A letter from eleven organisations was published in today’s Financial Times calling on MPs to amend the ‘Customs’ Bill. The legislation will set up the rules for the UK’s post-Brexit “trade remedies”. Remedies are important as they are the only way UK manufacturers can restore a competitive environment when faced with market-distorting trade practices by overseas producers.
This problem was most prominent when dumped steel products from China were a significant cause of the crisis in the UK steel industry a few years ago. My organisation, the British Ceramic Confederation, is a signatory of today’s letter because parts of our sector (tableware and tiles) have also been impacted by dumped imports from China. As I argued in my last CPA blog, huge overcapacities in many parts of China’s state-run economy, as well as in other countries should make trade distortions a concern of all UK manufacturers.
The current wording of the ‘Customs’ Bill will make the UK’s new trade remedies weaker than in any other major economy. The Bill makes inadequate provision for the treatment of distorted economies (like China) in trade investigations. It creates a mandatory ‘lesser duty rule’ with no exceptions, which will result in lower duties when dumping is found. Worryingly, it introduces an experimental economic interest test which could rule out action against dumped and subsidised imports. No other trade remedies system does this, and it is on top of an undefined public interest test by the Secretary of State.
Together these deficiencies with the ‘Customs’ Bill will deprive trade-sensitive UK manufacturers of the level playing field they need to survive and thrive. They are shortcomings that can be easily rectified through some sensible amendments. The organisations responsible for today’s FT letter have also written to the Secretary of State and other MPs to suggest constructively ways the Bill could be improved. We hope they take on board our recommendations. We’ll find out when the House of Commons gives the legislation its second reading next week.