UK steel industry pushes for protectionism — even for steels it doesn’t produce

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Iakov Kalinin/Adobe Stock

The phrase “be careful what you wish for” is often used by those who smirk at an unexpected outcome from a decision.

But some in the British Conservative party’s so-called Red Wall – those former Labour or center-left voters who swung behind the Conservative, or center-right, party in supporting Britain’s departure from Europe — must be wondering why the land of milk and honey is not by now the norm.

The industrial middle and north of England overwhelmingly voted for Brexit, as it quickly became termed. Those voters narrowly swinged the vote in favor of leaving, over the wishes of London, the southeast, Wales and Scotland.

But those same voters are increasingly facing several changes that threaten their livelihoods.

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Protectionism and UK steel

First up is a preliminary decision by the UK Department for International Trade to remove a number of products from so-called import “safeguards” adopted from Britain legacy rules in the European Union. The safeguards aimed to protect domestic producers from cheap imports.

The system sets quarterly quotas for steel products that come in with nominal duty. When the country reaches the quota, a massive 25% tariff comes into play to dissuade larger volumes.

The lobby group UK Steel, representing the industry, warned that the removal of protections would have an adverse impact on steel manufacturers in Wales and northeast England.

“The UK will become a magnet for huge volumes of steel imports, it is beyond worrying to consider the damage this could do to the UK steel sector and its long-term viability,” the Financial Times quoted the group as saying.

UK steel producers object

The producers’ fears are understandable. The group is seeking to block amendment to all categories, apparently on the “thin end of the wedge” argument that a change to any of them opens debate about all of them.

Yet the Department for International Trade has said it intends to extend the measures on 10 categories of imports for a further three years from next month to protect domestic producers. However, it has also said that measures on a further nine categories will be revoked on the grounds those cover products not manufactured in the UK.

The steel industry may support some 33,000 jobs. However, many, many, more exist further down the supply chain from consumers of steel products in the manufacturing industry.

Those downstream consumers have to pay higher prices for imported steel products for which there is no domestic producer. That is a senseless position for the country to adopt. It is tantamount to hamstringing your manufacturing companies on the world stage in the interests of … well, no one really. Dogma, maybe?

Brexit aftermath

Part of the Tory party’s manifesto for leaving the EU was to make the UK a global trading superpower again. It also called for the embrace of free trade and forging free trade deals with countries outside of the EU.

Indeed, some prior EU free trade deals have rolled over into UK free trade deals. The UK is also negotiating new ones with varying levels of success.

Meanwhile, a US deal seems as far away as ever. On the other hand, farmers’ opposition to farm imports represents a roadblock toward a potential deal with Australia. Furthermore, fishermen have been thrown under the bus in the UK’s haste to secure a somewhat one-sided deal with the EU.

It dawned on the government a long time ago that securing deals with countries outside the EU was not going to be as smooth sailing as had been promised. Now it is finally dawning on voters that global Britain may not be the land of milk and honey they had hoped for.

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