US Steel and Aluminium Tariffs

Barry Gardiner Excerpts

Monday 4th June 2018 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

I am grateful to the Secretary of State for advance sight of his statement and for his telephone call yesterday afternoon. He is a very courteous man, but no amount of courtesy can hide the fact that he and his party have a record of failure when it comes to defending our steel industry.

When China began dumping its over-production into the European market back in 2015, it was the Secretary of State’s Government who opposed the European Union taking stronger defence measures and who precipitated a crisis for producers in the UK that led to the loss of companies such as SSI and of 1,700 jobs at Redcar. That was not some civil service mistake, but ministerial ideology. That ideology has been confirmed by the Government’s refusal to accept the amendments that Labour tabled to both the customs Bill and the Trade Bill precisely to strengthen the trade defence measures that we could take against such illegal action.

Last week, the Secretary of State’s initial response was to say that he did “not rule out” countervailing measures with our European partners. Did “not rule out” such measures? He should have been demanding them. On the departmental website it says begrudgingly that while we are members of the EU we

“must abide by EU trade decisions”.

That hardly sounds like a full-throated and co-ordinated position with our EU trade partners—and no wonder: when the EU recently voted to modernise the trade defence measures available to protect our industries, our Government were one of only two to vote against them. It is no use the Secretary of State saying that the Opposition voted against the Trade Bill and the customs Bill and that that would have left us with no Trade Remedies Authority. We voted against those Bills precisely because they were so weak and ineffective on this matter, and he knows it.

Some 34,000 UK jobs in our steel industry and 3,500 more in the aluminium industry are at risk because President Trump is imposing protectionist tariffs that the rest of the world believes are illegal under WTO rules. We saw him use the same protectionist policies to attack Bombardier in Northern Ireland. This time, he has based the policy on a fundamental lie. He is pretending that the tariffs fall under section 232 of the Trade Expansion Act 1962 and are necessary for the national security of the United States. They are not. The lie is to try to avoid the perfectly correct response that the EU is now making in taking this as a dispute to the WTO, because the WTO is naturally reluctant to rule on what is and what is not member states’ national security.

All our steel producers want is a fair and level playing field on which to compete. They and we acknowledge that there is a real issue of global overcapacity, which brought our industry to crisis point three years ago and threatens to do so again now. That is why there are three issues on which we need absolute clarity from the Secretary of State. First, will the UK give the consent required to trigger the countervailing measures and enable them to come into effect on 20 June? The implication of the statement is that the Secretary of State will, but I ask him to leave no doubt. Secondly, the greatest threat to jobs is perhaps not directly from the loss of trade into the USA as a result of tariffs—the USA only accounts for 7% of our steel and 3% of our aluminium exports. The real danger is from the products diverted from other countries which can no longer export into the US being dumped here. When I first read the statement, I believed that the Secretary of State had made a commitment to agree to strong safeguarding measures to protect against such an influx surge. On careful reading, however, it appears that he may have given himself a get-out clause. He talks of supporting

“any safeguard measures required to deal with steel diversion”.

Can he confirm that he will support maximal measures to defend the immediate interests of our steel industry as well as any future trade defence measures that go beyond the lesser duty rule?

Thirdly, the Secretary of State mentioned that the EU filed a dispute at the World Trade Organisation on Friday. Strangely, he did not say that he welcomed that move. He knows that President Trump wishes to undermine the WTO and would prefer to do his trade deals on a bilateral basis using America’s economic might to obtain concessions. Can he confirm that, once outside of the EU, it would be his intention for the UK to continue with a WTO dispute against the US and that he is not minded to succumb to bully-boy tactics for fear of offending the President before a future trade agreement?

We do not want a trade war; most rational people believe that there are no winners in such a war. Only President Trump has said that he believes that he can win one. The UK and the EU must stand up to this behaviour and restore the integrity of the rules-based system. I therefore welcome the upcoming G7 summit and the opportunity that it provides the Prime Minister to press the case with President Trump. Will the Secretary of State assure the House that, however diplomatically embarrassing it may be for Canada as the host country, the UK will insist that this matter be given a high priority on the formal agenda and not relegated to the sidelines? The Prime Minister must persuade other leaders to respond to the fundamental problem of global oversupply as well as the unjustified action of the United States. The 37,500 workers in the UK whose jobs depend on these industries will expect her not to fail them.

[Dr Fox]

I am grateful to the hon. Gentleman. He is right that there is an issue of global overcapacity and that, as I have said, that must be tackled on a multilateral basis because it cannot be effectively tackled on a bilateral basis with the use of tariffs. That will not be a successful way of dealing with it. What it has resulted in is a great deal of energy being spent on blue on blue activity, rather than on dealing with the issue at source. However, he is wrong about the support to the steel industry. As of 8 November 2017, the Government have, for example, paid more than £207 million in compensation to the steel sector as an energy-intensive manufacturer.

The hon. Gentleman is also wrong about the Opposition’s vote against the Trade Bill. They voted against not the provisions of a Trade Remedies Authority, but the setting up of a Trade Remedies Authority, which would have meant that we had no defence whatsoever. He is wrong about another matter, too. The American President was not involved in the Bombardier dispute. That was a commercial dispute brought by Boeing and nothing to do with the US Administration. However, the hon. Gentleman is right on the precedent of national security. The problem with using national security, as has been done in this case through the section 232 mechanism, is twofold: first, if the United States were successful, it would set a precedent for others to do the same and to use national security as a pretext for protectionism; and, secondly, it leads the WTO into the realms of having to determine what is, and what is not, acceptable as a definition of national security. That is something that the WTO has always shied away from.

When it comes to the countermeasures, we will still want to see what the measures themselves are. Specifically, we have been talking to the Irish Government about the issue of bourbon being on the list because of the potential implications for the Scotch whisky industry and the Irish whiskey industry. We will want to continue those discussions with the Commission.

I made it very clear that we will have whatever safeguards are required. I do welcome the WTO dispute. If we are talking about the need for an international rules-based system, it is the appropriate mechanism for us to show our displeasure and that is the correct route for us to go down. Once we have left the European Union, I hope that we will have no problems with a UK exemption.