Are cheap imports wearing you down? – how to make use of new UK trade remedies following Brexit

 

Since our last trade remedies update, the UK and the EU have agreed on a Brexit deal and the UK is now operating its own independent trade remedies system. The Government has also decided to retain some EU trade remedy measures, which will continue to be imposed to protect UK industry from foreign unfair trade practices even though the Brexit transition period has ended.

Businesses looking to protect their UK trading interests from injurious imports should ensure that they understand the new legal and institutional framework for assessment.

Trade remedies

Trade remedies are measures that are applied to protect domestic industry from foreign unfair trade practices or emergency economic situations. Broadly, the three types of trade remedies are:

• Anti-dumping measures – these remedies address imported goods being sold at prices which are below the ‘normal value’ (comparable or constructed) in the country they are being exported from.
• Countervailing measures – these address imported goods which are being subsidised by foreign governments (where the subsidy is ‘countervailable’).
• Safeguards – these protect domestic industries against an unexpected surge in imports.

New regime

Before the end of the Brexit transition period, the UK was covered by the EU trade remedy regime and the European institutions were responsible for investigations and decisions on trade remedies affecting the UK. However, as of 1 January 2021, the UK has had to apply its own trade remedies independently. To that end, the Government has established a new legal and institutional framework:

• The legal framework comprises primary legislation in the Taxation (Cross-border Trade) Act 2018 and the Trade Bill (currently undergoing ‘Ping Pong’ in Parliament), supported by detailed rules and procedures set out in a raft of secondary legislation.
• The institutional framework comprises a new non-departmental public body, the Trade Remedies Authority (the “TRA”), which will be responsible for carrying out investigations, consulting interested parties and making recommendations to the Secretary of State for International Trade.

The combined effect of the new legal and institutional framework is to create a regime which is consistent with the relevant World Trade Organisation (“WTO”) rules and agreements.

The TRA

An essential part of the independent UK trade remedies regime is the successful establishment of the TRA, based in Reading. However, due to delays in establishing the TRA before the end of the Brexit transition period, the Trade Remedies Investigations Directorate (the “TRID”) – within the Department for International Trade – is currently carrying out all of the same functions that will eventually belong to the TRA. The TRID will essentially be renamed as the TRA when the Trade Bill is passed and the TRA is formally established.

Northern Ireland

Importantly, the new UK trade remedies regime will also need to comply with the Northern Ireland Protocol to the EU-UK Withdrawal Agreement (the “NI Protocol”). The NI Protocol provides that EU trade remedy measures will continue to apply to goods entering Northern Ireland from outside the EU after the end of the transition period. This includes, for example, exports from Great Britain to Northern Ireland.

Conclusion

While the framework for assessment accords with the WTO model (on which the EU trade remedies system is also based), the UK’s independent trade remedies regime presents new opportunities for UK businesses to use trade remedy measures in ways that otherwise may not have been possible before the end of the Brexit transition period.Not only will remedies now be UK-focused, but they will be predicated on injury that foreign imports are causing to businesses in the UK.The new UK ‘Economic Interest Test’ (the “EIT”) is also designed to ensure the implementation of a proposed UK trade remedy measure is in the wider economic interest of the UK.The EIT takes account of the injury caused to UK industry and the benefits to that industry of removing the injury; the economic significance of the affected UK industries or consumers; the likely effect on wider UK industries or consumers and geographic areas within the UK; as well as the likely consequences for the competitive environment and the structure of UK markets for these goods.However, the EIT is presumed to be met in UK anti-dumping and countervailing/subsidy investigations where the presence of dumped or subsidised imports that are causing injury has been established, unless TRID/the TRA or the Secretary of State is satisfied that the application of the trade remedy measures is not in the economic interest of the UK.  There is no such presumption in safeguard investigations.With substantial expertise in EU and WTO trade remedy measures, Freeths’ Competition department is extremely well placed to advise UK businesses on the new UK trade remedy regime.  Please contact a member of Freeths’ Competition department if you would like further information on any aspect covered by this alert.

As always, Freeths LLP are very happy to give advice on these aspects. Please get in touch with Andy Maxwell to discuss anything in this article.

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