Steel Safeguards

Part of the debate – in the House of Commons at 12:36 pm on 29th June 2022.

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Photo of Anne-Marie Trevelyan Anne-Marie Trevelyan The Secretary of State for International Trade and President of the Board of Trade 12:36 pm, 29th June 2022

With permission, Mr Speaker, I will make a statement on the Government’s final decision regarding the UK’s steel safeguards.

A strategic steel industry is of the utmost importance to the UK, especially given the uncertain geopolitical and economic waters that we are all charting. Trade remedies are one of the ways that Government can protect their businesses. Trade remedies tackle issues of dumping, unfair Government subsidies or, as in the case of safeguards, give businesses time to adjust to unforeseen increases in imports.

When we left the EU, the UK rolled over the relevant trade remedies that were already in place. That included safeguards on 19 different categories of steel imported into the UK from the rest of the world. Last year, the Trade Remedies Authority reviewed those measures and recommended keeping the safeguard on 10 categories of steel and removing it on nine. On 30 June 2021, the Government announced that they would extend the safeguard, as recommended by the TRA, on 10 product categories of steel for three years and remove it on four of the remaining nine, but that they would extend the safeguard for one year on five categories of steel to allow further time to review them.

In March this year, we passed legislation to allow the Government to take responsibility for the conduct of transitional reviews and reconsiderations of any transitional review. In March, I called in the reconsideration of the steel safeguards with the new authority. The TRA has since completed additional analysis for my consideration. I have considered its report and findings and have concluded that there would be serious injury, or the threat of serious injury, to UK steel producers if the safeguards on the five additional categories of steel were to be removed at this time.

Given the broader national interest and significance of this strategic UK industry and the global disruptions to energy markets and supply chains that the UK faces, we have concluded that it is in the UK’s economic interest to maintain these safeguards to reduce the risk of material harm if they are not maintained. I am therefore extending the measure on the five steel categories for a further two years until 30 June 2024, alongside the other 10 categories. That means that the safeguard will remain in place on all 15 categories, updated from 1 July to reflect recent trade flows.

The Government wish to make it clear to Parliament that the decision to extend the safeguards on the five product categories departs from our international legal obligations under the relevant World Trade Organisation agreement as it relates to the five product categories. However, from time to time, issues may arise in which the national interest requires action to be taken that may be in tension with normal rules or procedures.

The Government have therefore actively engaged with interested parties—including those outside the UK—on the future of the UK safeguard, and have listened to the concerns raised, including the needs of the many thousands of people employed throughout our downstream steel industry, who play a vital role in the economic life of the UK. Throughout the investigation, downstream users of steel have raised concerns about difficulties in sourcing some steel products in the UK, particularly those classified under category 12. I have listened to those concerns and am acting to protect this vital part of the economy by increasing the tariff rate quota on category 12A to ensure that it better reflects trade flows.

The Government have also decided to suspend the safeguard measure for steel goods coming from Ukraine for the next two years. The Government are clear that we will do everything in our power to support Ukraine’s brave fight against Russia’s unprovoked and illegal invasion and to ensure long-term security, prosperity and the maintenance of the world order from which we all benefit. The Government have already removed all tariffs under the UK-Ukraine free trade agreement to zero to support Ukraine’s economy. This decision means that Ukrainian steel will not be subject to the additional safeguard quotas and duty.

These are unusual times. The aftershocks of the gravest pandemic have combined with the biggest war in Europe since 1945, the spike in energy costs is creating huge stresses on manufacturing, global steel markets are facing persistent overcapacity, and the TRA’s findings provide clear evidence of serious injury or the threat of serious injury to our UK producers. The Government have a duty to use our democratic mandate to the greatest possible effect to protect the interests of the British people and provide leadership in these challenging times. On balance, we have therefore decided that it is in the vital public interest that the Government act to protect the steel sector, which is why we have taken these steps.

We believe that our approach is in the public interest. The decision has been taken collectively and with reference to the ministerial code, noting the conflict that I have outlined. It has been a finely balanced decision. Steel is a vital industry for the UK and is in constant use in our everyday lives, but the global position for steel production is challenging. The use of unfair subsidies contributes to global overcapacity, putting domestic industries at risk around the world, so the measures that I am announcing today will further support our steel industry and those who work in it. They come on the back of the Government’s having secured an expansive removal of section 232 tariffs on imports of UK steel and aluminium products into the USA, which came into effect earlier this month. The tariff-free volumes that we have secured mean that UK steel and aluminium exports to the US can return to levels not seen since before 2018.

It is important to remember that safeguards are a temporary, short-term measure. We will continue to work with international partners, alongside other Departments, to support our domestic steel sector for the long term. I hope that the House will support the Government’s stance in defending our strategically important steel sector. I commend this statement to the House.