Lord Sharpe of Epsom:

Asked by Lord Sharpe of Epsom

To ask His Majesty’s Government what assessment they have made of reports that the United Kingdom’s proposed steel import restrictions may jeopardise the implementation of the UK-India Free Trade Agreement; and what steps they are taking to protect British exporters, consumers, investment, and the benefits secured under that agreement.

My Lords, the steel trade measure is being put in place to address the serious threat posed by global overcapacity to our domestic steel-making capability. Given the strategic and economic importance of steel, the Government cannot afford to leave the situation unaddressed. Today the DBT Secretary of State is in Delhi, seeking to further strengthen the relationship and bring the UK-India FTA into force as soon as possible, to ensure that the benefits are realised.

My Lords, I am very grateful to the Minister for the Answer, and it is reassuring to hear that the Secretary of State is in India. However, the fact is that the previous Government secured Brexit freedoms precisely to break free from EU protectionism and position Britain as a champion of global free trade. Within months of signing what Ministers themselves called a landmark deal with India, this Government have now announced steel tariff measures so damaging that senior Indian officials are threatening to withdraw important concessions.

For example, the Scotch whisky industry, one of Britain’s greatest exporting success stories, was on the cusp of seeing tariffs on its exports to India slashed from 150% to 75% immediately, falling further to 40% over the life of the agreement. We do not need a review in 12 months to tell us what 100 years of economic history already confirms: tariffs damage trade, raise costs and, ultimately, hurt the very industries and consumers they purport to protect. Will the Minister commit today to reversing the steel tariffs outright, saving the landmark deal and sending an unambiguous signal to British businesses and our global partners that Britain is open for business?

My Lords, first, we use tariffs only as a last resort, and only in circumstances where we have no other choice. Without action, we risk losing domestic steel-making capability, which would mean that we could not mean critical infrastructure and defence needs without relying fully on imports. Furthermore, as I am sure the noble Lord knows, we are not the only country that has tariffs: the EU has tariffs, Canada has tariffs and the US has tariffs.

On the point about whisky, we have signed a legal treaty with India that underpins the trade deal, and the liberalisation of whisky is a clear part of that. We will adhere to that and support the Scottish Whisky Association to ensure that India meets its obligation.

My Lords, as the Minister will no doubt realise, tariffs are double-edged. The businesses that use steel that is not being manufactured in this country are in danger of having to pay higher prices for that steel, unless the Government are subtler than seems to be the case to date. Can the Minister undertake forthwith to make sure that the steel catalogue is thoroughly reviewed and that no steel that cannot be made in the United Kingdom would come under any tariff at all?

The noble Lord is absolutely right. We recall that the quota currently in place stands at 60%. For most countries, we have not achieved 60%: it is only when we exceed that 60% that that tariff of 50% comes in. Furthermore, we import most of our steel from the EU; 70% of our steel imports are from overseas and 60% from the EU, while India contributes only 5% of the market.

My Lords, when we had Brexit, we were informed that there were oven-ready schemes for trade. Where are they?

Sorry, I did not hear the question.

The question is: when we had Brexit, we were told by the supporters of Brexit that we had oven-ready trade deals, ready to go, and they would boost the economy. Where are those trade deals?

I thank my noble friend for that. We are making best use of where we are today as far as our position with Brexit is concerned. We are entering into free trade deals with many countries across the world; we have just signed the FTA with India and are in conversations with South Korea and Turkey, and we have completed a free trade deal with the GCC countries. Those are the benefits and dividends of Brexit.

My Lords, just to share with the noble Lord opposite, there were extensive discussions: the CPTPP was signed and the India trade negotiations were started under the previous Government. I should know, because I was involved in them. I have a simple question. Having worked with our counterparts and friends in India, I know they will look at this as ill thought-out. The steel strategy was not effectively co-ordinated—to address the question from the previous noble Lord—on the implications for manufacturers here who rely on steel that is imported into the country, and in particular those reliant on Indian steel.

The noble Lord is absolutely right and I congratulate the former Government on starting the conversations on the India free trade deal and the CPTPP. However, the prize is closing the deal, which we have done in government. On the assessments and all that, look, we have absolutely no intention of undermining the benefits of the trade deal for any specific sector. That is why my Right Honourable Friend the Secretary of State for Business and Trade is in India having conversations with Minister Goyal to ensure that this free trade deal is implemented as soon as possible.

My Lords, as I understand it, our free trade agreement with India includes a special Clause on the welfare of animals, which is quite good. Is a human rights clause also included? If not, do the British Government really think that human rights in India are less important than those of animals?

No, we do not. Human rights are important everywhere, whether in India or any other country, and we will abide by our obligations under the international conventions on human rights.

My Lords, I was delighted to hear from the Minister a brief summary of just some of the benefits that being outside the European Union has brought this country. Not only do we have an independent trade policy that allows us to protect steel jobs, but, just before the Recess, the Chancellor of the exchequer removed entirely a slew of tariffs on products, which she emphasised would mean cheaper prices in our supermarkets for every citizen. It is also of course the case that precision breeding means that we have plants and animals with higher yields that are more resilient to environmental and other pressures, and changes to share issuance which mean that the City of London is more competitive than ever. I join the Minister in saying that that vote 10 years ago was a fantastic leap forward for the United Kingdom and I am so delighted that this Minister is showing the courage of the nation’s convictions.

I did not detect a question there. We are where we are. We have to get Brexit done and we are making the most of it. We have signed trade deals with many countries and many more are in the pipeline. We will continue signing free trade deals everywhere.

How many job losses will there be in the steel-using industries in the United Kingdom as a result of the new higher tariffs?

That is why we have brought in special measures to safeguard jobs in British Steel in Scunthorpe. At the same time, we have invested loads of money and given £500 million to Tata to ensure that Port Talbot continues. We will ensure that jobs are protected.

My Lords, consumers do not buy raw steel, but they do buy the things made from it. Tariffs cause a squeeze on real wages as more household income goes on goods whose prices have been pushed up by input costs. Why would any Government want that?

I am afraid the noble Earl did not hear my earlier answer. No one wants tariffs. They are always the last resort when we have no alternative to protect our domestic industry. Furthermore, with steel, most imports do not even meet the quota of 60%. Until it hits 60%, the 50% does not come in.