Sanctions

Part of the debate – in the House of Commons at 5:45 pm on 22nd September 2022.

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Photo of Mark Eastwood Mark Eastwood Conservative, Dewsbury 5:45 pm, 22nd September 2022

I join my hon. Friend Kevin Hollinrake in welcoming the Minister to his place, and I also find myself in the strange position of thanking the shadow Minister for raising the issue of loopholes. This is an issue specific to my constituency, and relates to a business that has potentially been affected by such loopholes. I speak on behalf of JD UK/Alunet Systems, but I clarify that I will be supporting the sanctions and will not press the House to a Division—I am sure there will be a sigh of relief all round.

Alunet Systems is a group of companies based in Dewsbury that sells a wide variety of metal-based products, including aluminium, steel, and iron-based garage doors. Before the invasion its revenue was £30 million per annum, but that has now reduced to £20 million. It employed 100 people, but that has now reduced to 70. That could be down to a potential loophole in the Russia (Sanctions) (EU Exit) (Amendment) (No. 11) Regulations 2022, which should be on an equal level to the amendments to schedule 2B under the Republic of Belarus (Sanctions) (EU Exit) (Amendment) Regulations 2022—I am not trying to confuse Members.

The company’s previous Belarusian supplier, Alutech, which supplied aluminium and sectional garage doors, has found a potential loophole to avoid the impact of sanctions on the import of products containing steel and iron from Belarus and Russia. The Belarusian company entered the UK market directly after JD UK ceased trading with it. Belarusians have claimed about 30% of JD UK’s iron and steel customers, and about 15% of its aluminium customers through price dumping. That is a loss of about £10 million in revenue from a British business based in my constituency.

Amendments to schedule 2B under the Republic of Belarus (Sanctions) (EU Exit) (Amendment) Regulations 2022 banned the import of iron and steel consigned from or originating in Belarus, and they applied to all commodity codes starting 72 or 73. Chapter 7 of the Russia (Sanctions) (EU Exit) (Amendment) (No. 11) Regulations 2022 covers iron and steel imports and acquisitions under schedule 3B. However, that does not seem to extend to the same range as stated for Belarus, and includes only some elements of the 72 and 73 codes, but not all. One of JD UK’s products—sectional garage doors—contains steel and has a commodity code starting 7308. It is banned under the Belarus amendment, yet is still available to import if the components are Russian. I am sure the Minister would agree that the difference in sanctioned goods has a significant potential to threaten JD UK’s business sales, and encourages Alutech to export via Russian subsidiaries instead of Belarus. That is an unintended consequence of the sanctions.

Currently, no sanctions are in place regarding exports of aluminium from Belarus. Again, the Belarusian company contacted several of my constituent’s major customers, offering to supply them aluminium profile directly from its Belarus factory. The lack of sanctions and/or high enough tariffs on aluminium exports could allow the Belarusians to threaten my constituent’s business sales in the UK. The current 35% tariff regime for aluminium products has made it unviable for my constituent to continue conducting business with Belarus. However, Alutech in Belarus is diverting material through Russia and continuing to sell at very attractive prices, making more profit than selling through my constituent. Alunet suggests that, unless the loophole closes, its revenue from aluminium is likely to fall by another £10 million, which would make the business unviable. It also suggests—I would like the Minister to consider this—that the tariff against Russia and Belarus be increased to 100% to make it more consistent.

I have some questions for the Minister, which I hope he can respond to. First, how will the Government make the position unviable for Russian and Belarussian companies that exploit these anomalies, loopholes or whatever we want to call them? To support British businesses, please will he clarify why there are such differences between the Belarusian and Russian sanctions, and also outline what will be done to protect our UK markets? In summary, will he reassure Alunet that he will take these matters into consideration so that we can protect a Dewsbury business that employs so many people in my constituency?