Post-Brexit Britain must steel itself against the growing forces of protectionism that are being driven globally by the race to net zero and rising antipathy towards China, the outgoing chief of the UK’s independent trade advisory body has warned.
Simon Walker, who stepped down as chair of the Trade Remedies Authority this month after a turbulent three-and-a-half years in office, also expressed regret that Boris Johnson’s government had failed to live up to its promise of championing free trade.
He reflected that Johnson had begun his premiership with a swashbuckling speech in Greenwich lionising the UK’s prospects as a trading power, but subsequently bowed to political pressure to protect steel producers, handing ministers powers to over-rule evidence-based findings of the TRA.
Walker said he was “not pleased” with the decision, which the government admitted would breach legal obligations under the World Trade Organization, but he took comfort in the fact that ministers had been forced to be open and transparent about their decision.
“In theory there was a possibility that Britain would be standing up for free trade, as a matter of principle, in terms of international leadership, and perhaps it was naive to think that would survive political storms, but I still think there is more of a commitment to it here than there is there [in the US],” Walker told the Financial Times.
A former director-general of the Institute of Directors, Walker built up the TRA after Brexit as the UK took control of trade defence measures from the European Commission.
The TRA is an independent, arms-length body that advises the government on when to apply tariffs to address unfair subsidies and product dumping, and when to apply safeguard measures to protect British producers against a sudden flood of imports.
As well as steel, the TRA’s 150-strong staff has handled cases covering aluminium, optical fibres and even Turkish ironing boards, which Walker said demonstrated the authority’s effectiveness.
Walker said the government’s decision to over-rule the TRA’s advice on steel safeguard measures had created the impression that ministers would bow to pressure from MPs worried about keeping their seats rather than defending the principles of free trade.
He added that by disregarding the agency’s advice, the government had prioritised the concerns of producers over the more disparate interests of consumers and smaller businesses whose voices were less easily heard, but whose rights the TRA was also there to protect.
“I noticed 10 days ago that Godfrey Watt, the chair of the International Steel Trade Association (ISTA) was saying it is now clear that it is ministers who will call the shots on steel in the United Kingdom, and not an ‘arms-length body’, and one can see why he thinks that,” Walker said.
But he added that the UK government remained far away from the full-blown protectionism exhibited by the US, which under former president Donald Trump imposed 1,700 per cent tariffs to protect US mattress-makers.
“I hope that instincts towards free trade in this government — and one is assured in a future government, if it is a Starmer government — will be sufficient to keep us pretty much on the straight and narrow,” he said.
But Walker warned that resisting the temptations of protectionism would become more difficult as the race to secure green investments and rising sinophobia would provide a pretext for protectionism.
Walker said he was concerned by recent warnings by the head of Turkey’s Arçelik, owner of the consumer goods brand Beko, that China could dump white goods on international markets as its domestic economy cooled.
“Talking about consumer goods and the need to protect against Chinese washing machines and other imports — that’s the kind of thing that would worry me if it ever got over here. And clearly at a time when there’s almost hysteria about connections with China, I’d hate that to spread into the trade area. It is a worry,” he said.
He also warned that the introduction of carbon border taxes to ensure a level playing field in the transition to net zero must not become a backdoor to protectionist policies.
“I accept that carbon border adjustment taxes are going to be a policy tool for the future, I’m just anxious that measures like that, and indeed measures against China, don’t provide a cloak for protectionism, and I think we need to watch for that,” he said.
Walker said he was also concerned about the protectionist drift of the EU under the growing influence of France. He added that the TRA was now actively engaging with the European Commission after being frozen out for three years because of the diplomatic row over post-Brexit trading arrangements for Northern Ireland.
Walker said France had long held protectionist inclinations and recalled its attempt to strangle Japanese video recorder imports in the 1980s by ordering them to be cleared through a nine-man customs depot in the cathedral city of Poitiers.
“This country has always had a more liberal approach and I suppose it is inevitable that without Britain’s voice their commitment to free trade is going to be rather weaker. But at least they have free trade within the European Union which ensures a degree of competition whether people like it or not,” he said.
Source: Economy - ft.com
