With permission, Mr Speaker, I shall make a statement on US imposition of steel and aluminium import tariffs.
On Thursday 31st May President Trump announced that the United States would impose tariffs of 25% on steel imports and a 10% tariff on aluminium imports from the European Union.
Canada and Mexico, with whom the United States is renegotiating the North American Free Trade Agreement, will also be subject to the same tariffs.
Although Argentina, Brazil and South Korea have avoided tariffs, those countries agreed to lower exports to the US. Indications are that they will be restrictive, in some instances involving quarterly quotas.
For the products within the scope of these tariffs, in 2017, the US accounted for 7% of UK steel exports and 3% of UK aluminium exports. Put another way Mr Speaker, the UK accounted for 1% of US steel imports and 0.1% of US aluminium imports, in tonnage, at a value of £360 million and £29 million respectively.
We are deeply disappointed that the United States has taken this unjustified decision, particularly on grounds of national security. We share a strong defence and security cooperation relationship.
As close allies in NATO, permanent members of the UN Security Council and nuclear powers, close co-operation between the UK and US is vital to international peace and security and other EU states are also key players in transatlantic security co-operation.
As I said the last time I addressed the house on this issue, these unilateral trade measures have weak foundations indeed in international law and they are not consistent with the US Department of Defense’s own judgement in an investigation that was conducted on the basis of national security.
We believe the EU should have been permanently and fully exempted from the unjustified measures on steel and aluminium.
We will continue to make this case at the highest level, in concert with the EU.
Our priorities now are to defend the rules based international trading system which supports growth, consumers and industry, to ensure that this does not escalate and risk further undermining world trade. And most importantly to protect the interests of British industry.
Mr Speaker, the use of national defence as the rationale for this action threatens to create a worrying global precedent.
We are clear that these unjustified additional tariffs could harm consumers, hold back growth and ultimately damage industry by driving up the price of inputs and production and diminish global competitiveness.
We remain of the view that issues of global overcapacity in the steel market are best solved through international collaboration not unilateral action.
The UK has worked hard to address the issue of overcapacity. The Prime Minister called for a forum of G20 members to tackle this issue and the UK will continue to work within the rules-based international trade system to tackle this problem through the G20 Steel Forum.
However, as the US has decided to impose these tariffs which will damage the steel and aluminium industries in Europe, we must respond. As a member of the European Union, we will continue to work with the European Commission and member states on the EU response.
That is focused on 3 areas:
Firstly, the European Commission is preparing to introduce immediate duties on the US, ahead of a WTO dispute.
Following a unanimous decision by member states, the EU notified the WTO of its potential list of product lines on 18 May and could trigger tariffs on this list of products from 20 June. The Commission is required to seek member state approval a second time in order for any of the countermeasures to come into effect. Specific timings are yet to be determined by the Commission.
Second, the EU can apply safeguard measures to protect the steel and aluminium industries from being damaged by an influx of imports to the EU caused by the displacing effect of US tariffs. The EU is finalising an ongoing investigation launched on 26 March into potential EU-level safeguard measures to protect its own steel market from trade diversion resulting from US measures.
Provisional measures could be adopted as early as mid-July. The EU has also introduced surveillance of aluminium imports to determine whether an aluminium safeguard investigation is justified. We will support any safeguard measures required to deal with steel diversion as a result of these tariffs.
Third, the EU can pursue a dispute at the WTO and it filed such a dispute challenging US steel and aluminium tariffs last Friday.
Mr Speaker, it is right to seek to defend our domestic industries from both the direct and indirect impacts of these US tariffs. The response must be measured and proportionate and it is important that the UK and the EU works within the boundaries of the rules-based international trading system.
Since the President asked the Commerce Department to launch the investigations into the national security impact of steel and aluminium imports last April, the government has made clear on repeated occasions to the administration, the potentially damaging impact of tariffs on the UK and EU steel and aluminium industries.
The Prime Minister has also raised her concerns with President Trump.
I, myself, have spoken on multiple occasions to the Commerce Secretary and US Trade Representative about the investigation, the Director General of the WTO, Roberto Azevedo, and the EU Trade Commissioner, Cecilia Malmstrom, as well as my colleagues in member states.
The government has worked closely with the EU as part of our unified response.
In addition, I can assure the House that we have been in regular contact with the UK steel and aluminium industry throughout and the Business Secretary has convened a Steel Council which will take place shortly. I’ve been in touch regularly with UK Steel, most recently in a meeting in Westminster earlier today.
We remain committed to robustly defending and protecting the UK steel and aluminium industries and its employees. The government will continue to press the US for an EU wide exemption from these unjustified tariffs.
In parallel, UK suppliers will want to encourage their US customers to seek product exemptions via the process being overseen by the US Commerce Department.
The Department of Business, Energy and Industrial Strategy will be hosting a meeting with the industry tomorrow morning to share information and advice on the product exemptions process which is being run by the US Department of Commerce.
UK firms without a presence in the US cannot apply directly for a product exemption. This means UK firms will need to work with the end users of their products in the US to apply for the for a product exemption to gather the relevant data and justification for a product exemption.
The government will support applications made on behalf of UK industry with representations to the Commerce Department to process applications for product exemptions as promptly as possible.
My department published an information note on the procedure on gov.uk on Friday.
Mr Speaker, the government is committed to free and fair trade and the international rules that underpin both. We will seek to promote and protect those rules alongside the interests of British industry.
I commend this statement to the House.