British steelmakers pin hopes on continued EU trade defense, for good reason

31 January 2017 9:56am
Steel Worker

8 July 2016. By Poppy Bullock and Dafydd Nelson.

In Neath Port Talbot, the Welsh county where Tata Steel’s troubled steelworks resides, citizens voted to leave the EU. Now, in the face of Brexit, British steelmakers are urging the UK government to strike a deal with Brussels allowing them to remain within its fortress walls to defend against dumped foreign imports.

The last year has not been a good one for British steel. At least three plants have closed or seriously downsized, spelling job losses in their thousands.

The latest casualty, Tata Steel, which owns the Port Talbot facility, is reported to be considering whether to go ahead with the announced sale of its plant. The Mumbai-based company, which is part of Cyrus Pallonji Mistry’s Tata Group, is said to be considering the impact of the UK’s referendum vote to leave the Europe Union.

The UK’s business minister, Sajid Javid, is today in Mumbai for talks with Mistry about the future of Tata’s British operations. The future of Britain’s trade defense is likely to be part of their considerations.

One of the reasons for the cuts in the steel sector is the influx of foreign competitors’ cheap steel — especially from China.

Leading up to the UK’s referendum on whether to leave the EU on June 23, Brexit supporters blamed Brussels for not doing more to help steelmakers in Europe: EU trade investigators were criticized for taking too long over probing companies and imposing tariffs. And the tariffs they did slap on imports weren’t high enough, they said.

Despite that, in its manifesto published today, trade association UK Steel has called upon the government to ensure “through its negotiations in leaving the EU” that Britain “remains linked to the EU Commission’s dumping measures.” This would mean somehow remaining part of the EU’s trade-defense instrument and maintaining tariffs against dumping and unfair subsidies.

But EU lawyers have said that alongside Britain’s membership to the EU goes its protection against unfairly cheap imports.

The UK cannot simply adopt the same regulations imposing dumping or antisubsidy tariffs, they say, because their market is different to the whole of the EU and so they would need to conduct an entirely new investigation first.

This reading could leave the UK without defense against dumped imports until its own probes were carried out. Which is why UK Steel is asking the government, if maintaining EU protection isn’t possible, that it alone “brings about a swifter, more robust set of measures to deal with dumping.”

The request is understandable, but practically very difficult. First, the UK cannot technically start an investigation until it’s out of the EU. This is because European law states only the European Commission can undertake that role as investigator.

The UK would have to assemble its own team of trade-defense experts, who are thin on the ground. And, starting from scratch, its own processes of trade-defense probes could take much longer, at least to begin with.

This means months, or years, could pass without any UK trade defense, leaving the market wide open for foreign exporters.

Brexit Special Report