Leaving the EU: Future Trade Remedies

Philip Hollobone Excerpts

Tuesday 17th April 2018 Westminster Hall

[Jack Brereton]

The hon. Gentleman is right. Some of what has been proposed has not been experienced around the world; we will be testing something out that has not been tried. I will move on now, and I will not take many more interventions as time is short, but it would be particularly helpful to know whether the intention is that trade remedies would be applied before any test or only after the test. As the Manufacturing Trade Remedies Alliance has argued, duties could always be refunded retroactively if any test found that trade remedy measures were not in the public interest.

Current trade rules have served the ceramics sector well against outrageous dumping by countries that have far less regard for the spirit of free trade and the necessary rules underpinning free market economies. For example, just 10 years ago, we saw huge volumes of ceramic tiles, giftware and tableware all made in China being dumped at a price that could not have covered the real cost of production. The investigations into those price anomalies found that they were such clear cut cases of dumping that the EU still imposes remedial duties today.

There are good reasons for maintaining those duties after Brexit. Not least is the fact that since the measures against tile dumping were introduced in 2011, employee numbers in the UK have increased by about 40%. Not every new job will have been created as a result of the anti-dumping duties—the economy recovered substantially and employment grew significantly across many sectors in that time—but it is clear from the evidence that anti-dumping measures underpin the ceramics sector’s ability to take advantage of the Government’s wider pro-enterprise policy agenda, giving breathing space for the industry to invest in becoming more resilient.

Indeed, as recently as 2016, an expiry review of anti-dumping measures in the ceramic tiles market found overcapacity in the Chinese industry equal to six times total EU annual consumption. The anti-dumping duties on Chinese tiles were therefore extended for a further five years. I hope that the Minister will confirm that those measures will apply at least for the rest of those five years once we have left the European Union. Similarly, in the giftware and tableware sector, UK employee numbers have increased by 20% since anti-dumping measures were introduced. Our ceramics manufacturers are currently preparing a complaint for an expiry review. If the complaint is successful, the investigation will take place while we are still in the process of leaving the EU, so for clarity the industry would surely welcome any indication the Minister can give that the continuation of any EU anti-dumping measures that might result from any expiry review will also apply in the UK market.

In addition, the ceramics industry is keen for Ministers to reflect on how difficult it can be to counter dumping if the definition of dumping is too narrow. Unscrupulous actors who seek to dump their goods will be unscrupulous in exploiting any loopholes they see. For example, it may not be appropriate to rely on the price in the home market from which imports come when those imports originate from heavily distorted economies—that is to say from countries where market situations are distorted by the interventions of the state, which is usually an undemocratic state working outside the norms of transparency and governance that we take for granted.

On dumping calculations, I am therefore eager to learn what view the Government take on ensuring that the Taxation (Cross-border Trade) Bill makes it clear that there are circumstances in which the difficulty in determining normal value in the presence of state distortions means that provisions should be made for when it is not appropriate to use the domestic price. By clarifying how the Trade Remedies Authority would, in anti-dumping investigations, calculate the level of dumping for cases in which the domestic price of the alleged dumped imports cannot be used, there will be legal certainty and greater confidence in the ceramics industry.

I also wish to raise the Government’s proposed use of a minimum market share in relation to the acceptance of dumping—or indeed subsidy—complaints. I would be grateful for clarity on their intentions. Will a de minimis level be set and, if so, at what level? What rules for flexibility might there be in that level? For example, will there be flexibility if an industry has evidence that it is being materially retarded from achieving the minimum market share by dumping or subsidies, if previous injury from dumping has reduced an industry to the de minimis level, or if an industry plays a peculiarly important role in a particular area of the UK, though not across the UK economy as a whole?

As we leave the EU, almost everyone now agrees that the Brexit process should not be some sort of sharp shock; it should be a growing opportunity, with a smooth transition period in which to adjust to the new reality of global Britain. Will that transition include the retention of existing trade remedies for the ceramics sector, followed to their full course and renewed if necessary? Such an assurance from the Minister would be extremely welcome.

While the Department for International Trade will rightly be proffering carrots in seeking free trade deals for global Britain, in terms of opening access to the UK market, it should also let it be known that we will keep some big sticks in our trade policy array should tit-for-tat measures prove necessary. Brexit is a great opportunity for us to be a leading independent force in the WTO, and the champion of free and fair trade across the world. It will take time to convince all other members of our case, and in that time we will have to be ready to combat egregious distortions. However, the direction of travel should be clear: freer markets, freer trade, and an empowered and liberated entrepreneurial British spirit, with more of our world-class manufactured goods reaching global markets, all of it underpinned by a sense of enforceable fair play. That is the Brexit that my constituents voted for, and that is the direction in which I hope the Minister will be pleased to travel.

[Mr Philip Hollobone (in the Chair)]

The debate can last until 5.45 pm. I am obliged to call the Front-Bench spokespeople no later than 5.23 pm. The guideline limits are: five minutes for the Scottish National party, five minutes for Her Majesty’s Opposition, 10 minutes for the Minister, and two or three minutes for Mr Brereton to sum up the debate at the end. Until 5.23 pm there is time for other contributions.

--- Later in debate ---

[Bill Esterson]

I am grateful to my hon. Friend for the intervention. I was about to make the same point. She is absolutely right to say that we need to hear from the Minister what his intentions are.

The EU does not want the UK to be swamped with dumped goods, whether that is steel, ceramics or washing machines, because if that happened, such goods could enter the EU market from the UK. Equally, UK businesses do not want dumping, because it is unfair competition. Lack of protection in the UK risks thousands of jobs in the UK. It is no good the Minister’s saying that it means cheaper goods for consumers—as I have heard him say on countless occasions—because the workers whose jobs are at risk are consumers as well. No job means no wage to buy the goods. A lack of trade defence is bad for producers, workers and consumers, yet that is what there has been far too often. My hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss) is right to highlight exactly what happened in the steel industry, because when the Government failed to support EU trade defence measures against Chinese steel dumping and acted too late to intervene and save SSI, it was the Conservative group of MEPs, at David Cameron’s prompting, who were the cheerleaders in the European Parliament against Europe-wide action. That included their blocking attempts to end the use of the lesser duty rule.

However, protection and the use of trade remedies is not the same as Trump-style protectionism. Trade remedies should be about the creation of a level playing field that defends domestic producers against unfair competition from dumped goods. They are an essential policy tool to correct multilateral distortions. Failure to use anti-dumping measures, in the name of free trade, misses the point that for trade to be free, it also has to be fair. Adjustments are needed in the event of Chinese or Russian state subsidies or distorted pricing of raw materials, or to address Trump’s tariffs. The European Commission is due to vote soon on higher anti-dumping duties to tackle raw material distortions, so it is incredible for the Government to say, as the Minister has, that they will vote against those measures.

That brings us to the customs Bill—the Taxation (Cross-border) Trade Bill—and the Trade Bill. As the hon. Member for Livingston (Hannah Bardell) said, we should be debating the amendments to the two Bills on Report in the main Chamber, not having a general debate in this Chamber, but as we are, let us look at what the Bills will do.

The Government are planning to give themselves the power to decide not to act on behalf of UK industries, in favour of the consumer interest. That will be a political decision, balancing the interests of jobs in one area of the country against the interest of consumers—a point made to us by George Peretz, QC, when he gave evidence to the Trade Bill Committee. Trade remedies are essential to protect British industries, whether that is steel, ceramics, tyres, chemicals or pharmaceuticals. The Minister will no doubt say—he has said it before—that the lesser duty rule has been effective in tackling unfair trade. He wants to continue to apply it at the very moment when the EU is moving away from it, so tell us: where is the evidence to support that approach? I am glad that he is nodding, because I am looking forward to hearing his answer. Ask workers who used to work at SSI. Ask the MTRA. Ask industry and workers. They believe in strong trade remedies and they want to know the reason why the Government are taking a different approach.

The continued application of the lesser duty rule will see dumped goods diverted to the UK, and as we leave the EU, divergence in trade remedies will add to the damage done to the UK economy. The Minister is fond of saying to me and my colleagues that we are against the creation of a trade remedies authority. He knows that that is not true, of course, but that does not stop him saying it. The difference between him and me is that I want the Trade Remedies Authority to be effective. I take seriously the importance of trade remedies in creating a level playing field for our producers so that they can compete in international trade in a fair market. That is why we tabled a reasoned amendment on Second Reading of the Trade Bill that stated categorically our support for the creation of a trade remedies authority, but we believe that the Trade Remedies Authority should be representative of all sides of industry; it should include representatives of producers, trade unions and each of the devolved Administrations. We tabled amendments to that effect in Committee, as did the SNP. In addition, the chair of the TRA should go through parliamentary scrutiny of their appointment, rather than being placed in post by the Secretary of State; Parliament should also have its say on the membership and non-executive appointments. I totally agree with the hon. Member for Hornchurch and Upminster that the Select Committee on which she serves should be scrutinising all these appointments. The Government are using ministerial discretion in the establishment of the TRA before the legislation has been passed that sets it up, and the Minister should explain why, as ministerial discretion is usually reserved for matters of disagreement on spending within a Department.

British industry needs a strong, robust and independent Trade Remedies Authority that will use international best practice. Our amendments to the customs Bill and the Trade Bill will be designed to achieve the objective of giving our industry a level playing field. The Minister and his hon. Friends should support our approach or introduce their own amendments to do just that; otherwise, workers in the Potteries and many more across the country will face the possibility of the same fate as steelworkers faced in Redcar just a few years ago.

[Mr Philip Hollobone (in the Chair)]

If the Minister would be kind enough to finish his remarks no later than 5.42 pm, that would give Mr Brereton time to sum up the debate.