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Steel Imports

5. Mr. Ian Cawsey (Brigg and Goole): What action she proposes to take in response to the US Government's decision to impose tariffs on steel imports. [42849]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The Government will stand by our steel producers in combating this unjustified and deeply regrettable action. We fully support the action already taken by the European Trade Commissioner in initiating World Trade Organisation action against the United States. We are pressing the Commission to take appropriate and urgent action to safeguard British and European steel producers and workers against a flood of steel imports. We expect a decision on that within a matter of days, and we are working closely with British companies to support their efforts to secure exclusion from the American measures of products that American steel producers cannot supply.

Mr. Cawsey: I thank my right hon. Friend for that reply and for her efforts on behalf of the steel industry, which we hope will be successful in persuading Commissioner Lamy to introduce quotas at the pre-1998 level. However, my right hon. Friend will be aware that the problems of the British steel industry did not begin with American tariffs. The relative strength of the pound against the euro has made life very difficult, and although EU defensive mechanisms are appropriate, what unilateral measures will she take to ensure that EU partners with a

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high dependency on US exports do not merely export those goods to the United Kingdom, further hitting the British steel industry?

Ms Hewitt: We are working closely with our steel companies, trade unions and trade association to ensure that we do everything that is possible within the framework of WTO rules, which we support even if the Americans do not, to protect our companies and workers against the American action. Of course we are all aware of the impact of the weak euro on many of our steel companies, but despite that our steel industry has an excellent productivity record and a range of very high value-added products. We will continue to support the innovation and R and D that will help them to sustain their competitiveness both in Europe and globally.

Mr. Andrew MacKay (Bracknell): During the Secretary of State's recent statement to the House, she continually refused to answer questions on when the Prime Minister first became involved in making representations to the President and others in the American Administration. Will she now answer that—otherwise we, like steelworkers and others around the country, will conclude that the right hon. Gentleman's representations were woefully inadequate and made very late in the day?

Ms Hewitt: I find it a little difficult to regard the right hon. Gentleman as a consistent and effective spokesman for our steel industry. I made it clear in that statement that since last July, the British Government—the Prime Minister, myself and other Ministers—and our embassy in Washington have consistently lobbied the American Government to persuade them not to take this deplorable action. We are now doing everything that we can to protect our industry against the consequences.

Helen Jackson (Sheffield, Hillsborough): Does my right hon. Friend accept that the steel industry in the UK is very appreciative of the efforts that she and her Department are making following the imposition of tariffs? Does she recognise the importance of the urgent action that Commissioner Lamy is considering, to which she referred in her reply to my hon. Friend the Member for Brigg and Goole (Mr. Cawsey)? There must be proper recognition of the time scale within which the European Commission applies the import safeguards. We need to return to the level set five years ago, or at least to take into consideration the fact that 2001 was an exceptional year. If the Commission does not note that, it will not provide the safeguards that the steel industry expects.

Ms Hewitt: My hon. Friend makes an important point about the base of imports from which safeguard action is calculated. That is a matter that we have been discussing both with the steel companies and with the Commission. A decision on safeguard measures is expected within a matter of days, and our target is to ensure that provisional safeguard measures across the European Union are put into effect as close as possible to 1 April.

In the meantime, discussions on compensation have already started, and if they do not lead to agreement by about the middle of April the European Union will then

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be free to take retaliatory action against the United States. All those issues are being pursued as quickly as we possibly can.

Adam Price (East Carmarthen and Dinefwr): May I press the Secretary of State on this important point? She mentions safeguard measures against imports from outside the European Union, but one of the most urgent threats to the UK steel industry will be the approximately 4 million tonnes of western European steel that will be displaced out of the US market. If that steel is targeted at the UK because of the exchange rate, the effect on the UK steel industry will be devastating. What urgent measures will the Secretary of State take to prevent that from happening?

Ms Hewitt: We are talking to the industry and working with our European partners to minimise the damage that the American action will do to British and to other European steel producers. The hon. Gentleman will be aware, as are the Government, of the damage that the weakness of the euro is doing to many of our exporters in steel and in other parts of manufacturing industry. However, we will not make the mistake that Conservative Governments made in the past of trying to operate both an inflation target and an exchange rate target. Above all, our steel and manufacturing industry requires the framework of economic stability that this Government have delivered and the Conservative Government so signally failed to deliver.

Alan Howarth (Newport, East): I echo the thanks expressed by my hon. Friend the Member for Sheffield, Hillsborough (Helen Jackson) to my right hon. Friend for her tough championship of the UK steel industry.

Has my right hon. Friend had occasion to make clear to the US Administration how profoundly offensive is their steel protectionism at a time when British troops are mobilised to fight alongside American troops in Afghanistan and the Americans are making big demands of British friendship in international affairs? What sort of behaviour is it deliberately to impose restraints on trade to ensure that British workers lose their jobs to protect American ones?

Ms Hewitt: As I said when I made my statement to the House on the American action, we would be wrong to link the war against terrorism with the trade war on steel that the Americans have unfortunately launched. We stand with our American allies and with the international coalition against terrorism because that is the right thing to do and it is in British interests—just as we stand with our steel producers against the American import tariffs on steel because on this occasion the American Administration are doing the wrong thing. I have expressed very directly to the American Administration our views on this unlawful and wholly unjustified action, and I shall continue to have discussions with members of the Administration to seek to mitigate the worst effects of their action on our British steel producers and workers.

Alan Simpson (Nottingham, South): Will the Secretary of State use this as an opportunity to review the effectiveness of the UK's anti-dumping policies? She will be aware that in the past week Raleigh Cycles in Nottingham made the sad announcement of its intention

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to cease producing bicycles in the United Kingdom. The main reason that it cites is the dumping of bikes from south-east Asia in terms with which it is impossible for the UK economy to compete.

Raleigh has invested money to raise the standards of health and safety in its factory and to reduce waste by a factor 10 times better than that of its competitors from south-east Asia. Is not it a good time to consider the case for environmental tariffs so that we reward those who do not poison the land or the labour that they use in production?

Ms Hewitt: I share my hon. Friend's real disappointment at the announcement made by Raleigh a few days ago. Raleigh is a great British firm that has been manufacturing bicycles in the city of Nottingham for many, many decades.

We are always willing to look at evidence of dumping when it occurs and, where there is that evidence, to take action within World Trade Organisation rules. Environmental standards are of real concern not only to us but to our European partners. We discussed them fully during the Doha negotiations for a new world trade round. I hope that those discussions will proceed—but in the appropriate framework. My hon. Friend is aware that, unfortunately, many developing countries regard Europe's concern for the environment as no more than disguised protectionism.

Mr. John Whittingdale (Maldon and East Chelmsford): As the Secretary of State knows, we support the imposition of safeguard measures by the EU in the form of steel quotas. However, this week, Corus announced losses of £400 million last year and confirmed that another 4,000 British steel workers are to lose their jobs. Is not that further proof of the damage caused by the overcapacity in the global steel industry, which is being sustained by her Government's support for Mr. Mittal's takeover of Corus's foreign competitors, while her Government are destroying the competitiveness of the UK industry through the climate change levy?

Ms Hewitt: The hon. Gentleman makes an absurd proposition. The challenge to him is: does he support enlargement of the European Union, or does he not? Does he support economic reform in the candidate countries, or does he not? Does he support the steps that we are taking to sustain economic stability and to support directly the increasing competitiveness of our steel industry and the rest of our manufacturing industry?

Mr. Whittingdale: It is no good for the Secretary of State to put on her pained expression. The issue will not go away. Does not she understand the feeling of betrayal among steel workers who have the prospect of their market being flooded by steel that previously went to the American market, while the steel produced by the Romanian company that is owned by the Government's crony, Mr. Mittal, will escape tariffs in the United States? Perhaps she will tell us whether her efforts to persuade the United States authorities to exempt British steel from tariffs have been half as successful as Mr. Mittal's efforts to have those tariffs imposed in the first place.

Ms Hewitt: The hon. Gentleman continues to talk nonsense. The steel output from Romania—a tiny, tiny

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fraction of European or world steel output—will continue to be exported to the American markets because it has been exempted by the American Government from the tariffs, just as steel produced in other developing countries has been exempted. The issue of the diversion of Romanian steel—or that of developing countries—from the American markets to the British and European markets simply does not arise. The much larger issue is that of world overcapacity in steel and American overcapacity in steel. That is why we have been supporting multilateral talks under the umbrella of the OECD to try and deal with the problem.

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