Daily Management Review

Brexit Could Potentially Be Injurious To British Steel Sector


“Brexit will not improve the situation for the steel sector but it has the potential to cause a great deal of damage”, says the director general of the “Trade Association UK Steel”.

Brexit Could Potentially Be Injurious To British Steel Sector
The Director General of the Trade Association UK Steel, Gareth Stace write that the difficulties that have come on British Steel have quickly found their place in Brexit debate as commentators consider the country’s membership or the Brexit decision to be at the root of this cause.
Even though businesses tread cautiously when it comes to give opinion about political debates but Stace thinks that one should not choose to remain quiet when things prominently come in public discourse, for industries too have the responsibility to ensure an accurate representation and establishment of “the facts” when it concerns the very own sector.
It is also true that the hovering uncertainties of Brexit have generated a significant amount of “British Steel’s problems”. Both the exporters of the UK as well as the consumers across the EU are facing difficulties in deciphering the future of “UK/EU trading relationship”. Moreover, recently, the EU bloc has exercised “safeguard” measures to check the steel imports from surging, and even after the Brexit, the steel export industry of the U.K. will face the same restrictions, while the “disorderly no-deal Brexit” that’s doing the rounds now seem to affect them “particularly badly”.
However, the “longer-term question” would still remain as to a “well-managed” Brexit’s capacity in delivering “notable benefits to steel producers” if any. While Stace added:
“There have been claims in recent days about the ability of the UK government to use state aid more extensively to support the steel industry once it is outside the EU. Most importantly, this disregards the fact that the UK steel sector has no interest in operating under the support of state subsidies (we are vociferous critics of this practice in places such as China), and ignores a number of other important technical points”.
Stace goes on to enlist various points that are not to be overlooked, for example the WTO membership of the U.K. might come in its way in providing unrestricted “state aid support”. Furthermore, ever since the year of 2006, the EU has sought to “systematically” align on “state aid rules in all its FTAs”, and Stace perceives that a “UK-EU FTA would be no different”. He also goes on to say:
“I must also debunk any idea that Brexit will provide steel with greater trading opportunities. WTO tariffs on steel in developed countries are already zero, and the EU’s expanding list of FTAs is providing tariff-free access to many others. There is little advantage any new UK FTAs could offer. Moreover, UK-produced steel currently qualifies as EU steel under complicated rules of origin within the EU’s FTAs. In practice, this means a German car manufacturer exporting tariff-free to Japan will just as happily use steel from the UK as from France. After Brexit, UK steel would be classified as UK not EU, reducing the attractiveness of it to EU manufacturers”.
However, he reminds that all the above mentioned remarks or observations cannot be reasons enough for not being able to deliver on “similar trading conditions outside the EU” which is totally depend on how the Brexit takes place, although it will need “a huge amount of effort” besides facing disruption to “replicate the status quo”. Stace added:
“In short, I must be honest in stating that Brexit will not improve the situation for the steel sector but it has the potential to cause a great deal of damage. The No 1 priority to improve the outlook for steel, and the wider manufacturing sector, is to secure a withdrawal agreement as soon as possible, ending this uncertainty and avoiding the turmoil of a no-deal Brexit”.