HL Deb 18 March 2002 vol 632 cc1098-100

2.59 p.m.

Lord Razzall

asked Her Majesty's Government:

What steps they propose to take in view of the imposition of steel tariffs by the Government of the United States.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, steps have already been taken through the European Union to respond to this unjustified American action. A decision is expected within days on measures to protect UK and EU industry from diversion of steel products to the EU as a result of the US measures. In addition, the European Commission has sought formal consultations with the US under both the World Trade Organisation safeguards agreement and the dispute settlement understanding.

Lord Razzall

My Lords, I thank the Minister for that Answer. I am sure he will accept that it is a somewhat Kafkaesque situation when, for example, the Democratic Party in the United States is in favour of even higher tariffs on steel and Corus, I understand, has made a significant financial contribution to the campaign for US steel tariffs. Does the Minister accept that, in those circumstances, the danger is that we in the European Union will engage in tit-for-tat measures, leading to a trade war in which the only people to suffer will be the British consumer and the British worker?

Lord Sainsbury of Turville

My Lords, the Government have so far taken four actions. The EU Trade Commissioner, Pascal Lamy, has requested immediate WTO dispute-settlement action. That will, of course, take some time, even if we win—possibly 15 months. With Commissioner Lamy, we are already considering what safeguard action we can take to protect British and European steel producers and workers against a flood of steel imports. The action that we take will be WTO-compatible; we will act within WTO rules. We are also supporting UK exclusion requests and compensation. Only if we pass through the compensation stage can we, under WTO rules, move towards retaliation. The first action will be to press the Americans on compensation.

Lord Barnett

My Lords, does my noble friend the Minister accept that tit-for-tat retaliation on that scale would not be helpful to the UK or anyone else? Would he not rather bring pressure to bear on our "friends"—in quotes—in the United States for them to withdraw what they are doing on tariffs? Retaliation is in nobody's interests—neither those of the US nor those of anyone else.

Lord Sainsbury of Turville

My Lords, in the year since the action was started by President Bush., we have, on numerous occasions, made our views clear. We are not taking any kind of tit-for-tat action at this stage. We are doing something different: protecting our industry from a flood of imports. That is what the safeguard action under the WTO rules is specifically about.

Our argument with America is that the Americans have not seen a flood of imports in the past few years. On the contrary, there has been a substantial decline in the volume of imports into America. They are 'very much down on two years ago—I think 28 per cent down compared with 1998. In this case, we are within our rights to take action to protect our steel industry from floods of imports.

Lord Howell of Guildford

My Lords, does the Minister agree with the sentiments expressed in the previous two questions that, in this case, the European Union should move cautiously and avoid rushing into any impulsive retaliation? As he rightly said, the WTO and its procedures are the right mechanism with which to sort the matter out. Also, it is clear that the Bush Administration is in a complex political mode whereby this unhelpful and unwelcome move could be a precursor to more trade liberalisation and stronger emphasis on trade freedom. President Bush has indicated that that is still the way he wants to go.

Lord Sainsbury of Turville

My Lords, I am not sure that I understand what a complex political mode is. We can be certain that the British Government will stand by the steel producers and steelworkers in this country in dealing with what many of us regard as a piece of straightforward protectionism. We will take action to defend our industry. We will do so in a measured and considered way, within the WTO rules, but we will stand by it.

Lord Hardy of Wath

My Lords, given the experience of unfair trading within the EU during the 1980s and 1990s, which greatly affected the engineering steel industry, especially in south Yorkshire, one can sympathise with the United States if it can prove that there has been dumping. Have the Government taken any action to assist the engineering steel industry to maintain its traditional, long-established export of engineering steels to the United States? That trade has gone on for a long time, and the Americans expected it to continue. Have the Government made representations and what was the response?

Lord Sainsbury of Turville

My Lords, there is the issue of exclusions. We are working with the steel industry to make certain that if a case can be made for exclusions, it will be made. That is what we are working on.

Lord Acton

My Lords, the Minister mentioned a 15-month period required for the WTO to take action. That seems a long time. Is there any thing the Government can do to speed up the WTO machinery?

Lord Sainsbury of Turville

My Lords, the process will take 15 months, including the different stages of making representations, appeals and so on. There is nothing that we can do in these circumstances, although it is desirable in such situations that the process be speeded up.

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