In August, we reported that the newly established Trade Remedies Authority (TRA) recommended the maintenance of safeguards on only 10 of 19 categories of steel products, pursuant to its post-Brexit transition review. The recommendation, if accepted by the Secretary of State for International Trade (the Trade Minister), would result in imports of certain wire rods, stainless-steel bars, tin mill products, and certain railway material entering the UK tariff-free. However, the Trade Minister (then Liz Truss) circumvented the regulations governing recommendations made by the TRA in order to retain the safeguard measures for five of the nine categories in respect of which the TRA recommended removing the safeguard.
The Trade Minister’s move was arguably driven by the significant pressure placed on the UK government by the local steel industry, which made their concerns regarding the TRA’s recommendation very clear. Now it appears that the TRA is possibly acting upon some pressure which it too is facing. On 7 September, the TRA initiated a reconsideration of its recommendation to the Trade Minister, following requests for reconsideration submitted by domestic steel producers as well as importers and downstream UK manufacturers. Unsurprisingly, the domestic steel industry is insisting that the TRA’s original recommendation should have extended the safeguards to a greater number of steel products, while the importers and manufacturers are arguing that the safeguard measures for various categories should have been removed.
The reconsideration process allows affected parties to make further representations concerning a decision, even after it has been made. Reconsiderations cover the same remit as the original transition review, but with the noteworthy addition of further information submitted by interested parties. At the end of the process, the TRA will make a reconsidered decision, in terms of which it will either amend or uphold its original recommendation.
The decision by the TRA to reconsider its original recommendation feeds into critics’ views that Britain’s post-Brexit trade remedies system is not fit for purpose. It also arguably reflects not only the pressure placed on the UK government by industry, but also by the Labour Party's John Healey, the Shadow Secretary of State for Defence, who criticised the TRA’s original recommendation as “taking Britain in totally the wrong direction”.
With the role of Trade Minister since having been taken over by Anne-Marie Trevelyan, and as part of Prime Minister Boris Johnson’s Cabinet reshuffle, it will be interesting to see whether Ms Trevelyan pays greater deference to the TRA than her predecessor.
The European Commission (the Commission) is also facing pressure from local steel producers which have expressed significant concern over the EU’s proposed plan to temporarily suspend specific anti-dumping duties due to market distortions emanating from the Covid-19 pandemic. The EU’s Basic Anti-Dumping Regulation permits the Commission to suspend anti-dumping duties for up to a year, provided that market conditions have temporarily changed (e.g. due to exceptional supply-chain disruptions) to such an extent that injury to the domestic industry would be unlikely to resume as a result of the suspension. The Commission has been reviewing a small number of candidate anti-dumping measures (including those on some stainless-steel products) for suspension, and two of those reviews have so far been concluded: the Commission suspended the anti-dumping measures on imports of flat-rolled aluminium products from China – a first since over a decade (and at the same time as their imposition, which is exceptional in the EU’s trade remedies practice). The Commission however decided not to suspend the measures on Russian plywood imports – a signal that the Commission might want to maintain the rare and exceptional nature of such a suspension.
The Commission also faces complaints that the proposed EU levy on imports of polluting industrial goods does not cover enough sectors. The draft Carbon Border Adjustment Mechanism (CBAM) forms part of the EU’s climate change strategy and is intended to prevent the risk of carbon leakage while maintaining compliance with the WTO. The CBAM will require EU importers to buy carbon certificates corresponding to the carbon price that would have been paid had the goods been produced under the EU’s carbon pricing rules.
The European Parliament called for an all-encompassing policy earlier this year, which would cover all industrial sectors covered by the EU’s Emissions Trading Session. Notwithstanding this direction, the Commission has decided to limit CBAM to only five sectors: cement, iron and steel, aluminium, fertilizers and electricity. This narrow approach has attracted criticism from a number of lawmakers on the Parliament’s environmental committee. The lack of rebates for exporters has similarly attracted criticism, but the potential for export rebates to resemble subsidies in contravention of WTO law makes their absence more understandable.
In conclusion, although things may be looking slightly more positive for UK steel producers in the international trade space, their European counterparts will no doubt remain concerned over the Commission’s potential suspension of anti-dumping duties while simultaneously benefiting from the Commission’s inclusion of steel in CBAM.