Trade Remedy Measures: Uk Interests

Part of the debate – in the House of Commons at 5:05 pm on 25th February 2019.

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Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade 5:05 pm, 25th February 2019

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.[This section has been corrected on 27 February 2019, column 1MC — read correction] 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.