United States Tariffs: Steel and Aluminium

Lord Purvis of Tweed Excerpts

Tuesday 13th March 2018 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the noble Baroness, Lady Fairhead, for repeating the Statement. This is my first opportunity to debate her at the Front Bench, and I am looking forward to working with her on the international trade Bill when it reaches your Lordships’ House.

We have, over the past year, heard regular statements about problems affecting our steel industry, although this announcement of tariffs on steel and aluminium imports, blatantly aimed at protecting US producers, must rank as one of the worst because of its implications more widely for free trade.

The House of Commons Library briefing paper on the steel industry in the United Kingdom 2016 suggested that the steel sector accounted for £1.6 billion of UK economic output, which is about 0.1% of the UK economy and 0.7% of our manufacturing activity. It has about 600 businesses, and 32,000 people are employed in the sector. The UK is the 18th-largest steel producer in the world, the fifth-largest in the EU after Germany, Italy, France and Spain. Approximately 15% of 350,000 tonnes of steel was exported directly to the United States in 2017.

We should extend our concern and support to the employees of British steel firms and their communities, which must be very worried about this questionable and ill judged unilateral decision by the USA. What assessment have the Government made of the impact of this decision on jobs in the steel sector and the economic hit that will be felt, particularly in communities outside London?

I have three further questions for the Minister. First, this announcement was not unexpected. It followed a series of pledges from President Trump to take what he calls “tough and decisive action” on perceived threats to the US national interest and to domestic producers as a result of international trade competition from overseas. It is very much in line with his “America first” platform. When did the Government become aware that President Trump was going to impose tariffs on imported steel and aluminium? What representations did the Government make to the White House prior to the announcement, and what assurances were sought that these tariffs would not be applied to UK exports?

Secondly, earlier this year, President Trump announced tariffs on imported washing machines and solar panels to give a boost to US producers in these sectors. President Trump also imposed a 30% tariff on imported solar cells, and last year the Department of Commerce sought to impose tariffs of up to 292% on imported narrow-body, medium-range jets until the US International Trade Commission accepted the arguments made by Bombardier and others and overturned that decision. What other sectors of the economy are the Government concerned about? What representations are they currently making to ensure that the UK will be able to export to the United States in the near term without facing unfair tariffs? For example, the President has mentioned additional protection for intellectual property. Given the strength of our creative industries, have the Government taken up that issue in particular?

Finally, the Secretary of State announced the establishment of a US-UK Trade and Investment Working Group in July last year, a group that has met twice since then. Given that the President has said he would welcome a trade war and thinks America would win it, what discussions have been had about steel, aluminium and the other new tariffs at these meetings? What assurances have been sought from the US Government about exemptions for UK exports in any free trade agreement that might be in consideration post Brexit?

[Lord Purvis of Tweed (LD)]

My Lords, we too are grateful to the Minister for repeating the Statement. Just at the time that we are loosening our ties with our largest single integrated market in the European Union, we see the next bilateral largest market in the United States moving towards a protectionist tone. Over recent months we have been repeatedly counselled by Ministers that we should look at not just the rhetoric of the United States President but at the actions. Now it is quite clear that there are repeated actions which are contrary to the interests of the British economy. The announcement of the Secretary of State today and of economic advisers last week are clear.

When I was in Buenos Aires as an observer at the ministerial conference of the WTO, the US left without a communiqué being signed. These worrying trends are clear to see. Last year, the Secretary of State, Dr Fox, said, while in the US, referring to the UK/US relationship:

“Firstly, we must lead by example, and work to encourage our trading partners across the world to support, and adhere to, the rules-based global trading system”.


Will the Minister therefore confirm that it is the view of Her Majesty’s Government that this action by the President is clearly contrary not only to how strong allies with a so-called special relationship should act but to international law?

We also know that in the presidential proclamation the President said that there would be a mechanism for reviewing the decision on impairing US national security if the countries concerned showed that their actions would not impair that national security. However, in recent discussions with the US, the EU and Japan could not discern on what basis these issues would be considered. What is Her Majesty’s Government’s view on these blackmail conditions that President Trump would seek to impose on allies for there to be adjustments to, or the removal of, these tariffs?

We have heard reference to the working group, which I have raised in this Chamber before. Did officials on the working group inform us that there was a likelihood of these tariffs being imposed on the United Kingdom? The Secretary of State indicated that he was due to visit the US and had no doubt planned to discuss the progress of the working group. What status does the working group now have given that we are clearly in a trade dispute?

Finally, we and our allies around the world continue to believe in free trade, even if the United States does not. How will we seek redress within the WTO mechanisms? Will the Minister reassure the House that we will be in precisely the same position as the European Union if we appeal for redress under the WTO mechanisms? This trend of protectionism cannot be in the interests of the United Kingdom. Clearly, our interests lie in standing shoulder to shoulder with our European Union allies on this issue.

[Baroness Fairhead]

My Lords, regarding the core of the problem, which is global excess in steel capacity around the world, we have been clear as a Government, and my right honourable friend the Prime Minister has been absolutely clear, that this is the wrong way to approach a global problem. The right way to approach it is the way we have been encouraging: through summits, where we have discussions about the measures countries will take to manage the problem in a balanced, global, multilateral way. We have been clear that we do not think this decision is in line with our approach, and we do not agree with it.

We are trying as a Government to work as part of the EU—as you know, we have a duty of sincere co-operation, which we fully expect and intend to fulfil. The first aim will be to stop this happening at all, through a process of negotiation and engagement. There have been multiple examples of engagement, from the Prime Minister to the President and the Secretary of State for International Trade, all the way through government. We will also work with the EU to look at the protections we can put in place if our aim cannot be achieved. My difficulty in addressing the comments of the noble Lord, Lord Stevenson of Balmacara, about the effect on jobs, is that we do not know what the state of the negotiations and engagement will be, what exemptions can be achieved and therefore what the effects will be on which products. It is too early to say.

However, we will absolutely be supporting UK steel and aluminium companies, through multilateral bodies, trying to ensure a global playing field, and, through various initiatives, ensuring that the EU is working at the global summit on 28 specific recommendations to address capacity. We believe that that will help our steel and aluminium industries.

We are also working with the steel industry. I mentioned that we have met with Gareth Stace, the director of UK Steel, and we are working within BEIS to ensure that UK steel companies which think they will be affected present their cases as actively as possible in the US, so that companies there ask for exemption for their products. We are encouraging trade unions and industry to work with us; we find that in the US there is significant support from both Republicans and Democrats in Congress for open and free trade.

The noble Lord, Lord Stevenson, asked how much of a heads up we had about this. There have been noises in the press about potential statements. It was broadly mooted before a meeting in Sofia, where my right honourable friend the Minister of State for Trade Policy in the DIT was present. It was discussed in broad terms then but, until an executive order was put in place on 8 March, it was speculation.

Before we leave the EU we clearly cannot be in any formal negotiations, so the trade and investment working group is discussing options only. It has been making progress and is due to meet, as planned, next month, so that work is continuing. I believe the noble Lord, Lord Purvis of Tweed, asked specifically about that. We welcome the US in saying that they look forward to a free trade agreement when the UK is in a position to negotiate one.

In terms of the EU and the safeguards, this Government remain absolutely committed to the WTO. We believe in the principles of free trade but in a rules-based, multilateral environment, and we will continue to support the WTO. We believe that our role here is to make sure that the benefits are seen and that we do not raise the temperature of the debate, and to engage with the EU and industry on behalf of the UK but as part of the EU.