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Monday, Jul 04, 2022

Boris Johnson v ethics adviser: what is row over steel tariffs about?

Boris Johnson v ethics adviser: what is row over steel tariffs about?

Analysis: PM said he sought Lord Geidt’s advice on whether overriding trade rules would be in line with ministerial code
Boris Johnson has suggested that his ethics adviser resigned in a row over protection for the British steel industry, after being asked for a view about potentially breaking the UK’s obligations to the World Trade Organization.

In his letter responding to Christoper Geidt’s resignation, the prime minister said he wanted advice on the use of tariffs for “protecting a crucial industry”, which “might be seen to conflict with our obligations under the WTO”.

Johnson said he was asking Lord Geidt’s advice on whether a government decision relating to the UK’s Trade Remedies Authority (TRA) would be proper with due regard to the ministerial code, which obliges those covered by it to act within the law. Johnson appeared to suggest in his letter that overruling the TRA could conflict with the UK’s WTO obligations – essentially a form of international law.

Set up under post-Brexit reforms to advise on trade policy, the TRA told the government last June that nine out 19 tariffs the government had imposed on steel imports could be removed because there was no evidence that British producers were being hurt by cheap foreign imports.

In a recommendation to Liz Truss, who was international trade secretary at the time, it said tariffs on steel plates used by ship builders and tin used in cans, as well as barbed wire and steel rods for reinforcing concrete, could be scrapped.

It said the border taxes – first imposed by the EU while Britain was still a member in 2018, amid fears over cheap Chinese imports – could be extended on other products, including metallic-coated sheets, railway material, and large welded tubes used for energy pipelines.

With political considerations after winning “red wall” seats from Labour, and amid intensive lobbying from the steel industry, Truss launched emergency legislation to overrule the TRA. Extended for the past year after this change, the 25% taxes above a set quota are due to expire on 30 June, prompting a fresh push by industry to extend them again. Labour has also pushed for an extension.

Britain’s steel industry employs 33,700 people directly in the UK and supports a further 42,000 in supply chains, despite a steady decline in the number of mills dotted across industrial towns and cities in recent years. Owners include the Indian conglomerate Tata, the Spanish firm Celsa, and Liberty Steel, the embattled firm founded by Sanjeev Gupta.

The Conservatives have accepted donations, gifts and hospitality from steel industry bosses, including Gupta and Lakshmi Mittal, the chairman of ArcelorMittal. The prime minister’s spokesperson said on Thursday that Johnson had not sought Geidt’s advice in relation to donations.

Gareth Stace, the director general of UK Steel, said it was essential the safeguards were maintained. “Failure to do so would risk surges in steel imports resulting in significant damage to UK producers, placing jobs, production, and investment at risk.”

The trade body said it was “certain” that extending the safeguards was compatible with the UK’s WTO obligations. “Crucially, the EU has just reconfirmed its own steel safeguards until June 2024 and a WTO ruling found the measures to be compliant with the rules,” Stace added.

Experts said this month’s extension deadline could be why Geidt was being asked for his opinion, but questioned why an adviser on the ministerial code was being quizzed on the legality of trade rules.

“I’m completely puzzled,” said Peter Holmes, of the UK Trade Policy Observatory at Sussex University. “Almost invariably when you introduce anti-dumping measures, you claim that what you’re doing is consistent with the WTO. So to ask Geidt’s opinion on an anti-dumping duty, it’s totally bizarre. He has no expertise in this area. You would ask Suella Braverman [the attorney general] whether it’s legal.”

David Gauke, the former Conservative justice secretary, suggested that there could be “more to this” than Britain’s compliance with WTO rules. Either that, or the attorney general had concluded the tariffs plan was unlawful and had proposed an alternative course of action, but that ministers were considering ploughing on anyway.

“So much for Brexit being about ‘free trade’ as the PM loses his ethics adviser because of a desire to break WTO rules in order to put illegal tariffs on steel,” he tweeted.

The prime minister’s spokesperson said Johnson thought it was right to consult Geidt and get his view on how this interplayed with the ministerial code.

The WTO said its secretariat was not authorised to interpret WTO agreements, and would not comment on the domestic policies of any of its members. Trade disputes are brought to the WTO when one member feels that another member’s trade practices affect world trade in a manner contrary to the organisation’s agreements.

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