UK illegally extends steel tariffs

International Business News  –  A few days ago, the British International Trade Minister Trevelyan said that the United Kingdom will extend the import protection tariff for steel products until June 2024, as a way to protect the British domestic steel industry. It is reported that, in order to prevent the influx of steel products into the British market, the steel safeguard tariffs mainly for developed countries and China, and plans to gradually expand to other developing countries. Trevelyan said that the British side has been in contact with the relevant parties on the future situation of the safeguard measures. British authorities acknowledged that the move may conflict with World Trade Organization rules and may face legal challenges from the WTO, but the removal of safeguards on steel would cause more serious damage to the British steel industry.

1  The UK extended the safeguard tariffs on steel imports for two years for five products

In 2018, the UK, then still a member of the EU, introduced steel safeguards with the EU to protect domestic steel producers from cheap international steel. After Brexit, the UK decided to retain the EU global safeguard measures for steel products and reduce the scope of application of the measures from 26 major categories to 19 major categories of steel products. in October 2020, the UK trade remedy investigation authority launched a transitional review of the measures to decide whether to continue the measures or make adjustments after their expiration.On June 30, 2021, the UK Department for International Trade issued an announcement and decided to extend the implementation period of global safeguard measures for 15 major categories of steel products, of which the measures applicable to 10 major categories of steel products were extended for 3 years, and the measures applicable to 5 major categories of steel products were extended by 1 year, and the implementation method was to impose a 25% tariff on imports exceeding the quota. Therefore, the UK steel safeguards currently apply to 15 steel types, of which 10 steel measures are valid until June 2024 and 5 steel products expire on 30 June this year. A few days ago, the British Department of International Trade proposed a plan to extend tariffs on these five categories of products for another two years. At the same time, the authorities also hope that safeguard restrictions will be imposed on some developing countries whose imports exceed the thresholds established by law. Britain’s international trade secretary Trevillian said extending tariffs on steel products was crucial to protecting Britain’s steel industry. The UK Trade Remedy Authority (TRA) also recently announced that the data of the global steel market shows that in the foreseeable future, the relevant steel products in the international market are very likely to face the problem of oversupply. After a comprehensive assessment of a number of indicators such as capacity, import trends and UK market attractiveness, the TRA said that if this safeguard is removed, imports of all types of steel products could increase significantly, which will cause serious damage to the UK steel industry. Based on this, Trevillian stressed that the removal of steel safeguards will lead to an increase in imports, which will cause serious damage to local steel producers, so the British authorities have decided to extend the measures. In addition, she added that import restrictions on developing countries were intended to serve the same purpose.

2 British circles have different attitudes to the decision to extend the steel safeguard measures

Considering that the influx of cheap steel could cause thousands of people to lose their jobs in the UK, the British authorities decided to extend the steel safeguard measures. In this regard, the British steel industry expressed support and praised the determination of the authorities to protect the British domestic steel industry. Gareth Stas, director general of the British Steel Institute, pointed out that the British government’s safeguard measures will prevent a surge in imports from steel markets such as the United States and Europe, which will jeopardize employment and investment in the United Kingdom. On the other hand, the British Forging Association (CBM) is opposed to this. Even though the British authorities have repeatedly reiterated that the decision is aimed at solving the employment problem in the UK, CBM has warned that the tariff, which aims to protect the British steel production sector, has had a serious impact on the more than 200 members of the association, and the existence of the tariff has caused downstream industries. domestic demand cannot be met. If the government does not reconsider its decision to extend steel safeguards, thousands of downstream manufacturing jobs will still be lost in the UK domestic supply chain. Contractors and subcontractors in UK automotive, aerospace, construction and general engineering are currently paying hundreds of thousands of pounds to import steel of the specific quality and properties they require from steel mills in Europe. CBM said that while the move was welcomed by UK-based steelmakers, it was not enough to eliminate unnecessary financial costs and damage to industries downstream in the supply chain, while also increasing lost orders and shifting production from the UK possibility of going out. Steve, the chairman of the association, believes that British steel mills are unable to provide the specific steel required by the association members to support the British domestic and export supply chain. The extension of safeguards means member businesses will continue to operate under a high degree of uncertainty. If this uncertainty persists over the next two years, it will lead overseas holding companies to constantly question the viability of UK manufacturing. Even if tariff levels are reduced, tariff costs will cause unreasonable damage to these downstream players.

3  Britain’s decision to extend steel tariffs may face legal challenges at the WTO

In addition, Johnson’s unstable leadership may also be one of the reasons for his proposed extension of steel tariffs. At present, the United Kingdom is caught in the dire waters of inflation, and the inflation rate in May refreshed a 40-year record. The strike of the century has also been staged in the UK, which has made ordinary British people full of doubts about Johnson. At the moment, the steel tariffs can be used as a bargaining chip for Johnson to appease the British industry and restore some positive images. However, the move could face legal challenges from the WTO for breaching WTO obligations. Although Trevelyan has repeatedly emphasized that the original intention of extending the steel import safeguard measures is to protect the British steel industry, she also admitted that although the plan to protect the British steel industry is in the “national interest”, it also “deviates from the British international legal obligations”. Likewise, the decision was condemned by free-market supporters. Conservative MP Anthony Mannall has voiced his support for protecting the steel industry, but “not by extending safeguards like this”. Liam Fox, the former UK international trade secretary and chairman of the trade committee, also urged Johnson’s government to drop the tariffs, saying the UK should “play a leadership role in free trade” rather than “damaging its global reputation to the detriment of other economies at home”. The sector is in uncertainty.” He bluntly said that protectionism, like inflation, hits low-income people the hardest. This is not dissimilar to Britain breaking its WTO commitments with steel measures. While human protection may take some of the pressure off UK steel producers, countries whose exports have been hit because of UK steel safeguards, such as Turkey, India and South Korea, could impose retaliatory tariffs on UK cars or whisky products , thereby affecting the rest of the UK economy. For example, South Korea, which has £13.3bn of trade with the UK, is unlikely to stand idly by and watch its steel exports be curbed without any countermeasures. As a result, Fox believes that “choosing protectionism is one of the worst decisions this administration has ever made”. To play a leading role in free trade, British authorities will have to find an alternative solution for the steel industry that does not damage Britain’s global reputation or jeopardize the rest of the economy at home.