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International Trade

Volume 626: debated on Thursday 6 July 2017

The Secretary of State was asked—

Commonwealth Countries

1. What recent discussions he has had with his counterparts in other Commonwealth countries on the future of trade and investment between the UK and those countries. (900255)

7. What recent discussions he has had with his counterparts in other Commonwealth countries on the future of trade and investment between the UK and those countries. (900262)

Ministerial colleagues and I regularly engage with business stakeholders and policy makers in Commonwealth partner countries. In March, my noble Friend Lord Price and I met over 20 visiting Trade Ministers at the inaugural Commonwealth Trade Ministers meeting in London, and we discussed strengthening collaboration and deepening intra-Commonwealth trade and investment. We are now preparing for the Commonwealth summit in 2018.

I thank the Secretary of State for that answer. The Commonwealth is particularly up for doing trade with the UK, especially in Africa. The Secretary of State referred to intra-Africa trade. Can we be even bolder and encourage a continental—intra-Africa—free trade deal not only with our Commonwealth friends but going beyond our Commonwealth friends?

We are sympathetic to the concept of an African continental free trade area, and we are in favour of a range of initiatives to help foster wider and greater intra-Commonwealth trade. There is a great deal to be gained for all Commonwealth partners from closer co-operation. The Government’s aim—including through the development agenda championed by my right hon. Friend the Secretary of State for International Development—is to create sustainable prosperity, and helping developing countries to enable them to trade their way out of poverty is an essential and key element of that strategy.

Britain and the Commonwealth nations share a great history, and over the years have formed many great links across academia, sport, culture and numerous other areas. What steps has my right hon. Friend taken to expand this co-operation with Commonwealth countries to include a free trade agreement, so that we can add business and commerce to the long list of Commonwealth co-operative endeavours?

As my hon. Friend knows, the Commonwealth is not a trading bloc, and it actually contains a number of very disparate economies. We are liaising with several Commonwealth partners about bilateral agreements in the future, and my Department is working with stakeholders to develop initiatives that will stimulate UK and intra-Commonwealth trade and investment in the lead up to and beyond that vital Commonwealth summit next year.

Members on the Conservative Back Benches are desperate for the Secretary of State to give us more confidence that we will massively increase trade with the Commonwealth, but I think he is wise not to do so. India, Australia and Canada collectively account for less than 5% of our exports, and research shows that the most enduring statistic is that trade halves whenever the distance between nations doubles. Is it not foolhardy for us to be turning away from our closest trading partners and relying on increasing trade with countries so very far away?

I am sorry to hear such a lack of understanding of how the modern economy works. Particularly for countries that have a large proportion of their trade in services, services trade does not depend on distance. In fact, what we need is increasingly close co-operation with countries that are similar to us in their economic status, not necessarily geographically proximate, although I entirely understand that for goods the geographical distance does have a greater bearing.

One country with which negotiations on trade have been very advanced is Canada, with the EU discussions on the Canadian trade deal. Obviously, the Secretary of State will want to seek to replicate that fairly quickly after our exit from the EU, but that has been subject to a huge amount of disinformation regarding the costs and benefits of the deal. When are the Government actually going to take on this issue and set the record straight?

What we do not know at present is what the state of the EU-Canada agreement will be at the point at which we exit the European Union. It may well be that all countries have ratified it, but as the right hon. Gentleman is well aware, as a result of the Singapore judgment every single Parliament and some regional parliaments will have to ratify the deal. If the deal is not ratified at the point at which we leave the European Union and has only provisional application, it will have no basis in UK law, in which case we will have to have the fall-back position of using that as the basis for a future UK-Canada agreement.

I think that the potential for trade with Commonwealth countries is very exciting—they are growing and strong economies—but every time I open a newspaper or listen to the radio or TV, the story is presented very negatively, as though it will be almost impossible for us to do these trade deals. Does the Secretary of State feel that that is wrong, and that it undermines the work he is doing?

It does appear that some elements of our media would rather see Britain fail than see Brexit succeed. I cannot recall a single time recently when I have seen good economic news that the BBC has not described as being “despite Brexit”.

Our agri-food producers see the Commonwealth as an exciting, wonderful and expansive new market for their powdered milk products, red meats, pig and poultry. Will the Secretary of State assure us that he is in discussions with the Commonwealth countries about increasing the opportunities for trade in our agri-food products to give encouragement to our producers at home?

I entirely agree. To underpin the confidence in the agricultural sector, it needs to know that there are increasing markets out there. One of the key roles of the Government is to help our agricultural sector to have the confidence that it requires for investment by showing that we can help it into markets. It is worth pointing out that according to the European Commission’s own website, 90% of global growth in the next 10 years will be outside the European Union. Those are the markets we have to help British business get into.

Businesses (Support)

2. What steps he is taking to encourage businesses to take advantage of new opportunities for international trade. (900256)

The Department for International Trade provides market access, support and advice to UK business in the UK and in 109 markets overseas. Through the GREAT campaign, we build the global appetite for British goods and services, and give UK companies access to millions of pounds’ worth of potential business through the digital services offered on the digital platform.

It is a great tribute to my hon. Friend’s Department that in the first year of its operation, the Office for National Statistics reports that exports went up by a huge 7% to £548 billion. Does he agree that with the increase in demand for British exports, UK Export Finance, with its widened role, has an important part to play?

My hon. Friend is absolutely right to raise that matter. I thank him for the work he does on the all-party parliamentary group for international trade and investment. He is absolutely right that the Department for International Trade needs to provide a suite of services, and that includes UK Export Finance. Some 7,000 businesses have been helped by UK Export Finance, the appetite for risk has been doubled and we have increased the number of currencies we can use from 10 to 40, from the Australian dollar to the Zambian kwacha. That is part of a very wide range of things and we have been successful so far.

This Front-Bench team must know that a silly attack on the BBC cannot be used as an excuse for policy. This is a Secretary of State who has refused to meet the all-party parliamentary manufacturing group. The manufacturers I know have no confidence in this Secretary of State. They think he is living in cloud cuckoo land and is not competent, and they want his resignation.

Will the Minister explain what steps the Government are taking to ensure that, following our departure from the European Union, our export manufacturing businesses do not face high tariffs from other nations?

The Department for International Trade is embarking on a series of talks with the World Trade Organisation and individual countries to, in the first instance, secure continuity of business with those countries with which we already have agreements. I speak as a remainer from the campaign, but this is a fantastic opportunity to forge new trade deals and take advantage of the opportunities that Brexit presents.

To grow their international trade, many businesses need to be able to call on the best possible members of staff. What will the Minister do to ensure that freedom of movement is retained for those businesses, and that the investment they get through initiatives such as Horizon 2020 is still available to them?

It has always been the case that the Government have had not an open policy, but a mature policy for people who come from outside the European Union. Britain will certainly be open to the best and the brightest people in the world, who will want to come and work in what is, frankly, one of the best places to enlarge those skills.


3. What recent discussions he has had with the Government of Brazil on a trade agreement with that country after the UK leaves the EU. (900257)

Brazil is the UK’s largest export market in Latin America and represents significant opportunities for the UK. My right hon. Friend the Secretary of State attended the UK-Brazil joint economic and trade committee last December. As I saw for myself in March in Rio, São Paulo and Belo Horizonte, both Governments are committed to deepening UK-Brazil trade and investment. UK and Brazilian officials continue to work together on proposals for reducing trade barriers, for discussion at the next joint committee.

I thank the Minister for his response and congratulate him on that work. I was in Brazil last November and have had many meetings with His Excellency the Brazilian ambassador to London, and while Brazil has not been able to achieve a trade deal with the European Union, it very much looks forward to one with the UK. So can the Minister expedite such arrangements as quickly as possible?

I congratulate my hon. Friend on his work with the all-party group on Brazil in the last Parliament, and he makes the good point that we do not need to have a free trade agreement to have free trade. Indeed, as I am sure he knows, the EU has no free trade agreement with the world’s largest markets such as the US, China, India and, indeed, Brazil. So there are many trade barriers that we can address without having a formal free trade agreement. This is very much our approach in Brazil, as seen by our joint committee talks and my own visit in March.

The Minister will be aware that the barriers to trade are not simply those that would be covered in an orthodox trade deal; there is also the unfamiliarity with local customs and so on. If we are to encourage our small and medium-sized enterprises to export, what practical facilities can be given to open up markets like Brazil, potentially enormous but at present very difficult for SMEs to access?

I thank the hon. Gentleman for his question and welcome him back to his place; I have fond memories of working closely with him in previous Departments on trade and other issues.

There are two things to say in response to the hon. Gentleman’s question. He is right that the removal of non-tariff barriers—the grit in the system—is a key aspect of our Department’s work, and he is right to emphasise that this is about not just free trade agreements in the future, but also removing those practical barriers, which is why my right hon. Friend the Secretary of State had those talks back in December. In terms of supporting SMEs, the portal is very good; there is good access to Brazilian deals that are coming up, and I urge all SMEs to go to that portal, in order to access that.

Of course, the Minister could have pointed out that a trade agreement can only take place with Mercosur, because Brazil is part of that bloc, and should an EU trade agreement be put in place with Mercosur prior to our leaving the EU, it would become one of the agreements the EU currently has with some 50 countries. How does the Secretary of State propose to carry out his manifesto commitment to replicate all of those existing agreements after Brexit, and specifically, what legislative instruments does he propose to introduce to that end in the trade Bill?

A lot of these matters will form part of the trade Bill which will be introduced in this Session. What is most important is that, as we seek a smooth and orderly exit from the European Union, we seek to replicate all of those existing EU free trade agreements, to provide certainty and stability for our businesses as we go forward to enable them to access both existing and future markets.

Food and Drink Sector

4. What estimate he has made of the value of the contribution of the food and drink sector to UK exports. (900258)

10. What estimate he has made of the value of the contribution of the food and drink sector to UK exports. (900265)

With your permission, Mr Speaker, I will answer questions 4, 9 and 10 together. The food and drink sector makes an important contribution to exports. In 2016, UK food and drink exports reached £20.1 billion, an increase of 9% from the previous year. This represented 6.6% of our total goods exports. For the first quarter of this year, food and drink exports reached £4.9 billion, up 8.3% on 2016, representing the highest first quarter exports value on record.

I gently say to the Minister that the grouping is with Nos. 10 and 12. [Interruption.] No, a question was withdrawn, and it might well be the case that the briefing had not kept up with the evolution of events, I say to the hon. Member for Huddersfield (Mr Sheerman). That should satisfy him; he does not seem easily satisfied this morning, but that will have to do.

I know that my hon. Friend the Minister understands the importance of the food and drink sector to the south-west of England, so may I ask what he is doing to promote growth and trade across the south-west?

The answer to my hon. Friend’s question exemplifies the type of tailored help the Department for International Trade can give. Working with our officials in the south-west and local producers and businesses, we have created the Great British Food programme, which is designed specifically to allow south-west food and drink businesses to interact directly with overseas buyers. We have already seen them working with the EU, Turkey and China, and since April 2016 we have won over £19 million-worth of business across more than 30 export markets.

As the Minister knows, food and drink manufacturing is an enormous market, particularly in my constituency. Issues over regulations, sampling and tariffs are among the concerns of global leaders such as Muntons, as well as some of my smaller exporters. Will he agree to meet me and them to discuss these issues further?

My hon. Friend had a number of such meetings when she brought her local chamber of commerce down to London, and I believe that Muntons was part of that. She is absolutely right, however, to say that regulations, sampling and tariffs are an important part of doing trade deals, and it is important that we maintain those standards ourselves as well. It is absolutely the job of the Department for International Trade to interact with those people who need help at any level, and I would be very happy to visit my hon. Friend’s constituency and meet not only Muntons but others as well.

Lincolnshire has a proud tradition of producing food, and the food and drink industry is very important to my constituency. What is the Minister doing to help the food and drink manufacturers in Lincolnshire with their exports?

The Department for International Trade spans the whole of the country, and when it comes to specific areas, we look at specific needs. For example, in October, the Department and the midlands engine trade mission will be going to Anuga trade fair in Cologne, which is the leading international trade fair for food and beverages. I hope that we will be taking firms from my hon. Friend’s constituency to promote their goods and opportunities there.

9. York has a food manufacturing sector, and it has real concerns over the increases in import and production costs and over labour; we are all, of course, concerned about the environment. Can the Minister tell the food manufacturing sector what new trade opportunities he has secured for it, and what their value will be to the economy? (900264)

The value to the economy of the food exporting sector is absolutely enormous. I think it is the biggest manufacturing sector in the world. We have already seen a number of opportunities for going out and exporting it, and trade figures are up by some 7%. We can give a breakdown of the actual data, and I would be happy to write to the hon. Lady about that later. Without a shadow of a doubt, the Department for International Trade is successful in what it does. We have seen exports increase across all sectors and, as I pointed out earlier, we have seen record numbers in food and drink exports.

Why have the Government done nothing to stop Nestlé moving production from the United Kingdom to Poland, with the loss of 300 jobs? The Government confirmed this week in a written answer that Ministers met Nestlé in April. Nestlé has said that it would take an investment of £1 million to keep production in the UK. The Government found £1 billion to save one job in Downing Street, but they cannot find £1 million to save 300 jobs at Nestlé. Unbelievable!

The hon. Gentleman raises a number of issues. The hon. Member for York Central (Rachael Maskell) has been working hard on behalf of her constituents to try to help with the redundancies at Nestlé, as indeed has the Department for Work and Pensions, which is standing ready to put in place its rapid response service. We are happy to meet representatives of Nestlé, and I would be very happy to meet them again. [Interruption.] Fantastic. Thank you.

Scottish food and drink exports have doubled since the Scottish National party Government came to power in 2007. This has been key to the development of the Scottish economy. What does the Minister think about Michel Barnier’s comment that frictionless trade in goods is “not possible” outside the single market and the customs union? Given the concerns of the Scottish Food and Drink Federation and the Scotch Whisky Association, and the huge reliance of the Scottish economy on this sector, will the Minister consider a transitional arrangement?

The total value of Scottish exports is some £62 billion a year, of which £50 billion is exported to the rest of the United Kingdom. That is as good a statement as any as to why Scotland should remain in the Union of the United Kingdom, rather than in the European Union.

More than 80% of the fish caught around the south-west coast and 30% of our lamb is exported straight to the rest of the EU, yet under World Trade Organisation rules, that produce would face very high tariffs. What guarantees can the Minister give that our fishermen and our agricultural industry will not face tariffs or any other barriers if we leave the European Union?

This is all part of our negotiations with the European Union. It is an ongoing process, which will hopefully reach its end by March 2019. The United Kingdom Government are very keen to secure a deal with the European Union that sees no change whatever for businesses. We want as smooth a transition as possible into independence from the European Union, and the interests of fishermen down in the south-west are as important as those of everyone else.

More than £30 million-worth of fish was sold through Brixham fish market last year, the most valuable catch in England. Will the Minister meet me and industry representatives to discuss opportunities for expanding markets after we leave the European Union, as well as frictionless trade and smooth transfer across the border?

The Secretary of State is a Member of Parliament for the south-west, and he is happy to come and have that meeting, as am I as the departmental lead on the food and drink sector. Between the two of us, my hon. Friend the Member for Totnes (Dr Wollaston) may get twice as many meetings as she anticipates. We look forward to coming to help.

Topical Questions

The Department for International Trade has three main tasks: promoting British goods and services overseas, supporting inward and outward direct investment and creating a trade policy that benefits our businesses and citizens across the whole UK. To that end, I am delighted to welcome Antonia Romeo as our new permanent secretary and Crawford Falconer as our new chief trade negotiation adviser. Both bring excellence and expertise to the Department at this crucial time.

Fisheries and agriculture, the environment and transport are all key competencies of the National Assembly that could be affected by any future trade deal. Does the Minister concede that the National Assembly must have the power to endorse or reject any trade deal that would so profoundly affect its basic duties?

We have made it clear all along that we intend to have maximum consultation and collaboration in that area and, to emphasise the point, in our manifesto we set out a plan to create a new board of trade, which will ensure that trade and investment is equally spread, as far as we can, across all parts of the United Kingdom—the devolved Administrations, as well as the English regions.

T3. As well as an economic opportunity, there is a moral opportunity in trade with the developing world. Will the Secretary of State please tell the House what steps he is taking to support trade with developing countries? (900287)

We have made it clear that, post Brexit, we will continue with duty-free access for the least-developed countries, but we need to see whether we can go further and reduce some of the burdens, particularly as we leave the customs union and are outside the common external tariff, by stopping the distortions on value added, which diminish the chance of investment in some of those developing countries.

In his recent talks in the United States, did the Secretary of State discuss President Trump’s initiation of a section 232 investigation into the effect of steel imports on US national security? What concerns does the Secretary of State have about the impact such a protectionist ruling might have on the UK’s steel sector and on jobs in our steel industry due to lost exports and trade deflection of dumped goods on our market?

We are all concerned about the overproduction of steel, largely coming from China, and what we have seen as possibly unacceptable subsidies into that sector, but it needs to be addressed in a way that is compliant with the WTO rules-based system. I raised with Secretary Ross and the trade representative, Mr Lighthizer, the impact that could have on the United Kingdom, and it is fair to say that our views landed. We now await the publication of the report, on which the President has up to 90 days to act.

T4. Brecon and Radnorshire is full of excellent small business owners who are looking to trade with the rest of the world, but many are concerned that the trade deals the UK is looking to make with the rest of the world will focus on big, rather than small, businesses. What assurance can my right hon. Friend give to small business owners that their voice will not be lost in negotiations? (900288)

My hon. Friend makes an extremely strong point. Over 99% of businesses in this country’s non-financial business economy are small and medium-sized enterprises. Last year we helped over 1,200 Welsh companies, most of which were SMEs, and we ensure that we have regular SME-focused roundtables. We meet SME representative groups and, of course, SMEs can always access our portal,, which gives important indicators on how to improve their exports.

T2. The Secretary of State wants to leave the EU because he felt it was undemocratic and unaccountable, so why is he happy for the UK to trade under World Trade Organisation rules, given that the WTO is more undemocratic and more unaccountable? (900286)

The two things are not analogous. We operate with the WTO because we believe there needs to be a rules-based system for global trade, and if the WTO did not exist, we would have to invent it today.

T5. My constituency has one of the largest export clusters in the south-west, and it is focused on the rest of the world as much as it is on the EU. What assurance can my right hon. Friend give that we will focus on doing global trade deals and not just on the EU? (900289)

My hon. Friend makes a very valid point, and of course it is not just about exports; it is also about inward investment. Therefore, let me bring the House up to date by saying that at 9.30 this morning we published figures showing that a record-breaking number of foreign direct investment projects came into the UK in 2016-17—2,265—safeguarding nearly 108,000 jobs or creating new jobs in the UK. No doubt, the usual suspects will describe this by saying, “despite Brexit”.

T7. I thank the Ministers for the written answers they have given me this week on the EU-Japan free trade agreement. They were at pains to reassure me that existing animal welfare and environmental standards would be maintained, but can they give me further reassurance that we will use this as an opportunity to address with Japan the illegal timber trade and commercial whaling? (900292)

We engage on these issues on an ongoing basis with Japan. I know this is very important to the hon. Lady, so may I reassure her that the Government share a lot of her concerns on protecting animal welfare in free trade agreements? The UK has one of the best scores on the world animal protection index, where we are in the top four. It is important that we maintain animal welfare standards in this country in future agreements, and I have every confidence that we will.

T6. Ten and a half thousand UK businesses export to Canada, a quarter of a million jobs in the UK rely on trade with Canada and we are likely to be one of the biggest winners from the EU-Canada trade treaty. However, CETA—the EU-Canada comprehensive economic and trade agreement—is imperfect, so what are we going to do post-Brexit to ensure that we do even better in our trading relationship with Canada? (900291)

That is a very appropriate question, in this the week of the 150th anniversary of the Canadian confederation. My hon. Friend will know only too well that the UK exported more than £7 billion-worth of goods and services to Canada in 2015. We have five offices throughout Canada. We remain strongly supportive of CETA, but of course we will look to have a future agreement with Canada at an appropriate time.

Secretary of State, you will be aware that there are not only particular opportunities, but some challenges for each of the devolved regions across the UK in the next few years. Can you outline what plans and intentions you have to fully integrate the interests of the devolved regions within your strategy? Will you commit to an early meeting with delegations from the devolved regions to outline your engagement moving forward?

Order. It is a great pleasure to welcome the hon. Lady to the Chamber again. She is already a prodigious and assiduous contributor, but may I politely say to her that she must not inherit the bad trait of her hon. Friend the hon. Member for Strangford (Jim Shannon) of referring to the Minister as “you”? The word “you” in this Chamber refers to the Chair, and I have no plans to adopt any policies on these matters. She should refer to the Minister. I am still trying to train the hon. Member for Strangford, but I think his apprenticeship has some distance to travel.

The words “tricks” and “old dogs” definitely come to mind on that one. The hon. Lady makes a good point: there are not only challenges, but great opportunities. It is essential that we look at our trade and investment programmes across the whole of the UK. As I said in answer to an earlier question, that is why we are bringing in the new Board of Trade to help ensure that we have that balance, but I can tell her that in the figures that we announced today Northern Ireland secured 34 new projects, totalling 1,622 new jobs. That is a big gain and this is exactly the sort of programme that we want to encourage to ensure that investment goes to all parts of the UK, ensuring that we create an economy that works for everyone.

You will be delighted to learn, Mr Speaker, that British tie manufacturers’ exports are worth millions of pounds. Can the Secretary of State suggest how this House could help promote the wearing of ties, to increase exports?

I did not check with my fellow Ministers before I came to answer these questions, but I suggest we can lead by example: my tie was made in England.

I cannot claim that mine was; I am not sure. But I am sure that if they are so popular, it will not be necessary to compel people to wear them. We shall move on.