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International Trade

Volume 658: debated on Thursday 25 April 2019

The Secretary of State was asked—

Free Trade Agreements: NHS/Public Services

1. What steps he has taken to ensure that the NHS and other public services are excluded from future trade agreements. (910509)

7. If he will ensure that future free trade agreements do not (a) lower standards in and (b) lead to the privatisation of the NHS. (910516)

9. If he will ensure that future free trade agreements do not (a) lower standards in and (b) lead to the privatisation of the NHS. (910518)

As we leave the European Union, the Government will ensure that all future trade agreements continue to protect the UK’s right to regulate public services, including the NHS. I have been clear on a number of occasions that more trade should not come at the expense of the high levels of quality and protection enjoyed in the UK.

I am pleased that the Secretary of State has made those comments, and I am sure we can all agree that, whatever happens with Brexit, our country must not be held to ransom by multinational corporate interests over the future of the NHS and other public services, so can the Secretary of State give a watertight guarantee that we will not see any trade deals that would drive up the costs of medicines and allow foreign firms to sue the UK over improvements in public health and standards in healthcare generally?

As I have made clear in questions and in debate in this House, if we look at trade agreements that we have already entered into—for example, in chapter 9 of the EU-Canada comprehensive economic and trade agreement, the cross-border trade and services chapter, article 9.2 makes it very clear we see that the Government retain the right to regulate in public services. Any changes in the NHS should be a matter for domestic policy debate in the United Kingdom, and not anywhere else.

The UK is a world leader in healthcare provision, founded on the core values of the NHS. What steps is the Department taking to promote British expertise in this sector and sell those skills abroad?

There is not only enormous interest but enormous demand for UK expertise in healthcare, and we are committed to sharing that expertise and knowledge with the rest of the world. Research commissioned by Healthcare UK recently identified £3 billion to £7 billion of potential contracts for UK health organisations annually over the next 10 years. That is a lot of jobs.

Mr Philip Dunne—not here. Where is the fella? I hope he is not indisposed. We will have to proceed.

Free trade agreements are, of course, needed, and the EU has some very good ones, which is why the United Kingdom Government are copying them. But trading on World Trade Organisation terms is very expensive. What is the Secretary of State doing to dispel the notion that is abroad, particularly in his own party, that leaving the EU and trading on WTO terms is a good idea? If it was, every country would be walking out of their trade blocs and every country would be ripping up trade agreements. It is a very silly and very dangerous idea, and I hope he is doing his best to combat it.

I am not quite sure how that relates to the question on healthcare, but it is an important point that the WTO rules provide a baseline, and the way in which countries get preferential treatment beyond that baseline is very often through a free trade agreement. That is why we want to see free trade agreements beyond what we have today.

I welcome the assurances that the Secretary of State has given to the House here today, but can he confirm that the principal protections for public services related to the comprehensive economic and trade agreement are in fact to be found in the joint interpretative instrument, which does not have the same legal force as the treaty? Crucially, it cannot alter or override it. If we are to have confidence in the protections for our public services and the NHS in future trade agreements, these must be written into the text of the treaties. Does he agree?

However we get the assurances, that is what we need to do. In CETA, for example, they are contained in chapters 9 and 28, as well as annexe 2 and the additional national reservation in annexe 2. It is up to this House how we carry out public policy. For example, in the four years from 2006, Labour outsourced 0.5% of the NHS budget to the private sector each year, which of course fell to only half that level under the coalition Government. If Labour wants to increase to its previous levels of outsourcing, it should be able to do so under a policy protection given under the treaties.

Service Businesses: Overseas Markets

2. What steps he is taking to enable service businesses to access overseas markets; and if he will make a statement. (910510)

The Government support UK services businesses to access foreign markets in a number of ways, including through trade promotion and facilitation. For example, in March 2019, the DIT took a delegation of eight leading UK FinTech companies to exhibit at Money 20/20 in Singapore. The DIT also works with partners overseas to remove access barriers, opening up new opportunities for UK businesses.

My hon. Friend will know that in this rather complex world environment, there is a confusion at times under WTO rules between goods and services. Once we leave the EU, get a clean break and regain our place at the WTO table, will he make it a priority to make clearer definitions of what are goods and what are services?

I thank my hon. Friend for his question. He is right; there are a great many complexities at the WTO. In fact, the world is sliding inexorably towards a future of increased protectionism without changes being agreed at the WTO to address all problems and to cope with new forms of trade that simply did not exist even 10 years ago and that create the confusion he identifies. As a newly independent voice, the UK will be a champion for change, openness and co-operation, because believe me, Mr Speaker, a failure to deal with the problems the WTO faces is not an outcome that anybody should want to contemplate.

In congratulating the hon. Member for Huddersfield upon the magnificence of his tie, I call Mr Barry Sheerman.

Can all those on the Government Front Bench tell me what I should say to my service and manufacturing industries that export overseas? For years, they have been frustrated that the Chinese are stealing their patents and intellectual property, but now this Government are going to open not only the back door but the front door to the Chinese to take their secrets and undercut them.

In the past week, the Chinese have agreed a joint communiqué with the EU about the forced transfer of intellectual property, which gives us some comfort. We work extensively with the Chinese Government through joint trade reviews to examine various areas of the economy, particularly in services, where we can address this. I believe that progress is being made on this front, but I go back to the point I made to my hon. Friend the Member for Lichfield (Michael Fabricant): this is a complex area. WTO rules make this very difficult to address, and we need to change it.

Three quarters of our economy is in services, yet over 90% of service firms export nothing. What more can be done to change this underlying culture and systemic issue, so that the majority of service firms export?

As I mentioned in answer to the previous question, we are conducting a number of joint trade reviews with India, China and Brazil—some of the largest economies in the world—to ensure that we address some of these access barriers; to ensure that, for example, Chinese-language contracts are translated into an official English version; to ensure that service providers understand what the rules and regulations are; and to ensure that qualifications are matched across the piece. There is a great deal we can do and more that we will do.

I welcome what the Minister said about trying to open up overseas access to UK service companies. However, is it not hugely disappointing that the continuity agreements with Norway and Switzerland exclude trade in services? Is it not the case that if, post Brexit, we revert to WTO rules trade with the EU, we would see a massive 26% fall in global service trade, with just as bad a fall in the UK’s service trade even if we get that free trade agreement?

As we approach the negotiations with the EU on the future economic partnership, services will play a large part in that. We have signed mutual recognition agreements with Australia and New Zealand, and as for the Norway and Switzerland deals, we should never forget that 35% of pretty much all the goods contracts entered into by the UK is contained within services value. This is not just a matter of pure services, but of goods as well.

Service exporters depend on an international workforce, but arbitrary immigration targets limit their ability to recruit the staff they need. Growing our market share in services is essential to the future success of our economy, so if this Government truly have a global strategy, why are businesses that want to export being denied access to a global pool of talent?

On the whole, the services businesses that are exporting are doing so by establishing overseas, and therefore recruitment in the UK does not particularly concern them, as they are employing people in foreign countries. That said, we know there is an issue with provision of skilled labour in the UK. The immigration Bill, when it comes forward, will provide reassurance on the ability to recruit people with certain skill levels, and I look forward to seeing that.

Free Trade Agreements: Regions and Devolved Administrations

3. What steps he is taking to ensure that the (a) regions and (b) devolved Administrations of the UK contribute to the formulation of new free trade agreements. (910511)

We are committed to ensuring a meaningful role for the regions and devolved Administrations in the development of our trade policy. The DIT has been consulting widely on its approach to potential FTAs with regional representatives from local government and local enterprise partnerships. I can further confirm that we are putting in place a new ministerial forum with the devolved Administrations to cover international trade, as well as continuing to discuss wider future working arrangements on trade policy.

I thank the Minister for that answer. Businesses in Redditch such as Mettis Aerospace, Bee Lighting and Thorlux Lighting are at the heart of global manufacturing and are leading-edge businesses. Will the Minister confirm that he is working closely with representatives of west midlands manufacturing industry to ensure that their interests are represented and our local economy can benefit from future trade agreements?

As my hon. Friend will know, my hon. Friend the Member for Lichfield (Michael Fabricant) is very keen on our keeping up contact with the Mayor of the West Midlands combined authority. We of course do so, and create contacts with businesses that way. The strategic trade advisory group, which will be helping us with FTAs, includes representation from regional business. We will always be there to consult with local business, and I urge my hon. Friend the Member for Redditch (Rachel Maclean) to contact the local DIT business office in Birmingham in relation to any businesses in Redditch that need its help.

Does the Minister accept that the devolved Administrations must be fully involved in developing both the negotiation mandate and the negotiations themselves when the international trade negotiations have an impact on devolved competencies?

I have visited the devolved Administrations several times and I talk with the Ministers on a regular basis. I absolutely agree with the hon. Lady that the devolved Administrations have a key part to play as we go forward and negotiate our free trade agreements. We are currently in negotiation with the DAs on putting together what is known as a concordat on how they will be implemented. The progress on that, to be quite frank with the House, has been disappointingly slow. From our end, we have not reached an agreed policy position, but we will do so shortly, and I am keen that the devolved Administrations are properly involved.

If all these trade agreements are going to be so glorious, irresistible and beneficial to the economy, why not simply give the devolved Administrations the power to express their consent through legislation for each of them?

EU Customs Union

4. What assessment he has made of the implications for the responsibilities of his Department of including UK membership of the EU customs union in the EU-UK political declaration. (910512)

8. What assessment he has made of the implications for his policies of the UK’s continuing membership of the EU customs union. (910517)

The Government’s intention, as provided for in the political declaration, is to secure a tariff-free trading relationship with our European partners, alongside an ambitious independent trade policy with the rest of the world. A customs union would prevent the UK from varying its tariffs and could leave the UK subject, without representation, to the policy of an entity over which MPs had no democratic control.

If we were to be part of the EU customs union after Brexit, the United Kingdom, as the world’s fifth biggest economy, could kiss goodbye to any realistic chance of an independent trade policy. For this very good reason, being a member of the customs union was ruled out in the last Conservative party manifesto. Were this to become Government policy, would not the Secretary of State and his entire ministerial team be honour bound to resign?

It is very clear that we do not want to see a customs union being put in place for one of the reasons that my hon. Friend has already given, which is that, with us as a third country, the EU would be able to negotiate access to the UK market—the world’s fifth biggest market—without any due consideration of the impact on the United Kingdom. We would find ourselves in a totally new trading position in that access to our market would be traded for us.

One of the principal benefits of Brexit is of course the ability to set our own trade policies, and many businesses in my constituency—it includes Immingham, the largest port in the country—want to take advantage of the freedoms that will be forthcoming. What additional support will the Secretary of State’s Department offer those businesses?

I know that my hon. Friend has taken a very close interest in free ports. We are close to finalising a report on their potential benefits, and he will be one of the first with whom I will share that information.

Some 9,000 people work in the Welsh steel industry, so can I ask the Secretary of State to think again, and support a permanent customs union and commit to a common external tariff on steel imports to support steel jobs in south Wales?

No, I will not commit to that. I have set out the reasons why I believe the application of a common external tariff will be limiting on the UK’s ability to carry out an independent trade policy. What I would say is that we already have the Trade Remedies Authority up and running, and that is the best way to deal with any disputes over steel through WTO rules.[Official Report, 30 April 2019, Vol. 659, c. 2MC.]

Does the Secretary of State accept that even outside the European Union, some other countries will seek to restrict their trade? For instance, has not the United States said about its negotiating objectives that it will seek to restrict the trading ability of any country that seeks to trade with China?

The United States is perfectly entitled to set out trade objectives, as are we. We believe that trade is best operated through the rules-based international system based on the WTO. Countries can have their own opinions, but that is still the safest, best and most predictable way to carry out global trade.

We know the benefit of a permanent customs union, particularly for the integrated supply chains on which so much of our manufacturing success is based. What assessment has the Secretary of State made of the net economic benefit of an independent trade policy in the short, medium and long term?

We believe it is possible to get the benefits of a customs union—no tariffs, no quotas and no rules of origin checks—through the mechanism set out in the Government’s proposal on our future relationship with the European Union. The ability to access growing markets will depend on our ability to create trade agreements with those markets. A report by the United Nations Conference on Trade and Development suggested that by 2030 the Asian proportion of trade will be above 50% for the first time since the 19th century, and we must be in a position to take advantage of that.

Intellectual Property Rights

5. What steps the Government are taking to protect intellectual property rights in international trade agreements. (910514)

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 and ensuring that existing trade arrangements with global partners—including provisions on intellectual property—continue uninterrupted on the day the UK leaves the EU.

The Minister will no doubt be aware that tomorrow is World Intellectual Property Day, and this year the theme is sport and intellectual property. A number of United Kingdom-based companies have had their intellectual property stolen by beoutQ, a Saudi Arabian-based pirate broadcaster, including—I know this will interest you, Mr Speaker—last Monday’s Watford against Arsenal match. What steps are we taking to protect the intellectual property rights of UK businesses and sports interests, and will we use our trade policy to hold to account countries such as Saudi Arabia that are allowing the theft of our country’s intellectual property in that way?

I am not familiar with the case raised by the right hon. Gentleman, but if would like to drop me a line, I would be happy to look into it more carefully. We will continue to make representations to Saudi Arabia on that point. The UK intellectual property regime is respected around the world, and our local, European and international commitments produce one of the tightest and most respected regulatory regimes for IP worldwide. We believe that is the right system, and we will insist that it is honoured by others, particularly if we are to do trade deals with them.

The Minister is right to encourage small and medium-sized businesses to do more trade internationally, but those businesses are the most vulnerable to the risk of intellectual property theft. What assurances and support can the Minister give companies such as those in the digital games sector in my constituency, to encourage them to do more abroad?

I refer the hon. Gentleman to the answer I gave a moment ago. We have one of the most robust and respected regimes for IP protection internationally. A specialist group sits in the Department for International Trade and advises on IP matters, and that is very important to this country. We recognise the extent of exports that are driven by games, TV, sports and so on, and that is hugely important to us. SMEs should get in contact with local DIT offices. We can always help and would be delighted to do so.

GREAT Campaign

GREAT is the Government’s most ambitious ever international marketing campaign. [Interruption.] It encourages the world to visit, study and do business in the UK. While Labour Members never lose an opportunity to talk this country down—as the hon. Member for Rhondda (Chris Bryant) has just done there—we use GREAT to sell Britain abroad. If the chuntering from the potential future Speaker could stop for one second, I will say that GREAT works across 144 countries, and for trade and investment in 2019-20, its priorities are the USA, Germany, China, Japan, Australia, India, Canada, France, Italy and Spain.

Britain’s universities are among our greatest organisations. Some are household names across the world, but some, like Anglia Ruskin University, which is based in Chelmsford as well as Cambridge, are less well known. How is the GREAT campaign supporting our education sector?

I am grateful to my hon. Friend for that question. I was at the all-party university group yesterday, meeting vice-chancellors and others, to discuss this issue. Just last month, we launched our new international education strategy. As part of that, we are encouraging bids to the GREAT challenge fund to showcase to even more countries the fantastic education offer this country has.

Topical Questions

My Department is responsible for foreign and outward direct investment, establishing an independent trade policy and export promotion. I can announce to the House that UK Export Finance will support an Airbus Defence and Space UK contract worth nearly $500 million to manufacture and deliver two satellites and a ground station for Türksat, Turkey’s communications satellite operator.

May I also, with your indulgence Mr Speaker, thank two civil servants who are leaving my Department? My principal private secretary, Oliver Christian, has been an outstanding civil servant and I congratulate him on his promotion. I also thank Amy Tinley, my outgoing special adviser, who has been a force of nature in my Department and will be widely missed across the whole of the civil service.

I congratulate the civil servants on getting out of Dodge while they can.

Scottish Enterprise told the Scottish Affairs Committee that the success of Scotland’s financial industry was based on accessing and servicing all customers in the EU, which it does currently under the free trade non-tariff EU passport system. Does that not highlight once again the vital importance of freedom of movement to Scotland, and that the Secretary of State’s Government simply do not care about Scottish interests or Scotland’s vote to remain?

I will ignore the hon. Gentleman’s lack of grace in his first comment.

What that shows is the importance to Scotland of services and of access to the single market in the United Kingdom. Financial services are one of the country’s greatest and strongest exports, and Scotland benefits hugely from being part of the United Kingdom’s infrastructure.

T2. I congratulate the Government on the GREAT campaign but, in this week of St George’s Day, as we celebrate all things English, will the Secretary of State confirm that we are going to promote not only everything British but the component parts of the United Kingdom, including England, Scotland, Northern Ireland and Wales, and indeed our cherished Crown dependencies and overseas territories? (910525)

My hon. Friend, in his usual way, makes an excellent point. It is not just the fact that we have those very important constituent parts of the United Kingdom to celebrate—we also celebrate our commonality and our unity as expressed through the Union.

The world was shocked by the two crashes of Boeing 737 Max 8s that saw the tragic loss of 346 lives. That is, of course, a matter for the European Aviation Safety Agency to investigate, but it is for the Secretary of State to investigate whether the export capacity of Airbus was unfairly affected by Boeing’s failure to be transparent about the pitch instability of the aircraft, or to provide specific safety training on the MCAS system, which was supposed to counter that instability. He will know that in one 12-month period the concealment of those issues helped Boeing to increase its sales against the Airbus A320neo aircraft by 768 planes, while Airbus sales dropped by 748 in the same period. What support, if any, does his Department currently provide to Boeing? Does he consider that its ethical failure has had an adverse impact on Airbus’s sales? What discussions has he had about Boeing with the Directorate-General for Competition and the Directorate-General for Trade in the European Union to protect Airbus’s export capacity from unfair and potentially illegal practices by its competitors?

Let me associate myself immediately with the hon. Gentleman’s sentiments about the loss of lives as a result of the tragic crashes of the 737 Max aircraft. Safety issues are, of course, the responsibility of the Department for Transport but, in the context of international competition, as he is well aware, there have been two recent cases at the World Trade Organisation relating to Washington’s state subsidies for Boeing and European subsidies for Airbus. As far as I am concerned, the issues relating to Airbus have been solved. I think that we would all benefit from a clear set of international rules on aircraft subsidy so that we could be assured that there is a genuine international level playing field, not least because of the rise of the Chinese aircraft industry and its entry into the market.

T6. This afternoon the Confederation of Indian Industry will host a major conference to allow the regions of the United Kingdom to pitch to the states of India for future international trade. What action is my hon. Friend taking to encourage the regions to pitch for business in India? (910530)

According to an EY report, foreign direct investment has tended to move out of London into other parts of the United Kingdom, and there has been an increase in manufacturing activity. We are seeking to expand exports from all parts of the country, not least to India, and I am delighted to say that exports to India were up by nearly 20% in 2018. Only last night I attended the Grant Thornton tracker event with Mr Banerjee, the director general of the Confederation of Indian Industry, who is a great friend to this country and to our businesses up and down the land.

T3. Because of the shambles over Brexit, UK manufacturing currently has the highest-ever level of stockpiling in the G7. The latest survey conducted by the North East chamber of commerce shows low levels of cash and, as a consequence, a sharp downturn in export activity. Cash is king: it is the lifeblood of business. Will the Secretary of State speak to his colleagues in the Department for Business, Energy and Industrial Strategy and the Treasury and, as a matter of urgency, provide financial support for UK manufacturers to deal with this Brexit chaos? (910527)

The entire premise of that question is wrong. There has not been a depression in export activity. In fact, in the first quarter of this year, exports rose by 3.1%, which was an acceleration of the trend in the fourth quarter of 2018.

T7. Britain is also great at green tech, and a leader in areas such as offshore wind technology. What opportunities are being exploited for us to export our expertise in clean technology to other parts of the world? (910531)

It is important that we take climate issues seriously. Whether or not individuals accept the current scientific consensus on the causes of climate change, it is sensible for everyone to use finite resources in a responsible way. The United Kingdom was the first country to establish legally binding emission targets, through the Climate Change Act 2008, and we have reduced emissions faster than any other G7 country. We are leaders in clean energy production, and it is estimated that $11.5 trillion is likely to be invested globally in clean energy between now and 2050. That represents an enormous opportunity and the potential for more jobs in the United Kingdom, which, as I have said, is already a global leader in terms of both practice and exports.

T4. May I ask the Secretary of State to welcome Anzac day, and our long-standing friendship with Australia and New Zealand? May I also ask whether he recognises what every major economy understands—that in order to export, firms need a strong domestic market, including public sector contracts? Rather than believing that we are the only ones in step and lecturing other countries about changing their ways, should we not face reality? Will the Secretary of State urge his Cabinet colleagues to put British firms and British workers first and, in public sector contracts, to put Britain first? (910528)

There is also the small matter of putting British taxpayers first, and ensuring that they are getting value for money from any contracts that we award. However, I entirely agree with what the right hon. Gentleman said about Anzac day. In fact, may I take the opportunity to invite colleagues to join me and others at the wreath-laying ceremony that will take place at the Cenotaph at 10.30 this morning, and the service at Westminster Abbey that will follow it?

I welcome my right hon. Friend’s comments earlier on trade agreements and the NHS. As a former clinician, can he confirm categorically that future trade agreements will not impact adversely on the values, standards or funding model of the NHS?

As I said, it is very important that NHS policy and management are decided by British political debate, not from outside. We have had considerable success in utilising the private sector to augment the NHS. As Andy Burnham said, the previous Labour Government worked with the private sector to bring down NHS waiting lists, and they came right down. I would hope that any future Labour Government would have exactly the same freedoms to use the same policies.

T5. Donald Trump is an “America first” US President, so does that mean that in any future trade deals with the US we will be “Britain second”, to our disadvantage? (910529)

Is there any opportunity to further promote UK steel exports through the GREAT campaign in the year ahead, not least because it is the best steel in the world?

We will take every opportunity to support UK steel exports, and of course exports in general, which is why we produced our export strategy last year. With the help of Members such as my hon. Friend, we will champion local businesses and ensure that that message goes right around the world.

The Canadian model offers a useful example of how the devolved Administrations should be involved in trade policy formulation. Does the Secretary of State agree that a substantive role in the strategic trade advisory group is essential for the meaningful involvement of the Welsh Government in UK trade policy?

The strategic trade advisory group is there to provide a broad societal view of what should be achieved in free trade agreements. We are of course talking in depth with the Welsh Government about their views on what we ought and ought not to be doing on trade policy, the industries we should be championing and how. I do not think that the strategic trade advisory group is the right place for that engagement, but there is of course a Welsh business represented on the group.

It is vital for us to encourage low-income countries to participate fairly in world trade, and for that they need inward investment. Will the Minister kindly advise us on what the UK is doing to promote investment into low-income countries so that they can participate fairly and reasonably in world trade, with world-class goods and services?

I thank my hon. Friend for championing lower-income countries around the world. We have made outward direct investment a priority. We are working with the Department for International Development to help developing countries to attract FDI. The Prime Minister has tasked us with making the UK Africa’s biggest G7 investor by 2022. Through our own investment promotion programme, DFID’s Invest Africa programme, and the Africa investment summit, which I am organising with DFID and the Foreign and Commonwealth Office, we aim to drive mutual prosperity, in Africa and beyond.