Leaving the EU: Future Trade Remedies

Greg Hands Excerpts

Tuesday 17th April 2018 Westminster Hall

[The Minister for Trade Policy (Greg Hands)]

I congratulate my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) on securing the debate. As you will know, Mr Hollobone, it is relatively rare, so far, for the Department for International Trade to be in Westminster Hall, so I welcome this opportunity to set out some of our proposals on trade remedies. I thank my hon. Friend for his kind words about recent UK trading success, the record levels of investment and the UK’s role in supporting the global rules-based system of trade, which is extremely important at the moment—it is important that we get that on the record right away.

I know well that my hon. Friend is passionate about his constituency and about defending manufacturing in Stoke. He was the first MP from the region to approach me, very soon after his election in June 2017, to talk about the importance of trade remedies to his constituents. He also introduced me to the British Ceramic Confederation, whose representatives I have now met three times in connection with trade remedies, as well as the Manufacturing Trade Remedies Alliance.

I also thank the other Members who have contributed to the debate. I will get through as many of the points that were made as I can. I thank them all for their contributions in a short debate—perhaps it could usefully have been longer. I will try to reply to the hon. Member for Scunthorpe (Nic Dakin), even though he is no longer here, but first let me say a few things about the actual contributions.

My hon. Friend the Member for Gordon (Colin Clark) made a number of important points. He of course is passionate about oil and gas in Scotland—as are we in the Department for International Trade—and about the capabilities and the future of fisheries exports from his constituency. We are working very closely with the Department for Environment, Food and Rural Affairs to pursue that. I heard his call for a DIT office in Aberdeen. I can tell him that the majority of DIT’s oil and gas team is based in Glasgow and spends significant time in Aberdeen. I agree with my hon. Friend that there are significant opportunities in the future. Only yesterday I was speaking to Wood Group, which, as my hon. Friend will know, is headquartered in Aberdeen, about the significant opportunities that the Commonwealth markets offer them, which he also referred to.

My hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) is an active member of the International Trade Committee. I gave evidence to her Committee—it must have been in early March—on the Trade Remedies Authority. It is a little bit early to say exactly how big this new organisation will be. We have yet to appoint the chair, let alone any members of it. However, I think an early indication of the sort of budget we are looking at is in the region of £15 million to £20 million a year. I referred at the Committee hearings to the size of the EU’s operation, which is about 100 people working on trade remedies within DG Trade. That will give some early indication of the sort of size we are thinking about for that body.

I thank the hon. Member for Livingston (Hannah Bardell) for her kind words. We have worked together on two or three issues with companies in her constituency. I have worked for their interests abroad, particularly on recent cases. She and I have a constructive relationship. I will answer a few points she made upfront. We talked about representation across the UK during the Bill Committee. She will know that the important thing is for the up to nine members of the board to think about how trade remedies work right across the UK and not to be beholden to any particular nation, region, interest group or company anywhere in the UK, but to have an expert view on how trade remedies might work throughout the UK.

[Hannah Bardell]

I take on board the point that the right hon. Gentleman makes, but I fail to understand why somebody from Scotland, Wales or Northern Ireland would be any less able to understand the distinct nature of the economies of their country as opposed to taking a wider view. The two need not be mutually exclusive. In the spirit of co-operation, and doing the right thing and what is best for the UK as a whole, why not have representatives and offices across the UK?

[Greg Hands]

I very much agree with the hon. Lady. It is perfectly possible and quite likely that of those nine members, one or more will originate from the devolved nations. The point is, however, that they should be appointed for their expertise in assessing some of these quite technical aspects, such as the determination of dumping, the calculation of injury and so on. The point is not to appoint them to represent a nation, region or particular stakeholder of the UK, but to have an interest across the board. She mentioned the possibility of satellite offices. I gave an indication of the likely size of the body.

[Bill Esterson]

I am puzzled by the Minister’s answer, as I was when he said the same thing in the Bill Committee. I do not understand why he does not see the benefit of having a mixture of independent members, who quite rightly have the expertise that he sets out, and a number drawn from different interest groups. There could be a balance of the two to reflect the needs of the different parts of the economy and the United Kingdom.

[Greg Hands]

I feel that I have already answered this. We want a set of people who have expertise in the subject matter, rather than who come from a particular perspective, body, nation or region. That is the most important thing. Returning to the question of location, I think satellite officers would add cost, but I stress to the hon. Member for Livingston that we have yet to make a decision on where the location of the body should be. Again, that will be driven by where we can access the expertise that would be needed for this Trade Remedies Authority. I mentioned earlier that the Department for International Trade has placed a significant part of its operation in Scotland, for example through the oil and gas team in Glasgow, so as a Department we are not averse to placing something in one of the devolved nations of the UK.

I do not want to labour the point, but the hon. Member for Sefton Central (Bill Esterson) goes on about his reasoned amendments. Mr Hollobone, given your long years in the House, you know perhaps better than anybody that when you put down a reasoned amendment, it normally means that you wish to vote for the reasoned amendment, because you wish to propose some way in which to improve the legislation, but you would not normally vote for a reasoned amendment and then vote against the Second Reading of the Bill. My point is that by voting against the Second Reading of the Bill, the hon. Gentleman showed that he disagreed with the central core of the Bill, part of which, of course, is to set up the Trade Remedies Authority.

This Government firmly believe in the benefits of free trade—I will come back to some of the other points raised in a moment—for consumers, earnings and jobs. My hon. Friend the Member for Stoke-on-Trent South spoke powerfully about the importance of the ceramics industry for his constituency, which is a huge UK success story as an industry. Other hon. Members have spoken about their own local industries as well. Our manufacturers benefit from trade. Manufacturing makes up 8% of our economy, but most of our exports. I think we all agree that free trade does not mean trade without rules, whether product safety or IP protection; some of the most important rules will be our system of trade remedies.

WTO members are permitted to take action where their domestic industry is suffering harm as a result of unfair trade practices such as dumping, where foreign companies sell their products in the UK for less than they are sold at home, or subsidies, which let foreign companies sell goods in the UK at a lower price than they would otherwise be able to. Members can also act in response to harm caused by unexpected surges in imports. In such cases, members can introduce safeguard measures to give industry time to adjust against unexpected surges in imports. Well-functioning trade remedies can level the playing field for domestic industry, by counteracting any unfair subsidies, dumping or unexpected import surges. They can also deter dumping and unfair subsidies from happening in the first place. It is important to have these first and foremost as a basic matter of fairness. Our industries should not lose contracts and our workers should not lose jobs because a foreign company has gained an unfair advantage. It would also be unfair if jobs were lost that could have been saved if only industry had been given time to adjust. That is why we are introducing a rigorous and robust system of remedies, which provides for the full suite of powers offered under WTO rules.

My hon. Friend the Member for Stoke-on-Trent South raised points about existing EU trade remedies. He should bear it in mind that we have just finished a call for evidence on the existing EU trade remedies. That call for evidence closed on 30 March. The response was good. We will be looking at our response to that in due course. We have been clear that when we operate our own trade remedies system, we will transition those measures in the EU system that matter to UK business. We received over 70 responses from producers and other interested parties in that consultation. Most importantly, I can assure hon. Members there will not be one day when a UK industry that needs protection from unfairly traded imports will be left alone.

I will quickly answer the point made by the hon. Member for Scunthorpe about a transparent approach. The Government will use secondary legislation to set out the details of the TRA’s framework. That is very important. Mr Hollobone, you will know from your years in the House that secondary legislation is not on the face of it particularly welcomed by legislators, but it is important in this case to be able to have a dynamic body of law that particularly reflects recent WTO case law, rather than write all of these details on to the face of the two Bills that are currently passing through the House of Commons. In particular this secondary legislation will include the different dumping methodologies and the level of remedy required to address injury to UK industry. We are meeting trade bodies in the coming days to talk about some of those details. In the future, the TRA will set out the way in which it has carried out its calculations in any investigation as part of a commitment to transparency.

My hon. Friend the Member for Stoke-on-Trent South asked about the de minimis threshold. At what level would an investigation simply not be taken on, because the amount of product produced in the UK was below a particular amount? If UK producers have a negligible share of the total UK market, the TRA would not initiate an investigation, as it would be unlikely to result in measures. For example, a company could be the only producer of widgets in the UK and therefore meet the WTO requirements to bring a case, but if that company produced a negligible proportion of the widgets actually bought in the UK—in other words, the total market that is there—putting duties in place would have a disproportionate effect on the rest of the market, much of which would not necessarily be consumers, but could be other businesses and industries purchasing that product. That is why we will have a de minimis threshold.

In special cases, the TRA could choose to waive the threshold, which, by the way, we have not yet set. That would help to avoid a scenario in which an industry’s market share is negligible precisely because of the impact of dumped imports, or in cases involving an emerging UK industry struggling to establish itself in the face of dumped or subsidised imports. I assure my hon. Friend that it will reflect a de minimis level, but there will be exceptions. The TRA will be able to overrule.

My hon. Friend asked whether EU measures will be transitioned for the full five years. We have agreed that EU trade remedy rules and regulations will continue to apply during the implementation period. We will assess which EU measures matter to UK industry, which the call for evidence that closed last month did, and maintain those measures at their current level until the TRA reviews them.

My hon. Friend the Member for Gordon mentioned agricultural imports. Our trade remedies framework will enable the TRA to investigate unfairly subsidised imports where they are injuring UK agricultural producers and to take action where appropriate. The Secretary of State for Environment, Food and Rural Affairs is working on a safeguards regime for agricultural products to address the issues that my hon. Friend identified.

My hon. Friend the Member for Hornchurch and Upminster asked whether the TRA should consist of two bodies. There are, of course, always different views. There is not an exact parallel. We have looked at systems across the world, as she knows from the evidence I gave to the Committee. However, I believe that we are setting up the TRA with the right level of independence to allow it to reach informed and objective conclusions, which includes clear projections for the TRA’s independence, impartiality and expertise. Other countries that use a single-body trade remedy system include Australia and New Zealand.

It is standard practice for the chair and the non-execs to be ministerial appointments. The other members would typically be appointed by the chair. That is the practice we have followed in relation to the Trade Remedies Authority.

[Hannah Bardell]

Will the Minister give way?

[Greg Hands]

No, I am going to finish. I have perhaps not been able to answer every single point. Obviously, this is a matter for legislation that is still continuing its passage through the House. I hope that I have outlined some of the strengths of the trade remedies regime. We look forward to further engagement during the passage of the Bills.