The UK manufacturing sector is world leading, and we are determined to secure the best deal for it which enables it to go from strength to strength. We are aiming to agree a bold and ambitious free trade agreement with the EU, including zero tariffs, that is more ambitious than any other trade deal agreed with the EU to date.
In North Tyneside, Smulders, a Belgian company, has filled a void in the manufacturing market left when this Government failed to back OGN. The company hopes to create up to 400 new jobs and expand even further. What guarantees can the Minister give that will allow it the same benefits it currently gets with access to the single market and customs union after Brexit?
I had a discussion just this week with the Flanders chamber of commerce, and it recognised the important issue of bilateral trade between Belgium and the UK. I am pleased to say that it fully realised the need for frictionless agreements once we leave the EU, and of course this Government are committed to that.
It is clear that if we are to seek free trade agreements around the world, we will not be able to remain in the customs union as it currently stands. Having said that, we seek arrangements with our EU partners that will enable us to construct customs arrangements that are as frictionless as possible, for the benefit of both the EU and the UK.
The post-Brexit fall in the pound has led to a boost in manufacturing exports, with 45% of north-east manufacturers expecting orders to rise over the coming year, but it has also led to an increase in import costs. These costs will only increase if customs checks are required at borders. What is the Secretary of State planning to do for north-east manufacturers to make sure that costs at borders are not being increased for products they are making?
Of course, north-east manufacturing is at the forefront of the Government’s mind; the hon. Gentleman will know that with Nissan we arranged a state of affairs that will allow it to continue to manufacture in the north-east. He is right to say that we do not want to see customs arrangements that impede trade with the EU, and we are looking to agree arrangements, for our mutual benefit, that are as frictionless as possible.
But is it not the case that when the UK leaves the EU we will be its largest export market? Does the Minister not agree with my favourite politician at the moment, Wolfgang Schäuble, Germany’s Finance Minister, who says that if the Germans or the EU were to cause any damage to the UK, it would be increased tenfold for the EU?
My hon. Friend makes an extremely good point: the UK market will be the biggest export market for the continuing European Union after we leave. I am glad to say that that is recognised not only by Herr Schäuble but by the Belgian chamber of commerce, with which I spoke earlier this week.
Does the Minister agree that, although we hope for the best, the chaotic patchwork of EU institutions and election cycles may mean that a deal is not done in two years? If that is the case, will he consider the case for investing in the roads to the channel ports and, indeed, in frictionless and modern borders, to ensure that we have a seamless flow of trade in future?
I agree with my hon. Friend about frictionless agreements. We have a huge advantage in that Britain is, of course, currently a member of the European Union, so our standards and regulations are in complete alignment. I was heartened to see that Michel Barnier, the chief negotiator for the European Union, has recognised that a deal is doable in two years.
Although we will not continue to be a member of the single market, as I indicated previously we are looking to achieve a very good free trade agreement with the continuing European Union, which would be very much to the mutual benefit of the UK and the European Union.
As my right hon. Friend considers the customs union, may I urge him to look at the experience of close trading partners around the world? The US and Canada trade half a trillion dollars of goods annually, Norway does 70% of its trade with the EU, and China buys 30% of Australia’s exports; none of them has seen fit to form customs unions with each other.
The fact that the oil and gas industry is a high priority for the Government was shown by the Chancellor’s announcement yesterday. Frankly, rather than talking bleakly about the future of the industry, the hon. Gentleman should urge his colleagues in the Scottish Government to work strongly with the United Kingdom Government to ensure that arrangements can be made that are satisfactory for the industry.
One of the advantages of our leaving the European Union is that we will be in a position to design our own package of trade defence instruments, which I would think Opposition Members would welcome. Will my right hon. Friend update the House on the ongoing cross-Government work on that?
Clearly, any arrangements we strike will have to be WTO-compliant, but my hon. Friend is entirely right. British industry has recently experienced many difficulties, not least in the steel industry, in which he has a particular interest. He will know about the support the Government have given to that industry.
This week, a report by the American Chamber of Commerce to the European Union concluded that
“America’s significant commercial and financial presence in the UK has been premised in large part on UK membership in the European Union—the largest, wealthiest and most important foreign market in the world to U.S. companies.”
Do the Secretary of State and the Minister recognise the importance of our relationship with the single market to those non-EU countries with which the Government are keen to build trade and investment?
Well, the significance of that and the “America First” policy is yet to be demonstrated.
On 24 January, the Secretary of State told the House that he is seeking
“a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have”.—[Official Report, 24 January 2017; Vol. 620, c. 169.]
Will the Minister confirm that that is still the Government’s aim?
Thanks to the new opportunities that will open up for the UK after we leave the EU, the accountancy firm PricewaterhouseCoopers has said that the UK will have the fastest growing economy in the G7 over the next 30 years. Does my right hon. Friend agree that that demonstrates that manufacturing has nothing to fear from our leaving the EU?