British steel producers will have to pay a 25 per cent tariff to sell certain construction products into Northern Ireland after EU quotas for global imports were exhausted earlier than expected.
Steel producers and stockholders were informed of the new tariff on Wednesday in a notice from HM Revenue & Customs, prompting a fierce backlash from industry.
“It is beyond farcical that UK producers are now prevented by these tariffs from selling goods to customers in their own country,” said Gareth Stace, director-general of UK Steel, the industry trade association.
“To add insult to injury EU steel producers can continue to export these goods tariff free throughout the UK, but we can no longer do so in the opposite direction,” he added.
UK Steel called on the government to immediately suspend the tariffs.
The prospect of UK companies paying tariffs to send steel within the UK’s own internal market is hugely politically sensitive, and is likely to further anger the region’s Unionist community which has rejected the protocol because it divides the United Kingdom.
Both of the candidates to replace Boris Johnson as prime minister next month have committed to passing legislation that will give UK ministers powers to unilaterally rewrite the protocol which they have declared to be “unworkable”.
Brussels has warned that if the UK presses ahead with the legislation it will be in breach of its international treaty commitments and risks the possible suspension of the entire EU-UK trade co-operation agreement.
Under the deal governing post-Brexit trading arrangements for Northern Ireland, all goods going from Great Britain must pay EU tariffs if they are “at risk” of crossing into the Republic of Ireland and the EU single market.
When the Northern Ireland protocol came into force at the start of 2021, a temporary workaround was established which gave British companies a specific quota for exporting into the province tariff-free.
This changed in July following a decision in Brussels to lump together individual national quotas. This opened up Britain’s share to other countries which have been quicker to use the global quota, said UK Steel.
“Countries like Turkey are using up big chunks of the quota and there is none left for anyone else,” said Richard Warren, UK Steel head of policy.
The European Commission, in its decision on steel tariff quotas, said that it had consciously rejected the idea of creating special arrangements for the UK in the light of “the historical trade” between Great Britain and Northern Ireland.
Sam Lowe, a trade expert at consultancy Flint Global, wrote that the soured political relationship between London and Brussels over the Northern Ireland protocol had exacerbated the commission’s refusal to make exceptions for the UK.
“This is something that could be resolved fairly easily if the EU-UK relationship was in a better place. But it’s not,” he wrote in his Most Favoured Nation blog on trade affairs earlier this month.
The global quota is renewed every quarter, but the abolition of the UK’s specific allocation meant that British producers were likely to face tariffs yet again in the autumn, Warren said. UK steel companies fear that this will encourage customers to switch to EU suppliers to avoid the uncertainty of tariffs.
Neither the UK government nor the European Commission would comment.