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Free Trade Agreements

Volume 642: debated on Thursday 14 June 2018

6. What assessment he has made of the potential effect of the UK remaining in the customs union on its ability to negotiate new free trade agreements throughout the world. (905834)

8. What assessment he has made of the potential effect of the UK remaining in the customs union on its ability to negotiate new free trade agreements throughout the world. (905837)

9. What assessment he has made of the potential effect of the UK remaining in the customs union on its ability to negotiate new free trade agreements throughout the world. (905838)

We have been clear that the UK will be leaving the EU’s customs union and the single market in March 2019. Only by leaving the customs union and establishing a new and ambitious customs arrangement with the EU will we be able to forge new trade relationships with our partners around the world. If the UK were to remain in the customs union, we would be unable to implement our own trade deals or to set our own tariffs. That would not give us control over our trade policy and it would not be respecting the referendum result.

Any policy whereby Britain leaves the European Union but remains in the customs union would mean surrendering our trade policy to a third party, and would mean that we were required to open our markets to other countries without guaranteed reciprocal access to theirs. Does my hon. Friend agree that no independent, self-respecting nation could tolerate such a position?

I agree with my hon. Friend. A customs union creates an asymmetrical relationship. Turkey is an example of a country in a customs union with the EU but not in the customs union with the EU. The effect of that is that if the EU signs a free trade agreement with a third country—let us say, the US or Canada—goods from the US or Canada can enter Turkey tariff-free, but Turkish goods still face a tariff barrier in Canada or America, which puts Turkish businesses and exporters at a significant disadvantage. With free trade as the big prize for Brexit, Labour’s support for a customs union makes no sense at all.

I do not know whether you are a cider drinker, Mr Speaker, but say the word Somerset and you inevitably think of cider. Last week I held an event for the cider industry trade, to which I invited all the cider makers from Somerset. There was a great deal of positivity and emphasis on the fact that we can grow in the world market when we leave Europe. Does my hon. Friend agree that yesterday’s decision will help us negotiate unfettered and that that will benefit our south-west industries?

I agree with my hon. Friend. You may well agree, Mr Speaker, that cider is a delicious drink and, if I may be so bold, like me you may have had many a joyous occasion, perhaps in your teenage or university days, where the memories were enhanced precisely because of the consumption of cider.

I am very pleased that companies, particularly in my hon. Friend’s constituency and her region, have a can-do attitude to Brexit and are looking forward to increased global trading opportunities. Brexit presents those opportunities, especially for the food and drink industry.

When I have met elected representatives from places as far apart as Wellington and Washington, they have been very keen to do trade deals with the United Kingdom post-Brexit. Will the Minister confirm that that would not be possible if we remained part of the customs union?

Yes. Remaining in a customs union or the customs union with the EU would not be compatible with having a meaningful, independent trade policy. It would mean that we would have less control than we have now over our trading relationships with other countries. Neither leave nor remain voters would want that.

The hon. Lady has given an extremely clear and helpful answer, but the problem is that we have a lot of questions to get through and I want to accommodate colleagues. If all Ministers could be brief, that would be great.

Car manufacturing in this country is world leading, but the president of the CBI has said that if we leave the customs union it would become extinct. What contingencies do the Government have to replace the 800,000 jobs affected, including the 30,000 jobs in the north-east of England?

I disagree with the hon. Gentleman’s description. The automotive sector is one of our great success stories and the Government will continue to support it. Just this April, Vauxhall announced an investment of more than £100 million in its UK plant, to build the next generation of Vivaro vans. We are seeing more and more success in the sector. We have to support that, and that will be an ambition of our future trade agreement with the EU.

As well as the motor sector, the food sector has expressed concern that rules of origin in the supply chain could have a real impact post-Brexit if we are not part of a customs union. What is the Department’s approach? Is it considering a broader definition of “local origin”? How else will it help those sectors deal with rules of origin post-Brexit?

The hon. Lady is right to highlight the issue of rules of origin with regard to the sector. We want to ensure as limited friction as possible, with a tariff-free arrangement for goods, so that we have the integrated supply chains that are vital to the success of the sector.

Will the Minister comment on the Foreign Secretary’s analysis that the Government’s EU negotiations are heading for “meltdown”? Is that not just another example of the chaos and division at the heart of Government?

I think that the hon. Lady’s interpretation is incorrect. The Government are making—[Interruption.] Let us look at the progress the Government have made. We have agreed an implementation period. Led by the Prime Minister, we secured agreement in December on EU citizens, and we are now in the phase of talking about the exciting future relationship with the European Union. I am looking forward to the opportunities and success that will be led by this Government, not the predictions of failure.