Leaving the EU: Future Trade Remedies

– in Westminster Hall at 4:39 pm on 17th April 2018.

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Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South 4:39 pm, 17th April 2018

I beg to move,

That this House
has considered future trade remedies after the UK leaves the EU.

It is a pleasure to introduce this debate with you in the Chair, Mr Hollobone. If our future trade proves as free and fair as I know you will be, we will be making progress.

I am grateful for the opportunity to raise the hugely important and wide-ranging issue of the trade remedies that will be employed by global Britain after we leave the European Union. To bring focus to the debate, I will mainly address the position faced by the modern ceramics industry and other advanced manufacturing businesses in Stoke-on-Trent, but I am sure that other Members will be able to draw parallels with relevant trading sectors in their constituencies.

In 2017, the UK’s total trade in goods and services deficit was 1.4% of GDP. Importantly, that looks to be the lowest annual deficit this century. Indeed, I checked the Office for National Statistics historical data series, and it looks to me to be the lowest deficit as a percentage of GDP since 1998 and less than half what it was in Labour’s economic meltdown of 2008. I am not sure whether the Department for International Trade has made much of that fact, but perhaps it should. That, combined with the record foreign direct investment into the UK in 2017, shows that something in our trade policy is strengthening our international position. It is imperative that we identify what that something is—what works in our trade policy while we are an EU member state—and look to continue what works after we leave the EU or replace it with something at least as effective, and preferably even more so.

Photo of Nick Thomas-Symonds Nick Thomas-Symonds Shadow Solicitor General, Shadow Minister (Home Office) (Security)

I congratulate the hon. Gentleman on securing the debate. Does he agree that we need transparency about how we calculate duties, not least in the steel industry, where we could do with great transparency about how we calculate the level of dumping, for example?

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South

I agree that it is important that we have a transparent and open approach. It is certainly important to ensure that there is transparency through an independent trade remedies authority.

Most pressingly, I seek assurances from the Minister that we will have effective anti-dumping measures which ensure that there is a level and fair playing field on which free trade can be played out. Our job is to embrace the opportunities of Brexit and use Britain’s position as a leading member of the World Trade Organisation to push for free and fair trade globally. We need the same level and fair playing field globally that we pushed for on the regional stage of the single market as a member of the European Union.

Thanks to this Government, global Britain starts from a solid economic base, underpinned by a world-renowned and hugely attractive legal system with sound governance rules that has been hard built over centuries. The UK is a great place to do business. In a competitive world, it needs to be. I do not argue that we should reinvent the corn laws—far from it. British industry must continue its efforts to be more productive and innovative. Although our modern industrial strategy will create an environment from which winners can emerge, it will not pick winners, and it will not prop up or bail out those who fail to satisfy their customer base, diversify their product range or provide the right value for money with products that are worth every penny of their competitive price.

I am hugely encouraged that manufacturing productivity increased by 2.6% in the fourth quarter of 2017, not just because that might be a signal that we are finally resolving the productivity puzzle but because it shows that the renaissance of British manufacturing and export success is, unlike what some people claim, built on more than the current low trading range of the pound. It is true that the lower pound helps with finding new markets in the short term, but achieving longer-term competitiveness will be key to keeping those markets and expanding them when exchange rates change again. Getting domestic policies right, keeping taxes and the regulatory burden down and getting skills and the entrepreneurial spirit high is every bit as important to our future trade as the adoption of remedial measures sanctioned by the WTO.

By getting both domestic policies and international rules right, and having free and fair rules-based markets guiding both, we can continue to boost the number of UK firms that engage in export markets. That is not just theory; it is happening in practice. City A.M. reported only yesterday that, according to Lloyds bank’s latest business barometer, two in five businesses in the UK are planning to export for the first time or enter a new market within six months. The prospect of increased profits and turnover is the main reason why firms are looking to expand their business abroad. Almost one fifth explained that they were looking to export due to existing demand overseas, while only 13% were driven by exchange rates. There are big growth markets out there, and the Prime Minister is right to highlight and drive the amazing opportunities for trade across the Commonwealth.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention), Shadow PC Spokesperson (Business, Energy and Industrial Strategy)

I congratulate the hon. Gentleman on securing the debate, but it seems to me that we are entering a global trade war, largely driven by the protectionist policies of the United States. Is it his view that domestic industries are better protected within the EU customs union or outside it?

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South

I do not think it needs to be. We should pursue opportunities globally. As I said, there are real opportunities out there in the Commonwealth—and, yes, with the United States, too—to improve our trade links and the opportunities of trade for British businesses, such as those in my Stoke-on-Trent constituency.

We need more businesses to be confident exporters. For that, they need the right skills, the right support from DIT, the right trading opportunities and trade agreements negotiated by Britain in the British national interest. We need of course to ensure that, as a nation, we make full use of digital technology and use the internet as a worldwide exports showroom and sales platform. But we also need to guard against material retardation of the establishment of new industries in the UK, either from barriers to entry due to costs or regulation here at home, or from imports that are unfairly and illegally dumped or subsidised by those who wish to nip competition in the bud.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

I congratulate the hon. Gentleman on securing this important debate, and I apologise that I have to leave shortly to be on the Bench in the main Chamber. Does he agree that it would help to ensure free and fair trade if the calculation of dumping were stated transparently in the Trade Bill, which is due to come back on Report? That would give a lot more confidence to industries that need confidence, such as ceramics and steel.

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South

As the hon. Gentleman says, there are a number of issues, and I will come on to more of them.

Looking forward to our global future, although there is necessarily some uncertainty about the final Brexit deal because negotiations are still under way, I welcome the Government’s acknowledgement that free and fair trade must operate within a rules-based system and that options must be available for countering those who break those rules. That is to say that fairness means everyone playing by the rules—or, as Nigel Lawson once said, “Rules rule: OK?” However, those rules need to be clear, fair and consistent. If they are not, we risk pent-up grudges feeding economic nationalism, full-scale protectionism and eventual trade decline. I therefore hope that the Minister will give us additional assurances that will soothe industries that look for as much clarity and transparency as possible from the Government when making their investment decisions.

The British Ceramic Confederation, which is a founding member of the Manufacturing Trade Remedies Alliance, is keen to maximise confidence in the sector that the UK’s framework for post-Brexit trade will be effective and open to the full range of remedies allowed under WTO agreements. Those agreements allow for three types of trade remedy: anti-dumping measures, countervailing duties and safeguards. I will focus on anti-dumping measures, because there are genuine concerns among BCC members and others that measures that the UK has previously actively supported may fall short of the proposed new economic interest test. Part of the concern is that it is not clear how that test would apply in practice, because, of course, it seems to be billed as something different from a public interest test; an innovation that goes beyond the public interest test in its calculations. Clarity from the Minister on that would be welcome.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

The hon. Gentleman is being generous. On the point he is making, if we look at the systems of New Zealand, Canada and the US, we do not see additional tests. It would therefore seem perverse for the UK to introduce additional tests, which are not necessary in the best cases we see around the world.

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South

The hon. Gentleman is right. Some of what has been proposed has not been experienced around the world; we will be testing something out that has not been tried. I will move on now, and I will not take many more interventions as time is short, but it would be particularly helpful to know whether the intention is that trade remedies would be applied before any test or only after the test. As the Manufacturing Trade Remedies Alliance has argued, duties could always be refunded retroactively if any test found that trade remedy measures were not in the public interest.

Current trade rules have served the ceramics sector well against outrageous dumping by countries that have far less regard for the spirit of free trade and the necessary rules underpinning free market economies. For example, just 10 years ago, we saw huge volumes of ceramic tiles, giftware and tableware all made in China being dumped at a price that could not have covered the real cost of production. The investigations into those price anomalies found that they were such clear cut cases of dumping that the EU still imposes remedial duties today.

There are good reasons for maintaining those duties after Brexit. Not least is the fact that since the measures against tile dumping were introduced in 2011, employee numbers in the UK have increased by about 40%. Not every new job will have been created as a result of the anti-dumping duties—the economy recovered substantially and employment grew significantly across many sectors in that time—but it is clear from the evidence that anti-dumping measures underpin the ceramics sector’s ability to take advantage of the Government’s wider pro-enterprise policy agenda, giving breathing space for the industry to invest in becoming more resilient.

Indeed, as recently as 2016, an expiry review of anti-dumping measures in the ceramic tiles market found overcapacity in the Chinese industry equal to six times total EU annual consumption. The anti-dumping duties on Chinese tiles were therefore extended for a further five years. I hope that the Minister will confirm that those measures will apply at least for the rest of those five years once we have left the European Union. Similarly, in the giftware and tableware sector, UK employee numbers have increased by 20% since anti-dumping measures were introduced. Our ceramics manufacturers are currently preparing a complaint for an expiry review. If the complaint is successful, the investigation will take place while we are still in the process of leaving the EU, so for clarity the industry would surely welcome any indication the Minister can give that the continuation of any EU anti-dumping measures that might result from any expiry review will also apply in the UK market.

In addition, the ceramics industry is keen for Ministers to reflect on how difficult it can be to counter dumping if the definition of dumping is too narrow. Unscrupulous actors who seek to dump their goods will be unscrupulous in exploiting any loopholes they see. For example, it may not be appropriate to rely on the price in the home market from which imports come when those imports originate from heavily distorted economies—that is to say from countries where market situations are distorted by the interventions of the state, which is usually an undemocratic state working outside the norms of transparency and governance that we take for granted.

On dumping calculations, I am therefore eager to learn what view the Government take on ensuring that the Taxation (Cross-border Trade) Bill makes it clear that there are circumstances in which the difficulty in determining normal value in the presence of state distortions means that provisions should be made for when it is not appropriate to use the domestic price. By clarifying how the Trade Remedies Authority would, in anti-dumping investigations, calculate the level of dumping for cases in which the domestic price of the alleged dumped imports cannot be used, there will be legal certainty and greater confidence in the ceramics industry.

I also wish to raise the Government’s proposed use of a minimum market share in relation to the acceptance of dumping—or indeed subsidy—complaints. I would be grateful for clarity on their intentions. Will a de minimis level be set and, if so, at what level? What rules for flexibility might there be in that level? For example, will there be flexibility if an industry has evidence that it is being materially retarded from achieving the minimum market share by dumping or subsidies, if previous injury from dumping has reduced an industry to the de minimis level, or if an industry plays a peculiarly important role in a particular area of the UK, though not across the UK economy as a whole?

As we leave the EU, almost everyone now agrees that the Brexit process should not be some sort of sharp shock; it should be a growing opportunity, with a smooth transition period in which to adjust to the new reality of global Britain. Will that transition include the retention of existing trade remedies for the ceramics sector, followed to their full course and renewed if necessary? Such an assurance from the Minister would be extremely welcome.

While the Department for International Trade will rightly be proffering carrots in seeking free trade deals for global Britain, in terms of opening access to the UK market, it should also let it be known that we will keep some big sticks in our trade policy array should tit-for-tat measures prove necessary. Brexit is a great opportunity for us to be a leading independent force in the WTO, and the champion of free and fair trade across the world. It will take time to convince all other members of our case, and in that time we will have to be ready to combat egregious distortions. However, the direction of travel should be clear: freer markets, freer trade, and an empowered and liberated entrepreneurial British spirit, with more of our world-class manufactured goods reaching global markets, all of it underpinned by a sense of enforceable fair play. That is the Brexit that my constituents voted for, and that is the direction in which I hope the Minister will be pleased to travel.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

The debate can last until 5.45 pm. I am obliged to call the Front-Bench spokespeople no later than 5.23 pm. The guideline limits are: five minutes for the Scottish National party, five minutes for Her Majesty’s Opposition, 10 minutes for the Minister, and two or three minutes for Mr Brereton to sum up the debate at the end. Until 5.23 pm there is time for other contributions.

Photo of Colin Clark Colin Clark Conservative, Gordon 4:58 pm, 17th April 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend Jack Brereton on securing this timely and valuable debate. I am optimistic about the prospect of the United Kingdom having an independent trade policy after Brexit. That policy will rely in part on us having an effective trade remedies framework, as he mentioned.

The UK Government’s call for evidence, which ran between November and March to identify interests with respect to existing EU trade remedy measures, was a welcome development, and I look forward to the response. I doubt that the EU’s approach to trade remedies has been entirely perfect. The UK can formulate a better policy, more tailored to our interests as an independent trading nation.

As my hon. Friend said, different constituencies have different issues. In my constituency it is very much about oil and gas, agriculture and the service sector. Trade remedies are important to my constituents and the businesses that create the jobs on which the constituency very much depends. We are concerned about anti-dumping policy, because agriculture and trading in commodities are particularly exposed to that risk. The EU’s protectionist approach to agriculture has naturally discouraged countries from reducing barriers to agri-food from the EU. I hope that we can chart a different course, but we need to be careful that we open up opportunities with the rest of the world. The same goes for subsidies in agriculture, which is a heavily subsidised industry worldwide. We need a level playing field and we must be very conscious, if the EU carries on with its levels of subsidy, of the need to ensure that we do not allow that to distort our own agricultural output.

Oil & Gas UK has said that if the UK can get minimal tariffs with the EU and improved tariffs with the rest of the world, that could save the oil and gas sector £100 million a year. The sector will be worth something in the region of £1 trillion over the next 20 to 30 years, according to Oil & Gas UK’s own figures. It is an absolutely enormous sector. However, free trade does not mean being a doormat. When other countries’ subsidies go beyond what is reasonable and start threatening our industries, we should not be afraid to step in. Energy is a heavily subsidised industry in the rest of the world.

I will point out a couple of recent developments in the north-east, because it is important for our future trading opportunities and because I am conscious of the Department that is responding to this debate. I recently visited a social organisation called Elevator, which drives entrepreneurial opportunities, predominantly in the north-east of Scotland. The north-east of Scotland is the engine room of the Scottish economy, with 7% of the population and 15% of the economy. When the oil industry turned down in the north-east of Scotland, it had a huge effect on the Scottish economy and a significant effect on the United Kingdom economy. Many of the start-ups that Elevator is involved in are export-driven, and I encourage the Department to open an office—in Aberdeen, surprisingly enough—to develop those opportunities.

The global Britain opportunity is huge. In terms of future trade opportunities, it is important to note that the north-east of Scotland is a dollar-driven economy, where 60% of the service sector in oil and gas is exporting outwith the EU. The vast majority is outwith the EU. It has a target of doubling in size, and the natural areas in which it will look to grow will be the middle east, the far east and other oil and gas production areas.

Much has been said about the negative effect of Brexit and of changing our trading arrangements with the EU, but a recent survey found that over 50% of companies said they were not worried about Brexit causing a talent shortage. However, 33% were worried, so we need to ensure that we get the policy right.

I look forward to better trading agreements on Scottish fishing. Norway already has a better trading arrangement with Japan and the far east than we do, and there is an enormous opportunity to develop, since 80% of fish from British waters is eaten outwith the UK at the moment. We need to have a seamless deal with Europe and to develop new opportunities in the rest of the world. Taking back control of our waters will necessitate new trading deals and opportunities.

I am optimistic about the future. There is a balancing act to be achieved, and I firmly believe that the UK Government can do it better than the EU, and have a tailor-made deal that works for Scotland and the whole of the United Kingdom.

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster 5:03 pm, 17th April 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend Jack Brereton for securing this debate on future trade remedies. He is ahead of the curve on this issue, because amid the wrangling over Brexit we have rather overlooked the profile that this issue will have. I believe that it will become ever more pressing as we chart a new path beyond the EU. It is therefore important at this stage, as we draw up our Trade Remedies Authority, that we get its basic structure right.

As I have said before in this House, we are lucky to be among the first generation of politicians in more than 40 years to be drawing up our own independent trade policy, but that means we are also very green as a nation in fully grasping trade legislation and its implications. None the less, these are issues of enormous relevance to consumers and to businesses of all sizes in our constituencies. It is all well and good for us to be free traders in principle, but in practice many of those principles can be sorely tested when producers in our own constituencies are challenged by international competition. Indeed, they can be tested to breaking point when that competition is able to undercut domestic businesses due to the state subsidy or economic structure of their own countries.

My hon. Friend spoke eloquently about the capacity of Chinese pottery firms to undercut domestic industries, with a speed that can pull the rug from under industries that have been carefully developed over many years. Equally, however, cheaper products from abroad can be a boon to other industries, for instance by providing cheap steel for car manufacture, helping to retain production on these shores and delivering cheaper prices for consumers. These are not simple issues and they must be carefully considered.

As a member of the International Trade Committee, which has been closely examining the Government’s plans to set up our own Trade Remedies Authority, I have been encouraging the Government to study the arrangements of respected trade authorities in other nations, particularly the US and Canada. Throughout the TRA process I have been concerned about the amount of power being vested in the hands of the Secretary of State, including over appointments to the TRA’s board. I am also concerned about whether the TRA will be sufficiently skilled and resourced for what can be extremely intensive investigations.

In the US, the body responsible for injury investigations alone, the United States International Trade Commission, has several hundred employees. Given the difficulty that the Select Committee has securing sufficiently knowledgeable domestic trade panellists, we have a considerable recruitment challenge on our hands. As we leave the EU, there is the chance to produce a more flexible and responsive trade remedies model. UK Steel sees the EU’s decision-making process as monolithic, with too much power in the hands of the Commission and a heavily politicised system. We have opted for an approach similar to Australia’s, but in a recent Committee session one of our panellists expressed concerns that producer interests are beginning to take a much stronger precedence in that system.

I still believe that we would do well to consider the bifurcated model of the US and Canada, with subsidy and injury investigated separately to avoid politicisation and bias. With our TRA’s chair and non-executive members all appointed by the Secretary of State, and with the Secretary of State retaining the ultimate say on the imposition of a trade remedy, I must confess that I am uneasy about the concentration of power in ministerial hands, given the prospect of a much more interventionist Opposition taking power.

Our new regime must be open and transparent, and have integrity and credibility. I therefore suggest that we try to take steps to ensure that the executive board of any TRA is open to independent scrutiny, perhaps through the Select Committee, rather than being only a matter for the Secretary of State to decide. I am sympathetic to my hon. Friend’s concerns about dumped and subsidised produce, and the issue of transparency on the economic interest and public interest tests. Trade remedies are currently a highly political issue, and it is vital that our own desire to secure trade deals does not prevent us from imposing trade remedies if we need to in the event of dumping.

It is also necessary to flesh out the appeals mechanism for trade remedies. There is much that remains up for grabs, with a lot being allocated to statutory instruments by the Secretary of State, and details remain patchy. I would be grateful if the Minister could use his contribution to the debate to assure us further of his Department’s progress in establishing a robust TRA in time for March 2019, if we are unable to secure the deal with the EU that we seek.

Photo of Hannah Bardell Hannah Bardell Shadow SNP Spokesperson (Trade and Investment)

The hon. Lady makes a number of points that I find myself agreeing with. I am sure that I will get the opportunity to say this in my own contribution but, given what she has said about the Trade Remedies Authority being a transparent and fully representative body, does she agree that the amendments put forward by the Scottish National party and Labour, with the support of Plaid Cymru, to have representatives from all the devolved nations are vital?

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

I might be sympathetic to that, but there is a real concern that all those on the board of the Trade Remedies Authority should be able to rise above particular interests. Those particular interests could be strong industrial concerns in particular regions of the UK. Board members will need to be able to look at the UK as a whole and weigh up different arguments made to them. I would have concerns about being very prescriptive about exactly who should be on any board. None the less, there needs to be independent scrutiny of the Secretary of State’s decisions in making those appointments. On that note, my contribution has ended.

Photo of Hannah Bardell Hannah Bardell Shadow SNP Spokesperson (Trade and Investment) 5:09 pm, 17th April 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I agree with other hon. Members that Jack Brereton has brought this debate in a timely manner. I can only hope that the Government will bring the Trade Bill to the Floor of the House on Report also in a timely manner. We all await it with great anticipation and bated breath. Those of us who sat on the Trade Bill Committee had a good and robust debate.

I share some of the concerns expressed by previous speakers, and I know they are shared by several sectors and organisations. As the Member for Livingston, I represent a constituency that has been at the forefront of Scottish manufacturing. The Minister and I have worked directly and personally on some challenges in my constituency, and I pay tribute to the work he has done in his ministerial role. I cannot reveal the details of the company or the organisation involved, but I know him to be extremely hard working and willing to work across parties. While we may not agree on the current approach and wording of the Bill, I know that he shares my determination to support Scottish manufacturing and to ensure that companies that face problems when trading abroad are supported. I wanted to briefly say that.

I feel that, in a recent debate on the Floor of the House, the Scottish National party’s position was somewhat misrepresented by the Secretary of State, which I am sure he did not mean to do. Our opposition was not to the notion of the Trade Remedies Authority—we accept that it will be needed, for the many reasons already outlined—but to the detail and the way it is to be set up, and the lack of engagement with the devolved nations and the lack of opportunity for them to have a say and to be represented. I take on board the point made by Julia Lopez about special interests, but surely we in this place can recognise that many membership organisations are set up with representation at UK level and fair representation for each of the devolved nations. As we leave the EU, knowing the way that Scotland and other parts of the UK voted in that referendum and the importance of trade to our economy, surely the Minister recognises the importance of Scotland and the other UK nations having a permanent seat and a commissioner. To reiterate, the SNP position is to have a commissioner in the TRA and—very much in line with what the hon. Lady said, and about it not being a London-centric Whitehall Department—to have TRA offices in the devolved nations, and even in regions of England. It is only fair and right that we take a sensible approach. This is not something that I want to be seen as being party political about. The Minister and his Department should give that serious thought.

A cross-party, collaborative approach was taken to the UK Green Investment Bank. Its headquarters are in Edinburgh, so it takes a different view and a different perspective, and it takes talent and opportunity from Scotland. We see that organisation invest across the UK while being outwith London. When we look at the TRA and the many challenges that face us post Brexit, devolving more power and opportunity to other parts of the United Kingdom is extremely important. I hope that the Minister will look again at the amendments we proposed—we will table further amendments on Report—and give them serious consideration.

The British Ceramic Confederation, which has been mentioned, has raised several legitimate concerns, and I hope that the Minister will give some more detail and indicate his views. One concern raised with me in a number of meetings with organisations and businesses is the lack of clarity and detail about the Government’s approach and about putting meat on the bones of the TRA. That is something we all feel strongly about.

The BCC is concerned that there is no indication that the TRA will use any special methodology when investigating countries with distorted local prices. That is crucial, as China and Russia, where domestic prices are not decided by market forces, are the main dumping culprits. I know that dumping concerns us all. It would also be interesting to hear how injury will be calculated. Some of these are very technical terms, but the BCC feels it is crucial, as that is how the UK will set its anti-dumping duties because of the decision to adopt the lesser duty role. It also raises the point of presumption, with the economic and public interest tests not being clear. It suggests that special consideration should be given within the tests of the need to remove injurious dumping subsidies.

ActionAid also gave me an excellent briefing recently, and I pay tribute to it for raising concerns about human rights and gender inequality. Those matters have been championed and challenged through the EU. I know that the Government always have warm words on human rights and on making sure that imported goods meet the highest standards, and I hope that that will be very much at the heart of the TRA and that it will take the opportunity to consider that.

I also hope that the Trade Bill will come back as soon as possible; perhaps the Minister will give a potential date. I would not like to press him too hard, but hopefully he has some thoughts on that. It is extremely important that we have clarity, because businesses are asking for it and want to know. In terms of the vision that he wants to set out, we have a clear view on Brexit and on the EU and remaining within the customs union and single market. However, as we set up these organisations, it is fair to say that there is an opportunity, in the sense that something new will have to be created.

There are major risks across all sectors of the UK and across all the devolved nations, and it is my firm belief that significant damage will be done to fishing, farming and manufacturing. However, the Government must be absolutely certain that, when setting up new bodies and organisations, those warm words are lived up to, that that promise of devolution to the devolved nations is taken as seriously as possible and that we are fully engaged in that process.

I go back to my point about looking at the amendments, having discussions and looking at the good work that was done on things like the UK Green Investment Bank. The Minister should give serious consideration to how the devolved nations will be involved in the TRA and how it will serve the nations and their sectors, because there is no doubt that the devolved nations of the United Kingdom have distinct sectors and deserve the opportunity to play their full part. I hope that he can give some hope and certainty to my constituents in Livingston and to businesses in my constituency, across Scotland and across the UK.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade) 5:17 pm, 17th April 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate Jack Brereton. He made some extremely important points, which I shall touch on. I will also mention some of the comments from Julia Lopez.

Trade remedies are a key element of our future trade policy. Without adequate trade remedies, we will become the dumping ground for not only Europe but the rest of the world. That point was made to us by Gareth Stace of UK Steel when he gave evidence to the Trade Bill Committee. Trade remedies are the means by which we protect our industries and our economy—meaning producers and consumers. What that protection looks like is very topical, given the imposition of tariffs of up to 25% on steel and aluminium imports into the US—[Interruption.] The hon. Member for Stoke-on-Trent South is not the only one struggling with his words today.

Those tariffs have been imposed by President Trump on the spurious grounds of national security. The danger exists that United States-bound steel will now be dumped in the UK instead, as we saw China do just a few years ago, which led to a crisis and the appalling bad news for the people of the north-east with the closure of SSI in Redcar. That is why an international, co-ordinated approach on anti-dumping is essential and why a common approach is needed to trade defence.

Photo of Gill Furniss Gill Furniss Shadow Minister (Business, Energy and Industrial Strategy) (Steel, Postal Affairs and Consumer Protection)

I congratulate Jack Brereton on securing this very important debate. I want to touch on the things that my hon. Friend Bill Esterson has just said about dumping. In 2015-16, when the steel crisis was a huge issue, there were 92 EU trade remedies and those covering steel were vital in stemming the flow of under-priced Chinese steel, but ever since, the Tories have pushed back against any new measures in the EU to defend our industries from that arising again. I would like to know whether the Minister will give some assurances, particularly at this difficult time in the steel industry’s history, to reassure the manufacturers, the workers and UK Steel, which has been mentioned, that their industry will get the protection that it deserves and will survive the latest crisis.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

I am grateful to my hon. Friend for the intervention. I was about to make the same point. She is absolutely right to say that we need to hear from the Minister what his intentions are.

The EU does not want the UK to be swamped with dumped goods, whether that is steel, ceramics or washing machines, because if that happened, such goods could enter the EU market from the UK. Equally, UK businesses do not want dumping, because it is unfair competition. Lack of protection in the UK risks thousands of jobs in the UK. It is no good the Minister’s saying that it means cheaper goods for consumers—as I have heard him say on countless occasions—because the workers whose jobs are at risk are consumers as well. No job means no wage to buy the goods. A lack of trade defence is bad for producers, workers and consumers, yet that is what there has been far too often. My hon. Friend Gill Furniss is right to highlight exactly what happened in the steel industry, because when the Government failed to support EU trade defence measures against Chinese steel dumping and acted too late to intervene and save SSI, it was the Conservative group of MEPs, at David Cameron’s prompting, who were the cheerleaders in the European Parliament against Europe-wide action. That included their blocking attempts to end the use of the lesser duty rule.

However, protection and the use of trade remedies is not the same as Trump-style protectionism. Trade remedies should be about the creation of a level playing field that defends domestic producers against unfair competition from dumped goods. They are an essential policy tool to correct multilateral distortions. Failure to use anti-dumping measures, in the name of free trade, misses the point that for trade to be free, it also has to be fair. Adjustments are needed in the event of Chinese or Russian state subsidies or distorted pricing of raw materials, or to address Trump’s tariffs. The European Commission is due to vote soon on higher anti-dumping duties to tackle raw material distortions, so it is incredible for the Government to say, as the Minister has, that they will vote against those measures.

That brings us to the customs Bill—the Taxation (Cross-border) Trade Bill—and the Trade Bill. As Hannah Bardell said, we should be debating the amendments to the two Bills on Report in the main Chamber, not having a general debate in this Chamber, but as we are, let us look at what the Bills will do.

The Government are planning to give themselves the power to decide not to act on behalf of UK industries, in favour of the consumer interest. That will be a political decision, balancing the interests of jobs in one area of the country against the interest of consumers—a point made to us by George Peretz, QC, when he gave evidence to the Trade Bill Committee. Trade remedies are essential to protect British industries, whether that is steel, ceramics, tyres, chemicals or pharmaceuticals. The Minister will no doubt say—he has said it before—that the lesser duty rule has been effective in tackling unfair trade. He wants to continue to apply it at the very moment when the EU is moving away from it, so tell us: where is the evidence to support that approach? I am glad that he is nodding, because I am looking forward to hearing his answer. Ask workers who used to work at SSI. Ask the MTRA. Ask industry and workers. They believe in strong trade remedies and they want to know the reason why the Government are taking a different approach.

The continued application of the lesser duty rule will see dumped goods diverted to the UK, and as we leave the EU, divergence in trade remedies will add to the damage done to the UK economy. The Minister is fond of saying to me and my colleagues that we are against the creation of a trade remedies authority. He knows that that is not true, of course, but that does not stop him saying it. The difference between him and me is that I want the Trade Remedies Authority to be effective. I take seriously the importance of trade remedies in creating a level playing field for our producers so that they can compete in international trade in a fair market. That is why we tabled a reasoned amendment on Second Reading of the Trade Bill that stated categorically our support for the creation of a trade remedies authority, but we believe that the Trade Remedies Authority should be representative of all sides of industry; it should include representatives of producers, trade unions and each of the devolved Administrations. We tabled amendments to that effect in Committee, as did the SNP. In addition, the chair of the TRA should go through parliamentary scrutiny of their appointment, rather than being placed in post by the Secretary of State; Parliament should also have its say on the membership and non-executive appointments. I totally agree with the hon. Member for Hornchurch and Upminster that the Select Committee on which she serves should be scrutinising all these appointments. The Government are using ministerial discretion in the establishment of the TRA before the legislation has been passed that sets it up, and the Minister should explain why, as ministerial discretion is usually reserved for matters of disagreement on spending within a Department.

British industry needs a strong, robust and independent Trade Remedies Authority that will use international best practice. Our amendments to the customs Bill and the Trade Bill will be designed to achieve the objective of giving our industry a level playing field. The Minister and his hon. Friends should support our approach or introduce their own amendments to do just that; otherwise, workers in the Potteries and many more across the country will face the possibility of the same fate as steelworkers faced in Redcar just a few years ago.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

If the Minister would be kind enough to finish his remarks no later than 5.42 pm, that would give Mr Brereton time to sum up the debate.

Photo of Greg Hands Greg Hands The Minister of State, Department for International Trade 5:27 pm, 17th April 2018

I congratulate my hon. Friend Jack Brereton on securing the debate. As you will know, Mr Hollobone, it is relatively rare, so far, for the Department for International Trade to be in Westminster Hall, so I welcome this opportunity to set out some of our proposals on trade remedies. I thank my hon. Friend for his kind words about recent UK trading success, the record levels of investment and the UK’s role in supporting the global rules-based system of trade, which is extremely important at the moment—it is important that we get that on the record right away.

I know well that my hon. Friend is passionate about his constituency and about defending manufacturing in Stoke. He was the first MP from the region to approach me, very soon after his election in June 2017, to talk about the importance of trade remedies to his constituents. He also introduced me to the British Ceramic Confederation, whose representatives I have now met three times in connection with trade remedies, as well as the Manufacturing Trade Remedies Alliance.

I also thank the other Members who have contributed to the debate. I will get through as many of the points that were made as I can. I thank them all for their contributions in a short debate—perhaps it could usefully have been longer. I will try to reply to Nic Dakin, even though he is no longer here, but first let me say a few things about the actual contributions.

My hon. Friend Colin Clark made a number of important points. He of course is passionate about oil and gas in Scotland—as are we in the Department for International Trade—and about the capabilities and the future of fisheries exports from his constituency. We are working very closely with the Department for Environment, Food and Rural Affairs to pursue that. I heard his call for a DIT office in Aberdeen. I can tell him that the majority of DIT’s oil and gas team is based in Glasgow and spends significant time in Aberdeen. I agree with my hon. Friend that there are significant opportunities in the future. Only yesterday I was speaking to Wood Group, which, as my hon. Friend will know, is headquartered in Aberdeen, about the significant opportunities that the Commonwealth markets offer them, which he also referred to.

My hon. Friend Julia Lopez is an active member of the International Trade Committee. I gave evidence to her Committee—it must have been in early March—on the Trade Remedies Authority. It is a little bit early to say exactly how big this new organisation will be. We are yet to appoint the chair, let alone any members of it. However, I think an early indication of the sort of budget we are looking at is in the region of £15 million to £20 million a year. I drew reference at the Committee hearings to the size of the EU’s operation, which is about 100 people working on trade remedies within DG Trade. That will give some early indication of the sort of size we are thinking about for that body.

I thank Hannah Bardell for her kind words. We have worked together on two or three issues with companies in her constituency. I have worked for their interests abroad, particularly on recent cases. She and I have a constructive relationship. I will answer a few points she made upfront. We talked about representation across the UK during the Bill Committee. She will know that the important thing is for the up to nine members of the board to think about how trade remedies work right across the UK and not to be beholden to any particular nation, region, interest group or company anywhere in the UK, but to have an expert view on how trade remedies might work throughout the UK.

Photo of Hannah Bardell Hannah Bardell Shadow SNP Spokesperson (Trade and Investment)

I take on board the point that the right hon. Gentleman makes, but I fail to understand why somebody from Scotland, Wales or Northern Ireland would be any less able to understand the distinct nature of the economies of their country as opposed to taking a wider view. The two need not be mutually exclusive. In the spirit of co-operation, and doing the right thing and what is best for the UK as a whole, why not have representatives and offices across the UK?

Photo of Greg Hands Greg Hands The Minister of State, Department for International Trade

I very much agree with the hon. Lady. It is perfectly possible and quite likely that of those nine members, one or more will originate from the devolved nations. The point is, however, that they should be appointed for their expertise in assessing some of these quite technical aspects, such as the determination of dumping, the calculation of injury and so on. The point is not to appoint them to represent a nation, region or particular stakeholder of the UK, but to have an interest across the board. She mentioned the possibility of satellite offices. I gave an indication of the likely size of the body.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

I am puzzled by the Minister’s answer, as I was when he said the same thing in the Bill Committee. I do not understand why he does not see the benefit of having a mixture of independent members, who quite rightly have the expertise that he sets out, and a number drawn from different interest groups. There could be a balance of the two to reflect the needs of the different parts of the economy and the United Kingdom.

Photo of Greg Hands Greg Hands The Minister of State, Department for International Trade

I feel that I have already answered this. We want a set of people who have expertise in the subject matter, rather than who come from a particular perspective, body, nation or region. That is the most important thing. Returning to the question of location, I think satellite officers would add cost, but I stress to the hon. Member for Livingston that we have yet to make a decision on where the location of the body should be. Again, that will be driven by where we can access the expertise that would be needed for this Trade Remedies Authority. I mentioned earlier that the Department for International Trade has placed a significant part of its operation in Scotland, for example through the oil and gas team in Glasgow, so as a Department we are not averse to placing something in one of the devolved nations of the UK.

I do not want to labour the point, but Bill Esterson goes on about his reasoned amendments. Mr Hollobone, given your long years in the House, you know perhaps better than anybody that when you put down a reasoned amendment, it normally means that you wish to vote for the reasoned amendment, because you wish to propose some way in which to improve the legislation, but you would not normally vote for a reasoned amendment and then vote against the Second Reading of the Bill. My point is that by voting against the Second Reading of the Bill, the hon. Gentleman showed that he disagreed with the central core of the Bill, part of which, of course, is to set up the Trade Remedies Authority.

This Government firmly believe in the benefits of free trade—I will come back to some of the other points raised in a moment—for consumers, earnings and jobs. My hon. Friend the Member for Stoke-on-Trent South spoke powerfully about the importance of the ceramics industry for his constituency, which is a huge UK success story as an industry. Other hon. Members have spoken about their own local industries as well. Our manufacturers benefit from trade. Manufacturing makes up 8% of our economy, but most of our exports. I think we all agree that free trade does not mean trade without rules, whether product safety or IP protection; some of the most important rules will be our system of trade remedies.

WTO members are permitted to take action where their domestic industry is suffering harm as a result of unfair trade practices such as dumping, where foreign companies sell their products in the UK for less than they are sold at home, or subsidies, which let foreign companies sell goods in the UK at a lower price than they would otherwise be able to. Members can also act in response to harm caused by unexpected surges in imports. In such cases, members can introduce safeguard measures to give industry time to adjust against unexpected surges in imports. Well-functioning trade remedies can level the playing field for domestic industry, by counteracting any unfair subsidies, dumping or unexpected import surges. They can also deter dumping and unfair subsidies from happening in the first place. It is important to have these first and foremost as a basic matter of fairness. Our industries should not lose contracts and our workers should not lose jobs because a foreign company has gained an unfair advantage. It would also be unfair if jobs were lost that could have been saved if only industry had been given time to adjust. That is why we are introducing a rigorous and robust system of remedies, which provides for the full suite of powers offered under WTO rules.

My hon. Friend the Member for Stoke-on-Trent South raised points about existing EU trade remedies. He should bear it in mind that we have just finished a call for evidence on the existing EU trade remedies. That call for evidence closed on 30 March. The response was good. We will be looking at our response to that in due course. We have been clear that when we operate our own trade remedies system, we will transition those measures in the EU system that matter to UK business. We received over 70 responses from producers and other interested parties in that consultation. Most importantly, I can assure hon. Members there will not be one day when a UK industry that needs protection from unfairly traded imports will be left alone.

I will quickly answer the point made by the hon. Member for Scunthorpe about a transparent approach. The Government will use secondary legislation to set out the details of the TRA’s framework. That is very important. Mr Hollobone, you will know from your years in the House that secondary legislation is not on the face of it particularly welcomed by legislators, but it is important in this case to be able to have a dynamic body of law that particularly reflects recent WTO case law, rather than write all of these details on to the face of the two Bills that are currently passing through the House of Commons. In particular this secondary legislation will include the different dumping methodologies and the level of remedy required to address injury to UK industry. We are meeting with trade bodies in the coming days to talk about some of those details. In the future, the TRA will set out the way in which it has carried out its calculations in any investigation as part of a commitment to transparency.

My hon. Friend the Member for Stoke-on-Trent South asked about the de minimis threshold. At what level would an investigation simply not be taken on, because the amount of product produced in the UK was below a particular amount? If UK producers have a negligible share of the total UK market, the TRA would not initiate an investigation, as it would be unlikely to result in measures. For example, a company could be the only producer of widgets in the UK and therefore meet the WTO requirements to bring a case, but if that company produced a negligible proportion of the widgets actually bought in the UK—in other words, the total market that is there—putting duties in place would have a disproportionate effect on the rest of the market, much of which would not necessarily be consumers, but could be other businesses and industries purchasing that product. That is why we will have a de minimis threshold.

In special cases, the TRA could choose to waive the threshold, which, by the way, we have not yet set. That would help to avoid a scenario in which an industry’s market share is negligible precisely because of the impact of dumped imports, or in cases involving an emerging UK industry struggling to establish itself in the face of dumped or subsidised imports. I assure my hon. Friend that it will reflect a de minimis level, but there will be exceptions. The TRA will be able to overrule.

My hon. Friend asked whether EU measures will be transitioned for the full five years. We have agreed that EU trade remedy rules and regulations will continue to apply during the implementation period. We will assess which EU measures matter to UK industry, which the call for evidence that closed last month did, and maintain those measures at their current level until the TRA reviews them.

My hon. Friend the Member for Gordon mentioned agricultural imports. Our trade remedies framework will enable the TRA to investigate unfairly subsidised imports where they are injuring UK agricultural producers and to take action where appropriate. The Secretary of State for Environment, Food and Rural Affairs is working on a safeguards regime for agricultural products to address the issues that my hon. Friend identified.

My hon. Friend the Member for Hornchurch and Upminster asked whether the TRA should consist of two bodies. There are, of course, always different views. There is not an exact parallel. We have looked at systems across the world, as she knows from the evidence I gave to the Committee. However, I believe that we are setting up the TRA with the right level of independence to allow it to reach informed and objective conclusions, which includes clear projections for the TRA’s independence, impartiality and expertise. Other countries that use a single-body trade remedy system include Australia and New Zealand.

It is standard practice for the chair and the non-execs to be ministerial appointments. The other members would typically be appointed by the chair. That is the practice we have followed in relation to the Trade Remedies Authority.

Photo of Greg Hands Greg Hands The Minister of State, Department for International Trade

No, I am going to finish. I have perhaps not been able to answer every single point. Obviously, this is a matter for legislation that is still continuing its passage through the House. I hope that I have outlined some of the strengths of the trade remedies regime. We look forward to further engagement during the passage of the Bills.

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South 5:42 pm, 17th April 2018

I would like to thank all Members who have taken part in the debate, and the Minister for his response.

I thank my hon. Friend Colin Clark for his important responses about industries in his constituency. My hon. Friend Julia Lopez also made important points about the challenges of unfair international competition and the setting up of the TRA. I am pleased that the Minister has referenced the importance of the TRA’s objectivity in the actions that it takes.

I do not agree with everything that Hannah Bardell said, but I certainly agree with her points about the Minister. He is exceptionally diligent and very hard-working.

Photo of Hannah Bardell Hannah Bardell Shadow SNP Spokesperson (Trade and Investment)

I will just ask the hon. Gentleman this question, as I did not get the chance to make the point to the Minister. I think it is great that the hon. Gentleman secured this debate, but does he agree that we need to have the Trade Bill back on the Floor of the House on Report, to have a substantive debate and get more information on the Trade Remedies Authority as soon as possible?

I love the Library staff and their briefings, particularly when they are as direct as this one. In the “Comment” section, it says:

“The Bill establishes the TRA but says relatively little about its functions or the Government’s approach to trade remedies.”

I could not put it better myself. Does the hon. Gentleman agree that business and all the nations of the UK need more information on this as soon as possible?

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South

The measures that the Trade Remedies Authority will set out will be set out in the customs Bill, so I encourage the Government to introduce that Bill as soon as possible.

I did not agree with everything that was said by the Labour Front-Bench spokesman, but I agree that it was Conservatives who previously put forward these points in the EU and were the strongest advocates for the current trade remedies. It is about creating that level playing field and not about protectionism. I agree with that.

I thank the Minister for his responses and the clarity he offered about the transitioning. I am very pleased that it will include transitioning measures across from what is in place in the EU to the UK’s trade remedies regime. I also thank him for the clarity around some of the secondary measures.

Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).