Trade Bill

Supplementary written evidence submitted by Tom Reynolds, Commercial and Public Affairs Director, British Ceramic Confederation (TB15)

Dear Committee Members,

Thank you for the opportunity to provide oral evidence to the committee during yesterday’s session. I hope that my testimony will be useful to your further deliberations on the Bill. I promised to come back to you in writing with further information in response to a couple of your questions. This also provides me with an opportunity to restate my two principal concerns with the Trade Bill.

1. A lack of detail

i. The effectiveness of the Trade Remedies Authority (TRA) in providing a level playing for UK producers will be determined by the rules that govern its operation. Apart from dealing with the administrative fundamentals of the new organisation, there are no details in the Trade Bill on how the TRA will perform its duties. Most of the trade remedy legal framework appears in the Taxation (Cross Border Trade) Bill, also before the House of Commons. For that reason it is necessary to view the Bills side by side.

ii. Unfortunately, the Taxation (Cross Border Trade) Bill contains little detail and relies heavily on secondary legislation to fill in extensive gaps. Other witnesses have eloquently highlighted the weaknesses of overreliance on secondary legislation, principally the lack of meaningful scrutiny and democratic oversight. The EU has recently been through the process of updating various elements of its trade defence framework, involving rounds of European Parliament and Member State input. The result has been amended and improved regulations. It is deeply regrettable that neither of the two bills under consideration will enable comparable democratic input into the UK’s new trade remedies framework.

iii. The areas of missing detail of most concern are: a) how the level of dumping will be calculated in anti-dumping investigations, particularly in countries where the domestic price cannot be used because of state distortions (e.g. China); b) how, if Parliament insists on a lesser duty rule, the level of injury should be calculated; c) how, if Parliament insists on an Economic Interest Test, that test will operate and what weight it will give to the economic value of restoring a competitive environment; and d) the nature of the Secretary of State’s Public Interest Test which is currently completely undefined.

2. Composition of the Trade Remedies Authority

i. The Government has stated that it is seeking to establish a balanced Trade Remedies system that takes account of different economic actors. Given the powers granted to the TRA in Part 2 of the Bill, the composition of the non-executive board in setting the direction of the organisation is crucial to achieving a real balance.

ii. Schedule 4 provides the Secretary of State with complete discretion to appoint whoever he/she likes to the TRA board. This risks an unbalanced composition, especially if the Secretary of State has a particular outlook or relies solely on ‘experts’ to guide the organisation. Classical liberal economic theory is dominant among UK trade academics and would lead to an inbuilt prejudice against implementing trade remedies. Instead, we suggest the board should consist of a range of stakeholders, including representatives of manufacturing and other producers, trade unions and consumer interests to assist the Chair in guiding the organisation and ensuring a balanced approach.

iii. In yesterday’s session Mr Esterson asked if I thought the Trade Remedies Authority board should be appointed independently rather than by the Secretary of State. An earlier witness had referenced the Competition and Markets Authority (CMA) as a possible inspiration. The priority for us would be achieving a balanced composition on the board including producer representation, regardless of person or body responsible for appointment. Mr Stace made a compelling argument yesterday that the appointment process should not in any way hinder the TRA in the performance of its duties - quickly investigating and remedying industry complaints.

iv. On reading Schedule 4 of the Enterprise and Regulatory Reform Act 2013, it is clear that appointments to the CMA Board and Panel are made by the Secretary of State and not by an independent body. For the CMA’s Panel, however, the Secretary of State is obliged to make appointments so that panel members are available for certain reference groups (e.g. newspaper mergers, utilities). This has some resemblance to the legislation I cited as a possible inspiration within my oral evidence: the Health and Safety at Work Act 1974 requires the Secretary of State to consult with the representative organisations of employers, employees, local authorities and professional bodies before making appointments on the HSE board in each respective category. For the TRA, any amendments to Schedule 4 of the Trade Bill to oblige the Secretary of State (or indeed an independent appointing body) to similarly balance the composition of its non-executive board would be very welcome.

I’d like to conclude by emphasising that, contrary to a view of some, strong and effective Trade Remedies are not protectionism. They are about ensuring genuinely free trade in the face of distortions and restoring a competitive environment. The UK ceramic industry is innovative and efficient; with a level playing field we can take on the world.

Yours sincerely,

Tom Reynolds

January 2018

 

Prepared 30th January 2018