US Imposition of Steel and Aluminium Import Tariffs

Lord Fox Excerpts

Monday 4th June 2018 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for repeating the Statement and I welcome her to the Front Bench—I think it is the first time we have had a chance to speak directly across the Dispatch Box. That was three pages’ worth and quite long on description but there was not very much on achievement. I wonder whether the balance was entirely right, given that it was mostly about the difficulties that firms and others will experience in the new situation and very little about what will happen to our own British firms and employees. I have to say that if the Government have been spending the last month seeking to change minds in the United States Government, it has been a spectacular failure, apart from making it very clear that they can do little themselves and that much has to be done in co-operation with the world’s larger trading blocs, including the EU.

The House of Commons Library briefing paper on the industry shows that the steel sector accounted for £1.6 billion of the UK’s economic output. Some 330,000 tonnes of steel are exported annually by British producers, roughly 15% of which are to the United States, so we are talking about a very substantial hit on the industry. The industry has about 600 businesses and 32,000 people are currently employed there. On this side, we make it very clear from the beginning that our concern and support is there for the employees of British steel firms, and their communities, which must be very worried about this questionable and ill-judged unilateral decision by the USA. What assessment have the Government made of the impact of this decision on jobs in the steel sector and the aluminium sector and the economic hit that will be felt, particularly on communities outside London? What representations had the Government made to the White House prior to this announcement, and what assurances were sought that these tariffs would not apply to the UK? Will the Minister put any documents relevant to that in the Library for us to look at?

Secondly, what other sectors of the economy are the Government concerned about? The President has mentioned in passing additional protection for intellectual property. Given the strength of our creativity industries, have the Government taken up that issue in particular? If so, will the Minister give us some detail? The Secretary of State announced the establishment of a US-UK trade and investment working group in July last year. What discussions have been had about steel and the other new tariffs at these meetings? Has it been convened to discuss this issue?

Turning to the Statement itself, I note that half way down page 2 it says that before the EU can take any direct action on countermeasures to come into effect, it has to consult member states. Will the Minister confirm that Parliament will have a chance to discuss these when this second round of discussions is requested? Secondly, although the Minister made it clear to the House that the department had been in regular contact with the UK steel and aluminium industries throughout all this and the Business Secretary had convened a steel council, will she give us details on who actually attends that council and what exactly are its programmes? What concrete steps, in short, will it take to help our industries?

[Lord Fox (LD)]

My Lords, I too welcome the repeating of the Statement in your Lordships’ House. I would not normally be speaking across the Dispatch Box and normal service will be resumed when my noble friend Lord Purvis is available. The noble Lord, Lord Stevenson, makes a good point in that this is very long on adjectives and very short on hope. He set out a very good analysis of the UK steel market. My understanding is that a large proportion of these exports are at the high-technology end of steel, so in a sense the bulk numbers we use for the amount of the total industry affected by this blind us to the fact that the high-technology end of our industry is disproportionately affected. I would like to understand the Government’s analysis of how this will hit that particularly important part of the UK steel offering, because this is an area in which we have excellent businesses and a recovering economy and this could be a very serious blow going forward.

The Statement says in robust terms that the tariffs have weak foundations in law. Elsewhere, Secretary of State Liam Fox is on the record as saying that they are illegal. Do the Government stand by the view that they are illegal, or are we going to continue to tiptoe around this issue?

The noble Lord, Lord Stevenson, also mentioned the US-UK trade working group. If it has not been discussing this issue, what is this group for? While the Minister is on her feet, can she tell us under what mandate this group operates? I am not aware that there has been extensive discussion in Parliament about the basis for future trade with the United States, so what is this group’s mandate and what has come back on steel?

It is clear from the Statement that if the EU decides to trigger its punitive measures, the Government will be part of that because we are part of the EU. If the WTO is brought in on a legal basis, it will be a drawn-out affair, going well past March next year. Assuming that the Government get their way and we exit the customs union, HMT will have a decision to make: will it continue to maintain the robust measures that we have talked about and sit in solidarity alongside our largest trading partner, or will the Government decide to side with the United States? Perhaps the Minister can talk us through that process.

Finally, Prime Minister Trudeau of Canada has been the most articulate in setting out how Trump’s use of the national security justification has been most hurtful and corrosive to the closest military allies of the United States. To some extent, that is alluded to, in a softer way, in the Statement. Can the Minister tell us if and when the UK will raise this in NATO and with NATO allies? If it has already been discussed, what was the result of those discussions?

[Baroness Manzoor]

I thank the noble Lords, Lord Stevenson and Lord Fox, for their questions. I particularly thank the noble Lord, Lord Stevenson, for his warm welcome. He may not continue with it when I answer his questions but I will do my best to answer the questions of both noble Lords.

As I have said, we are deeply disappointed in the action that the US has taken. We want a multilateral action. We need to look at the capacity of steel from China and work together to resolve that issue, instead of the action taken by the US. As part of the EU, we will work very closely with our stakeholders in other EU countries to ensure that we have a collective response. We are still part of the EU; we have not left yet.

Like both noble Lords, I am concerned about the impact that these tariffs will have on our steel and aluminium industry here in the UK, as well as the effect on employees. The Secretary of State and other Ministers, both within business, will meet CEOs, trade unions and other bodies connected to the industry to look at what impact the tariffs will have on our industry and how we can move forward with the industry to find solutions. It is too early to say what the impact will be but I have indicated the amount of money involved in terms of turnover.

One of the other questions posed by the noble Lord, Lord Stevenson, was on intellectual property and whether these tariffs are likely to spread. Indeed, some people have asked whether the auto industry will be affected. Once again, we are working closely with the EU and the US. We must not forget that the US is a very important and key ally of the UK. We want to ensure that we, with the EU, discuss very clearly the impact that the steel and aluminium tariffs will have. I know that Germany is looking at the issues around the car industry and the tariffs that may happen in that arena.

I was also asked by the noble Lords, Lord Stevenson and Lord Fox, how often the trade and investment group meets. I know that it is about to meet soon, and it will look clearly at the impact these tariffs will have. However, I do not know what the group’s terms of reference are. I will certainly write to noble Lords and place a copy in the Library so that they know exactly who sits on the group and what its terms of reference are.

I was also asked whether Parliament will have a chance to vote before the EU goes back, in relation to the WTO rules. We are firmly of the view that we want to see a rules-based solution, not a unilateral situation. We are disappointed, and I personally say that it is to be regretted that the US has taken the decision it has. Nevertheless, I am not clear whether Parliament will have a chance to vote. Again, I will write to the noble Lord. On balance, from the briefings I have seen, the EU will make a decision at a later stage on the list it has identified.

The noble Lord, Lord Fox, mentioned the Canadian Prime Minister’s strong and vocal opposition to the tariffs. We are very disappointed, as I said, and it is clearly to be regretted that these tariffs are to take place, but it is a question not of how vocal one is but of what the outcome will be. We want an outcome where we have free trade with the US. We will work very closely to see what we can do regarding these tariffs, which we think are unhelpful to the UK aluminium and steel industry. We will endeavour to work very closely with employers and businesses in the UK, and employees, but just as importantly with the US, because it is an important ally and we need to ensure we can work in this collaborative method to try to get some exemptions not only for the UK, but for the EU.

If there is anything I have missed I hope noble Lords will forgive me. I will write to them to respond.