UK to extend steel import quotas and tariffs for two years | Financial Times 31/3/23, 12:50 PM

UK business & economy

UK to extend steel import quotas and tariffs for two years

Move risks legal challenge at the World Trade Organization

Rolls of steel at a shipyard in Nantong, China. The UK government’s extension of tariffs is aimed largely at developed countries and China ©
AFP/Getty Images

Jim Pickard and Sylvia Pfeifer in London JUNE 29 2022

The UK will extend a package of quotas and tariffs on foreign steel imports by two years in
an effort to protect domestic producers, the international trade secretary announced on
Wednesday.

Anne-Marie Trevelyan admitted that the move would risk a legal challenge at the World
Trade Organization, which oversees global trade, but said it was essential to protect
Britain’s steel industry.

“We have concluded that it is in the economic interest of the UK to maintain the safeguards
to reduce the risk of material harm if they were not maintained,” she told the House of
Commons.

However, some experts believe extending the tariffs would constitute a breach of the UK’s
international legal obligations under WTO rules.

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UK to extend steel import quotas and tariffs for two years | Financial Times 31/3/23, 12:50 PM

Lord Christopher Geidt quit this month as ethics adviser to Boris Johnson, the prime
minister, citing his disapproval of the plan to breach international law through steel tariffs
as part of the reason for his decision.

The government will extend existing steel tariffs, largely on developed countries and China,
by a further two years. It will also expand import limits to other, mostly developing but as
yet unnamed, countries to prevent a flood of steel into the UK after some of them increased
their exports to the UK beyond the legal threshold.

Trevelyan said Ukraine would not be included, in order to help its steel industry.

The move was welcomed by trade unions and UK Steel, the industry trade body, which said
it showed that the “government is backing Britain’s steel industry”.

“As the UK establishes itself as an independent trading nation, [ministers] have taken their
duty seriously to stand up for jobs in British steelmaking and for the future of this strategic
industry,” said Gareth Stace, UK Steel’s director-general.

The interventions, he added, would “guard against anticipated surges in imports from
trade diverted away from the US and EU markets that will remain shielded for years to
come” and which would have “risked jobs, investment, and our ability to transition to net
zero”.

Sir Andrew Cook, chair of family-owned Sheffield steel fabricator William Cook, said
unrestricted imports would have “created a great deal of damage, not just to the domestic
industry but also on a wider scale”.

Most of the “offending steel comes from China . . . which has almost single-handedly
created enormous overcapacity”, he added, noting that there were also questions over the
reliability of that country’s product quality control.

The UK sector employs more than 33,000 people directly and supports a further 42,000
jobs in supply chains.

The two largest producers, Tata Steel and British Steel, are both backed by foreign owners
— India’s Tata and China’s Jingye Group, respectively. Liberty Steel, which has
manufacturing sites in Yorkshire, is owned by Sanjeev Gupta’s GFG Alliance. GFG’s
companies are under investigation by the Serious Fraud Office over suspected fraud and
money laundering.

The UK adopted “safeguard” measures in 2018 while it was part of the EU and has since
rolled over most of them.

The limits, which apply to 15 categories of steel, restrict how much a country can export to
Britain before being hit with a 25 per cent tariff.

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UK to extend steel import quotas and tariffs for two years | Financial Times 31/3/23, 12:50 PM

Nick Thomas-Symonds, shadow trade secretary, welcomed the decision, saying it would
provide “welcome relief” to the steel industry, but criticised the government for not moving
faster.

The decision, however, has sparked concerns among some UK manufacturers who said
they had to rely on overseas steel as domestic suppliers were unable to meet demand.

“The cost changes associated with further tariffs will force businesses across the supply
chain to scrutinise their contracts,” warned Mark Stefanini, partner at law firm Mayer
Brown. “They will be seeking to understand whether and in what circumstances they are
required to pay these additional costs and if so whether they can in turn pass them on to
their customers.”

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