Trade remedies are the heavy artillery in a trade war. But will Britain have them in place by the time it leaves Europe?by George Peretz / August 13, 2018 / Leave a comment
One effect of the threat of war is that the issue of whether a country’s armed forces are in a fit state to fight climbs up the political agenda. Similarly, the threat of a trade war resulting from the Trump administration’s policies and from concerns as to the effects of China’s industrial strategy has made the question of trade remedies vitally important: in a trade war, trade remedies are the heavy artillery.
For the UK, the renewed focus on trade remedies comes just as the UK is leaving the European Union and taking steps to set up its own trade remedies regime.
Trade remedies are exceptions, permitted under World Trade Organisation rules, to the general principle of non-discrimination that tariffs should be applied uniformly no matter where the imported product comes from. A trade remedy is a permitted additional tariff—often a very large one—applied to products coming from a particular country or countries.
There are three types of trade remedy recognised under WTO rules (and, in addition, there is a general exception for matters of national security which could in theory provide the basis for imposing a specific tariff).
Anti-dumping duties may be imposed on another country’s exports where those exports are being “dumped”—essentially exported at prices well below those paid in the other country’s own market. Countervailing measures may be imposed where another country’s exports benefit from subsidies.
Finally, safeguard measures may be imposed to protect national producers against a sudden increase in imports—though where safeguard measures are imposed by an importing country, the exporting country may respond by imposing “substantially equivalent” tariff increases on imports from that country. (It is that last rule that provides the WTO legal basis for the EU’s “retaliatory” tariffs in response to the Trump tariffs: the EU does not accept that the Trump tariffs fall under the national security exception, and considers that they should be seen as safeguard measures to which it is entitled to respond.)
These remedies are frequently used. At present, the EU has around 114 trade remedies in place covering products from solar panels to glass fibres to bicycles. A large proportion of these apply to products from China, but other countries such as India, Brazil, Turkey, and Russia also feature.
Since 1973 the UK has essentially contracted out its trade remedies policy to the EU. After Brexit, that will all change.
The government’s proposals for a new UK trade…