UK MPs push for tariffs on cheap Chinese goods
The Government’s current trade remedies framework is inadequate to protect UK economic interests against unfair, heavily subsidised competition. This is one of the key takeaways published in a new report by the Business Innovation, Science and Trade Committee on Monday (2 November).
As a result, the Committee wants the UK to prepare tariffs on Chinese goods if Beijing keeps subsidising its exporters.
“We welcome the Government’s reforms to Trade Remedies Authority powers. However, the magnitude of the challenge requires fundamental rethink of the UK’s economic security toolkit and the development of new tools to incentivise fair competition, including the preparation of a tariff regime for deployment if China refuses to take action to re-balance its economy, continues to unfairly subsidise Chinese industry and fails to offer fully reciprocal access to its markets,” the report states.
The Committee noted that current UK procurement rules fail to prevent heavily subsidised foreign firms undercutting British businesses for public contracts.
This may save public money in the short term, but it will have a negative long-term impact on UK industrial capacity, it said.
The low-cost trade off
The committee recognised that low-cost, increasingly high-quality Chinese imports are a boon to UK consumers at a time when household incomes are squeezed.
It added tools such as tariffs only work if the government has the political will to use them and the public accepts the economic pain.
Presenting evidence to the Committee Grzegorz Stec, Head of the Brussels Office and Senior Analyst at the Mercator Institute for China Studies (MERICS), argued that anti-coercion tools such as tariffs are only useful if the Government has the political will to deploy them, and if the public is able to accept the economic pain that results.
He contends that there is a: “pain threshold gap between us and China. Our societies are deemed by Beijing to be simply not willing to take the heat of economic struggle. If we are going to back down, Beijing feels like it is in a position ultimately to dictate the rules of the game when push comes to shove.”
Survey data suggests that when it comes to relations with China, the British public willing to sacrifice short-term economic gains to protect the UK’s national security. The researchers conclude that: “When announcing decisions on Chinese trade, investment, or market access, the Government should explicitly set out the trade-offs involved.”
This ultimately leaves at a crossroads – short-term pain to remove Chinese dominance or face a long deterioration and disruption of local supply chains.
“The deterrent power of anti-coercion tools depends on the Government’s willingness to use them and the public’s willingness to accept the economic pain that might result from their deployment. The Government must plan for both the use of new measures and securing public support for their use.
“The British public is aware of the trade-offs that economic relations with China raise and is willing to pay an economic price to protect UK national security. The Government should lay the ground in advance and not wait for a crisis before communicating with industry and the wider public,” it said.
