The UK is having an immensely confusing debate about the steel industry and rule-following.
This is partly because, in the moral morass that is Downing Street, it was steel tariffs that reportedly prompted the resignation of Boris Johnson’s ethics adviser Lord Christopher Geidt. He has since said this was merely one example of a broader disregard for international law.
And it is partly because the government’s approach to both trade and the steel industry is being reimagined for political reasons on the hoof.
To recap: after the Trump administration imposed 25 per cent tariffs on steel in 2018, the EU took steps to stop metal shut out of the US from washing into Europe. After Brexit, a new body — the Trade Remedies Authority — was charged with looking at those safeguards to check they were suitable for buccaneering, free trade-loving Global Britain.
The TRA was set up as an independent entity making evidence-based decisions. In other words, it was designed to be as divorced from political meddling as possible. This lasted until it delivered a finding the government didn’t much like.
When the body last year suggested scrapping nine of 19 safeguards on steel products, the government took back control of the process, passing emergency legislation to allow it to extend five of those measures temporarily while four lapsed. It then asked the TRA to rerun its analysis and reconsider the work on a new, broader basis.
Anyone attempting to read the 271-page result, released last week, would have some sympathy with Geidt in heading 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: it said the new directions from the government did indeed produce results that justified keeping the tariffs in place.
The only thing more inherently political than trade policy is steelmaking, particularly for a government elected on a promise of levelling up the areas that do it. Still, the disintegration of the post-Brexit commitment to lower trade barriers has been quick and definitive — and it involves staying more aligned with the EU than the original analysis (which the steel sector maintains was flawed) suggests is merited.
Whether or not this constitutes a breach of World Trade Organization rules isn’t at all clear — and won’t be unless someone brings a lengthy case and wins. Turkey has already challenged the EU safeguards unsuccessfully. But it is, at the very least, unhelpful to have overhauled your rigorous process of analysis and decision-making midway through in order to get a different answer.
Boris Johnson’s comments when asked about plans for tariffs (including a related issue about reassessing the exemptions offered to developing nations) have muddled things further. The industry, he said, needed “much cheaper energy and cheap electricity” and “until we can fix that” UK steelmakers should have the same protection as in other European countries.
These are two separate issues. The steel industry has complained, with some justification, for years about high UK electricity prices compared with France and Germany. The disparity, with UK prices at £35 per MWh — or 60 per cent — higher than Germany’s on UK Steel’s latest numbers, has historically been down to domestic policy and network costs, according to the trade body.
The government, having long resisted this kind of intervention, has lately taken action: it has increased the relief on carbon pricing for heavy energy users, currently worth a few pounds a megawatt hour, and pledged to review network costs. This pleases the sector immensely. But it falls short, argues David Bailey at the University of Birmingham, of the kind of comprehensive industrial policy that is needed to boost investment and decarbonise the industry.
What it doesn’t do is justify tariffs to protect the steel sector while the UK attempts to get its domestic policy in order. No wonder everyone is confused.
helen.thomas@ft.com
@helentbiz
Source: Economy - ft.com
