The Secretary of State was asked—
This is the first time that I have spoken in the House since the death of Sir Jeremy Heywood. He was a dedicated public servant to whom I, among many, owe a great debt. I am very fortunate to have been able to call him a friend as well as a colleague. I am sure that Members on both sides of the House would join in a tribute to Sir Jeremy.
The export strategy launched in the summer consists of the four ways in which Governments can make a difference: encourage, inform, connect and finance. It is only by making it easier for businesses that we will increase our exporting performance. Governments do not create wealth, businesses do.
Last week, I visited Crosby Premier Stampings in Cradley Heath. The company has been forging for nearly 100 years in the Black country, and currently uses traditional and high-tech methods. It is increasing its global sales, including to China. Will the Secretary of State explain how the export strategy will help other such small and medium-sized enterprises to develop their export business worldwide?
My hon. Friend is a great champion of business in the Black country, but all businesses are different, and we want to help both new and seasoned exporters of all sizes with the sort of support that is appropriate to the barriers and opportunities that they will face. SMEs in particular will benefit from increased peer-to-peer learning, improved access to specialist advice, and the thousands of export opportunities on the great.gov.uk website.
When I was a Minister at the Department of Trade and Industry, the Trade Minister had no control over trade policy—they just went on jollies around the world promoting trade. As we will now be stuck in the EU customs union for years to come, with no ability to make our own trade deals, will the Secretary of State change the name of his Department to the “Department for International Trade Promotion and Engagement with the Customs Union”?
The Government’s intention is that we will leave the European Union in March, we will exit the implementation period in December 2020, and we will have a fully independent trade policy. We have already begun—and finished—the first four consultations on independent trade agreements with other countries.
It is welcome that, under the draft EU withdrawal agreement, businesses that export to the EU can continue to discount tariffs, volumes, customs, fees and so on, but the documentation —this relates directly to future export strategy—says:
“the development of the United Kingdom’s independent trade policy will be the subject of the future relationship negotiations.”
Given what we have seen so far, that effectively means that the UK will not be able to strike differentiated deals with third countries with which the EU currently has a deal. Given that that contradicts precisely everything that the Secretary of State has been saying, why has he not resigned?
We have made it very clear that, in the areas where the EU already has an agreement, our first aim is continuity. We have also made it very clear that we have further ambition for bespoke agreements with those countries.
One key part of the Government’s strategy is to build an extensive business-to-business network of exporters. What progress has been made on that? In particular, what role are business organisations playing so that we can foster such a network?
One of the demands of the business community during the consultation was to give them better online communities so that they can speak to one another. We discovered that businesses did not necessarily want to talk to Government advisers, but wanted much more to speak to those who had faced similar business challenges and to ask how they had overcome them. That is under way, and we have recruited more staff to make that happen.
Foreign Direct Investment
The UK, I am pleased to say, remains the No. 1 destination in Europe for foreign direct investment. We have recently published analyses of the positive economic impact of FDI, which show the benefits of investment to the UK and how the Department is delivering national wealth by attracting investors to our key industries.
Foreign direct investment in the UK has been directly responsible for more than half a million jobs since 2010, including hundreds in my constituency. Whatever the shape of future trade policy, will the Minister assure me that, building on that figure, increasing our attractiveness to foreign direct investment remains a priority for this Government?
My hon. Friend is absolutely right—it is a priority of this Government to create even more high-paying jobs by making the UK the most business-friendly market in the world. The Labour party’s promise to seize the assets of foreign pension funds invested in the UK threatens our prosperity and the retirement of those around the world who have put their confidence in Britain.
In the past few years I have often thought that I live on a parallel planet to the Minister. That obviously is the case, because the senior people I meet from the United States, China and other major economies are not investing, or thinking of investing, in the United Kingdom, partly because of the uncertainty over Brexit and because, if we leave the European Union, they want a market of 650 million, not 65 million.
I can confirm that the hon. Gentleman does live in a parallel universe, but it is one that he shares with his Front Benchers. His parallel universe is entirely divorced from the reality that investors are coming to the UK. We are the No. 1 foreign direct investment destination in Europe. We have the largest stock, and that is why we have been able to support more than half a million new jobs since 2010. The biggest threat, investors tell me, is that of Labour coming to power.
During the referendum, “Project Fear” told us that global business interest in the UK would collapse if people voted to leave. Can the Minister confirm whether foreign direct investment has gone up or down since the referendum in June 2016?
I am glad to confirm to my hon. Friend that our stock of foreign direct investment has gone up. We remain the No. 1 destination in Europe and are seeing companies in so many sectors coming here. Investors have some concerns about Brexit but, as I have said, what they are really alarmed about is the prospect of Labour seizing their assets and destroying the job creation that investment brings.
May I associate myself with the Secretary of State’s remarks about Sir Jeremy Heywood?
I was delighted, if somewhat surprised, to see the Secretary of State at the Dispatch Box this morning. He and his Ministers have talked about a record number of FDI investments in the last full year, 2017, but he knows that, in value, it was actually the worst year for inward investment since 1994. Complacently, he celebrates the forecast by the United Nations Conference on Trade and Development for the first half of 2018, but he knows that the UNCTAD report states that this reflects
“a surge in intra-firm loans”.
These are loans that are often used to minimise tax by creating an artificial debt shield and they create no new jobs in the UK. How many such intra-firm loans are in the FDI statistics, and what assessment has the Minister made of the reduction in tax receipts to the Exchequer as a result?
The UNCTAD figures that measure foreign direct investment showed the UK moving above the United States into third in the first six months of this year, but the hon. Gentleman is entirely right to say that they include intra-company loans. Any figures around flow should be treated with caution; the most important thing is the stock of foreign direct investment in this country. As my hon. Friend the Member for Kettering (Mr Hollobone) said, if we had listened to some, we would have expected divestment. There was no divestment; there were increases in investment. In the last year, if I may deal with what is most important to me and my constituents, there were 75,000 new jobs created by foreign direct investment.
China: Trade and Investment
I have made five visits to China this year. The most recent was when I led the UK delegation to China’s International Import Expo in Shanghai this month, supporting British firms to sign deals worth over £2 billion.
How are we doing in terms of goods and services, and how does that compare internationally?
Our ratio of goods and services exports to the world outside the European Union is roughly 50:50. Eighty per cent. of our exports to China are goods, which suggests that the Chinese service market is not as open as it should be. Therefore, much of our effort is based on trying to encourage the Government of China to open up its services, which of course would be of benefit to the United Kingdom, the world’s second biggest services exporter.
Let me put on record my thanks for the work that the Minister and others have done to secure the £250 million deal for Lakeland Dairies’ milk products over a five-year period, which secures jobs as well.
In the past 10 years alone, China’s GDP has tripled. What assessment has the Department made of the potential trade and investment opportunities for the UK, with special reference to the agri-food industry?
We are conducting a joint trade and investment review with China as part of looking ahead to deepen that relationship. Under the UK-China Joint Economic and Trade Commission, we lobby for increased market access sector by sector. I am grateful to the hon. Gentleman for his comments; it is not the highest publicity aspect of the Department for International Trade, but opening up a sector worth quarter of a billion pounds to Northern Ireland is a big achievement.
Last year, British exports to China grew by 28%. What assessment has the Secretary of State made of how that trajectory will rise over the next few years?
We know from a number of consumer surveys that about 60% of Chinese consumers say that they would pay a higher price for produce just because it is made in the United Kingdom. We are associated with the quality end of the global market, which is the rising market in China, and I expect our exports there to continue to grow apace.
The UK is home to a world-leading creative industries sector, which we will continue to support as part of our modern and ambitious trade policy. UK creative industries exported £40.2 billion of goods and services in 2016, and we recently completed a public consultation that will inform our future approach in trade agreements.
Can the Secretary of State reassure the creative industries that professional equipment such as musical instruments will not be subject to additional documentation requirements and tariffs at the border?
That is exactly what we are seeking to achieve in the agreement the Prime Minister reaches—I take it that the hon. Gentleman is referring to the European market. Not only do we want to secure continued tariff-free EU access, but we want further liberalisation so that we increase potential global trade, too.
Can the Secretary of State confirm that trade in the creative industries of the EU will benefit from reciprocity of regulation on licensing and collective rights management?
On services, we want an open and liberal arrangement with the European Union that goes well beyond the current World Trade Organisation commitments that both sides have, so we will want not just continuity of liberalisation, but an increase.
May I make a particular plea for the gaming sector so that BAFTA-winning companies such as Wales Interactive, which is in my constituency, can continue to thrive, whether we do or do not leave the European Union?
We will be leaving the European Union. It is important to note that sometimes the creative industries sector is generally underappreciated for the contribution it makes to the earnings of this country, not only through exports—I mentioned the £40.2 billion of goods and services exports—but through the income it generates for the United Kingdom. It is an important sector, which is why we put it at the heart of not only our industrial policy, but our trade policy.
The Society of Authors has called on the Government to ensure that copyright is not used as a bargaining chip in trade negotiations. Any future deals must ensure that international copyright treaties are applied by the book; anything else would risk damaging this important and iconic sector. Will the Secretary of State still be here to reassure British authors, the reading public and other creative industries that our gold standard copyright regime will be protected post Brexit?
I should probably declare an interest as someone who has published a book and receives royalties, and who takes an interest in copyright. I and all Secretaries of State will be here to ensure that copyrights are protected.
Food and Agricultural Standards
The Government have been clear that future imports to the UK must meet UK food safety, animal welfare and environmental standards. We will not compromise our standards in pursuit of a trade agreement.
The Minister knows full well that UK consumers expect safe, high-quality food. The Secretary of State has assured us that he has 40 trade deals ready to go at the drop of a hat. Can the Minister tell us how many of those trade deals embed the exact same high food standards?
The 40 deals to which the hon. Gentleman refers are, of course, the deals that the EU currently has with partners. Our ambition is to transition those trade deals exactly as they are—or at least as closely as possible—and they contain the current measures.
We not only have really high welfare and hygiene standards, but reduce much antibiotic use by producing good-quality food. Can we be assured that food that does not meet those standards will not come into the country and that those standards will not be frittered away in an agreement on service industries?
I can say to my hon. Friend the Chair of the Environment, Food and Rural Affairs Committee that we absolutely have that intention. It is very straightforward. When I am abroad, I find on a regular basis, as the Secretary of State has said, that it is the commitment to high standards in the UK market that so motivates consumers to buy our products. Not only is having these high standards the right thing to do, but there is no rational commercial incentive to do otherwise.
The so-called backstop would trap Northern Ireland in a common regulatory area under EU rules for our key export industries of manufacturing, agriculture and agri-food. What assessment has the Department made of the impact of that on Northern Ireland’s ability to participate in UK-wide trade deals in relation to those key exports?
The Government have only just published the withdrawal agreement, which will be before the House shortly, and the Department will assess all issues of that sort in the context of the proposed agreement.
The Secretary of State spoke earlier of how highly regarded UK goods are. That is true of successful exports such as dairy, smoked salmon and vegetables. I noticed that the Minister made a commitment in his initial answer to not dropping our food standards. Given that the United States has made it clear that that is exactly what has to happen to agree any future trade deals, will he now rule out any trade deals, including with the United States, that see any drop in our very high and successful food standards?
I can only refer the hon. Gentleman to the answer I gave moments ago. We are scoping potential trade deals with all the partners with whom we have announced that we are seeking to do free trade deals, and our position on these standards remains exactly the same: we will not be changing UK law in this regard.
The UK’s automotive sector is one of our strongest industries and, for that reason, it has been at the heart of our negotiations with the EU. The agreement announced last night will protect integrated supply chains and allow the industry to continue to thrive.
I would like to press the Minister further. What will the Department do to protect this specific supply chain, which is made up of many hundreds of SMEs across the country?
The hon. Gentleman is right, which was why we put the interests of that industry at the heart of our negotiations. That is why the deal provides the supply chain with exactly the continuity needed to ensure its successful growth, and it is why I ask the hon. Gentleman to ensure that he supports it; otherwise, he will be putting all those automotive jobs at risk.
The UK’s steel sector currently provides around a third of our automotive sector’s steel requirements. What are Ministers doing to replicate the EU’s steel safeguards, which prevent sudden surges of imports, after Brexit?
We have set up the Trade Remedies Authority, which I note the Labour party voted against. We have put in place all the measures necessary to ensure that producers are protected from dumping. It was a shame that the Labour party voted against the very measures that sought to protect British jobs, and I do not know why the hon. Lady joined those on her Front Bench in doing so.
The Minister says that he will support all measures to help the supply chain, including small businesses in my constituency, but can he guarantee that he and the Secretary of State will still be in post by lunchtime to defend those industries?
It is unfortunate, as was shown by the previous vote, that the Labour party always puts politics ahead of the interests of ordinary people working in the automotive industry across this country. We are seeing more and more investment in this country, with the announcement of a major investment by McLaren in Sheffield only yesterday. Let us not play politics. Let us get the deal over the line and protect our growing and strong automotive industry.
Food and Agricultural Standards
My ministerial colleagues and I regularly meet our counterparts from the Department for Environment, Food and Rural Affairs to discuss a range of issues. When it comes to products imported to the UK, quality, safety and performance will continue to be paramount. Without exception, imports must meet all the relevant UK product rules and regulations.
We have heard quite a few times this morning that there will be no lowering of standards when it comes to imports under future trade deals, but the Government rejected an amendment to the Trade Bill to include a non-regression clause. Will they now support an amendment to the Agriculture Bill, which we will be discussing in Committee later today, that would allow for the same so that we can be sure that our food and our safety standards are protected?
I have noted some of the discussions on the Agriculture Bill, which I read earlier today, and I have noted the discussions on this. I have to say, and the hon. Lady should take some real encouragement from this fact, that the standards on these issues in the UK are already higher than they are in the EU. That, I think, should give the House confidence as to the UK’s intention on this. I will repeat one more time: there is absolutely no intention that the Government will reduce their standards in this area.
I am committed to ensuring that UK trade policy supports gender equality. I will be publishing scoping assessments on each new free trade agreement and these will consider the effects of concluding trade deals on different groups, including gender groups.
I thank the Secretary of State for that answer, but what policy measures will he put in place to ensure that the sustainable development goals are met, particularly goal 5 to ensure equality for women and girls?
The hon. Lady raises a very important point. It was one of the points we considered at the World Trade Organisation meeting of Trade Ministers in Buenos Aires. We looked at a study showing that of companies that trade only offline, four out of five are owned or run by men. Of those that run only online, four out of five are run or owned by women. This indicates that e-commerce is one of the prime development tools that we can use. The liberalisation of e-commerce and creating a global network of regulation is therefore one of the best ways we can combine trade and development policy, specifically to help women experience the benefits of the global economy.
My Department is responsible for foreign and outward direct investment, establishing an independent trade policy and export promotion. Later today, the Board of Trade will meet in Wales for the first time in history, jointly hosted by my right hon. Friend the Secretary of State for Wales. As the President of the Board of Trade, I can today announce a £240 million investment drive in Wales, which will create thousands of jobs. The Board of Trade will also today announce the launch of the UK’s first energy investment portfolio, worth an estimated £5 billion.
Exporting companies in my constituency have told me that the Trade Secretary actually asked to meet them, but on condition that they did not discuss Brexit. Even more ludicrously, the Brexit Secretary—not the one who has just resigned, but the one who resigned before that—also said he wanted to meet them, but on the same condition. It is only £1 to go over Clifton suspension bridge from the right hon. Gentleman’s constituency into Bristol. If I offer to pay that quid for him, will he come to Bristol and tell our exporting companies what the hell is going on?
The companies in Bristol seem to know already what is going on, without requiring any contribution from the hon. Lady—financial or otherwise. They are not only creating huge numbers of jobs, but are among the best export hubs in the whole of the United Kingdom, showing excellence in whole areas from the creative industries to aerospace. She need not worry too much.
There are a number of events up and down the country. I will be hosting events in my own constituency, using the export hub. A number of Members will already have used the hub in their own constituencies. This is a great initiative, and it is a chance for MPs of all parties to show just how much support they give to small businesses. I know that a number of MPs hosted events up and down the country last year. I will be doing so, and I urge my hon. Friend to do so, although I am sure he requires no urging whatsoever. I hope that Members on both sides of the House will use this opportunity to celebrate the success of small business.
We have set out our export and investment strategy, and we are one of the few countries in the world that are seeing a rise in investment at a time when foreign direct investment is dropping by 41%. We currently have one of the biggest increases in exports, and our trade policy and new system of trade commissioners will ensure increased levels of contact with Governments in all countries, including the one that the right hon. Gentleman failed to tell us the name of.
As my hon. Friend will know, the Government have outlined to the House the progress that new free trade deals will make, and consultations on four potential deals were in the public realm from July to October. Those potential deals include the US, Australia, New Zealand and the comprehensive and progressive agreement for trans-Pacific partnership, and we are currently in the process of analysing the extensive responses that we received.
The United Kingdom is committed to the joint comprehensive plan of action, and we want Iran to derive the economic benefits of that agreement. As the hon. Gentleman knows, there are two particular difficulties for British companies. One is access to finance for doing business in Iran, and the second is that it is often difficult for companies to know who the end point they are dealing with is, and whether they may in fact be part of the regime that would require sanctions to be applied. We work with British businesses to try to help them, but we understand that it is a real minefield.
Trudy Harrison—not here.
My hon. Friend makes a useful point, and we have identified 400,000 businesses that could be exporting but do not because of their fear, or lack of understanding, of the markets to which they would export, and their cultural and regulatory frameworks. That is why we have established the framework of our trade commissioners around the world, and why we have put members of UK Export Finance in those markets, so that they can gain expertise in the financial areas that companies will enter, and will be there to advise companies in those markets.
The north-east is the only region in the country that still exports more than it imports. That involves large companies such as Nissan, as well as many great small start-ups and businesses that cannot afford expensive lawyers or management consultants. What specific guidance is available to those companies on how to continue and increase trading post-Brexit?
That is why we have the export strategy and we have worked with industry, which has been welcomed by small business groups and others. With staff in 108 countries around the world, and our regional and sector teams, we are working harder than ever before to ensure that the information flow, and the advice and opportunities for small businesses, is advertised in a better and more effective way than ever before. [Interruption.] Despite the hon. Lady’s laughter, that is why last year our exports grew by more than 10% to £617 billion, and they are now more than £630 billion and counting.