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International Trade

Volume 618: debated on Thursday 15 December 2016

The Secretary of State was asked—

Foreign Direct Investment

My Department is working globally to attract foreign firms to set up or expand their businesses in the UK and to generate new jobs and contribute to national wealth creation. We are promoting the UK as a prime destination for inward investment from across our global network, with dedicated support for investors in 50 overseas markets. With the support of sector specialists, we are ensuring that the UK has the best opportunities to attract higher-quality foreign direct investment.

Latest gross value added figures show that Wales is the fastest growing area outside London, and Cardiff is unabashedly the engine room of the Welsh economy. What positive steps is the Department taking to ensure that Welsh businesses and Cardiff businesses get the help they expect to get?

Let me say that my hon. Friend, given that his constituency is Cardiff North, is the engine-room of the Cardiff economy. The Department for International Trade works for the whole of the UK, but I stress that my right hon. Friend the Secretary of State has already visited Wales, and I am working with the Wales Office to see what more we can do. We also support the Welsh Government by offering them support in posts overseas. We see the opportunities presented by Wales as very exciting.

Today we are told that it could take up to 10 years to reach a trade agreement with the EU after we leave, while research from the National Institute of Economic and Social Research suggests a drop in trade of up to 60% if we are outside the customs union. Foreign investors are vital for the British economy, so will the Minister give those investors some of the certainty they so desperately need—and that we need, as well? Will he tell them whether he wants Britain to be inside the customs union and whether he wants tariff-free access to the single market or not?

It has been made very clear that the Government are not going to give a running commentary on what we are proposing to do. I also stress that the comments of Ivan Rogers are opinions and words taken from interlocutors and do not necessarily define how long it will take to create a trade deal. It is worth bearing in mind, if we look at various trade deals around the world, that while the Trans-Pacific Partnership has taken potentially eight years, the US-Jordan trade deal took just four months. It is very difficult to establish exactly how long any trade deal will take.

As the UK becomes a world leader in the fourth industrial revolution—new technology—will the Minister update the House on what steps his Department is taking to secure foreign direct investment in this vital new sector?

I congratulate my hon. Friend on launching the all-party parliamentary group on the fourth industrial revolution. This type of innovative approach by businesses moving forward is incredibly important to the success of this country’s economy. We are working extraordinarily hard to make sure that this innovative approach is being transmitted around the world through our posts overseas, and that we can secure foreign direct investment to support it.

World Trade Organisation

2. What discussions he has had with the World Trade Organisation on the approval of new schedules for the UK after the UK has left the EU. (907891)

I have had a number of constructive discussions with the director-general of the World Trade Organisation, Roberto Azevêdo. We have made clear to the WTO membership the UK’s intention to replicate as far as possible our current obligations in order to avoid disrupting our trading relationships or those of our trading partners across the world. The UK will need its own schedules in the WTO regardless of the nature of our future trading relationship with the EU.

Given that the list of countries offended by the Foreign Secretary grows longer by the day, what contingencies are being put in place should there be some opposition to the renegotiation of the UK schedule?

The contingency that the hon. Gentleman asks for is in place, because until new schedules are negotiated and agreed, current schedules will apply. It is worth noting that the European Union itself, having failed to negotiate EU28 schedules, is still operating successfully under the EU15 of 1995.

Civitas has estimated that if we were to go to World Trade Organisation terms with the EU, EU businesses would have to pay £12 billion to access the UK market, and UK businesses will have to pay £5 billion to access the EU market. Does the Secretary of State accept those figures? If the Government do not accept them, will he tell us what the Government’s figures are?

Whatever the actual figures are, there is one point that is more important—the introduction of any impediments to trade and investment in intra-European trade would be disadvantageous to producers and consumers alike. Of course, the Government have made it very clear that we will try to get maximum access to European markets in order to avoid a disruption of trade.

Are not these WTO schedules of concessions just one of many examples of the mammoth bureaucratic task that has to be conducted, and should we not be thanking our ambassador to the European Union for the reality check he has given about the decade-long period it will take to extricate ourselves from this process? Does the Secretary of State agree we should not be rushing so headlong into this timetable?

Yes, we face a number of bureaucratic challenges, but the people we should be thanking are the British people for giving us such clear instructions to leave the EU.

The UK has high standards in the workplace and for its products and animal welfare. Does the Secretary of State agree that a free trade deal with zero tariffs with countries that have much lower standards could have a significant commercial disadvantage for many of our companies?

The whole point of reaching an agreement is because it is beneficial to both parties, otherwise an agreement would not be reached, and regulatory and compliance standards will always be an important part of that.

Global Trade

With the current slowdown in the growth of global trade, the UK must be a world leader in championing free trade worldwide and banging a drum for British business. Our measures to support UK business trading globally include a network of advisers in 109 markets, online advice at and support through UK Export Finance. Both myself and ministerial colleagues have continued to meet businesses in the UK and abroad, including 50 ministerial visits to 34 markets overseas.

I thank the Secretary of State for that answer. Professor Patrick Minford has estimated that UK trade liberalisation would cut consumer prices by 8%. Does the Secretary of State agree that forging our own free trade arrangements outside the EU presents huge opportunities to ease the cost of living for low-income families?

I am grateful to my hon. Friend for that question, and he is right to highlight the potential of free trade to reduce the cost of living in this country. Free trade ensures that more people can access more goods at better value, making their incomes go further, whereas protectionism tends to hurt the poorest the most.

It has been two years since the then Environment Secretary announced with great fanfare plans to sell pigs’ trotters to China. As my written question this week revealed, we are still no closer to signing the pigs’ trotters protocol. If it takes this long to reach an agreement to sell pigs’ trotters, what does that say about our ability to make all the other trade deals we need in the wake of Brexit?

I am very intent that our agricultural exports continue apace. I shall continue to push pigs’ trotters as fast as they can possibly go.

A very alluring prospect, to be accomplished by the right hon. Gentleman probably not without sweat or emotion.

Many countries are using non-tariff barriers to block global trade. However, as the Secretary of State is well aware, in countries such as Brazil we are now seeing real progress in the removal of local content regulations. What more can be done to encourage other countries to follow this example?

I thank my hon. Friend for his work as our trade envoy to Brazil. I was extremely impressed in the meetings I had last week in that country that we are now seeing major attempts not only to open up markets, but to deal with endemic corruption. That corruption is one of the biggest single barriers to trade, and, as the World Bank has made clear, improved governance is a major improvement in the potential for trade.

The Secretary of State recently reaffirmed the Government’s target to double exports by 2020, but at the autumn statement the Office for Budget Responsibility contradicted this, stating that it expects UK trade to reduce as a result of the UK leaving the EU and the single market. So who is right: does he accept the assessment of the experts of the OBR, yes or no?

I am tempted to ask the hon. Lady if she would like Santa to bring her a dictionary, because expectations and targets are not the same thing.

Will my right hon. Friend seek to unblock the global trading system by adopting a new open anti-distortions agreement that can deliver free trade and self-government, fight crony capitalism at home and defend against predatory practice abroad, like the one proposed by the Legatum Institute special trade commission?

I do not think I need to explain to my hon. Friend that I and my fellow Ministers have set out the case for free trade on a number of occasions. We are seeing a slowdown in the rate of global trade growth at present, which is a threat to the prosperity of people across the globe. We must have more open trade, fewer tariffs and fewer non-tariff barriers if we are to succeed in that task.

One of the steps that the Government are taking to expand UK trade is through arms sales, particularly to the middle east. In July, the Committees on Arms Export Controls heard evidence that there was an imbalance in arms sales, with promotion coming at the expense of regulation

“such that in UK practice those things are at odds.”

Does the Secretary of State recognise that imbalance? If he does, what does he propose to do about it? If he does not, has he chastised the White House for the remarks this week that “systemic, endemic” problems in Saudi Arabia’s targeting of civilians in Yemen drove the US decision to halt a future weapons sale, which has the Secretary of State and British policy in this area looking callous and threadbare?

I thank the hon. Gentleman; this is the first time in my life that I have been grateful for being colour blind. [Laughter.] This country has one of the world’s strictest arms control regimes. It is both robust and transparent, and decisions are scrutinised intensely. I simply do not accept the picture that he paints of the UK’s attitude.

I am going to play the role of tie referee and say that the tie of the hon. Member for Brent North (Barry Gardiner) is absolutely beautiful. It is tasteful and interesting, not boring like all too many ties. Now, let us hear from the fellow from Gloucester.

The UK has an excellent tradition of hosting major international sports events—most recently the Olympics, the Commonwealth games, and the Rugby World cup—and other countries hosting such events can benefit from our expertise. In 2018, Indonesia will host the Asian games, which is a great opportunity to highlight the improvements it has made in infrastructure development. Should my right hon. Friend have the chance to visit south-east Asia in the new year, will he highlight British expertise and the help that we can give Indonesia to deliver a magnificent Asian games?

Yet again, I am able to thank an hon. Friend for working as a trade envoy—this time to Indonesia. My hon. Friend’s specific point applies more generally: the United Kingdom can provide great service sector skills to many countries, which not only helps them to mature their economies, but provides them with the ability to grow their markets, offering an export opportunity for the United Kingdom.

Newcastle international airport plays a vital role in the north-east’s economy, by facilitating over £300 million-worth of exports every year. Like other English regional airports, however, it faces unfair competition on tax as air passenger duty is devolved to Scotland. The Government have failed to commit to mitigate that. What discussions will the Department have with the Treasury to ensure that airports such as Newcastle can continue to play a vital role in international trade?

Such imbalances are an inevitable consequence of devolution, for which the hon. Lady’s party campaigned. I also have a regional airport in my constituency, and I can assure her that the ongoing discussions with the Treasury will be not just general but personal.

Free Trade Agreement: USA

The United States is our single largest export market, accounting for £100 billion-worth of UK exports. As the Prime Minister said, the UK and US are, and will remain, strong and close partners on trade, security and defence. We cannot negotiate and conclude trade deals while we are a member of the EU, but we can discuss our current and future trading relationships. The Secretary of State for International Trade, Lord Price and I have all visited the US since taking office. We look forward to working with President-elect Donald Trump to ensure the continuing prosperity of our nations.

The excellent Minister is quite correct that the USA is our biggest single export market, although we have no trade deal with it. However, the current President said that we would at the “back of the queue” when it comes to a trade deal. In the discussions that the Minister will have in the US, does he think that President-elect Trump will put us at the back or the front of the line?

My hon. Friend is right to stress the importance of the bilateral trading relationship and the investment relationship. Every day, 1 million Britons go to work for American companies here and 1 million Americans go to work for British companies in the United States. Not only are our exports to the US very strong, but they grew by 19% in the most recent year for which data are available. Of course we look forward to developing a stronger and more open trading relationship with the new President and the new Congress.

One of the main proponents of a future UK-US trade deal in Congress is Congressman Charlie Dent, who happens to be a very good friend of mine and of the hon. Member for Aberconwy (Guto Bebb). However, President-elect Trump was elected on an anti-globalisation mandate, so why does the Minister think the new President will put UK-US trade deals at the front of his agenda in a post-Brexit environment?

Over the summer, I met Senator Orrin Hatch, one of the co-authors of the Congress resolution calling for a future US-UK free trade agreement. We strongly welcome the support right the way across Congress on our future trade relationship with the United States. As for the President-elect, I suggest we wait to see his actions. He did say during different campaign events:

“Trade has big benefits, and I am in favour—totally in favour—of trade…Isolation is not an option. Only great and well-crafted trade deals”.

We look forward to working with him in the future.

What consideration has the Department given to the President-elect’s views on the Trans-Pacific Partnership?

In a very general sense, the UK remains supportive of trade deals, right the way across the globe, that reduce or remove trade barriers—tariff barriers or non-tariff barriers—to help facilitate the flow of international trade.

The TPP, which has just been mentioned, and the Transatlantic Trade and Investment Partnership have been fraught with difficulties and concerns from the public, businesses and sectors. So what will the Minister do when negotiating a bilateral trade deal with the US to make sure that those issues do not derail that kind of deal?

The first thing to say is that TTIP is still on the table, and we have always been clear that the rights of Governments to regulate in the public interest will still be there in all these different trade deals. As the hon. Gentleman will know, TTIP has been debated in the Commons on at least five occasions, and the views of parliamentarians have been made clear. We will make sure that there will be no reduction in regulatory standards if TTIP comes to pass.

Trading Opportunities Abroad

6. What steps his Department is taking to support businesses in establishing future trading opportunities abroad. (907896)

8. What steps his Department is taking to support businesses in establishing future trading opportunities abroad. (907901)

The Department is working across the UK, as well as in both current and future export markets overseas, to help British businesses. We are helping them to export their goods and services, identify new export opportunities and win those export sales. We are doing this digitally, through the website, and in person, through our network of international trade advisers across the UK and through our overseas staff in 109 countries.

Businesses in my constituency do not always have the resources to explore export markets but are keen to maximise opportunities. What is the Department going to do to help those businesses, so that they can find more opportunities abroad?

May I refer my hon. Friend, who is a champion of businesses in her constituency, to the website? Although it has been going for only one month, 174,000 users have visited it, more than 6,000 users have already made use of our selling online overseas services and nearly 1,000 businesses have created a profile on our “Find a buyer” service. This was highlighted to all hon. Members when the Department sent out our MPs’ toolkit, so that all MPs can help their constituents to find new markets and raise their eyes to the horizon.

With only 5% of businesses trading directly with the EU, surely leaving the internal market will allow us to relieve the other 95% from the shackles of over-regulation? Will the Minister say a bit about the balance his Department is going to strike between inward and outward investment?

I thank a member of the Select Committee for his very wise question. It is a new approach by this Department to look equally at overseas direct investment for businesses looking to move overseas. This is incredibly important because it provides opportunities for many businesses to create new opportunities and new markets overseas. It is worth bearing in mind that, as British businesses invest overseas, they take with them skills and expertise, which can only help those developing economies to grow, thus creating even more opportunities for British businesses in further developed markets.

9. The Secretary of State for Exiting the EU said yesterday that he is considering four options for the customs union: completely inside; completely outside; the Turkish model, which is partially inside but outside the single market; and the Swiss model, which is outside but with customs arrangements. Are there enough staff in the International Trade Department and the Brexit Department to assess by February the concerns of UK businesses that leaving the customs union would devastate their complex cross-border EU supply chain by exposing new paperwork hurdles and tariffs? (907902)

The Department for International Trade is currently recruiting some of the finest people known in this country to help us to develop that. I stress to the hon. Lady that this whole exercise is not just defined by one Department or by the Department for Exiting the European Union; every Department is working to help to maximise the assistance that we can give both to British businesses and to the entire economy.

Expanding UK global trade will mean that we need better connectivity within the UK. With that in mind, does the Minister agree that expanding Heathrow and adding more flights from Northern Ireland will enable more of our exporters in Northern Ireland to reach clients, particularly in new and emerging markets outside the EU?

I certainly agree that greater connectivity through airports is incredibly important for the whole country. However, I must stress that the details for such arrangements are for Ministers in the Department for Transport, so perhaps I can refer the hon. Gentleman to them.

Order. I am very conscious that the hon. Member for Bishop Auckland (Helen Goodman) had her question transferred to another Department, and I am sensitive to her plight. If she wishes to give the House the benefit of her thoughts, doubtless she will bob up and down during topical questions and we will all be grateful for that.

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 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.

Will my right hon. Friend shed some light on the difference between our trade deficit with the EU and our trade deficit with the USA?

I am pleased to say that we do not have a trade deficit with the US; we have a trade surplus with the US. In fact, we send £100 billion of exports to the US a year, which is 20% of our total, with a £40 billion surplus. The US is responsible for 26% of all our inward investment, and we are responsible for 23% of outward investment to the US. It is a very, very interdependent relationship.

By insulting my wife’s taste in ties, the Secretary of State must await her reprimand, but she must wait in line because there are others who wish to reprimand him. The European Scrutiny Committee told off the Secretary of State for going to Brussels and agreeing the comprehensive economic trade agreement between the EU and Canada without first bringing it to the UK Parliament for scrutiny. He undertook to the Committee that he would bring CETA for debate in this House by the end of November, a deadline that he missed. The Committee then set a more generous deadline, but that deadline expired two days ago, on 13 December. Will he tell us whether he actually believes in taking back sovereignty from Brussels—does he or does he not? If he does, repeatedly denying the UK Parliament the right to properly scrutinise such an important trade agreement is a very odd way to go about it. Will he now commit to bring a debate and a vote to the Floor of the House before the European Parliament finally votes on CETA on 2 February?

May I very gently say to the hon. Member for Brent North (Barry Gardiner), whom I hold in the highest esteem, that I hope, in due course, his PhD thesis will be published?

I am grateful to the hon. Gentleman for giving way before Christmas. We did not go against procedure. Owing to parliamentary timetable constraints, we could not offer a debate in the House before signalling political agreement on 18 October. We have committed, and continue to commit, to holding a full parliamentary debate on CETA as soon as possible, and we are working with business managers to arrange it. The European Parliament has now changed the date of the expected vote on the agreement to 2 February 2017, and we hope to have a debate well within that timetable.

T2. Over the past five years, South Korea has been our second fastest growing trading partner. Does my right hon. Friend agree that we should seek to boost trade with South Korea further still until we leave the EU and, after we leave the EU, enter a prompt bilateral trade deal with South Korea, which its Government would welcome? (907882)

I know that my hon. Friend takes a huge interest in Korea and his Korean community in Kingston. He knows that I visited Seoul, as did Lord Price, in September and saw for myself what natural allies we will be in the global future of free trade. I had excellent meetings with Samsung and with other interlocutors. We look forward to working very closely with South Korea in the future in developing free trading relationships, and I will make sure that my hon. Friend is very involved.

T3. Recently, the hon. Member for North East Somerset (Mr Rees-Mogg) said in relation to emissions standards that what is good enough for India is good enough for us. May we have a firm assurance that no emissions standards will be watered down as part of any free trade deal? (907883)

The Government take very seriously their environmental obligations and will continue to do so.

T4. On Monday, I was delighted to hear my right hon. Friend the Prime Minister announce that she wanted to take the trade relationship with Israel to the next level—our key ally in the middle east and strong trading partner. Can my right hon. Friend set out the steps that he is taking to ensure that we put in place a new trade deal with Israel, so that we can cement that commitment by the Prime Minister? (907884)

My hon. Friend is right. We have an extraordinarily good relationship with Israel, and we are the second biggest export market for Israel. Currently, we are governed by the association agreement that the EU has with Israel, and we are certainly keen to engage with Israel to make sure that in a post-Brexit world there is no disruption to the trade that we have.

I am sure that the Secretary of State is delighted to be back in the Cabinet, but does he agree that the 1 million jobs that will be put at risk if we leave the customs union matter more than his own career?

I repeat that the Government have made no decision yet in relation to the discussions and negotiations that we will have with the European Union. We have made no decision yet on the customs union. That will be part of the ongoing discussion and the Government will make decisions based on evidence.

T5. What action is my right hon. Friend taking to promote our world-class science base around the globe? Will he confirm that he recognises that face-to-face collaboration is an important part of that continued success, and that we need to attract the best and the brightest to do their research here? (907885)

I commend my hon. Friend on his work as Chairman of the Science and Technology Committee. As he will know, I was in his constituency on Friday looking at some technological innovation at DP World’s fantastic port facilities at the London Gateway. The UK has a long-established system that supports and therefore attracts the brightest minds at all stages of their careers. We will make sure that Britain is the global go-to nation for scientists, innovators and tech investors.

If I understood the hon. Lady’s question correctly, while we remain members of the European Union, of course we are party to all the EU agreements and all the human rights elements attached to those. With regard to the future, the UK has as strong a history as any in the EU of promoting and protecting human rights around the world, including in relation to trade.

T6. In prioritising a post-Brexit free trade deal with Israel, will the Minister ensure that as far as possible the Palestinian Authority is included, because enhanced trade between the UK, Israel and the Palestinian Authority will be an essential part of building a sustainable and lasting peace? (907886)

I wholeheartedly agree with my hon. Friend. The British Government absolutely support a negotiated settlement leading to a safe and secure Israel living alongside a viable and sovereign Palestine state. We should continue to engage with those countries. I was in Israel not so long ago, but I also visited Ministers in Palestine. We are very keen to engage with both Israel and Palestine.

A recent parliamentary question revealed that the involvement of Scottish companies in the recent trade visit by the Prime Minister to India was very limited. What extra effort can the Secretary of State make to ensure that Scottish companies are better represented by the UK to support them in exporting into new international markets?

We have repeatedly said that this Department is open to all businesses in the United Kingdom when it comes to seeking our support for exports, and I hope that the Scottish Government will encourage businesses in Scotland to work with the Department for International Trade, so that we can maximise that. We have made that offer, and we hope that they will take it up.

We have repeatedly set out our worries about the slowdown in the growth of global trade. That has implications across the globe. It is worth making the general point that we need more free trade because it increases global prosperity. Increasing global prosperity leads to greater political stability, and greater political stability leads to greater global security. It is not possible to disaggregate those different elements.

When the Secretary of State is lobbying for foreign inward investment, does he agree with the comments of his friend the Foreign Secretary, who said that a pound spent in Croydon has more value to this country than a pound spent in Strathclyde?

I bow to no one in this House in terms of my credentials as a Unionist, and I want to see prosperity spread to every part of the United Kingdom. I hope that the Scottish Government’s economic policies will help to contribute to that.