Play by the rules: Making free trade a level playing fields

Monday 14 February 2022 8:00 am

Two years ago in Greenwich, the Prime Minister spoke eloquently of Britain’s “re-emergence after decades of hibernation as a campaigner for global free trade”.

Trade – which he described as “God’s diplomacy” – has done more than any other economic idea to raise global living standards and lift billions out of poverty. If there is one concept that unites virtually all economists from Adam Smith to Marx and Keynes, it is the desirability of free trade.

But we need to recognise that globalisation has brought a degree of disruption and dislocation to some long-established industries and their local communities.

And our foreign competitors do not always play by the rules. One small but important part of the UK’s free trade ambition is defending UK economic interests from unfair international trading practices. This means ensuring the UK and its trading partners follow the global rules of trade, as set by the World Trade Organisation (WTO).

The Trade Remedies Authority (TRA), set up as an independent authority last year, has a mission to investigate where imported goods are dumped in the UK at below cost, or which are unfairly subsidised by foreign governments and damaging viable industries in this country, or where imports are rising so quickly that a temporary safeguard may be needed.

Trade needs tariffs – but only when necessary

Trade remedies – usually in the form of tariffs applied at the border – are an essential pairing with free trade. By blocking egregious dumping and predatory subsidies, they protect British producers and the communities in which they operate. This, in turn, helps preserve a public consensus behind global trade and the competition it enables.

When the UK left the European Union, 44 trade remedy measures were “transitioned” into UK law. It’s our job now to examine all 44 measures to see if they are still needed or should be updated.

We’re also open for applications to start new investigations to see if remedies that weren’t previously offered by the EU are needed, as the UK plots its own course.

Across a range of industries, from biodiesel to steel products and from aluminium to glass fibres, we are investigating whether targeted additional tariffs are in the interests of the UK economy.

The TRA is not against fair international competition and the benefits it brings to us all through increased choice and lower prices. Nor do we only take into account the interests of producers.

The economic interest test

By applying an Economic Interest Test, which the government has created, we weigh up impacts on the entire supply chain, including the communities in which elements of the supply chain are based, and UK consumers.

In some cases, we may conclude that the benefits of lower prices to millions of consumers outweigh the downsides to a manufacturer, even if the losses are felt more acutely by a few, than the gains which are dispersed across many households. A time of high inflation reminds us all of the value of keeping prices down.

In making our recommendations to government, we will always be led by the evidence and our analysis will always be fair, rigorous and impartial.

We are independent of government and not beholden to any political or commercial influence. But once we have made our recommendations to government, it will always be for ministers to make the final decision.

Free trade is not the same as a free for all. The TRA is an important defence against predatory practices or foreign subsidies that are used aggressively to harm the British economy.

But make no mistake: the TRA is also enabling the government’s commitment to the UK being an outward-looking, welcoming nation, engaged with the world and championing global free trade at a time when openness urgently needs global champions.