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International Trade

Volume 641: debated on Thursday 17 May 2018

The Secretary of State was asked—

US Tariffs: Steel and Aluminium

1. What recent discussions he has had with his international counterparts on US tariffs on steel and aluminium. (905353)

The Prime Minister and I continue to raise our concerns with President Trump and his Administration about the potentially damaging impact of tariffs on our steel and aluminium industries.  We are working closely with the US and our EU partners to secure a permanent EU exemption to these tariffs.

Steel tariff exemptions are vital for Tata Steel. Many of my constituents work at Tata in Port Talbot in the next constituency along from mine. The exemption is welcome, but there are concerns about the US placing quotas on steel imports, which will have a major impact on the exports going not just from Britain but from Europe. How does the Secretary of State see himself protecting our export trade once we leave the European Union and do not have its negotiating power behind us?

When it comes to protection post EU, we will have our own trade remedies measures. But of course the hon. Lady and her Labour colleagues voted against our being able to establish those when the legislation came to the House.

What is the Secretary of State doing with our partners to ensure that we do not suffer from diversionary dumping of steel as a result of what the US is doing?

We want to see a permanent exemption so that we do not get into that position in the first place, but we have made it clear that we would operate with our European partners to ensure that we took any measures necessary that were proportionate and within international trade law to ensure that the situation that the hon. Gentleman describes would not happen.

The US President seems intent on undermining the World Trade Organisation’s multilateral rules-based system. He is delaying the settlement of disputes by vetoing the appointment of judges to the appellate body and is using national security as a cover, in this case, for naked protectionism against foreign steel and aluminium. Does the Secretary of State still think that Donald Trump is a man we can do business with?

We do business with the United States Administration because the United States is our closest strategic partner. Where we disagree on issues such as steel, we make our voice very clear. We do not support the use of section 232 as a mechanism for dealing with the overproduction of steel. That actually hits the United States’ allies and not the designed target, which was China. Citing national security, particularly in Britain’s case, makes no sense at all given that some of the steel that we send to the United States goes into its military programmes.

Leaving the EU: Women’s Rights

2. What steps he is taking to ensure that UK trade with developing countries promotes women’s rights after the UK leaves the EU. (905354)

The UK is committed to promoting equality and women’s rights in trade in the UK and around the world.  We have taken decisive steps to recognise the role of trade in promoting gender equality by signing the WTO’s joint declaration on women’s economic empowerment.  We also launched at the Commonwealth Heads of Government meeting last month the SheTrades Commonwealth programme, which will boost participation of women-owned businesses in trade.

I very much welcome that answer because a well-designed trade policy can positively transform women’s social and economic rights in developing countries. If that is not the case, that can destroy livelihoods, undercut wages and damage vital public services. Will the Minister commit to publishing an assessment of the impact on women of every trade deal that he signs with developing countries?

I agree with the thrust of the hon. Gentleman’s question. I commend the work of some key non-governmental organisations in this space, particularly ActionAid UK. The matter of impact assessments is one for future trade policy and future trade agreements. However, we are not waiting on that to make a difference on ensuring that women can participate fully in trade. I point him to a recent study by McKinsey that showed that, if women participated in the economy on an equal basis to men, there would be an increase of 26% in world GDP—the equivalent of an economy the size of the US and China put together.

My right hon. Friend is quite right: the UK has been a key driver of that agenda. He is also right that the EU27 may well take a different approach. However, the UK approach remains strongly and resolutely in favour of promoting gender equality in trade and making sure that trade works particularly for women entrepreneurs, who make up a disproportionate part of the online entrepreneurial community.

This will be my last outing as the Scottish National party trade spokesman; I will be moving to pastures new in Digital, Culture, Media and Sport. I want to put on the record my thanks to the Secretary of State and his team. While we do not always agree—in fact, rarely—our discussions and exchanges are always respectful and lively.

The 2013 Rana Plaza disaster is a prime example of how growth in export industries can have devastating results, particularly for women and girls. Jobs were created that were unsafe and had exploitative conditions for the largely female factory workers. Can the Minister assure the House and indeed everyone across the UK that any trade deals he does will not result in the exploitation of anyone, in particular women and girls?

May I first commend the hon. Lady for the constructive role she has taken? She and I have worked together particularly to try to benefit certain businesses in Livingston, her constituency, and in terms of her wider brief.

Yes, of course, we are absolutely committed that future trade agreements will pay heed to the importance of gender rights and a whole series of other rights in those agreements. What we can do, however, in the meantime is make sure that the trade agenda fully recognises gender equality, particularly, as I have mentioned, in relation to the Commonwealth and the WTO. We were one of the 120 WTO members at Buenos Aires in December that adopted the joint declaration on trade and women’s economic empowerment.

The Minister often remarks that trade has pulled millions of women out of poverty, but in the Trade Bill Committee the Government voted against ensuring that future trade deals fully comply with the convention on the elimination of all forms of discrimination against women. Has he changed his mind on this and, if so, will he ensure that future trade deals contain effective mechanisms that protect women in the global supply chain from exploitation, poverty wages and the suppression of trade union rights?

I gently remind the hon. Lady that she of course voted against the Trade Bill in its entirety on Second Reading, which I think is always worth remembering. Secondly, I would say that we will take no lessons from Labour in this space because the UK has been a leader, over the last eight years, in making sure that this agenda is taken up at the WTO, at the European Union and at CHOGM. When it comes to future trade agreements and future trade policies around those trade agreements, that will be a matter for future proposals, as she well knows.

Leaving the EU: Textile and Fashion Industry

3. What plans he has to secure export markets and inward investment for the UK textile and fashion industry after the UK leaves the EU. [R] (905356)

I am delighted to tell the hon. Lady that 2017 saw our fashion and textile exports up 6%, that a new creative industries trade and investment board is being created and that trade associations are being extensively consulted ahead of the launch of our new export strategy.

I am chair of the textile and fashion all-party group, and this week we held a wonderful Commonwealth fashion event, with diversity, talent and young design on show. However, there are issues in terms of intellectual property rights and passporting, so would the Minister demonstrate his flair for fashion and attend the all-party group to discuss these issues?

I pay tribute to the hon. Lady. This week, the meeting was on the Commonwealth; the last meeting, I believe, was on China. She is doing a great job with the APPG, focusing on the importance of fashion to the UK economy. It goes without saying that, however poorly dressed I am that day, I will be thrilled to go along and meet the much more fashionable members of that APPG.

For more than 220 years, Johnstons of Elgin has been producing some of the finest-quality cashmere clothing, fabrics and accessories. Will the Minister continue to support this great industry, and will he explain what the UK Government are doing to ensure we have more export markets for the textile industry?

I thank my hon. Friend for his question. He is right. Inward investment in Scotland has included Chanel buying Barrie in Hawick and we have trade working groups covering 21 countries. The very formation of this Department means that for the first time we have a Department of State only focused on our international economic competitiveness. For the fashion industry, for Scotland and for the whole of the UK, we will aim to work flat out to build our exports and improve the levels of investment into this country.

In a moment we will hear from the hon. Member for Huddersfield (Mr Sheerman). He has been chuntering from a sedentary position about the suit worn by the right hon. Member for New Forest West (Sir Desmond Swayne), apparently expressing the hope that it was made in west Yorkshire. That is not a matter for the Chair—I have no idea. It seems to me a most admirable suit, but I have no idea where it was made.

Unlike you, Mr Speaker, the Minister has never been to Huddersfield or visited the Textile Centre of Excellence. I keep inviting Ministers, but I think they are worried because Huddersfield, which is a great centre in the premier league for fashion, has many employers who are fearful about the future and the 90% drop in inward investment in our country. There is real worry about the penetration of European markets after Brexit.

I am pleased to say that the fashion sense of the good people in the hon. Gentleman’s constituency is different from his—that is why they are so well dressed. Not only that, but they have a different, optimistic view about the future of the UK outside the European Union, and that is why, unlike the hon. Gentleman, they voted overwhelmingly to leave.

On a point of order, Mr Speaker. My constituents voted to remain. The Minister is misleading the House.

I am sure it was inadvertent. There was not going to be further discussion on this question, but the effect of raising a point of order in mid-question is to preclude any further supplementary questions on the matter. In this case, however, the crime is victimless.

Free Trade Promotion

The UK champions the opportunities created by free trade. As I said in my lecture at Speaker’s House last month, free trade increases prosperity, stability and, in turn, security. My Department engages businesses and the public to set out the economic and moral case for free trade: better UK jobs, consumer access to high-quality, well-priced goods and services, and lifting people in the developing world out of poverty.

I thank the Secretary of State for his reply. Forecasts suggest that 90% of economic growth in the coming years will be in countries outside the EU. Does he agree that that gives this country great opportunities to extend our trade with developing nations, which will be of great benefit to them?

I agree with my hon. Friend that that provides enormous opportunities. Free trade has helped to lift more than 1 billion people out of poverty since 1990, and we will do all we can to continue to support the liberalisation of trade with developing countries. Indeed, we demonstrated that commitment by announcing £18 million to support the WTO’s enhanced integration framework in December at Buenos Aires.

A slightly surprising grouping, Mr Speaker. Does the Secretary of State agree that the public might be even more strongly in favour of free trade if they are completely convinced that the right remedies are in place for goods that come from countries that are perhaps not quite as keen on free trade as we are? The ceramics industry, for example, has a big base in my constituency, so will he ensure that, when we import products from countries that have a state-distorted market, the right powers are in place in the Bill?

I am grateful for the support that my hon. Friend gives to the ceramics industry. It is, of course, necessary to have an international rules-based system. Where we have problems with that, it is our duty to try to improve it, not to try to break or leave the system.

What optimistic free trade message is the Secretary of State going to give to Welsh hill farmers or Suffolk sugar beet growers?

The same message that I would give to everybody: free trade is of benefit to consumers and producers alike in the UK and to our trading partners. As I said, it has been one of the main tools through which we have alleviated global poverty.

One thing that free trade depends on is investment. What steps is my right hon. Friend taking to promote outward direct investment by the UK to help those countries with which we would like to engage in greater free trade?

The Government have recently completed a number of pilot projects on outward direct investment, and ODI can be a major adjunct to our development agenda. I recently visited a Jaguar Land Rover dealership in Johannesburg. It is not only promoting the sale of UK goods abroad, but providing apprenticeships in mechanics and salesmanship for some of the most deprived young people in Johannesburg. Trade and development can go hand in hand.

Those who advocate protectionism often claim that free trade means a free-for-all. It is not. May I urge the Secretary of State to make it clear that free trade means trading within the rule of law, with clear remedies to the benefit of everyone?

The WTO and the rules-based system is under attack, it has to be said, today. If the WTO did not exist we would have to invent it. There is a need for a rules-based system, otherwise we would have a free-for-all. The alternative to a rules-based system is a deals-based system, which might be fine for some of the biggest economies but would not help many of the smaller developing economies. It is our moral duty to ensure that there is fair play across trade.

Foreign Direct Investment

5. What steps his Department is taking to increase the level of foreign direct investment into the UK. (905359)

To ensure that we continue to be a global leader in attracting foreign direct investment, the Department for International Trade has launched a new FDI strategy that will deliver new ways to target support for those projects that create the most value for investors and national wealth. I am pleased to say that 2016-17 was a record year for FDI projects landing in the UK, showing that the fundamentals of the UK economy are strong.

We regularly ask our investors why they put money in the UK and the answers are very similar. They say that the British legal system provides certainty and predictability. We have a skilled workforce. We have a good, predictable regulatory system and a low-taxation economy. We speak English. We have some of the best universities and some of the best access to tech, and we are in a good time zone for global trading. None of those, incidentally, depends on our membership of the European Union.

Leaving the EU: Third-country Trade Deals

6. What assessment he has made of the potential benefits to the UK arising from third-country trade deals after the UK leaves the EU. (905361)

Leaving the EU means, for the first time in over 40 years, we will from next March be able to sign and ratify new trade deals. We are currently party to about 40 international trade agreements and are committed to securing continuity of those agreements. We have also established 14 trade working groups in major markets to explore the best ways of developing new trade and investment relationships post Brexit.

I thank my right hon. Friend for that answer. He will know, as I do, that international regulatory standards are what fuel international trade. For the continuation of those deals and opportunities, does he agree that regulatory alignment will be necessary to secure the best British deals post Brexit?

As my hon. Friend will know, we have some good news for him about the implementation period. The UK will be party to those deals up to the end of December 2020. He is also right that there is a very important read-across between what is agreed with the EU on standards, rules of origin and so on. Our commitment remains absolute to have high standards and to encourage the use of broad international global standards of the highest quality.

10. Ministers have said that trade with Commonwealth countries will be important after Brexit and the Minister will be aware that currently our trading arrangements with many African and Caribbean Commonwealth countries are by virtue of the Cotonou agreement, which is due to be renegotiated during the transition period. Will the Minister say what trade arrangements he expects we will have with those countries once the new agreement with the EU takes effect? (905366)

As I say, up to the end of 2020, the UK will remain party to those agreements as they stand. We are also putting in significant efforts to make sure that the substance of those agreements rolls over beyond that. That is why we have signed memorandums of understanding with, for example, the South African Development Community—the South African customs area—CARIFORUM and the eastern and southern African economic partnership agreement group. That is work that is making good progress.

Leaving the EU: Preferential Market Access

7. What steps he is taking to ensure that the UK maintains preferential market access to those countries with which it currently has such access as a member of the EU after leaving the EU. (905362)

The Government are committed to securing continuity of existing EU trade agreements and other preferential arrangements as we leave the EU. The draft withdrawal agreement confirms EU international agreements continue to apply to the UK during the implementation period. We are working to ensure continuity of those arrangements after that.

The REACH—registration, evaluation, authorisation and restriction of chemicals—regulations that govern production and other standards are critical to countless chemical companies in my Stockton North constituency and beyond for trade across the world. Will the Minister update the House on the progress to retain them when we leave the EU?

I met the chemicals industry earlier this week—in line with other industries—in a very useful roundtable at the Department for Business, Energy and Industrial Strategy. That work to make sure that the UK benefits from the best possible rules as we go forward is ongoing.

Does the Minister agree that one of the big opportunities from leaving the EU is that we can negotiate trade deals that best suit the UK, rather than being tied into the other 27 member states?

My hon. Friend makes a very important point. That is why we have these 14 trade working groups with major markets around the world. We are in active discussions with those counterparts and we have the benefit, from March next year, of the ability to negotiate, sign and ratify trade agreements with them.

First, the Government said that they were simply rolling over these agreements on precisely the same terms. Then they admitted that they would have to amend the agreements with Norway, Turkey and Switzerland to avoid rolling over such things as the customs union or the four freedoms that they would rather avoid, but the Minister has still not explained what process this sovereign Parliament will undertake to ensure that these important new agreements are subjected to proper democratic scrutiny. When will he?

We had significant exchanges on this during the Trade Bill Committee and the scrutiny arrangements are enshrined in that Bill, which I note again that the hon. Gentleman voted against. He will also know that these agreements have already been scrutinised in this House under existing EU scrutiny procedures, and there are precise arrangements set out in the Bill for how we go forward from here.

Commonwealth Countries: Trade Agreements

8. What progress he made on potential trade agreements with Commonwealth countries at the Commonwealth Heads of Government Meeting in April 2018. (905363)

My Department continues to work with the 24 Commonwealth countries that are part of the EU’s economic partnership agreements or other preferential arrangements to ensure that there is no disruption to our existing trade. We also have regular discussions with Australia and New Zealand on our future bilateral trading relationships through our trade working groups. With Canada, we already have an agreement in place in CETA—the comprehensive economic and trade agreement—which will form the basis of a UK-Canada agreement once we have left the European Union.

That is good news. Firms in my constituency such as GKN-Melrose, Vestas and BAE Systems export across the Commonwealth and the wider world. Is my right hon. Friend confident that post Brexit, we will be able to continue and grow that trade?

Very confident. I pay tribute to the companies such as BAE and GKN that he mentions in his constituency, which are exemplary exporters. We intend to have an open and comprehensive trade agreement with the European Union. We intend to take advantage of the fact that the International Monetary Fund says that 90% of the global trade increase will be outside Europe in the next 10 to 15 years, and we have a new export strategy to support all exporters, including the ones that he mentions in his constituency.

Ironically, a trade deal between India and the European Union is more likely to be agreed by the remaining EU27, as two of the main stumbling blocks are whisky and visas, which mainly involve the United Kingdom. Therefore, will the Secretary of State advise me, the House and my constituents at the Auchentoshan distillery and the Loch Lomond distillery how they will seek to overcome that when the Government will be all alone?

One of the main problems with India, of course, is the tariff that it applies on whisky. We have been involved in a trade review with India for some months now, and part of the process is to look at the areas where we require liberalisation to bring our two economies close enough to be able to consider a free trade agreement. The high tariff applied on Scotch whisky by India is one of the impediments, and we continue to urge them to reduce that.

EU Free Trade Agreements

9. If he will take steps to ensure that the UK has third-party membership of current EU free trade agreements to maintain compliance with rules of origin requirements after the UK leaves the EU. (905365)

Since the draft withdrawal agreement confirms that international agreements continue to apply to the UK during the implementation period, common rules of origin will remain until the end of 2020.  We are keen, of course, to avoid disruption to supply chains, so we are working to secure continuity after this.

I am sure the Minister has met motor manufacturers who have warned that they will simply not be able to meet the 60% local content requirement under rules of origin if EU components cannot be included. At present, the UK content is between about 40% and 44%. How will the Minister address that?

I think the hon. Lady is referring to the EU’s current set of more than 40 agreements with more than 70 counterparts. That is a matter for active discussions. We are obviously trying to secure the best possible deal for UK motor manufacturers, not only those involved with the finished product but those who provide the components, as part of our talks with third parties.

Topical Questions

My Department is responsible for foreign and outward direct investment, for establishing an independent trade policy, and for export promotion. I am delighted to announce that my Department recently appointed John Mahon as our new director general for exports; he will oversee the delivery of the Government’s export strategy. Later today, my fellow Ministers and I will be in Stirling for the third meeting of the Board of Trade.

In the light of the latest mass killing of Palestinian civilians by the Israel Defence Forces, will the Secretary of State review and apply the criteria for arms sales to states that violate international law?

The UK has one of the most robust arms export systems, which we operate under the consolidated criteria in line with our EU partners.

I welcome the Department’s focus on international trade. I am delighted to hear that the Redditch eastern gateway is included in a project and strategy that the Secretary of State will announce today. Will he update the House on what he will do to bring much-needed international investment into Redditch?

Later today I shall outline a project to attract £30 billion of foreign direct investment to the United Kingdom. Many projects, such as the one mentioned by my hon. Friend, are not necessarily visible to global investors, but our new website will ensure that we can attract more investment in middle-sized opportunities, which will genuinely help to bring prosperity to constituencies such as my hon. Friend’s.

T3. In 2017, Britain sold £216 million worth of military contracts and supplies to Israel and £571 million worth to Turkey. The disproportionate use of deadly force by those nations against Palestinian and Kurdish citizens has been rightly condemned. Does the Minister agree that the UK needs a transparent and human rights-oriented arms trade to ensure that this country does not enable brutal attacks to be made on civilians? (905370)

All export licence applications are rigorously assessed, case by case, against the consolidated EU and national arms export licensing criteria. No licence will be granted if there is a clear risk that the equipment might be used for internal repression, or in a serious violation of international humanitarian law. However, we continue to monitor the situation in Israel and Gaza closely.

T2. I hope that the Secretary of State enjoyed his recent visit to Aberdeen, which is probably the most productive part of Scotland, let alone the United Kingdom. Does he agree that the oil and gas industry is a deserving recipient of the export finance that is boosting that valuable sector? (905369)

I did indeed enjoy my visit to Aberdeen, where I was able to chair a roundtable of companies from across the oil and gas industries as well as meeting senior figures from the Wood Group. Representatives of UK Export Finance were present at both meetings, and, as my hon. Friend will know, we are more than happy for UKEF facilities to be made available to the sector.

T4. Given the uncertainty over the future customs arrangements between this country and the rest of Europe, what steps is the Department taking to ensure that training is provided for the additional customs officials who will be needed to deal with the probable extra workload? (905372)

That is not, in fact, the duty of the Department. Her Majesty’s Revenue and Customs is responsible for customs in the United Kingdom. None the less, HMRC has received extra funds from the Treasury to ensure that preparations are made for Brexit.

The UK defence and aerospace industry plays a vital role in the country’s prosperity, and Farnborough, in my constituency, has a special place at the heart of it. What steps is the Department taking to support the industry, and will the Secretary of State kindly confirm that members of his team will attend the Farnborough international air show in July?

I can certainly give that assurance to my hon. Friend. He will also know that in order to improve the functioning of our defence and security exports we are reorganising the Defence and Security Organisation so as to separate the defence from the security elements, because they require different levels and types of Government intervention and contact. I want to ensure that the appropriate skills are there to maximise our defence and security exports.

It was my pleasure to address the hon. Gentleman’s all-party group on India only last week, and we have a huge success story. My right hon. Friend the Secretary of State has talked about the trade audit—the trade review—that we have done with India. I can also report that bilateral trade has increased by 15% over the last year, and we remain the largest G20 investor in India, with British companies currently employing around 788,000 people in India.

It was a pleasure to welcome the Secretary of State to my constituency last week where he could see that, from food and drink to oil and gas, Aberdeen is best placed to take on the opportunities of Brexit. I thank my right hon. Friend’s Department for promoting Aberdeen’s £150 million Queen’s Square project this afternoon. Will my right hon. Friend update the House on the benefits to Scotland of extending the high potential opportunity scheme, and does it not show that Scotland is better off in the United Kingdom?

One of the benefits of having a UK-wide Department is that we are able to use economies of scale to lever international investment into the whole of the United Kingdom. My hon. Friend will be aware that a number of projects in Scotland are being highlighted today during our visit to Stirling, and it is much better to have a UK-wide Department able to bring investment to all parts of the United Kingdom than to have it broken up and fragmented.