Prime Minister Boris Johnson is gearing up to introduce new “safeguard” import limits to protect British manufacturers from a “flood of cheap steel” from overseas developing economies as part of a plan to win back support in “red wall” seats, weekly newspaper, The Sunday Telegraph reported.
“Red wall” seats - also known as the Labour heartlands - is a term used to refer to constituencies mainly in the Midlands, northern England and north-east Wales, which historically have tended to support the UK Labour Party.
Johnson’s government is also set to unveil a two-year extension of tariffs and quotas for five categories of steel already imposed on emerging economies and China. The moves, informally agreed by key Cabinet ministers, are ostensibly being finalized for an announcement as soon as this week.
“We will act in the national interest,” a Downing Street source was cited as saying.
The reported changes are ones that Johnson’s former ethics adviser, Christopher, Lord Geidt, cited when he stepped down earlier this month.
At the time, in his resignation letter, Geidt emphasized that he had been put in an “odious position” of being "tasked to offer a view about the government's intention to consider measures which risk a deliberate and purposeful breach of the Ministerial Code".
Johnson's written reply to Geidt suggested he had sought his advice "on a crucial industry, which is protected in other European countries and would suffer material harm if we do not continue to apply such tariffs". The PM said the tariffs would be in line with UK law but might face the accusation of breaking the country's World Trade Organization obligations.
The UK's steel safeguards measure limits the volume of certain steel products that can be imported into the country tariff-free. Quarterly quotas are set for each product and once the limit is reached, a 25 percent tariff is applied.
Steel tariffs ‘Gamble’
Johnson’s new policy move is said to have triggered concern among some senior government figures, who believe that it might unleash a trade war.
“This is going to screw the economy. It is a total violation of the WTO rules. The Prime Minister said he had recognized that we have to govern as Conservatives, but this is anti-Conservative, anti-free market and anti-capitalist,” a government source, who is opposed to the extension of tariffs, was cited as saying. Fears have been voiced that the measures may prompt retaliatory export restrictions, targeting, for example, UK whisky.
However, the moves set to be announced by Johnson come hot on the heels of the Tories' historic by-election losses. On 23 June the Liberal Democrats claimed the Tiverton and Honiton constituency, a “true blue” seat held by the Tories since its creation in 1997. Labour won back the “red wall” Wakefield seat, receiving its largest majority in the constituency since 2001.
With the result representing the biggest defeat of a party in a by-election, the PM is reportedly hoping his new policy will garner voter support in the Labour “heartlands”.
Pressure over Johnson’s leadership of the Conservative Party mounted after the by-election double defeat, with Conservative Party Chairman Oliver Dowden stepping down and new calls for the PM's resignation coming from two former Tory leaders, Michael, Lord Howard and William, Lord Hague.
Furthermore, Johnson is also hoping to get backing from the country’s opposition for his effort to protect jobs in the North. The Labour party, as well as Tory "red wall" MPs, have been consistently advocating steel tariffs for fear that a flood of products from overseas could gravely undermine British firms.
Last year, the UK retained quotas and tariffs it inherited from its pre-Brexit stint within the European Union on 10 categories of steel for three years. It also extended for one year restrictions on five categories of steel, including tin mill products, steel quarto plates and wire rod.
On Thursday, the British government announced that these were to be extended for two more years.
“Removal of the steel safeguard measure would probably result in an increase in imports and therefore would result in serious injury or the threat of serious injury to UK steel producers,” a government statement said.
Earlier, Nick Thomas-Symonds, the shadow secretary for international trade, accused ministers of “dragging their feet on confirming measures that would safeguard the steel sector".
“Labour backs British steel. It seems this Tory government is too busy trying to prop up the prime minister to focus on protecting jobs,” Thomas-Symonds was cited as saying.
Earlier in June, Gareth Stace, director-general of lobby group UK Steel, warned it was essential that the steel safeguard was maintained.
“Failure to do so would risk surges in steel imports, resulting in significant damage to UK producers and placing jobs, production, and investment at risk,” he stated, adding:
“There should be no question of the UK unilaterally weakening our steel safeguard when the EU and US are committed to maintaining their own. This would expose UK producers to the full might of growing, state-induced distortions in the global marketplace and could cause as much as £150Mln a year in damage.”
UK-based metals giant, Tata Steel, which has production sites in Hartlepool and Corby - both Tory-held constituencies - has told government ministers that if imports “continue to flow into the UK at [the] same pace, let alone grow, it may cause irreparable damage to the UK industry”.