Skip to main content

Customs Union

Volume 640: debated on Thursday 3 May 2018

9. What assessment he has made of the effect of the UK remaining in the customs union on its ability to negotiate new free trade agreements throughout the world after the UK leaves the EU. (905126)

We have been clear that we are leaving the EU’s customs union and single market in March 2019. Only by doing so will we be able to set out own tariffs on goods, deliver our own trade policy with the rest of the world and open markets for UK businesses. All of these are golden opportunities for our nation that will enable more growth, prosperity and jobs—I am sure my hon. Friend will be looking forward to this opportunity.

I am delighted I have got the services of the dynamic new young Minister. I am very grateful to her for reinforcing the point that if we stay in the customs union, that will mean that Brussels retains control of our trade policy. Will she tell the House and explain to me why, given that we have the sixth largest economy in the world and English is the language of international trade, some people are so nervous about the UK having its own trade policy?

My hon. Friend makes an excellent point. We have so many strengths in our country, which make us well placed for our future outside the EU and its customs union. Some 90% of future global growth will come from outside the EU. We had record high foreign direct investment last year and exports up by 10%, with unemployment down, inflation down and growth up—all of this is despite Brexit.

Does the Minister agree with this from the Institute for Fiscal Studies:

“Get a sense of scale, throw in some simple arithmetic and sprinkle a basic understanding of trade and it is obvious that the economic costs of leaving the customs union must outweigh the benefits”?

Will the excellent Minister explain something to me? Say we have our own trade policy with Nigeria, or another developing country, and its food is coming into this country with no tariff. If that country is suddenly told that it has to pay a tariff of 30%, 40% or 50% because that is the EU external policy, but that it might get that back at some time in future, is this new customs partnership a good idea?

The Government set out the two options in our policy papers last summer, and one of those options will be adopted in due course. Free trade has brought unprecedented prosperity to some of the poorest countries in the world. My hon. Friend referred to developing countries: free trade has lifted more than 1 billion people out of poverty by increasing choice and lowering prices for consumers. It will enable us to forge trade agreements with some of the poorer countries in the world, thereby incentivising them to capitalise and industrialise, and to be sustainable and not dependent on aid. This is a great opportunity.

Is not the reality that trade deals with, for instance, the US and Australia would require concessions on regulatory standards that would create impenetrable trade barriers with Europe? When it comes to trade policy, surely one bird in the hand is better than two in the bush.

By leaving the single market, we will regain control of our laws and regulatory regimes, which will enable us—Parliament and the Government—to set the terms on which we negotiate any future trade deals with other countries. Let us be clear: we have a trade surplus with countries outside the EU. There is excessive and impressive demand for British goods out there. We need to open our markets so that our businesses can expand their sales and capitalise on this opportunity.

It is one thing to negotiate free trade agreements—I very much support that ambition—but it is a completely different thing to benefit from them. To do that, we need a much stronger trade network around the world, particularly throughout Africa, where that network is potentially declining. Will my hon. Friend speak to the Chancellor and the Secretary of State for International Trade to ensure that our international trade network is enhanced and not diminished?

My hon. Friend raises an important point. All those who work at the Department for International Trade are highly focused on how we can forge better links with new markets and new partners through our trade envoys and working groups. This heralds a new beginning and new opportunities for our country; I cannot understand why the Opposition will not welcome it.

Research into the Government’s own EU exit analysis was carried out last month by the House of Commons Library, and it suggests that leaving the customs union and ruling out a new comprehensive EU-UK customs union will create new customs barriers that could cost the economy billions over the next 15 years. Does the Minister accept that assessment? If not, what does the Department now put the cost at?

That analysis does not represent Government policy—it does not assess the Government’s preferred objectives. We are working towards a free trade agreement with the EU that will be as frictionless as possible, so that our businesses can continue to trade with and sell their goods into the EU, and vice versa. That is going to be good for the economy, good for the hon. Gentleman’s constituents and good for the country.