Understanding trade remedies is essential after Brexit

Understanding trade remedies is essential after Brexit

One of the lesser-known consequences of Brexit is that the UK is now responsible for dealing with dumped and unfairly subsidised imports by undertaking trade remedies investigations.

Companies should understand that these investigations exist and how they work. They aim to level the playing field for UK manufacturers by imposing tariffs on some imports, but importers of the products concerned may wish to oppose those tariffs.

Guest writer, Sarah Hurst explains…

The UK hopes to establish a Trade Remedies Authority (TRA) as an arms-length public body, but since the Trade Bill hasn’t yet passed that would create the TRA (due to various debates about the scrutiny of future trade deals), trade remedies are currently the remit of the Trade Remedies Investigations Directorate (TRID) under the Department for International Trade. The TRID, which in future will become the TRA, is based in Reading.

The UK has “transitioned” about 43 EU measures on various products, maintaining the tariffs that existed before Brexit. Each of these measures must be reviewed by the TRID to adapt them to the UK’s needs, which means companies and trade associations can contribute their views, and some will be asked to complete lengthy questionnaires about their sales of the product and general finances. For example, a UK ironing board manufacturer will want to provide evidence that their sales are being harmed or could be harmed by unfair competition from cheap, Chinese ironing boards in a TRID review. TRID investigators will conduct on-site verification visits to ensure that the same product is being made here and examine the company’s accounts. Importers of the Chinese ironing boards might want to prove that an anti-dumping duty would damage their business.

However, individual companies should not rely on their trade association to represent them as associations are likely to represent similar companies that may be for or against particular tariffs, and may not take a strong stance one way or another.  

The general rules of trade remedy investigations were devised by the WTO, but within those rules each country has their own specifics. The UK’s trade remedies process leans towards lower tariffs than those that the US or the EU usually impose. This results from the use of the lesser duty rule that selects a tariff that is the lower of the dumping margin or the amount of injury companies have reported as a result of the dumping; and also the wide-ranging economic interest test that requires the TRID to ensure that any duties imposed are in the interest of the whole of the UK.

What should companies be doing now?

No one knows yet how successful this system will be or how its success will be measured. The TRID opened its first transition review cases of EU measures over a year ago, but none have been completed yet. Companies can also ask the TRID to open new cases if they believe they are being harmed by dumped or unfairly subsidised imports. It is important for both manufacturers and importers to monitor the TRID’s investigations in case they start looking at a product they make or sell. A company’s participation in an investigation, or lack of participation, can make a big difference to the outcome.

Parliament’s International Trade Committee recently concluded an inquiry into the UK’s trade remedies process and published a report that highlights some of the issues we will face as we take on these investigations. One is that TRID staff are inexperienced and will face high-powered lawyers and companies in countries such as the United States and China strongly opposing any duties on their exports.  They also question the validity of the UK’s measures that were transitioned from the EU. Another is that participating in these investigations is a lengthy process that can be very expensive for companies. That’s why fully understanding how trade remedies investigations work and whether you can benefit from them is essential as part of your strategy to succeed in the post-Brexit era.

Sarah Hurst is a trade remedies consultant who participated in the establishment of the TRID in 2018-19.  She works for Castle Knight Services.