[Relevant document: Oral evidence taken before the International Trade Committee on 29 November 2017, on the Trade Bill, HC 603-i.]
I beg to move, That the Bill be now read a Second time.
Free and fair trade is fundamental to the prosperity of the United Kingdom—that is something on which both sides of the House can agree. As globalisation and new technology have changed the face of the world economy, the old barriers of distance and time have been eroded. In an age in which data, knowledge and expertise are traded as readily as cars and steel, even the simplest transactions are no longer confined to one country or even one continent. The United Kingdom is one of the world’s leading trading nations. The total value of our trade with the rest of the world is equivalent to over half our gross domestic product. The UK is the most popular destination for foreign direct investment in Europe, and last year FDI created or safeguarded an estimated 108,000 new jobs. British companies operate across the globe with an international reputation for quality and expertise that few nations can match. That has enabled us to boost the total value of our exports by around 14% in the past year to some £617 billion.
Our current success is built on a long and proud trading tradition. From our unilateral adoption of free trade in the 1840s to our instrumental role in founding the World Trade Organisation, the United Kingdom has been at the heart of international trading innovations. Often, we have led the way, using our economic and diplomatic influence to guide the world towards a free trading future, confident in the benefits that the rules-based global trading system can bestow. For more than four decades, the United Kingdom has been unable to fulfil that leadership role, but soon this country will once again be able to pursue an independent trade policy, whether unilaterally or within bodies such as the WTO. We will be able to unlock some of the key areas of global growth, to offer preferential market access to developing nations of our choosing, to develop closer economic links with our Commonwealth partners and to influence, as we once did, the future of international trade.
One of the real problems with the EU in trade agreements was the lack of transparency and openness. Does the Secretary of State believe that we will be able to be much more open and transparent when we become involved in getting trade deals going between this country and other parts of the world?
I do. As the hon. Lady knows, this Bill is not concerned with new trading agreements, but when the Government come forward with the mechanics for such agreements, I believe that it will be in the interests of all to have as open and wide a consultation as possible—perhaps even more open than has been traditional in other countries.
There has been much speculation over several weeks about the possibility of the United Kingdom staying in the single market or the customs union. The Secretary of State talks about an exciting world in which we will be able to do trade deals with a number of other countries. Would we be able to do that if we stayed in the single market or the customs union?
We know that we would not be able to do that if we were constrained by the customs union, but I say to my hon. Friend that we need to look at where the growth in global trade is going to come from. According to the International Monetary Fund, about 90% of global growth in the next 10 to 15 years will occur outside the continent of Europe. It therefore makes sense for the United Kingdom to have the freedom to maximise our ability to trade with those countries whose economies are growing the fastest, if we want to generate the income that this country will need for the spending projects that we all seem to value.
This House voted overwhelmingly to begin the process of implementing the referendum decision. Since then, we have had two major Bills—this being the second—where the Order Paper looks as though the main aim is to interrupt the Government’s carrying out that intention to follow through on the referendum decision. In the Secretary of State’s opinion, what image does that give to people outside, given that 75% of the electorate now want the Government to get on with the job of taking us out of the EU?
I was encouraged to hear reports yesterday that the Leader of the Opposition had made it clear that there was no chance of continuing in the single market or the customs union. It was therefore with some disappointment that I saw the reasoned amendment today, which seems to go in an entirely different direction. I am not sure what the reasoned amendment was drafted for, but it does not seem to have been drafted for this Bill, given that it concentrates on future free trade agreements, which are not covered in the Bill at all.
I will give way later.
The Government believe that we have an unprecedented opportunity to regain our former influence in trade policy. The United Kingdom will be able to put in place a trade policy that acts in our own interest and that of our friends and allies, but trade is not only about self-interested commercial gain. It is also about nurturing developing economies, eliminating poverty and building partnerships for the future. Closer to home, trade ensures that British consumers can access quality goods at a reasonable price, and foreign investment creates jobs and protects livelihoods the length and breadth of the country. Fundamentally, we will have the power to choose our own economic destiny and chart our own course to a brighter, more prosperous future.
Yet for all the high political ideals, we recognise that trade is carried out not by Governments but by individual enterprises. To operate, they require certainty and stability. Confidence is a very valuable commodity indeed, and the UK has been economically successful in part because our stability, our labour market flexibility and skills, and our regulatory environment all inspire confidence in investors and international firms. That is why we attracted the highest number of new foreign direct investment projects in our history last year.
The Secretary of State mentioned increasing trade with the developing world. Does he agree that the European Union has been the greatest single mechanism for exporting poverty to the third world, with its high tariffs on foodstuffs, and that when we leave the European Union we will be able to give our own consumers the benefit of cheaper citrus fruits, as well as helping poorer farmers in Africa and elsewhere?
Where I would particularly agree with the hon. Gentleman is on the European Union applying high tariffs to value-added exports from developing countries. In other words, those countries are able to export basic commodities into the European Union with zero tariffs, but if they try to add value, they face considerable penalties. One of the areas that I would like the United Kingdom to explore as we leave the European Union is our ability to help those countries to export with added value, so that they can trade their way out of poverty rather than depend on aid. I believe that such a policy would carry widespread support across the United Kingdom.
As the Secretary of State says, the Bill is about existing trade. It will need a legislative consent motion from the Scottish Government, but the Scottish Government say that it is not fit for purpose in its current form. He is probably also aware that yesterday the Holyrood Finance and Constitution Committee, including three Tory MSPs, voted to withhold a legislative consent motion for the European Union (Withdrawal) Bill. What will he and other Ministers do to ensure that both Bills are fit for purpose, so that they can get an LCM from Holyrood?
We believe that this Bill is fit for purpose, as it merely continues what we have at the present time. I hope that, through the large number of Scottish National party Members in this House, we will be able to convince Holyrood that our case is correct and just.
I will give way later.
Before we can begin to forge new trading relationships, we must act to prevent disruption to our existing trade environment. As the Prime Minister has said, our ambition is to forge a deep and special new partnership with our European friends and allies; we will retain the bonds of friendship, security and trade that have united Britain and Europe for so long. If we want to achieve that, before we leave the European Union we must put in place the essential legal powers and structures that will enable the UK to operate an independent trade policy. That is what our trade legislation is designed to achieve. In this, as in all our legislation, the Department for International Trade will be guided by what delivers the greatest economic advantage to the UK and ensures the continued confidence of our partners and allies.
The Bill contains six delegated powers allowing the Government to make regulations to support and develop their trade policy. Two of the powers allow the Government to amend primary legislation; they relate to ensuring the continuity of EU trade agreements into a UK-only context and to the collection of exporter information by Her Majesty’s Revenue and Customs. Both powers are subject to significant restrictions on how they can be used. The trade agreement continuity powers are limited in scope; in particular, they can be used to amend primary legislation only when it forms part of retained EU law. We intend to use the powers to make necessary amendments to domestic legislation as part of the transition project. By taking those powers, we can be sure that we have the ability to implement efficiently all obligations of existing trade agreements in our new context.
The EU’s trade agreements, which we intend to transition and which are within the scope of this Bill, will have already been scrutinised by Parliament’s EU Committees. Free trade agreements that the UK has already ratified have also been through the normal parliamentary scrutiny process. The Bill simply aims to enable us to continue those existing trading arrangements, allowing us to provide certainty and to reassure international partners, businesses and investors.
I am glad to hear everything that my right hon. Friend has said not only today, but throughout his tenure as Secretary of State. I am so glad that he is still in that post and that he will carry on.
Will my right hon. Friend confirm that we are running a trade deficit with the other 27 member states of the EU that has been accumulating for a long time? It increased from £71 billion to £82 billion in one year alone, which gives some indication of the fact that we are now looking outwards towards the rest of the world and that continuing to pursue a policy of exclusively working in the context of a strategy run by the EU Commission does not work for us.
First, the fact that there is a large EU trade surplus with the UK is one reason why it is in the interests of the EU to want a good and open trading agreement with the UK. Secondly, on my hon. Friend’s point about the direction of travel, it is certainly true that the proportion of UK exports that go to the EU has diminished from some 54% at the beginning of the millennium to about 42% today, so it is already true that the UK is exporting into other growing parts of the global economy.
I want to bring the Secretary of State back to legislative consent. He gave some advice to the SNP Members, but he has more difficulty in Northern Ireland, where we have not had a functioning Assembly for a year. That is totally frustrating for the people of Northern Ireland, but how do the Government think they are going to obtain legislative consent from the Northern Ireland Assembly—or are they preparing for direct rule in Northern Ireland? It is one or the other.
The hon. Lady gives me a good opportunity to pay tribute to my right hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), who stood down from the post of Secretary of State for Northern Ireland yesterday, for his work in trying to achieve a deal in Northern Ireland. We all hope that there will be a functioning Government that the UK Government are able to deal with, because it is in the best interests of all concerned in Northern Ireland that we get a functioning democratic Government in Stormont.
Will my right hon. Friend confirm that all the countries that have trade deals with the EU either have indicated that they would like to have a similar agreement with the UK or have certainly not indicated the opposite, so we can look forward to those deals novating, or transferring, to us?
I can indeed confirm that there is considerable interest in the continuation of those trading agreements with the UK, for one overwhelming reason: we are the fifth biggest economy in the world and provide a large market to countries that want to trade with us, so they have every interest in wanting to continue those agreements.
I have given way a number of times, so I will make some progress.
The new legislation has four primary aims. First, as I have already mentioned, it aims to prevent disruption to UK businesses and consumers. I alluded earlier to the importance of the UK’s ability to access other markets across the world. Currently, as a member of the European Union, we are part of about 40 free trade agreements across the world, as my right hon. Friend just mentioned. Maintaining that market access for UK companies is a priority. That is why, as we leave the EU, we seek continuity and have therefore been public about our aim to enter into our own agreements with our partner countries that maintain the effects of the free trade agreements currently in place with the EU. The Bill will create new powers to make regulations, where required, to ensure that we can fully implement these free trade agreements and our other existing trade agreements as we leave the EU. By ensuring continuity in our existing trade arrangements, we will provide certainty and stability for workers, consumers, businesses, and our international trading partners.
Secondly, we want to maintain UK businesses’ guaranteed rights to access global public procurement markets worth approximately £1.3 trillion per year. The GPA, or government procurement agreement, is a plurilateral agreement within the framework of the WTO that aims to create an open market for Government procurement among participating nations. They include many of the world’s major economies, such as the United States, Japan and Canada, as well as the EU states. Currently, we participate in the GPA through our membership of the EU. It is worth pointing out that the UK creates around £68 billion of procurement opportunities within the GPA annually—over 25% of the total EU offering. After we leave the EU, the UK will need to join the GPA as an independent member, not only to safeguard continuity of access for UK companies overseas, but to ensure that we can tap into international expertise and obtain the best deal for the taxpayer here in the UK. The powers in clause 1 will allow us to make regulations implementing our obligations under the GPA as an independent member, reflecting our new status within the GPA. Parliament will be able to scrutinise the terms of our membership of the GPA through the Constitutional Reform and Governance Act 2010 before we join.
I totally support my right hon. Friend’s aims in clause 1 and the need for us to re-engage with the GPA. The clause also shows how vital it is that we leave the EU with agreements in place, rather than just falling off a cliff. We are not a member of the GPA through our membership of the EU, and we will have to rejoin in our own right—in the same way as we will have to re-engage with our schedules, which we have through the EU rather than in our own right.
As a doctor, I have never thought that falling off a cliff is sensible. It is certainly clear that it is beneficial to the UK to have a number of agreements in place, which is why we have introduced the legislation—to provide maximal continuity and security. That is the whole point of the legislation. My hon. Friend is correct that we will have to do the same exercise with our schedules in Geneva, but if I may make one slight correction, we are already an independent member of the WTO in our own right and we simply operate our schedules through the EU. We are not a member of the WTO by virtue of our membership of the EU in the same way as we are with the GPA.
Given that the Bill covers only existing EU trade agreements, will the Secretary of State guarantee that there will definitely be a second trade Bill in due course to cover new trade deals with non-EU countries? If he cannot guarantee that, will he accept that it is even more important that the openness and transparency that he claims to support are reflected in this Bill? One way to do that would be to ensure that, like the European Parliament and the US Congress, this Parliament has the right to reject trade agreements. The negative procedure does not provide a real opportunity to say no.
As I think I already said, we will use separate vehicles for new free trade agreements, and we will introduce a separate proposal on consultation. I am keen not to get to the position we got to in, for example, the Transatlantic Trade and Investment Partnership, where a whole negotiation was undertaken only to find there was insufficient public support. It is much better to seek support for a trade agreement mandate by having as wide a consultation as possible across the country with various ranges of stakeholders before we enter such negotiations. That is more democratic, and the process is more efficient. Consumers will in future take a greater interest in trade agreements than they have perhaps taken in the past, so consultation is also politically prudent.
The Secretary of State is absolutely right that the Bill will prevent anybody from falling off any sort of cliff edge. One of our most important trading relationships is, of course, with Canada, which is covered by the comprehensive economic and trade agreement. Will he confirm that the Canadian Government have committed themselves to reaching a free trade agreement with the United Kingdom once we leave the European Union and have established a joint ministerial council with us? Contrary to what we hear from some who seem unable to accept the result, many of our bigger trading partners, such as Canada, have quite a lot of enthusiasm for ensuring that we have a new relationship that perhaps goes further than the current arrangement through the EU.
I confirm that we have had very positive discussions with the Canadian Government, and I also confirm it is our intention, as we have said, to ratify CETA before we leave the European Union. Once we have left the European Union, CETA will form a good basis for any future agreement with Canada, while taking advantage of the increased trading freedoms the United Kingdom might have, unrestricted by elements such as the data localisation restrictions that are currently placed on us by the EU’s negotiating position.
This Bill is a consequence of the Government’s decision to leave the customs union. Will the Secretary of State explain why, as we learned from his colleague the Secretary of State for Exiting the European Union, the decision was taken without any economic assessment of the consequences of leaving the customs union? Will he now set out why he thinks the gains will outweigh any potential losses?
I hate to correct the right hon. Gentleman, but this Bill is a consequence of the British public’s vote to leave the European Union. Leaving the European Union means that we are leaving our current trading agreements. If we want stability to continue for our businesses, we have to put the legislative framework in place for it to do so. That is exactly what we are doing.
I have given way a number of times. I will give way again later.
It is worth reminding the House that, on a number of occasions, we have made a commitment that decisions about public services, such as the national health service, will be made by UK Governments, including the devolved Administrations, and not by our trade partners. As we leave the EU, the UK will continue to ensure that rigorous protections for the NHS and other public services are included in all trade agreements to which it is a party.
The third aim of the Trade Bill, together with the Taxation (Cross-border Trade) Bill, is to create a new UK trade remedies framework overseen by an independent body, the Trade Remedies Authority. It is important to remember that free trade does not mean trade without rules. Free trade is not a free-for-all. Trade remedies are a vital safety net for firms operating in the global marketplace, protecting them from injury caused by unfair trading practices such as dumping or trade-distorting subsidies, as well as from unforeseen surges of imports.
After its creation, the TRA will be required to prepare both an annual report on the performance of its functions and an annual statement of accounts. Those documents will be laid before the House of Commons, ensuring that Parliament is able to fully scrutinise the TRA’s functions and financial activity.
I am sure, when the Secretary of State visited Stoke-on-Trent, he heard from Wade Ceramics about the importance of a proper trade remedy body. May I press him regarding the report in today’s Daily Telegraph that when trade remedies are considered, they will be weighed against any potential negative impact on a broader free trade deal? In the case of ceramics, we need protection from Chinese tiles and Chinese tableware. Can the Minister assure me that if that has an impact on a larger trade deal with China, British industry will be protected before trade deals are put in place?
I totally agree with the hon. Gentleman on the need to set up such trade remedies, so I hope he will support the Bill today. Without the Bill, we would be unable to have such trade remedies as we leave the European Union. It is essential that we have a mechanism to protect the United Kingdom and that we do not allow unfair dumping or subsidy to harm UK businesses. That is why we are setting up the TRA. The details will be set out after the passage of the Taxation (Cross-border Trade) Bill. He is right that we need to have such trade remedies in place, but I reiterate that, if we do not approve Second Reading today, we will not have the ability to create those remedies to protect British business. If Opposition Members oppose the Trade Bill, they will be opposing the very measures that will be able to protect British businesses and British jobs.
The good burghers of Southend will be glad that the Secretary of State is delivering the Brexit that they supported wholeheartedly. Will he confirm that the Trade Remedies Authority will be wholly independent? Will he give us an indication of how quickly some of the detail will come together once the Bill is enacted? What forms of consultation will there be on how to set up the Trade Remedies Authority, given that we have so little experience of trade remedies other than through the EU?
As my hon. Friend knows, detail on the implementation of the Trade Remedies Authority will be in secondary legislation subsequent to the passing of the Taxation (Cross-border Trade) Bill, which we debated in this House last night. The Trade Bill merely creates the framework for creating the Trade Remedies Authority, which will be an arm’s length authority. These issues are often commercially sensitive and market sensitive, so it is important that we are seen not to have overt political intervention. Likewise, if we want to be WTO compliant, we have to be as transparent as possible. We will want to consult further, but we want to set out the details as soon as possible.
Closely related to that is the Bill’s fourth aim. We want to enable HMRC to collect and share essential data on the United Kingdom’s trade flows, which will enable DIT and bodies such as the Trade Remedies Authority to perform essential trade functions such as providing evidence to WTO panels that rule on trade disputes. It will also provide a vital insight into our export performance during our development of trade policy.
Can the Secretary of State give us an idea of how much more resource HMRC will get so it can do that job of collecting data? Will the Government expand the number of HMRC offices, rather than reducing the number of offices, as he and his Government are currently doing?
My understanding is that HMRC was given extra resource in advance, before we reached this point. It seems strange that we do not already collect this data. If we want better-informed policy, we need better datasets. It is merely a sensible option for any Government to collect this data as widely as possible, so that we operate on the basis of better information.
Before I further explain the process, this is a good juncture to correct some of the misunderstandings that seem to have grown, deliberately or otherwise, around the Trade Bill. As I have explained, the Bill contains two powers that allow the Government to amend primary legislation: the power in clause 2 to implement the trade agreements that the UK adopts; and the power in clause 7 to allow HMRC to collect the export information that the hon. Lady has just mentioned. Both these powers are limited in scope and restricted in their use. Contrary to the belief of some in this House and beyond, seemingly including the shadow Secretary of State for International Trade, this Bill does not legislate for powers that could be used when implementing new free trade agreements with countries with which the EU does not have a free trade agreement before exit day. An article in The Guardian—I do not avidly read it, but this was brought to my attention—written by him incorrectly asserted that the Government would only be obliged to present the text of new trade agreements under the convention of the Ponsonby rule. As I mentioned earlier, the scrutiny of new agreements requiring ratification is ensured by the Constitutional Reform and Governance Act 2010.
Will the Secretary of State confirm that the 2010 Act proceeds by negative resolution and it is not open to any debate, any scrutiny, any vote and may not even be amended? Therefore, the sort of scrutiny that most Members of this place would expect to take place for any new trade agreements will not occur in the way he has led the House to believe.
This Bill is not about trade agreements; I can only explain it to the hon. Gentleman—I cannot understand it for him. This Bill is about continuity of existing agreements. In any case, the 2010 Act effectively gives the Commons the power to block ratification, notwithstanding the fact that we have already scrutinised these agreements in the past. He ought to know that, as the 2010 Act was passed by the Labour Government and he voted for it.
There is no attempt here to bypass parliamentary scrutiny or to obtain sweeping new authority for the Government over this country’s trading structures. Rather, the Government seek powers in clause 2 that we think necessary for us fully to implement in UK law non-tariff obligations of the transitioned existing EU-third country trade agreements that we adopt. Any tariff-related obligations in such transitioned agreements will be implemented using powers conferred by the Taxation (Cross-border Trade) Bill, which had its Second Reading in this House yesterday.
Will the Secretary of State answer three questions? First, on the existing agreements the EU has with third countries, which he says will be transposed, will he guarantee that those 65 agreements will be transposed by the exit day? Secondly, this Bill does touch on new agreements, to the extent that the Trade Remedies Authority will have a locus and oversight on those agreements. He was part of the campaign that promised that we would have all these new agreements, with Canada, the US and Japan, and would immediately start negotiating with all these countries. It is right, is it not, that none of those negotiations has actually started?
I look forward to the hon. Gentleman’s extension of that intervention in his speech. Let me deal with the last of those issues. He is well aware that, under our duty of sincere co-operation, while we remain a member of the EU we are not able to negotiate new trade agreements. We will want, first, to get continuity of the existing agreements, which number about 40. We will want to have as many of them as possible—all of them, if possible—transitioned before we leave the EU. I absolutely confirm that. We already have 14 working groups with 21 countries in preparation for future negotiations in the trade agreements that we want to take advantage of when we leave the EU.
I will make some progress.
When the UK enters directly into its own arrangements with our partner countries, the Government will seek, as far as possible, to maintain the effects of the existing arrangements they have with the EU. This means we will be able to deliver the continuity that businesses, consumers and our trading partners, and this House of Commons, desire. It will maintain market access and allow us to continue to abide by our obligations to our international trading partners. The UK has used the European Communities Act 1972 to implement existing EU trade agreements and the GPA. The European Union (Withdrawal) Bill will repeal the 1972 Act. This means that the UK will require a new way to ensure that our transitioned agreements are fully implemented in UK law and remain operable over time. Clauses 1, 2, 3 and 4 of the Trade Bill will give the Government the necessary powers to do so in relation to the non-tariff elements of those transitioned agreements, including amending legislation, where necessary. They will also grant these powers to the devolved Administrations to ensure that they, too, can implement transitioned agreements and reflect the UK’s independent GPA membership in areas that fall within their devolved competence.
The powers to implement free trade agreements will be available only if the partner country has signed an FTA with the EU before exit day. In other words, and as I said earlier, this Bill does not legislate for powers that could be used when implementing new FTAs with countries with which the EU does not have an FTA before exit day.
We have said that where we needed to change legislation to bring into UK law the non-tariff elements of existing agreements, we would do so, but these powers exist for no other reason. They are very limited, and I make it very clear today that they are limited to these particular circumstances.
I wish my right hon. Friend well in this task of ensuring continuity of the trade relationships we currently have within the EU. I fully understand the point he has made about the fact that this is about those relationships and not new ones, but does the delegated powers memorandum not make it absolutely clear that the powers are broad enough to enable not just the implementation of these agreements, but their substantial amendment, including the creation of new obligations? Does that not then make it sensible—I urge him to do this—for the Government to look, as the Bill progresses, at ways to ensure that those can be properly scrutinised, because the methods we currently have of the European Scrutiny Committee and the European Parliament will no longer exist? That is a relevant issue for this House, and if the Government were to look at it in a sensible light, the Bill would be improved.
I am sure that in Committee my right hon. and learned Friend will again wish to bring his expertise to bear, but I say to him again that the Government do not seek to make any substantial changes to the agreements that already exist. There are some unavoidable changes—for example, the disaggregation of tariff-rate quotas—that we will have to introduce, but they will simply be done to bring the greatest continuity possible to arrangements. As I have said several times, when it comes to new agreements, the Government will bring forward new proposals, where we can ensure that there will be adequate scrutiny of any new agreements that we want with countries once we have left the EU.
I wish just to push the Secretary of State on one point. What will be the process in this House if, for example, the South Korea trade deal, which is currently an EU trade deal, is transposed to UK law to be a UK trade deal and the South Koreans decide to renegotiate the deal on Scotch whisky? What goes through this House?
Having had substantial discussions already with the South Koreans, I can tell the House that there is no plan to do anything such as the hon. Gentleman suggests. That is why I say to him that this is not about new trade agreements; it is about continuity of what we have at the present time.
I will make a little progress.
The Government are taking a similar approach on the transitional trade agreements and on the GPA, looking to maintain the guaranteed access created by our current participation to ensure stability and continuity for UK businesses. As I mentioned earlier, the UK participates in the GPA through our membership of the European Union. Clearly, if we are to retain the benefits of the GPA, we will soon have to join as an independent participant. This legislation will enable the UK Government to make any changes required in domestic law as part of the UK becoming an independent member of the GPA and provide the power to make changes in future to reflect new countries joining the GPA or existing countries withdrawing from it. It is in the UK’s best interests for its businesses to continue to have guaranteed access to the GPA’s global procurement markets and for us to continue to work with our partners in the GPA to address trade barriers within the government procurement sector. We intend the UK to join the GPA, while maintaining our existing terms of participation. Clause 1 will allow the UK to legislate to reflect our new independent GPA status.
Will the Secretary of State confirm that a helpful and comprehensive trade facilitation agreement came into effect at the WTO in spring last year? It should be reassuring to all those who are worried about possible disruption to UK-EU trade—pending any agreement—that a lot of it will be governed by those helpful provisions because we and the EU will of course remain members of the WTO.
My right hon. Friend is right. That agreement was the first multilateral trade agreement for decades, which shows how difficult it is to get such multilateral agreements. It does reduce friction for customs arrangements worldwide, but although, as he said, the benefits are great, it is still in the best interests of the UK to come to an open and comprehensive trading agreement with the EU itself.
The Bill provides powers for HMRC to collect and share trade data, as has been mentioned. Those powers include the one in clause 7 that allows primary legislation to be amended to provide for HMRC to collect exporter information. Clause 8 will grant HMRC the authority to share data with those bodies that require those data to carry out a range of public functions relating to trade. Currently, HMRC collects a range of data from import and export declarations that is shared with the European Commission, as well as with other Departments and public bodies, under information gateways governed by EU law. Such gateways will, of course, cease to apply once we leave the European Union, and numerous functions that are currently carried out by the European Commission will be transferred back to the United Kingdom. HMRC will therefore need to be granted the legal authority to request data from exporters and share that data to ensure the continued smooth operation of the UK’s trade frameworks and clear and informed policy making from my Department, as I said to the hon. Member for Livingston (Hannah Bardell). The powers in clauses 7 and 8 will grant that authority, and nothing more.
Thank goodness I am blessed with bundles of patience. I am exceedingly grateful to the Secretary of State for giving way. I am really worried about clause 7, which is extremely broad and gives enormous powers to HMRC. The Secretary of State will be well aware that there are hundreds of farms that straddle the border in Northern Ireland. Under clause 7, if those farms trade in machinery and cattle across the border—as they do daily—they will be obliged to give information to HMRC. The clause says that “any person” may be asked for such information. Would Sinn Féin MPs who represent border constituencies be obliged to give HMRC such information, as well as farmers?
When we discussed this proposal with the Treasury and HMRC, we were keen to ensure that it applied to information related only to those elements needed to continue what we currently do and to gain the information that we believe we need for better trade policy making. HMRC was insistent that before it made any changes we restricted the power as much as possible, because HMRC did not want to become a huge bureaucratic organisation, as the hon. Lady suggests. We intend to define the power tightly when we set the regulations. I have had discussions with HMRC on the basis that we will not want to carry out a hugely bureaucratic exercise. Nevertheless, it makes sense for us to know exactly how much we are importing and exporting and which businesses are doing that. That is the basis for good future policy making.
The time will come when we can begin to forge new trading relationships around the world, building a truly global, outward-facing Britain—a country at the very heart of international trade—but this Bill is not about those new relationships. Instead, it is about preserving and ensuring continuity. We want to protect the access to global markets that is so vital to thousands of British businesses. We want to abide by our obligations to those economies that have already negotiated free trade agreements and other trade agreements with the European Union. The Bill grants us the powers necessary to achieve those aims.
We present the Bill for Second Reading with an eye to the future. It is explicitly designed to prepare for our departure from the European Union, while building the foundations that will facilitate successful future trading relations with the wider world. I hope Members from all parties recognise the value of the Bill and the measures it contains, as well as its importance in helping to provide much-needed certainty to businesses and consumers as our departure from the EU next year approaches. Trade is an issue that transcends party politics: it is an intrinsic part of our very way of life and our prosperity. The Bill is just the beginning, but it is a first step towards a stable, secure and prosperous future for the United Kingdom and our friends beyond.
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House recognises that on leaving the European Union, whether or not the UK concludes a new long-term customs union with the EU, it will need effective legislation to implement agreements with partner countries corresponding to international trade agreements of the European Union in place before the UK’s exit, to implement procurement obligations arising from the UK becoming a member of the Government Procurement Agreement in its own right, to establish a Trade Remedies Authority to deliver the new UK trade remedies framework, and to establish powers for Her Majesty’s Revenue and Customs to collect and disclose data on exporters, but declines to give a Second Reading to the Trade Bill because it fails to set out proper procedures for Parliamentary consultation, scrutiny, debate and approval of future international trade agreements, fails to protect the principle of Parliamentary sovereignty in the implementation of those trade agreements previously negotiated by the European Union and in respect of changes to existing government procurement regulations arising from the UK’s or other countries’ accession to the Government Procurement Agreement, fails to establish sufficient scrutiny procedures to replace those that have pertained while the UK has been a member of the European Union, fails to guarantee that European Union standards and rights will be protected in future trade agreements, and fails to render the Trade Remedies Authority answerable to Parliament or representative of the full range of stakeholders.”
May I take this opportunity to wish you, Madam Deputy Speaker, and all those in this place who in their various ways serve the public, a very happy new year?
Our country is in the throes of an extraordinary change in our constitutional arrangements. At this stage, no one can be entirely certain what the structure of our future relations with the European Union will be, but the Labour party is clear that the country cannot be left without the capacity to defend our manufacturing industry against unfair trading practices. Indeed, many Opposition Members will wish that the Government had been more keenly aware of the need for strong action on trade defence when our steel industry was put into crisis by the unfair dumping of Chinese steel, or when the United States took entirely unjustified action against Bombardier in Northern Ireland.
The need for a Bill to establish a trade remedies authority, to establish our independent membership of the WTO government procurement agreement, to enable us to maintain strong trading ties with partner countries that have had historical agreements with us through the EU, and to establish the power to collect and share trade information—all are uncontroversial requirements. However, the way in which the Government have gone about this process is not uncontroversial; it is quite the opposite.
On the face of it, this is a modest little Bill that has a lot to be modest about. The four things that the Bill does, it does badly. But what is worse is that the one thing it absolutely should have done well—namely, to provide appropriate parliamentary scrutiny and oversight of our country’s trade agreements—it fails to do entirely.
We were repeatedly told that the Trade Bill would provide the basis for the country’s future trade policy once we had left the EU. To quote the Queen’s Speech policy paper from last June:
“The Bill will put in place the essential and necessary legislative framework to allow the UK to operate its own independent trade policy upon exit from the European Union.”
It does not do that. Instead, it represents yet another attempt by the Government to appropriate to themselves powers that should by rights be afforded to Parliament.
I must acknowledge my bias: I voted to remain in the EU and I think our country has embarked on an act of economic self-harm. But I am 100% certain that those of our fellow citizens who did vote to leave the EU did not vote for sovereign powers to be taken away from the bureaucrats, as they regarded them, in Brussels, only to be handed over to the Secretary of State for International Trade. They thought—indeed, they were told—that we were taking back control to our sovereign Parliament, yet the Bill contains Henry VIII powers that explicitly give Ministers the right to amend primary legislation.
Does my hon. Friend agree that it is somewhat anomalous that for the past 18 months we have talked about nothing but the sovereignty of Parliament, yet we as parliamentarians now have to beg for a role in our future trade arrangements?
I slightly disagree with my hon. Friend when he says that he is 100% certain about what people thought they were voting for, because leaving the customs union was not on the ballot paper at the referendum. Can I persuade him to encourage our Front-Bench colleagues to support participation in the customs union because, as he will know, that is the view of 85% of the Labour party membership?
I am grateful to my hon. Friend, and I commend him for the article he published this morning on LabourList, which I thought was an excellent exposé of the Bill. To answer his specific question, once the UK leaves the European Union, it cannot remain in the EU customs union, because by definition when a state leaves the European Union all EU rules cease to apply to it, as set out in article 50. The customs union is an institution of the European Union; it has its legal basis in the European treaties and its functioning is set out in EU regulations.
I will happily give way to my hon. Friend once I have answered our hon. Friend the Member for Nottingham East (Mr Leslie).
As we will no longer be a signatory to the European treaties and no longer come under their territorial scope, we cannot formally be a member of the EU’s customs union. As the EU’s treaties currently stand, only EU member states, and territories attached to those states, are actually members of the customs union. However, it is possible for the UK to enter into a customs union with the EU after Brexit, whereby we choose to have a joined external tariff and no tariffs on trade between the EU and the UK. That would, in effect, mirror the current arrangements. I think that my hon. Friend the Member for Nottingham East, like me, will have been interested to find that provision to do just that was incorporated in clause 31 of the Taxation (Cross-border Trade) Bill, which we debated last night.
No, I am not telling the House that at all. I am happy to try to answer not only the letter of the Secretary of State’s question, but the spirit. Those on the Labour Front Bench have always tried to make it clear that we recognise the benefits of the single market to this country, and the benefits that traditionally the customs union has brought and that a customs union could bring. However, we are focused in the negotiations on achieving the benefits, rather than putting red lines around the structures, which is what the Government have done, and ruling those off the table.
I will press on.
The Bill fails utterly to establish the legislative framework for the UK’s future trade policy, which it leaves entirely in the hands of Ministers. It also risks undermining the rights of the devolved Administrations through its undue centralisation of powers in Westminster. The impact assessment accompanying the Taxation (Cross-border Trade) Bill, which the House debated only yesterday, confirms that this Trade Bill was to provide the key measures necessary
“to build a future trade policy for the UK once we leave the EU.”
We were looking forward to a full debate today on the future of the powers that we will have repatriated from Brussels, and how we might like to use them to make Britain what the Secretary of State calls
“a great trading nation once again”.
Some of us believe that we still are a great trading nation, but clearly he does not.
Yet somewhere along the way the Secretary of State seems to have lost his nerve. Instead of the legislative framework for a future trade policy that we were promised, he has left us with this hollowed out little embarrassment of a Bill, which extends to just six pages and four schedules. We have no more than a vague suggestion that at some point in future we might return to the business of discussing whether Parliament may or may not play a role in overseeing our relations with trading partners around the world.
I thank my hon. Friend. His earlier comments about the UK being unable to remain a member of the customs union after leaving the European Union are surely incorrect. Surely it would be possible for the UK to negotiate fresh membership of the customs union, in the same way that Turkey has done. Equally, surely it would be possible to negotiate membership of the single market on departure, in the same way that Norway and Iceland have done. It is entirely possible for the UK to renegotiate membership of both.
I am very happy to respond to my hon. Friend, and I understand the distinctions she is making, but she will also understand what I have already set out about the force of the treaties, which is simply a matter of law. We will not be bound by the treaties and therefore we would not be able to continue as a member of the EU, and therefore as a member of the EU customs union, although, as I have pointed out, we could then come back and form a customs union with the European Union.
My hon. Friend asked specifically about Turkey’s relationship with the European Union. Turkey has a customs union agreement with the EU customs union, but it is not a member of the EU customs union—she should be aware of that—and there is therefore an asymmetry in the way in which its trade relations are conducted. The EU conducts the deals and agreements with third-party countries on behalf of Turkey that set its tariffs and quotas. Indeed, that has caused Turkey great concern, because while the Mexico-EU agreement means that Mexico can import cars into Turkey tariff-free, there is no reciprocal liberalisation of Mexico’s markets for Turkey’s textiles, and Turkey is extremely aggrieved about that.
Were we to have the same arrangement, we could be in a position in which the European Union concluded an agreement with the United States—for example, perhaps along the lines of the Transatlantic Trade and Investment Partnership, which many Members would have concerns about—to the detriment of this country but the advantage of the European Union, which we would have no control over, and without liberalising US markets to British exports. That would be an extremely bad deal indeed. I trust that fully answers my hon. Friend’s question.
I will not give way again on that point.
International trade agreements have the status of treaties under international law. They cannot be repealed in the same way that domestic legislation can be repealed, and they create real and binding obligations on future generations to uphold their provisions. In a word, they are serious undertakings that demand the most rigorous procedural safeguards if they are not to cause lasting harm. As we take back responsibility for trade policy from Brussels, do hon. Members really think we should end up with less scrutiny and accountability than we currently have as a member of the EU?
My party made a manifesto commitment to ensure proper transparency and parliamentary scrutiny of all future trade and investment deals. That means parliamentary approval of negotiating mandates for future trade arrangements; proper consultation with trade union, industry and civil society stakeholders; comprehensive impact assessments of the likely social, economic and environmental risks; a new scrutiny committee to fill the vacuum created by the loss of the existing powers over trade agreements; unrestricted access to the consolidated texts of trade and investment treaties as they are being formulated; the most rigorous ratification process, with a debate and vote on the Floor of the House—[Interruption.] The Secretary of State is chuntering away from a sedentary position, saying, “That’s not what this Bill is about.” My point is that that is what it should be about, and it is what the Government promised it would be about. That is why, when it comes to the new agreements that the Bill is creating, we need the powers that I am talking about.
I will give way a little later to both the right hon. Lady and the hon. and learned Lady, but in the meantime I propose to make a little progress.
There is nothing particularly remarkable about any of the strictures that we laid down in our manifesto. Many other countries around the world have such procedures to exercise oversight over their Executives. New Zealand requires its Government to present national interest analyses before its Parliament. Australia has a separate joint scrutiny committee on treaties. Even in the EU, Germany requires all trade treaties to undergo a process of scrutiny by parliamentary committee before ratification can take place.
Currently, the Council of Ministers sets a negotiating mandate and the Commission is charged with implementing it. Our representatives in the European Parliament debate it and scrutinise it in the trade committee. The resulting treaty is then put under the powerful microscope of the hon. Member for Stone (Sir William Cash), who chairs the European Scrutiny Committee in this House. Once we leave the EU, all those institutional levels of accountability are stripped away and we will fall back on the 1924 Ponsonby rule. It was interesting to hear the Secretary of State say, “No, no, it’s all about the Constitutional Reform and Governance Act 2010.” Does he not realise that CRAGA actually gives legislative effect to the Ponsonby rule, an arcane procedure from the last century that allows our Government to ratify a trade agreement—an international trade treaty—by simply laying the text before the House for 21 sitting days, with no need for a debate or vote? That is simply not good enough in a modern democracy. Hon. Members hold this House’s dignity very cheap indeed if they vote tonight to govern ourselves after the fashion of a tinpot dictatorship.
The Government have a woeful record on transparency and democratic oversight when it comes to international trade agreements, so it pains me to remind the House of the exchange of letters, which were revealed just before Christmas, between the Department and the Office of the United States Trade Representative, in which the Secretary of State gave assurances to President Trump’s Administration that he will deny Members of this House access to information on the substance of talks held in the UK-US trade working group. The letter says that the following approach will be taken:
“Proposals, accompanying explanatory material, emails related to the substance of the working group, and other information, exchanged in the context of the working group, are provided and will be held in confidence unless otherwise jointly decided.”
Yet when the Secretary of State responded to my hon. Friend the Member for Vauxhall (Kate Hoey), who asked a trenchant question about the need for transparency, he said that of course he believed there should be full transparency. In fact, this obsession with secrecy should not be taken for a prudent desire to conceal our negotiating hand from the Americans. The provisions agreed by the Secretary of State are expressly designed to deny British MPs and the wider public any knowledge of what has already been discussed with the United States’ representatives. He will not tell us what he has already told them.
Talking of telling the House about policy, will the hon. Gentleman now tell us Labour’s Front-Bench policy on our future relationship with the European Union when it comes to the customs union? How does that differ from the Government’s policy, because I suggest that the Labour Front-Bench team is in agreement with the Government’s Front-Bench team?
The right hon. Lady is free to suggest whatever she likes. I have dealt with the customs union at great length this afternoon and made our position quite clear.
All information exchanged between the UK and US officials will be kept secret until four years after the working group has been concluded. That is why hon. Members should not take on trust any verbal reassurances that the Government or the Secretary of State might give this afternoon. One has to establish good faith to earn trust.
If I may, I want to take the hon. Gentleman back to his suggestion that the European Parliament is somehow a far more transparent organisation when it comes to discussions on trade deals, especially trade deals with the US. My memory is that the discussions with trade negotiators and MEPs were held behind closed doors, with only trade committee members and committee chairs present. The papers held by the European Parliament were all kept behind closed doors and were not transparent. I have heard the Minister say that he wants us to have a transparent process in which the House will be consulted and able to scrutinise future trade deals in a better manner.
Look, the hon. Lady is of course right that the European Union held a lot of those discussions in private, particularly over TTIP. However, she may be unaware though that although European Members of Parliament were able to access the text of the TTIP agreement, this Secretary of State refused for nine months to set up a reading room so that Members of this House could access the very same information that was available to her colleagues in the European Union.
The hon. Gentleman has made a very powerful case for more scrutiny of future trade agreements by this Parliament, but it is not the only Parliament in the United Kingdom—there is a Scottish Parliament and a Welsh Parliament, and, I hope that, eventually, the Northern Ireland Assembly will be up and running again. With the CETA process, we saw the powerful influence of not only national and regional Parliaments in the European Union, but provincial Parliaments in Canada. Will the Labour party support such influence for the Scottish Parliament, the Welsh Parliament and the Northern Ireland Assembly?
I will deal with issues around devolution later in my speech. Indeed, that is something that my hon. Friend the Member for Sefton Central (Bill Esterson) will be addressing in his winding-up speech.
Having set the context, let us look at the detail. The Bill’s opening clause sets the tone for the power grab that is to come. It gives Ministers the power to implement regulatory changes as a consequence of any country acceding to or seceding from the WTO’s government procurement agreement. This is not a temporary power. It is not simply to facilitate our transition from a member under the wing of the EU to a member in our own right, as the explanatory notes to the Bill claim, but a power in perpetuity without the requirement for any scrutiny by Parliament.
The Government will use the sweeping powers of the Constitutional Reform and Governance Act 2010 to push through the UK’s independent membership of the GPA without a vote in Parliament. The Bill confirms that any future changes to the terms of the GPA will go the same way. We can talk about the merits of the GPA—I am sure that we will find much common cause across the Dispatch Boxes—but the Secretary of State said that we would be acceding on the “existing terms of participation”, if I wrote that down correctly. That is something that Members should be free to scrutinise and debate. The United States, Canada, South Korea and Japan have all put annexes to their schedules for the GPA that allow them to set aside and disapply regulations on behalf of small businesses and other organisations. That is something that we might wish to consider. It would be quite proper for us to do so, to boost trade for our small businesses, but the Bill, as currently formulated, would not allow that.
I have to confess that when I first looked at the GPA, I wondered what material difference this might make to British business. I was quite impressed to find that the Government’s explanatory notes showed that the GPA opened up £1.3 trillion of contracts to UK business—we should all rejoice in that—but when I checked the Bill’s impact assessment, I learned that the total cross-border earnings of our businesses from GPA contracts outside the UK is just £1.2 billion, which is less than 1% of that amount. I also learned that the total earnings by foreign companies from the £68 billion of GPA contracts inside the UK was £16.7 billion, which is about 24.5%. Will the Minister explain what the saving to the public purse was from this procurement agreement that merited £16.7 billion going to foreign companies while just £1.2 billion came back to the UK? There might well be a very good answer, but is this not precisely the sort of issue on which Parliament should have a proper role of scrutiny and holding the Executive to account? Of course, the Bill denies us the capacity to do so.
Clause 2 gives the Secretary of State the most far-reaching powers to implement new international trade agreements without the need for even a debate in Parliament. As his Department has confirmed, the clause includes the Henry VIII power to modify primary legislation without a vote. On that point, we were treated to the extraordinary spectacle of the Secretary of State resorting to the letters page of a national newspaper to deny what is printed in black and white—actually in black and green—in his own legislation. He must have been piqued by a number of articles in response to the Bill’s publication in November that accused him of appropriating powers that should, by rights, lie with Parliament. He responded on The Guardian website on the evening of 20 November, saying:
“In an editorial (13 November) you claim that the trade bill is ‘effectively granting ministers the power to write law behind parliament’s back’ with ‘Henry VIII powers’. This claim is repeated in a column by George Monbiot (18 November). This is untrue. The powers in the bill will only allow for amendment of secondary legislation covering existing trade agreements, and secondary legislation is still subject to parliamentary oversight.”
Yet it was not The Guardian that was wrong; the Secretary of State was wrong. He knew that he was wrong, although he did not correct his remarks, because clause 2 of the Trade Bill, which he had published just two weeks earlier, states quite clearly that the powers in the Bill make provision not only for the amendment of secondary legislation, but for “modifying primary legislation”. Lest there should be any doubt about this, the delegated powers memorandum published by the Secretary of State’s Department to accompany the Bill, which was quoted by the right hon. and learned Member for Beaconsfield (Mr Grieve) with such devastating effect earlier, states on its very first page:
“The Bill contains 6 individual provisions containing delegated powers. Two of these, clauses 2(1) and 7(3), include a Henry VIII power.”
This was not the case of a Cabinet Minister misspeaking or being ambushed in a broadcast interview; this was a written communication that the Secretary of State placed in a national newspaper in the cold light of day that contradicted plain fact and the considered explanation of his own officials. I will happily give way to the Secretary of State if he would care to come to the Dispatch Box and explain himself by putting on the public record why he chose to suggest that there are no Henry VIII powers in this Bill when his own Department had already confirmed the opposite to be the case. I cannot claim to have served with Henry VIII. I cannot claim that Henry VIII was a friend of mine. But, to misquote Senator Lloyd Bentsen’s remark to Dan Quayle, I can say, “Secretary of State, you are no Henry VIII. This Bill is an affront to the dignity of your office and to the authority of this House.”
Clause 2 provides the Secretary of State with unprecedented powers to implement international trade agreements without a vote in Parliament. It is perhaps the most egregiously anti-democratic provision of the Bill, in that it allows the Secretary of State to engage in secret negotiations with a trading partner of the EU, to lay the results of those negotiations before Parliament without the need for a debate or a vote, and to proceed to incorporate the resulting treaty into UK law without the need for a vote either.
The Government have tried to justify this power grab with the sham argument that these are simply roll-over agreements—existing agreements that are just being grandfathered. They claim that the corresponding agreements between 60-plus countries and the EU have already been through the process of scrutiny, meaning that the UK’s new agreements can go through on the nod. Yet the Government have been forced to admit that the UK’s new trade agreements are legally distinct from those previously negotiated by the EU. They are new agreements in international law. If we allow the Bill to go through as it stands, the Secretary of State, as the Government have acknowledged, will be given carte blanche to agree substantively new obligations with third countries and to implement them without a vote in Parliament.
The Government are aware of the magnitude of what they are attempting. The delegated powers memorandum could scarcely disguise its shame with regard to this part of the Bill. It says:
“It is recognised that Parliament will want considerable assurances from the Government that this power will not be used beyond what is necessary to ensure a seamless transition of the agreements in scope.”
The Government have given that assurance, but they cannot deny that the power is there. In the next breath, the memorandum claims, apparently without irony:
“The Department considers that this power is appropriate for the negative procedure.”
The negative procedure is the least rigorous procedure available to this House, as it allows the Government to bypass the need for a debate or a vote, or the possibility of amendment—there is nothing.
I ask the Minister to come clean and confirm to the House that the delegated powers memorandum is correct. Will he assure us that the Government will bring forward their own amendment in Committee to ensure that these new internationally binding agreements must go through a due process of proper scrutiny by Parliament, rather than being signed off by Ministers without a vote?
I applaud my hon. Friend’s speech. The Government are making out that this is all about roll-overs and business as usual. Does he accept that what will actually happen is that countries will want to negotiate new terms of trade because we will be a small minnow compared with the EU giant? What is more, when an EU quota is involved, countries within Europe such as Spain may want to take some of our quota. We will keep our quota only if we give better terms of trade, with lower standards, lower prices and a worse deal for us. That is why we must have scrutiny in this place.
The honest answer to my hon. Friend is that I do not know, although I share his suspicion that that might well be the case. The point is that the Bill shows that the Government’s expectation is that these are not simply roll-over agreements and that, precisely as he suggests, third countries may demand additional features in new agreements. On that point, he is absolutely right and the Secretary of State is absolutely wrong.
My hon. Friend will know that trade agreements require negotiation—it takes two to tango. This Parliament will be asked to delegate powers to the Secretary of State and the Executive to make changes to bilateral agreements with countries that already have EU bilateral agreements, so decisions that might involve sectors such as the Scotch whisky industry being thrown under a bus to protect other sectors will not come to this House.
My hon. Friend is absolutely correct to say that that is a possibility, but while I have disagreements with the Secretary of State, do I think he is so foolish as to throw the Scotch whisky sector under a bus? No, I do not, because it is a very important player in our economy, as my hon. Friend knows. However, the point he makes is entirely right: it is possible that new interpolations in old agreements may do damage to other sectors. The point remains that this House—I repeat, this House—is the appropriate place for that to be scrutinised.
Clauses 5 and 6 deal with the establishment of the Trade Remedies Authority. We of course welcome the establishment of a new authority as an essential pillar of our international trade policy to ensure that British manufacturers are not exposed to dumping or other countries’ unfair trading practices.
I tried to push the Secretary of State on this point earlier, but my hon. Friend may be able to help. It is reported in The Daily Telegraph today that the economic interest test that the Government will apply will balance potential trade remedies against the impact that they may have on the wider negotiations for a free trade agreement. We could therefore have the perverse situation that, much as with the Scotch whisky industry, the ceramic industry in my constituency could be put to one side in the interests of the greater good of a trade deal with China. I do not believe that that is a good idea, and I am sure my hon. Friend does not, but the Government will not say so.
I was very interested to hear the Secretary of State’s response to my hon. Friend’s question. It was a feat of Dispatch Box prestidigitation such as I have not seen for many years, because the Secretary of State appeared to agree with my hon. Friend while in fact disagreeing. My hon. Friend is absolutely correct. As we saw with the Taxation (Cross-border Trade) Bill, which we debated yesterday—that Bill sets out the role and powers of the Trade Remedies Authority—the Government certainly envisage a key role for not only the lesser duty rule, but such economic impact assessments. Of course we must conduct economic impact assessments—I know my hon. Friend does not disagree with that—and a balanced decision must then be taken, but, again, it is right that the House should scrutinise those things and ensure that they are genuinely in the wider interest. In particular, hon. Members with specific constituency interests—the ceramics industry; the Scotch whisky industry; the steel industry—should have the opportunity, at the appropriate point, for scrutiny.
While the TRA will clearly play a very important role, does my hon. Friend agree that it cannot take a balanced decision unless it includes a wide range of stakeholders, such as the trade union movement, producers and representatives of the devolved Governments?
I cannot tell you how pleased I am to have taken that intervention, Madam Deputy Speaker. Mindful of your strictures on time, as I always am, I had actually excised a paragraph about that from my speech, so I am grateful to my hon. Friend for his well-made point.
Order. While the hon. Gentleman is addressing my strictures on time, I know that he will be thinking about concluding quite soon, because he would not want to be in danger of having taken even more of the House’s time than the Secretary of State.
Indeed, Madam Deputy Speaker. The Secretary of State spoke for quite long enough; I will try to beat him by a short head.
The House will recall that the consultation on the Trade Remedies Authority ended on the evening of 6 November, but by early morning on 7 November, hard copies of the Trade Bill were already being delivered to Parliament. One can only suppose that the Secretary of State did not receive the updated consultation principles that were issued to all Departments in 2016, which state:
“Take consultation responses into account when taking policy forward…Do not ask questions about issues on which you already have a final view.”
Worse still, the Secretary of State has chosen to appropriate to himself the power to appoint all the key postholders of the TRA without any constraints on their representative function—that point echoes what my hon. Friend the Member for Aberavon (Stephen Kinnock) was just saying. He will even decide without limit how much those people will be paid. The Bill creates a lapdog, not an industrious and independent guard dog.
Labour believes that the Trade Remedies Authority should be formally constituted, so that it is fully representative of the key stakeholders affected by unfair trading practices. That means the experts within business and the trade unions who face the reality of dumping and unfair state subsidies as an existential threat to their jobs and industries, not a côterie of Rabbit’s friends and relations.
Finally, I must alert the House to the threat that the Bill presents to the devolved Administrations. Today’s international trade agreements reach far behind the border into the policy space of national, regional and local authorities. The Welsh Government have already established that several of the clauses in the Trade Bill pertain to areas covered by its legislative competence and have found restrictions on Welsh Ministers in the Bill that they consider inappropriate. The Welsh Government have therefore stated that whether they consent to the Bill will depend on the Government’s response to amendments tabled to address those shortcomings. The undue concentration of powers in Westminster to the detriment of the devolved Administrations mirrors the undue appropriation of powers by the Secretary of State to the detriment of this Parliament.
This Bill fails to establish the proper framework that would allow our country to develop a sound, legitimate and properly scrutinised trade policy for the future. Instead, we are faced with another sordid power grab by a Government forced to hide their own weakness behind a legislative veil that is technically and morally incompetent. The Opposition believe that the British people deserve better. That is why we have tabled the reasoned amendment. If it is not accepted, we will vote against the Bill.
Order. The House will appreciate that while the Secretary of State and the shadow Secretary of State have been very thorough in their arguments this afternoon and patient in taking an enormous number of interventions, thus allowing a full and meaningful debate, the quid pro quo is that we have a short amount of time left. A great many people still wish to speak, so I have to impose an initial 10-minute limit on Back-Bench speeches, although that is likely to be reduced later in the day.
I note your strictures, Madam Deputy Speaker, and I will do my best to keep within that timeframe. I state for the record that I am a former Business Minister and a former interim Trade Minister, and I am now the Prime Minister’s trade and investment envoy to Brazil and the Nordic and Baltic nations.
I welcome the Bill and the fact that we will now have a legal structure that will create an opportunity for both continuity and consistency—which is somewhat more than can be said about the Opposition’s policy on a customs union. I welcome the fact that this is one of the very first Bills that addresses the issues that this nation will face after Brexit. Trading will be one of the top issues for all of us as politicians, not just for Ministers. If we are to be an outward looking nation, it is crucial that, both as a House and in government, we embrace trade, but what principles should inform that trade policy? What kind of approach should we take as we leave the European Union? In the short time available, I will offer three broad suggestions.
First, I agree with the strong sentiments expressed by the Secretary of State that we should renew our advocacy of free trade. I strongly believe in open markets—that free trade is the way in which we stimulate innovation and create new jobs. For the consumer, it means greater choice and lower prices; and by encouraging firms to specialise, which is one of the key drivers of trade, it increases productivity. Indeed, recent evidence shows that in companies that export, productivity rises by a third in the first year of trading. That is good for them, but it is also good for the wider economy. The Secretary of State was right to say that trade is also crucial for developing nations—indeed, it is through trade that millions of the world’s poorest citizens have been lifted out of abject poverty.
I strongly believe, therefore, that once we are outside the European Union, one of our core principles should be that the UK leads the way in advocating open markets and free trade. But as we have heard in this debate, free trade does not mean a free-for-all—trade without rules. For international markets to work, there have to be clear rules that we agree on, so my second point is that we must consistently work for a rules-based multilateral trading system, based on fairness and proportionality.
I strongly commend the Government, and particularly the leadership of the Secretary of State, for their engagement with the World Trade Organisation. In the last year, British Ministers have been building up good working relationships within the WTO; they have taken the key steps needed to enable us to be an effective, independent member in the future. That is why the Bill is absolutely right to empower the Government to rejoin the GPA in our own right. Government procurement is a £1.3 trillion market, so it is clearly in our interests, but it is also important at this point for us as a nation to signal our intention to engage in that sort of plurilateral agreement.
A rules-based trading environment also means that we need to create new powers, so that we can challenge unfair or injurious practices when others break the rules; equally, we need to be able to respond when the market becomes distorted. That is why I very much welcome the creation in the Bill of the Trade Remedies Authority. I am sure that in Committee we will debate how that will work, but to be effective the TRA will need to be objective, it will need to be evidence-based and—as questions in this debate have already suggested—it will need to be free of political interference in individual cases. If I am a member of the Committee, I will want to ensure that the legal framework and the authority itself are able to pass these tests. Clearly, when there are unfair practices that are damaging UK businesses, the Government of the day and the TRA must act, but we must be careful to avoid creating rules that can be bent for political expediency.
As a former Business Minister. I know how intense the political and the media pressure can become. A really awkward case suddenly comes out of the blue—perhaps it involves a totemic, major British brand or company, or perhaps substantial job losses are threatened, affecting an individual town. The tempting path for us as politicians, quite naturally, is to instantly demand, “The Government must act! The Government must retaliate! The Government must intervene!” regardless of the evidence. But we should be clear as a House that if we go down that path—if we seek to bend the rules for uncompetitive British businesses—we will have created a cover for protectionism, and that path leads to economic failure. Protectionism makes an economy less competitive, reducing its ability to create new jobs. Domestic prices rise, which hurts those on the lowest incomes the most. If we gain a reputation for being protectionist, what will happen? Others will retaliate. In the end, if we want others to follow the rules, we must lead by example.
That leads me to my third point. We need a cultural change in both business and politics if we are to succeed as a global trading nation. We need not just more exports but more exporters. Our current trading is far too reliant on a small proportion of British companies—11%, according to recorded figures. I suspect that that does not capture everything, but even if it were 15%, that would still be less than half the proportion in Germany. We need to challenge the business world to change the culture.
As the Prime Minister’s trade envoy to the Nordic and Baltic nations, I have seen for myself the success of companies in those countries. It is already our sixth-largest export market, and there is a strong appetite for British goods and services, but the business groups can do more. They can use their networks and resources and set the expectation that British firms should export. That should be the norm and should be expected of people in each and every business sector. It is the reverse at the moment. We need to change that culture. I hope that Ministers, and all of us as Members of Parliament, will continue to challenge the business groups that say they speak on behalf of business to ensure that they promote exporting.
We also need to change our thinking about trade agreements. A lot of the debate—I heard it again today about trade and Brexit—is all about comprehensive multilateral trade agreements. They will be important, particularly with our European neighbours and other regions, yet because of their scale and complexity few will be fully implemented in the next five, six or seven years, so we need to change our thinking. We need to recognise the role of bilateral and plurilateral agreements, particularly in regions such as the Pacific. The Secretary of State is absolutely right to take the pragmatic view and say, “Where is the growth coming in the world in the next 20 years?” It is in the far east, and we need to be in that market. We need to change our thinking.
The circumstances for most exporters are such that billions of pounds of exports are being undertaken today in areas where there is no formal trading agreement. We need to be pragmatic; we need to be smart; we need to be sharp. We should not always assume that this is simply about national Government to national Government. I have learned from my work in Brazil, for example, that the regional state of São Paulo, on its own, has an economy larger than most Latin American nations. We need to be sharp in how we engage with the regions and nations abroad and with their city states.
Free and fair trade is crucial, but we in the House should not kid ourselves that when awkward cases come up, those discussions will be easy. I want a remedies environment that is free of individual political interference; one that is objective and evidence-based. This is a strong Bill that will allow us to move from where we are to the next stage in our transition. As the Secretary of State has rightly said, there are more legislative measures to come, but the Bill has considerable merit. It is a shame that the Opposition seem to be trying to amend a Bill that is not before the House.
It is a pleasure to speak on behalf of the Scottish National party. I will do my best not to take up too much of your or the House’s time, Madam Deputy Speaker.
The UK Government have an opportunity in the Bill to show leadership, to engage widely and to consult with devolved nations, business and other stakeholders about what should be contained within it, but it seems like a paper-thin effort—and not a very great effort at that. Given the magnitude of Brexit and its potentially damaging ramifications, this pretty paper-thin Bill is an affront to democracy and lacking in any real detail—not a great start as we enter this new territory.
A hard Tory Brexit would be disastrous for the economy and completely undermine the Scottish Government’s efforts to boost Scotland’s trading position. We found out just a few moments ago that the UK Government have dropped their promise to amend devolution aspects of the European Union (Withdrawal) Bill and that they plan to do it in the House of Lords. That is shameful, because the Secretary of State for Scotland made a promise on the Floor of the House to the people of Scotland and Scottish MPs.
We have significant concerns about trust in the Government and about whether they can stick to their word. Regarding withdrawal, the Scottish Parliament should not have its powers in any way diminished. As we know, the Government cannot be trusted. The Law Society of Scotland, for instance, says:
“We are concerned by the extensive scope of delegated ministerial powers under the Act, mirroring concerns previously identified in relation to the use of Henry VIII powers in the context of the European Union (Withdrawal) Bill. It is not clear why the Government considers such wide powers to be necessary.”
It would be interesting to hear from the Secretary of State what his take on that is. In its excellent briefing, the Law Society of Scotland refers to “Clarity of drafting”, which it says is
“central to good law-making.”
“Under clause 2(2) an international trade agreement means a ‘free trade agreement’, however ‘free trade agreement’ is not itself defined.”
That is a very important point. In all these discussions about free trade agreements, the actual definition is not given. The briefing points out that clause 2(2) also
“refers to ‘an international agreement that mainly relates to trade, other than a free trade agreement’. However, ‘mainly’ does not grant sufficient certainty in terms of interpretation.”
I am no legal eagle, but I am sure that my hon. and learned Friend the Member for Edinburgh South West (Joanna Cherry) will give us her take on matters later.
There is a very significant omission from the definition section in clause 4, which relates to Northern Ireland. When I asked the Secretary of State about that in an intervention, he repeated the Government’s mantra that there is hope of restoring the Northern Ireland Executive. If there were indeed that hope, one would expect to see some reference to the devolved authority meaning the First Minister and Deputy First Minister, hopefully acting jointly, but there is zero mention of those Ministers. The clause defines a devolved authority as “a Northern Ireland department”. The Government, I suggest, are clearly preparing for direct rule, and I am deeply concerned about that.
I share the hon. Lady’s concern. It seems very much as though the Government are making policy on a wing and a prayer.
It is just over 20 years since the people of Scotland voted for devolution, for progress, to move forward and have power over some, but not all, of their own affairs. In 1997, voters in Scotland backed the creation of a Scottish Parliament by 74% to 26% and voted by 63% to 37% for it to have tax-raising powers—powers that we are very proud to be using.
The Scottish Parliament’s pillars of establishment include accountability: it is answerable to the people of Scotland. It should be open and encourage participation. It should be accessible, and should involve the people of Scotland in its decisions as much as possible. I remind the House of that not to give a history lesson, but to highlight what the people of Scotland voted for and what was delivered in devolution, on a cross-party basis. This Bill, and more generally Brexit, are not what Scotland, or indeed the rest of the UK, voted for. The Bill threatens devolution in Scotland, and it threatens the vote that took place 20 years ago.
My hon. Friend quoted the Law Society of Scotland. Does she agree that it is important for the Tory Government to understand that it is not just members of the SNP who are concerned about the Bill, but that a wide section of Scottish civic society is completely behind the devolved settlement for which it voted so overwhelmingly in 1997? The Law Society’s trenchant comments should give the Government pause for thought about what they are doing. They should bear in mind that it is not just a political party that says they are undermining the devolved settlement, but an apolitical, professional association with great expertise behind it.
I absolutely, and not surprisingly, agree with my hon. and learned Friend. It is true that Scotland voted by 62% to remain in the EU. My colleagues and I are here today to stand up for Scotland and what it voted for in that referendum and to defend and protect the powers of our Parliament in Scotland and the rights, protections and equalities that we enjoy by virtue of our membership of the EU. I for one am not going to let this chaotic and reckless Tory Government diminish or damage the powers of the Parliament, country and economy of Scotland without a very real and determined fight.
We should not have to fight for our voice to be heard here or in trade negotiations and any trade deals that are done. Scotland and the devolved nations should be treated as equal partners, and if we are not, we reserve the right to make a decision about our constitutional future.
Just today we learned that the Scottish Parliament’s Finance and Constitution Committee unanimously endorsed the view that it could not recommend legislative consent to the Scottish Parliament for the withdrawal Bill, and the Committee includes no less than Adam Tomkins, spokesperson on the constitution for the Conservative party in the Scottish Parliament.
I thank my hon. Friend for that intervention. I am not given to agreeing with Professor Tomkins, but on this matter I do.
The SNP had a manifesto commitment to call for greater transparency in any proposed international trade deals following Brexit, with the UK and Scottish Parliaments being given a say. As I am sure the Secretary of State will know, there are 111 powers returning from the EU that intersect with the devolution settlement in Scotland and that must come back to Scotland and not be seized by Westminster.
The Law Society of Scotland has been much quoted, but I shall quote it again because, interestingly, it has highlighted the importance of extending a whole of governance approach to trade negotiations, and we very much endorse that. The Secretary of State will also know that we held a roundtable this morning with my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford). The Leader of the Opposition was sorely missed; we would have loved to have seen him there. The Law Society of Scotland has said:
“We would urge further consideration of how trade negotiations will be handled where they intersect with the powers of the Scottish Parliament and other devolved legislative authorities where any proposed trade agreement will affect an area of devolved competence.”
Devolved Governments inevitably have different priorities. Indeed, as the hon. Member for North Down (Lady Hermon) has said, there is a country in the UK that does not have a Parliament, and we need this Government not to be making deals or imposing direct rule by the back door; they need to be up-front about what they are doing and how they are going to ensure that the devolved nations of the UK have their say in this process.
They have different priorities, and therefore trade negotiations must be carried out with their involvement. For example, the Scottish food and drink sector has had record growth year on year and has outstripped the rest of the UK. Under the protected geographical indication—PGI—scheme, the EU guarantees no trademark interference with the name of an area, specific place or, in exceptional cases, a country.
The hon. Lady will have heard from the Secretary of State that our exports have increased dramatically since the decision of the British people to leave the EU. What aspects of the rolling over of the trade deals that already exist between the EU and other countries does she object to in this Bill?
I am not sure that I have referred to that at all; what I am referring to—[Interruption.] The point I am making is that the powers that will be given to this Government and the deals in place and the powers that intersect with the devolved nations will not be protected, so any future trade deals might well be imposed or impinged on, and our powers will be diminished.
The point my hon. Friend is forcefully making—[Interruption.] Conservative Members laugh, but this is very important for the Scottish and British economy, because the biggest export from Scotland and indeed of the whole UK is Scotch whisky; that is what is keeping the economy afloat. It is very important to Scotland that trade deals such as that with South Korea are perpetuated on the same terms and that Scotch whisky’s geographical indication is protected. These are not just my concerns. I am holding an email from the Scottish Whisky Association, with which I am in regular contact. It wants these matters to be raised; it is used to hearing assurances from the Government, as am I, but we do not hear much else. Does my hon. Friend agree that the point is this: she is talking about the importance of—
Order. First, the hon. and learned Lady, whose eloquence is far above average in this House—that is meant to be a compliment—knows that she should not make such a long intervention. Secondly, she cannot have a private conversation with her colleague the hon. Member for Livingston (Hannah Bardell) and be looking away from the Chamber towards her; she must look this way. I call Hannah Bardell.
Thank you very much, Madam Deputy Speaker. I absolutely agree with my hon. and learned Friend. The point is that we do not want to leave the EU; we did not vote to leave the EU. The legislation as it stands is insufficient, not only by our standards but by those of others.
As I was saying, some of our most globally renowned brands, such as Scotch beef, Scotch lamb and Scottish farmed salmon are among the 14 protected food names in Scotland, along with the Arbroath smokie, Dunlop cheese and Stornoway black pudding. Those are among the localities to have been given PGI status. In any trade deal after Brexit, we must be able to protect those Scottish brands. Scotch whisky is an important example. It is the UK’s biggest export and, quite frankly, we are getting a bit fed up with that trade propping up the UK Government and their economy.
Last month, the SNP Government published a legislative consent memorandum outlining why they do not intend to lodge a legislative consent motion in relation to the Bill. We firmly believe that policy responsibility and expertise for matters within devolved competence lie with the Scottish Government, who are accountable to the Scottish Parliament and to the Scottish people. We take democracy seriously in Scotland, and we do it pretty well. When we had a referendum in Scotland on independence, we had the widest possible participation. We included the future of our nation in it—the 16 and 17-year-olds who were sadly left out of the EU referendum but who will reap what is being sown by Brexit. We also had a proper timescale for the debate. We asked people what kind of nation they wanted to live in and be part of, rather than trying to exclude some people from society, to “other” them, and to blame them for the failures of the UK Government’s austerity plans.
This trade Bill is lacking in detail. It takes some serious and worrying paths, and it is just the starter for 10. We are told that there is going to be a further Bill later, but why not get it right now? Why not be bold and stand by that old adage that Scotland is leading the UK, not leaving the UK? The Government could have put forward proposals for the devolved nations to have Trade Remedies Authority offices and their own permanent commissioners. A truly collaborative approach could have been possible.
I thank my hon. Friend for that intervention, but I do not want to be uncharitable to the Secretary of State.
The trade White Paper was issued on 16 October, with a deadline of 6 November. That is not exactly a long period for the consultation and it did not give anyone much time to respond. When the Trade Bill was published the very next day, there was concern at the speed with which the process was concluded. The Manufacturing Trade Remedies Alliance, which I met recently, voiced anger on behalf of its members, saying that officials would have no time to analyse reaction to the trade White Paper or to brief Ministers on the industry’s concerns. This goes back to the point about conducting a proper process in a timeous manner.
It is an excellent suggestion that the Trade Remedies Authority should have an office and a commissioner in Scotland. The balance that feeds into the equation of what remedies are taken cannot be properly achieved by an authority based only in London that has a London-centric point of view.
Absolutely. This was an opportunity to move away from that London-centric psychology.
In Scotland, Dave Tudor, the chairman of the Life Sciences Scotland Industry Leadership Group, published an open letter to the UK’s Brexit negotiators warning of the damage that uncertainty is already inflicting on the industry. These are his grim words, of which we should all take note:
“Widespread concern over regulation, movement of goods, access to talent and research and development and the negative impact this uncertainty is causing is set to intensify.”
I genuinely wonder when it will dawn on the UK Government and others across this House that our universities cannot staff their courses and are having to close departments, that they are dropping down the world rankings because they cannot attract talent and European funding and that we are becoming a union of diminished importance and influence. I for one have no intention of letting that happen to Scotland or, if I can help it, to the rest of the UK. As our First Minister, Nicola Sturgeon, said recently,
“no Brexit is preferable to no deal.”
We accept that the UK Government should make preparations for the UK’s withdrawal from the EU, particularly with regard to maintaining the important continuity of current trading arrangements. This is of vital importance to businesses across the UK and the EU. However, we are concerned about the direction of travel in the Bill.
Since 2007, Scottish exports to the EU have grown by more than 25%, which is a clear demonstration that the single market is Scotland’s real growth market. Being part of the EU means that our businesses are operating within the world’s largest trading area. With 500 million potential customers, it is eight times bigger than the UK alone and contains eight of our top 12 export destinations. The financial services sector alone employs 40,000 people in Edinburgh, and over £500 billion-worth of assets are under management in the city. We have already seen banks move from London due to fears of a hard Brexit when we lose our membership of the single market. Just a month ago, the European Banking Authority announced it will move from London to Paris.
My hon. Friend is making a serious point that is in stark contrast to what the Government were originally coming out with, which was that Brexit would somehow lead to empire 2.0 and that the floodgates would open in terms of opportunities for the United Kingdom. In fact, the floodgates are opening in the opposite direction and people are fleeing the UK at the prospect of what is happening with Brexit.
I do not want to be a “doomsday-scenarioist” but the reality is that these things are happening now. The European Medicines Agency is off to the Netherlands, which is a significant loss to the UK and diminishes its role in regulating medicines, taking away 900 great jobs and a serious amount of influence.
As for my constituency of Livingston, which is at the heart of West Lothian, around 4,500 to 5,000 jobs are sustained by exports to the EU. Members from across the Chamber will have been contacted with the numbers that their constituencies could lose. Owing to its relatively strong manufacturing base, the proportion of West Lothian’s international trade with its EU partners is estimated to be higher than the Scottish average, so I have real and grave concerns as a constituency MP. Many of the business people I have spoken to have expressed deep worries about the lack of experience in the Brexit and International Trade Departments. I pay tribute to the staff in those Departments, but those are real concerns that have been raised with me none the less. The Secretary of State for International Trade admitted in an interview last year that
“Britain has turned down countries wishing to strike free-trade deals after Brexit because the government does not have the capacity to negotiate them”.
That somewhat contradicts his previous comment that securing a post-Brexit trade deal with the European Union should be the “easiest in human history”, but it is not so easy if the Departments do not have any staff.
The potential impacts are significant, ranging from planes being grounded the day after Brexit to fresh Scottish produce rotting in a protracted customs process, to prohibitive tariffs and diminished access to labour. Let us look airlines for example. As the London Market Group explained to me, a broad range of EU-based businesses, often undertaking activities critical to the EU economy, require specialist cover from the London insurance market, including airlines. Currently, the UK insurance market is the only location with the specialist aviation insurance knowledge and financial capacity to provide the full coverage for all risks faced by an airline. If airlines cannot get that insurance when we leave the EU, there is a risk that planes could be grounded at the end of March 2019.
I raised that on the Floor of the House on 11 September, and I was laughed at from across the Chamber, but lo and behold that very risk was raised almost a month later when the Chancellor became the first Cabinet Minister to admit that no deal could ground all flights. It took so long because, as we know, the Government had not done a proper assessment of the economic consequences. Without contractual certainty, which is the fear following Brexit, there could be market disruption and dislocation in a range of sectors.
The hon. Lady has repeated the scare that flights will somehow be grounded on the day the UK leaves the EU. May I suggest that she look at the transcript of the Transport Committee evidence session when the heads of major airlines and airports said that such a fear was completely groundless?
I thank my hon. Friend for his intervention, and I remind the hon. Member for Milton Keynes South (Iain Stewart) that it was the Chancellor who said that flights being grounded is a concern.
Financial services of all kinds, from insurance to loans to derivatives, could be disrupted because UK firms are not able to continue servicing EU customers, or vice versa. EU banks that have derivatives cleared through UK central counterparty clearing houses might be in breach of regulations, as those central counterparties may not be authorised. I appreciate this is a technical point, but it is important. Contracts may have to be unwound, or may become unenforceable. According to reports from the Association for Financial Markets in Europe, €1.3 billion of bank assets, including loans, securities and derivatives, may need to be moved from the UK to the EU. I am sure the Secretary of State is familiar with those issues, but I wonder what he and his colleagues will do about it.
This Bill also gives the Government power to implement agreements with partner countries corresponding to the EU’s free trade agreements. We have serious concerns about that, and we hear that the UK Government are off negotiating deals in the US—top-secret deals that the Secretary of State has said should remain classified for four years after a deal is struck, which beggars belief.
This Trade Bill also provides measures for HMRC to collect data on behalf of the Government—the hon. Member for Ribble Valley (Mr Evans) asked whether I did not agree that should happen, and I have no problem with it. It is important that it happens, but it is about how it happens. It is vital that data is collected in an appropriate fashion, and the Law Society of Scotland has expressed concerns:
“We are concerned that clause 7(1) grants a very wide discretion to HMRC to require information. The scope of this provision should be more clearly defined to give greater certainty as to the extent of information and the anticipated frequency and method of data collection.”
The focus of the Scottish Government, and of the Scottish National party in power in Scotland, has always been to preserve our place in Europe for the benefit of business, the economy and families everywhere. The only way a hard Tory Brexit can be avoided is if Labour joins the SNP in supporting our continued membership of the single market and the customs union in these Brexit negotiations. I know these Benches are not very comfy, but some of the bums opposite must be pretty sore from sitting on the fence. We really need to get together on this issue.
Liberty has expressed deep concerns:
“The plans are the latest attempt by ministers to undermine democracy and bypass parliamentary scrutiny of the Brexit process, after the EU (Withdrawal) Bill and Data Protection Bill contained similar ‘Henry VIII’ powers.”
The EU (Withdrawal) Bill defines “retained EU law” as including primary legislation that gives effect to EU mandates, such as the Equality Act 2010 and the Modern Slavery Act 2015.
The concerns continue to be wide ranging not just on the Opposition Benches but across society.
I close by sharing a little lyric I wrote that sums up the current situation:
Fed up with Brexit, me three,
Trading relations headed down the ‘swanee’
If it doesn’t fit on the side of a bus,
Then let’s not say it, don’t make a fuss
Phase one was a floundering mess
The Prime Minister said she did her best
The Irish border was the sticking point, and the DUP
Cross-border trade we’re told it’s possible, it’s about wording, you see
A fudge not a dodge
Or has the right hon. Lady for Maidenhead, really lost the thread?
The Brexit spool unravels
Our economy headed south and what about travel?
Blue passports we’re told
Ah, perfect, imported they’ll be, that’s me, I’m sold
Choose Brexit, choose a new queue,
At the airport, we’ll be going through
It’s for the next generation of children I fear
Erasmus, international trade, travel will be lost, I shed a tear.
LGBT rights, workers’ rights, equal pay,
All important things, the EU has paved the way,
On the night of the referendum, and then the next day
Promises made were dead straightaway
How will history judge, our politicians of today
All of us here, not well, I’d say
Not all of us want to be facing this mess,
In Scotland we voted to stay in, we think it’s for the best
So let’s get together and stop this guddle,
For the sake of our future, we need out of this Brexit muddle.”
I will be brief. First, Brexit has already been a great success. We have seen great improvements in our economy and great opportunities for many businesses. Despite her wonderful ditty, I take issue with the sentiments of the hon. Member for Livingston (Hannah Bardell).
I am pleased that today we are talking trade because, when we talk about Brexit, trade is the key win as far as I am concerned. For me, it is vital that the 50 or so EU FTAs are properly transitioned. That is absolutely right. My right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) rightly explained that the powers are wide, but when we are trying to transition that number of agreements in a relatively short period, we need the ability to make necessary changes. Let us remember that third parties have a say in this; it is not just about the UK going to these countries and saying, “Let’s do it the old way.” This is also an opportunity for us to do it in a way that benefits the UK economy.
This Bill is an important part of the whole Brexit piece. Although I understand that the prime objective of this legislation relates to the existing EU relationships and trade deals, there will be some new agreements and, de facto, the potential of their setting some form of precedent for the Government’s approach to doing future trade deals with other countries. I do not think it is appropriate to put this in the Bill, but it would be helpful to have something on the record from the Government about what exactly their trade policy is. What theme will bind their approach to these 50 agreements and future agreements with other states?
The Government have said that they believe that they now have a great opportunity to set themselves up as the new global leader for free trade, a position that some might say has been vacated by the USA. Therein lies a question: what is free trade? We need to be clear that it does not mean free without any limitations. Every FTA has its exclusions and every country that is part of an FTA will negotiate for what is in its best interests. Complete free trade would work only if the law of comparative advantage could come into play, but that would apply only if we were all one country, with no boundaries, and with the same laws and taxes, and that is simply not the case.
Inevitably, therefore, all FTAs include some element of protectionism and it seems that now is the time for the Government, in carving out these exclusions, as is the norm, to make it clear to the country where they want to be on the balance between totally free trade, with no exclusions and no protections for our industries, and having some protection. I recall that way back the Prime Minister talked about ensuring that some of our core industries were protected. That is a key issue and I want to hear something from the Government on it. If we are talking about the economy versus the community and jobs issue, if I may put it that way, I want to hear that there is some commitment to retraining in those areas where there will be fallout. Clearly, those will be minimised, because the opportunity under Brexit is greater than the threat, but it would be naive not to recognise that there is that potential fallout.
People are increasingly talking about something called “fair trade”. That also has an old meaning—ensuring fair access to markets in developing countries—but it is now being twisted. The President of the USA is redefining “fair trade” to talk about “fair” support for his national industries, which is interesting because it is a way of trying to make protectionism look like fair trade and free trade. It is important that we remember that these words are now being twisted. It is important that the Government are clear about what is meant. Let us forget for a minute the lingo and think about what we want to achieve through these agreements for our domestic economy and for our domestic security. That issue came to light specifically when the Hinkley Point contract was reviewed. In the end it was affirmed and it is going forward, but there is an issue about security, which we have not yet referred to in this debate. We need to consider whether there are key infrastructure areas that we believe should never be in foreign ownership. Would we like to see the BBC or BT owned by China or Russia? I do not think so, but it would be helpful if the Government made that clear.
So let us get rid of the labels. We must look at what the Government really want to do and have some clarity for industry. I have two significant ceramics businesses in my constituency and they are concerned that the TRA and the future protection will not be enough. Looking at this industry sector by industry sector is going to be important.
In conclusion, I do not agree with the solutions put forward by the Opposition because, given the speed required, the Henry VIII powers are necessary. Indeed, exactly the same conditions applied under the European Communities Act 1972. I do think, though, that there would be some benefit to the country were the Government to clarify exactly what their trade policy is. They should consult industries to find out where the opportunities are, so that we maximise rather than minimise the real win-win here. We should also put in place clear guidance on what we will do to support retraining. Of course there will be cost-benefits for consumers and higher salaries, but it would be wrong to ignore the fact that there will be a few losers, and we need to look after them.
We should never forget that trade agreements are not for the Government to determine on their own; they are also for the third parties with which we enter into agreements. International trends are moving and the notions of fair trade and free trade are parting company, depending on which part of the world one considers. Let us have some clarity from the Government. The Bill is a good start, but let us now have a little detail about how their ideas will be taken forward.
It is a great pleasure to speak in this debate as the Chair of the International Trade Committee. My Committee took evidence on the Bill in November to aid the House in its scrutiny, but as yet we have not taken a position on the legislation, as often happens with Select Committees. The views I express today are my own, not those of my Committee colleagues.
This is a significant day for the current UK’s future as a trading entity. The Bill is one of a suite of legislation promised by the Government to establish the framework for an independent UK trade policy. It must be noted that the current UK has not operated an independent trade policy since 1973, when I was three years old. To create a new trade policy after a 40-year hiatus is an immeasurable challenge. It is paramount that we get it right and have in place the right legislation.
According to the background briefing to the Queen’s Speech, the Trade Bill was intended to create the
“necessary legislative framework to allow the UK to operate its own independent trade policy”
after Brexit. The Government said that the legislative framework would include two key features: first, a power to strike new trade deals with third countries, and secondly, the establishment of a UK trade remedies system. On reflection, it is interesting and striking to see how little of the original stated purpose the Trade Bill achieves. There is nothing in it about striking new trade deals with third countries, and the establishment of a UK trade remedies regime is largely left to the Treasury to achieve in the Taxation (Cross-border Trade) Bill. The point made by my hon. Friend the Member for Livingston (Hannah Bardell) was also striking: we need the Bill not to have a London-centric point of view.
I have three observations that concern the breadth of the powers conferred by the Bill; the lack of parliamentary scrutiny offered in the Bill; and the relationship between the Trade Remedies Authority and the Secretary of State—sadly, just the Secretary of State. On the breadth of the powers, the Government are seeking to maintain their trade arrangements with third countries with which the EU has trade agreements.
The UK Government are seeking to strike a deal with South Korea. Has my hon. Friend noted, as I have, that that might not be as straightforward as was hoped by the UK Government?
Absolutely; a number of deals with third countries will not be straightforward, and I will address the one with South Korea in particular —my hon. Friend pre-empts my speech very well.
It is striking that the UK, finding itself leaving the EU, now wants to ape exactly what the EU has been doing. It is as though the UK is tipping its hat to the EU and thanking it for leading the way—the EU has been doing such a good job that the UK wants to do exactly the same after we leave.
This is to be done by the UK establishing partner agreements with third countries that correspond as closely as possible to the agreements the EU has with those countries. As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) pointed out, South Korea is a particularly striking example because the 55% provision on rules of origin in the automotive sector cannot be replicated by the UK because the UK cannot produce the 55%. That would give South Korea licence to export to the UK automotive sector and disadvantage UK manufacturers. If we want to change that percentage, any Korean trade negotiator who hopes to keep his job for a further week is not going to just nod his head. He is going to look for some sort of quid pro quo. The question then becomes whether that is the ceramics of Stoke-on-Trent, Harris tweed or Stornoway black pudding. What could it be? Is it the whole of agriculture? We just do not know. That is the reality of how trade works. If I give something, I want something back in return. I do not just give something for nothing in a trade agreement.
The trade agreements to which the Bill applies include free trade agreements and international agreements that relate mainly to trade, other than free trade agreements where the other signatory and the European Union are signatories to the agreement immediately before exit day. Furthermore, all but five countries around the world are involved in regional trade agreements. Therefore, the UK would be joining company with East Timor, Somalia, South Sudan, Mauritania, and São Tomé and Príncipe in the gulf of Guinea. More strikingly, the UK will find itself with higher trade barriers with 27 countries in Europe, plus another 67 that are covered under another 40 agreements with the EU, making a total of 94 countries. When I asked the Prime Minister about that in the Liaison Committee, she seemed unaware that the UK could be disadvantaged in its trade with up to 94 countries.
Much could be said about the breadth of the powers that the Government are taking, but I think that the point should come from the Department for International Trade, whose second permanent secretary told my Committee that replication
“will depend as much on whether the party at the other end is prepared themselves or will seek to have some agreement that will allow common content. Until we have that detailed discussion on the replication, neither we nor they will be 100% sure of exactly how you will define what is as close as possible to what we have had with the EU.”
Time is against me, as I had hoped to have 10 minutes but have only two and a half remaining. One of the major issues that we have to consider is parliamentary scrutiny. Many countries allow parliamentary scrutiny of their trade Bills, including the United States, Australia, New Zealand and Canada—even the European Union allows that—so we are not asking for anything new. In the United Kingdom, whether it is Henry VIII powers or James II powers, which the Williamite revolution got rid of, this is the situation we might be left in. In trade negotiations there is give and take, with winners and losers within the negotiating countries.
My colleague is again absolutely correct.
In here, there are Members representing many constituencies—today they are on the Government Benches—who think that they will be okay. Governments change over time. Who makes the decisions and according to what criteria? Will decisions be made such as the bilateral aid agreements run from 1945 to 1985, in which the UK Government had a deliberate policy to support only London airports, for example? When Iceland wanted flights to Scotland, the UK Government tried to get them to fly first to London and then north to Scotland. It was Iceland that broke that. That was a deliberate policy of the UK Government. London is not the place it is today because of anything magical about London; it is the result of UK Government policy over many years. Other areas of the UK could be sacrificed in future, just as they have been sacrificed in the past, for the benefit of London or elsewhere. If there is no parliamentary scrutiny, on what basis will that be done? Will it be on the basis of the Secretary of State having a meeting in an airport departure lounge? It is not at all clear.
I am running out of time and cannot give way.
Surely the devolved Administrations must be involved. My hon. Friend the Member for Livingston (Hannah Bardell) mentioned the 111 powers coming back from Brussels. I am tempted to say that we must free the 111 powers from the grasp of the Westminster super-state, because that is what is happening at the moment. Those 111 powers should be going to Scotland.
Polls show that the EU has 68% support in Scotland and that the UK has 51% support. If Members were wise, they would not treat Scotland in the highhanded way the UK super-state is trying to do, because that will lead—I want it to—to an independent Scotland. If they were sensible, they would be more measured in what they are doing. The new Trade Remedies Authority should exactly mirror that point. [Interruption.] The Minister chunters from a sedentary position, “What does this have to do with the Bill?” It has everything to do with the Bill, because if you continue with your London- centric point of view, you will regret it in future—
I am very grateful, Madam Deputy Speaker—you are indeed a great Madam Deputy Speaker—for the extra 30 seconds.
The Trade Remedies Authority needs to be current UK-wide, otherwise it will face the real temptation of being only a London-centric body. As things are given, things are taken. Some people are going to win and some are unfortunately going to lose. We have to ensure that that happens on the basis of thought-through decision making involving this place. I urge the House to be a champion for democracy and accountability in trade policy. This Bill needs to be amended accordingly, as my Committee more than knows. I think on that we can agree.
It is always a pleasure to follow the Chairman of the International Trade Committee, although I suspect that the only part of his speech with which I will agree is his praise for you, Madam Deputy Speaker. The rest of it, I suspect, we will disagree about.
I am grateful for the opportunity to speak in favour of the Bill. Many of the contributions we have heard in the debate confirm my fear that too many people want to re-fight the referendum and quite possibly deny the democratically expressed will of the British people to leave the European Union. As we heard from the right hon. Member for Birkenhead (Frank Field), who is no longer in the Chamber, the vast majority of fair-minded people, however they voted in the referendum, want us to get on with it and stop trying to re-fight the battles of 2016. That is what the Bill is about. It is not about re-fighting old battles or trying to shape future trade agreements; it is an important, practical, common-sense set of measures that will form part of the framework in which we can negotiate further agreements. The Bill is about giving continuity to our traders and investors, particularly companies with an interest in countries with which we have an existing trade agreement through the EU.
Several hon. Members have mentioned Scotch whisky. I declare an interest—I do my best to keep that industry going. However, the fear that the powers in the Bill will allow the agreements with third countries that we have through the EU somehow to disadvantage the Scotch whisky industry are completely wide of the mark, because this is about the continuity of existing arrangements. If there was a substantial rewriting of the basis of an agreement, that would be a new trade agreement, and would therefore not be covered by the principles of the Bill. It is important that we have the Bill, because doing nothing is not a credible option. Our agreements with countries that we have through the EU would simply come to an end if we did not have these measures in place. Whatever shape our future UK-EU trade arrangements take, the Bill gives us the flexibility to mirror those important third-party agreements in our domestic law.
I welcome all the provisions in the Bill, but in the time available, I wish to focus on part 3, which relates to trade information. It is clear to me from my previous work in the Department for International Trade that for too many years this country has underperformed its potential for exports and overseas investment. As we try to remedy that, it is critical that we obtain complete data on our exports and overseas investment. It is important, too, that we have more clarity about what constitutes exports and overseas investment, because many services that UK-based companies provide overseas, particularly with the advent of modern technology, might not be captured in the export data. For example, if a professional services company gives a software upgrade to one of its subsidiaries overseas, that might not be counted as an export.
If such data is available, it will allow both the Department and private companies better to support those who wish to expand their export activities. The Secretary of State’s Department has already made an important start in boosting our export performance through the new digital platform to provide enhanced and affordable insurance cover, which may be used where there is a political risk in the country to which the exports are destined, and the ongoing appointment of new trade commissioners, which will better reflect where our export markets are. My hon. Friend the Member for Hertford and Stortford (Mr Prisk) made the point that the traditional capital-centric model and distribution of our trade proponents does not necessarily reflect where the growth markets are. It is critical that we have flexibility and such additional resource. In addition, we need to work with banks, insurance companies, legal firms and other professional services, so that we can tap into their knowledge of export markets. It is critical that the Government, working with these bodies, are allowed to better provide export assistance.
We also need to go further and, like the Germans, use our chamber of commerce network better to support our exports. There is much that we can still be doing to learn from that. Not having an independent trade policy for 40 years has left us sluggish. We are starting to catch up, but there is much more to do. The Bill is an important part of that process.
Let me conclude by referring to an article that the Secretary of State published last week—his new year message. He hit the nail on the head when he said that one of his most frustrating experiences last year was returning from a very positive and optimistic overseas trade visit only to encounter waves of negativism at home. There is huge interest in British products, services and investment, yet too often we have self-defeating pessimism here.
My right hon. Friend the Secretary of State gets accused of not having a job and of not yet signing new trade agreements. Well, of course he cannot at the moment, because that is prohibited under our current membership, but he is doing a lot of preparatory work to ensure that, on the day we leave, we will be in the front seat to get these new agreements, whether they are complete free trade agreements or some other form of bilateral co-operation. That is the work that is going on. As we enter the new year, I hope that an important positivity—a can-do attitude—can prevail, instead of the self-defeating pessimism that so many seek to ply.
I believe that the Bill is unnecessary; that we should be seeking to stay in the customs union and the single market; and that we are better off in a union with no tariffs or quotas, as well as with the elimination of non-tariff barriers.
The EU market accounts for nearly 50% of our total trade, and trade under EU agreements with third countries, including the likes of Canada and South Korea, comprises a further 13%. Last month, the EU-Japan trade agreement was finalised, and the EU is starting to open negotiations with both Australia and New Zealand. We would benefit from all those agreements if we were to remain in the customs union.
I chair the all-party group on agroecology, which launched its report into post-Brexit trade at the Oxford real farming conference last week. The report sets out the importance of the EU for our food, feed and drinks market. In 2016, 60% of UK exports in those sectors were to the EU, compared with just 16% to Asia and 14% to North America. The picture is even starker for imports: 70% from the EU, compared with just 8% and 6% from Asia and North America.
Currently, we negotiate as a bloc of 500 million consumers in a market renowned for its high standards. After Brexit, we could be negotiating from a much-diminished position, and I have to say that, on our current record, we are not very good in this area. In January 2008, Gordon Brown announced a deal to sell pigs’ trotters to China, following years of complex negotiations. In November 2017, nearly 10 years later, Meat Management magazine—I am an avid reader, as hon. Members can imagine—reported that the UK had finally got the go-ahead to start shipping those trotters out to China. This followed a lengthy process of technical negotiations led by the Agriculture and Horticulture Development Board in collaboration with the Department for Environment, Food and Rural Affairs, the Food Standards Agency and others, as well as inspections of UK facilities by the Chinese authorities. That example shows that it took 10 years just to get the pigs’ trotters protocol off the ground. Imagine how long it will take to negotiate comprehensive trade agreements covering more than that.
There are a few general points of concern that I want to raise about our future trading relationships and the way in which trade deals and rules can affect people involved in the sectors in which I am interested. In 2014, I visited El Salvador to look at the impact of climate change on its farmers. I was told how its Government’s efforts to promote native seeds and more traditional, organic forms of farming had been thwarted because following the central America free trade agreement, they were unable to stop Monsanto peddling its wares. That raises concerns in my mind about what will happen when products come on the market that we do not have the power to reject post deal, even if we manage to carve out concessions when we negotiate trade agreements now.
The North American free trade agreement is held responsible for the tripling of obesity in Mexico, as fast food companies came in and flooded the market with high fructose corn syrup. To give a quite obscure example, the republic of Samoa has among the highest rates of obesity, hypertension and diabetes in the world. In 2007, in a bid to combat that public health crisis, its Government banned the imports of two favourite delicacies: turkey tails from the US and mutton flaps from New Zealand. But when Samoa joined the WTO in 2012, it had to lift that ban. A deal was struck that allowed it to add a 300% tariff to turkey tails for two years, and then a 100% tariff for one more year on top of that. After that, Samoa was told that its only mechanism was to resort to public health education. The lack of freedom that countries have under current trading arrangements concerns me.
Perhaps many Members here think that the people of the republic of Samoa should not be deprived of their freedom to eat deep-fried turkey tails, if that is what they really want to do, but the broader point is that if the United Kingdom is taking back control, we should be able to decide. We should set standards for what we want to import into this country. It is not about protectionism; it is about ethics, the economy and the type of sustainable and healthy society we want. That makes it all the more important that we have full scrutiny of not just the trade deals covered by the Bill that we are seeking to carry over—they cannot possibly be exactly replicated—but future trade deals. As it stands, MEPs and members of other EU countries’ national Parliaments will have more influence than we will, and it is not just national Parliaments. After all, it was the regional representatives in the Parliament of Wallonia who blocked the CETA deal.
The European Parliament does not have a formal role in EU treaty negotiations with third countries, but it is kept
“immediately and fully informed at all stages of the procedure”,
because its consent is often required. For example, it voted against the proposed anti-counterfeiting trade agreement in 2012.
The Library’s useful briefing on the Bill states that there are four ways that Parliaments can be involved in treaties:
“Setting the negotiating mandate…Scrutinising negotiations… Approving or objecting to ratification…Passing implementing legislation”.
Yet the Bill only deals with the fourth of those points. The Government plan to limit Parliament’s role on such agreements by taking powers through secondary legislation, with only the negative procedure available to Members. The Government should heed the advice of the Institute for Government, the Trade Justice Movement and others, and include in the Bill a guarantee that all future trade deals will be subject to a full debate and vote in this place.
Parliament should have the right to set a thorough mandate for each trade negotiation. We should have the right to amend and reject trade deals and the ability to review them and withdraw from them in a timely manner if we think it is in our interests to do so. We should be able to consider the need for environmental protections or human rights clauses in agreements and to seek reassurance about how they would be enforced. This is too important to be left to the say-so of Ministers. We already know about the spats that have occurred in Cabinet between the International Trade Secretary, who is all in favour of chlorinated chicken, and the Environment Secretary, who has said the United States would have to “kiss goodbye” to a trade deal if it wanted to include chlorinated chicken.
The Americans, meanwhile, are telling us that we must adhere to their rules and not set our own standards. Wilbur Ross, the US Secretary of Commerce, has said that the UK must ditch EU food safety laws. Last week at the Oxford farming conference, Ted McKinney, the US Under Secretary for Trade and Foreign Agricultural Affairs, said that the UK should consider the “reset button” on our food standards. There are many examples other than chlorinated chicken, including hormone-injected beef, food colourings and brominated vegetable oil. I make the plea for proper scrutiny; we must not let this be only in the hands of Ministers.
It is a pleasure to follow the hon. Member for Bristol East (Kerry McCarthy).
I am one of the Prime Minister’s trade envoys—I wanted to make that clear at the outset—but I speak today less as a trade envoy than as a constituency MP for a constituency that exports perhaps more than any other in the UK. We build Typhoon and Hawk fighter jets, and we make nuclear fuel, so we are dependent on international export markets. Tens of thousands of people are employed, directly and indirectly, as a result. I will focus on what this Bill is about and not what it is not about.
I pay tribute to the Secretary of State and the Minister for Trade Policy—I am delighted that both remain in their posts—for the work that they have done and the work, much of it unseen, that their very capable officials, both in-Department and in-country, do day in, day out on behalf of the United Kingdom. By so doing, they are securing hundreds of thousands of export-related jobs. Once again, I put on record my thanks for what these hard-working civil servants do.
In countries around the world, not just those that I represent as a trade envoy but those that I visit, the one thing that comes up, particularly in a post-Brexit environment, is a desire to do trade with the United Kingdom—not just to continue the trade that we do, but to build trade relations where they do not currently exist. The countries that I represent—Peru, Colombia, and Chile—are three markets with high growth potential. They are also three countries where we massively under-punch; we are nowhere near as significant as we ought to be. The work that has been put in by the Department for International Trade is a genuine effort to redress that, but we can do that and meet the concerns in these countries only if the Bill receives its Second Reading tonight. The main question that one gets asked, not by people on the street but by senior Government officials and business leaders, is, “What’s Brexit all about?” The question behind the question is, “What does this mean for the trade agreements and the terms of business that we have?” A fruit grower in Chile exporting to Tesco, Morrisons or Sainsbury’s wants to know what Brexit will mean, in a post-2019 environment, for the thousands of people employed supplying UK consumers.
When I was in Chile and Colombia in November as a trade envoy, I was able to tell people that the British Government were putting measures in place through this Bill that would ensure the continuity of the relations and the agreements that we have in place with those countries as a member of the EU. The Bill is not about putting new trade agreements in place; it is about ensuring that at the moment of exit the terms and conditions of trade flip over, so that British businesses out there trying to secure export orders, or British companies that are importing from key markets, are able to do business with certainty of that continuity. If we do not give them that certainty, they will have to tell their constituents who are worried about potentially losing their jobs as a result of Brexit that tonight they stood in the way of giving businesses that export to or import from key markets that continuity and certainty. This applies to businesses big and small, and people in all parts of this country.
In a former life, I was the export manager for our family manufacturing business, and I was very much involved in exporting to other countries. It was certainly not the EU that stopped us from exporting—there were many other factors. Can the hon. Gentleman tell me how this Bill is going to make a difference?
Unlike the hon. Lady, I do not live in a former life; I live in the here and now, and I am thinking about what happens post 2019. The Bill will give continuity and certainty to companies that export. The trade deals that we have with, for example, Colombia, Peru or Chile are the result of our membership of the EU, and unless those deals are rolled over, as the Bill will enable us to do, there will be a gap that is disastrous for all the men and women living in our constituencies. The Bill is about looking to the future and dealing with the world as it is, not how we would like it to be.
Another key provision in the Bill gives the Government the ability to collect important trade data. That will ensure that the Government—the Department for International Trade or any other branch of the Government—can better serve the interests of British exporters and of British companies that import into this country. It will ensure that we put money into the supply chain and show that we intend to add value to the exports we are involved in producing. This sensible and practical measure shows that the Government are looking to the future.
The United Kingdom must, by agreeing this Bill on Second Reading tonight, send out a clear message that, in the post-2019 environment, we want to trade with the rest of the world. As part of the conversation with individual nation states, we must make sure that their respective legislatures—their congresses, senates or parliaments—put in place reciprocal legislative changes where necessary. Although that will not be necessary in every case, some such measures will be needed to ensure that the reciprocal arrangements also flip over in advance of 2019. Unless we send out such a clear message tonight, confusion will reign because, as I said at the outset, there is a distinct lack of clarity in many countries across the world about what the future looks like for them.
I urge on the Government in their work. I recommend that the Secretary of State and the Minister ensure that our trade commissioners, where they are in place, continue the excellent work they have already begun and that DIT offices in such countries continue to be well resourced. I urge them to be ambitious.
Absolutely. The Bill is about Britain looking outwards, not inwards. It is about dealing with the world as it is becoming, and it is also about ensuring that British companies and the British people working in those companies are best placed to take advantage of such opportunities. Only by earning our way in the world, not by making life difficult for British companies or creating uncertainty, can we pay for the public services that all of us expect and demand. By not voting for the Bill’s Second Reading, we would be making life even more difficult for British companies and sending countries around the world conflicting messages about what Britain will be like in a post-Brexit environment. I honestly ask Members to look at what the Bill is—
Oh, we hear from a sedentary position that this is a power grab. We have not really heard from Scottish National party Members what they plan to do to support the Scottish whisky industry. If by voting against the Bill tonight, they frustrate the Scottish whisky industry, then shame on them. Conservative Members are committed to supporting British exports, dealing with the world as it is and continuing to battle for Britain.
Happy new year, Madam Deputy Speaker, to you and everyone in the House. I want to send a clear message to my constituents, in response to the invitation of the hon. Member for Fylde (Mark Menzies), that I hope this Parliament votes some time to continue to participate in the single market and the customs union to protect the very jobs, businesses and future prosperity that he wants his constituents to be part of.
I am sorry if I sound slightly cynical this early in 2018, but the Secretary of State—I am sorry that he is not in his place—said on 15 June 2016, a matter of days before the referendum, “After we Vote Leave, we would immediately be able to start negotiating new trade deals”. Then, a year ago, on 9 January 2017, he said, “We are unable to negotiate new trade agreements while we are members of the EU.” He repeated that in the House during his opening statement. I am sorry if I appear slightly cynical about trusting the Government and believing that the powers will be used only if necessary, but I just do not believe that the intentions of the Government in these kinds of trade deals are honourable. I will highlight that with another point.
This Parliament will have no decision-making power at all on trade deals that are currently bilateral trade deals with the European Union. The point that I made to the Secretary of State and my hon. Friend the shadow Secretary of State is that it takes two to tango in trade deals. If the bilateral partner is unhappy with any element of the trade deal, they will seek to renegotiate it. This Parliament will have no say on that. We will have no power to change any single trade deal that is negotiated, whether it be chlorinated chicken, beef containing antibiotics, car parts or anything in the supply chain. When Governments negotiate trade deals, there have to be trade-offs: not every party can get everything. I have an awful lot of respect for the Minister for Trade Policy in the job that he is trying to do in the Department, but I would like him to come to the Dispatch Box and tell Parliament, the country and the people employed in the manufacturing of goods and services in this country what sectors the Government are willing to throw under the bus to protect the sectors that he thinks are important.
The hon. Gentleman is making some important points, but like his Front-Bench colleague he is conflating future trade agreements with current trade agreements. To the best of my knowledge, no one we are speaking to is seeking significant revision of those trade agreements. They are speaking to us to roll over the existing trade agreements, which has nothing to do with a future free trade agreement, which I think the hon. Gentleman is deliberately conflating.
I am sorry, but the hon. Gentleman has misquoted me. I am not saying that. What I am saying is that none of those third parties is seeking significant changes to those agreements. I am not saying that we will be successful in rolling over all those agreements. We are seeking to be successful in doing so, and that is a very different matter.
Whether it be mutton flaps, which my hon. Friend the Member for Bristol East (Kerry McCarthy) talked about in the case of Samoa, the Scotch whisky industry, car parts or anything that this country currently exports, the people who have been watching this debate tonight should look at the television, rewind to 5.15 and listen to the Minister’s two responses. His first response was, “Nothing will change.” His second response was, “Nothing significant will change.” Whatever the process is, and whatever does change, this Parliament will get absolutely no say.
The Minister is right, and the Secretary of State hid behind this as well. The Secretary of State says, “Everyone is wrong today because we are talking about current trade deals.” So am I. Let us take South Korea as an example. The South Korea trade deal took a long time to conclude. A significant proportion of the deal affects the Scotch whisky industry—an industry that is doing rather well at the moment. If the South Koreans decide that that part of the agreement is not quite what they want, but this Government decide, “It’s okay; it is an existing trade deal so it is covered by this Bill. We will grandfather it across, but we will renegotiate that part,” this Parliament, I representing my constituents and people who represent the food and drink industry in this country will get no significant say. That is exactly what the Bill does.
The Minister can maybe clarify when he sums up the debate, and I hope he does, because he has created a bit of confusion.
I say this in the greatest of spirit to my own Front Benchers. I do not disagree with their movement on retaining the customs union and the single market during the transitional phase, but I do disagree with them on this. I say, with all due respect, that is no difference in principle, or even in practice, between a customs union and the customs union. I just hope that at some point, somebody looks at the significant detriment that this country will suffer from ceasing participation in both the single market and the customs union, and realises it is bad for the country.
I do not say that to be rebellious or to undermine the Front Bench. I say it as a constructive comment from someone who disagrees with the current policy of my own Front Benchers. I hope we are able to move on that, because it is not about membership of the single market or the customs union; it is about the participation in them. If the EU decides that the negotiating position should be a certain way for this country, it will fall on future generations to take that burden.
It is beyond my comprehension that the Government have taken off the negotiating table participation in the single market and the customs union. The European Union (Withdrawal) Bill, the customs Bill—the ways and means Bill that we debated yesterday—and the Trade Bill that we are debating today, all boil down to one singular point. We could have extended our Christmas and new year holiday by another week, two weeks or three weeks by staying in the single market and the customs union, because all this legislation would be completely and utterly unnecessary. It would solve the Northern Ireland border problem, so the north-south problems on the island of Ireland would be resolved. It would solve the east-west problem between the island of Ireland and the United Kingdom. It would solve the problem with our having to renegotiate the trade deals between the EU and the UK—the very trade deals that may not have any significant changes, but may have significant changes—and it would take away the unmitigated, unprecedented and unnecessary Executive power grab from this Parliament to Downing Street that, in my view, is completely and utterly unacceptable.
I shall finish by saying why I think the Minister and the Government are on the wrong track. The Secretary of State for Foreign and Commonwealth Affairs, appearing before the Foreign Affairs Committee, talked about 50 new staff to enable us to enhance our embassies across the European Union to create bilateral trade deals when we leave the European Union. That is not 50 new staff at all; it is a reallocation of Foreign Office resources. It is new staff in those particular offices, but they are being reallocated in some way or other from other offices, and therefore our bilateral trade potential with third party countries outwith the EU is diminished because resources are having to be put into bilateral negotiations with individual EU member states. That surely shows that the best way for us to move on is to stay in the customs union.
I tabled my amendment to the Bill yesterday to be published today not in any way to undermine anyone and not in any way to undermine my own Front Bench, but merely to continue to make the point that for the future prosperity of this country, to try to turn a very bad situation of our leaving the EU into not quite such a bad situation, we should continue to participate in the two things that would take away all these issues—the single market and the customs union.
Order. Because of the pressure on time, I am going to have to reduce the time limit. For the next speaker, it will be six minutes. After that, it will be five minutes. I remind colleagues that if there are a lot of interventions, I will have to reduce it further.
Admid the sparring over Brexit, it is easy to overlook our privilege in being the first MPs in over 40 years to debate the UK’s independent trade policy. This generation of parliamentarians stands at the foothills of an important new chapter in British history. When we come to look back on this era, I believe it will be regarded as a moment of crucial transition during which the post-war frameworks governing international politics underwent a crucial reform to reflect the reality of a globalised world and its changing power dynamic.
The character of that reform is up for grabs, and I therefore believe the UK has a huge role to play in ensuring that change delivers prosperity and security to people across the world. At its best, Brexit can aid in rebooting stalled progress in trade liberalisation and the setting of international standards in services and data, to govern and benefit properly from new technology, confounding the pessimists who see post-Brexit Britain as a diminished force.
Before I get too caught up in the moment, however, I record that the Bill before us today is relatively limited in its scope. Like the customs Bill yesterday, it is instead about preparedness. It sets us up for our independent status at the WTO, rolls over existing FTAs and EPAs, gives HMRC new powers to collect and share data on exports and makes way for a new trade remedies authority.
It would nevertheless be wrong to regard the Bill merely as administrative tidying, and I hope to offer my thoughts on its provisions in my capacity as a new member of the International Trade Committee. Reflecting the approach evident in the EU withdrawal Bill, this Bill is an understandable compromise between how our trade approach would look if we were starting with a blank sheet of paper and what necessarily needs to happen to prepare for March 2019 if we are to minimise disruption to UK businesses and consumers. I sympathise with the concerns expressed about the limited opportunity to scrutinise this and the customs Bill, but I accept that that is largely a result of practical constraints, rather than an Executive power grab. In time, though, it will be essential to have mechanisms in place for effective public scrutiny of new trade deals and to ensure that delegated powers do not extend beyond narrow technical changes.
The Secretary of State has been upbeat about the translation of existing trade deals when we cease to be party to the EU’s FTAs post Brexit by keeping it to a very narrow technical process without the possibility of renegotiation. I must express my own concern that that risks not proving to be such a straightforward process. I touched yesterday on the issue of tariff-rate quotas in my contribution to the customs debate. Existing trade partners might not wish to commence discussions on translating deals until they can see the shape of any EU-UK deal and might seek to change the terms of their FTAs with us. Those terms could actually improve, given that deals would be made without needing to account for the EU’s producer interests, but any renegotiation could prove time consuming. It is not clear how existing TRQs will be administered during any transition after March 2019. I would therefore welcome clarity from Ministers about which existing FTAs we are prioritising in the grandfathering process and what is being done to recruit even more specialist negotiation staff around any bilateral discussions.
In the creation of the Trade Remedies Authority, we have an opportunity to establish a globally respected, independent body that cements the UK’s credibility and reputation as a champion of competition, open trade and legal certainty. The EU’s own trade remedies process is unwieldy, bureaucratic and politicised, so there is a lot of room for improvement, but I should like to express my concern at the proposed powers being bestowed on the Secretary of State in imposing trade remedies—a structure considered to be 1970s thinking by panellists at a recent International Trade Committee hearing.
Many of us on the Conservative Benches like to think of ourselves as pro-free trade and pro-competition. None the less, our membership of the EU has sheltered us from the raw political choices that these ideas can entail. The politics of trade can be highly contentious and emotional, wrapped up in people’s livelihoods and an area’s industrial history. Less competitive domestic industries that benefit from protection often form powerful interest groups that can make trade protection measures politically alluring to any Trade Secretary, particularly when set against a consumer benefit that is very dispersed or sometimes apparent only in the medium term.
It is vital that we establish a robust, dispassionate and transparent trade remedies authority that has a clear duty to the wider economy and can unpick genuine concern about dumping or market distortion from protectionist producer interests. I should be grateful, therefore, if Ministers would consider commissioning detailed analysis of equivalent authorities in nations such as Canada, the US and Australia, in search of best practice. We might wish to establish a bifurcated model of two separate specialist bodies, the first working out whether dumping or subsidy has occurred and the second establishing whether injury has been caused. This could speed up the trade remedy process and lead to more objective outcomes. We might also want to look carefully at the TRA’s board to ensure that it contains a consumer representative.
The Bill proposes the automatic grandfathering of EPAs with developing nations. I should like to see a time limit or a mechanism for automatic review placed on these agreements. Brexit ought to spur a new approach on trade and aid, particularly with Commonwealth countries, but I fear that EPAs might prove counterproductive and even damaging to our relationship with developing nations in this regard.
There will be much to say in future trade debates about how we incorporate commitments on data sharing, cross-border services, technology and standards into modern trade deals, entrenching British values and opening up new markets to services. I would also like to talk about the UK’s high animal welfare and safety standards and traceable livestock systems, but these are things for another day. For now, I will finish with my concern that the political imperative to conclude trade deals swiftly post Brexit does not lead us to overlook our long-term economic interest. To avoid such a scenario, I ask the Minister to consider setting up an independent organisation to provide impartial and dispassionate advice on our trade policies options, which is what happens now in the US and Australia.
I shall not repeat the points that have already been made by other Members, including the hon. Member for Livingston (Hannah Bardell), who made an excellent speech.
I shall begin my own brief speech by explaining why I think that turning our back on the economic institutions of Europe is an error. I shall then explain why I support the current stance of the two sitting devolved Administrations in denying the Bill a legislative consent motion. Finally, I shall refer to changes that should be made to the Bill to ensure that any future trade deals are based on the principles of fairness, clarity and reasonable representation. I hope to speak about those matters in more detail during the Bill’s later stages.
The free trade agreements that we have with countries as a beneficial consequence of our membership of the European customs union account for nearly £140 billion of UK trade. Wales is a trading and exporting economy, which has recently been in surplus, and that is extremely important to us. The Minister said earlier that he believed that the Bill would simply translate these highly effective deals into domestic legislation. That was a bit like the characterisation by the Secretary of State for International Trade of a post-Brexit trade deal with the EU which he said could be the “easiest in human history”. However, we just do not know. We have no guarantee, and common sense suggests that it might be otherwise. Getting equal or better terms for our trade outside the EU after Brexit is a bit of a punt, to say the least.
Furthermore, while we remain members of the EU, and possibly throughout the transition phase, our Government will be precluded from finalising any negotiations with third countries. If we are to grandfather agreements and continue with the status quo ante Brexit, we will be reliant on the co-operation and good will of the 50-plus nations with which we have existing deals. This is a £140 billion gamble to try to secure trade terms that we already have.
My second point concerns the power grab. The Government’s default position on Brexit legislation now seems to include clauses seeking to claw back the powers of the devolved Parliaments. We have seen that in, for instance, this afternoon’s U-turn. Clauses 1 to 4 and schedule 1 to the Bill do just that by giving Westminster the power to change devolved legislation without consultation and without the consent of the devolved Parliaments. As I have said in previous Brexit speeches, this is no longer the 1980s or the early 1990s, and it is certainly not the 1950s. The UK is not a two-party, one-Parliament state, latterly globally dominant. Things have changed, but the Government seem to be in denial—and up with this we will not put. That is why I support the decision of the two sitting devolved Administrations to reject the legislative consent motion.
However, I will not leave it at that. Plaid Cymru is a pragmatic, positive party. We are determined to secure the best deal that we can for our country, even in these dark times. The Bill would set us on a deeply concerning path. Ministers might barter away the advantages of our high-quality agricultural industry and aspects of the NHS, perhaps to secure a “genius” trade deal with Mr Trump. Our amendment would ensure that trade deals were at least based on those principles of clarity, fairness and representation.
For clarity, we would require proper impact assessments, geographically focused and published at the beginning and the end of any trade negotiations. They would outline the impact of any potential trade deal on Wales and the other countries of the UK, and they would empower the public and elected politicians by giving them the information that is necessary for the making of democratic, ground-level decisions.
I am afraid that I have agreed not to take interventions.
For fairness, we propose parity of voting power. Any trade deal would require a ratification vote in all the UK’s Parliaments. That would be a genuine partnership. It is an unremarkable approach, which is common to European states and others throughout the world. For representation, as a first baby step, there must be Welsh, Scottish and Irish representation on the board of the new Trade Remedies Authority.
Let me end by saying this. I have been to a horse race only once in my life. Tempted to place a modest bet, I asked an experienced friend how I should judge the assembled nags for winning form. He drew me closer and says confidentially, “Count the legs. If there are four, you are in with a chance.” As far as I can see, the Bill has only three, and is stumbling away from the finishing line in any event. We in Plaid Cymru will not support it tonight.
I am going to speak only very briefly because I appreciate that people want us to move on.
Part of the reason for my getting to my feet is that, if you live in Walsall North, you can believe that the country voted for Brexit. In my constituency a substantial proportion of people—over 70%—voted for Brexit. That is the same for Walsall generally and for the west midlands, so we would have to travel some distance from my constituency to get to a place where people did not vote for Brexit.
It is useful for me to have been in the Chamber for the entirety of this debate because I have learned a lot. It was good to hear the candid comments of the hon. Member for Brent North (Barry Gardiner), who said he voted for remain and his intention is to protect the UK from a path of economic destruction—I think that was the phrase; it was something along those lines. He is protecting the country from itself, effectively, because the people of Walsall North did not know what they were doing when they voted for Brexit and they need to be protected from their own decisions. What are they going to be protected from? Let me tell Members what I have learned during the debate. One of the things they are going to be protected from is the fact that when we leave the EU planes might not be able to take off from our airports. People of my age may remember hearing that the millennium bug was going to do the same thing. In fact, I was terrified to either fly or go to hospital because I was completely convinced that, if I was in a plane it would drop out of the sky, and if I was on a resuscitator it would stop functioning immediately. I was terrified, but what happened? I got walloped and went to bed because I thought that, obviously, the world would end the next day. Incredibly, when I got up on 1 January 2000 everything was fine.
I heard the same sort of protestations in the debate on whether we should Brexit or not. It was said that economic Armageddon was coming the day after we voted if we voted to leave. So I woke up the next morning, excited that I had voted to leave, and expecting the world to end, but it has not; it has continued to prosper. Why has the UK continued to prosper? It is because we are an amazing country. We have some of the best—if not the best—universities in the world at one extreme in terms of academia, and we have Scotch whisky, which I learned only yesterday is such an important export to South Korea.
What do we want now for Brexit? We want certainty. Those who export or import at the moment want to know things are going to stay pretty much the same initially while we find our feet and develop new trading arrangements around the world. They also want to know that we are going to maintain access to the £1.3 trillion-worth of opportunities we have through the GPA.
I trust our excellent ministerial team to deliver these services and the process as part of the general Brexit process. I trust them not to use those immense powers for evil. I am trusting them to just put those powers to good use and to continue to ensure that the UK trades globally and in a way that is good for the people of Bloxwich and Willenhall. Why is that? Because if we trade internationally we know we get better access to a wider range of goods and services at the best possible price.
I will therefore be voting for the Bill this evening—the people of Willenhall and Bloxwich would expect no less—and I hope we can have a small amount of positivity for the rest of the debate.
I welcome the Bill and its provisions. Along with the setting up of the new trade dispute mechanisms and enhanced trade information powers in relation to HMRC, the Bill is about protecting the UK against regression. It is about compounding and securing where we are now. To some, that may sound a little dull in ambition, but it is undoubtedly absolutely necessary and, in my view, is a prudent and timely approach to this matter, for, to grow and maximise the opportunities in relation to Brexit, we must first ensure that there is no regression.
As indicated by the Chairperson of the International Trade Committee, we on the Committee have been examining the issue of transitioning or grandfathering the existing EU trade deals with third parties. Regardless of how we voted in the referendum, we have to acknowledge the reality that, in the context of leaving the European Union, that is the sensible thing to do if we are to secure where we are at the moment. I welcome the fact that the Bill provides a legislative framework to allow that to happen.
Many people across the United Kingdom, regardless of how they voted in the referendum, want the Government to get on with the process of leaving the European Union, and they want two things to happen in that regard. First, they want the best possible trading deals and arrangements for the United Kingdom. Secondly, they want an orderly, sensible and smooth journey towards the Brexit destination. That journey will be aided significantly by ensuring that existing deals can be moved across and transitioned into the UK and third party agreements, while addressing any required minor changes or any necessary redrafting. We have heard a little about that in the evidence to the Committee.
There has been a great deal of misinformation in relation to the Bill, and I can only imagine that that is why the amendment has been drafted as it has been. The Bill does not cover new deals; its covers only non-tariff barriers. As has been indicated, the agreements on the categories of deals to be transitioned have already been through the European Union scrutiny process. I have my own view about the quality, appropriateness and depth—or lack thereof—of accountability in European scrutiny, but there is an irony that those who praised the European scrutiny process are now, according to the amendment, questioning its adequacy. They are saying that the measures now need to be scrutinised again.
There are two aspects of this subject that have not been covered in detail in the Bill or the explanatory notes. I have not heard Ministers cover them. The first scenario relates to what would happen if there were a significant amendment in terms of the transition. I think we all acknowledge that it is not ideal to transition the current arrangements across because of the different nuances relating to, on the one hand, European Union and third party agreements and, on the other, United Kingdom and third party agreements. However, in recognition of the timeframe and of the need for security, that seems to be the prudent thing to do. However, there may be an opportunity to make a beneficial and significant amendment to the existing deals, and I would be keen to hear from the Minister what consultation he would be minded to carry out if that were the case.
Likewise, in a second scenario in which the deals are transitioned across, I think that many of us would want to build on that existing relationship and, in so doing, improve the deal in due course. In that way, the transition deal would be revisited. Perhaps this will come up in Committee, but I would like to hear from the Minister what scrutiny mechanisms would be used if these deals were revisited in a number of years’ time.
Unfortunately I will not, as time is really tight.
I want briefly to touch on two issues. The first relates to clause 7 and the additional reporting requirements to HMRC. There are many farmers and businesses around the border, and I say to the Minister that we do not want to create even greater burdens for them in this regard. Secondly, and in conclusion, I want to highlight the difficult situation in Northern Ireland. Today marks a full year since the resignation of Martin McGuinness as Deputy First Minister of Northern Ireland, which triggered the collapse of the Assembly. There is no Government in Northern Ireland. There are no Ministers, and there is no democratic accountability. That needs to be addressed, and I would like a commitment from the Minister that he will engage with the elected representatives from Northern Ireland in creative ways to ensure that the voices and interests of Northern Ireland are heard in the trade deals and the transition deals.
I welcome the Bill, and I am pleased to see these first steps towards building an independent trade policy. I look forward to exciting new trade deals, but this Bill is about ensuring that we have continuity with the existing EU bilateral trade deals. I am a great believer in free trade and free markets, and I do not want to see any unnecessary barriers to trade. However, today, those true market values and principles—those rules-based values—are under threat. It is important that the rules are followed because, if they are not, that will destroy trust and faith not just in free markets, but in capitalism, and businessmen and women in this country who play by the rules will be unfairly penalised. That is why I welcome the establishment of the Trade Remedies Authority.
We need trade remedies because anti-dumping, anti-subsidy and safeguarding measures are necessary to ensure that a level playing field whenever people bring goods into this country. I mention that in particular due to the farmers in my constituency. I have had many meetings with them, and safeguarding comes up time and again. Our farmers work to some of the highest food and environmental welfare standards in the world. The Red Tractor scheme, for example, guarantees animal welfare, food safety, traceability and environmental protection in the UK. As we pursue a free trade and free market agenda, it is vital that we demand the same standards of farmers in other countries as we do of our own. We must have a level playing field.
I look forward to seeing more trade with developing countries—in particular, those badly affected by the common agricultural policy. This is an opportunity not just to get food at cheaper prices, but to use the strength of our large market to help other countries to achieve high standards in food production and animal and environmental welfare. I cannot think of any reason for voting against this Bill given the benefits that it will bring. For that and many other reasons, I am happy to support it and will be voting in favour of its Second Reading this evening.
Members have talked about free trade, but Brexit is of course the biggest reversal of free trade in the UK’s history. Margaret Thatcher was a great proponent of the single market, which is the probably the greatest example of free trade in the world. She also did not like referendums and quoted Attlee, who said that they were the instrument of demagogues and dictators because of their use by Hitler. Unfortunately, we now appear to be withdrawing from the customs union and the single market. We are withdrawing from the EU, making ourselves much weaker in negotiations with other countries. We are also making the EU weaker. The EU is currently the biggest market in the world, but that title will go to China after we leave, so there will also be significant impacts on human rights, democracy and the rule of law.
Of course, this Bill is not directly about our relationship with the EU, but we will be reducing our trade with it due to the tariffs that will be imposed if we do not have membership—I hope we will—of the single market and the customs union. This Bill is about our relationship with third parties—the 65 agreements—but it is not fit for purpose in that respect, because it does not do what it says on the can. It claims that it can guarantee the continuation of those 65 agreements on existing terms, but it is intuitively obvious from a business point of view that other countries will see Britain up against the wall, on its own and weaker, and they will demand better terms, whether lower quality, lower standards or lower prices. What is more—
I am not sure whether the hon. Gentleman has been listening to the debate or my previous interventions, but that process has already begun. We are in conversations with third parties and none of them is behaving in the manner that he is describing. Let me put his fears to one side: I cannot promise that we will be able to transition every single agreement, but nobody is behaving in that manner.
The Minister tells us that third parties are not behaving like that at the moment, so he implies that they will not behave like that in the future—what false logic; what naivety.. That is absolutely ridiculous. Any negotiator or country that sees Britain with its back to the wall, turning away from the biggest market in the world, will ask for more. If they did not say that they will give the money to Spain or wherever, they would not be doing their job. What is more, they will be dragging their heels, because they will know that the clock is ticking and that we need to get something sorted out. They have everything on their side. The Minister is so naive. All the negotiations over the past 40 years have been done by EU negotiators. We do not have the negotiating capacity. He is smiling glibly and pretending that it will be all right on the night, but it will not. People will remember what he has said today and how naive he was.
This Bill is simply not fit for purpose. It takes two to tango, and the Bill presumes, as the Minister does, that the EU will tango and not trip us up in the process.
The other facet of the Bill is secrecy and hiding what will happen. My hon. Friend the Member for Brent North (Barry Gardiner) said that the US-UK deal will be hidden for four years, and there are all sorts of fears about our having to import substandard food products from the US, including chlorinated chicken, which the Secretary of State looks forward to eating—his name is Fox—and hormone-impregnated meat. In the US, medicines are introduced into meat and asbestos is for sale. All those standards may end up coming through the back door under the cloak of darkness in these secret deals.
I know that the Bill is not about the US-UK relationship at the moment, but the Minister and the Secretary of State have mentioned CETA, which already enables certain changes to occur. There is a real risk that we will take on some of these problems. Indeed, there is a real risk that we will lose out on opportunities that the EU is creating, particularly in the trade relationship with Japan. That trade relationship will involve 600 million people and comprise 30% of the world’s GDP. The Europeans have built in environmental conditions, particularly through the Paris agreement, and other rights and protections that we enjoy in the EU, and the real problem is that downstream, due to both changing the existing bilateral relationships and as part of future trade relationships, the protections and rights we enjoy through our trade relationships in the EU will be bargained away. Whether it is human rights, environmental rights or consumer rights, those things are now inadvertently on the table, and that table is under the cloak of darkness, as there will not be public scrutiny.
There should be a guarantee of scrutiny, and we should ensure that the rights and protections we enjoy in the EU are sustained in future trade relationships. In my view, we should stay in at least a customs union, and ideally the customs union and the single market.
The British people voted to leave the European Union, and they were told before and during the referendum that leaving the European Union meant leaving the single market—[Interruption.] Yes, they were. The Prime Minister at the time, David Cameron, said exactly that.
The hon. Gentleman clearly wants to use smoke and mirrors to drag Wales back into some form of European union in which we have to pay money to access the single market and the customs union. Surely that is money that should be spent on the NHS in Wales.
As we know, 51% of people currently want to remain while 41% want to leave. On the day, it is the case that the people of Wales voted as the hon. Gentleman said, but he will also know that Wales is the beneficiary of billions of pounds of EU, convergence funding, that 70% of our exports go to the EU and that 25,000 jobs in Swansea bay rely on the EU. It is very much in the interests of Wales to be in the single market and in the EU, and that is increasingly the view of the people of Wales. The people of Swansea West certainly voted to stay in the EU.
As everything unfolds, people are essentially saying, “I voted for more money, market access and a greater say, but I find that I am not getting any of those things. I am not getting what I was promised, and I want a final say on the exit deal.” People should have that final say.
Specifically on the money, we know from the Financial Times that we are losing £350 million a week, that the divorce bill will cost £1,000 per family and that the increase in inflation is costing the average worker a week in wages. That was not what people voted for, and people are worried about these deals. I have been contacted by Liberty, for instance, about the loss of workers’ rights and environmental rights, and even about issues such as slavery.
We want open and transparent trade agreements. We want the protection of being in the single market and the customs union, and we want people to have the right to a final say—to think again—on the basis that the facts have changed. That is what democracy and a sensible future for Britain is about.
It is enormously important that as we move through the period of the Brexit negotiations and into the future, we give businesses and consumers stability and continuity in trade agreements—not only in our trade relationship with the EU, but in our relationships with the 60-odd other countries with which we currently trade via our relationship with the EU. We are living in a time of unprecedented change in the world, with the fourth industrial revolution and the digital revolution, and trading flows are ever-changing. It is crucial that at this time we hold on to the principles and remember the benefits of free trade. Free trade is not just about helping big business; it brings benefits for all. Opening markets brings opportunities for exporters and importers, large and small. Those businesses can then help to deliver growth, real jobs and opportunities. For consumers, trade brings more choice and lower prices.
It is incredibly important that we look at what this Bill does and does not do, because the entirety of our new FTAs will not be set just in this one move. This is an enabling Bill that maintains the right of British companies to bid on government procurement contracts in other parts of the world. We are talking about £1.3 trillion—there are so many zeroes on the end of that number—and we must protect that business. The Bill also protects our national interests such as the NHS and our broadcasters. It transitions our existing trade deals with those 60-odd countries into British law from the current EU relationship. I do not know how many Members have read CETA, but it is 1,568 pages long and I have read a lot of it. There will need to be changes when it comes into British law, which is why the Minister needs powers to make technical changes. The Bill allows us to collect and share vital information on our existing and potential future trade flows—this is information currently shared under EU premises. It will allow us to share and understand that information domestically.
Free trade is not a free-for-all; we have global rules that protect us. It is important that when those rules are broken, we can take remedies, which is why the Bill also establishes the new Trade Remedies Authority. It is incredibly important that it is up and running, and staffed with strength, well in advance of our new era. That is why we must make sure in Committee that its powers are made very clear, as I mentioned last night.
The Bill does not set a long-term trade policy. It is important that it does not do so today, because that needs to be properly consulted on with not just Members of this House, but the many stakeholders who are involved. There has been a lot of scaremongering about what free trade could involve. Free trade does not mean lowering our standards. It does not mean throwing out our environmental standards, our consumer protections, our environment law or our long history on human rights. All that can be preserved and should continue to be preserved in the new era, but it is right that the Government take time to consult stakeholders across the country on the priority of our new law.
The Bill also does not say, as Opposition Members were suggesting last night, that we should stay in the customs union. There seems to be some confusion about the benefits of a union with the customs union, and I would like to remind the shadow Minister about the deficiencies of the Turkish solution, for example: Turkey opens up its market to any trade that the EU signs itself up to, but Turkey cannot get access to the Canadian market in return, for example. The UK needs a better, more bespoke and more workable and practical relationship with the EU, as well as the rest of the world. I hope that we can start to work together this year to deliver that.
Had the Secretary of State been in his place, I would have reassured him that the Labour party knows that the Bill is a deliberately limited piece of legislation concerned with continuing the existing trade arrangements after Brexit. However, the fact that the Bill is about transmuting EU agreements into UK law does not mean that we do not have questions about, first, the process the Government are adopting; secondly, the degree of parliamentary scrutiny of the arrangements, or lack thereof—after all, the Institute for Government recommended that the Bill should ensure that there is parliamentary time for debate and scrutiny, but the Government seem to have ignored that; and thirdly, the possible effect of the Bill on future trade deals.
The Opposition recognise that the UK will need to formalise trading relationships with those third countries that have a trade agreement with the EU because, should Brexit happen, we will no longer be party to those agreements. However, the Government intend to award Ministers sweeping Henry VIII powers to amend retained EU law, so that they can fast-track the agreements. I join my colleagues in opposing the use of Henry VIII powers for such fast-tracking, especially when those powers might be used to water down or remove standards, safeguards, rights or protections. We heard no reassurance from the Secretary of State on that.
We want a truly independent Trade Remedies Authority to help to protect UK industry, but that authority should report directly to Parliament rather than to the Department. That seems so obvious that I do not know why the Minister has not already caved in on the issue.
The Bill awards to HMRC new powers to share limited taxpayer information with international bodies and Departments, including the Department for International Trade, but the circumstances in which the Government intend those powers to be used has not been made clear and the wording of the legislation is opaque. More clarity on that from the Minister would be helpful.
Many organisations are saying that the Bill is a missed opportunity to align Britain’s international trade and international development policies. The Government have been clear that trade is a route out of poverty, so they should be saying through the Bill more about how the sustainable development goals in particular could be used to achieve that aim. The Fairtrade Foundation has raised the potential effect of Brexit on Fairtrade, but it seems the Government have not fully considered it. The fair trade market is currently worth £1.6 billion and is dependent on an effective trading relationship with the EU27. Many fair trade goods are exported to one EU country before being processed and re-exported to other EU countries. It is not clear whether the Bill takes that into account.
Does the hon. Lady believe that there will be an opportunity in future deals for value-added goods such as chocolate and processed coffee to come into the UK from continents such as Africa, rather than just the raw materials coming in and us adding the value?
The hon. Gentleman makes a good point, but the point I am making is that it would have been extremely helpful to have had things like that flagged up in the legislation, partly to give reassurance to developing countries.
Global Justice Now has highlighted the problems with some existing economic partnership agreements because some countries have refused to sign them. It would have been useful for the Government to have taken that on board in the Bill and stated clearly that they would seek to improve on those agreements in future trade deals.
The Overseas Development Institute has presented some recommendations for the Government, which I think it would be helpful if the Minister addressed. It recommends that the UK should, first, apply the principle of “do no harm” so that, at the very least, existing unilateral preference schemes should be rolled over; secondly, prioritise the roll-over of existing free trade agreements with developing countries; and thirdly, align its trade and development policies.
There is a lot at stake. When I was in Bangladesh recently, I met a fair trade co-operative that has extremely good working practices and can export to a range of countries, including the UK. I urge the Government to support those sorts of projects and businesses, in this legislation and in future legislation.
I shall endeavour to be brief, Madam Deputy Speaker—in fact, I have spent the past 10 minutes furiously editing my speech.
I welcome the Trade Bill. It is a breath of fresh air to be able to talk about the opportunities of global trade rather than just the process of Brexit. As the Secretary of State and many other Members have pointed out, the Bill does not cover new trade agreements, but rather aims to help with the process of transitioning the EU’s trade agreements to UK agreements. It is worth reflecting on some of the opportunities that will provide.
My constituents in Clacton voted strongly for Brexit. Of course, there was a range of issues behind that, including control over our laws, borders and money, as well as trade, but one key aspect of trade is ensuring that the deals we strike are consistent with British values, and specifically British values with regard to animal welfare. I fully recognise and support the reasons for transposing existing EU law into UK law: to provide business with certainty and consistency. To my mind, the Bill does just that; it provides a great deal of stability for business. However, in our recent debate on animal sentience, it was clear to me and to many others that existing British law is far more robust than EU law in this area. Therefore, as we go through the Brexit process and consider the trade implications, we need to look past EU law and maybe use these transposed regulations as a starting point to see how British trade policy and law could do more for animal welfare once we are outside the EU.
My message for Ministers is this: the Bill is a great step forward, but we must not simply fall back on adopting unreformed EU law where there is clearly a case to use EU regulations as a stepping stone to a better place. For example, an EU pet travel regulation introduced in 2014 brought further measures to strengthen enforcement, which was welcome. As the UK withdraws from the EU, there will be opportunities to re-evaluate the rules to ensure that they are fit for the modern world and to exercise our trade laws and regulations more efficiently than the EU could.
Animal welfare has always been dear to my heart—indeed, I fought against some outrageous puppy farming in Wales in the mid-1990s. Please do not assume that I am simply rubbishing the work that the UK and the EU have already done on animal welfare and trade. The EU regulation on the welfare of animals in transport, for example, has achieved dramatic improvements, but does it go far enough? Animals must be transported in a way that will not cause them injury or suffering. European law that governs the welfare of animals during transport applies to anyone who transports live vertebrate animals in connection with “economic activity”—a business or trade. That is something that I am sure we all support.
My point is that with a more dynamic trading relationship with the world outside the EU, we cannot simply use old EU regulation as default. Rather, we should put British values of animal welfare, and the need always to improve, update and refine these rules, at the heart of our trade initiatives and associated laws. Let this Bill lay the ground work for a future trading policy that makes us proud of how we discharge our duties towards animals within the trading system.
Finally, the Executive need the powers to negotiate with the strength of the knowledge that what they say goes. More importantly, those with whom they negotiate must know that our Executive have that power, because otherwise we are all weakened. That is why I support the Bill.
I rise to speak in favour of denying the Bill a Second Reading, for two simple reasons. The first is that the Bill would simply not be necessary were the Prime Minister and her shambolic Cabinet to reverse their masochistic and deeply misguided decision to reject the option of a soft Brexit by making leaving the EU single market and customs union such a red line in their negotiations with the EU27. The second reason is that the Bill fails to provide for a proper role for Parliament in the scrutiny and approval of the replacement trade agreements.
The Secretary of State spoke earlier about his apparent commitment to openness and transparency, yet the procedure outlined in the Bill, far from being an improvement on EU scrutiny processes, is significantly worse in that respect. In the UK, trade agreements can be negotiated entirely under royal prerogative powers, giving the Government free rein to decide when and with whom to start negotiations, to decide their own priorities and objectives, to conduct negotiations in deep secrecy and to conclude an agreement without any meaningful scrutiny by Parliament at all. We in this House are therefore in a much worse position than our colleagues in the European Parliament or, indeed, the US Congress. That not only sidelines Members of this House, but prevents input from the public and civil society organisations. That is a huge democratic deficit that must be corrected.
The second point to make is that Ministers might well be absolutely wrong in suggesting that this is simply a case of rolling over existing EU trade agreements. As other hon. Members have made clear, plenty of countries with which we have trade agreements might not wish to be rolled over in that way, and they might have strong views about changing those agreements. Indeed, paragraph 53 of the explanatory notes states that
“the new UK third country agreements that are implemented through”
“will be legally distinct from the EU…agreements on which they are based. It may…be necessary to substantively amend the text of the previous…agreements”.
We need to recognise that we not talking about a straightforward roll-over; we are talking about essentially new agreements. Presumably that is why the Bill grants Ministers extraordinary Henry VIII powers to implement —or, more accurately, replace—existing agreements without further parliamentary scrutiny for up to 10 years. If this was going to be as simple as the Government suggest, they would not need 10 years—they would not need 10 months, according to them—so there is quite simply a flaw at the heart of their argument. This Bill is supposed to help to implement an independent trade policy following withdrawal from the EU, but it does nothing to put in place the kind of framework that should be required for an accountable trade policy in a modern democratic country.
Nor have we had any guarantee from the Government that there will be a second trade Bill, covering new trade deals with non-EU countries. When I asked the Secretary of State earlier, he referred rather vaguely to vehicles that would be brought forward vis-à-vis each new trade agreement made. He has not made a commitment to a second trade Bill, which would be the vehicle for all the scrutiny and transparency powers that we would like to see. Unless the Minister is about to intervene on me—I would be delighted if he did—it is even more important to ensure that this is the Bill in which we put in place all the transparency and scrutiny mechanisms that we urgently need, whether we are talking about replacement agreements with the EU or non-EU trade agreements.
The kind of framework that we need would include, for example, the requirement for impact assessments to be conducted before negotiating or renegotiating a trade agreement. Those impact assessments should not be limited just to economics; they should cover social, environmental and human rights aspects and, crucially, they should be published. The public should be consulted about the potential deal, as is required in the US. If the decision is to go ahead, Parliament should be required to give its consent to a mandate for the negotiations, a procedure that could build on the model in Denmark. The Government should conduct negotiations transparently, releasing texts before and after each negotiating round, building on the procedures in the EU and following practices that are common in other areas of international negotiation, such as the climate talks.
During negotiations, a parliamentary committee should be responsible for scrutinising developments, building on the EU system and enabling Parliament to direct changes of approach as needed. Crucially, at the end of negotiations, Parliament should be guaranteed a vote before the agreement is implemented, as are both the European Parliament and US Congress. This should not be just a simple, straight “up or down” vote, which comes with great pressure to accept bad aspects for the sake of something positive in the deal, but one that allows Parliament to insist on a good deal.
The Bill as it stands is simply not fit for purpose. It is not democratic and it does not take us forward in terms of taking back control. It takes us backwards.
I do not have enough time to address some of the particular details in this Bill in relation to the Marrakesh agreement, the general procurement agreement and some of the issues to do with the Trade Remedies Authority. This is a short Bill of 12 simple clauses, but it represents massive potential change for our constituents and for our economy. The Minister may wince as I say this, but we are not simply talking about rolling over agreements that already exist. The Bill may well have provisions that cover deals with countries with which the EU already has a deal, but, as he has admitted, those deals may be significantly different in their character when they come forward for approval under the proposed process.
I wish to address only a few points in the time that I have. The first one is on the very point of parliamentary scrutiny. When relatively new deals do come forward, albeit with countries with which we have historically had such arrangements, a negative statutory instrument process—a kind of rubber stamp where we do not have the capacity or the right to look into things—is just not good enough. There is a compromise way forward, and I genuinely implore Ministers to consider it. A pure affirmative statutory instrument process is not quite there; we need to accept that Ministers need the leeway and the flexibility to conduct negotiations, which is why I recommend the super-affirmative procedure, which sounds technical, but, under the Crime and Courts Act 2013, it allows Ministers to bring forward a proposal for a trade deal, to publish it in draft form so that we can consult on it, and then for a Committee of this House to make recommendations and report to the Minister and say, “Well, perhaps you have not thought about this aspect.” The Minister can set those suggestions aside, but there is the ability to amend the proposals and put them to the House for a final agreement. That would strike the right balance between improving parliamentary scrutiny for trade arrangements and allowing negotiations to go forward. I commend that super- affirmative process and I hope that such an amendment comes forward during the course of this Bill. At the very least, we need the same sort of scrutiny powers that Members of the European Parliament have at present, and the super-affirmative process would allow that.
My second point is that we really must get our skates on. If we go past March 2019, these 36—possibly more—trade deals with the rest of the world run the risk of expiring. If they do expire, we fall back on to WTO rules, where those countries will have to offer, under the most favoured nation arrangement, a tariff that could significantly harm our consumers. For instance, clothes from Turkey would carry an extra 12% tariff; fish products from Iceland, an extra 11% tariff; and fruit from Peru or Chile, an extra 13%. This is serious stuff for consumers and our constituents, which is why we must ensure that we make more progress. I am not convinced that that can be done by March 2019. We will certainly need a period of transition, and that transition needs to be a bridging period to allow us to conduct these negotiations and conclude them, and then give business the chance to adapt thereafter.
My third point is that this Bill really should mandate Ministers to negotiate to stay within the customs union. I agree with the amendment tabled by my hon. Friend the Member for Edinburgh South (Ian Murray); it is absolutely critical. So many supply chains are at risk if we do not stay in the customs union. Some 2.5 million lorries going through Dover could be disrupted by very, very worrying friction, obstacles and barriers. Half our goods trade is with the European Union, our nearest neighbours.
There is also that big issue of the Irish border. The stability of the relationship between the Republic and Northern Ireland could be put in jeopardy if we have such a barrier in place, which is why the customs union is so critical. I say to all hon. Members, whether in the Government or on my Front Bench, that the customs union will determine the future prosperity and the revenues for our public services in this country. I do not want to be responsible for the austerity that looms in the decade ahead if we get this wrong. That is why we must stay in the customs union.
As I and other hon. Members from the region highlighted during yesterday’s debate on the customs Bill, the north-east continues to have a proud record of being the only part of the UK consistently to export more than it imports, with some 61% of those exports currently going to the EU—our largest market by some measure. Many thousands of valuable north-east jobs and firms depend on the Prime Minister’s ability to deliver a good Brexit deal that secures frictionless, unbureaucratic, two-way access to the European markets; that is what my region clearly needs.
North-east firms are not solely focused on Europe, however. Emirates flights have been operating since 2007 from Newcastle International airport to Dubai, opening a whole range of new markets and opportunities to the region’s businesses and contributing significantly to the £350 million-plus of north-east goods that are now exported every year from the airport.
North-east businesses and the thousands of jobs they support need to have the confidence that they have a Government with the capacity swiftly to deliver complex new free trade agreements with non-EU countries that support, not damage, British businesses, workers, consumers and living standards. Sadly, the approach of the International Trade Secretary and the Foreign Secretary was only recently described as “ludicrous and clueless” and a “kind of fantasy” by the former Treasury Minister, Lord O’Neill—too focused on markets that have relatively few benefits for UK firms. Sir Simon Fraser, the former chief civil servant at the Department for Business, Innovation and Skills and then at the Foreign Office, only this month described Ministers as living in “cloud cuckoo land” on this issue.
When I challenged the Chancellor during a Treasury Committee session towards the end of last year on whether it was his and his Department’s view that the potential benefits of feasible future trade deals with non-EU countries will outweigh the costs and economic disadvantages of leaving the single market and the customs union, he was unable to provide a straight answer. There are many who are very clear about their concerns that benefits simply will not outweigh the disadvantages. Indeed, I remain of the belief that it was a catastrophic error of misjudgment and national self-harm on the part of the Prime Minister to rule out participation in the customs union and single market before the Brexit negotiations even began. It was an error that could disadvantage north-east businesses, and firms across the UK and the British economy, for decades to come.
We face enormous economic consequences as a result of leaving the customs union. The UK’s current annual goods trade with countries within the customs union stands at some £466 billion. As a member of this Union, the UK is also party to preferential trade agreements with 65 countries around the world. We risk the deeply concerning prospect of a hard border between Northern Ireland and the Republic, as other hon. Members have mentioned. Meanwhile, British business faces significant non-tariff costs, endless red tape and time wasted on new bureaucracy, and the UK’s ports could grind to a halt—all of which would have truly dreadful implications for the country’s already poor productivity levels. Indeed, one of the Brexit Secretary’s own advisers has previously estimated that leaving the customs union would result in a permanent cost to the UK of around £25 billion every year until 2030, which is 1 to 1.2% of GDP.
I was pleased to add my name to the amendment tabled by my hon. Friend the Member for Edinburgh South (Ian Murray). What does the Bill do to address or mitigate any of the concerns I have outlined? Nothing. Instead, we have a Bill that manages to create further concerns, rather than address existing ones. It again fails to take the opportunity to make it clear that the UK’s future trade policy will set a gold standard on sustainable development.
After all we have been told about Brexit being about taking back control and the sovereignty of the UK Parliament, this Bill concentrates power into the hands of the Government, reducing transparency and democratic accountability by failing to commit to proper parliamentary scrutiny of future trade negotiations and trade deals, such as that currently undertaken by the European Scrutiny Committee and Members of the European Parliament, and, indeed, such as that which takes place in several other countries, including Germany, New Zealand and Australia. Sadly, this is entirely reflective of the Government’s entire approach to this historic process—prioritising the avoidance of scrutiny, transparency and accountability, and putting party over national interest at every turn.