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Single Market and Customs Union: Manufacturing Sector

Volume 622: debated on Thursday 9 March 2017

7. What plans he has to retain the benefits of membership of the single market and customs union for the manufacturing sector after the UK has left the EU. (909143)

9. What plans he has to retain the benefits of membership of the single market and customs union for the manufacturing sector after the UK has left the EU. (909145)

13. What plans he has to retain the benefits of membership of the single market and customs union for the manufacturing sector after the UK has left the EU. (909149)

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.

The Prime Minister has said that Britain will not remain a full member of the customs union, but this morning the Chancellor said it is

“clear that we can’t stay in the customs union”.

Which of them should we believe?

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?

I am sure the Finance Minister in question will be uncontrollably excited to discover that the hon. Gentleman is such a staunch fan.

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 excellent Minister agree that it is much more in the EU’s interest for it to do a deal with us than it is in ours, because it has a £60 billion trade surplus with us?

I think it is very much in our mutual interests, and I am sure that once the negotiations begin we will move towards a sensible and satisfactory mutual conclusion.

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.

22. The food and drink industry is a growing sector in West Aberdeenshire and Kincardine. What plans does the Minister have to retain the benefits of membership of the single market and customs union for the food and drink sector after the UK has left the EU? (909159)

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.

My hon. Friend makes an excellent point. It is not necessary to be part of a customs union, but we seek frictionless customs arrangements for the benefit of the EU and the UK.

23. In a document leaked to The Times, the oil and gas industry was shamefully listed as a low priority for the UK Government in their negotiations with the EU. Given the Minister’s earlier answer, will he confirm that he has no plans to retain membership of the customs union and the single market for the oil and gas industry? (909160)

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?

The importance of the United Kingdom to the United States was reflected very strongly in the Prime Minister’s recent meeting with the new President, in which he showed great enthusiasm for free trade arrangements between the United States and the UK.

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?

The Government’s aim is to seek a bold and ambitious free trade agreement with the continuing European Union that will be to the benefit of both the United Kingdom and the European Union.

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?

My hon. Friend is entirely right to point out that the naysayers and doom-mongers who said that the British economy would crash after we decided to leave the European Union have been proven wrong.