Some of you will have heard the heartbreaking news that Martin Bell, the Deputy Director of Trade at the Scotch Whisky Association and a stalwart of the UK’s trade community, has died. As well as being one of the most informed people working on trade in the UK, he was incredibly kind and generous with his time. He was also a big supporter of this newsletter, and could often be found in the comment section making incisive points and, on a few occasions (!), gently correcting me when I had got something wrong.
Something he frequently asked me to write about, but I never did, was the UK’s procedural approach to triggering (and joining) trade disputes. So I am going to do that today.
How to trigger (or join) a trade dispute?
We’ve spoken quite a bit in this newsletter about defensive trade action. For example, the EU instigating an anti-subsidy investigation into imported Chinese electric vehicles; the UK Trade Remedies Authority opening investigations into Chinese JCBs, and the trials and tribulations of the UK Trade Remedies Authority in general.
Just as important, but hardly mentioned, is the question of how to convince your own country to take action to address a market access barrier somewhere else.
At the more extreme end, this could involve instigating a trade dispute — either under the auspice of the WTO or under the dispute-settlement provisions of a free trade agreement. It could also involve joining someone else’s dispute. For example, in 2022 the UK, Australia and the US officially backed the EU’s WTO complaint against China’s treatment of Lithuania.
In the EU, the official route for getting this stuff done is via the so-called Single Entry Point, and, according to Martin, this worked fairly well (if imperfect).
Post-Brexit, it is not clear exactly how the UK goes about this at least from a procedural point of view. You can flag a trade barrier, but the process by which registering a complaint leads to a trade dispute isn’t clear.
When discussing this with Martin, my observation was always that the obvious answer to “How do you get the government to start a dispute?” is “Lobby the relevant politicians”. But while this route is available to larger companies, it’s probably not something most smaller firms could resource. It also doesn’t really address the question of how to get the UK to join other country’s disputes.
Also, it would be better for this to be an ongoing, technical, discussion with industry (and slightly less politicised) in the long run. [Trade disputes are fairly normal, and don’t need to be accompanied by a diplomatic breakdown … at least in theory.]
Anyway, I write this knowing I have not done the issue justice, and that Martin would surely have appeared in the comments with clarifications and further technical detail, drastically improving the quality of the analysis.
Martin, you will be missed.
Trade defence dominoes
Something that annoys me about most political (with a capital ‘P’) analysis is that people pay too much attention to what politicians say, rather than the structural pressures that will force them to do things whether they want to or not.
On that note, in a blog post for Flint Global (my employer), I have written about the domino effect in trade and why country x raising tariffs, or introducing due diligence obligations, puts pressure on country y:
But this will soon change. Last October, the European Commission instigated an anti-subsidy investigation into imported China-originating electric vehicles. The investigation will probably result in new tariffs, provisionally initiated, before the European Parliament election in June this year. (Yes, the timing is deliberate.)
Where the EU moves, the UK usually follows. While the UK government and industry are currently publicly reluctant to replicate the EU measures, this will probably change once China-originating cars originally destined for the EU turn up in observable quantities on British driveways.
Already we have seen the British government reluctantly accept it will need to introduce its own version of the EU’s carbon border adjustment mechanism. (Albeit, it has left the design and ultimate responsibility for implementation to a future, probably Labour, government.)
The logic is the same as the examples outlined above: as the EU’s measure comes into effect – the pricing element comes into force from 2026 – carbon-intensive products such as steel and cement that would otherwise have been sold into the EU could be diverted to the unprotected UK market. The UK could end up bringing forward its 2027 deadline to sync with the EU and avoid 12 months of asymmetrical exposure.
Trump’s tariff will fail
Over on LinkedIn, as part of his ‘Factful Friday’ series, Prof Richard Baldwin has written a new piece arguing that Trump’s 10% tariff will not work, or at least “not have the effect that many people think it might”.
What is it many people think a 10 per cent tariff might do? He doesn’t say explicitly (I think he may have just forgotten!), but inferring from the rest of the piece, most people assume a 10 per cent tariff on all US imports will make the US less competitive.
Using historical evidence, Baldwin argues that in practice a 10 per cent tariff won’t have a huge impact on US competitiveness because it will be offset by dollar appreciation. In simple terms, this means that the imports won’t actually become much more expensive because 1 dollar will be able to buy more foreign goods than before.
His argument is largely based on the historical evidence. See:
I don’t necessarily disagree with any of this. But I would love to hear more from him on the “why” — Why will the dollar appreciate in this instance? Is this due to foreigners buying up US stocks/companies/debt in expectation of a Trump economic boom? Is it because foreign companies will invest in new US manufacturing capabilities to dodge the tariffs? Is it just because traders like playing the Forex?
Best,
Sam
Very sad news indeed! As you say, he was a lovely fellow and a great advocate of Scottish Whisky.
I am lost for words. In addition to being a simply lovely human being, Martin was so generous with his time and amazing at explaining why trade policy (and especially what happens at the WTO) is so important in the real world - and not just to the trade policy nerds. He also cheerleaded us through a number of difficult moments in FTA negotiations - which I was personally very grateful for. He's had a huge impact and we won't forget his wisdom.