Taxation (Cross-border Trade) Bill

Stephen Kinnock Excerpts

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

[Mel Stride]

The hon. Gentleman raises the extremely important matter of protecting our UK producers from dumped goods in this country, goods that have been subject to excessive subsidy, and indeed import surges that arise for other reasons. That is why this Bill and the Trade Bill, which will have its Second Reading tomorrow, make provision to set up a Trade Remedies Authority with the ability and powers to investigate appropriately the kinds of issues to which the hon. Gentleman alludes, and to ensure that we are able to take remedial action, in terms of additional duties and so on, to ensure that we properly address those particular threats as and when they occur.

[Stephen Kinnock (Aberavon) (Lab)]

The Financial Secretary of course knows how close we came to the collapse of the British steel industry, thanks to the dumping of Chinese steel, but even though schedules 4 and 5 of the Bill refer to incredibly onerous public interest and economic interest tests, there is absolutely no detail of how so many of the practical aspects will work. Why do the Government seem to be set on leaving our manufacturing sector completely exposed to the dumping of Chinese steel, for example?

[Mel Stride]

I am afraid that I have to disagree with the hon. Gentleman. The Bill takes a balanced approach to the issue of protecting our domestic producers including, very importantly, steel producers. By “balanced approach”, I mean that we should also take into account the interests of consumers of those imported goods and businesses that use them in their processes. If the hon. Gentleman looks closely at the measures—we will do that in Committee—he will see that they provide for compensation where dumping has occurred and for appropriate sanctions to be made.

The economic advantage to the UK is very important, and that means continued UK-EU trade that is as frictionless as possible. It also means avoiding a hard border on the island of Ireland and establishing an independent international trade policy. As we look forward to the next stage of our negotiations with the European Union, we see that the nature of our future customs relationship with the EU, and therefore the legislation that will allow the Government to give effect to any such relationship, become all the more significant.

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[Peter Dowd]

My hon. Friend is absolutely right on that point.

What is concerning is the fact that UK manufacturers and key industries have not been consulted on the trade remedies in the Bill. Perhaps the Minister can explain why, if the Prime Minister is happy to meet representatives from Toyota to agree a deal and the Environment Secretary is in regular contact with the National Farmers Union on future agricultural subsidies, he has failed to consult an industry that represents nearly 10% of the economy and employs millions on the trade remedies it needs to protect UK jobs.

[Stephen Kinnock]

I am sure my hon. Friend will have seen the letter in the Financial Times from the chief executive officers of the British steel, paper, ceramics, minerals and chemicals associations, along with their trade union counterparts, which puts this very well: they are deeply critical of the Bill, saying it does not do anything like what is required on trade defence and making it absolutely clear that the UK’s manufacturing base and tens of thousands of jobs around the country will be at risk if Parliament gets this Bill wrong.

--- Later in debate ---

[Stephen Kinnock (Aberavon) (Lab)]

It is a pleasure to follow the hon. Member for Ayr, Carrick and Cumnock (Bill Grant), even though large parts of his speech were based on magical thinking.

I rise to address schedules 4 and 5, which propose the introduction of a new post-Brexit trade defence regime. Trade remedies enable countries to defend themselves against underpriced and state-subsidised goods, so they play a pivotal role in the rules-based WTO system. Governments would never have agreed to the radical trade liberalisation of the past half century were they not reassured that they could act to step in and defend their industries, if necessary. Trade defence remedies have therefore played a central role in tearing down the walls that prevent free and fair trade. How ironic, then, that this Bill is the work of a Conservative Government. The party that claims to be the voice of enterprise, free trade, business and industrial strategy has produced a Bill that, if passed in its current form, would fatally undermine the British manufacturing sector.

To illustrate my point, I wish to focus on what the Bill, in its current form, would mean for the British steel industry, which is centred on the Port Talbot steelworks in my Aberavon constituency. Over a third of the EU’s 92 trade defence instruments relate to steel, and over the years those 30-odd measures have played a vital part in stemming the flow of the dumped Chinese steel that almost led to the total collapse of the British steel industry. The Chinese Communist party owns 80% of that country’s steel industry. The party subsidises the industry to the hilt and sells the steel at well below cost on the global market. It is a well-established strategy that the Chinese state pursues relentlessly and ruthlessly in its bid to extinguish all competition and establish monopoly status.

The all-party group on steel’s “Steel 2020” report, which was supported and signed by Members who now serve in government, concluded that trade defence instruments exist not to unfairly protect certain sectors of the economy, but rather

“to support the free, fair and efficient functioning of the market.”

I will certainly not stand here and claim that the EU’s trade remedies regime works perfectly; it does not. It has often been too slow and bureaucratic, and it has unfortunately been hamstrung by the lesser duty rule. The fact of the matter is that the European Commission acts on behalf of 28 member states and 500 million consumers, so when it threatens action, even behemoths such as China sit up and take notice. It is therefore no exaggeration to say that were it not for the anti-dumping measures taken by the Commission at the height of the steel crisis, our precious steel industry would probably have gone under.

I speak today not only to raise concerns about the Bill’s implications for our steel industry, but to highlight the fact that this is about the future of our entire manufacturing sector. Indeed, the chief executive officers of the British steel, paper, ceramics, minerals and chemicals associations, along with their trade union counterparts, put it very well in their letter of 5 January to the Financial Times. They said:

“Without a robust approach to trade remedies the UK government will be unable to achieve its international trade or industrial strategy ambitions. The UK’s manufacturing base and tens of thousands of jobs around the country…will be at risk if parliament gets the bill wrong.”

I say to hon. Members on both sides of the House that if they have any form of manufacturing in their constituency, the Bill really matters to them.

As an MP who represents a constituency whose local economy relies almost entirely on manufacturing, I desperately want the Government’s industrial strategy to succeed, but the fact is that it will not be worth the paper it is written on if it is not underpinned by a robust trade remedies regime. It is in that constructive spirit that I urge the Government to undertake a radical rethink of schedules 4 and 5, with particular reference to five issues. First, the Bill contains very little detail about how the post-Brexit trade remedies regime will operate in practice. Instead it enables the Secretary of State to legislate for all-important details through statutory instruments. That really matters not only because it is yet another example of Ministers attempting to sideline Parliament, which has become a recurring theme of this whole Brexit process, but because there will be deep and widespread industry uncertainty until the secondary legislation is in place. Labour Members have raised the issue of steel in this place more than 300 times since 2015, but if this Bill passes in its current form, steelworkers and their families can kiss goodbye to the idea that they will have a voice in Parliament standing up for their interests and fighting their corner. We will not be able to do so because all the key decisions will be taken behind closed doors and implemented by statutory instruments.

Secondly, it is imperative that the Bill includes a cast-iron commitment to scrapping the lesser duty rule. This Government have been the ringleader of attempts to block EU moves to reform the rule, which means that we have only been able to impose tariffs of 13% to 16%, whereas the Americans, for example, can impose import duties of over 200% on dumped Chinese steel. An unreformed lesser duty rule must not be retained in UK law. We therefore call on the Government to state precisely how they intend to calculate the margin of injury to ensure that the process is at least as robust as the reformed EU system, and to lay out all that detail in the Bill.

Thirdly, the economic and public interest tests would create an unnecessarily high barrier to introducing any form of trade defence. None of those tests is required under WTO rules, so why are the Government intent on placing multiple obstacles in the path of an industry that wishes to file a complaint?

Fourthly, we need changes to the proposed remit and composition of the Trade Remedies Authority, bringing it in line with global norms and ensuring proper representation of trade unions and industry. Fifthly, the Bill must be amended to ensure that British courts are able to correct decisions made by the Government that deny British industry WTO-complainant rights that our competitors across the world enjoy. Without those changes, the Bill will fail in its essential task of establishing a fit and proper trade defence regime.

Once we have decoupled ourselves from the EU’s trade defence regime, it is simply beyond debate that we will have less leverage. Therefore, if anything, the post-Brexit regime that we create must be far tougher and more robust than the one that we have left. That is why we simply cannot allow schedules 4 and 5 to pass unamended. Unless the Bill is amended, it will deny us even those scant protections. For that reason, I urge hon. and right hon. Members to join me in the Lobby to amend and fix this broken Bill.