Out-Law News 3 min. read
02 Jun 2021, 10:17 am
A new regulator, with powers to investigate and address unfair trade practices and subsidies, has begun operating in the UK.
The Trade Remedies Authority (TRA) has taken on the role of the UK’s domestic trade defence enforcement authority from the Trade Remedies Investigations Directorate (TRID) within the Department for International Trade, which had been carrying out the function on an interim basis since the UK exited the EU. Prior to Brexit, the role was performed by the European Commission.
Businesses can complain to the TRA about competition from imports which are unfairly subsidised by foreign governments, or about the ‘dumping’ of goods on the UK markets. Dumping is where goods are sold at below their usual cost of sale in the exporting country.
The TRA can investigate those complaints and make recommendations to government ministers over countervailing anti-subsidy or anti-dumping measures that could be imposed to address the injury caused to the domestic industry.
Dr. Totis Kotsonis, an expert in international trade at Pinsent Masons, the law firm behind Out-Law, said: “The launching of the TRA marks yet another important milestone in the setting up of a fully functioning independent UK trade policy. Whilst the UK was a member of the EU it was the European Commission which was responsible for trade, including decisions over the imposition of trade defence measures.”
“Whilst in many respects, the rules and processes leading to the possibility of action against unfair competition as a result of foreign subsidies or dumping are WTO-mandated and therefore, remain substantively the same and should be familiar to UK businesses, there are some important differences. Key amongst these is the obvious fact that the TRA would ultimately be making recommendations, and the secretary of state making decisions, by reference to the question of whether the imposition of a trade defence measure is in the economic interest of the UK alone. By definition, that should lead to the implementation of a trade defence policy which should be more effective as it would be fully aligned with UK interests,” he said.
The International Trade Committee within the UK parliament published a report on UK trade remedies policy in March this year. In a recently published response to the report, the government addressed some points of concern the committee had raised, including those centred on the extent to which “political judgement” will influence the work of the TRA in relation to countervailing measures. The government explained that the economic interest test that the TRA will carry out before making recommendations of countervailing measures to government is “evidence-based” and that it would involve consideration of “economic factors” specifically referred to in UK legislation.
The government said: “The legislation includes several factors, such as the benefits to the United Kingdom industry in removing injury caused by dumping and the likely impact of measures on other industries and consumers in the United Kingdom to make an objective and reasoned recommendation to ministers. The rationale and reasoning behind the TRA’s assessment will be clearly set out in a statement of essential facts for interested parties to comment on prior to the recommendation, and will be detailed in the recommendation itself, which will be made public following the secretary of state’s final decision to ensure transparency.”
“It is then for ministers to make a final decision. As part of this the secretary of state will consider whether measures are in the public interest herself. This ensures that the final decisions rests with ministers who are accountable to parliament,” it said.
The TRA can also investigate an unexpected surge in imports of a particular product and take steps to counteract harm to domestic industry by imposing temporary safeguard measures. Currently there are safeguards on steel imports, for example. In its response to the International Trade Committee’s report, the government explained the distinction between the process for imposing countervailing measures and the process for imposing temporary safeguards.
It said: “Anti-dumping and countervailing measures respond to unfair trading practices of specific exporting countries. Therefore, the starting presumption is that measures should be imposed unless TRID / the TRA can demonstrate that doing so is not in the United Kingdom’s economic interests. The role of the secretary of state in these cases is to assure herself that the determination on the economic interest test is reasonable.”
“By comparison, safeguard measures respond to unexpected import surges. These import surges may cause serious economic injury to domestic producers but are not necessarily reflective of unfair trading practices. Safeguards apply to all countries (with some minor exceptions) and therefore have a much broader impact. This is recognised in the WTO requirements and in our framework, both in the reversal of the presumption that measures should be imposed, and in the greater role of the secretary of state in being able to reject a recommendation if she concludes that imposing a safeguard is not in the United Kingdom’s economic interest. Unlike anti-dumping and countervailing measures, safeguards are not targeted at specific countries or exporters and can have much more wide-ranging impacts on the economy than anti-dumping or countervailing measures,” it said.
“Across all trade remedy measures, the secretary of state’s scope to make decisions in current legislation is limited. She cannot amend or vary a recommendation. She may only reject a recommendation to impose a measure if she considers that it is not in the public interest or in relation to the economic interest test. If this happens, the secretary of state must set out her reasons in a statement to the House of Commons,” the government said.