Leaving the EU: Future Trade Remedies

Hannah Bardell Excerpts

Tuesday 17th April 2018 Westminster Hall

[Julia Lopez (Hornchurch and Upminster) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) for securing this debate on future trade remedies. He is ahead of the curve on this issue, because amid the wrangling over Brexit we have rather overlooked the profile that this issue will have. I believe that it will become ever more pressing as we chart a new path beyond the EU. It is therefore important at this stage, as we draw up our Trade Remedies Authority, that we get its basic structure right.

As I have said before in this House, we are lucky to be among the first generation of politicians in more than 40 years to be drawing up our own independent trade policy, but that means we are also very green as a nation in fully grasping trade legislation and its implications. None the less, these are issues of enormous relevance to consumers and to businesses of all sizes in our constituencies. It is all well and good for us to be free traders in principle, but in practice many of those principles can be sorely tested when producers in our own constituencies are challenged by international competition. Indeed, they can be tested to breaking point when that competition is able to undercut domestic businesses due to the state subsidy or economic structure of their own countries.

My hon. Friend spoke eloquently about the capacity of Chinese pottery firms to undercut domestic industries, with a speed that can pull the rug from under industries that have been carefully developed over many years. Equally, however, cheaper products from abroad can be a boon to other industries, for instance by providing cheap steel for car manufacture, helping to retain production on these shores and delivering cheaper prices for consumers. These are not simple issues and they must be carefully considered.

As a member of the International Trade Committee, which has been closely examining the Government’s plans to set up our own Trade Remedies Authority, I have been encouraging the Government to study the arrangements of respected trade authorities in other nations, particularly the US and Canada. Throughout the TRA process I have been concerned about the amount of power being vested in the hands of the Secretary of State, including over appointments to the TRA’s board. I am also concerned about whether the TRA will be sufficiently skilled and resourced for what can be extremely intensive investigations.

In the US, the body responsible for injury investigations alone, the United States International Trade Commission, has several hundred employees. Given the difficulty that the Select Committee has securing sufficiently knowledgeable domestic trade panellists, we have a considerable recruitment challenge on our hands. As we leave the EU, there is the chance to produce a more flexible and responsive trade remedies model. UK Steel sees the EU’s decision-making process as monolithic, with too much power in the hands of the Commission and a heavily politicised system. We have opted for an approach similar to Australia’s, but in a recent Committee session one of our panellists expressed concerns that producer interests are beginning to take a much stronger precedence in that system.

I still believe that we would do well to consider the bifurcated model of the US and Canada, with subsidy and injury investigated separately to avoid politicisation and bias. With our TRA’s chair and non-executive members all appointed by the Secretary of State, and with the Secretary of State retaining the ultimate say on the imposition of a trade remedy, I must confess that I am uneasy about the concentration of power in ministerial hands, given the prospect of a much more interventionist Opposition taking power.

Our new regime must be open and transparent, and have integrity and credibility. I therefore suggest that we try to take steps to ensure that the executive board of any TRA is open to independent scrutiny, perhaps through the Select Committee, rather than being only a matter for the Secretary of State to decide. I am sympathetic to my hon. Friend’s concerns about dumped and subsidised produce, and the issue of transparency on the economic interest and public interest tests. Trade remedies are currently a highly political issue, and it is vital that our own desire to secure trade deals does not prevent us from imposing trade remedies if we need to in the event of dumping.

It is also necessary to flesh out the appeals mechanism for trade remedies. There is much that remains up for grabs, with a lot being allocated to statutory instruments by the Secretary of State, and details remain patchy. I would be grateful if the Minister could use his contribution to the debate to assure us further of his Department’s progress in establishing a robust TRA in time for March 2019, if we are unable to secure the deal with the EU that we seek.

[Hannah Bardell (Livingston) (SNP)]

The hon. Lady makes a number of points that I find myself agreeing with. I am sure that I will get the opportunity to say this in my own contribution but, given what she has said about the Trade Remedies Authority being a transparent and fully representative body, does she agree that the amendments put forward by the Scottish National party and Labour, with the support of Plaid Cymru, to have representatives from all the devolved nations are vital?

[Julia Lopez]

I might be sympathetic to that, but there is a real concern that all those on the board of the Trade Remedies Authority should be able to rise above particular interests. Those particular interests could be strong industrial concerns in particular regions of the UK. Board members will need to be able to look at the UK as a whole and weigh up different arguments made to them. I would have concerns about being very prescriptive about exactly who should be on any board. None the less, there needs to be independent scrutiny of the Secretary of State’s decisions in making those appointments. On that note, my contribution has ended.

[Hannah Bardell (Livingston) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I agree with other hon. Members that the hon. Member for Stoke-on-Trent South (Jack Brereton) has brought this debate to the Chamber in a timely manner. I can only hope that the Government will bring the Trade Bill to the Floor of the House on Report also in a timely manner. We all await it with great anticipation and bated breath. Those of us who sat on the Trade Bill Committee had a good and robust debate.

I share some of the concerns expressed by previous speakers, and I know they are shared by several sectors and organisations. As the Member for Livingston, I represent a constituency that has been at the forefront of Scottish manufacturing. The Minister and I have worked directly and personally on some challenges in my constituency, and I pay tribute to the work he has done in his ministerial role. I cannot reveal the details of the company or the organisation involved, but I know him to be extremely hard working and willing to work across parties. While we may not agree on the current approach and wording of the Bill, I know that he shares my determination to support Scottish manufacturing and to ensure that companies that face problems when trading abroad are supported. I wanted to briefly say that.

I feel that, in a recent debate on the Floor of the House, the Scottish National party’s position was somewhat misrepresented by the Secretary of State, which I am sure he did not mean to do. Our opposition was not to the notion of the Trade Remedies Authority—we accept that it will be needed, for the many reasons already outlined—but to the detail and the way it is to be set up, and the lack of engagement with the devolved nations and the lack of opportunity for them to have a say and to be represented. I take on board the point made by the hon. Member for Hornchurch and Upminster (Julia Lopez) about special interests, but surely we in this place can recognise that many membership organisations are set up with representation at UK level and fair representation for each of the devolved nations. As we leave the EU, knowing the way that Scotland and other parts of the UK voted in that referendum and the importance of trade to our economy, surely the Minister recognises the importance of Scotland and the other UK nations having a permanent seat and a commissioner. To reiterate, the SNP position is to have a commissioner in the TRA and—very much in line with what the hon. Lady said, and about it not being a London-centric Whitehall Department—to have TRA offices in the devolved nations, and even in regions of England. It is only fair and right that we take a sensible approach. This is not something that I want to be seen as being party political about. The Minister and his Department should give that serious thought.

A cross-party, collaborative approach was taken to the UK Green Investment Bank. Its headquarters are in Edinburgh, so it takes a different view and a different perspective, and it takes talent and opportunity from Scotland. We see that organisation invest across the UK while being outwith London. When we look at the TRA and the many challenges that face us post Brexit, devolving more power and opportunity to other parts of the United Kingdom is extremely important. I hope that the Minister will look again at the amendments we proposed—we will table further amendments on Report—and give them serious consideration.

The British Ceramic Confederation, which has been mentioned, has raised several legitimate concerns, and I hope that the Minister will give some more detail and indicate his views. One concern raised with me in a number of meetings with organisations and businesses is the lack of clarity and detail about the Government’s approach and about putting meat on the bones of the TRA. That is something we all feel strongly about.

The BCC is concerned that there is no indication that the TRA will use any special methodology when investigating countries with distorted local prices. That is crucial, as China and Russia, where domestic prices are not decided by market forces, are the main dumping culprits. I know that dumping concerns us all. It would also be interesting to hear how injury will be calculated. Some of these are very technical terms, but the BCC feels it is crucial, as that is how the UK will set its anti-dumping duties because of the decision to adopt the lesser duty role. It also raises the point of presumption, with the economic and public interest tests not being clear. It suggests that special consideration should be given within the tests to the need to remove injurious dumping subsidies.

ActionAid also gave me an excellent briefing recently, and I pay tribute to it for raising concerns about human rights and gender inequality. Those matters have been championed and challenged through the EU. I know that the Government always have warm words on human rights and on making sure that imported goods meet the highest standards, and I hope that that will be very much at the heart of the TRA and that it will take the opportunity to consider that.

I also hope that the Trade Bill will come back as soon as possible; perhaps the Minister will give a potential date. I would not like to press him too hard, but hopefully he has some thoughts on that. It is extremely important that we have clarity, because businesses are asking for it and want to know. In terms of the vision that he wants to set out, we have a clear view on Brexit and on the EU and remaining within the customs union and single market. However, as we set up these organisations, it is fair to say that there is an opportunity, in the sense that something new will have to be created.

There are major risks across all sectors of the UK and across all the devolved nations, and it is my firm belief that significant damage will be done to fishing, farming and manufacturing. However, the Government must be absolutely certain that, when setting up new bodies and organisations, those warm words are lived up to, that that promise of devolution to the devolved nations is taken as seriously as possible and that we are fully engaged in that process.

I go back to my point about looking at the amendments, having discussions and looking at the good work that was done on things like the UK Green Investment Bank. The Minister should give serious consideration to how the devolved nations will be involved in the TRA and how it will serve the nations and their sectors, because there is no doubt that the devolved nations of the United Kingdom have distinct sectors and deserve the opportunity to play their full part. I hope that he can give some hope and certainty to my constituents in Livingston and to businesses in my constituency, across Scotland and across the UK.

--- Later in debate ---

[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.

[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.

[Jack Brereton]

I would like to thank all Members who have taken part in the debate, and the Minister for his response.

I thank my hon. Friend the Member for Gordon (Colin Clark) for his important responses about industries in his constituency. My hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) also made important points about the challenges of unfair international competition and the setting up of the TRA. I am pleased that the Minister has referenced the importance of the TRA’s objectivity in the actions that it takes.

I do not agree with everything that the hon. Member for Livingston (Hannah Bardell) said, but I certainly agree with her points about the Minister. He is exceptionally diligent and very hard-working.

[Hannah Bardell]

I will just ask the hon. Gentleman this question, as I did not get the chance to make the point to the Minister. I think it is great that the hon. Gentleman secured this debate, but does he agree that we need to have the Trade Bill back on the Floor of the House on Report, to have a substantive debate and get more information on the Trade Remedies Authority as soon as possible?

I love the Library staff and their briefings, particularly when they are as direct as this one. In the “Comment” section, it says:

“The Bill establishes the TRA but says relatively little about its functions or the Government’s approach to trade remedies.”

I could not put it better myself. Does the hon. Gentleman agree that business and all the nations of the UK need more information on this as soon as possible?

[Jack Brereton]

The measures that the Trade Remedies Authority will set out will be set out in the customs Bill, so I encourage the Government to introduce that Bill as soon as possible.

I did not agree with everything that was said by the Labour Front-Bench spokesman, but I agree that it was Conservatives who previously put forward these points in the EU and were the strongest advocates for the current trade remedies. It is about creating that level playing field and not about protectionism. I agree with that.

I thank the Minister for his responses and the clarity he offered about the transitioning. I am very pleased that it will include transitioning measures across from what is in place in the EU to the UK’s trade remedies regime. I also thank him for the clarity around some of the secondary measures.