Trade Remedy Measures: UK Interests

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.[Official Report, 27 February 2019, Vol. 655, c. 1MC.] 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?

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.

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 with both industry and 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, during the implementation period, 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 were 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 under 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?