This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/commentisfree/2019/may/26/uk-steel-industry-brexit-eu-damage-exports

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Want to save the UK steel industry? Brexit isn’t the answer Want to save the UK steel industry? Brexit isn’t the answer
(about 3 hours later)
The difficulties facing British Steel have quickly become part of the Brexit debate, with commentators variously pointing to our membership of the EU or our decision to leave as an underlying cause. Business is naturally cautious about entering into political debates, but it should not remain silent when it features so prominently in the public discourse. Industry has a responsibility to ensure its views are accurately represented and to establish the facts as they relate to our sector.The difficulties facing British Steel have quickly become part of the Brexit debate, with commentators variously pointing to our membership of the EU or our decision to leave as an underlying cause. Business is naturally cautious about entering into political debates, but it should not remain silent when it features so prominently in the public discourse. Industry has a responsibility to ensure its views are accurately represented and to establish the facts as they relate to our sector.
There can be no doubt that the ongoing Brexit uncertainty has contributed significantly to British Steel’s problems. Unable to decipher what the UK/EU trading relationship will be in just five months’ time, planning has become fiendishly complicated for both UK exporters and their EU customers. The timing is particularly bad, with the EU having recently imposed “safeguard” measures to prevent a surge in steel imports resulting from protectionist action elsewhere. Post-Brexit, UK steel exports to Europe will be restricted by these measures, with a disorderly no-deal Brexit affecting them particularly badly.There can be no doubt that the ongoing Brexit uncertainty has contributed significantly to British Steel’s problems. Unable to decipher what the UK/EU trading relationship will be in just five months’ time, planning has become fiendishly complicated for both UK exporters and their EU customers. The timing is particularly bad, with the EU having recently imposed “safeguard” measures to prevent a surge in steel imports resulting from protectionist action elsewhere. Post-Brexit, UK steel exports to Europe will be restricted by these measures, with a disorderly no-deal Brexit affecting them particularly badly.
I must debunk the idea that Brexit will provide us with greater trading opportunities Brexit will not save troubled steel industry, says trade body
Then there is the longer-term question of whether a well-managed Brexit could provide any notable benefits to steel producers. There have been claims in recent days about the ability of the UK government to use state aid more extensively to support the steel industry once it is outside the EU. Most importantly, this disregards the fact that the UK steel sector has no interest in operating under the support of state subsidies (we are vociferous critics of this practice in places such as China), and ignores a number of other important technical points.Then there is the longer-term question of whether a well-managed Brexit could provide any notable benefits to steel producers. There have been claims in recent days about the ability of the UK government to use state aid more extensively to support the steel industry once it is outside the EU. Most importantly, this disregards the fact that the UK steel sector has no interest in operating under the support of state subsidies (we are vociferous critics of this practice in places such as China), and ignores a number of other important technical points.
First, the UK’s ability to provide state aid support will remain restricted, although less so, by its WTO membership, which bans certain subsidies outright, and allows others to be counteracted by other WTO members with the imposition of “anti-subsidy duties” – effectively closing off important export markets. Second, the EU has systematically required alignment on state aid rules in all its FTAs (free trade agreements) since 2006, and a UK-EU FTA would be no different. The US and others would insist on similar provisions in their FTAs with us, meaning that if we want to take full advantage of our ability to make new trade agreements we will continue to be restricted in our use of state aid.First, the UK’s ability to provide state aid support will remain restricted, although less so, by its WTO membership, which bans certain subsidies outright, and allows others to be counteracted by other WTO members with the imposition of “anti-subsidy duties” – effectively closing off important export markets. Second, the EU has systematically required alignment on state aid rules in all its FTAs (free trade agreements) since 2006, and a UK-EU FTA would be no different. The US and others would insist on similar provisions in their FTAs with us, meaning that if we want to take full advantage of our ability to make new trade agreements we will continue to be restricted in our use of state aid.
I must also debunk any idea that Brexit will provide steel with greater trading opportunities. WTO tariffs on steel in developed countries are already zero, and the EU’s expanding list of FTAs is providing tariff-free access to many others. There is little advantage any new UK FTAs could offer. Moreover, UK-produced steel currently qualifies as EU steel under complicated rules of origin within the EU’s FTAs. In practice, this means a German car manufacturer exporting tariff-free to Japan will just as happily use steel from the UK as from France. After Brexit, UK steel would be classified as UK not EU, reducing the attractiveness of it to EU manufacturers.I must also debunk any idea that Brexit will provide steel with greater trading opportunities. WTO tariffs on steel in developed countries are already zero, and the EU’s expanding list of FTAs is providing tariff-free access to many others. There is little advantage any new UK FTAs could offer. Moreover, UK-produced steel currently qualifies as EU steel under complicated rules of origin within the EU’s FTAs. In practice, this means a German car manufacturer exporting tariff-free to Japan will just as happily use steel from the UK as from France. After Brexit, UK steel would be classified as UK not EU, reducing the attractiveness of it to EU manufacturers.
None of this is to say that we can’t ultimately deliver similar trading conditions outside the EU, depending on the colour of Brexit eventually chosen, simply that a huge amount of effort will be required, and disruption caused, in order to replicate the status quo. In short, I must be honest in stating that Brexit will not improve the situation for the steel sector but it has the potential to cause a great deal of damage. The No 1 priority to improve the outlook for steel, and the wider manufacturing sector, is to secure a withdrawal agreement as soon as possible, ending this uncertainty and avoiding the turmoil of a no-deal Brexit.None of this is to say that we can’t ultimately deliver similar trading conditions outside the EU, depending on the colour of Brexit eventually chosen, simply that a huge amount of effort will be required, and disruption caused, in order to replicate the status quo. In short, I must be honest in stating that Brexit will not improve the situation for the steel sector but it has the potential to cause a great deal of damage. The No 1 priority to improve the outlook for steel, and the wider manufacturing sector, is to secure a withdrawal agreement as soon as possible, ending this uncertainty and avoiding the turmoil of a no-deal Brexit.
British Steel's owners Greybull Capital to face grilling from MPs
Looking beyond Brexit, many of the measures that could help the steel industry are already within the government’s gift. We have long called on the government to tackle the UK’s sky-high industrial electricity prices, now twice the price of those in France, placing an additional £85m a year cost on the sector, money that should instead be spent on much needed capital investment. Moreover, UK business rates are five to 10 times higher than elsewhere in the EU, perversely increasing costs for those that modernise and upgrade. Government must act on these issues and others if we are to secure a sustainable future for steel in the UK.Looking beyond Brexit, many of the measures that could help the steel industry are already within the government’s gift. We have long called on the government to tackle the UK’s sky-high industrial electricity prices, now twice the price of those in France, placing an additional £85m a year cost on the sector, money that should instead be spent on much needed capital investment. Moreover, UK business rates are five to 10 times higher than elsewhere in the EU, perversely increasing costs for those that modernise and upgrade. Government must act on these issues and others if we are to secure a sustainable future for steel in the UK.
These are of course challenging times, but the steel sector is an enduring one. Society will continue to require steel and we will continue to supply it, provided we are given the right foundations to do so competitively.These are of course challenging times, but the steel sector is an enduring one. Society will continue to require steel and we will continue to supply it, provided we are given the right foundations to do so competitively.
• Gareth Stace is director general of the trade association UK Steel• Gareth Stace is director general of the trade association UK Steel
British Steel's owners Greybull Capital to face grilling from MPs
Steel industrySteel industry
OpinionOpinion
BrexitBrexit
European UnionEuropean Union
EuropeEurope
Foreign policyForeign policy
Trade policyTrade policy
commentcomment
Share on FacebookShare on Facebook
Share on TwitterShare on Twitter
Share via EmailShare via Email
Share on LinkedInShare on LinkedIn
Share on PinterestShare on Pinterest
Share on WhatsAppShare on WhatsApp
Share on MessengerShare on Messenger
Reuse this contentReuse this content