One of the more technical and, possibly, obscure organisations to have come out of Brexit is the Trade Remedies Authority. Back in the old days of EU membership, the EU took control of how to protect domestic industries in the event of a trade war.
Trade wars work both ways. Some countries will maintain tariffs on imports to protect domestic industries. This is widely seen with the agricultural sector and is the subject of much debate about, amongst other things, chlorine washed chickens from the US and hormone pumped beef from a lot of places. This in itself is an interesting argument because it begs the question of consumer choice: if the Americans are OK with chlorine washed chickens, why shouldn’t we be? Interestingly, Kentucky Fried Chickens actually come from Thailand.
But some countries find a surplus of product and engage in dumping. This can be to get rid of extra stock, or it can be to undermine a domestic market to the point of bankruptcy, only to fill the demand and hike prices.
Since leaving the EU, we now have to decide on these measures ourselves and the Trade Remedies Authority is the body to look at economic impact.
Steel is an emotive industry in the UK and the Government has this week brought in tariffs to protect a number of elements of the UK steel industry. This is not without controversy.
For those working in the UK steel industry, this is good news. Jobs will be protected and the industry, already struggling under global competition, can continue with protection. But for the construction sector, automotive sector and, indeed, every sector that uses steel, access to cheaper steel has been cut off. The beneficiary of TRA intervention is limited to steel workers and investors; the wider economy will suffer.
It is a hard argument to rationalise. Those who saw Brexit as an opportunity to go out into the world to trade will be dismayed at the intervention, seeing opportunities taken away. But those who wanted to protect UK interests will see this as a glorious demonstration of the UK taking control of its borders.
I’m a free trader. My instinct follows that of the great economist Adam Smith, who’s 1776 book The Wealth of Nations laid the foundations of our modern economy. But for the steel workers who may lose their jobs with global competition, there is opportunity with higher paid manufacturing jobs in other sectors.