The UK is having a hugely confusing debate about the steel industry and compliance with the rules.
That’s partly because, in the moral quagmire that is Downing Street, it was steel tariffs that allegedly prompted the resignation of Boris Johnson’s ethics adviser, Lord Christopher Geidt. He has since said it was just one example of a wider disregard for international law.
And that’s partly because the government’s approach to trade and the steel industry is being overhauled for political reasons on the hoof.
To recap: After the Trump administration imposed 25% tariffs on steel in 2018, the EU took action to prevent the metal excluded from the United States from arriving in Europe. After Brexit, a new body – the Trade Remedies Authority – was tasked with reviewing these safeguards to ensure they were suitable for buccaneering, free-trade-loving Britain.
The TRA was established as an independent body making decisions based on evidence. In other words, it was designed to be as far removed from political interference as possible. This went on until he delivered a conclusion that the government did not like very much.
When the body last year suggested scrapping nine of 19 safeguard measures on steel products, the government regained control of the process by passing emergency legislation allowing it to temporarily extend five of those measures while four were expired. She then asked the TRA to relaunch its analysis and reconsider the work on a new and broader basis.
Anyone attempting to read the 271-page result, released last week, would have some sympathy for Geidt as they headed for the door. But, noted Sam Lowe, director of trade policy at Flint Global, the TRA effectively stood by the methodology and results of its original analysis. But with different questions come different answers: he said the government’s new directions did indeed produce results that justified keeping the tariffs in place.
The only thing more inherently political than trade policy is the steel industry, especially for a government elected on the promise to level the sectors that do. Yet the disintegration of the post-Brexit commitment to lower trade barriers has been quick and final – and that means staying more aligned with the EU than the initial analysis (which the steel industry says was erroneous).
Whether or not this constitutes a violation of World Trade Organization rules is not at all clear – and will not be unless someone presents a long case and wins. Turkey has already challenged EU safeguards without success. But it is, at the very least, pointless to have revised your rigorous mid-term analysis and decision-making process in order to get a different answer.
Comments by Boris Johnson when asked about the tariff plans (including a related question about the reassessment of exemptions offered to developing countries) further muddied the waters. The industry, he said, needed ‘much cheaper energy and cheap electricity’ and ‘until we can fix this’ Britain’s steelmakers stand to benefit from the same protection as in other European countries.
These are two separate issues. The steel industry has rightly complained for years about the high electricity prices in the UK compared to France and Germany. The disparity, with UK prices £35 per MWh – or 60% – higher than Germany in the latest figures from UK Steel, has always been down to domestic politics and grid costs, according to the body. commercial.
The government, which has long resisted this type of intervention, recently took action: it increased carbon pricing relief for heavy energy users, which is currently worth a few pounds per megawatt hour, and committed to reviewing network costs. This is very popular with the sector. But this is not, according to David Bailey of the University of Birmingham, the kind of comprehensive industrial policy needed to boost investment and decarbonise industry.
What it is not doing is justifying tariffs to protect the steel sector while the UK tries to get its domestic politics in order. No wonder everyone is confused.