UK steel industry welcomes extension of protectionist tariffs

Ministers overrule Trade Remedies Authority to defend sector against cheap imports, notably from China

Last modified on Thu 1 Jul 2021 05.50 EDT

The steel industry has welcomed the government’s extension of measures to defend the ailing sector from a flood of cheap imports.

Liz Truss, the international trade minister, said the government had overruled the Trade Remedies Authority, a public body that had said protectionist tariffs and quotas on 10 types of steel product should be maintained for three years, but lifted on nine others.

The industry said last month that upholding the TRA’s decision would be “utter madness”.

Instead, Truss said the government would now extend special powers to prolong import limits on five of the nine steel products that would otherwise have been freed from any restrictions. The safeguards will be extended for a year.

“Imports outside the quotas will face a tariff of 25%,” she said. The decision indicates that the government is more open than its predecessors to taking protectionist measures to aid a sector that has suffered crisis after crisis in recent years.

The European Union introduced quotas in 2019, while the UK was still an EU member, in an effort to ensure that 25% tariffs imposed by Donald Trump, then US president, did not result in a flood of steel being diverted into Europe.

The measures came against the backdrop of mounting concern about EU producers, already struggling with overcapacity, being further hurt by an influx of cheap steel from China, where producers have lower labour costs and are often state-subsidised.

As business minister Sajid Javid had previously attracted criticism for opposing plans to limit the flow of Chinese steel into Europe.

The trade body UK Steel welcomed the current government’s new stance on extending the safeguards, originally put in place by the EU, saying it would protect an industry that generates £2bn a year in revenue and directly employs 33,700 people.

UK Steel’s director-general, Gareth Stace, said removing limits on steel imports, in line with the TRA’s decision, would have cost the industry “hundreds of millions” a year.

He said: “The government’s interventions will prevent an anticipated wave of overseas steel flooding our market, that would have cost jobs, investment, and our ability to decarbonise as a sector, threatening the UK’s road to net zero.”

But the trade union Unite warned that the “can has just been kicked down the road”, with steelmakers likely to come under pressure from cheap imports again.

Global oversupply, particularly of cheap Chinese steel, has hurt UK steelmakers already struggling with high business rates and energy costs compared to other countries.

British Steel was bought out of insolvency by the Chinese firm Jingye in March 2020, shortly before the pandemic struck the UK, while the future of steelworks owned by Sanjeev Gupta’s GFG Alliance have been thrown into doubt by the scandal surrounding the financial backer Greensill Capital.

The vast steelworks at Port Talbot, owned by the Indian conglomerate Tata, has also repeatedly been at the centre of fears about jobs.

“UK steel can’t keep limping from crisis to crisis like this,” said Unite assistant general secretary Steve Turner. “We urgently need a plan and government support to bring some stability and security to this strategically vital sector.”

Labour’s shadow international trade secretary, Emily Thornberry, said the government had performed a U-turn due to hard lobbying from steelworkers and Labour figures in parliament, spurring a “last-minute reversal”.

She said the TRA “must be urgently reformed before any more of Britain’s businesses face the anguish and uncertainty that the British steel industry has faced in recent weeks”.

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