The steel industry is heading towards a historic crisis – are the Government going anything about it?

No Deal would leave the steel industry dangerously exposed

A hard hitting report issued by UK Steel (part of the Engineering Employers Federation) on the implications of a ‘No Deal Brexit’ and its effect on UK steel says that the industry will be highly vulnerable to the dumping of steel on the UK market after Brexit, particularly if the Britain crashes out of the EU.

Currently the steel sector has more protective measures in place than any other sector in the EU, accounting for 31 of the 92 currently in place – 15 of these are relevant to UK producers.

The briefing says this is “driven by a range of factors including overcapacity in the global sector, continued widespread state support for steel producers in many countries, the high level of international trade in the sector (30-40% of all steel produced crosses borders), and the fact that all developed nations have had no customs tariffs on steel products since 1994. Steel sectors in developed countries are particularly at risk from the import of under-priced and subsidised products and therefore rely, more than any other sector, on a robust and reactive regime to provide a level playing field in trade.

The briefing warns that any gap in the coverage of necessary measures (known as trade remedies) would very quickly be taken advantage of by foreign exporters and would undermine the UK steel sector.

The briefing demands that the UK steel industry needs urgent assurances that a ‘no deal Brexit’ won’t be allowed to impact on the industry’s ability to deal with the duel crises of Donald Trump’s trade war and global overcapacity.

As a member of the Manufacturing Trade Remedies Alliance (alongside UK Steel and other employers organisations and trade unions), Unite has been at the forefront of lobbying the Government to listen to the voice of manufacturers to stop dumping of goods, including steel, ceramics, paper, chemicals, tyres and other goods – post Brexit.

The new Trade Remedies Authority (which is supposed to deal with anti-dumping cases) will not be in place until 2020. The TRA currently has no staff and when they do have them they will require significant training to acquire the specialist knowledge needed. This will not be achieved in a mere seven months, raising the prospect of a gap in protections.

The briefing welcomes the fact that the EU Commission introduced safeguard measures on a wide range of steel products in response to Trump’s US Section 232 steel tariffs (as demanded by Unite) – but UK Steel rightly asks how these measures would be transitioned over to the UK post-Brexit. “With the prospect of ‘no deal’ looming this question becomes all the more urgent.

It is not just steel that will face a crisis if no deal is reached. The UK Steel briefing rightly points out: “A no deal Brexit does throw up major concerns for the use of steel by other manufacturers. For example, we could see a 10% tariff on cars between the UK and the EU, possibly reducing demand for UK cars on the continent and thus demand for automotive steel in the UK. These are naturally considerations the steel sector has already been grappling with, but the prospect of no deal and a cliff edge in seven months makes them far more difficult to mitigate and adapt to.

The briefing also warns that research and development in the industry will be hit badly as the EU has already said that UK participants would cease to receive funds and may also need to withdraw from existing programmes.

With just seven months to go until Britain leaves the EU, UK Steel’s briefing leaves no room for doubt – a ‘no deal’ Brexit would be disastrous for the UK steel industry, coming in the midst of Trump’s trade war and the ongoing crisis of global overcapacity of steel and aluminium.
Unite agrees with UK Steel that a no deal would leave the steel industry dangerously exposed, with little prospect of establishing a trade defence regime in time and no commitment to maintaining the protections and safeguards currently provided at EU level.

It appears that Dr. Liam Fox, the Minister for International Trade, seems willing to weaken those protections as he scrambles to cobble together trade deals with the very countries which have caused the steel crisis, such as China and Turkey – or consulting on phantom trade deals with the USA, Australia and New Zealand and joining the Pacific Rim trade deal known as TPP.

It should be remembered that when the trade unions lobbied in Europe to win those protections the Tory government was prepared to sit back and let thousands of jobs in Redcar go to the wall.

The coming weeks will show if the Government are once again sitting on their hands as the steel industry heads towards another historic crisis.

Tony Burke is assistant general secretary of Unite 

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