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International Trade

Volume 654: debated on Thursday 7 February 2019

The Secretary of State was asked—

New Trade Agreements: Human Rights

1. What assessment he has made of the potential merits of including human rights protections in new trade agreements. (909083)

The United Kingdom has a strong and proud history of promoting our values globally, including on human rights. We are considering all options in the design of future trade agreements, including human rights provisions. We recognise the need to maximise the benefits of trade while being true to our values.

I am one of the 38 Co-operative MPs in this place. We are the third largest party in Parliament and we have a long-standing campaign against modern slavery. There is a particular need to emphasise any safeguards against modern slavery in our supply chains, which is an insidious aspect of international trade. Will the Secretary of State take cognisance of that urgency in ensuring that the scourge of modern slavery is outlawed in our legislation and trade agreements?

I am grateful to the hon. Gentleman for reminding me that a party within a party is in fact normal practice in the Labour party—

The hon. Gentleman raises an extraordinarily important point. Modern slavery is far more widespread than is recognised. It is a pernicious, wicked practice and it is something that this Government have taken the lead on internationally. It will certainly be reflected in all the values of this Government, including our trade policy.

11. Scrutiny of our trade deals is vital as we leave the EU. Given the Government’s commitment to an inclusive and fair trade policy, will the Secretary of State seek a debate in this place to talk about the scrutiny of our trade deals? (909096)

On the consultations that we have already had in public on Australia, New Zealand, the comprehensive and progressive agreement for trans-Pacific partnership —the CPTPP—and the United States, the Government have a commitment to hold such a debate in the House of Commons. Assuming the agreement of the business managers, I hope that we will have that debate in the House within the next two weeks.

What assessment has the Secretary of State’s Department made of the role of British businesses in tackling abuse and exploitation in global supply chains?

As I said in answer to a previous question, we take such abuses very seriously. This country operates its international trade policy with one of the highest levels of ethics of any country globally, and the Government are always keen to ensure that those ethics are upheld in every way.

Order. It is open to the hon. Member for Fylde (Mark Menzies) to seek to shoehorn Question 9 into the question with which we are dealing now. It is not obligatory, but his opportunity exists if he wants it, and it looks as though he does.

9. I would be foolish not to accept such a generous offer, Mr Speaker. Fylde is one of the biggest exporters of any constituency in the country and, with Brexit fast approaching, trade deals are more important to the sector than ever. What has been done to ensure that future trade deals are processed with the least possible delay and with the best interests of business in mind? (909093)

In terms of the continuity of our existing agreements, the best way to ensure full continuity is to have a deal. All those who talk about the pitfalls of no deal would do well to remember that in voting against the deal they make those pitfalls all the more likely. My hon. Friend is right to suggest that it is not only trade agreements that are important but trade itself, including trade promotion for our exports, and I congratulate him on the work he has done to promote this country’s interests abroad.

The persecution and mass incarceration of the Uyghur community in the Xinjiang province of China is facilitated by companies such as Hikvision, which manufactures and supplies much of the surveillance equipment that is used there. Hikvision has an expanding presence in this country. Can the Secretary of State assure me that the trade deals that we might have post Brexit will not encourage trade of that nature?

As I have said, any future trade agreements that we have beyond the European Union will be subject to public consultation, to debate in this House and, I hope, to rigorous processes that I may set out in due course about how we can increase scrutiny of those agreements. Members across the House will place different types of emphasis on different constituencies and different sectors of the economy, but I think that the whole House will share those concerns about ethics. I hope that the design of the scrutiny of those trade agreements that I will be able to bring to the House in greater detail soon will give the right hon. Gentleman the reassurance that he seeks.

We all need to remember that the great success of free trade over the last generation has been the truly historic achievement of taking 1 billion people out of abject poverty. That has been the benefit of free trade, and in this era of protectionism we should realise that economic nationalism is a way of rolling back what has been an enormously beneficial human trend.

Two weeks ago, the Joint Committee on Human Rights heard how the Canadian Government had to make a substantial pay-out and issue a public apology to a chemicals company after they were sued for taking a public policy decision to ban a chemical additive to protect human health. The Committee was told that investor-state dispute settlement provisions in trade and investment agreements can

“impact very negatively on human rights.”

Does the Secretary of State recognise that danger? If so, will he rule out such ISDS clauses in future trade agreements? If not, what counter-evidence will he present to the Joint Committee on Human Rights?

I have made clear our concern about human rights, but the idea of banning such agreements is nonsensical. This country has £1.3 trillion of stock overseas. Our investors are important in providing development in a lot of these countries, yet they are not given sufficient legal protections, which they would normally get under systems such as the UK’s. That is why those provisions are put in—to protect our investors overseas.

British Businesses Investing Overseas

Supporting UK-based companies to invest and operate overseas is a key pillar of the Department’s work. In 2017, UK companies brought home £86 billion as a result of those investments. The Department provides market information and identifies investment opportunities and potential partners. We have developed a new suite of products to help UK businesses as a result of outward direct investment pilots in New York, China, Turkey, Brazil, South Africa and Ethiopia.

I thank the Minister for that answer, but people are quite rightly concerned that setting up overseas subsidiaries or acquiring foreign enterprises could lead to job losses or relocations. Will the Minister confirm the net number of jobs created in the UK as a result of his Department’s support for outward direct investment?

This Government’s job creation record speaks for itself. It is the protectionist instincts that run throughout the Labour party that so threaten the jobs miracles that my constituents and the hon. Lady’s have enjoyed over recent years.

I do not know whether the hon. Member for Gillingham and Rainham (Rehman Chishti) has observed that there is an opportunity for him now. He takes a grave risk if he waits for question 10, because we might not reach it.

10. I am grateful to you, Mr Speaker. With regard to investment in the United Kingdom, having recently attended the opening session of the 116th United States Congress, it was clear that the US wants a free trade agreement with the United Kingdom. However, the US has legitimate concerns about whether the UK would be able to do that if it is tied into EU regulations in goods and services. What does the Minister have to say on that? (909094)

The Secretary of State recently led more than 100 innovative tech companies to CES, the world’s biggest trade show. The US is of course our largest trading partner and our largest overseas investor. As my hon. Friend rightly points out, there are real opportunities, which is why one of the first priorities on free trade agreements is one with the US.

The Environmental Audit Committee has just started an inquiry into the role of UK Export Finance. We pledge to meet climate change targets at home, so why is it that nearly every penny of support for energy projects overseas goes on fossil fuels?

I do not think that that is accurate, but I do not have the exact numbers to hand. UK Export Finance is there to support UK business in meeting demands and needs as requested by overseas companies and, indeed, countries. I make no apology for saying that UKEF is there to try to promote that, and it has played a role in funding renewable technologies. Our record on that front is good worldwide.

With UK Export Finance reaching its centenary later this year, what difference has UKEF made to exports? How does my hon. Friend intend to mark the occasion?

UKEF is yet another example of how this country has led the way when it comes to exporting. It was the world’s first export credit agency, and we should all be proud of its work to support British exports over the last 100 years. We will celebrate the centenary throughout this year, notably at the UK trade and export finance forum in June, and we will continue to promote UKEF’s world-class support so that even more UK companies can succeed abroad.

UK Tech Sector Investment

7. What recent assessment he has made of trends in the level of investment in the UK tech sector. (909091)

We lead Europe in developing a sustainable tech ecosystem. Tech Nation’s latest release in 2018 shows that the UK attracted more venture capital investment than anywhere else in Europe, with $7.9 billion in funding from investors, ahead of Germany, France and Israel. We announced £1 billion for the artificial intelligence sector alone in last year’s sector deal, which will help to unlock further opportunities for AI investment in the UK.

The UK tech industry has been one of the great success stories of the British economy over the last decade. Does the Minister agree that, as we leave the European Union, it is vital that we continue to retain that combination of innovation, entrepreneurial spirit and investment flows, which have put the rocket boosters under the UK tech industry, so that we stay on the leading edge over the decades to come?

My hon. Friend is absolutely right. Tech is not only an enormously important industry in its own right, but it is vital to innovation and advances in so many other areas. The Government’s industrial strategy grand challenges seek to secure the country’s future in innovative technologies. FinTech, for instance, has raised nearly £12.2 billion in just the first half of 2018, with companies such as Revolut securing £190 million of investment. My Department will do everything it can to support innovators, including through the global entrepreneur programme.

As well as having immense strength in artificial intelligence, the UK is a world leader in medical research. Does my hon. Friend agree that the work being done to prepare for our post-Brexit future will deliver a superb collaboration with Israel that will help further strengthen the UK as a technological hub?

The industrial challenge’s grand challenge on ageing focuses on our world-leading pharmaceutical and health companies. We have a dedicated team in Tel Aviv actively promoting co-operation between UK and Israeli companies, and we have an established UK-Israel tech hub to enhance those partnerships between British companies and Israeli technology innovators.

The Minister missed an opportunity in his answer to the supplementary question of the hon. Member for Halesowen and Rowley Regis (James Morris), in which he was invited to talk about a rocket. He should have said that this is the answer to Donald Tusk: to get out of hell, we are going to fly on a rocket.

The hon. Gentleman, as a Member from a party so bereft of optimists, gives an example to the others. This country has a great future outside the European Union, and technology, in which we are the undisputed European leader, is fundamental to putting a rocket up not only our industry but many of the people with whom he shares the Opposition Benches.

It is hard to follow that question. None the less, Northern Ireland has many companies that lead their fields in the tech and medicare sectors, so what discussions has the Minister had with the Department for Enterprise, Trade and Investment in Northern Ireland to partner and develop those Northern Ireland companies?

We work very closely with that Department. I would not say I am a natural industrial strategy sort of person, but the grand challenges have identified the big issues facing not only this country but humanity. By channelling our limited resources to those who make the most difference, we can support areas, not least agritech, in which Northern Ireland is a global leader.

Preferential Trade Agreement with India

4. What recent assessment he has made of the potential for a preferential trade agreement with India. (909088)

India is an important part of our future trading arrangements. The UK-India joint trade review has enabled us better to understand the bilateral trade relationship by examining trade flows and barriers that could be jointly addressed. Collaboration is continuing to address barriers in the food and drink, life sciences and information and communications technology sectors. The appointment of Her Majesty’s trade commissioner in 2018 also provides a joined-up and co-ordinated Government effort to promote UK trade and prosperity in India.

I thank the Minister for his answer. He will be aware that the UK is the third biggest investor in India and India is the third biggest investor in the UK. What more can we do to ensure that we increase the trade as we leave the European Union and set out on our own free trade mission across the world?

I thank my hon. Friend for his question. Crispin Simon, the aforementioned HMTC, is leading the Department’s network to grow trade in key sectors. UK exports to India grew by 28%, to £7.9 billion, in the year ending quarter 2 2018, making that seven consecutive quarters of growth. Goods exports increased by 38% in the same period. Following the launch of the UK-India technology partnership by the Prime Minister and Indian Prime Minister Modi in April 2018, there have been many successes, including the healthcare AI catalyst programme. We have worked closely with many companies, such as BT, Rolex, Diageo, GlaxoSmithKline, Marks & Spencer and G4S.

The Minister might know that, in the Leeds city region, which includes Huddersfield, we have many brilliant businesspeople from an Indian background and they of course have very good partnerships with India. They are totally demoralised at the moment, partly because of this Secretary of State. I would not wish him to go into hell, but they have no confidence in him and they have no confidence in shrinking the potential market for India from 650 million to 65 million people.

All I can say is that the hon. Gentleman is entitled to his opinions, but I happen to disagree with him fundamentally. We have a close trading relationship with India, and we are working extremely hard to grow trade there. The figures I have already given him this morning demonstrate that there is potential in India, which we are exploiting and will continue to exploit if and when we leave the EU.

India of course is in the EU’s generalised scheme of preferences, whereas nearby countries such as Pakistan and Sri Lanka are in GSP+, with Bangladesh probably soon to join them. Does my hon. Friend agree that, if we were to adopt Labour’s customs union policy, we would have to accept EU trade preference policy without any say in its formulation? Does he also agree that that would lead to a big decline in UK foreign policy influence in south Asia and among diaspora communities in the UK?

One reason why the Prime Minister has put forward the deal that she has to the House is that it allows the flexibility for us to engage in the ways in which my right hon. Friend expects us to be able to —actively with the south Asia region, and India in particular—and to prescribe our own preference schemes such that we can control our own rules.

Is it not the case that the priority for the Indian Government is a trade deal with the EU and that the best way for the British state to have a trade deal with the EU is to stay in the EU customs union?

The Indian Government’s priority is likely to be trade with anybody with whom it suits. The hon. Gentleman simply needed to listen to the answer I gave a little earlier: there has been a 28% increase in UK exports to India, to £7.9 billion, in the year to quarter 2 2018, and a 38% increase in goods exports. We can conclude from that there is plenty of attention in India on UK trade.

Future Trade Agreements: Intellectual Property Rights

5. What steps his Department plans to take to ensure the protection of intellectual property rights in future trade agreements. (909089)

The UK’s intellectual property regime is consistently rated as one of the best in the world. The Government are reviewing their future trade policy as we leave the EU. We will continue to consult widely with stakeholders on intellectual property provisions in future trade agreements to support inventors, creators, consumers, and food and drink producers.

Scotland is one of the fastest growing regions in the UK’s creative industries, which are world leading and currently worth £91.8 billion to the UK economy. Can the Minister therefore reassure the creative industries in Scotland, and indeed across the UK, that professional equipment such as musical instruments will not be subject to the disruption of additional documentation requirements and tariffs at the border after Brexit?

Plainly, if the Prime Minister’s deal is accepted in the House of Commons, including by being supported by the Labour party, that will not be an issue. If we leave the EU without a deal, the regimes will be what they are. What I can say is that we are working incredibly hard on copyright, patents and enforcement to make sure that the creative industries, which are vital to the prosperity of this country, will be protected in the event of the UK leaving the EU.

UK Service Exports: European Single Market

In 2017, 46.8% of UK services exports went to the European single market—including the European economic area and Switzerland—worth around £130.5 billion. That represents around 21% of total UK exports. Leaving the EU gives us the freedom to pursue an independent trade policy with countries around the world that reflects our unique strengths in services.

I thank the Secretary of State for his response, but last week the Office for National Statistics published the international trade and services statistics for 2017, which showed that financial services proved to be the largest service product exported globally by UK businesses and that the EU made up nearly half the UK’s service exports. A key part of business relationships with clients in the EU is the ability to travel freely, known as passporting rights. Has the Secretary of State made an assessment of what the end of freedom of movement, including for labour, will mean for services under the Prime Minister’s deal?

Actually, the share of our exports to the European Union accounted for by services is less than our average exported to the rest of the world. In fact, the future of our services will be dependent on global services arrangements, and outside the EU we will have a golden opportunity to shape the global services agenda in a way that suits the United Kingdom’s best interests. It is time that we in this House started to reflect the optimism and confidence of the British public who voted to leave the EU.

Leaving the EU: UK Steel Sector

8. What steps he is taking to ensure that the UK steel sector can continue to trade without disruption after the UK leaves the EU. (909092)

We are working closely with the UK steel sector to provide as much continuity as possible in trading arrangements after we leave the EU. This includes establishing the Trade Remedies Authority to help to prevent unfair trading practices and identifying more than half a billion pounds’-worth of opportunities for UK steel producers.

When the all-party group on steel met key voices in the industry this week, it was made clear that there is a real lack of engagement from the Government on steel safeguard measures for the UK market in a no-deal scenario. Will the Minister commit to meet UK Steel urgently to discuss this critical detail for an industry that contributes £1.6 billion to the economy?

I do not recognise that description; the Government are indeed involved in talks with the industry about safeguards. The hon. Lady will know that the best way to avoid the problems she identifies is to support the Prime Minister’s deal. Those who keep talking about the pitfalls of no deal but keep voting against a deal are making those pitfalls more likely.

Does my right hon. Friend agree that our future trade policies must protect UK businesses, including in the steel sector, against unfair competition from abroad? It cannot be right for Parliament to expect our businesses to respect high standards on the environment, workplace or welfare and then compete freely with businesses abroad that do not.

That is exactly why, in the Trade Bill, the Government introduced the Trade Remedies Authority to ensure that we have protections against unfair global competition in future. It seems absolutely inexplicable that the Labour party keeps talking about protections but voted against the Trade Bill and the establishment of the Trade Remedies Authority.

Currently, 15% of steel export consignments are subject to tariffs; in the event of no deal, 97% of export consignments would be subject to tariffs. If one considers non-tariff barriers and domestic concerns—the shortage of warehousing was reported yesterday—is this not the time to support an extension of article 50 and to reach out and get a real compromise and an acceptable deal? Otherwise, the Conservatives risk being seen as the party prepared to sacrifice the steel industry on the altar of right-wing ideology.

What the time is right for is reaching an agreement with the European Union, as the Prime Minister has set out, that will give us that certainty. Those who consistently vote against that deal are the ones putting industries at risk.

The very fact that the Secretary of State is even considering zero import tariffs threatens the survival of our steel, ceramics and tyre industries. There will be no incentive for our partners to negotiate new trade deals, or to renegotiate existing ones, as the Secretary of State will have given away the shop before negotiations start. Thousands of workers whose jobs will have gone will no longer be the consumers he says will take advantage of cheap imports. When is he going to admit he is wrong?

The Government have made no decision on this. When we do so, we will communicate it to stakeholders, the public and Parliament. Of course, the best way to avoid any of this scenario is for us to have a deal with the European Union. Whipping up fear over people’s jobs is simply the humbug that has become the hon. Gentleman’s hallmark.

Topical Questions

My departmental responsibilities are to have foreign and inward direct investment, to establish an independent trade policy and to promote the United Kingdom’s exports. I am pleased to announce to the House this morning that UK Export Finance will provide £49 million of support for Darlington-based firm Cleveland Bridge to construct 250 bridges for rural Sri Lankan communities.

International trade is a reserved power. What steps is my right hon. Friend taking to engage MPs in the devolved nations to ensure both that they are helping to form policy and that the DIT is properly resourcing devolved nations?

My hon. Friend is right that trade is a reserved power, but we work with parliamentarians across the House through our regular briefings with MPs, which MPs from all parties attend, our international events programme, online services and the Board of Trade, which I established, to ensure that the benefits of trade are equally felt across all the parts of the United Kingdom.

Many British companies are currently part of trade disputes put forward by the EU at the World Trade Organisation. After 29 March they will be able to continue those disputes, utilising the evidence already submitted, but only if the Government accept a regional approach of 27 plus one countries, which is specifically allowed for under WTO rules. That would avoid the time and cost for businesses and for the taxpayer of having to resubmit evidence in a separate case. Why have the Government refused to adopt that simple solution? Why will they not support British business and ensure that trade disputes do not drag on for longer and at far greater cost than absolutely necessary?

We will not want to see trade disputes drag on longer than necessary, and we will want to co-operate with our European partners in that regard. Of course, the best way to ensure that we have the highest level of co-operation on the disputes that are currently under way is to agree to the Prime Minister’s deal.

T2. What progress on trade reform and WTO reform was made at the recent World Economic Forum annual meeting? In particular, was consideration given to continuity arrangements with countries such as Turkey so that Ford engines can continue to be fitted to Ford Transits built in Turkey? (909099)

A number of issues were discussed with Trade Ministers in Davos, including those of continuity. They also included how complex global value chains will be dealt with in the future, because, as my right hon. Friend has said, when the WTO was created the global economy was not so dependent on them. We need to look at how we deal with the question of tariffs and multiple, repeated taxation in industries such as the car industry.

I call Lloyd Russell-Moyle. Not here—where is the fella? I hope that he is not indisposed; that would be most unfortunate. Well, who is here? Nic Dakin is here.

Thank you, Mr Speaker.

The steel industry is confronted with the possibility that the trade defence instruments currently in place at European level to prevent Chinese dumping will not come forward at UK level. We also face having to compete against quotas to sell steel into the EU when we are outside the EU. What is the Secretary of State doing to make sure that that does not happen?

I can say straightforwardly that the anti-subsidy and anti-dumping measures that are currently in place in the EU have been widely consulted on with British industry, and particularly with the steel sector, as the hon. Gentleman will appreciate. We will be transitioning the measures that are important to those industries. The same process has been gone through for safeguarding, and the same result will occur.

Will the ministerial team update us on progress in seeking continuity of some of the other EU trade agreements, particularly those in Canada and in Africa, many of which, of course, the Opposition opposed in the first place?

I simply say what I have said to the House on a number of occasions: we are making good progress on many of those agreements. I have already signed three of them very recently and deposited them with the House. We will continue to update the House as progress is made, and we will bring forward a report in the next week or two, which will help elucidate the matter further.

T4. Employment rights are human rights, so what is the Minister doing to ensure that no trade agreement is signed that undermines our standards in employment rights, health and safety rights and equality rights? (909104)

We set out in the trade agreement that this House supported on Canada the non-regression clauses that said we would not water down labour rights or environmental standards, or give away Government control on public service regulation, in order to reach agreement. I supported that and my colleagues supported that in the House, but the Labour party voted against it; I do not understand why.

Will the Secretary of State update the House on what progress the Government have made on advancing food and drink exports, and particularly on getting some of our exporting countries to reduce their tariffs?

Food and drink is one of this country’s most successful export sectors, but a lot of areas of it, particularly those such as spirits—I had discussions with the Scotch Whisky Association just a couple of nights ago—face very high tariffs in countries such as India and Brazil. They are enormous markets for us, but we face disproportionate tariffs, and that is one of the key areas where we seek unilateral reform in such countries so that they can show that they are genuinely committed to free trade.

The Secretary of State has shared with business a progress report on trade deals. I have been trying to obtain that information from him for months; is he willing to share that information with Members of the House as well as with business?

I dealt with this extensively at the International Trade Committee yesterday; the right hon. Gentleman might have wanted to attend.

Can the Secretary of State update the House on the ongoing trade negotiations and discussions he is having with the United States Administration, not least because the US is our single largest export market?

Our working group with the United States on future trade has met a number of times. There is broad agreement that we should have a free trade agreement with the United States. That would open up huge possibilities for the United Kingdom. There has been a lot of talk in the news this week about the ceramics industry; it would benefit from a free trade agreement with the United States, not least by the removal of the 27% tariffs that it currently faces for UK exports.

May I congratulate the Secretary of State on signing a trade agreement with the Faroe Islands? Those must have been tough negotiations. Is he seeking an extension to article 50 to complete the negotiations on the 40 trade deals he promised us he would sign?

The hon. Gentleman mocks the agreement with the Faroe Islands; how typical that is of the Labour party when so many jobs in the fishing and fish processing industry are dependent upon it. He may want to know that when I go to Switzerland on Monday I will be signing the largest of the EU agreements of all. [Interruption.]

Order. Before we move on, as Humphrey Bogart said,

“I don’t mind if you don’t like my manners, I don’t like them myself”,

but just because the hon. Member for Huddersfield (Mr Sheerman) is sporting a rather splendid and garish Bogart tie, that does not mean that he should descend to that level himself. [Interruption.] He is chuntering from a sedentary position with predictable regularity—

The hon. Gentleman says his constituents have a particular view about the Secretary of State; that is quite possible. The Secretary of State’s constituents might have a particular view about the hon. Gentleman, too—who knows?