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International Trade

Volume 646: debated on Thursday 13 September 2018

The Secretary of State was asked—

Trade Co-operation: UK and Israel

1. What steps he is taking to encourage trade co-operation between the UK and Israel in the (a) information and (b) agricultural technology sectors. (906889)

The UK and Israel have an important trading relationship in information and agricultural technology, which we are strengthening through our dedicated trade promotion team at our embassy in Tel Aviv. We have established a UK-Israel tech hub, which helps to create partnerships between British companies and innovative Israeli technology businesses. This is part of our confident, outward-looking approach to Britain’s trading future.

From online banking security to prescription drugs to cherry tomatoes, Israel has become an international technological and trade powerhouse. Every day, millions of Britons are benefiting from Israeli inventions and produce, even if they do not realise it. What progress is being made in the UK-Israel trade working group to ensure that this vital trade relationship continues to prosper after Brexit?

My hon. Friend is right. Our trade with Israel currently stands at £3.9 billion in goods and services, with our exports up 7% in the past year. The Prime Minister met the Israeli Prime Minister in February 2017 to set up the joint trade working group, and I would like to thank the Israeli Government for their close liaison. We are dedicated to the continuity of trade and, once we leave the European Union, to having an ambitious new trade agreement that will provide even greater benefits than those we currently have.

I do not know whether the Secretary of State listens to my favourite programme in the morning, “Farming Today”, but is he aware that, following the publication yesterday of the Agriculture Bill, there is a great deal of concern in the farming community about the Bill and about the possibility of having a decent trading relationship, with high-technology components, after Brexit?

Thank you, Mr Speaker; I was wondering whether there was going to be even a tentative link to the question. The tech hub is there to help British businesses to get access to the innovations that come out of Israel across a range of sectors. It is worth pointing out that Israel is an extraordinarily innovative country and has more start-ups per capita than any other country on the planet. Where we can get UK businesses across a range of sectors to get access to such innovation, it is always a positive outcome.

The latest computers used in the House of Commons use Intel 7 and Intel 8 cores and above, and Shazam, Skype and FaceTime all use technology developed in Israel. What more are we doing to encourage that sort of co-operation, particularly in relation to computer technology?

As I have already said, the key to that is the UK-Israel tech hub. This relates not only to the area of computers, which my hon. Friend has mentioned, but to FinTech, cyber-security, biomed, retail technology and the creative industries. These are all prime areas for co-operation between the United Kingdom and Israel, and we should celebrate that relationship and the benefits that it brings to both our populations.

In the context of the agriculture sector, what representations have been made about trading with illegal Israeli settlements, which in the long run further jeopardises the two-state solution that the UK is supposed to aspire to?

Our trade relationship with Israel is clearly set out in the agreement that the European Union has with Israel, and that is the agreement that we will roll over as we leave the EU. We will want to have a further ambitious trading agreement. We believe that the extension of trade in Israel and in the wider region contributes to not only the prosperity but the political stability and security of the region.

Trade and Investment: India

2. What recent assessment he has made of trends in the level of UK trade and investment with India. (906890)

India is a key partner for the UK, and bilateral trade between the UK and India was £18 billion in 2017, up 15% on 2016. The UK and India are among the top four investors in each other’s countries, and the Secretary of State will be visiting India in December to attend the annual joint economic trade committee and to continue to build on this important relationship.

In my constituency, we are lucky to have a lot of firms doing business with India, which is an incredibly exciting market. Will the Minister tell us a bit more about what the Government will do to try to drive further trade, particularly between the east midlands and India?

I am pleased to say that trade between the east midlands and India is performing well and grew by 11.4% in 2017, with success stories such as Royal Enfield in Bruntingthorpe. We are supporting visits from the midlands engine to India, and I was in India with Prime Minister Modi at the Move Global Mobility conference only at the weekend.

If the Minister was with Mr Modi at the weekend, I expect that the subject of student numbers came up. India will want something in return for an expanded trade and investment programme, so what exactly is the Minister offering? I am not against increasing student numbers, but is he? Will he be honest with the British public?

That is an interesting question from the Opposition, as is so often the case, given that, from memory, student numbers from India grew by 32% last year. There is absolutely no cap on Indian students coming here, and I would hope that the hon. Lady, representing her constituents and the wider country, would promote the positive message that we are open to Indian students. There is no cap, students are growing in number, and we want more of them.

The potential for growth in trade between India and the UK is enormous and should be backed up by further trade missions. However, may I suggest that the next trade mission should take Justin Welby, the Archbishop of Canterbury? He would be able to talk to some of India’s incredible entrepreneurs and perhaps learn about wealth creation and the fact that greater trade between India and the United Kingdom will lift millions of Indians out of poverty.

I thank my hon. Friend for that question. There are so many things that we can do jointly with India. As I said, we had the mobility conference at the weekend, which was about cleaning up our air and our transport. India has set targets for 2030 to ensure that at least 30% of vehicles produce zero emissions, and we have said that 100% must produce zero emissions at the tailpipe by 2040. Working together, we can do more.

I thank the Minister for his response to that question. The cultural, historical, economic and educational links between the United Kingdom of Great Britain and Northern Ireland and India are enormous. Will the Minister outline how he believes that will continue post-Brexit? Will he also ensure that all the regions of the United Kingdom of Great Britain and Northern Ireland can benefit?

The Board of Trade was established precisely to send out a message about the benefits of trade and relationships with countries such as India to every part of the United Kingdom. We plan to work with Northern Ireland to ensure that it is part of the whole suite of offers that we provide using our posts right around the world.

Free Trade Agreements

The Government are committed to an inclusive and transparent trade policy. On 20 July, we launched a 14-week online consultation, allowing the public to provide views on future potential UK trade agreements with the US, Australia and New Zealand and, of course, the potential accession to the comprehensive and progressive agreement for Trans-Pacific Partnership.

We have huge potential to increase exports, particularly in the fantastic ceramics industry in Stoke-on-Trent, so I thank the Minister for that response. Will he update the House on the progress that is being made with the US-UK trade agreement, which is so important for that industry?

It is important to point out to my hon. Friend and, indeed, to the House that our duty of sincere co-operation means that we are only exploring information at this stage since we may not, cannot and should not explore actual free trade deals. However, the UK-US trade and investment working group has now met on four occasions and will meet again in November in Washington. We want our future trade agreements to work for all sectors and regions of the UK, including the UK’s highly valued ceramics industry in Staffordshire, for which my hon. Friend is a doughty champion. The Secretary of State will be chairing the consultation in Birmingham on 1 October. My hon. Friend recently wrote to me requesting a meeting for that particular sector, and we will be exploring dates shortly.

A potential free trade deal with the United States of America is reckoned to be worth about 0.2% of GDP, but the loss of GDP with a mere FTA deal with the European Union is 6%, which is a loss thirty times greater than the gain from America. Even if the Minister got an equivalent free trade agreement with the rest of the world, he would need a world population of 15 billion —twice the current population—to make up the gap. There are only 7.5 billion people on earth. Where are the Government going to make up the gap in GDP loss that this Brexit is costing the United Kingdom?

I point out to the hon. Gentleman that the British people voted in a referendum to leave the European Union and that is exactly what we are organising. We are in the middle of negotiating with the EU on a wide-ranging and comprehensive package of proposals that will allow trade to continue with the EU hopefully much as it does now.

The Minister’s last answer was very interesting. Do the Government agree that free trade agreements are good? If, unfortunately, the Chequers proposal is rejected by the European Union, would not an alternative be a free trade agreement with the European Union based on the Canada model?

I merely repeat what I said before. The Government are negotiating to put in place a deep future trade agreement with the European Union, and we believe we will succeed in that endeavour.

At the moment we have a free trade agreement with Colombia through the European Union, but the new President of Colombia, Iván Duque, has said that he wants no more free trade agreements, probably including with the United Kingdom if we are to leave the EU, and that he wants to renegotiate the deal with the EU. If we were to be able to roll over a new agreement with Colombia, would we make sure it had very strong human rights protections?

As the hon. Gentleman knows, we are negotiating with our partners who are currently signatories to agreements with the European Union to create continuity for businesses and to make sure those agreements are put in place. The elements to which those countries have already signed up will be included in those agreements, and I hope he will take some comfort from that.

We trade effectively without them. They often come with producer-interest strings attached. They might be nice to have, but we do not need them, do we?

Last time I stood at this Dispatch Box, I said that I was not entirely sure I understood a particular question.

We will negotiate free trade agreements that are to the benefit of the United Kingdom—we have offensive and defensive interests—and, when we conclude those agreements, I have no doubt they will be good for the United Kingdom.

I apologise on behalf of my colleague, who is not here and for whom I am standing in.

This 14-week consultation period is probably the only period in which the public will have a chance to have their say on the free trade agreement. Does the Minister agree it is vital for those people who are concerned about changes in food regulation, and for those people who are concerned about the diminution of the high standards we have here, that they take the opportunity to input into this consultation and make their voices heard, as they did so successfully in previous campaigns on, for example, the Transatlantic Trade and Investment Partnership?

I absolutely agree with the hon. Lady. It is right that members of the public should feed in all their concerns. One of the reasons why we are running this consultation is for exactly that purpose. I back her encouraging people to take part in the consultation. Indeed, when I was in Scotland recently to meet the Scottish Government, I also met Trade Justice Scotland to discuss exactly these sorts of issues.

The Government’s current consultation process has a worrying lack of transparency. No mandates have been published and no explanation has been given of which sectors are being considered or of what chapters may be included. Will the Minister commit to working with businesses and civil society to develop a consultation process that is more transparent, that looks at the full range of issues and that allows proper engagement on the big questions regarding our future trade? The current one is just simply not good enough.

In that case all I can say to the hon. Lady is that she simply does not understand the consultation process. There are 14 weeks in which the public themselves may come back to us with all their input. We are very clear that we will be exploring widely and deeply with all sectors of society, and indeed all sectors of business and all those with an interest. We have set up the strategic trade advisory group to do exactly the sorts of things she is asking for, and I am confident that this is the most open consultation on free trade agreements this country has ever undertaken.

Export Strategy

I would like to thank my noble Friend Baroness Fairhead for all her hard work in driving forward the launch of the Government’s export strategy, in her role as Minister for Trade and Export Promotion. We launched the Government’s export strategy on 21 August. The strategy has four pillars—encourage, inform, connect and finance. Our ambition is simple: it is for the UK to be a 21st-century exporting superpower.

I welcome the Secretary of State’s remarks. How will the strategy help increase exports in the aviation, defence and aerospace industries, which are so crucial to Farnborough in my constituency?

My hon. Friend, who is a very strong advocate for those sectors, makes a good point. They are strong export sectors for the UK, and the Government’s export strategy will build on their success, further encouraging and assisting companies to export. We will do so by providing more information and connections to overseas markets, supporting companies at overseas events and providing better access to export finance.

The overall growth in the value of UK exports is strong, but the growth in the number of companies starting to export is not so strong. Will my right hon. Friend advise what he is doing to help companies start exporting for the first time?

My hon. Friend, as usual, makes a telling point. I congratulate businesses up and down the country who export their goods and services overseas, but our survey suggests that some 20% of companies could be exporting at the present time but do not. That is around 400,000 companies whose export potential is not being fully realised. My message to those who could export but do not is to look at the success of our current exporters—if they can, so can you.

The north-east is the only region that exports more than it imports. Employers, employees, trade associations and trade unions all agree that a no deal Brexit will destroy jobs. What is the Secretary of State doing specifically to protect north-east businesses from a no deal Brexit, and to ensure that we continue to export successfully around the world?

What the Government are doing is to try to ensure that we get a good deal with the European Union—a free, open, comprehensive trade deal that enables our businesses to continue to trade with the substantial market that is the European Union.

Many small businesses in my constituency tell me that they have never exported outside the European Union and do not have plans in place—particularly in relation to a no deal Brexit, if that was to happen—for how they would export outside the EU. They do not have people who are experts in customs arrangements outside the EU. What practical help can the Minister give to small businesses, to ensure that they can trade outside the EU?

That is a very useful point. Members of the House who have used the export hub and had the export hub visit their constituency have seen the benefits of the very practical help that can be given to small businesses. We have been encouraging UK Export Finance to help more small and medium-sized enterprises trade. We have put UK Export Finance experts in the field, so that they may better understand overseas markets, regulatory frameworks and cultural issues. Our new trade commissioners around the world are there to provide better help. If the hon. Gentleman has not yet had the export hub in his constituency, if he contacts the Department we would happily arrange a time for a visit, so that small businesses in his constituency may get one-to-one advice on the opportunities and help available.

I very much welcome the export strategy, but given that international trade is a reserved matter, will my right hon. Friend look at extending his Department’s footprint north of the border, so that more Scottish businesses may take advantage?

We already have a footprint, but it is very clear, emphasising the point that my hon. Friend correctly makes, that it is a reserved matter, so it is the duty of the Government to ensure that all UK citizens, in whatever part of the kingdom they reside, have the same access to help when it comes to trade; and that is what the Department for International Trade provides.

The Federation of Small Businesses describes the export strategy as lacking “definitive detailed interventions”. The Secretary of State would do well to take note of what the FSB says. SMEs are vital to our export success, so I suggest, before he gets carried away by his own complacency, why not listen to what small businesses are saying?

We spend a great deal of time doing so, and in fact I was deeply encouraged by the welcome that we received for the export strategy from the FSB, the chambers, the Institute of Directors and the Confederation of British Industry, who do not share the Labour party’s anti-trade, anti-capitalist, anti-wealth agenda. The Labour party increasingly seems to see the model it prefers for Britain as the Venezuelan model.

Trans-Pacific Partnership

5. What progress his Department has made on the UK’s potential accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. (906894)

We are preparing ourselves to be able to take a decision on potential CPTPP accession in the light of the ongoing public consultation and the process of accession for new members being established. We are also undertaking further work to understand the opportunities that CPTPP presents, including by engaging with existing members.

I share the Secretary of State’s enthusiasm for the potential of the Trans-Pacific Partnership and greater trade with the countries of the Pacific rim in general. Will he confirm that nothing in the proposals currently being negotiated with the EU would prevent our being able to accede to the TPP? Does my right hon. Friend agree that although it is of course entirely for Malaysia to decide its role in the TPP, both its involvement and our accession would be good for all involved?

The CPTPP states currently account for more than 13% of global GDP—they comprise a combined GDP of around $11 trillion. Their economies are projected to grow to more than $14 trillion by 2023. It is self-evident that if Britain is able to take advantage of growing markets, a country that has a much more ambitious export strategy can benefit hugely. Malaysia will be able to take advantage of the improvement in our bilateral trade.

12. To what extent is our accession reflected in the work programme of the Board of Trade? Will the board make it a priority to begin the formal process of our accession to CPTPP? (906902)

The work of the Board of Trade is primarily about supporting exports and investment. The board itself does not have a role in trade policy, but the Department is fully co-ordinated with partners across the CPTPP and ready to discuss with them the great potential that exists for the United Kingdom. We should want to extend our trading horizons as we leave the European Union. We need to raise our ambitions, extend our timelines, and widen our geographical horizons if we are to maximise the benefits to the UK of the opportunities that Brexit will bring.

Topical Questions

My Department has responsibility for exports, inward and outward investment, and trade policy. I am delighted to announce that on my recent visit to China, I received approval from the Chinese Government to ease restrictions on the import of UK dairy products. That will be worth a quarter of a billion pounds over the next year and will be of particular benefit to Northern Ireland. I congratulate the many people involved in that effort, including my officials and the hon. Member for Strangford (Jim Shannon). Such success shows the benefit of collective effort, and I look forward to similar collaboration to support British companies to secure business around the world.

Later today, I will travel to the G20 summit in Buenos Aires.

Given that more than 60% of the north-east’s exports go to the EU, what preparations have the Secretary of State and his Department made for there being no Brexit deal, which could lead to firms in the north-east being hit with tariffs of up to 80% overnight?

As the hon. Gentleman knows, the Government have already published a number of papers in preparation for no deal. I have just left a Cabinet meeting, to which I shall return later, at which we are looking into that very subject. The best thing that we can do is to get an effective comprehensive trade agreement with the European Union so that all the countries of Europe—the EU27 and the UK—can continue to get the benefits of free and open trade.

T2. As chair of the all-party group on the furniture industry, I welcome the publication of the Government’s export strategy and draw my right hon. Friend the Secretary of State’s attention to the Long Point exhibition that will take place in my constituency next week. The exhibition acts as the global shop front for quality upholstery manufacturing. Will the Minister outline what plans the Government have in their export strategy to support the furniture industry to increase exports once we have left the EU? (906905)

There is no greater parliamentary champion of the furniture industry than my hon. Friend—I am delighted to congratulate her on that. For businesses and sectors of all sizes, the export strategy sets out a new UK export challenge, a smarter offer to help them to export, and a new framework to maximise our impact. The Long Point exhibition in my hon. Friend’s constituency next week will be another excellent opportunity for her and us to promote the furniture industry.

What proposals has the Secretary of State made to his counterparts ahead of this weekend’s G20 ministerial meeting to avert the threat by the President of the United States to pull the United States out of the World Trade Organisation, and to ensure that the WTO can continue to function despite America’s refusal to approve appointments to the WTO’s appellate body—or has he made no proposals?

I have had conversations with a number of my trade colleagues from Japan, Mexico and Canada all ahead of the G20 meeting. That is a very good opportunity for us to recommit ourselves to the concept and practice of free and open trade and the rules-based system based on the WTO in Geneva. We should be pointing out that protectionism has never ended well, and that the benefits that we have introduced in terms of the elimination of poverty and the support for our global security agenda are based on free trade. It is also worth saying that the alternative to a rules-based system is a deals-based system, which would upset the balance of global trade. Incidentally, let me point out to the hon. Gentleman that he will find that the power to withdraw from the WTO is not a presidential power, but one that would require approval by Congress in law.

T3. Africado is Tanzania’s biggest exporter of avocados, exporting more than 2,500 tonnes a year to British supermarkets such as Waitrose and Tesco. The project, which was kickstarted by UK aid, has transformed an abandoned coffee plantation into a thriving business that employs 2,000 farmers. Following on from the Prime Minister’s visit to Africa, what steps have Ministers taken to improve trading relationships with emerging markets? (906906)

I thank my hon. Friend for her very encouraging story from Tanzania. Britain is, of course, an international leader on development and my Department is working with the Department for International Development to ensure that global prosperity is at the heart of future policy. Our first priority is to deliver continuity in our trading relationships as we leave the EU. In the future, the Government will explore options to expand our relations with developing countries. DIT will be focusing on unilateral preference schemes and schemes to help to break down barriers to trade that exist in many countries.

T4. Trade statistics published last week by Her Majesty’s Revenue and Customs show an increase of £643 million in Wales’s exports to the EU over the past year. The data also shows a decrease of £32 million in exports to non-EU countries. Is not the reality that the best opportunities for Welsh exporters in the future lie with staying in the single market and the customs union? (906907)

As I have already pointed out, it is advantageous for us to have an open, liberal comprehensive trading deal with the European Union, but it is also important that we open up trading opportunities elsewhere, which was why I found it utterly depressing that the Labour party voted yesterday against the EU’s free trade agreement with Singapore, which is a chance generally to open up trade. That is another example of how the Labour party has been captured by the anti-trade hard left to the detriment of the United Kingdom’s interests.

T6. ARC Marine and Artificial Reef Construction Company will be the first recipients of a Torbay Development Agency trade bursary to support their ambitions to export. What role does my right hon. Friend see for this type of work at a local level in promoting exports, and how can his Department help to support it? (906909)

At a general level, joining up across Government and working with local partners to help businesses to overcome trade barriers is a key principle in the Government’s export strategy. I am encouraged that joint working between the Torbay Development Agency and my Department will allow ARC Marine to visit the wind summit in Hamburg in September. That is another good example of how collaboration can help local businesses.

T5. According to the Department’s annual report, the team in the north-west has among the lowest job creation numbers for the whole of England. What more can be done to boost exports from the north-west? (906908)

I think that it is in line with our ambitions elsewhere. Businesses themselves were very clear. They wanted us to inform them better, so we have upgraded our website. They wanted better encouragement from their peers, so we have set up a new online community to ensure that that can be done. They wanted better finance, which is why we have been improving links between UK Export Finance and small and medium-sized companies. They wanted better connectivity, which is why we have now published, in advance on our website, where Ministers will be visiting. That means that companies looking for market access, or indeed getting a deal over a line, can know when Ministers will be visiting and ensure that they are in contact with us.

T7. We have a thriving local economy in Corby and East Northampton- shire, a large share of which is driven by small and medium-sized enterprises. What steps is my right hon. Friend taking to help them to export more, particularly to the United States? (906910)

My hon. Friend asks two questions, the second of which is about our relationship with the United States. In our working group, we have had specifically dedicated discussions about how we might help SMEs on both sides of the Atlantic to improve that trade. Of course, one of the key elements of that is UK Export Finance. I am very pleased to say that, in a real change from previous practice, last year around 78% of the contracts that UK Export Finance placed were with SMEs. That is a real change that makes a difference to real businesses.

T8. In 2016, according to Office for National Statistics figures, UK services exported to the EU and European Free Trade Association countries were worth £105.5 billion. What plans do the Government have to secure EU and EFTA export markets for UK services in the event of a no-deal Brexit? (906911)

That is a very interesting question. Our services exports to the world’s most open market—the United States—comprise 65% of our exports. For non-EU countries, the figure is about 50%, and for the EU itself, it is only 38%. In the future, I would like to ensure that our services exporters are given the free access to European markets that they can currently take advantage of outside Europe.

As the Secretary of State knows, the UK is the largest investor in Tanzania, a proud Commonwealth nation to which I have just been appointed trade envoy. Will he be good enough to outline what Her Majesty’s Government will do to strengthen that relationship as we leave the European Union?

I welcome my hon. Friend to his post as the Prime Minister’s trade envoy to Tanzania and wish him luck. As the Prime Minister made clear on the visit on which I joined her at the end of August, partnerships based on mutual interest are key to the UK’s offer. The presence of a proactive Department for International Trade and broader prosperity team, and UK Export Finance’s risk appetite of £750 million for Tanzania, further show that commitment. We are working with the Department for International Development to align trade and investment policies throughout Africa and the developing world.

A report from the University of Sussex three days ago identified that a third of UK exporting firms have lost business due to Brexit. How will the export strategy help to secure existing jobs in export?

As usual, the right hon. Gentleman seems to have overlooked the fact that UK exports rose to a record £429 billion in the 12 months ending in July 2018. We are witnessing a very strong UK export performance, and the Government aim to see that continue by achieving a comprehensive trade agreement with the EU, and taking advantage of market liberalisation and new free trade agreements elsewhere. The Government are committed to that process; I just wish that we had seen more commitment to it from the Opposition this week in Parliament.

Fifty-one per cent. of the north-west’s goods exports go to non-EU countries, which is hugely important for Greater Manchester. What discussions has the Mayor of Greater Manchester had with the Department about Greater Manchester’s trade strategy as we leave the EU?

I am happy to have discussions with a range of stakeholders, including the Mayors, local enterprise partnerships and any other parts of government infra- structure. I am happy to have a meeting with the Mayor of Greater Manchester, but I have not yet had a request for a meeting following my letter to him in July 2017. I am perfectly open to making my diary available.