UK Parliament Considers Imposing Steel Import Restrictions Amid Delay to India Free Trade Agreement

UK Steel Tariffs Implemented to Address Global Overcapacity Threat

The British government has introduced steel trade measures to address the "serious threat" posed by global overcapacity to the UK's domestic steel-making capability. This move comes as the UK-India Comprehensive Economic and Trade Agreement (CETA) faces implementation delays due to the UK's steel import restrictions, which are set to come into effect next month.

UK Secretary of State for Business and Trade Peter Kyle recently returned from talks with his counterpart, Commerce Minister Piyush Goyal, in New Delhi. Kyle's visit aimed to ramp up enforcement of the CETA, which was signed off in July last year. The agreement has the potential to significantly boost the 48 billion pounds yearly two-way exchange between the UK and India.

Lord Sonny Leong, Government Whip in the House of Lords, emphasized the importance of addressing the steel situation. "Given the strategic and economic importance of steel, the government cannot afford to leave the situation unaddressed," he said. Leong noted that the UK uses tariffs only as a last resort, but without action, the country risks losing domestic steel-making capability, which would mean relying fully on imports to meet critical infrastructure and defence needs.

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The implementation of the steel tariffs has raised concerns that it may jeopardize the implementation of the trade deal with India. Tory peer Andrew Sharpe called for the government to reverse the steel tariffs outright, saving the landmark deal. However, Labour peer Lord Sonny Leong pointed out that the UK imports most of its steel from the EU, with 70% of steel imports coming from overseas and 60% from the EU, while India contributes only 5% of the market.

There are also reports that New Delhi might reconsider the significant slashing of Scotch whisky tariffs as a result of the steel measures. The tariffs were set to be reduced from 150% to 75% immediately and down to 40% in the longer term. Leong stressed that the UK will adhere to the legal treaty signed with India and support the Scottish Whisky Association to ensure that India meets its obligation.

UK Secretary of State for Business and Trade Peter Kyle sought to dismiss concerns about the bilateral trade deal, stating that both sides are "cracking on" at "breakneck speed" following his talks with Goyal. However, this timeline indicates some delay, as previously the implementation of the India-UK CETA was expected to take place in May-June.

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Foreign Secretary Yvette Cooper recently arrived in India for talks with her counterpart, External Affairs Minister S Jaishankar. The ministers are expected to have covered the FTA coming into force, with Jaishankar posting on social media that they "reviewed ongoing progress in our cooperation focusing on trade, technology, supply chains, defence, climate, education and people to people ties".