Fox moves to take trade disputes power from EU
Liam Fox, the trade secretary, will legislate next month to take back powers from Brussels to deal with trade disputes, in a move that will force Westminster politicians to grapple with exporters such as China.
Mr Fox also wants to set up an independent UK “trade remedies authority” to investigate “anti-dumping” cases after Brexit, but he will reserve the right to overrule the authority’s recommendations to take retaliatory action against trading partners.
Trade defence measures, such as higher tariffs or quotas, have historically been decided in Brussels by representatives of all 28 EU member states, allowing Britain to duck difficult decisions by “hiding behind” other countries.
But under the trade bill, which will have its second reading in the House of Commons on January 9, British ministers will have to deal with the problem of whether to retaliate if a trade partner “dumps” heavily subsidised or artificially low-priced goods on the UK market.
Ministers will have to make difficult decisions about whether to slap punitive tariffs on dumped goods, such as cheap Chinese steel imports, even if consumers and companies buying the imports would suffer.
“Once British politicians are completely on the hook for these decisions, they will have to think about how they balance the consumer and producer interests in a new way,” said Stephen Adams, a former EU trade official who is now a senior director at Global Counsel, the advisory firm.
“A string of free trade-minded UK governments have been in the privileged position of knowing that other EU states will speak up for defensive producer interests and leave them free to be sceptical about trade defence,” he added.
“Now the UK will find itself having to think about how it deploys its own trade defence system, for example where it pushes up against the desire to cultivate a close strategic relationship with China.”
Last year, the EU slapped tariffs of up to 73.7% on Chinese steel after European manufacturers were forced to cut jobs owing to falling prices and demand for the material because of an influx of cheap imports from Asia.
Under the trade bill, however, UK trade secretaries would have to balance the interests of British steel producers against those of consumers. They would also have to consider whether a possible trade war with China was against Britain’s strategic interest in building ties with Beijing.
Lord Mandelson, a former EU trade commissioner and business secretary, said Beijing would be less likely to fear reprisals from Britain acting on its own than if the EU retaliated. “I’m sure China et al are quaking in their boots,” he said.
Mr Fox’s trade bill also proposes a nine-member “trade remedies authority” to advise the secretary of state on anti-dumping cases.
The authority could take up a case following complaints from businesses or consumer groups. If the body concluded that no action should be taken against a third country, the secretary of state would have to accept that verdict.
However, under the proposals, Mr Fox or his successors would be able to ignore the authority’s calls for anti-dumping measures if such moves were deemed to be against Britain’s “wider economic interests”.
The opposition Labour party has said that Britain should “keep on the table” the option of staying in a customs union with the EU, implying that the UK would remain part of the Brussels trade architecture.
However, Barry Gardiner, shadow international trade secretary, said that if the government decided to embark on its own commercial policy, it would be “absolutely essential” to have a trade remedies authority.
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