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International Trade

Volume 616: debated on Thursday 3 November 2016

The Secretary of State was asked—

Trading Relationships: Israel

1. What plans he has to strengthen the UK’s trade relationship with Israel as a result of the decision to leave the EU. (907063)

The UK and Israel have a strong and important trading relationship, with nearly £6 billion in bilateral trade last year. The UK is the No. 1 destination for Israeli foreign direct investment in Europe, and there are now more than 300 Israeli companies established in the UK. I recently visited Israel to discuss investment and trade, and we will continue discussions on strengthening our important trade relationship.

I thank my hon. Friend for that answer. UK-Israel trade is at a record high, with strong ties in science and technology, cyber-security and medical science, but the terms are currently determined by the EU-Israel association agreement. Does he agree that our vote to leave the EU presents a great opportunity to strengthen co-operation between our countries, and will he update the House on progress on planning and securing a new post-Brexit deal with Israel?

We are taking advantage of all the opportunities presented to us to ensure that Britain becomes a truly global leader in free trade once we leave the EU, and that of course includes Israel, building on our strong relationship in areas such as research and development and cyber-security. For example, we have established the UK-Israel tech hub, which creates partnerships between British companies and world-class Israeli innovators.

A survey this year found that 89% of Israeli tech companies and 86% of Israeli investors are interested in business and tech co-operation with the UK. What steps will the Minister be taking to take advantage of that good will and ensure that Britain continues to be a leading destination for Israeli tech companies?

The right hon. Lady is quite right to mention our growing relationship. In cyber-security, in particular, we saw a 24% growth in exports last year. I was recently in Tel Aviv and had the opportunity to visit a tech accelerator hub that is sponsored by Barclays. It is very encouraging to see that private sector relationship, which is something we will continue to encourage.

11. One area in which the UK can strengthen its relationship with Israel is cyber, where Israel has 20% of the global market. Will the Minister welcome the UK-Israel cyber-physical initiative and say what is coming next? (907076)

My hon. Friend is quite right to raise the interest in cyber. In February we led a successful cyber-security collaboration mission of businesses and academics, and we will continue to promote further such delegations.

As part of these trade discussions, did the Minister raise the thorny issue of illegal settlements in Palestine and the demolitions that are ongoing? Demolitions of some buildings have actually been part-funded by the UK.

The hon. Gentleman will know that the Government do frown on the illegal settlements in the Palestine territories. These are not helping with the peace process—they are standing as an obstacle—and the Government continue to promote the two-state solution to ensure that Palestine becomes a viable and sovereign nation.

Bilateral Trade Deals

2. What discussions he has had with his international counterparts on the development of bilateral trade deals between the UK and other countries. (907064)

While we remain members of the European Union, discussions we have are limited by our considerations of the common commercial policy and our duties of sincere co-operation. We cannot negotiate and conclude trade agreements while we are a member of the European Union, but we can have discussions on our future trading relationships. The UK will continue to be a champion for free trade, and back the EU’s current and ongoing negotiations.

I am very grateful to the Secretary of State for that answer. Does he agree that the decision to leave the European Union presents this country with an enormous opportunity to re-engage with our Commonwealth friends and to forge proper trading links with them once more?

Yes, we are keen to seize all the opportunities that leaving the EU presents, and so, too, are many of our international partners, who recognise the attractiveness of doing business with the UK. I will be accompanying the Prime Minister on a trip next week to India to take forward some of those opportunities.

Does the Secretary of State see any irony or contradiction in his development of these new free trade and investment agreements, which involve the harmonisation of rules and standards with other countries—even obedience to supranational commercial courts—and the referendum instruction from the British people that we should leave membership of the largest free-trade agreement in the world so that we can set our own rules and take back our sovereignty?

No, because the European Union is not simply a trading organisation. Were it simply a trading, and not a political, organisation, the referendum result may have been different. One of the major problems with the European Union, and one of the reasons why the public voted to leave, was that there is such a strong supranational imposition on the United Kingdom.

As we are leaving the EU, and everybody knows it, why do we not just get on and start negotiating trade deals? After all, the EU can hardly punish us in the future.

It is not a question of punishment; it is a question of what we have signed up to and our duty to fulfil the obligations we have entered freely into.

Has the UK managed to get the World Trade Organisation’s 160-plus members to agree that we will be a continuing member, rather than a new member, of the WTO? If the UK is not able to have negotiations just now, how will it get that agreement?

We are a founding and full member of the WTO—there is no dispute about that. I think what the hon. Lady is referring to are the trading schedules under which we operate under the WTO, and, obviously, we will be in full discussions on those.

As my right hon. Friend has already said, to do a bilateral trade deal we need to be out of the European Union. Does he therefore deplore, as I do, the High Court’s decision this morning to rule against the Government and say that the will of the people in the EU referendum on 23 June is still subject to parliamentary approval?

The Government are disappointed by the Court’s judgment. The country voted to leave the European Union in a referendum approved by Act of Parliament. The Government are determined to respect the result of the referendum. This judgment raises important and complex matters of law, and it is right that we consider it carefully before deciding how to proceed.

Will the Government respect the ruling of the Court in this matter, and also respect Parliament? If they want to get on with these trade deals, should they not accept that Parliament should have its say, as the Court has ruled?

I have nothing to add, other than to reiterate that it is right that the Government will consider carefully before deciding how to proceed following the judgment.

Trade Negotiations: Parliamentary Vote

3. What discussions he has had with the Leader of the House on Parliament debating and voting on the outcome of trade negotiations before they are signed. (907065)

As the hon. Lady will know, I am a great advocate of parliamentary scrutiny. The Department for International Trade is currently working to shape a more independent UK trade policy. Once we begin to negotiate trade agreements, Parliament will, of course, play its crucial role in ensuring that we deliver on our commitment to secure the best possible negotiation outcome for the whole of the UK.

Trade agreements need at least 50 negotiators per bilateral. The former Brexit Minister, the right hon. Member for West Dorset (Sir Oliver Letwin), said in July that the UK has “no trade negotiators”. The Minister of State himself said last month that the number has “doubled since June”. Zero doubled is still zero. Will the Minister come clean? Exactly how many trade negotiators do we have?

I think the hon. Lady is conflating and confusing two different statistics relating to those working on trade policy and those working on trade negotiations. The answer that I gave in the written answer is correct: the number of people working on trade policy in the Department has doubled since the Department’s creation in July.

The truth is that this Parliament is, always has been and always will be sovereign, so Parliament could overcome any trade deal it wanted. The question we have to ask ourselves is whether Parliament should resist the will of the people.

My hon. Friend makes a very good point. I am not going to add anything to what the Secretary of State said earlier about the Court judgment, which has just been released.

Before I call the right hon. Member for Carshalton and Wallington (Tom Brake), I am moved to congratulate him on his achievement in winning the yellow jersey for his performance yesterday on the British Legion stationary bicycle. It was a remarkable athletic feat on his part.

Thank you, Mr Speaker. It is nice to come first at something when you are a Liberal Democrat.

More seriously, on the subject of debating and voting on essential trade matters, is it not essential that the Government give way to the courts and allow Parliament to be sovereign and to debate and vote on the issue of article 50?

I first join you, Mr Speaker, in congratulating the right hon. Gentleman on achieving the yellow jersey. I thought for a moment that it was an internal Liberal Democrat award, in which case winning out of eight was perhaps not the greatest of achievements, but I commend him on what he has done.

I have nothing to add to what the Secretary of State said earlier, but I will say that, in general, we are very committed to consulting Parliament on the future of trade agreements, which is the subject of the question on the Order Paper.

Certainly, the right hon. Member for Carshalton and Wallington beat me, as he is signalling from a sedentary position. I did my best, but he was far superior and I pay him due tribute.

Will my right hon. Friend the Minister confirm that, notwithstanding this morning’s Court judgment, Brexit means Brexit—[Interruption.]and the will of the British people in the referendum will be respected?

I entirely agree with my hon. Friend. I campaigned for the remain side on 23 June, but nevertheless I fundamentally and totally agree that Brexit means Brexit. This Government are getting on with delivering and making sure that it works for the whole of the United Kingdom.

EU Customs Union

4. What assessment he has made of the international trade opportunities available to the UK in the event of the UK leaving the EU customs union. (907068)

The people of Britain voted to leave the European Union and that is what we will do. It is the job of this Department to maximise the UK’s trade opportunities, whatever the relationship with the EU that the Government ultimately adopt. The Prime Minister has made it clear that the UK’s agreement with the EU will get the best deal for Britain at home and abroad.

Via our membership of the customs union the UK has access to more than 50 international trade deals, which according to a parliamentary answer I received accounts for 15% of UK exports. In the event of Brexit outside the customs union, what estimate has the Secretary of State made of the length of time it will require to renegotiate those deals, bearing in mind that he will not be able to begin his negotiations until after exit in March 2019?

There are a number of errors in what the hon. Gentleman has said. The EU currently has 36 free trade agreements covering more than 50 countries. It is entirely possible for us to be able to transition those into UK agreements and we are free to discuss them with countries while we are still a member of the European Union. Our aim will be to have minimum disruption of trade and no gap in market access for British companies.

Although I welcome the Canadian-EU trade agreement, does my right hon. Friend share my concerns at the elements of protectionism that have emerged in this agreement? Do they not indicate that there are advantages to the United Kingdom outside the customs union in negotiating its own deals more rapidly, in defence of free trade?

In recent history, most of the trade deals done in the world have been bilateral, because it is clearly easier to get country-to-country agreement. One of the reasons why the European Union does not have an agreement with the United States, China, Japan, India or the Gulf is that it is rather difficult to negotiate with 28 different partners, especially if they retain a veto.

The creative industries are some of Britain’s most competitive and successful industries, and they depend on worldwide access and negotiation with many multinational organisations. How, post-Brexit, will the UK maintain relationships with multinational organisations such as the EU and worldwide broadcasting organisations?

The hon. Gentleman is absolutely right. The creative industries are incredibly important, and one of the jobs of the Department for International Trade is to promote them. When we take trade delegations abroad and when we make representations to other Governments, we will fully take those industries into account. Where we have got areas of excellence in our economy, we need to promote them—sometimes more than we have done in the past.

The Secretary of State knows about the growing opportunities for trade and investment, in both directions, with the countries of south-east Asia. Does he agree that next year’s 50th anniversary of the Association of Southeast Asian Nations offers a great chance for the UK to demonstrate what a superb international platform we can be for all those countries’ exports and investment in both directions? Will he commit to DIT offering some finance to help this great session to go well?

I will certainly offer a great deal of help and goodwill. Mindful of the forthcoming autumn statement, I am not going to offer any sort of finance in advance of the Chancellor’s permission being granted.

May I say what a great job my hon. Friend the Member for Gloucester (Richard Graham) does as one of our trade envoys? Our trade envoys have contributed hugely to our recent export gains. He makes the important point that trade has to operate in both directions, both in exports and imports and in outward and inward investment. It is very important that we maintain a balance if we are to have a chance of reducing our current account deficit.

Trading Opportunities Abroad

5. What steps his Department is taking to help businesses take advantage of future trading opportunities abroad. (907070)

7. What steps his Department is taking to help businesses take advantage of future trading opportunities abroad. (907072)

9. What steps his Department is taking to help businesses take advantage of future trading opportunities abroad. (907074)

We want more British businesses to take advantage of trade opportunities. Currently, only 11% of British businesses export. Our overseas teams continue to help British businesses to win opportunities in 108 different markets, with 190 high-value priority campaigns.

British businesses benefit from the expertise of our embassies and consulates when seeking trading opportunities abroad. I saw that for myself at first hand while I was in Hong Kong over the summer. Will the Minister continue to back British businesses to gain market access by supporting our missions overseas?

I certainly will. My hon. Friend and I had a productive conversation just last week following his successful visit to Hong Kong. The Under-Secretary of State for International Trade, my hon. Friend the Member for Wyre Forest (Mark Garnier) was also in Hong Kong last month, and we are absolutely committed to using our networks and our professionals overseas to boost both trade and investment.

Given the strong contribution made by the life sciences sector to UK exports—AstraZeneca’s site in Macclesfield made a huge contribution to the company’s £5 billion-worth of exports in 2015—will my right hon. Friend tell the House what steps he is taking to work with the sector to ensure that medicines that are researched, developed and manufactured in the UK continue to have ease of access to European markets and global growth markets once the UK leaves the EU?

I know my hon. Friend’s passion for life sciences, and particularly for AstraZeneca’s key role in his constituency. We are liaising and working closely with the industry with an important working group, which has met on several occasions and recently briefed Ministers. We want, of course, the best possible arrangements for trade in all goods and services, including the pharmaceutical sector.

UK Trade & Investment has been very helpful to businesses in my constituency, but there are still many small businesses that need help and support to export and utilise the exchange rate of the pound. Would the Minister advocate UKTI holding events in Wiltshire and around the country to achieve that?

Yes, we are very open-minded about doing events on either a county or a constituency basis. I am open-minded about how that might best be pursued. We have regional teams in the Department for International Trade, but if my hon. Friend and I were to have a discussion, particularly about what we may be able to do in Chippenham, I would be all ears.

Will the Minister look at the trading opportunities we need for sectors that play to our comparative advantage already? As he knows, financial services amount to 12% of our output, yet the sector faces not a 10% or 20% tariff after April 2019 if we get this wrong, but a ban on selling and trading in many financial products altogether. What about some transitional arrangements? Will he talk to the Treasury about that?

The hon. Gentleman and I used to spar regularly on Treasury matters. I congratulate him on his election to the International Trade Committee. I look forward to appearing before him in due course. He will know that our priority is to maintain the maximum possible access to the single market across all these sectors.

Research published this week by the National Institute of Economic and Social Research shows that access to the single market is vital for the future trading of many Scottish companies. Leaving would have implications of titanic proportions. The Minister’s Government stood on a manifesto commitment to retain membership of the single market. Given that voters in Scotland voted to preserve that status in June’s referendum and that both the Scottish Parliament and the Scottish Government believe that that is in our best interests, what assurance can the Minister give individuals and businesses in Scotland that he will listen to the forthcoming proposals by the Scottish Government and deliver on that Government’s triple mandate to keep Scotland in the single market?

Of course we will listen to proposals and suggestions made by the Scottish Government. The Prime Minister has been absolutely clear on that. However, as we are talking about icebergs, perhaps the hon. Lady will reflect on one thing: 64% of goods leaving Scotland are destined for the rest of the United Kingdom. When it comes to a single market, I think she might prioritise that single market, rather than the one in which only 15% of goods go to the European Union.

The Foreign Secretary forgot about the icebergs when he mentioned the Titanic last night. Uncertainty is the enemy of business. Businesses need certainty about our future trading arrangements so they can make investment decisions. As the president of the Japanese chamber of commerce has said, other EU states are talking to UK-based companies. Are the warnings not there for all to hear? If the Secretary of State for International Trade has a plan, he needs to share it, otherwise businesses that need certainty will go elsewhere to find it.

May I welcome the hon. Gentleman to the Front Bench? It is good to see that the hon. Member for Brent North (Barry Gardiner) has some reinforcements this week. I notice that he has lost three of his four portfolios since he last appeared in the Chamber, so it is good to see other hon. Members helping him out.

I attended an event with the Japanese ambassador only this week. He was clear about the role that Japan plays and that Britain plays in promoting global free trade and global free markets. That is rather in contrast to the hon. Gentlemen’s leader calling free trade a “dogma”, which I think should be condemned.

Topical Questions

The Department for International Trade has three tasks: promoting UK exports to support a growing economy that serves the whole country; maximising opportunities for wealth creation, including through overseas direct investment to support the current account; and negotiating the best international trading framework for the UK outside the EU. Like the UK, my Department is open for business. Following my statement at our previous session of departmental questions, we received 111 applicants, in an international competition, for the post of permanent secretary, and we will shortly announce the successful candidate.

As a country, we need to export more. There are a lot of barriers to overcome to get businesses to start exporting or even to consider exporting, but we have a real opportunity to get existing exporters to export to more markets. Will my right hon. Friend outline the measures that the Government are taking to encourage and support small and medium-sized businesses to expand the number of markets to which they export?

Order. We must not expand the length of questions, I am afraid. I am sure it is a very important point, but let us have the answer.

I apologise for taking longer than usual to get to the Dispatch Box, Mr Speaker—the last time I take my own advice about going to the gym to get fit. It is important to get more small and medium-sized enterprises exporting. If we look at the UK’s performance we see that only 27% of our GDP is accounted for by exports, whereas for Germany it is 48%. A lot of that difference is accounted for by a lack of SME exports. We will be announcing a range of measures soon, and there will be a pack setting out those measures available for all Members of Parliament so that we can all help the SMEs in our own constituencies.

The Government Front-Bench team has tried to suggest that the High Court decision that Parliament should have a vote before triggering article 50 is in some way antidemocratic or thwarts the referendum result. Will the Secretary of State acknowledge that the vast majority of Members in this House are now committed to honouring the decision to leave the EU, but that democracy demands that the terms of our leaving must be subject to the proper advance scrutiny and consent of this democratically elected House, and not negotiated in secret and smuggled through without the support of this sovereign Parliament?

There will be numerous opportunities for the House to examine and discuss what the Government are negotiating. When we are clear about the position we will adopt, article 50 will be triggered, but given the nature of the judgment this morning we will now have to await the Government’s appeal to the Supreme Court.

T3. Will the Secretary of State let us know whether, in his discussions with countries that have trade agreements with the EU, those countries have indicated their interest in continuing such arrangements with the UK when we leave? (907027)

As I said earlier, the EU has some 36 free trade agreements, which cover more than 50 countries. A very large number of those have already made representations to the United Kingdom to say that they would like those agreements to continue. We will explore and discuss that, because, as I have said, our aim is to have no break in access to markets and to achieve the transition as smoothly as possible, with minimal disruption to the international trading environment.

T2. The EU trade deal with South Korea has reduced the tariff on scotch whisky to zero, while whisky imported to Korea from elsewhere faces a tariff of 20%. Does the Minister agree with the Foreign Secretary’s new adviser, David Frost—a former chief executive of the Scotch Whisky Association—who has said that we are much more likely to get such deals“with the weight of the whole of the EU behind us than we are in a negotiation nationally”? (907026)

I take an intense personal interest in this area, from long experience. I am delighted to see David Frost in his new position—he was so pleased with our policy he joined the company. It is very important that we get reductions in tariffs. One issue I will be raising in India next week is the very high level of tariff against scotch whisky there, to see whether we can make major reductions.

T4. Business in my constituency has praised the work of UK Export Finance but expressed some concerns about the bureaucracy and the length of documentation required to seal those deals. Will the Secretary of State please look into that? (907029)

May I first praise the work of UKEF? As a Government export credit agency it is the world leader and its practices are second to none. However, we are always trying to streamline and improve, and in fact have appointed a new chairman for UKEF, who will be announced shortly. When they are in place they will certainly be shaking up the organisation.

Some 80% of the fish caught around our coastline in the south-west goes straight for export to the rest of the European Union, and there is huge concern in the industry about the impact of tariffs if we leave the single market. Given that concern, and the excellent news from the High Court, would it not be wise of the Government not to invoke article 50 as early as March?

Export tariffs on food products, and on animal products in particular, are determined outside the provision of trade agreements. They are determined in terms of licensing based on the quality of the food products, on a separate basis.

T5. Yesterday I welcomed to Parliament a group of business leaders from Mendoza in Argentina. They want to increase our exports exponentially, which currently stand at 0.1%. Will the Minister assure me that everything will be done when we leave the EU to improve our trade relations with Latin America? (907030)

I commend my hon. Friend for his engagement with Argentina under its new Government, which he and I have discussed. As the Prime Minister has said, we will seek to be the global leader in free trade. While we remain a member of the EU, the UK will continue to press for and support an ambitious EU trade agenda, including its negotiations with the Mercosur bloc.

The Minister repeated the mantra that he wants the best possible deal for the life sciences sector, but does he agree with industry leaders that we need to be part of a European-wide regulatory system? A simple yes or no will suffice.

T6. Will the Secretary of State give us a progress report on new arrangements to be put in place with Gibraltar to ensure not only that there is a common market between the UK and Gibraltar post-Brexit, but that it has uninterrupted access to financial services for its financial market? (907032)

My hon. Friend is right to raise that. We have strong economic links with Gibraltar and 20% of the UK car insurance market is underwritten within Gibraltar. I stress that we have an interest not just in Gibraltar but in all the overseas territories. I met many of the leaders yesterday. They will very much be involved in the process of the negotiations of our deal with the EU as we progress through article 50.

Leaving the single market would mean that our agricultural exports would be subject to World Trade Organisation tariffs, which will have a hugely detrimental effect on a vital industry for Scotland. Does the Secretary of State plan to get farmers a special deal to ensure that they are not affected by sudden rises in tariffs to protect that vital industry?

The hon. Lady is right to raise that. It is incredibly important that we secure good tariff deals with other countries, and agricultural products suffer some of the highest tariff levies, but it is a two-way operation. On the one hand, exporters from Scotland to other markets may face big tariffs, but on the other hand, if we end up with a very low tariff barrier, we will have to impose it, which could mean that her farmers in Scotland are flooded by imports. It is a difficult and nuanced area to try to get right.

I refer to the answer given by my right hon. Friend the Secretary of State on today’s article 50 ruling, which says that the trigger should be exercised within Parliament. I think my right hon. Friend said that the Government will appeal, but I ask him, on behalf of the Government, please to look at the learned judges’ ruling and understand that it is not about a re-run of the arguments of the EU referendum. It is all about Parliament’s sovereignty. In that event, will the Government look at it carefully to decide whether or not the learned judges are right, and that this place should and indeed will trigger article 50?

Not least we will bear in mind the importance of referring to international trade in responding to the right hon. Lady.

As this is now an ongoing court case, I have nothing further to add to the comments I made earlier.

Order. I am sorry to disappoint remaining colleagues—demand invariably outstrips supply—but we will return to these important matters ere long.