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International Trade

Volume 629: debated on Thursday 12 October 2017

The Secretary of State was asked—

Trade White Paper

Since he is a conscientious and committed Member of the House of Commons, the hon. Gentleman will know that the Government published a trade White Paper on Monday 9 October 2017. The trade White Paper establishes the principles that will guide future UK trade policy and sets out the preparatory steps that we are taking. The paper can be found in the Libraries of both Houses and on the website.

What transitional plans does the Secretary of State have for the transitional period if he cannot necessarily do the trade deals that he wants to do?

If the hon. Gentleman is referring to the transitional adoption of existing EU agreements, I can tell him that we have had a very positive response from other Governments, who, like us, want to ensure that there is no disruption of trade at the point of departure from the European Union. We will want to get as many of those in place as we can. That depends partly on the willingness of partners to get that ready on time; there are obviously contingency measures available to us under the World Trade Organisation to ensure continued market access in any case.

This Government constantly declares for free trade. In fact, as we leave the European Union and take up our independent seat on the World Trade Organisation, this country intends to champion the cause of global free trade, especially at a time when the growth in trade has been slowing down in recent years.

Does the International Trade Secretary recognise that people fear that in the event of, for example, a very right-wing, ideological Government, we could see the erosion of social standards through our trade agreements or even the erosion of our ability to protect our national health service with the wrong type of trade treaty? Will he guarantee parliamentary scrutiny of every trade deal done?

I would like the Government to be judged by their actions. Therefore, as I indicated to the hon. Member for Coventry South (Mr Cunningham), as we want to transition the already agreed EU free trade agreements into UK law—which will include, for example, workers’ rights and environmental standards—I hope that we will get the full support of the Opposition in doing that and in getting the legislation available to give us the powers to do so.

The White Paper sets out a strong case for free trade: it is good for growth, and it is good for jobs—but occasionally other countries will act in unfair ways, such as through the dumping of goods. Will the Secretary of State therefore confirm that it will always be the Government’s approach to respond to that in a proportionate, carefully targeted and time-limited fashion?

The Government will bring forward legislation that sets out our plans for a trade remedies authority to ensure that the protections that UK business currently has—and that the UK workforce currently enjoy—are continued when we leave the European Union.

White Papers are all good and well, but yesterday the Scottish Government published a report showing what is at stake for business as the UK edges closer to the Brexit cliff edge. We know that the Secretary of State has consulted the business community to find out how it will be affected, but will he commit today to publishing the findings, as called for by a range of MPs across the House, even if they show that business wants to stay in the single market and customs union? At what point will this Government stop governing in secret and publish the reality of the impact of Brexit?

The Government are of course extremely concerned about any perceptions of instability. We will consult widely, particularly when it comes to new free trade agreements, but of course the greatest threat to stability, particularly in Scotland, is the insistence of the Scottish Government on threatening a second referendum on independence.

Car Exports

The Secretary of State for Exiting the European Union will be leading negotiations on our trade relationship with the EU, aimed at the greatest possible tariff and barrier-free trade with our European neighbours, including for the automotive sector. The UK will also be able to negotiate our own trade agreements around the world, and it is a high priority that we achieve the best possible deals with global partners. We are in close contact with stakeholders across the automotive industry to that end.

Last month, in a speech to the Bank of England, the Prime Minister described the free market economy as

“the greatest agent of collective human progress ever created.”

In view of the Prime Minister’s ideological objection to Government intervention, will the Minister say how the highly skilled workforce at Toyota in Derbyshire will be able to find comparable employment, in the event that of Toyota relocates thanks to the Government’s botched Brexit negotiations?

I know the hon. Gentleman stands up for those constituents of his who work at the Toyota plant, but we need to look more carefully at what Toyota is doing. It has made a £240 million investment in the Burnaston factory, to make a commitment to the UK after Brexit, and that has been supported by a further £21.5 million from the Government, who are also committed to the workers he describes in his constituency.

Given that the United Kingdom imports £30 billion worth of vehicles—more than we export each year—does my hon. Friend agree that it is in the interests of not just the UK but the EU for us to have barrier and tariff-free trade on vehicles in the future?

My hon. Friend is right. We are absolutely committed to a tariff and barrier-free relationship with the European Union in the future. It is worth remembering that the European Union exports twice as many cars to Britain as we export to the EU. It is in all our interests—it is in the interests of all the workers in the European Union—for us to achieve a successful and fruitful outcome.

Following the referendum and the subsequent depreciation of sterling, a number of car manufacturers in Britain have announced plans for further investment and an expansion of production. Nissan, in particular, says that it will expand production by 20% and invest more in the supply chain in Britain. Does that not augur well for Britain’s exports, and should we not start to look towards a time when we can export more than we import?

The hon. Gentleman is absolutely right. One of the characteristics of the UK car industry over the last few years is the fact that UK components of the supply chain now represent 42%, up from 38%. We have a great opportunity in the whole European Union automotive sector, and our Department is working incredibly hard to ensure that we take advantage of it.

Given that this country voted to leave the European Union, is it not the duty of every Member to talk up the British economy and the chances that are available to British manufacturing to exploit the new opportunities that will be presented to it around the world?

My hon. Friend, too, is absolutely right. I travel the world—as, indeed, do all our Ministers—and meet representatives of businesses in countries around the world who see the huge value that this country has, and the great British brand that the Department is representing and selling abroad. What we have to offer is fantastic, and I am an unashamed patriot when it comes to our great exports from fabulous businesses such as Aston Martin, and any number of others. It is the duty of everyone in the House to support all those businesses, and to talk up the British Isles when they travel, not just around the world but in the United Kingdom.

The Secretary of State has just said that he wants the Government to be judged by their actions. Can the Minister tell us what the cost of the Nissan deal was, whether deals have been struck with other car manufacturers, and whether the Government have set aside a large budget to ensure that other sectors can continue to export successfully?

The right hon. Gentleman knows full well that, under state aid rules which apply not only to the European Union but to the World Trade Organisation, the Government cannot give subsidies to businesses to create unfair competition against other countries. However, as I said in an earlier answer, the Government have supported Toyota with a £21 million investment. Any support that is given to any businesses—in the automotive sector, and across the piece—will be fully compliant with all the rules by which we abide. Subsidies such as those from the European regional development fund are widely known about, and they are perfectly fair and perfectly legal.

Foreign Direct Investment

The Department supports foreign investment in all parts of the United Kingdom through our overseas network, international events programme, bespoke sector support, online services and regional teams. We serve the whole UK by working closely with investment promotion bodies in the devolved Administrations and local enterprise partnerships in England to co-operate effectively across a range of investment support activities.

We have already heard positive news this morning about Toyota and Nissan. Will the Minister join me in welcoming recent work by EMY Consulting which proves that the United Kingdom remains the most attractive place in Europe for foreign direct investment?

My hon. Friend is absolutely right. We have seen some truly amazing numbers coming in. Britain has a record number of inward investment projects, and it is worth bearing in mind the fact that 158,000 jobs have been created and a further 66,000 safeguarded over the past year or so as a result of foreign direct investment.

I am very happy for the Minister to go around the world selling Britain, but will he come to see the real economy in, for instance, Huddersfield, where we have a strong manufacturing sector, or Leeds, where we have a financial sector? Not one person I meet in those sectors wants us to continue with this folly of Brexit. [Interruption.]

Yes, what about all those voters throughout the UK, 52% of whom voted for Brexit? I was a remainer, but we have to uphold the fundamental principle of democracy in this country, and it is the job of all of us in the Government to do our level best to embrace the opportunities—the optimistic opportunities—that Brexit presents.

I thank the Minister for coming to my constituency and talking to my exporters and the Port of Felixstowe, and ask him to assure me that he took on board the takeout that they want us to be oven ready with regulations and so forth as we look to move out of the common market.

It was a great pleasure to visit Muntons in my hon. Friend’s constituency. Her constituency produces a huge number of ingredients that go into Scottish whisky, beer and any number of fantastic products across the country. It is absolutely right that in addressing the question of regulations going forward into a post-Brexit era we in this country maintain our incredibly high standards of regulation, including workers’ rights as well as food standards.

The Minister is assuring his hon. Friend that he is indeed oven ready. That is a new one on me; the hon. Lady has very helpfully added to the collective lexicon of the House of Commons.

Why do the Government not draw a clearer distinction between inward foreign investment, which adds capacity and jobs and is welcome, and inward investment for acquisitions in devalued pounds, which often detracts from our science and technology?

The leader of the Liberal Democrats raises a very important point in respect of looking at the statistics. He is absolutely right that fresh investment that comes into this country that creates and safeguards jobs must be disaggregated from, say, stock market transactions, where there is a significant investment in that type of thing. We are looking very carefully at how to disaggregate these two types of investment to get a much clearer picture, but he raises an important point and I assure him that the Department’s economists are looking at this.

In the 12 months since the EU referendum in 2016, 32 Israeli companies have invested in new business ventures in the UK, bringing an increase in capital investment of 32% from that country. Does that not demonstrate, first, a strong vote of confidence in the UK economy, and, secondly, that Israel should be a natural partner for any future free trade agreement?

Indeed. I have visited Israel; we do a lot of trade with it, and the investment it is making in this country is very welcome. Importantly, since the Brexit vote, a huge number of investment projects are coming to the UK, which is creating new jobs. Doom mongers like me who during the referendum were part of the “Project Fear” campaign have been proved wrong, and it is important that we stand up and say that so far we have not got this right, and that is incredibly good news for both Britain and our individual constituencies.

The Government’s own figures show a 9% drop in the number of new jobs created through foreign direct investment projects and a record trade deficit in goods exports. In the real world, that means thousands of workers losing their jobs, as we have seen at BAE Systems. Does the Minister accept that it will take a fully aligned trade and industrial strategy to protect jobs in this country? The current policy of relying on a falling pound is simply not good enough.

I would refer the hon. Gentleman to the fact that we now have record numbers of people in work, record employment and record low unemployment. None the less, he raises an important point on the relationship between this Department and the Department for Business, Energy and Industrial Strategy. It is absolutely the case that in creating a pitch book for the UK, we must offer a number of different opportunities for companies around the world. Part of that is our tax regime, part of it is our tax credits regime, and part of it is our enthusiasm to legislate, for example, to allow autonomous vehicles to be tested on all British roads. This is a whole package from the entire Government working together. The hon. Gentleman is absolutely right to raise the industrial strategy as part of what we are presenting to the rest of the world, but this also involves the whole Government.

Leaving the EU: Workers’ Rights and Fair Trade

4. What steps he is taking to ensure that the principles of fair trade, workers’ rights and environmental protection are included in future trade agreements after the UK leaves the EU. (901073)

The UK has long supported the promotion of our values globally, including successfully supporting workers’ rights and environmental protections as a member of the EU, and the UK will continue to play a leading role on these as we leave the EU. We are committed to upholding the UK’s high standards; our prosperity benefits from us reinforcing these high standards, not abandoning them.

I am glad that the White Paper mentions respecting the role of Parliament, but to protect workers’ rights, fair trade and environmental rules, will the Minister now guarantee to transfer to this House the rights that our elected representatives in the European Parliament have to scrutinise, debate, amend and vote on trade agreements?

The Government have been absolutely clear on the importance of this House and this Parliament scrutinising trade agreements. There is an irony in the hon. Lady’s question. Only last month, she voted against the European Union (Withdrawal) Bill, which would write into domestic legislation 40 years of workers’ rights and environmental protection coming from Europe. She did not want to see that transfer. She even whipped her own side to vote against the Bill. Today, she is calling for us to introduce European procedures. I think her actions speak louder than her words.

Leaving the EU: Trade Policy

5. What steps his Department is taking to ensure that the Government will have an effective trade policy after the UK leaves the EU. (901074)

10. What steps his Department is taking to ensure that the UK will have an effective trade policy after the UK leaves the EU. (901082)

As the Prime Minister set out on Monday, the Government are preparing for the UK’s future as an independent trading nation. We will maximise our opportunities globally by seeking a deep and special partnership with the EU and boosting our trade relationships around the world.

The trade White Paper establishes the principles that will guide future UK trade policy and sets out the preparatory steps we are taking, as my right hon. Friend the Secretary of State laid out earlier in response to Question 1.

Will my right hon. Friend confirm that it is Government policy to take full control of the UK’s trade policy in services regulation, to take advantage of the free trade opportunities that are open to us as we leave the EU? Does he agree that this must not be obviated by any conditions of a period of implementation for our new arrangements with the EU?

The Prime Minister has made it very clear that we want a deep and comprehensive trade agreement with the EU. We in the Department for International Trade are losing no time in preparing ourselves for our own independent trade policy in terms of transitioning existing EU FTAs, in terms of the 14 trade working groups that we have set up and in terms of transitioning trade preferences for the developing world, and that includes the ability to scope out and negotiate new trade agreements once we leave.

Will the Minister update the House on the work that the Government are doing to engage with frontier markets, and how these are being prioritised with existing established markets?

May I first congratulate my hon. Friend on becoming the Prime Minister’s trade envoy to Pakistan —[Hon. Members: “Hear, hear.”]—which, I can tell him, went down extremely well on my visit to Islamabad last month. We are devoting resources to frontier and emerging markets through our economic horizons group. We are committed to transitioning the EU’s scheme of trade preferences with those markets into a UK scheme, which will bring real economic assistance to developing countries, including Pakistan.

Northern Ireland will be the only part of the United Kingdom to share a land border with an EU member state after the UK leaves the EU. What discussions has the Minister had with his counterparts in Northern Ireland regarding future trade and investment opportunities and potential issues post-Brexit?

The whole Government are engaging very closely with those in authority in Northern Ireland, as the hon. Gentleman knows, and also engaging with the other side of the border. I should be meeting the Irish Trade Minister tomorrow.

Given what the Minister says, why have the Government not responded positively to the request that Singapore made 10 months ago to revive the third country training partnership, which in their words would support global Britain’s role in the Commonwealth and the Association of Southeast Asian Nations?

The Government take the Commonwealth and ASEAN extremely seriously. In fact, yesterday we hosted a celebration for ASEAN’s anniversary, and we actually hosted the first Commonwealth Trade Ministers’ meeting ever, in March, here in London, and we are making extensive preparations for the Commonwealth Heads of Government meeting next year.

Could my right hon. Friend advise what steps the Government are taking to ensure that when we leave the EU, businesses do not face a cliff edge for trade with countries that are beyond the EU but covered by trade agreements that the EU has?

The Department for International Trade is devoting significant efforts to transitioning the EU’s existing FTAs into a UK FTA. We are doing this in consultation with the European Union. In the majority of countries—certainly all those that we have spoken to so far—third parties are in agreement with that. Just two weeks ago I was in Peru, my right hon. Friend the Secretary of State was in Colombia, and my hon. Friend the Under-Secretary of State met the Ecuadorian Trade Minister to talk about the transition of the EU/Andean FTA—a perfect example in this space.

WTO Tariff Rate Quotas

6. What recent discussions he has had with the World Trade Organisation and his US counterpart on the division of WTO tariff rate quotas between the UK and the EU after the UK leaves the EU. (901076)

I discussed the UK’s independent membership of the WTO with the US trade representative Robert Lighthizer when I visited the US in July, and I have had several productive conversations with the WTO director general Roberto Azevêdo, most recently on my visit to Geneva in July.

I understand that Britain and the EU have now formally informed WTO members of how they would like quotas to be split after Brexit, but the Trump Administration and seven WTO members have already rejected the proposals. What will the Secretary of State do to ensure that a deal on quotas is achieved?

I am grateful to the hon. Lady for giving me the chance to explain our methodology. We decided to split the quotas that we have up to now shared with the EU on a market basis. In other words, we would not divide by 28 or by 15, but by the UK’s share of a market. We did that to avoid disadvantaging exporters from other countries, as well as our own producers or consumers. That is the best route to avoid disputes in Switzerland.

As we are talking about the WTO, if this country cannot reach a deal with the EU, what are the Department’s plans if we do not get an agreement on quotas?

As I have said, we first have to get our trading schedules agreed and then we have to agree free trade agreements with third countries, which involves the division of quotas. We are making good progress on that. We want a comprehensive agreement, because that is in the interests of all concerned. However, the Government are preparing contingencies should there be no agreement, which is the only responsible thing for a Government to do.

The Secretary of State knows full well that a technical rectification would disadvantage other members, which is why seven member states of the WTO have written to Azevêdo specifically setting out that that is unacceptable to them. On 6 July, the Secretary of State said that he was confident that a technical rectification of WTO schedules would be

“smooth and fully understood by our trading partners.”—[Official Report, 6 July 2017; Vol. 626, c. 1364.]

Well, it is not. What is he going to do about that? What assessment has he made of the delays and of the impact on our businesses that will result from that?

I do not anticipate that that will happen. The hon. Gentleman clearly does not understand what the process is, or what a negotiation is. It is quite clear that our first offer is not the final thing that we expect to be accepted. For example, we have no agreement yet on what will happen with unused quotas or aggregate measures of support. Those issues will be dealt with during the negotiation—[Interruption.] I know that the hon. Gentleman likes to multitask, but being able to speak and listen simultaneously is not among his abilities.

Topical Questions

The Department 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; and negotiating the best international trading framework for the UK outside the EU.

I welcome Crawford Falconer to the Department as chief trade negotiation adviser—he brings a wealth of knowledge—and I can announce the convening of the Board of Trade today, which will ensure that the benefits of trade and investment are spread across the whole UK.

The EU Commission seems hellbent on damaging the economies of the remaining member states through its Brexit negotiations, so will my right hon. Friend say what preparations are being made for no deal?

The best thing for the whole of Europe is for us to reach a deep and comprehensive agreement on trade. We are committed to doing so, and we hope that our European partners will commit to move on to the second stage of negotiations as soon as possible, not least to remove any uncertainty to businesses and workers across Europe. However, if we are unable to do so, the Government have already undertaken a wide range of contingency plans.

Following the Bombardier tariff crisis, can the Secretary of State guarantee that Airbus in Bristol, which employs many people in my constituency, will not have new tariffs to pay once Britain leaves the EU?

There are two elements to that. Of course we want to maintain a completely tariff-free trading environment in Europe, and that is what we should be able to do, given that it is the starting point—that, of course, is unique in any trade negotiation. On the Bombardier case, we have made our views very clear to the United States. I spoke to Wilbur Ross, the Secretary of Commerce, only last week.

T2. The Government’s approach, based on the Florence speech, is entirely sensible and pragmatic. Of course we want a free trade deal, but it takes two to tango. May I press the Secretary of State further on earlier questions relating to what happens if there is no deal and we leave the single market at the end of March 2019? Is the Treasury giving him all the resources he needs to prepare for no deal—for schedules and making deals with other countries? That is absolutely vital. (901094)

I do not really wish to trumpet this to other Departments, but our Department has a unique agreement with the Treasury: we are able to increase staffing levels when that relates to Brexit issues, and we will continue to do so. As I said, we want to ensure that we get a good deal. There is no difference between the Chancellor and me. The Chancellor says that we need to spend money only as necessary. I think that that is correct, but we also need to ensure that we spend money on all areas where contingency plans are necessary.

Thank you, Sir; it is always good to have you keeping me up to pace.

Recent reports suggest that Boeing provided Monarch Airlines with 45 Boeing 737 MAX jets at a cut price and that Boeing used a complex sale and leaseback deal to provide Monarch with more than £100 million in cash against a paper profit. Given the Secretary of State’s earlier commitment to trade defence remedies, why has he left it to me to write to the EU Commissioners to ask them to investigate this as a matter of potential illegal dumping and anti-competitive behaviour?

I am happy to look at the precise nature of the hon. Gentleman’s allegation, but I have to say that the Government’s response on Monarch has been exemplary. We have devoted an incredible amount of resources to getting tens of thousands of stranded British subjects abroad back to this country. The process was led incredibly well by the Department for Transport, and we should be proud of the Government’s efforts in helping the victims of Monarch.

T3. Sheep farming in this country is good for the countryside, food and farming. It is important that we combine making sure that we control quotas of New Zealand lamb with maintaining exports to France. How is the Secretary of State getting on with disaggregating the EU quotas on New Zealand lamb meat? (901095)

We will take the same approach to New Zealand lamb as we do to all other tariff-rate quotas: allocate them on the basis of usage. As I have already explained, that will keep the market stable and mean that we are not disadvantaging New Zealand exporters or our domestic market. That is not only the fairest thing to do, but the best way to prevent the UK from being taken to dispute at the WTO, which is again to our mutual advantage.

If the EU27 do not give the two-year extension that the Prime Minister begged for in Florence, trade barriers will rise between the UK and how many other countries? Does the Department have a number?

I am not sure that I fully understand the hon. Gentleman’s question. If it is helpful to him, I can say that there are 27 other countries in the European Union and the EU has more than 40 FTAs around the world. As I mentioned earlier, one of the roles of our Department is to transition those into UK-only FTAs, which should avoid any cliff edge or future trade barriers at all.

T4. The all-party parliamentary group on trade out of poverty, which I chair, is initiating an investigation into the role that the Commonwealth can play to help developing nations to trade out of poverty. We hope that that agenda will be taken up at the Commonwealth Heads of Government meeting in April. We have a potential leadership role, so will the Secretary of State communicate with the Commonwealth secretariat to ensure that that agenda item is taken up? (901096)

We have made it clear that we see our trade policy and our developmental policy as going hand in hand. We want countries to have the power to trade their way out of poverty. That will be one of our key themes at CHOGM and we will be setting out processes by which we think that can be made more possible in the future.

Many businesses in my constituency, particularly sheep and dairy farmers, are signing contracts early in the new year for exports in 2019. What certainty can the Secretary of State give them about pricing for 2019?

As I have said, our aim is to maintain market stability, but of course the good news is that the UK is continuing to export extremely well—we had an increase of about 15% in our exports in the 12 months to August 2017. We want to encourage that and to ensure that we get bigger market penetration, irrespective of what deal we get with the EU.

T6. Will the Secretary of State publish the Department’s plans for a no-deal situation before Christmas? (901098)

Across the Government we will make our contingency plans, but we continue to hope that the EU will come forward with a proper commitment to entering into the second part of the trade deal, as we think that is in our mutual interest.