UK trade remedies policy Contents

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1The UK trade remedies policy

The role of trade remedies

7.DIT told the International Trade Committee that trade remedies “are key to ensuring an effective rules-based system for international trade” and that “they can level the playing field and restore the competitive balance between foreign exporters and domestic industry”.6 However, imposing a trade remedy can have costs and benefits for different stakeholders, as the Government explained in its Trade White Paper:

The overall economic case for trade remedies needs to be considered objectively on a case-by-case basis. Trade remedy measures can increase the cost of affected products for user industries, and consumers, as well as the competitiveness of both user and producer industries. Therefore, it is important that measures are used judiciously and proportionately to tackle unfair trade, ensuring fair competition and addressing the injury caused to domestic producers, whilst also taking appropriate account of impacts on users and consumers and the wider trade agenda.7

8.Some of our witnesses described the importance of trade remedies for their industry. Richard Warren, UK Steel, told us that trade remedies were “probably the most important element of trade policy for the steel industry”.8 In his oral evidence in October 2020, he explained that:

The majority of steel products, particularly at the current time with the steel safeguard measure in place, are under some form of trade remedy measure at this point. Therefore, the functioning of the UK system, our ability to ensure the level of protection we currently have as members of the EU customs union and being able to ensure continuity with that is extremely important, and it is extremely important to the sustainability and future of the steel sector in this country.9

9.The British Ceramics Confederation told us in September 2020 that there were two EU anti-dumping measures in place on Chinese tableware and Chinese manufactured ceramic tiles.10 Dr Laura Cohen, Chief Executive, British Ceramics Confederation, said that around 7,000 of the 20,000 jobs in the ceramics sector were protected by those measures and that they had “given the UK industry some breathing space to operate and, at least prior to the pandemic, grow”.11

Legislation and the role of the Trade Remedies Authority

10.The Trade Bill was introduced in the House of Commons on 19 March 2020 and provides for the creation of the TRA as a non-departmental public body, with members appointed by the Secretary of State, and with responsibility for conducting trade remedies investigations.12 The TRA will also make impartial recommendations to the Secretary of State for International Trade and provide advice, support and assistance to the Secretary of State in relation to the conduct of international disputes.13 The TRA will operate under the statutory framework provided by the Taxation (Cross-border Trade) Act 2018 and the secondary legislation made under it.14

11.The TRA will determine whether the legal conditions for the application of trade remedies are met, calculate the amount of duty that may be imposed and carry out an economic interest test to determine whether the implementation of a proposed trade remedies measure is in the wider economic interest of the UK. The criteria which the TRA must use to assess the economic interests of different stakeholders are set out in the legislation. In assessing the UK’s economic interest, the TRA must take account of a list of considerations (to the extent that they are relevant), and any other matters that they consider relevant. The TRA may then recommend to the Secretary of State that a trade remedy be imposed, and the level of duty necessary to prevent injury. The Secretary of State may reject the recommendation if he or she considers that the remedy is against the public interest. If the measure in consideration is anti-dumping or anti-subsidy, the Secretary of State must accept the TRA’s determination meets the economic interest test, unless he or she is satisfied that the determination is not one that the TRA could reasonably have made. For safeguard measures, the Secretary of State can reject the recommendation if he or she considers that it does not meet the economic interest test.15 The Secretary of State cannot make amendments to the recommendation. If the Secretary of State rejects a recommendation to impose a measure, he or she must lay a statement before the House of Commons setting out the reasons for the decision. We discuss the economic interest and public interest tests in more detail in Chapter 4.

12.The Trade Remedies Investigations Directorate (TRID) was established on 29 March 2019 within DIT, with interim responsibility for the trade defence regime until the Trade Bill receives Royal Assent and the TRA is legally established. In its written evidence, DIT explained that:

As you will be aware following the Department’s letter to the Committee on 6th March 2019, DIT has put in place contingency arrangements via secondary legislation temporarily conferring trade remedy functions on the Secretary of State. This allows the Department to operate the trade remedies function “in-house” as part of the Trade Remedies Investigations Directorate (TRID) until the TRA is established. Once the Bill is enacted, it is our intention that the TRA will be established at the earliest opportunity. At that point, staff currently within TRID will move to the TRA and the modifications conferring trade remedy functions on the Secretary of State will cease to apply.16

13.The Department for International Trade has published extensive guidance about the trade remedies investigations process on the gov.uk website.17

14.We note the significant progress made by the Government since our predecessor Committee’s inquiry, and that the policy and legal framework for the UK trade defence regime is now largely in place.

Northern Ireland

15.We heard evidence that further clarification is required in terms of how trade remedies will operate in Northern Ireland. James Kane, Associate, Institute for Government (IfG), explained that a situation could arise where the TRA would not be able to recommend an anti-dumping duty to protect a business in Northern Ireland because the customs duties for Northern Ireland would be those applied by the EU. However, the Northern Ireland business would not be able to complain to the European Commission about dumping because it was not a European Union industry.18

16.Dr Lorand Bartels, Senior Counsel, Linklaters LLP and Reader in International Law at University of Cambridge, said that the issue of how trade defence would apply in Northern Ireland was “a particularly fiddly area”. Under Article 4 of the Northern Ireland Protocol, Northern Ireland was within the UK’s customs territory for ordinary customs duties. However, products that were at risk of ending up in the EU were subject to the EU customs duty regime. Dr Bartels told us that how trade remedies sat within this was an issue to be negotiated, bearing in mind that trade remedies regimes are implementations of WTO rights, which only allow for the protection of the WTO member’s own industry.19

17.The Government did not see any barriers to the TRA operating in Northern Ireland. DIT told us that “Northern Ireland is part of the United Kingdom’s customs territory and, as such, trade remedies investigations will be conducted by TRID (or the TRA when established) on a nationwide basis”.20 The Minister said that Northern Ireland industry will form part of the same trade remedies investigations as the rest of the United Kingdom:

Northern Irish businesses, in common with businesses based in Great Britain, will be able to submit applications to the TRA directly for investigation. Although the protocol required a United Kingdom-EU Joint Committee decision on the application of tariffs for at-risk goods moving into Northern Ireland, we do not believe that provides any barrier to the TRA conducting its investigations for the whole of the United Kingdom. That decision simply informs the regime that applies.21

… Goods that are subject to EU trade remedies entering Northern Ireland from Great Britain, because they are at risk of entering the EU, mean that the EU tariff would apply in those instances, so that is where this Joint Committee decision has an implication for Northern Ireland. That at-risk test would, of course, also apply to all of the rest of the world’s goods travelling into Northern Ireland because of the at-risk test. To be clear, Northern Ireland remains part of the United Kingdom’s customs territory, so it would be for the TRA to undertake any investigations that might result in trade defences in the future.22

18.At the beginning of January 2021, there were press reports that “dozens of factories” in Northern Ireland risked closure because of the imposition of a 25% tariff on steel imports from Britain.23 It was reported that this situation had arisen because the Northern Ireland Protocol of the Withdrawal agreement required Northern Ireland to be treated as if it were part of the EU’s single market, and so subject to the EU’s trade defence measures. At the same time, the EU’s steel safeguard measures now applied to the UK as a third country. The EU trade defence measure in question applied a tariff of 25% on steel imports once the relevant zero-tariff quota was exceeded. In addition, EU legislation on EU quotas prevents imports to Northern Ireland from benefitting from the relevant zero-tariff rate quotas (TRQs), meaning that tariffs of 25% would be due on steel imports to Northern Ireland, whether from the rest of the UK or the rest of the world.24 According to guidance from UK Steel, on 21 January, HMRC put in place guidance and an “interim” solution that exporters of UK produced steel could use to avoid this situation and the imposition of tariffs. UK Steel also noted that HMT advice is that “any products subject to a trade remedies measure (including safeguards) will be considered at risk [of moving to the EU] and therefore treated as a UK to EU export”.25

19.In correspondence with European Commission Vice-President Maroš Šefčovič, the Chancellor of the Duchy of Lancaster raised the issue of the impact of the EU legislation on EU quotas on movements of steel into Northern Ireland from Great Britain and the rest of the world.26 In his response, Vice-President Maroš Šefčovič indicated that the Commission was examining amendments that would make it possible movements from Great Britain to Northern Ireland to count against EU tariff rate quotas (and so for steel, subject to the TRQ limits, to have a route to avoid 25% tariffs).27 This letter did not suggest such amendments were being considered for movements into Northern Ireland from beyond Great Britain or the EU.

20.Further clarification is required to set out the position of businesses in Northern Ireland in respect of trade remedies and the extent to which they fall within the remit of the TRA. We therefore ask the Government to confirm whether for the movement of goods into Northern Ireland from Great Britain, where EU trade remedies exist, the goods will be considered “at risk” and EU trade remedies will apply; and for the movement of goods into Northern Ireland from the rest of the world, where EU trade remedies exist, unless the EU duty is less than or equal to the UK duty, EU trade remedies will apply. We further ask the Government to confirm whether, when EU trade remedies apply to the movement of goods into Northern Ireland, they will apply with the same terms as they do to imports to the EU. We recommend that the Government publishes guidance on this matter for businesses operating in Northern Ireland.