thailand. This is just one of the benefits of the UK being able to operate its own independent trade policy, tailored to the specific needs of our people, businesses and communities.

 

The European Union has recently imposed safeguards on several categories of steel products in the form of tariff rate quotas. Safeguards can be used to protect domestic industry from surges in imports. They act as a safety valve and provide industry with some breathing space to adjust to increased imports. Under WTO rules, safeguards can only be used if unforeseen surges in imports are causing serious injury or there is a threat of serious injury to domestic industry. The Department for International Trade is working to ensure that these safeguards can be transitioned effectively, including setting the tariff rate quotas at an appropriate level for the UK market and reviewing the product scope, so that the safeguards only cover steel products made in the UK. I will be in a position to update the House on that shortly.

 

Turning back to the transition of anti-dumping and anti-subsidy measures, all transitioned measures will be maintained at the same level set previously by the European Commission until the UK Trade Remedies Authority completes a full review. This approach is a clear demonstration to our WTO partners of our continued commitment to a rules-based international trading system. The Trade Remedies Authority review will decide whether transitioned trade remedy measures should continue, and if so, at what level. It is designed to ensure that all interested parties have the opportunity to take part.

 

Once complete, the resulting measures will fully reflect the UK market situation based on UK-specific market data. The reviews will include an assessment of the risk of dumping or of subsidy recurring if measures are removed, an analysis of injury to UK producers and an assessment against the UK economic interest test. While the time taken for each review and their timing will be a matter for the Trade Remedies Authority to determine, we anticipate each review will take between 12 and 18 months to complete. I would very much like to thank the MPs from across the House who responded to the consultation process and those who made strong representations on behalf of specific interests in their constituencies.

 

As the House will know, work to establish the Trade Remedies Authority itself is well advanced, with over 80% of staff appointed. As I set out in my letter of 14 February to the International Trade Committee, in the event that the Trade Bill does not receive Royal Assent until shortly after exit day, I have prepared contingency options to ensure that we can deliver a fully operational trade remedy system. This contingency plan means that, until the Trade Remedies Authority is legally established, the staff recruited to and trained for that body can instead carry out their functions as part of the Department for International Trade. Once the Trade Bill receives Royal Assent, the drafting of the contingency regulations is such that trade remedy functions will immediately revert to the Trade Remedies Authority as a non-departmental public body. I intend to lay the secondary legislation giving effect to this option shortly. This will enable staff to begin reviews of transition measures. As far as possible, they will follow the same procedures as those that will apply once the Trade Remedies Authority is finally established.

 

Whatever the outcome of our negotiation with the European Union, UK industries can be confident that we are taking the necessary steps to ensure we are able to operate our own independent trade remedies framework, avoid exposing them to known unfair trade practices and maintain the existing trade remedies measures that matter to their interests. We are of course committed to ensuring that UK industries receive the protection they need, but I am absolutely aware that trade remedies measures can increase the cost of affected products for user industries and consumers, as well as the competitiveness of both user and producer industries. That is why the principles we have set out for our trade remedy system include the need for proportionality. The system we are introducing ensures appropriate account will be taken of the impacts on users and consumers and on the wider trade agenda. I commend this statement to the House.

I thank the Secretary of State for advance sight of the statement today. He is right of course that, as we transition, we will need to have our own trade remedies in place. In his response, he may play fast and loose with our opposition to the Trade Bill, but he will know that our opposition was principled on the basis that we disagreed with many of the measures contained therein. We do, none the less, need to have measures in place.

 

We are just five weeks away from leaving the UK and possibly operating our own trade remedies, yet the Trade Bill, which establishes the Trade Remedies Authority, is still stuck in the other place due to the Government’s refusal to set out a transparent and democratic approach to trade agreements. Will the Secretary of State confirm that the Manufacturing Trade Remedies Alliance’s suggestion is correct that it would have been possible to maintain the existing EU remedies until they came up for review? Indeed, if he accepted my party’s proposal for a customs union, he would ensure the continuity of trade remedies and that EU safeguard measures would not apply to British exports.

 

However, the Secretary of State has proceeded, as he wants, to fast-track the UK into the sort of less regulated economy he has always favoured. Rather than presuming to maintain trade remedies and maintain the status quo, so eager is he to begin cutting tariffs and opening up UK markets to cheaper imports that the Government have decided to presume that all such measures will be terminated, unless a case is made to maintain them. Such measures will undoubtedly increase the volume of imports on UK markets at less than fair market cost. After all, that is why the trade remedy measures were imposed in the first instance, following lengthy investigations by the EU. Indeed, at a time when the Department has faced repeated criticism about Brexit preparedness and priorities, when the Secretary of State has failed to bring forward the Trade Bill, when he has failed to discuss the 40 trade agreements that he promised would be ready “one second after midnight” after Brexit, and when the Government have failed to present a workable Brexit deal, why did he choose to ignore the MTRA?

 

The Government have failed to produce coherent evidence for these policy decisions; nor have they carried out an impact assessment. Indeed, many will be concerned that today’s findings are little more than policy-based evidence to support the Secretary of State’s free trade quest.

 

The Government’s handling of Brexit has been absolutely chaotic, no more so than in the extraordinary approach taken to delivering the UK’s trade policy. Any claims that the Government are acting in the interests of British business in ensuring continuity of trade on existing terms completely fall apart in the face of the evidence. The Secretary of State is chasing trade agreements with his gold tier friends across the Anglosphere and prioritising efforts to liberalise UK markets as part of his free trade experiment. In carrying out this consultation, the Government have refused to consider evidence from trade unions and civil society groups, instead only accepting arguments presented by a producer or group of producers who collectively meet what originally was an unspecified volume of production and/or who had an unspecified market share in those goods.

 

The Government’s intended agenda is clear. While they have explicitly stated that only evidence submitted from producers may be considered in the determination of the continuation of an existing measure, they have welcomed the views of downstream producers and consumer interest groups. That further compounds the concerns of our producers that the Government’s primary objective is cheaper prices, no matter how that might decimate manufacturing in the country. If people lose their jobs, cheaper prices will be of scant consolation.

 

There have also been recent reports that the Secretary of State wishes unilaterally to reduce all tariffs to zero in the event of a no-deal Brexit—a move that has been met with alarm and shock by our producing industries and which I detailed extensively in our debate last Thursday. Unfortunately the Secretary of State has refused to confirm that he has abandoned that folly. On zero tariffs, there has been no comprehensive formal consultation, no comprehensive impact assessment and no prolonged transition proposed. Such a significant decision would have far-reaching consequences for the UK economy and would demand full parliamentary scrutiny.

 

This Government have long stood against the interests of our producers and the jobs they maintain in our heartlands—from the Potteries to the valleys. The UK Government have repeatedly blocked efforts by the European Union to reform trade defence measures and, through the establishment of the Trade Remedies Authority, have taken a substantially different approach from the existing EU regime. The EU has since modernised those measures, as the UK no longer participates in those discussions. That resulted just last month in the EU introducing a range of safeguard measures to apply to steel imported into the EU, taking into account social and environmental factors in determining distortion in production. UK steel exports to the EU will likely be subject to the additional measures, which will undermine UK steel competitiveness in those markets. Indeed, the vast majority of UK steel exports are to the EU or to those countries with which the EU has a trade agreement. The Government’s trade policy priorities and failure properly to secure trade continuity arrangements jeopardise that.

 

The concerns of our producing industries are manifold. How will reviews of the maintained trade remedies be conducted? In determining the UK’s approach, will the Secretary of State accept the findings of any separate EU review? Will he accept evidence submitted by producers in respect of ongoing reviews or investigations by the EU as qualifying for automatic inclusion in any subsequent review or investigation to be carried out by the UK? What analysis has his Department carried out in respect of the impact of terminating trade remedy measures, and what assessment has it made of the unilateral reduction of trade tariffs to zero?

We got there just before Brexit, Mr Deputy Speaker.

 

The hon. Gentleman did not say very much about trade remedies, so there is very little to respond to. In fact, it is a great example of “If you haven’t got anything to say, don’t say anything”. The Government’s policy is quite clearly correct and is supported by what he calls producers but I call employers. I know it was a slip of the tongue and that he did not mean that his policy is to leave the UK—I am sure that is the policy of the SNP.

 

The hon. Gentleman says that I want a less regulated economy. Yes, of course I want a less regulated economy, but it is against the rules of the WTO to impose regulations and trade remedies where there is no UK production or where we do not meet the threshold. Is he actually suggesting that we maintain remedies where there is no UK business and industry to protect, to the detriment of our consumers who will pay higher prices without protecting anything in the UK itself?

 

The hon. Gentleman talks as though cheaper prices are somehow a bad thing. I would love to see an improvement in the disposable income of people across all income ranges. If we can do that by removing tariffs—which are effectively taxes—by procedures such as this, we should be willing to do so. In fact, this is one of the real advantages of our ability to leave the European Union—to set our own tariffs.

 

The hon. Gentleman asked about the Trade Bill. Report stage in the House of Lords will be on Monday 4 March. He does not seem to understand the consultation we have had. We have engaged widely with stakeholders. He said correctly that we have spoken to those who produce these products, but we have spoken to those who are involved further downstream and whose costs may be reduced by what we are doing. We have spoken to trade associations, in particular UK Steel and the British Ceramic Confederation. We have had bilaterals, roundtables and technical meetings. We have written to all MPs twice, which one would have thought covered a very wide range of consultation if MPs are doing what they should be doing in their constituencies.

 

On the European Union, if we go into an implementation period, all trade remedies will be rolled over and we will adopt any new European trade remedies during that period.

An excellent statement with a good balance: protecting our industries against dumping where needed, but giving our customers more choice and lower prices where we do not have an industrial interest. Will my right hon. Friend promise me that those same excellent principles will be applied when he sets out our full tariff schedule, where I hope, for example, we will have zero tariffs on imported components to give a really big boost to British industry?

The Treasury will bring forward the appropriate statutory instruments relating to that soon.

In evidence given about the formation of the TRA, the Law Society of Scotland said:

 

“it is important that any assessment of impact of particular trade measures takes into account a wide range of stakeholder interests. This should involve balancing the interests of producers and consumers, which may sometimes be directly opposed, as well as consideration of the wider public interest.”

 

That, of course, means consideration of measures such as the anti-dumping and subsidy measures that were in the provisional report published last July.

 

The methodology for determining whether measures would be maintained or rescinded, again published last July, included a great deal about production—supporting firms’ production, total domestic production, opposing firms’ production—and a great deal about the market, UK firms’ domestic sales and total domestic sales including imports. Those who have solely producer metrics are in the tables that were published last July—the producer application received, the support threshold met, the market share threshold met—and that led to some apparently contradictory decisions. Reinforcing bar from Belarus would have its measures terminated, but reinforcing bar from China would have its measures maintained. Tubes and pipes of ductile cast iron from India would be terminated, but welded tubes and pipes of iron or non-alloy steel from Belarus would be maintained. There were contradictions in what were apparently similar items.

 

May I therefore ask the Secretary of State—I know the updated version will be published soon—why was no weight given to the consumer interest explicitly? Why was no weight given to the wider public interest explicitly? Why do those outcomes seem so arbitrary for what would appear at face value to be similar products?

Our intention is to maintain protection where there is a case to protect British businesses from unfair trading practices. We have looked at the evidence that the EU put in place to have these remedies in the first place and we think there is a suitable case for doing it. The hon. Gentleman asked me a very specific question about rebar steel. The reason that we have maintained measures on China and terminated measures in other cases is because no producer interest was expressed. They made no application for that to happen during the call for evidence and therefore, it did not fall within the criteria that we set out for the consultation and which I reiterated in my statement.

I thank my right hon. Friend for the extensive consultation that he has carried out both with industry and with Members of this House. Will he confirm, for the 43 EU remedy measures that we are maintaining, that none the less, his new Trade Remedies Authority will be able, during the implementation period, to be able to start to review those measures to ensure that consumers are not paying any higher prices for goods than strictly necessary?

I can confirm that and, as I said, we will want to use British market-sensitive data to do that. At all times, we want to maintain the correct level of protection so that our businesses are not subject to unfair trading practices such as subsidies and dumping, but at the same time, we want to ensure that where we can reduce tariffs and therefore prices for consumers without in any way reducing the protection of British business, we will be able to do so. As my right hon. Friend the Member for Wokingham (John Redwood) said, it is a subtle, but important balance.

Will the Secretary of State please explain to the House why the Trade Bill is taking so long to gain Royal Assent? Will he also list which trade unions he has included in his consultation on the trade remedies strategy?

As I said, the Trade Bill will be on Report in the House of Lords next week. I hope that the Opposition will ensure that it can pass into law as quickly as possible—the Government will certainly not impede it. I cannot tell the hon. Lady which specific trade unions were involved, but I shall write to her with a response.

I listened very carefully to the question/statement that the shadow Secretary of State, the hon. Member for Brent North (Barry Gardiner), made, and he sounded so not in favour of the Trade Bill that it was rather worrying. May I ask the Secretary of State what would happen to those protections if the Trade Bill is thwarted somehow by the Opposition?

As I said in my statement, if we are unable to get the Trade Bill through, which provides legal underpinning of the TRA, we will use mechanisms under the Taxation (Cross-border Trade) Act 2018, but I would want to see the Trade Bill go through as soon as possible, because it gives us the best possible legal underpinnings for the mechanisms that we are putting in place.

When we talk sometimes about national security, we think about military and defensive measures. This is about our economic security and businesses that are potentially at threat of being undercut by unfair subsidies from China or elsewhere, putting our workforce and their livelihoods on the line. Will the Secretary of State give us an absolute guarantee that our economic security is not going to be weakened after 29 March? It is clear that the haphazard way in which he has not managed to give the Trade Remedies Authority a proper, legal basis yet makes this look as though it is all held together by a box of matches and sticky-back plastic. We need strong defences for our country and surely that has to include strong economic defences as well.

The hon. Gentleman is absolutely correct. We do need to look after our economic interests, which is why we need a Trade Remedies Authority that is able to put these trade remedies in place and review them. We did not vote against the establishment of the Trade Remedies Authority; the Opposition parties did so by voting against the Trade Bill in what would otherwise be an act of economic vandalism, were we not stepping in to ensure that businesses such as steel and ceramics are properly protected.

What is it about ironing boards?

Like all the other elements that I mentioned, they in one way or another provide jobs for people in the United Kingdom, and the Government will ensure that industries whether large or small are given the appropriate protection from unfair trading from overseas.

When does the Secretary of State expect the Trade Remedies Authority to be established, and what additional costs will be incurred before it is?

It is impossible to give a date. The right hon. Gentleman’s colleagues in the other place, who have been so holding up the Trade Bill, have more effect on the date than I do. He might want to have a word with them.

I congratulate my right hon. Friend on his statement. Its value for both business and consumers is plain. Does he agree that it underpins the importance of ensuring that we do not have a forever customs union of the sort that has been highlighted as a very bad thing, inter alia, by the Leader of the Opposition?

Were we to have a customs union, we would forever have to apply to the UK the trade remedies decided by the European Union, which might apply remedies to areas where there is no production in the United Kingdom, carrying a cost for our consumers but no benefit to our producers. That would seem to me to be one of the strongest arguments for leaving in the first place.

The Secretary of State and the House will be aware that trade remedies can equally be imposed against the UK. He will also be aware that in the event of a no-deal Brexit we are likely to see—according to the British Retail Consortium—trade measures linked to WTO tariffs and new regulatory checks hit the cost of sourcing food from overseas by up to 40%. Given that his Trade Remedies Authority is not likely to be able to do anything about that, would it not be a good time for him to announce that he will join other Cabinet Ministers in insisting that the Prime Minister takes a no-deal Brexit off the table this week?

There were several completely different issues in that question. I think that the hon. Gentleman is to some extent confusing the issue of most favoured nation day-one tariffs with the tariffs that come from trade remedies. No remedies could be applied to the United Kingdom unless we were in breach of WTO rules on subsidies and dumping. I assure him that under a Conservative Government that is simply not going to happen.

I thank my right hon. Friend for his statement. Trade remedies are an incredibly important measure for the protection of British industries, but they should not be used as protectionism. Can I urge my right hon. Friend that as we move forward as an independent nation free of the European Union we use our seat on the World Trade Organisation to highlight and champion the cause of free trade around the world?

Like my hon. Friend, I am, I would like to think, a great champion of free trade, but that does not mean a free-for-all. There have to be rules to ensure that there is fair trade in the global trading system. That means that those countries that purposely overproduce, dump and subsidise, and are therefore not part of a fair trading system, should be penalised for doing so.

Some 9,000 jobs in Wales depend on the steel industry. Further to the question from my hon. Friend the Member for Dundee East (Stewart Hosie), some steel products figure in the list of 43 measures to be maintained, but others appear in the 66 measures to be terminated. Will the Secretary of State give an absolute guarantee that the measures to be terminated will not lead to steel jobs being terminated in Wales?

I am encouraged by the reaction of UK Steel, who very much welcome the Government’s measures. In a very small number, such as rebar, we have maintained the remedy, where the industry itself has said that it wants to and it meets the threshold: we have not done so where there is either no production in the UK or there has been no representation from any UK producer that we should carry forward such a remedy.

As my right hon. Friend knows, the steel industry is vital for Corby. Can he say a little more about what these developments today mean for the steel industry in this country and for my constituents in particular?

I am grateful to my hon. Friend for his constant support for, and defence of, steel interests in his constituency and elsewhere. Today we are setting out to show the industry that we will continue to provide the same level of protection, and the same remedies at the same level, to which it has become used in the European Union, and for the same reasons. Those remedies are in place because there has been very unfair treatment in the global steel industry, especially in the form of overproduction, subsidy and dumping. We will ensure that the British steel industry is never subjected to those pressures.

My right hon. Friend mentioned this in his statement, but will he give a more explicit commitment that under a Conservative Government we will always seek to drive down tariff barriers where that is possible—and drive down prices for consumers—while protecting the industries in the United Kingdom from unfair and distorted competition from overseas?

Wherever we can bring down prices to make the disposable incomes of people throughout the United Kingdom go further, we will do so. That is a sound Conservative principle. We will also cut tariffs where we can do so without any potential disruption or disbenefit to UK business and industry, because tariffs are taxes. We are able to take those measures today because we will no longer have to apply remedies—that is, taxes—to the UK in areas where there is no UK production, but there is currently EU production. It is an act of economic liberation.

The Trade Remedies Authority sounds like a good idea, but it is a quango. It used to be a “sound Conservative principle” that we would reduce the number of quangos. I think it was our policy at one time that for every new quango introduced, two would be abolished. Before the authority is formally, officially established, will the Secretary of State identify two quangos that will get the chop?

Given the short time for which my Department has existed, we have not yet developed such bodies. I will convey my hon. Friend’s representations loudly and clearly to my departmental colleagues, but I must say to him that the Trade Remedies Authority is necessary for the protection of key British businesses and the application of international trade law. If we cannot get the Trade Bill through on time, I will take contingency measures to ensure that those protections are given to British businesses, and that international trade law is upheld.

It is always a pleasure to see you in the Chair, Mr Deputy Speaker.

 

The Secretary of State will be aware of Torbay’s vibrant photonics industry, which manufactures and exports particularly to the United States. I welcome the continuing commitment to protecting industries in which there is production, but does he agree that it would make absolutely no sense to go on protecting industries that do not exist in this country, which would merely drive up prices for consumers?

I find it bizarre that what I interpret as the position of the Labour Front Bench today is to maintain trade remedies where there is no UK producer interest. It does not comply with WTO law, but even if it did, it would make no economic sense whatsoever to apply increased cost to the United Kingdom unnecessarily. I think that that shows how utterly confused, and confusing, Labour’s policy in this area is.

I thank my right hon. Friend for his statement, and particularly for his reference to the ceramics industry. Does he agree that it is essential for the ceramics industry in Stoke-on-Trent that we maintain the level playing field in trade against those unfair practices, and prevent those who want to flood the UK market with low-value goods from doing so and threatening British manufacturers?

One of the reasons I looked forward to making my statement was that I would be protected from the persistent but not unwelcome badgering of my hon. Friend about ceramics in his constituency. In recent months, he has made the point forcefully and frequently in every corner of the building in Whitehall. Yes, I do agree with him: while we want our imports to fall given the cost to consumers, protection is necessary when countries are following policies that are designed to undermine the concepts of international trading law. We will resist those. We are rolling over the protections for the ceramics industry today because it is very vulnerable to the practices of dumping, overproduction and subsidy which we so deprecate.