Steel backlash after UK breaches WTO undertakings with tariff rollover

Boris Johnson's minister claim action is needed in the national interest

File photo dated 30/11/21 of International Trade Secretary Anne-Marie Trevelyan. The Government must hold off on ratifying a trade deal with Australia to allow greater scrutiny by MPs, a parliamentary committee has said. Issue date: Wednesday June 29, 2022.
Beta V.1.0 - Powered by automated translation

For a second time in a week a UK cabinet minister announced the government would breach international law as London announced on Wednesday it would maintain trade safeguards for the UK steel industry for another two years.

International Trade Secretary Anne-Marie Trevelyan also said the plans to protect British steel producers depart from the UK's "international legal obligations" but are in the "national interest".

British manufacturers have called on the government to allow them to import more steel products without paying tariffs because domestic suppliers have failed to meet demand, leaving them facing 25 per cent duties on a key raw material imported from China, India and elsewhere.

Liz Truss, the foreign secretary, conceded on Monday the Northern Ireland Protocol Bill was being brought on the basis of the legal doctrine of necessity, a defence that is only relevant when international law is being broken.

Since Britain left the European Union, imports of a type of steel used in vehicle parts and other manufacturing face a 25 per cent tariff if they exceed a certain quota level as a 'safeguarding' measure to encourage domestic steel production.

The quota currently covers about a third of British manufacturers' usage, and the government has proposed doubling it in size, but manufacturers say this will still leave them short.

"Increasing the quota is a step in the right direction, but it is not enough to protect our members," said Steve Morley, president of the Confederation of British Metalformers.

An employee uses tape to seal a packaged coil of rolled steel at the Jindal Stainless Ltd. factory in Hisar, Haryana, India, on Wednesday, May 16, 2018. India's biggest steelmakers are set to expand production to a record after reporting solid quarterly earnings amid strong steel prices. Photographer: Udit Kulshrestha/Bloomberg

Small engineering company Tinsley Bridge, which makes stabiliser bars for heavy trucks such as those made by Volvo and Renault, cannot source the specialised steel it needs in Britain and must import, but has been hit with the 25% tariffs.

That has pushed up costs for the business which has turnover of 22 million pounds ($27 million) and 220 workers.

"We obviously can't absorb that. We've got to pass that on to our customers. What that is going to mean is that we're not going to be seen as a competitive source," said managing director Mark Webber.

The 25 per cent tariffs on imports over the quota "raises the very real prospect of lost orders and production being moved away from the UK", the CBM said.

"British steel mills have not been able to supply the ... materials our members need to support critical domestic and export supply chains, nor are they likely to be able to do so in the near future," it said.

Britain proposed last week to extend tariffs and quotas on five steel products, with a final decision expected this week, aimed at supporting an industry that employs 34,000 workers and makes $2 billion in annual turnover.

Updated: June 29, 2022, 12:59 PM