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International Trade

Volume 634: debated on Thursday 11 January 2018

The Secretary of State was asked—

Trans-Pacific Partnership

First, I warmly welcome my hon. Friend the Member for Beverley and Holderness (Graham Stuart) to my ministerial team, where he will serve as the Minister for investment. I also pay tribute to the fantastic job that his predecessor, my hon. Friend the Member for Wyre Forest (Mark Garnier), did over the course of his time in the Department.

It is right that the Government prepare for all possible outcomes from leaving the EU, including preparing for no deal. We will consider a range of options as we establish our independent trade policy on a bilateral, plurilateral and multilateral basis. The Asia-Pacific region is a very important market and an engine for future global growth. We are closely following progress of the comprehensive and progressive agreement for the Trans-Pacific Partnership.

The UK’s trade with Trans-Pacific Partnership countries amounts to 7.2% of the UK’s total trade, whereas trade with the EU amounts to 48.6%. Will the Secretary of State confirm that his Department’s priority is to secure our close economic and trading ties with the world’s largest single market before embarking on negotiations with the other trade blocs?

These are not mutually exclusive. We want an open and comprehensive trading agreement with the European Union because it is an important part of our trade. However, TPP trade is already 14% of GDP—it would be 40% were the US to rejoin—and, as the International Monetary Fund has said, 90% of global growth in the next 10 to 15 years will occur outside Europe, where there will be important markets for the United Kingdom.

10. Two of the countries in the TPP are Australia and New Zealand. Will the Secretary of State look closely at their closer economic relationship agreement, which allows free trade of goods and services between those two countries, and will he prioritise an agreement between the United Kingdom and those two countries? (903221)

I have made it clear on a number of occasions, including in this House, that when it comes to future free trade agreements, Australia and New Zealand would be two of our top three priorities. If we are able, by another means, to achieve the sort of liberalisation in trade that we would all like to see, then that would be fine.

Surely the Secretary of State would agree that no Trans-Pacific Partnership trade deal will make up for the loss of the European Union market. Has he seen this morning’s independent report, commissioned by the Mayor of London, that shows what a cataclysmic effect leaving the EU will have on our business and so many jobs?

As usual, I do not accept the premise of any part of the hon. Gentleman’s question. I do not believe that we will necessarily lose our share of the market. We want to maintain an open agreement with the European Union, and it will want to maintain an open agreement with us, because we are the fifth biggest economy in the world and a major trading partner for it. Of course, this morning’s report was anything but cataclysmic. In fact, its worst assessment was less than half the assessment that was given to us before the European referendum on what our loss of market share might be if there were no deal whatsoever.

I, too, welcome the new arrival to the Government Front Bench. I also welcome yesterday’s trade statistics. The Secretary of State and I may disagree over how much that owes to the depreciation of sterling, but we both agree that the narrowing of the trade deficit is a very good thing.

With regard to the TPP, the Secretary of State says, “These are not mutually exclusive”, but he must account for regulatory alignment, which is part of the impact that joining the TPP would have. Indeed, the former permanent secretary at the Department for Business, Energy and Industrial Strategy declared that joining the TPP would be “cloud cuckoo land”. Does the Secretary of State consider that that regulatory alignment to a trade agreement negotiated in secret to suit the economies of the Pacific Rim, which constitute under 8% of our export market, is a viable proposition for our country?

I am in favour of trade liberalisation, whether it is bilateral, plurilateral or multilateral. If we can achieve openness in the global trading environment so that we can get global trading volumes up, that is of benefit not just to the United Kingdom but particularly to developing countries that should be able to trade their way out of poverty and not depend on aid.

Export Strategy

It is a pleasure to join a Government Front Bench full of fresh young talent—even if I am not among them. I pay tribute to my predecessor, my hon. Friend the Member for Wyre Forest (Mark Garnier), who showed tremendous commitment to investment promotion to the benefit both of his constituents and the nation as a whole.

Baroness Fairhead, the Minister of State for Trade and Export Promotion, is currently engaging closely with businesses to inform the creation of the new export strategy. Reporting in the spring, the strategy will ensure that the Government have the right financial, practical and promotional support in place to allow businesses to benefit from growth opportunities, generating wealth and wellbeing for the whole of the UK.

I congratulate the Minister on his promotion—I am sure he will do well—and I invite him to Mid Derbyshire at some point on his way back to his constituency. How will the Minister ensure that United Kingdom Export Finance is an integral part of the new export strategy?

I am grateful to my hon. Friend for her question, and I pay tribute to her for all her work promoting businesses in Derbyshire and beyond. UK Export Finance’s mission is to ensure that no viable UK export fails for lack of finance or insurance, and UKEF is at the heart of our export strategy. Today, I am pleased to announce an even more flexible local currency offering from UKEF to help UK exporters to compete for major overseas contracts. Finance is now available in 62 currencies for purchases from the UK, in addition to pounds sterling, which is an increase of 19 currencies, following the 30 added at the 2016 autumn statement.

The Secretary of State and his Department have made great play of promoting great British brands. Does the Minister agree that Colman’s of Norwich is best served by keeping production and the brand in Norwich, and will he join me in urging Unilever to do just that?

I do not want to get involved in internal battles in UK companies about the sites at which they base their operations, but I can tell the hon. Gentleman that growth in manufacturing exports is at a 10-year high and we need to continue to build on that, which would all be threatened if the Labour party were to come into office.

Exports are rising, but still only from a small proportion of British businesses. We need more exporters and a change of business culture, so may I urge the new Minister, with his colleagues, to challenge business representative bodies to ensure that exporting in Britain is the norm, not the exception?

I am grateful to my hon. Friend. Few people in the House have done so much to promote exports, and he is one of the 28 trade envoys doing a fantastic job for the country. Alongside the envoys, my Department works with 43 business ambassadors, who are at the forefront of the change that he describes. On the business representative bodies, the Department will engage with them in the export strategy review to ensure that the Government and the private sector work to provide businesses with the right practical, promotional and financial information to enable them to export.

11. Membership of the European Union single market is vital for Scotland’s economy. According to the Fraser of Allander Institute, 134,000 jobs in Scotland are supported by trade with the EU, and Brexit threatens to cost our economy £11 billion a year by 2030. Will the Minister reassure businesses in Scotland that they will continue to be able to export tariff-free to the world’s biggest single market after Brexit? (903222)

The hon. Lady is quite right to highlight and champion exports from Scotland, and she will know that the greatest export market for Scottish businesses is the rest of the United Kingdom. I can tell her that this Government will stay committed to promoting trade within the United Kingdom, with our neighbours in Europe and with the rest of the world to boot.

I, too, welcome the Minister to his place. I enjoyed serving with him on the Education Committee, and I look forward to debating these important matters with him.

Evidence to the former Business, Innovation and Skills Committee showed a budget of £23.6 million for the trade access partnership in 2013-14, which fell to £11.05 million in 2014-15 and to just £8 million the following year. We are now in the final quarter of this financial year and, just as last year, the Government still have not said what the current budget is. When are they going to end the uncertainty for business, and tell us how much money they are giving to support exporters who want to go to trade shows to promote exports for business and the economy?

As usual, I am afraid, Opposition Front Benchers are confusing inputs with outputs and outcomes. We are focused on promoting exports. We are doing that successfully, building on the position in 2010, and that is why we are seeing a record level of the manufacturing and other exports on which the hon. Gentleman’s constituents depend.

Trade Deals: Non-EU Countries

As the Prime Minister set out in her Florence speech, the UK will seek a time-limited implementation period with the EU. We will prepare for our future independent trade policy by negotiating trade deals with third countries, which could come into force after the conclusion of the implementation period. To that end, we have already established a series of 14 working groups and high-level dialogues with key trade partners.

Will the Secretary of State confirm that he is still on track to deliver 40 trade deals with non-EU countries after we leave the European Union in March 2019, as he said he would be? Will he explain to the House what demands there have been from those countries for additional visas for their citizens to come to the United Kingdom, and how that impacts on the tens of thousands figure?

The Government are indeed committed to ensuring continuity of the 40 or so EU free trade agreements after we leave the European Union, and that is why we introduced the relevant legislation this week. I am, however, rather disappointed that the right hon. Gentleman and his party saw fit to vote against that legislation, and deny British business that confidence.

Our clear aim is to achieve continuity and stability. We want the agreements that we have already as part of the EU to be delivered safely and securely into UK law, and that is the point of the Trade Bill.

Concerns have been raised that the transitional arrangements may lead to significant changes to the detriment of the United Kingdom. Will the Secretary of State confirm that he is not intending to make any significant or substantive changes to any of the transitional arrangements?

That is absolutely correct; we aim to keep the transitional arrangements as close as possible to the condition they are in today, given that we have some minor changes to make, for example in the disaggregation of tariff-rate quotas.

From the preliminary dialogue that my right hon. Friend has had with the United States, what assessment has he made of the prospect of doing a trade deal with that country?

May I add my congratulations to my hon. Friend on his well-deserved recognition of the service that he has given to this House and his constituency? We have four working groups with the United States on continuity, short-term outcomes, the potential scoping of a future free-trade agreement, and working with the US at the World Trade Organisation. I am content that we are making progress on all fronts.

I also welcome the Under-Secretary of State for International Trade, the hon. Member for Beverley and Holderness (Graham Stuart). He is a wonderful man, but I warn the Secretary of State not to send him anywhere at very high altitude because he is not very good with that.

The Secretary of State is right to try to pursue lots of good trade deals with countries outside the European Union, but is one of the major problems the corruption in some of the biggest countries? Brazil, Russia, India and China all fall very low down on Transparency International’s corruption perceptions index, and especially in Russia it is difficult for British businesses to do big business because they have to pay bribes all the time.

The hon. Gentleman is right, and when I am having those discussions I often describe corruption as a supply-side constraint in many of those economies. If we are able to get trade agreements and good legal agreements, and if we make transparency a key element of that, we will be contributing to success on both sides.

SMEs: Exports

We have three main ways to support exports by SMEs. First, the website offers digital tools, and has had more than 2.7 million visitors; secondly, international trade advisers based across England are supporting businesses; and thirdly, UK Export Finance has provided £3 billion in support. Last year it helped 221 UK companies, 79% of which were SMEs.

I am grateful for that answer. An additional hurdle faced by many SMEs in growing their exports is obtaining affordable political risk insurance. What steps can the Minister’s Department take to help in that matter?

My hon. Friend asks a good and pertinent question, and that is why UK Export Finance is working to ensure that SMEs can access the insurance that they need to export and invest overseas with confidence. Last year we launched an enhanced overseas investment insurance product to protect UK businesses against political risk when investing abroad, and I strongly recommend that product to companies in my hon. Friend’s Milton Keynes constituency.

There has been a significant revival of small and medium-sized manufacturing in the Black country over the past two or three years, so does the Minister agree that we need to do all we can to support those small and medium-sized manufacturing companies in the Black country to access markets around the world with development potential?

My hon. Friend makes a good, strong, pertinent point, which applies not just in the Black country but throughout the country. We have our export strategy, which will be reporting in the spring. I remind the House of our fantastic manufacturing figures—record growth in output, the highest in 10 years, growing 4% year on year according to new data just out. Confidence in manufacturing is at its highest in four years, according to the EEF.

There is a very close relationship between small and medium-sized manufacturers’ success in exporting and the viability of small and medium-sized road hauliers, many of whom are seriously concerned at the possibility of incurring substantial additional costs and facing additional bureaucracy if we cannot get an agreement that, for example, driving licences issued in the UK will be recognised in other countries when we leave the EU. What progress has been made in ensuring cast-iron guarantees that small road hauliers will not face any additional burdens in exporting to the EU after Brexit?

As my right hon. Friend the Secretary of State has pointed out, we are seeking a barrier-free, frictionless trading arrangement with the European Union as we leave. May I point out that the hon. Gentleman is seeking to put in place the potential for barriers between Scotland and the rest of the United Kingdom? Sixty-four per cent. of Scottish exports go to the rest of the UK, compared with just 15% to the rest of the Union.

Many SMEs have identified external and internal finances as well as a lack of awareness of the support available to them as barriers to entering the export market. Will the Minister ensure that those concerns are addressed in the Government’s review of the export strategy?

The hon. Gentleman makes a good point, and that is certainly very much part of the export strategy. I remind him and the whole House of some of the work we have been doing to ensure that finance is more accessible. We signed agreements in July 2016 and July 2017 with the leading UK banks to ensure that their SME customers can access finance more easily and that UK Export Finance assistance in particular is directly available.

Regulatory Alignment with the EU

5. What assessment he has made of the implications for his Department's policies of the joint declaration of 8 December 2017 on maintaining full regulatory alignment between the EU and the UK. (903216)

6. What assessment he has made of the implications for his Department's policies of the joint declaration of 8 December 2017 on maintaining full regulatory alignment between the EU and the UK. (903217)

9. What assessment he has made of the implications for his Department’s policies of the joint declaration of 8 December 2017 on maintaining full regulatory alignment between the EU and the UK. (903220)

As we leave the EU, the Government’s objective remains to maximise overall trading opportunities for the whole of the United Kingdom. As the Prime Minister has made clear—including at the time of the joint declaration of 8 December—we will be seeking a deep and special partnership with the EU, but at the same time looking to forge new and ambitious trade relationships with our partners around the world, as we develop our independent trade policy.

What discussions has the Secretary of State had with potential new trade agreement partners, including those that already have an agreement with the EU and those with whom the Government have established trade dialogue or working groups, about regulatory alignment?

We are intending to maintain consistency with the agreements that we already have. That is why we brought the trade legislation forward. We do not anticipate any change in that; we intend it to be the same as it is to date, to provide continuity for business.

Can the Secretary of State confirm whether maintaining full regulatory alignment with the EU will extend to farming standards in the United Kingdom, and that therefore chlorine-washed chicken will not be entering the UK in the event of a future agreement with the USA?

We have made it very clear on numerous occasions that we do not intend there to be any diminution of standards in food safety, environmental standards or workers’ rights as we negotiate new trade agreements.

Given how critical this issue is to maintaining an open border on the island of Ireland, what assessment has the Secretary of State made of practical supervision and management of maintaining full regulatory alignment with the European Union as per the joint agreement, and what institutions need to be established?

Alignment is about pursuing the same objectives; it is not the same as requiring regulatory harmonisation. We hope that our agreement with the Republic of Ireland is covered by a full and comprehensive agreement with the rest of the European Union.

The Irish Government have been clear that a deal that maintains regulatory alignment means free movement of people, goods and services across the border to Northern Ireland. Given that the United Kingdom Government have shown that they are willing to give a nation of the UK a differential deal, will they now bring to Brussels the Scottish Government’s proposals to keep Scotland in the single market and customs union, and if not, why not?

Why not? Because when we leave the European Union we leave the single market and the customs union—it is not that complicated.

Trade Deals: Developing Countries

7. What assessment he has made of the potential effect of trade deals between the UK and developing countries on the economies of those countries. (903218)

The UK is proudly spending 0.7% of gross national income on overseas development assistance—the first G7 country to honour its promise to do so. We are also committed to ensuring that developing countries can use trade as an engine of poverty reduction, and trade agreements play an important role in that. Our priority is to ensure that developing countries maintain their preferential access to the UK market as we leave the EU.

These texts are always delivered by Ministers in mellifluous tones, but they are often far too long. I know that there are people who scribble them for Ministers, but Ministers have a responsibility to recognise the virtues of the blue pencil.

But I also recognise the wisdom of the Minister’s answer, Mr Speaker, and I am grateful for it. I share his aspirations. Will he please remind the House what he will do to give those aspirations legislative effect?

The Taxation (Cross-border Trade) Bill, which had its Second Reading on Monday, provides exactly for the scheme of preferences to be taken across into UK law. I find it extraordinary that the Opposition parties voted against it. They voted against the UK having its own trade preferences scheme for developing countries. That is a disgrace. I very much hope that they will reconsider their position as the Bill passes through the House of Commons.

Topical Questions

Mr Speaker, you should see the length of the answers before we get to this stage.

My Department is responsible for UK exports, investment and trade policy. As we begin 2018, the House should note that in 2017 we achieved an all-time record for foreign direct investment. Our exports are up by 14% and employment is at a record level. Yesterday we saw that venture capital coming into tech firms was also at an all-time high, and that is before we consider the improvements in our manufacturing performance.

The Secretary of State does not want to trade under EU rules, under which we have considerable influence, but he is happy to trade under World Trade Organisation rules, under which we do not have very much influence. What does he find objectionable about EU trading rules that he does not find objectionable about the WTO?

That is rather to misunderstand the situation, because the EU itself has to trade under WTO rules and is not exempt from them. We look forward to having our independent seat on the WTO, of which we are a former member, so that we can have a greater say in global trading policy, because as a member of the European Union we have none.

T4. What practical steps is my right hon. Friend’s Department taking to increase capacity in developing countries to trade their way to sustainable growth? (903227)

Assisting trade capability in the developing world is one of the key parts of our official development assistance strategy, launched by the Department for International Development last year. In Buenos Aires last month the Secretary of State and I announced a big increase in funding for the WTO’s enhanced integrated framework, which does precisely that, making the UK the largest donor to that WTO fund.

The steel industry has repeatedly complained that the Government are not prepared to impose penalties on exports from countries with significant market distortions. America is clear, having imposed penalties on China under section 232, and the EU is clear, having recently voted to pass new anti-dumping rules, but the Secretary of State has constantly ducked the issue and refused to say what his Department will do after we leave the EU. When will he give the steel industry a straight answer?

What a cheek, in the very week that Labour voted against our ability to impose any penalties whatsoever in future. The steel industry and steelworkers in this country were betrayed this week by Labour Members, who would leave them as sitting ducks for dumping and subsidy, such is their love for their new hard-left, anti-trade ideology.

T3. The Secretary of State will be aware that Scotch whisky is one of the UK’s greatest exports, and much of it is produced in my Moray constituency. Around 10% of the industry’s £4 billion of annual exports are linked to EU free trade agreements. Will he update me on the steps he is taking to ensure that, when we leave the EU, the benefits of EU free trade agreements to the industry are maintained? (903226)

My hon. Friend makes an important point. The Government are committed to seeking continuity in our current trade and investment relationships, including those covered by EU trade preferences. Scotch whisky is a very important part of our exports and we want to maintain the vital bilateral dispute mechanisms, all of which are part of Scotch whisky’s contribution to our economy.

T2. In setting up the Trade Remedies Authority, the Government will need to include a full range of skills, knowledge and experience. Will that include representations from the devolved Governments and trade unions? (903225)

The Government are still looking at the potential membership. Of course before we can do so we have to have the legal basis for establishing the Trade Remedies Authority. The hon. Gentleman voted with his party against its establishment.

T5. Last year, I welcomed Nesta and Sage to Parliament when they launched their report on the state of small businesses. It said that just 18% of British small and medium-sized enterprises are exporting around the world, so what more can the Department do to help our innovative small businesses, especially in providing more information on the local rules and regulations those companies face in other markets? (903228)

I thank my hon. Friend for that question and for all she does to champion Chelmsford exporters, building on her great expertise in the European Parliament and elsewhere.

The Department does huge amounts to support small businesses to export and, as my right hon. Friend the Minister for Trade Policy explained earlier, we are seeing significant success in that regard. Baroness Fairhead recently announced a new great export readiness tool on to help SMEs better to understand how export-ready they are and what they can do to start exporting or to expand their exporting activity.

T6. Given what we know Saudi Arabia to be doing in Yemen, is it appropriate that we should still be selling arms to it? (903229)

All arms exports are covered by the consolidated criteria and, as the recent judicial review showed, the Government pay very due attention not just to the letter, but to the spirit of the consolidated criteria.

T7. With particular reference to the Trade Remedies Authority, will my right hon. Friend expand further on the potential consequences had the House voted the Trade Bill down this week? (903230)

Were we not to establish our own Trade Remedies Authority, we would be unable to protect British business from dumping and subsidy in future. All those in this country who work in the chemicals, steel or ceramics industries will now know that the Conservative party is determined to have the legal protections they deserve, but the Labour party and its allies in this House voted against giving our businesses and those workers that protection.

T8. Scotland is known internationally for its high- quality food and drink such as whisky and seafood, but there is real concern about the loss of protected geographical indications that are backed by the EU. How will the Secretary of State consult all the devolved Governments to help them to protect their unique products? (903231)

The hon. Lady should judge the Government by their action. In the transitional adoption of the agreements that we already have as a member of the EU—in those 40 trade agreements—protection of GI is an essential part. I notice that the Scottish National party voted against that as well.

Exports from my constituency include agricultural products from firms such as Saltire Seed and exports from the Aiken Group, one of the world’s leading suppliers for engineering solutions. What would the impact on Aberdeen be of not being able to implement continuity trade agreements with countries with which the EU already has trade deals?

Clearly, there would be a major disruption in the local economy, which is why it is so important that we get that continuity. The reason the Government introduced the Trade Bill with the parameters it has is that we are looking to get stability and continuity on the agreements we already have. I reiterate what I said in the House a couple of days ago: it is not about new free trade agreements; it is about giving stability to the ones we already have, which is why I am amazed that anyone should vote against the Bill.

What analysis has the Department done of the cost to business of complying with possible new non-tariff barriers, and what help will the Government provide companies, particularly SMEs, to understand the impact of any possible changes in this area?

Of course we look at all possible scenarios, but I reiterate what I have said several times today: we want to see an open and comprehensive trading agreement with the European Union, because that is good not only for the United Kingdom but for the European Union. European member states are looking for their companies to have access to the UK market, just as we are doing the other direction.

Last month, I welcomed a delegation from Taiwan to my constituency, where we met representatives of the offshore renewables sector and the seafood sector. Will Ministers work with me and with local businesses to ensure that we maximise our exports to that growing market?

Last month, I chaired the second of our joint economic and trade committee talks with Taiwan, and I can tell my hon. Friend that renewable energy was right at the heart of those talks. The UK has the highest capacity market anywhere in the world for offshore wind, and that is of strong interest to the Taiwanese authorities. Those discussions are ongoing.