United States Tariffs: Steel and Aluminium

Barry Gardiner Excerpts

Report stage: House of Commons
Monday 12th March 2018 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

I thank the Secretary of State for advance sight of his statement and for his telephone call over the weekend.

The world steel industry is on the verge of a crisis. In our domestic industry, 32,000 workers in the steel industry are facing an existential threat to their jobs. Many of those men and women are angry that it has taken the Secretary of State more than 10 days since President Trump’s initial announcement to come to this House and make a statement about the impact that this might have on their communities and what measures the Government are taking to protect their livelihoods. They expected better, and they had a right to do so, but I assure the Secretary of State that, for our part, the official Opposition will not seek to make this issue one of party political point scoring. Everyone in this House must work together. We will be constructively critical where we consider the Government can do better, but our fundamental position will be to work with the Government to achieve the best outcome for our steel communities, for our aluminium industry and for our wider economy.

The Secretary of State is correct that the fundamental cause of this crisis is overcapacity in the global market and a long-standing failure by Governments around the world to tackle dumping and unfair practices, but he should have acknowledged that this included his own Government. We have not forgotten that it was the Conservative Government in 2016 who sought to block EU plans to impose tougher tariffs on aggressive Chinese steel imports. Global over-supply has seen other countries dump their surplus—a surplus often created by actionable subsidies and lax enforcement of labour standards and workers’ rights—at less than market value.

Although the global situation has not been created by President Trump, the manner in which he has gone about trying to resolve its impact on US producers is fundamentally wrong and threatens to tip a very bad situation into a full-scale global trade crisis. The application of 25% tariffs on steel and 10% on aluminium imports into the United States is unjust and unjustifiable. The suggestion that such tariffs are necessary under section 232 to mitigate a threat to American national security is patently false. The US Secretary of Defence himself has publicly stated that US military requirements represent no more than 3% of US steel production and that the Department of Defence is able to acquire the steel and aluminium it needs for US national defence requirements. The UK steel industry has made it clear that the amount of UK steel exports to the United States military industrial complex is “very small indeed”.

The Secretary of State says that Trump’s tariffs have weak foundations in international law. In fact they have none. The truth is that the President is seeking to bully and threaten his trading partners to bring them weakened to the negotiating table. The temporary exemption for Canada and Mexico, making their position subject to a renegotiation of NAFTA that is favourable to the USA, is just one example. He is doing the same with the UK and Europe, where he wishes to reverse the US trade deficit.

Given that the Secretary of State accepts that the tariffs are unjustified, I ask him to consider that the two routes he outlined for petitioning for exemptions from them is to act as if they have a spurious legitimacy. This is precisely the trap that President Trump has set: “Negotiate with us and we will not bully you further.” In the part of Glasgow where I grew up, that was called a protection racket. If the Secretary of State does go down this route of trying to secure an exemption, will he give a commitment now to be totally transparent about any price that he has to pay and any assurances that he has to give to the US Administration in order to get it? It is reported that, following the Australian Foreign Minister's meeting with Rex Tillerson, these tariffs may not be applied to Australia. However, it has also been reported that Australia has had to concede to American demands for a bilateral security agreement, which would see Australia forced to commit to greater military spending. Will the Secretary of State also be clear about how any such attempt by the UK to secure an exemption sits with the duty of sincere co-operation, to which he rightly referred in his statement?

President Trump is imposing these tariffs on national security grounds precisely because, under WTO rules, this means that article 21 of the General Agreement on Tariffs and Trade would not apply. This specifically prevents member states of the WTO from demanding clarity on the grounds of such pronouncements and prevents them from commencing dispute proceedings or taking retaliatory action. The President is seeking to undermine the multilateral rules-based system of the WTO, to which he has long been opposed. He has said that he would welcome a trade war and thinks that America could win it. He cares nothing for the viability of UK producers who have respected the rules. He is treating them no differently from their competitors who have not. As the US market closes to our exports, countries that would otherwise export into the US will seek to divert their production to the UK, which will tend to undercut domestic producers here even further.

What action is the Secretary of State taking to defend against this trade divergence? He must recognise that our industry is particularly vulnerable because we have a Government who pride themselves on taking the weakest possible approach to remedying unfair practices by their adherence to the lesser duty rule. Both the Trade Bill and the Taxation (Cross-Border Trade) Bill currently going through Parliament were opposed by the Labour party precisely because they proposed to create what the Manufacturing Trade Remedies Alliance described as

“one of the weakest trade remedy regimes in the world.”

Will the Secretary of State say whether he will consider tabling Government amendments to strengthen both the statutory representation function of the Trade Remedies Authority and the powers available to it, in line with the amendments proposed by the Opposition in Committee?

The Secretary of State spoke of the retaliatory measures that the EU Commission is preparing. What assessment has his Department made of the legal rights to recourse under article 8 of the WTO agreement on safeguards and what representation has he made to the European Commission’s Directorate-General for Trade in relation to these measures? Is he persuaded that they would be lawful? Is he persuaded that they would be effective?

The Secretary of State is fond of painting international trade as a balance of consumer and producer interests. The fear of thousands of steel and aluminium workers in the UK is that he naturally leans too far in favour of lower prices for the consumer. He needs to prove to them that he will stand up for British industry, for their jobs and for their communities. They need confidence that he will tackle unfair practices that distort the market. If he does, he will have the Opposition’s full support.