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International Trade

Volume 656: debated on Thursday 14 March 2019

The Secretary of State was asked—

Trade and Investment: Switzerland

How are you, Mr Speaker? It has been so long.

I met with Federal Councillor Guy Parmelin during my visit to Switzerland in February. Together we signed the UK-Switzerland trade agreement. This was an important moment, ensuring continuity of a trading relationship worth over £32 billion in 2017.

I thank the Secretary of State for that answer. Recently we had the brilliant ambassador for Switzerland, Ambassador Fasel, visit my constituency looking at the potential for greater trade opportunities between our great countries. Can the Secretary of State clarify this point? He talks about continuity and I welcome the agreement he has signed but, on post-Brexit trading opportunities, the United Kingdom has identified the United States, Australia, New Zealand and trans-Pacific as key priorities. Can he confirm that Switzerland—our bilateral trade totals over £34 billion—will always be a key priority, certainly in looking forward to enhancing sectors such as finance and IT?

The countries my hon. Friend mentions are for new free trade agreements, whereas of course the agreement with Switzerland was a continuity agreement. In fact, it was an unusual agreement because, rather than being a single agreement to roll over, there were some 58 different ones. It was to the tremendous credit of the Swiss Government that they were able to carry out that work as expeditiously as they did and we owe them a great deal of gratitude.

Does not the Secretary of State realise that the Swiss deal is a tiny deal—nothing wrong with it, but it is tiny? Could we have a list of all the trade deals he has secured across the piece because, as I have been tracking them, they are very small indeed? May I also tell the Secretary of State that it was not his finest hour last night when he did not have the courage to take an intervention from the Father of the House?

Sometimes one wonders how small people can actually become in this House of Commons. The Swiss deal is not small, it is not insignificant; it is worth over £32 billion a year. Switzerland is Britain’s seventh biggest trading partner globally. The hon. Gentleman should know that.

I do not want to invest levity into these important proceedings, but equally one must not lose one’s sense of humour. That £32 billion volume of trade with Switzerland is very important, but I always say the best thing about Switzerland is not its watches, its financial services or its chocolate; the best thing about Switzerland is Roger Federer.

I must say that I am tempted to answer questions this morning due to the constitutional innovation of Ministers no longer having to resign when they disagree with Government policy, but I will ask this one. Trade with Switzerland represents about 21% of all the trade of all the countries that have the continuity agreement. Does my right hon. Friend agree that it shows the growing success of this programme and the importance of ensuring that we have those trade agreements in place in the event of a Brexit without a deal later this month?

I half-expected to see my right hon. Friend on the Front Bench with us this morning given the turn of events, but he is absolutely right that this is an important agreement. Over 20% of all the trade done under EU trade agreements is represented by Switzerland.

Mr Speaker, it is unlike me to disagree with you, but I do wonder whether on the morning after Roger Federer has defeated Kyle Edmund it is not a touch unpatriotic to be quite so pro-Swiss.

The Secretary of State may have heard an exchange a couple of days ago in which my right hon. Friend the leader of the Liberal Democrats highlighted the fact that, in the existing EU-Swiss trade deal, 19 technical standards have been brought in in common, whereas under the current UK-Swiss trade deal, only five technical standards have been brought in in common. What assessment has the Secretary of State made of the impact of that on UK business?

There are a number of technical interactions and some small technical issues that we shall continue to talk to the Swiss Government about. Of course the trade agreement itself is, we hope, a precursor to a further bespoke agreement as we leave the EU.

My understanding is that, of the 40 potential continuity agreements, five represent 76% of the total trade, of which Switzerland is one. Is not that a good omen for the remaining big four?

Of course a number of those who are engaged in trade continuity discussions with the UK are waiting to see what we will do in terms of Britain’s approach to the EU. They will be much more likely to sign up to those agreements when this House of Commons is clear about what it is going to do.

Leaving the EU: Agricultural Sector and Overseas Goods

2. What assurances the Government have provided to the agricultural sector that UK markets will not be opened to goods produced overseas to lower environmental, sanitary and phytosanitary or animal welfare standards after the UK leaves the EU. (909799)

I am grateful for the whip on Ministers having been imposed for as long as it was, otherwise I should not be standing here, but credit of course goes to my right hon. Friend the Member for Chelsea and Fulham (Greg Hands).

When we leave the EU, we will maintain our current domestic standards. We will keep our existing UK legislation, and the European Union (Withdrawal) Act 2018 will convert EU law into UK law as it applies at the moment of exit. This includes the regulatory regimes for environmental, food safety and animal welfare standards. Without exception, of course, imports must continue to meet all relevant UK product rules and regulations, as they do today.

What assessment has the Department made of the impact of the tariff barriers introduced yesterday on the farming sector?

The tariff package announced yesterday is a balanced package. It is a temporary package. It is a response to the potential effects of leaving the EU without a deal. There are sectors that are vulnerable to competition from imports, are not as nimble as others and cannot change as quickly—farming is one of those. We believe that the balanced package we have put together will sufficiently protect farming interests in the UK.

If regulatory alignment with the EU is maintained in these goods, to what extent will that constrain our ambitions for wider trade deals?

I thank my right hon. Friend for his question. Of course, if the Prime Minister’s deal is passed through this House in its third iteration, it will provide for regulatory alignment not to continue and therefore we would be able to pursue trade deals internationally. Of course we can do so in any event, as not all trade deals are to do with goods.

During the BSE crisis of the 1990s, the foot and mouth outbreak of 2001 and the scare of 2007, even some members of the European Union took advantage of these crises to ban British meat imports, even long after any risk had expired. If we leave with a bad deal, such as the one Parliament has now rejected twice, countries will not need an excuse to act with opportunistic protectionism in that way. So how will we make sure that our farmers are protected in the deals we strike in future?

Of course, the hon. Gentleman has a real constituency concern and interest in this. The simple fact is that the UK intends to operate within the World Trade Organisation and subscribe to the world’s rules-based order on trade, and that gives us a great deal of protection. We are always able to bring disputes if we feel that WTO rules are being flouted inappropriately.

In the United States, pork is produced using ractopamine, which causes heart disease, and it is not treated for trichinosis, which can lead to stomach upset. The US National Pork Producers Council wants its standards included in the US-UK trade deal, and it has the support of its Government in that demand. This threat to food safety is completely unacceptable, so will the Minister rule out any reduction in food standards in international trade agreements?

I repeat what we have said from this Dispatch Box and this Department many, many times: we absolutely agree with the hon. Gentleman that our food standards should be maintained. As for the requirements the US has laid out in its provisional negotiating strategy for its agreement with the UK, if he looks carefully at previous such agreements and previous such outline mandates from the US, he will find that they are almost exactly the same in every respect. That does not mean to say that they are delivered in that form.

Leaving the EU: Health Services and Legal Action

3. What steps the Government are taking to prevent potential legal action by companies overseas in relation to the provision of health services in any future trade deals after the UK leaves the EU. (909801)

The Government are considering their future approach to investor state dispute settlement. Where included in a trade agreement, ISDS will not oblige the Government to open the NHS to further competition, and overseas companies will not be able to take legal action to force us to do so.

The Secretary of State did not rule out the use of legal action against other companies in this country, so what message would he give to all those idealistic people who voted to leave the EU because they thought that the Transatlantic Trade and Investment Partnership would open us up to hostile lawsuits from US companies? Does he think that now that the truth is out they ought to have a chance for another vote?

I am not sure what the connection was between some of those points. Let me be clear that, through ISDS, investment claims can be made only in respect of established investments; the mechanism cannot be used in relation to an alleged failure to open up public services to a potential investor. It could not be much clearer that what was being put about was a complete myth.

What guarantees can the Secretary of State give us that pharmaceutical companies will not relocate to the EU, meaning that in effect more and more of our drugs would be imported? Will he give a guarantee that that will not happen?

It would be absolutely ridiculous of any Minister to try to tell businesses what they can and cannot do. I can tell the hon. Gentleman, though, that last year foreign direct investment into the United Kingdom rose by 20%; in continental Europe, it fell by 73%. The hon. Gentleman should draw his own conclusions.

In the recent debate on international trade, I cited two examples of the Canadian Government’s having to withdraw public health measures after legal challenges by businesses under the terms of the North American free trade agreement. When the Secretary of State is considering health protections in future UK FTAs, will he ensure that they go wider than direct NHS provision and encompass wider public health policy?

We will look to replicate the success we have already had in bilateral investment treaties. UK investors have successfully brought around 70 cases against other Governments. No private company has ever brought a successful case against the United Kingdom in respect of our bilateral investment treaties.

The British public are clear that they do not want our national health service to be bargained away as part of trade negotiations, and they do not want foreign companies to have the right to sue our Government for decisions taken in the interests of public health, yet that is exactly what could happen if we accept ISDS and the negative-list approaches in the future agreements that the Government are proposing. Will the Secretary of State now rule out agreeing to a single clause of a single trade deal that could threaten our NHS?

There are days when I genuinely have to thank God that the Labour party is the Opposition and not the Government of this country. We have £1.3 trillion of outward stock invested, including things like pension funds that British people will depend on for their prosperity. Were we to abandon the concept of investor-state dispute resolutions, what would happen to the protections for our investment overseas? The Labour party needs to start to think about the wider interests of this country.

Future Trade Deals: NHS and Other Public Services

4. What steps his Department is taking to ensure that the delivery of (a) NHS and (b) other public services are excluded from future trade deals. (909802)

7. What steps the Government are taking to ensure that contracts for the delivery of (a) NHS and (b) other public services will be excluded from future trade deals. (909805)

9. What steps the Government are taking to ensure that contracts for the delivery of (a) NHS and (b) other public services will be excluded from future trade deals. (909810)

Existing EU trade agreements, such as the EU-Canada comprehensive economic and trade agreement and the EU-Japan economic partnership agreement, contain provisions that ensure that it remains for the United Kingdom to decide how our public services are run. As we leave the EU, the Government will ensure that all future trade agreements continue to protect the UK’s right to regulate public services.

Technically, there is little that MPs and the public can do to prevent the Government from signing trade deals that could negatively impact on the NHS. Will the Secretary of State assure the House that he will expand the transparency and scrutiny mechanisms that pertain to any future trade deals?

I recommend the Government’s Command Paper on this issue, which we published last week. It sets out the scrutiny plans that will provide greater scrutiny in this country than most of our fellow countries in the European Union have.

Conservative Ministers chose to include the NHS in their approach to the Transatlantic Trade and Investment Partnership, which could have made it impossible to bring privatised NHS services back in-house. The Secretary of State will know that privatisation is proceeding apace in the NHS—it certainly is in my constituency, in our cancer-scanning services—so will he give us a cast-iron legal guarantee? That is what we will need to show that his Government are committed to excluding the NHS from future trade deals.

Where do I start? First, this Government did not negotiate TTIP; the European Union negotiated it on behalf of this country, so it was not for the United Kingdom to determine the mandate. None the less, the hon. Lady should look at the agreements that are already out there. For example, article 9.2 of CETA talks about the exclusion of

“services supplied in the exercise of governmental authority”.

It is quite clear from what the Government included in the CETA ratification that we intend to make provision to ensure that Governments have the right to regulate public services. I think that is a good idea, so I cannot understand why the Labour party voted against it.

The Secretary of State has publicly stated that he supports CETA as a model for future trade agreements—an agreement that prevents future Governments from tackling the failed privatisation agenda in both our health and transport services. Does he agree that trade agreements cannot be allowed to constrain future policy decisions?

I do not know where that briefing came from, but the hon. Lady should ask for her money back. There is nothing in CETA that stops the Government regulating their own public services; that is specifically what the exclusion is for. It is in the interests of the country that we get Government regulation of our own public services so that we can have proper scrutiny, including through this House, and that is what is included in the agreement.

Last year I saw at first hand how the New Zealand Parliament handles the scrutiny of trade agreements to ensure that they deliver for the country’s economy and protect key public services. What learnings and reassurances is my right hon. Friend taking from the experience of the New Zealand Parliament in scrutinising trade deals and ensuring that they deliver their promised benefits?

We have looked widely at what other countries are doing, particularly when they have similar legislatures and legal systems, but what we have set out in the Command Paper is a bespoke arrangement for the United Kingdom. For example, our consultation period is longer than the European Union’s because we thought that it was right to have increased scrutiny in the UK. It is a UK policy, made for the UK.

Leaving the EU: Interim Trade Tariffs

The Government announced details of the temporary tariff yesterday in a written statement to the House. This is a balanced tariff policy that aims to minimise costs to businesses and mitigate price impacts on consumers, while also supporting UK producers as far as possible.

Now that the details have been published at last, I noticed that slippers are going to be charged at 17% less under these tariffs. Given the disorientation of some ministerial colleagues last night, perhaps a few might like to invest in a pair and retire early. On a more important point, can we get away from the obscene nonsense whereby, in the past, we have given international aid money to countries such as Ethiopia to encourage cocoa farmers to produce agricultural products—quite rightly—only for the EU obscenely to charge them tariffs of 30% when they try to sell the products of their hard labour back to us?

My hon. Friend is right. The temporary arrangements that we are putting in place recognise that there are developing countries that we have long supported and have agreements with, and which require tariff-free access to our markets to ensure that they can sustain themselves through trade. Sections within the proposal keep tariffs on certain lines to allow those countries preferential access to the UK market to their advantage.

The National Farmers Union is profoundly concerned that it has only two weeks to prepare for the new tariff regime, particularly in view of the fact that cereals and egg producers will have no protection whatever. What discussions has the Minister had with the appropriate Ministers in other Departments to ensure support and compensation for those farmers?

Of course, the farming community is protected by a commitment to the payments they were expecting through to 2020. As the hon. Gentleman will know and would expect, we consulted widely with colleagues across Government, so this is a collectively agreed decision. We have placed tariffs on quite a large number of vulnerable agricultural products, and we hope that the mix is the right decision not just for producers, but for consumers.

I remind the House that, for people in the bottom 10 percentage points of income in this country, food is a very real cost every single day; some 20% of their weekly income is spent on food. If we allowed inflation to roar away on products of this sort, people at that end of the income scale would find it very hard to feed themselves, and we believe that we have to mitigate that situation for them, as well as for farmers’ incomes.

Hundreds of my constituents work in the fish processing industry in the Grimsby-Cleethorpes area, and the supply of fish from Iceland is essential to them. Can the Minister give an assurance that no decisions on tariffs will be detrimental to those supplies?

There are two points on this. First, we have transitioned the free trade agreements the EU has with the Faroes—something that Opposition Members have derided us for as to the scale of the deal. To certain communities, particularly in my hon. Friend’s part of the world, these fish products are extremely important to keep people in work and keep people in the country. Secondly, we are having extensive discussions with the European Free Trade Association countries and European economic area countries about transitioning the free trade deal, and we would hope to be able to get some news on this to the House in due course.

Only yesterday, trade arrangements were announced between the Republic of Ireland and Northern Ireland, and they give us some concessions. However, the Ulster Farmers Union has indicated that it has some concerns over the arrangements that have been made. What discussions has the Minister had with the Ulster Farmers Union in Northern Ireland to discuss this?

The hon. Gentleman identifies an extremely important issue. I am not going to sidestep the question—I will give him an answer—but of course in the end this is a matter for the Department for Exiting the European Union and, indeed, for the Government more widely. There is no doubt that the choices that have been made for the position on the border in Northern Ireland were made against an extraordinarily difficult backdrop. There were no easy decisions. The decision we have made is temporary. We believe that it is World Trade Organisation-compliant. We recognise that there are real difficulties. I spoke to representatives of the agricultural community in Northern Ireland only yesterday and explained this. While very disturbed by what was going to happen, they understood why the decision had been taken.

Topical Questions

My Department is responsible for foreign and outward direct investment, establishing an independent trade policy, and export promotion. Following this session, I will be signing the trade continuity agreement between the UK and the Pacific Islands in the event of no deal. This is part of our commitment to reducing poverty through trade, and it will ensure continued supply of key consumer products.

There is a lot of scaremongering on this issue that is concerning a number of my constituents, so will the Secretary of State set out what steps the Government are taking to ensure that contracts for the delivery of NHS services will be excluded from future trade deals?

As I have already said, the Government will ensure that all future trade agreements continue to protect the United Kingdom’s right to regulate public services. It could not be simpler. Any attempts to distort that basic message are political propaganda and they are untrue.

One of our most distinguished former diplomats, the noble Lord Kerr, spoke last week, during the passage of the Trade Bill in another place, of the value of having a mandate as a negotiator. He said:

“Having negotiated against Americans, I know that it greatly strengthens their hand to be able to say, ‘Here is the proof that I cannot give you what you want, because Congress would turn it down’.—[Official Report, House of Lords, 6 March 2019; Vol. 796, c. 671.]

Recently the US trade representative published the negotiating mandate for a US-UK trade deal—no concern about commercial confidentiality here, just openly and transparently setting out all the objectives they have for penetrating UK markets, with American healthcare and agribusiness to the fore. In the same week, the Secretary of State published his Command Paper. It is against mandates. Indeed, the Government tried unsuccessfully to defeat Lord Kerr and others who supported Lord Balmacara’s amendment. What does the Secretary of State know about negotiations that Lord Kerr does not, and will the Government try to reverse their lordships’ decision when the Bill returns to the Commons?

The Trade Bill was and is about trade continuity, including trade agreements and including the Trade Remedies Authority. It has been used, I am afraid, in the other place to hold debates on future trade agreements that will come in due course here. There is of course a difference between setting out negotiating objectives, which the United States did, and a mandate, which is how the negotiators actually go about it. It seems that the hon. Gentleman has not grasped that point yet.

T2. Does my hon. Friend agree that the enormous investment in Britain by the Norwegian sovereign wealth fund shows that, with or without a deal, this country is one of the best places in the world to do business? If he does agree, will he draw this to the attention of some of his colleagues in the Cabinet? (909814)

I thank my hon. Friend for his question. He is right; the world’s largest sovereign wealth fund has said that it will continue its investment here. The latest figures from the United Nations Conference on Trade and Development show that the UK strengthened its position last year as the No. 1 foreign direct investment destination in Europe. The hundreds of thousands of jobs and higher wages that result would be threatened by the Labour party if it got the chance to jack up corporation tax rates and put in place other business-unfriendly policies. That would reverse the investment that has brought so much good to this country since Labour left in 2010.

T3. UK food businesses such as Devro plc in my constituency benefit from free trade with the EU and its free trade agreements with third countries. Can the Secretary of State confirm how long it will take his Department to negotiate new agreements with these third countries, and will they be on the same terms as those we currently enjoy through our EU membership? (909815)

The Government’s policy is that we do not have to have these rollover agreements because we want to get an agreement through the House so that we can continue with the Prime Minister’s plan. If the hon. Gentleman wants to help the businesses that he mentions, he can vote for the Prime Minister’s agreement at the next opportunity.

T8. An area of international trade that is often overlooked is tourism, and of course, inbound tourism is export earnings. What discussions is the Department having with other Departments to boost our tourism industry, for example on visas? (909820)

My hon. Friend is right. Tourism is a great example—I use the word “great” advisedly. The GREAT brand is used across the whole of UK Government. It is that rarest of things—a joined-up government policy that actually works. It has added huge value to our tourism sector. In 2017 we saw record numbers of visitors to the UK, and a contribution to the UK economy of £24 billion.

T4. Given the inevitable downturn that will come from any kind of Brexit that we end up with, what consideration has the Minister given to the introduction of free ports to boost economic activity in areas of low economic performance just now? (909816)

I am grateful to the hon. Gentleman for the interest that he has shown in this issue. The experience of other countries in using the ability of free ports to increase economic activity is valuable and something that the Government are considering in an optimistic and positive way.

UK Export Finance does some excellent work, but some of its funding capacity goes unused. What can be done to change that to raise British exports?

We have signed a memorandum of understanding with the five biggest banks so that they can encourage businesses to utilise UK Export Finance. One of the main areas where it is under-utilised is small businesses, but the positive side is that last year more than 70% of the agreements signed by UKEF were with small businesses. That is a trend that we would like to see continue.

T5. More than 20,000 people, including many of my constituents, have signed the Fairtrade Fortnight petition calling on the Government to lead action on exploitative rates of pay in the hugely valuable international cocoa trade. Will the Government take up that challenge? (909817)

I take the opportunity to praise the work of the Fairtrade organisation, which is so well led and co-ordinated by my very good friend Lord Price. It is essential that we look at these issues because free trade is not a free-for-all. There need to be rules around it and there needs to be fair trade. The Government will look sympathetically at what the hon. Gentleman suggests.

Following the visit of the Taiwanese representative and the Philippines ambassador, does my right hon. Friend join me in welcoming the announcement that the Qatari ambassador, together with a trade delegation, will visit Southend on 25 March as we move towards city status, to explore the opportunities of trade and business investment as we leave the EU?

I welcome the announcement by Qatar’s ambassador to the UK, His Excellency Mr Yousef Al Khater, and his accompanying delegation of a visit to Southend. I am pleased to say that the UK is one of Qatar’s major investment destinations globally, with more than £35 billion already invested in the UK.

T6. If the United States lifts its suspension of title III of the Helms-Burton legislation, which gives US citizens the right to sue foreign companies for using Cuban nationalised properties, British businesses that trade with Cuba will suffer damaging consequences. What discussions has the Secretary of State had with our international partners to co-ordinate a response to the proposed changes in US extraterritorial policies that will have an impact on businesses trading with Cuba? (909818)

This is an issue that the Government take seriously because we want to ensure that British companies have the right to trade where we think it is appropriate and where the British Government’s foreign policy indicates that. I have had and will continue to have discussions with my American counterparts on that issue.

Given the announcement on tariffs, what progress is being made regarding the steel industry in relation to the trade defence instruments in place at European level being transferred across to UK level at the point of departure?

I am not sure whether the hon. Gentleman missed the statement we had in the House on this, but I made it very clear that those arrangements would be rolled over. It will not be the Government’s intention in any way, shape or form to leave our businesses less protected than they are today, which is why those trade remedies will continue.