Taxation (Cross-border Trade) Bill

Gareth Snell Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

Let me start by commending the work of the Manufacturing Trade Remedies Alliance, an organisation that is being serviced in a secretariat format by the Ceramics Confederation in my constituency. Working with a number of other trade bodies and trade unions, it has put together comprehensive work to try to make the Bill better. It is not seeking to torpedo the Bill, or to say that the status quo is what we should have. It has genuinely tried to engage to highlight the practical problems with the Bill and to propose solutions that it knows, both as workers and as employers, will benefit its manufacturing industry. I just wanted to put that on the record.

I wish to commend the hon. Member for Aberdeen North (Kirsty Blackman) for her speech, which covered, although in some depth, a number of quite technical points. This is where we are getting to in the Brexit negotiations: the time of painting in primary colours has almost gone, and we are now talking about the individual details that mean so much to our constituents. In my constituency, in Stoke-on-Trent, in the heart of the potteries, no more broadly will the impact of trade remedies and a proper customs arrangement be felt than in the ceramics industry.

In my constituency, around 5,000 jobs are directly related to manufacturing. Across the city, there are 15,000 such jobs, and even more when we tie in the supply chains and support services that make those industries flourish. Madam Deputy Speaker, if you go to any decent hotel around the world, to our own Tea Room, or to any high-class restaurant and turn over the plate, you will undoubtedly see, stamped with pride on the back of that piece of ceramic, “Made in Stoke-on-Trent” by Steelite, Churchill or Dudson. Those companies have been an ambassador for British business around the world for many years.

Only today in our local newspaper, The Sentinel, Jon Cameron from Steelite noted that 75% of every product that he makes is exported around the world. Therefore, the free trade arrangements that we have around the world, some of which are secured through the European Union, are important because they are about jobs in our constituency and jobs in our city. The hon. Member for Walsall North (Eddie Hughes) asked about South Korea. South Korea is one of the largest emerging markets for British ceramics in the world, and we are increasingly selling it more and more tableware and tiles than anywhere else. It is important that we recognise that countries that may seem obscure for some parts of the broader trade arrangements have huge impacts on smaller manufacturing areas where exports are becoming an increasingly important part of what we do.

What I wish to focus on today is the arrangements for market trade remedies. At the moment, the ceramics industry has a certain level of protection via the EU’s market protection arrangements, which affect tableware and tiles. Both are being looked at right now. They are being renewed through the European Parliament, so they are being scrutinised and looked at. The intention is that, where we know that there are market distortions caused by non-market economy countries such as China and Russia, the playing field is levelled.

We talk about free trade, but we should also be talking about fair trade. It is not fair on British manufacturing if Chinese companies are able to produce below-market value, cheap, low-quality tableware, import it into the UK, undermine the local manufacturing base and then distort the market and get away with it. Such practices cause job losses in Stoke-on-Trent and do serious long-term damage to the local market and the local industry. They also mean that, essentially, we are handing over domestic production to Chinese companies. What happens then? Once those companies have driven local producers out of the market, they put up their own prices, and suddenly there is no alternative. The next time I go on holiday, I do not want to turn over my plate and see that it is not made in Stoke-on-Trent. For me, that would be a symbol that we have got it wrong in terms of how we approach British manufacturing.

One in seven of the jobs in my constituency is linked to manufacturing, so making sure that we have those correct protections in place is vital. Across my neighbouring constituency of Stoke-on-Trent North and in Kidsgrove, nearly 19% of the workforce are involved in manufacturing. There are still parts of our country where manufacturing is the fundamental base of the work that we do. Making sure that we have those correct protections in place is vital to ensuring that we still have a manufacturing base that we are proud of in Britain.

Under schedule 4, the Bill will provide a number of mechanisms for the Manufacturing Trade Remedies Alliance, but, unfortunately, they are lacking. This is not a political point; it is a point of fact. As the hon. Member for Aberdeen North pointed out, they do not include a system for how we calculate injury from non-market economy countries. They do not point out how we calculate injury. The Bill commits us to the mandatory lesser duty rule, which is something that the EU is moving away from. It is looking at a conditional lesser duty rule.

The lesser duty rule basically says that, if we can demonstrate that there is injury to our market because of subsidy by a non-market economy country’s activities, we will only seek to remedy the lesser of those two injuries. We may still have goods being imported into our country below market value, distorting our market in a way that is unfair and we will be happy to accept that because it is the lesser of the two duties. That is fundamentally wrong. It is something that the EU is moving away from. We could easily have adopted the wording that was chosen by the EU and put it into the Bill, because it was supported by this Government in the European Council and by our MEPs across the piece.

[Mr Jim Cunningham]

This is not necessarily on ceramics, but when it comes to research and development for industry, the United States uses the defence budget. Does my hon. Friend agree that that is what we are up against if we pull out of the single market?

[Gareth Snell]

My hon. Friend is trying to tempt me down a particular course of discussion around single market membership, which I do not really wish to address as part of the Bill, but I do understand his point. In this Bill, not only do we have a set of Trade Remedies Authority procedures that are not particularly well defined and an attempt to wed ourselves to a mandatory lesser duty rule, we are also seeking to include an economic interest test—again, something that very few countries use. The only time we would see either a public interest test or an economic interest test is when we have multinational organisations such as the EU. We will not be in that position, yet we will be wedding ourselves to an extra layer of bureaucracy and complication to our trade remedy process that does not necessarily give the best outcome for British industry.

Unfortunately, there are a lot of the areas where this Parliament and this House should have some right of scrutiny, but where that is being brushed aside. This will all be done through written ministerial guidance, secondary legislation and statutory instruments. There is nothing in the Bill that immediately gives this House and all Members present the opportunity to properly define what we want to see regarding market and trade remedies.

There are a number of matters, which I am sure will come up during Second Reading of the Trade Bill tomorrow, that relate to the membership of the Trade Remedies Authority, the way in which it will be run and its budget. There are also questions around the cost of the investigations and who will be responsible for that cost. In the EU process at the moment, the trade itself makes up a good proportion of the cost, but it does so knowing that whatever remedy it gets out will more than offset the cost of the remedy process. There is no guarantee that that is the case for whatever system we set up once we are outside the customs union and the single market. That could simply result in a situation where industry does not take the risk—where it does not want to put the funding in place to do the investigation and to work out the dumping and injury levels because it does not know what they will look like beforehand. Therefore, any remedy would be of no benefit to the industry once it has made up those initial costs, so it simply will not do it. We will have a situation where we are not able to protect British industry and British business because the system is complicated and opaque.

The Financial Secretary to the Treasury is no longer in his place, but he has agreed to meet the British Ceramic Confederation to talk about some of the issues I have raised. I am grateful to him for doing so, and I hope that he will hear sense in the comments made this evening. When we leave the EU and come out of the customs union and the single market, there are a number of things that we can do to strengthen British business, put us in a better position and demonstrate to the world that Britain is still a manufacturing nation. We still make things. Nowhere is that more evident than in Stoke-on-Trent, where we make things and sell things of great beauty and high art around the world. We can continue do that, but only if we put the protections in place. Once we are outside the EU, we will have the freedoms and flexibilities to put in place the protections we want.

Having read this Bill, I fear that the Government are trying to come up with the lowest level of protection that they possibly can, which is of interest economically to only a few groups of people and whereby the Minister himself would have the ability to override future decisions. Therefore, I support the reasoned amendment; I hope that the Government have heard my comments; and I look forward to scrutinising this legislation further.