31.In this Chapter we consider how Board members of the TRA are appointed and the overall structure of the body. First, we address concerns raised about the Secretary of State’s powers to make appointments, and the need for the TRA to have a balance of expertise. We then consider the executive structure of the TRA, and how the investigation process with respect to injury and dumping / subsidisation will be structured.
32.The TRA will consist of, at most, nine people including a Chair, non-executive and executive members, and a chief executive. The Secretary of State is responsible for appointing the Chair and non-executive members of the TRA. The Chair is responsible for appointing the chief executive, subject to the Secretary of State’s approval, and executive members. Subject to clauses five to ten of Schedule 4 to the Trade Bill, the terms and conditions of the Chair and non-executive members’ appointments are determined by the Secretary of State. The Secretary of State also determines remuneration for non-executive members, and otherwise determines the funding for the TRA.
33.It has been argued that the “composition of the members of the TRA is critical because trade remedies is a highly political area of policy where there are very different views.” Some witnesses told us that they were concerned about the impact of the Secretary of State’s power to appoint Board members of the TRA on the TRA’s independence. The MTRA told us that to “improve the independence of the TRA, and prevent it from being ideologically ‘stacked’”, the TRA Board member appointment process should be modelled on the Health and Safety at Work Act 1974 (HASAWA). According to Tom Reynolds, MTRA, HASAWA “stipulates the Secretary of State, in making appointments … must consult with organisations for three of the members. There could be representatives of the employers, and three of the representatives could be from the trade unions”. He suggested that this model “might lend itself well to the establishment of the [TRA]”.
34.We also heard that Parliament, including this Committee, could have a greater role in Board appointments to the TRA. George Peretz QC has argued that there is a strong case for Board appointments (or at least the Chair and chief executive) to be subject to approval of this Committee. He told us that the best way of testing the capacity of the appointee to “deal effectively with public comment, criticism, to engage, to respond intelligently to public concerns” was by way of an approval hearing before the Committee. Mr Peretz QC also told us that, in principle, the Chair and chief executive should have the confidence of Parliament. For Mr Peretz QC, doing so would act as a “bit of a deterrent to any tendency that there might be by any Secretary of State to appoint his or her friends and relations, acquaintances, to the job”.
35.However, in evidence before us, Greg Hands said that it was not the Government’s intention “for there to be [Select Committee] hearings for members of the board of the [TRA]”. Mr Hands noted that amendments to this effect had been debated in the Public Bill Committee on the Trade Bill and “the Committee decided not to have that as part of the process”. In addition, the Secretary of State wrote to the Chair of the Committee on 29 March 2018 in relation to the appointment of the Chair of the TRA. He said that recruitment would begin shortly and that, to ensure the TRA’s independence, the Secretary of State would be “inviting input from the Devolved Administrations and key external stakeholders—including domestic industry, trade union and consumer groups—on the content of the TRA Chair job description and person specification.”
36.In considering TRA appointments, witnesses also told us that TRA Board appointees “need to be impartial and independent people” with a “range of expertise and a range of backgrounds”. We heard that these expertise and backgrounds should include “economic and legal skills”, “a good knowledge of the way that the WTO systems work, how the countries’ systems work”, “a consumer voice”, and “balanced representation of trade unions and manufacturing employers”. To ensure an adequate range of expertise and backgrounds, some witnesses argued that the Trade Bill should require the “Secretary of State to appoint members of the TRA from a specified range of backgrounds and based on a specified range of experience and expertise”. The Law Society of Scotland also suggested considering “whether criteria or qualifications should be set out to determine eligibility for appointments to the TRA.” However, Mr Moulis said that the TRA may be “asking for trouble” if Board members “who appear to be representative of a particular interest group” were appointed. He added that, “[i]f there is any suggestion that they have come from a particular background and they are going to favour the views of that background, they should not be there.” Instead, he told us the key was to have “guidelines as to the independence of the people who you are appointing, but with experience in particular areas.”
37.In evidence before us, Greg Hands dismissed any suggestion that particular groups should be represented on the TRA’s Board. For the Minister, “the most important consideration” was “mak[ing] sure that the people appointed are experts in the field”. The Minister indicated that TRA Board appointees may “have a background in one of those groups, but it is very important that they are not seen to be appointed by one of those groups.” The Minister told us he expected appointees to take “a UK-wide view of the issue[s]”, but the Government did not intend to legislate to require that appointees have “a balance of different party political backgrounds, sectors or different parts of the United Kingdom”.
38.In the remainder of this Chapter, we consider the structure of the TRA. In particular, we examine other trade defence bodies and consider whether the TRA’s Board structure is the most appropriate approach, and how the TRA will structure its trade defence investigations.
39.Witnesses told us that the approach of other countries to the decision-making structures of their trade defence bodies varies considerably. In Australia, for example, the Anti-Dumping Commission is “headed up by a commissioner, a statutory officer. There is only one person appointed in that role, who has his or her own staff”. Cliff Stevenson, consultant to the MTRA, told us that the Commissioner is the “equivalent of a board of members and does sign off on the cases”, with recommendations then made to the Minister. In the US, two bodies are involved in the trade defence investigation process: the US International Trade Commission (ITC) and the Department of Commerce. The ITC is headed by six Commissioners and, after a hearing on a proposed TDM, the Commissioners cast their votes in favour of, or against, the measure. By contrast, in the case of the EU, the whole investigation takes place under the political control of the Commission with ultimate adoption decided by EU Member States in the Council of Ministers.
40.In the light of these approaches, witnesses questioned whether having nine TRA Board members was necessary. Mr Moulis told us that two things could happen with a body of this size: “[e]ither you get a groupthink or you start to get things splintering and you start to get some decisions made in perhaps a bit of a radical way or even it could come to a grinding halt, and it would not be able to make decisions”. We also heard that there was a “lot of uncertainty and lack of clarity” around the decision-making process of the TRA’s Board members and “what the role of these up to nine TRA members will [be]”. Mr Stevenson told us that “[i]f the members are going to sign off on whether duties will be adopted in a particular case then … this is a level of decision making that is more complex than any other system in the world.” The MTRA further added that there could be extra levels of Board decision-making, and queried whether it will be TRA’s Board members or senior departmental officials within the staff teams employed by the TRA that will sign off on recommendations to the Secretary of State.
41.Trade remedies bodies also vary in how they approach trade defence investigations. The two primary approaches to investigative structures are the unified (for example, the EU, India and Australia) and bifurcated (for example, the US and Canada) models. China uses a third model, with a “[s]ingle ministry but different departments dealing with dumping and injury”. The principal difference between the two primary approaches is that a bifurcated system has two specialist bodies, one which investigates dumping / subsidisation and another which investigates whether material injury has been caused by the dumping / subsidisation. By contrast, in a unified structure one body “considers the questions of both dumping and material injury and whether the dumping has caused the injury”. The TRA has a unified investigative structure. For example, the Customs Bill provides that the TRA may investigate both whether goods are being dumped and whether the dumping has caused or is causing injury.
42.Witnesses and commentators differ as to which is the preferred approach. UK Steel have argued that the bifurcated approach has several benefits, including that: (i) findings are more objective; (ii) the process is more efficient, as both investigations can run in parallel; and (iii) it enables the development of knowledgeable, experienced teams, with skillsets suited to the two very different types of investigation. However, several witnesses suggested that the unified approach was preferable. Mr O’Connor told us that having a single body investigate both injury and dumping / subsidisation “create[s] efficiencies”. He added that a “unified system is cheaper overall for all players involved, not only the Administration but those subject to investigations.” The MTRA likewise “support[ed] the idea of a single unit within a single authority.” They noted in written evidence that:
In terms of the authority’s budget it means that capacity can be directed towards wherever there is an intensity of work. Having two separate departments means that there might be times where there is spare capacity in one or both organisations. Also, the cost of interested parties participating in an investigation is increased through having to deal with different departments.
The MTRA further told us that, given the limited timeframe, having a simpler structure may mean the TRA is better placed to function as of March 2019.
43.It is easy to underestimate how contentious trade defence may be. Even where the decision to impose a trade defence measure follows a rigorous process, the consequences of a measure can place the interests of producers, consumers and workers in conflict, as well as having wider economic and diplomatic consequences. Managing these competing demands requires a trade defence regime which is robustly independent, and which protects the interests of the UK economy as a whole. Robust independence can only be ensured through an appointment process which is fair and open, and is seen to be so. There is a strong argument that the TRA’s independence would best be ensured by removing the appointment process for TRA Board members from the sole discretion of the Secretary of State. We consider that appointments of the Chair of the TRA should be conditional upon the approval of this Committee, and that this should be set out in statute. We would also expect to conduct a pre-appointment hearing with the proposed candidate for chief executive of the TRA.
44.We accept that for the TRA to be operational by March 2019, it is necessary to appoint its first Chair as soon as possible and welcome the Secretary of State’s announcement that he will do so. However, we note that he is doing so without the statutory authority that would be conferred upon him by the Trade Bill because it is not yet law. In these circumstances, Parliament must have a say and there is a particularly strong argument for the appointment to be conditional on a resolution of this Committee that it approves the appointment. There may also be an argument for the appointment of the Chair to be for a short, fixed term so that it can be reviewed soon after the Trade Bill receives Royal Assent, although we also recognise that this could have a disruptive effect on the body at a critical time.
45.Diverse representation is also vital to ensuring that the TRA is viewed, both domestically and internationally, as credible and transparent. In circumstances where the Government has proposed appointing as many as nine TRA Board members, there is a strong case for requiring that some TRA Board members be appointed to represent the interests of particular groups (for example, consumers and trade unions) or that appointees to the TRA have expertise which would enable them to understand one of these groups’ interests in detail. In any event, the Department should publish guidelines as to the independence of the people who are to be appointed.
46.Compared to trade defence bodies in other jurisdictions, the TRA is very large with up to nine members. We are concerned that this could make decision-making cumbersome. It may also be unduly expensive. To avoid unnecessary complexity in decision-making which could result from such a large body, the Department should publish clear guidance on the roles of the TRA members in the decision-making process for recommending the imposition of trade defence measures. We further recommend that the Department consider whether it ought to appoint fewer TRA members, at least initially, to progress the operationality of the body. Nine members is a maximum, not a quota.
47.We consider that, on balance, the proposed ‘unified’ investigative structure for the TRA is the correct one. While a bifurcated approach may offer benefits in terms of objectivity of decision-making, we do not consider that these benefits outweigh the efficiencies created by a unified approach. This approach must not, however, be used as in such a way as to politicise the decision-making process of the TRA and to compromise its operational independence.
79 With respect to non-executive members, the Secretary of State must consult the Chair before appointing the other non-executive members (Trade Bill, Schedule 4, clause 2(3) [Bill 122 (2017–19)]).
80 Trade Bill, Schedule 4, clause 2 [Bill 122 (2017–19)]
81 Trade Bill, Schedule 4, clause 4 [Bill 122 (2017–19)]
82 Trade Bill, Schedule 4, clauses 11–16, 29 [Bill 122 (2017–19)]
83 Trade Bill Committee, , col 65 [Cliff Stevenson]
84 Manufacturing Trade Remedies Alliance (), para 18
85 Trade Bill Committee, , col 66.
86 George Peretz QC, , UK Trade Forum, 22 January 2018
87 Q 71
88 Q 71
89 Q 27
90 Q 22
91 , 29 March 2018
92 Q 73 [Daniel Moulis]
93 Q 73 [George Peretz QC]
94 Q 73 [George Peretz QC]
95 Q 91 [Daniel Moulis]
96 Q 73 [George Peretz QC]; Which? (), para 9.
97 Q 106 [Rosa Crawford]. See also British Ceramic Confederation ().
98 George Peretz QC, , UK Trade Forum, 22 January 2018
99 Law Society of Scotland (), p 4
100 Q 73 [Daniel Moulis]
101 Q 13
102 Q 6
103 Q 8
104 Q 32
105 Q 45 [Daniel Moulis]
106 Q 105 [Cliff Stevenson]
107 United States International Trade Commission, , June 2015, pp II-3–II-25
108 Manufacturing Trade Remedies Alliance (), para 11
109 Q 73 [Daniel Moulis]
110 Q 105 [Cliff Stevenson]
111 Q 105 [Cliff Stevenson]
112 Manufacturing Trade Remedies Alliance (), para 14
113 Manufacturing Trade Remedies Alliance (), para 3
114 UK Steel, , April 2017, p 6
115 Q 59 [Daniel Moulis]
116 Taxation (Cross-border Trade) Bill, Schedule 4, clause 8(1) [Bill 128 (2017–19)]. Similar functions are conferred on the TRA in respect of the investigation and imposition of anti-subsidy measures (see Taxation (Cross-border Trade) Bill, Schedule 4, clause 8(3) and Schedule 5, clause 6(1) [Bill 128 (2017–19)]).
117 UK Steel, , April 2017, p 6
118 Q 60 [Bernard O’Connor]
119 Manufacturing Trade Remedies Alliance (), para 4
120 Manufacturing Trade Remedies Alliance (), para 5
Published: 10 May 2018