Britain’s steel industry is braced for a decision on the UK’s tariff protections as soon as this week – potentially opening the floodgates to a wave of cheap imports.
Industry insiders fear that Liz Truss, the International Trade Secretary, is set to follow a preliminary decision that recommends the removal of a large number of products from so-called import “safeguards”.
Such a move risks exposing domestic manufacturers to excess production at bargain prices which they cannot match, experts have warned.
The Department for International Trade’s new Trade Remedies Authority (TRA) – an arm’s length body charged with protecting UK industry from unfair overseas competition – published a preliminary decision last month in which it recommended retaining 10 safeguards for three years but dropping the other nine.
The trade group UK Steel said that the nine safeguards being dropped would mean 33pc of steel imports would no longer be covered, leaving a “gaping hole in the measures”.
It said that steel imports into the UK in the five years before the measures were introduced surged by 25pc, with imports from outside of the EU rising even faster at a rate of 56pc.
Instead, the industry wants the safeguards rolled over in their entirety, saying removal of even part of them would “fundamentally undermine” the domestic sector. However, rejecting the TRA’s proposals risks all protections being dropped completely as Ms Truss only has the power to either veto or accept the recommendations.
Gareth Stace, director-general of UK Steel, said: “The preliminary decision from the TRA was extremely worrying and stands to cause huge levels of harm. Removing the safeguards would leave a gaping hole in the measures at a time when other steel markets, like the US and EU, are fully maintaining their own measures.”
The protective measures were brought in under EU rules three years ago but were transferred into UK law after Brexit. They were originally brought in amid ratcheting trade tensions, with the US introducing similar measures for its own steel industry.
However, the UK legislation is now about to lapse, requiring a decision on whether they should be retained or dropped.
The safeguards cover 19 different steel categories, encompassing 253 products, which go into goods ranging from cars and household appliances, rebar used in construction and tubes with applications from pipes to scaffolding.
Once a certain quota of imports is reached, a 25pc tariff kicks in, making imported steel more expensive and the UK a less attractive market for overseas producers such as China. Ms Truss has previously said she wants greater powers for the UK to impose trade defences without the TRA’s permission.
A decision on the safeguards is also seen as a key test of post-Brexit trade policy, with UK Steel’s Mr Stace calling the TRA’s first decision “the biggest they will make this decade and one that they cannot fail”.
He added: “The final decision must be one to extend the safeguards in their entirety for three more years.”
Alasdair McDiarmid, of Community, the UK steel workers’ union, said: “This is the first test of the Government’s commitment to our steel industry post-Brexit and they’re failing it. [They] have had plenty of warm words for steelworkers but now it’s come to the crunch, we’re being left exposed to a catastrophic surge of cheap imports.”
The DIT did not respond to requests for comment.