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International Trade

Volume 614: debated on Thursday 8 September 2016

The Secretary of State for International Trade and President of the Board of Trade was asked—

Trade Negotiators: Recruitment

May I first say what a pleasure it is to see the hon. Lady in her place looking so healthy and radiant? It is especially a pleasure for her neighbouring MPs to see her.

My Department already has a strong and capable trade policy team, which has doubled since 23 June. In the next two years, we will be developing that team to build the world-class negotiating strengths needed to deliver the best outcomes for the UK. In terms of negotiators, we have already had strong expressions of interest from individuals, organisations and Governments.

I thank the Secretary of State for that answer, but will he reassure my constituents that the trade negotiators will speak to strategically important sectors such as aerospace, which employs and trains hundreds of people in Bristol, before they begin detailed negotiations, so that we may guard against horse trading between sectors, which could damage our crucial role in aerospace and other such significant sectors?

The hon. Lady is absolutely correct. It is a question not simply of having a single team, but of having the expertise to deal with specific sectors as well as in-country knowledge. We will certainly ensure that we build a core ability among those negotiators and bring in the sector experts who are so important in getting the sort of deals that she correctly outlines. That is especially important in areas such as the west country.

A team of skilled, experienced, first-class international trade negotiators has been assembled at the Legatum Institute’s special trade commission. Will my right hon. Friend consult the commission and listen to its proposals for a much larger prosperity zone than the European Union?

As I said, the expressions of interest have been wide: they have been from individuals, organisations and Governments. All those who are willing to put their talents at our disposal are extremely welcome. We will be looking at those individuals and the strengths they have in terms of sectoral and in-country knowledge, and we want to draw from the best that is on offer.

Can the Secretary of State confirm whether he is likely to hire any consultants to manage these trade negotiations? According to a headhunter I was speaking to a couple of weeks ago—[Laughter.] Not for my purposes. According to a headhunter I was talking to a couple of weeks ago, the head of a trade negotiating team, if hired as a consultant, would cost around £750,000 a year.

It is nice to see that the Lib Dems are looking forward to repeating their election success at the next election. I always think it is nice for politicians to cover all their options. We do not intend to create a standing army of bureaucrats that would be expensive to the taxpayer. We are looking to see how most effectively we can create the skills and the cadre of negotiators we will require.

I welcome the President of the Board of Trade and his Ministers to their place. May I follow up on the previous question by saying that those in the private sector surely have a lot of experience and insight to offer in particular markets? Will he assure the House that the private sector will be consulted and its skills harnessed and welcomed by the Government?

That is correct, but I would say to counterbalance that that we also have a great deal of expertise inside Whitehall Departments, and it seems to me it would not necessarily be a good use of taxpayers’ money to contract out all these functions when we have the ability to get that knowledge into the negotiations from inside the Departments we already have. I think that a judicious mix between the two would be the appropriate way forward.

I welcome the Secretary of State and his team to this exciting new Department and look forward to working with them to promote British trade across the world. I also welcome his progress in recruiting international trade negotiators, although it seems that they may have to wait some time before they can do any actual negotiating. Does he accept that under the current EU treaty the UK does not possess competence—the right to negotiate separate trade deals—and will he confirm that the UK will assume competence not when article 50 is triggered, but only when the UK actually leaves the EU?

May I reciprocate by welcoming the hon. Gentleman to another one of his many roles in the House of Commons? Let me be very clear that while we are not able to negotiate in terms of concluding a deal while we are members of the EU, there is nothing to stop us having discussions and scoping out future agreements, and I can announce to the House that as of last week we have now concluded a deal to set up a trade working group with India to look at how we will remove barriers to trade before negotiating a free trade agreement on our exit from the EU.

Trade Barriers: Potential Cost

2. If he will estimate the potential cost to the economy of trade barriers between the UK and EU countries after the UK has left the EU. (906155)

We are going to make a success of Brexit. As the Prime Minister made clear ahead of the G20 summit, the UK will continue to be a powerful advocate for free and fair trade.

I thank the Minister for that answer, such as it was. Scotland voted overwhelmingly to remain in the EU and the single European market, the largest trading bloc in the world which benefits consumers and businesses across Renfrewshire and right across Scotland. Will he be advising the Prime Minister to negotiate to remain inside the single market, yes or no?

First, I remind the hon. Gentleman that more Scottish people voted to remain in the UK than voted to remain in the EU. But on the subject of the single market, our objective will be to gain as much access as we can, consistent with the way people across the whole of the UK voted on 23 June. That is the purpose of our approach.

Do Ministers agree that Britain voted overwhelmingly for Brexit and we should stop listening to the doom-mongers, recognise the democratic will of 17 million people, and all work together to make this the huge success it is going to be?

My hon. Friend is right. As the Prime Minister said, Brexit means Brexit, and we need to make the most of the opportunities our departure presents, getting out into the world and doing business right across the globe, banging the drum for Britain and doing trade.

I, too, welcome the Secretary of State and his Front-Bench team to their places.

We know that the Secretary of State would like the UK to be outside the customs union and his colleague the Secretary of State for Exiting the European Union believes that at the end of this process the UK will be outside the single market. We also know that the Prime Minister disagrees with both of them. May I ask the Minister to ask the Secretary of State for International Trade if he stands by his statement in July when he said:

“If the price of the relationship with the single market is free movement of people, it’s a price I’m not willing to pay”?

Does he still want to leave the European single market, yes or no?

I refer the hon. Lady to the answer that I gave to her colleague, the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), just a few seconds ago. I want to make it quite clear that there will be no running commentary on the negotiations at this stage. She will know how important that is, following last year’s negotiations between the UK Government and the Scottish Government on the fiscal framework, at which time the Scottish Government understood perfectly the importance of not providing a running commentary.

I agree with my right hon. Friend that we should not be showing our hand when we go into such massive negotiations as these, but will he expand on the parliamentary process behind any new trade deals with the EU and any other trading bloc?

My hon. Friend raises an important point. Of course we would want to keep Parliament involved and consulted in relation to new trade deals, but precisely what format that will take is a matter for us and for the House authorities.

“No running commentary” is politician-speak for not having a clue. How is the Minister getting on with delivering on the promise made by the Secretary of State for Exiting the European Union that the Government would

“trigger a large round of global trade deals with all our most favoured trade partners”

by tomorrow?

It is a bit rich for Opposition Members to talk about having a clue. I noted with interest the Leader of the Opposition yesterday attacking something he called “free trade dogma”. Let us be absolutely clear: the Prime Minister has said that under her leadership, Britain will seek to become the global leader in free trade, and that is what we will do.

South-east Asia

Our posts across the region are in frequent, regular contact with their host Governments. In my second week in the Department, I visited Burma and Thailand to promote trade and investment. Since the referendum, major Association of Southeast Asian Nations—ASEAN—economies have expressed an interest in discussing future trade relations with the UK. We have been clear that the UK will remain open for business and investment, and we are committed to strengthening our already excellent economic ties with the region.

I am grateful to the Minister for his answer, and I warmly welcome him to his place. As the vice-chairman of the all-party parliamentary group on Singapore, I also welcome the indication that Singapore is open to removing the barriers to trade between our countries. What discussions will he have to promote investment opportunities for UK businesses in Singapore and across south-east Asia?

I congratulate my hon. Friend on his important work for the all-party group on Singapore. The opportunities in ASEAN and Singapore are absolutely enormous. In the next 15 years, the members of ASEAN will make up the fourth biggest economy on the planet. We are in constant discussions, we have trade envoys going out to the region and we are very keen to open negotiations to promote trade between our countries.

It is almost exactly three years since the Government launched their action plan for business and human rights. When the Minister goes to countries such as Burma and Thailand, are human rights on the agenda during those trade talks as well as business?

The Government are never neglectful of their duty to ensure human rights around the world. There are two clear elements involved. The Foreign and Commonwealth Office is key on human rights and we will support it where we can by raising the issue when we are talking about trade.

Trading Opportunities

We will continue to be a powerful advocate for free trade by playing to Britain’s strengths as a trading nation and forging our own new trade deals around the world. Fifty-six per cent. of our export value and two thirds of inward investment projects are with non-EU countries. My Department has the experience and expertise in trading outside the EU to grow our significance as a global trading nation even further.

In order to maximise the benefits of leaving the EU, the Prime Minister has appointed three excellent Cabinet Ministers to run the Department for International Trade, the Foreign Office and the Department for Exiting the European Union. Can the Secretary of State assure us that the machinery exists to enable them to follow the example of their illustrious predecessors by adopting the mantra “All for one and one for all”?

That is a difficult one! I am grateful to my right hon. Friend for his question. I am reticent about indulging in personality politics but I am glad to see that he was as able to read the August press as I was. When it comes to our commitment to delivering on Brexit, he can be in no doubt that we will be working together as a tight team to ensure that that happens as soon as we can achieve it on behalf of our country, having made all the necessary preparations.

I am sure we all remember Tony Benn’s adage that it is not about personalities but about the issues.

12. Can manufacturing companies in my constituency, such as Jaguar Land Rover, have some clarity on whether the Secretary of State expects the UK to revert to the World Trade Organisation default tariffs after leaving the European Union? We need some answers. (906165)

My team will be placing a great deal of emphasis on looking at our relationship with the WTO and where we exist on the current EU schedules.

On 24 November, I am hosting an exporters summit for businesses in the M11 area. I thank officials in the Department for their fantastic support. Given the importance of winning new trade opportunities, does the Secretary of State agree that all Members have the chance to play their part in ensuring that more British firms export to not only Europe, but the whole world?

I congratulate my hon. Friend on his personal commitment to trade and the practical way in which he is demonstrating it. He makes a useful point. All of us should encourage businesses in our constituencies to export. In a nation that built itself upon free trade, it is disappointing that only 11% of businesses export. I hope that my Department will help all Members improve that position and create the expertise required to get all parts of the United Kingdom exporting to all parts of the globe.

Will the Secretary of State explain to our European partners the huge benefit to their industries of car and truck sales to the UK and ensure that there are no obstacles to our own vehicle makers selling to the EU? While he is at it, will he persuade other Departments to behave like their European counterparts and support domestic industry and buy British?

On the latter point, the GREAT campaign has been moved to the Department for International Trade and I am keen for it to encourage people in this country to buy British where possible. He makes an important point about the wider negotiations in that the European Union has a huge trade surplus with the United Kingdom. It is more in their interest than ours—if that is possible—to maintain an open, free-trading environment.

Currently, 21 trade envoys deal with about 50 markets around the world, yet with the huge opportunities available post-Brexit, does my right hon. Friend agree that it may be wise to look at boosting both the number of trade envoys and the resources available to our people on the ground overseas?

The programme of prime ministerial trade envoys set up by the previous Prime Minister has been extremely successful and has delivered notable results given the resources initially allocated to it. The Department and No. 10 are looking at how we can improve on the success of that programme, which will depend upon the distribution of DIT’s staff overseas. I hope to make an announcement about that programme in the near future.

USA: Trade Discussions

I travelled to the US in July and had extremely productive meetings with the US trade representatives, senior White House officials, and business leaders. My message was that Britain remains open for business and that we place continued importance on the commercial relationship between the UK and the US, our largest single trading partner.

I welcome the Secretary of State to his place and thank him for that answer. What particular opportunities does he think will open up for people in the west country?

The US is the south-west’s third-largest export market with £1.59 billion-worth of goods exported in the year to March 2016, including everything from aerospace, as mentioned by the hon. Member for Bristol West (Thangam Debbonaire), to cider and cheese. We want to expand those opportunities. I have already announced that we will open three new trade offices in the US in Minneapolis, Raleigh-Durham and San Diego. We need to look at where there are markets and not simply operate on a geographical basis.

The Secretary of State will acknowledge that the most important ongoing discussions with the USA are on the Transatlantic Trade and Investment Partnership. Does he therefore find it strange that although the UK has voted to leave the European Union in order to reclaim parliamentary sovereignty in this country, the Government, unlike their EU counterparts, have still not made available any provision for Members of Parliament to scrutinise the secret text of the TTIP agreement, despite having promised to establish a reading room securely for this purpose in February?

While we remain in the EU, we will continue to push all free trade agreements possible, because we believe in global trade liberalisation; that includes the Government’s position of support for TTIP. It remains the United States’ clear priority to get this agreement, but I think the hon. Gentleman will accept that given the comments that have come from both France and Germany in recent weeks, and the fact that we have elections next year in both countries, the future of TTIP, at least in the immediate future, looks less than utterly secure.

10. Given that the Commonwealth has a larger population and is enjoying faster economic growth than the EU, as indeed is the US, does my right hon. Friend agree that it provides a much better prospect for trading opportunities than the EU? (906163)

There are indeed enormous opportunities with Commonwealth countries, and we will be wanting to explore with a number of those exactly how we might take forward trade working groups along the lines that we have already announced with Australia and with India. However, I point out that although we have political links with Commonwealth countries, they are not, in terms of economics and trading, homogenous. Therefore, there will be a great difference between the biggest markets and some of the smaller markets, although we will want to take a look at those that may be developing markets in the future.

Commonwealth: Trade Discussions

This Department has many valued interactions with Commonwealth partners in support of our aim for the UK to be a global leader in free trade. My right hon. Friend the Secretary of State recently visited India and will co-chair a bilateral trade dialogue there in November. He also recently met the Australian Trade Minister. In addition, several ministerial visits are planned to Commonwealth markets, and the UK will co-host the Commonwealth Trade Ministers meeting next year.

I welcome the Minister’s response. What priority is being placed on negotiating trade deals with Commonwealth countries?

As my hon. Friend will have heard from an earlier question, the Commonwealth is made up of a very diverse set of economies, so there will not be one, single trade negotiation. We are already enjoying excellent trade relationships with our 52 Commonwealth partners and we are committed to strengthening those further. One example of this is that the UK is co-hosting with Malta the inaugural Commonwealth Trade Ministers meeting in London in March 2017, which will be an excellent opportunity to promote greater trade and investment within the Commonwealth.

The Indian company Wockhardt exports from Wrexham pharmaceuticals to the rest of the world, including to the European Union. What comfort can the Minister give that the important regulation that exists in the single market will continue for that company in the post-Brexit world?

As my right hon. Friend the Secretary of State said a little earlier, we are reluctant to give a running commentary on how negotiations and where ideas are going to go, but I assure the hon. Gentleman that we are incredibly keen to recognise the important contribution to the British economy that international companies are making when they invest in the UK, such as the company he mentions investing from India.

Scotland: Trade and Investment

The Department for International Trade is a Department for the whole UK. I visited Scotland last month, met the Cabinet Secretary for the Economy, Jobs and Fair Work, and offered my support to Scottish businesses. The Export Hub is currently touring Scotland, with trade experts providing advice to 252 first-time exporters, from just two Scottish tours. Its focus is on demonstrating real live business opportunities that businesses in any part of the UK can apply for.

I thank the Minister for that response. The attraction of worldwide entrepreneurs to work in Scotland is a particular form of investment that needs encouraging. Will he speak to his colleagues and encourage a complete review of tier 1 entrepreneur visas, as current barriers have led to rejection rates of about 70%, thereby harming investment and growth?

The visa regime is constantly being reviewed by my colleagues at the Home Office, and I take note of the hon. Gentleman’s comments. In terms of having an open economy, we must welcome the concept of free trade, and ensure that we have a low-tax, low-regulation economy and access to skilled labour. The United Kingdom as a whole has a number of advantages, not least that we speak English and that we are at the centre of the world trading time zones.

When he was the keynote speaker in Scotland of the Go movement, the Secretary of State will remember how much and how many people there welcomed the fact that we had the opportunity to exit the EU and increase trade opportunities. Will he lay to rest the lie that everyone in Scotland is against leaving the EU?

Two things are clear: the people of Scotland voted to remain part of the United Kingdom; and the people of the United Kingdom, with an equal vote in every part of this country, voted to leave the European Union. We are taking the decision as a United Kingdom, not as separate parts of it.

Topical Questions

This is the first time that I have had an opportunity to set out the new Department’s responsibilities. We have three tasks: promoting UK exports of goods and services to support a growing economy that serves the whole of the United Kingdom; maximising opportunities for wealth creation through supporting foreign direct investment with a renewed focus on overseas direct investment to support the current account; and delivering the best international trading framework for the UK outside the European Union, including through building our capacity to negotiate and administer a national trade policy. Like the UK as a whole, the Department for International Trade is open for business, and I am pleased to say today that we will now demonstrate that by launching an open international recruitment for a new permanent secretary, which gives me an opportunity to thank very much Sir Martin Donnelly for his fantastic work in helping build the new Department.

I congratulate the Secretary of State and his ministerial team on their appointments. Later today, the fourth industrial revolution will be debated in the Chamber for the very first time. Will my right hon. Friend commit to helping small and medium-sized enterprises involved in new and emerging technologies to export and to secure more overseas clients?

May I first congratulate my hon. Friend on securing a debate later this afternoon? The Department for International Trade supports cutting-edge British technology companies to take advantage of overseas opportunities. Working closely with industry partners such as Tech City UK, techUK and our network of international trade advisers, we assist SMEs to scale up, reach their export potential and win overseas business. Companies have the opportunity to take part in focused trade missions, key tech industry events and meet potential buyers, and we will be setting out new ways in which we intend to maximise that in the coming months.

The Secretary of State will be aware that, in the automotive business, the original equipment manufacturer focuses on the stability of its supply chain, which is typically sourced from many different countries. Has he identified those supply chains in the automotive sector in which the involvement of UK companies would violate country of origin rules once the UK has left the EU, and what advice has his Department given to those companies?

The country of origin complications is of course tied up with the point that was made earlier about the World Trade Organisation and the EU schedules. The WTO is still working on EU 15 schedules having not yet ratified EU 28, so the way in which it operates still has some way to go. The hon. Gentleman is quite right in looking at country of origin; it is one of the issues that the Government will look at as a whole when considering the options for our future relationship with European Union and outside.

T2. Despite the difficult political situation with Russia, there are still many British companies exporting to Russia and investing in that country in sectors not affected by sanctions. Bearing that in mind and also the need to prepare for a post-sanctions relationship with Russia, will my right hon. Friend ensure that an appropriate trade envoy is appointed for this very important country? (906176)

I am grateful for all job applications—formal and otherwise. Whether we have a post-sanctions relationship with Russia will depend on Russia’s international behaviour, and we can only look forward to that business opportunity when we get the appropriate international behaviour by the Putin regime. When that occasion arises, if it does, I am sure that my hon. Friend has now made his well-known interest in that area a formal job application.

The latest quarterly review published by Scottish Engineering shows a slump in orders, a sharp fall in output volume and a drop in employment levels, with companies blaming the uncertainty caused by the decision to leave the EU. Can the Secretary of State tell us what he expects the effects will be on Scottish business exports if the UK withdraws from the single market?

Industry dislikes uncertainty, as the hon. Lady says, but I would add two uncertainties into the equation. The first is the uncertainty over Scotland’s fiscal position. We have seen the deterioration in the position, which makes me very grateful that the people of Scotland took the sensible decision to remain in the United Kingdom. The second is the uncertainty posed by the Scottish Government and their constant reference to a second independence referendum. I can think of no greater cause of uncertainty for Scottish business investment.

T3. Can my right hon. Friend, whom I congratulate on his appointment, confirm that were we to remain in the EU we would stand little prospect of trade deals with the two largest countries in the world—India and China? China is not agreeing to open negotiations with the EU and India has broken them off. Outside, we can follow the example of Switzerland, which already has a free trade agreement with China and is going ahead to negotiate one with India? (906177)

Switzerland is still negotiating its trade agreement with India, but my right hon. Friend is correct that leaving the EU will give the UK greater freedom to strike its own trade agreements, including with some of the largest and fastest-growing economies in the world. As he will well know, these will not necessarily be straightforward, as these countries are tough negotiators, but it would be much simpler to negotiate a bilateral agreement, and they have shown greater willingness to negotiate a bilateral deal outside the complications that sometimes come with an EU free trade agreement, which is often a political agreement rather than a pure FTA.

Switzerland also has its own unique selling point, called Roger Federer. Just thought I would mention that.

The Japanese Government have thrown a huge cold bucket of water over Brexit, with their announcement that UK investment from Japan might be threatened. Is not access to the single market key to calming Japanese nerves?

I had a constructive meeting with the Japanese ambassador earlier this week. It might be worth reiterating what he said in his “Today” interview:

“There is no indication so far I have received from Japanese industries that they are contemplating an exit from the UK economy because they like it here and they have benefited from working in the UK.”

That will continue because the economic fundamentals of this country remain extremely strong thanks to this Government and no thanks to the Opposition.

We know that politicians love to don high-vis jackets, walk around factories and stand next to manufacturing goods, but the reality is that 79% of our exports are in services. The UK is the world’s second biggest exporter of services, and all the most successful export nations play to their strengths. Will my right hon. Friend assure me that, in setting the strategy for his Department and choosing personnel and trade missions for the future, he will focus on services as much as on goods?

I will not call people for topical questions if they abuse the system. The hon. Gentleman is a very good parliamentarian, and that question was not just too long but far too long.

My hon. Friend makes a good point. I met him in July in his capacity as joint chair of the all-party parliamentary group on trade and investment. He is right that services are vital to our economy. They provide 78% of our GDP and 80% of our jobs. It was often a frustration with the EU that it failed to deepen the single market in services. It is important to realise that we are talking not just about financial services but about digital and other services. We will make sure that they are all at the heart of our efforts as we move forward into the free trade world.

Following the questions asked earlier by my right hon. Friend the Member for Warley (Mr Spellar) and my hon. Friend the shadow Secretary of State more recently, has the Secretary of State met representatives of the UK automotive industry? If so, what clarifications have they sought and what have been his responses, and if he has not, when will he do so?

The UK has a highly successful automotive industry, and Ministers are seeking input from that industry on an ongoing basis in order to make sure that we are very attentive to the needs of that industry. I cannot stress too much the importance we attach to the automotive industry. It is one of our leading and most fabulous industries, as evidenced not least by the fact that nine out of 11 Formula 1 racing teams choose to come and build their cars in this country.

Order. I know that we have overrun, but I want to accommodate remaining questions if they are extremely brief.

T5. Pendle is home to a number of key aerospace businesses, such as Rolls-Royce. What discussions has my hon. Friend had with the aerospace sector to ensure that we continue to support this vital industry? (906179)

The Government, with industry, are working with the Aerospace Growth Partnership to boost growth and exports. Together we have committed £3.9 billion to aerospace research up until 2026. I will shortly be visiting Rolls-Royce in Derby, and I look forward to holding a separate round-table meeting with aerospace companies later this month in Toulouse.

The Secretary of State will know that there is a very healthy all-party manufacturing group. Will he come and speak to us soon, and also look at our Manufacturing Commission and our campaign, Exported by Britain? We would love to talk to him.

On behalf of the team, I will give full agreement to that. If I am unable to do that because of diary commitments, another member of our ministerial team will certainly do so.

T6. We heard this morning about a focus on the positive opportunities for free trade with the Commonwealth and Australia. Does the Minister agree that that gives a great opportunity to reassure businesses in our constituencies that this Government can make a great success of the bold choice made by our voters? (906180)

As my right hon. Friend the Secretary of State has made clear, we are encouraged by comments coming from across the Commonwealth, from leaders and Ministers of countries such as Australia. Several additional ministerial visits are planned in Commonwealth and non-Commonwealth markets—for example, Australia, New Zealand and Singapore. I will be in South Korea and Taiwan, and other Ministers in China, Japan and Vietnam in the coming months.

I warmly endorse what the Secretary of State has just said about Russia. I am glad he is adopting that attitude, but may I urge him to extend the same attitude towards North Carolina? I think it bizarre that he has opened a new office in North Carolina, when Deutsche Bank, PayPal and a string of other businesses and many US states are boycotting North Carolina because of its ludicrous homophobic new policy in relation to transgender people.

I made the point earlier that what we need to do to provide certainty about jobs and profits in the United Kingdom is to be in the markets where we have the greatest maturity and the greatest potential for value. That means, in the United States, not just looking at the established areas where we have personnel, but looking to where we have growing markets that can prove to be of value to the United Kingdom, its people and its businesses.

Given that in two decades’ time, one in four people on this planet will be African, will my right hon. Friend give an assurance that his Department will focus on trade in Africa, because that is a sure way to keep the economies of that continent fully functioning and stable?

My hon. Friend is right. We will also require to see greater co-operation between Government Departments and a cross-Government approach to Africa. I expect to make an announcement shortly about a joint visit by myself and the Secretary of State for International Development to Africa in the coming months.

I am most grateful to the Secretary of State and to colleagues. There is no shortage of demand in this session, and I dare say that that will continue.