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07 November 2017

Financial Times: Whitehall tensions on trade defence

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UK industry could be left exposed if Britain fails to adopt a tougher approach to anti-dumping after Brexit.

The international trade secretary’s bill covers a wide range of issues, such as how the UK will try to roll over trade deals that the EU currently has with more than 60 states. But there is another aspect of the legislation that could have a significant impact on UK industry: the plan to create an independent UK trade remedies body that will defend British companies from unfair trade practices by other states, most notably when it comes to dumping.

At present, the UK falls into line completely with the EU over anti-dumping policy. When the dumping of a particular product causes material injury to an EU industry, Brussels imposes anti-dumping tariffs on behalf of all 28 member states.

Once the UK has left the EU, however, the British government will have to impose its own trade defence instruments and anti-dumping tariffs. “The decisions that the UK takes here could have significant consequences for domestic manufacturers,” says Bernardine Adkins, a partner at international law firm Gowling WLG. “But we are in a blind spot as to how things will play out.”

Post-Brexit, the UK is unlikely to adopt the aggressive anti-dumping approach taken by the US, which has, for example, imposed a 265 per cent tariff on imports of Chinese steel. After all, Britain will be reluctant to impose high tariff anti-dumping penalties on countries like China while it is also in a rush to sign trade deals with them.

But the UK may also discover that, once it is outside the EU, Brussels is far more at liberty to impose higher anti-dumping tariffs on third countries. At present, the UK’s commitment to free trade has constrained aggressive anti-dumping measures by Brussels. Britain has consistently been the biggest and most influential vote within the EU for keeping the EU’s Lesser Duty Rule, which determines that anti-dumping tariffs imposed on exports should be no higher than is required to prevent injury to EU industry. Once Brexit has happened, that British constraint will be gone.

In short, the risk for the UK is that the US and EU will both coalesce around a much tougher stance on trade defence. This would leave Britain isolated and exposed to future dumping by China and other countries. “That could be very good for British consumers who might get cheaper imports but it could pose a risk for British industry and for UK manufacturers,” says Ms Adkins. [...]

Full article on Financial Times (subscription required)

© Financial Times

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