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International Trade

Volume 661: debated on Thursday 6 June 2019

The Secretary of State was asked—

Climate Change

The UK has long supported the promotion of our values globally, including ambitious global action to tackle climate change, and this will continue. We are exploring all options in the design of future trade policy, including how to tackle climate change. We are working to realise the potential for low-carbon exports from the UK and supporting UK jobs.

While the Department for International Development has a clear strategy for promoting low-carbon development in low-income countries, fossil fuels made up a shocking 99.4% of UK Export Finance’s energy support to low and middle-income countries in the last financial year. Does the Secretary of State agree with the International Development Committee’s finding that his Department’s spending is

“damaging the coherence of the Government’s approach to combating climate change”,

and what steps has he taken to ensure a more joined-up approach among his Cabinet colleagues?

The UK has an enviable record of success in decarbonisation. A target will be agreed of an 80% reduction by 2050; renewable capacity is up four times since 2010; and there will be £10 billion in annual support by 2021. Expertise is being built in offshore, smart energy, sustainable construction, precision agriculture, green finance, electric vehicles and so on. As I travel around the world, I meet many representatives from developing countries who are interested in all these technologies. Our trade policy is focused absolutely on ensuring that our exporters are set up to spread this green technology around the world. UKEF will play its part in funding this global revolution. In the short term, I have no doubt that some fossil fuel investments will be made, but as we progress that will transform into low-carbon development.

The Secretary of State has previously stated that

“poverty reduction objectives are deemed to outweigh the impact on climate change.”

However, his colleague the Secretary of State for International Development has previously stated that unless we tackle climate change with the urgency it requires “100 million more people” will be thrown “into poverty”. Can the Minister confirm who is correct and what the Government position actually is?

Certainly from the Department for International Trade point of view, our job is to promote international trade. We are out there making sure that the deals we do internationally suit those countries with which we do them. We are bringing in the unilateral preferences that are transitioning across from a European perspective. We are confident that the backing we can give developing countries is suitable for their circumstances, and allows them to participate in world trade and so bring their people out of poverty.

I think we are spending £1.5 billion in the current period on climate change for less-developed nations, and the same amount—£1.5 billion—on promoting economic development and trade, so there is some synergy for us to work with, is there not?

There absolutely is. As we grow our capacity in this country, we have more capability of exporting and, indeed, advising others on climate change. Yes, we can work in countries on poverty reduction at the same time as promoting energy sustainability.

Will the Minister say a bit more in relation to climate change and trade policy, particularly vis-à-vis the US, because the President of the United States has said:

“The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive”?

The recent chapters in CETA— the EU-Canada comprehensive economic and trade agreement—and the EU agreements with Japan, Singapore and Vietnam include quite clear climate change commitments. We are of course signatories to the Paris agreement. I recognise that the President of the United States has said it is going to withdraw from that; it has currently not done so. Where it is possible to have chapters in our free trade agreements on climate change and on our climate change policies, we will do so; where not, we have to understand that we can open doors to dialogue through those trade deals. Indeed, we can then create flows of exports on untariffed sales at more favourable rates into those economies and help the transition, even in more developed countries where it is difficult to negotiate such chapters in our FTAs.

May I congratulate the Government on their policies and on what they are doing on the way forward? We should set an example to the rest of the world when it comes to global policies on how we trade. The recent election results have proven that there is a wish among all parties for that to happen, so we need to set an example. What has been done with the regional Administrations to ensure that Scotland, Northern Ireland, Wales and England work together to set that example?

As the hon. Gentleman knows well, the UK has extensive funding for climate change mitigation and for sustainability. I would simply say to him that, as and when we manage to reinstitute the Stormont Assembly in Northern Ireland, we can have discussions between the DIT and other parts of the UK Government to ensure that those issues are taken forward.

The Secretary of State’s damascene conversion to addressing the climate emergency is welcome, but, as we have heard, some of those with whom he wishes to conclude trade agreements are less enlightened. Given what he has just said, will the Minister commit to introducing climate clauses to all future trade agreements? Will he publish specific details of the support his Department offers the fossil fuel sector through export finance, and say how that support conforms with the Equator Principles?

As I have said, we will consider each and every FTA on its own merits, and in certain circumstances we may find partners who are not prepared to put those sorts of clauses in an FTA. On balance, however, we will look at the advantage to exporters of low-carbon products, and ensure that as and when we proceed with those agreements—if we decide to do so—we facilitate the export of low-carbon products so that economies represented by Governments who do not wish to include an FTA clause on the environment can benefit from the transition that lower input costs produce. I have already made clear the Government’s position on publishing the output of UKEF. There will be an element of carbon-based energy generation in UKEF’s mix in the short term. The UK has huge and growing expertise that will no doubt come to the forefront of UKEF financing in due course, as that transition happens.

UK-Israel Medical Research and Development

4. What steps he is taking to strengthen UK trading relations with Israel in medical research and development; and if he will make a statement. (911190)

Before I answer that question, on the 75th anniversary of D-day it is worth our reflecting that we in this House are able to ask and answer questions in a free and democratic Parliament because of the sacrifices made by those who went before us.

Our dedicated team at the UK embassy in Tel Aviv actively promotes UK-Israel trade, and there is extensive collaboration on medical research between the UK and Israel. The UK-Israel Tech Hub, which is based at the embassy, helps to create tech and innovation partnerships across several sectors, including healthcare.

That is very good to hear. My right hon. Friend knows the state of Israeli technology—for example, all our chips, including the Intel fifth, sixth and seventh core chips, are developed in Israel for Intel in America. Magen David Adom, the equivalent of the Israeli Red Cross, has an app that provides live streaming, medical history and the location of people who use it, and that sort of innovation could be of great benefit to the UK. When we leave the European Union, what will be the advantages of doing business with Israel for both our nations?

There are huge advantages to our collaboration in or outside the European Union. To enable us to shine a light on the excellence that my hon. Friend mentions, on my recent trip to Israel I agreed with Prime Minister Netanyahu that we will jointly sponsor a Government high-level trade and investment conference that will enable us to show the world the best of what both countries have to offer in the sector mentioned by my hon. Friend.

I congratulate the Secretary of State on mentioning D-day. My father served in the Royal Engineers throughout the war, and my thoughts are of him and our brave troops today.

The Secretary of State is right to say that global trade can take place only in conditions of peace. Will he back the small group of MPs from across the House who are trying to create close relationships between university research in the UK and university research in Israel?

I thank the hon. Gentleman for his kind words. He is right—where we are able to take advantage of the innovation coming out of universities, we should make every attempt to do so. One reason that international investors give for putting money into the United Kingdom is the access to high-quality innovation that comes from the collaboration between industry and academia. Where we can take full advantage of that, including with bilateral relations elsewhere, we should do so.

The Secretary of State has already mentioned the UK-Israel Tech Hub, which is the first of its kind and has already generated business of £85 million. How does he see that developing over the coming years?

I see it going from strength to strength, and as greater investment goes into both economies we will be able to scale up the innovation and creativity that is clearly shown in the tech sector. That will be of benefit not only to our two countries, but to the wider global economy.

I wish to associate myself fully with the Secretary of State’s remarks and pay tribute to the sacrifices of the fallen.

What assessment has the Secretary of State made of Israel’s participation in the agreement on pan-Euro-Mediterranean cumulation on the trade in medical products between the UK and the EU? What progress have the Government made in replicating other agreements between the EU and Israel, including the 2013 EU-Israel agreement on conformity assessment and acceptance of industrial products?

As the hon. Lady is aware, we reached a continuity agreement with Israel on 19 February, which will come into effect as we leave the European Union. The conformity assessment element of that is very important because of the number of generic prescriptions that the NHS takes advantage of that are produced by Israeli pharmaceutical companies. We will want to see as much continuity in all those arrangements as possible.

Global Free Trade

5. What recent assessment his Department has made of the value of global free trade to developing countries. [R] (911192)

Free trade is a driver of economic growth that can trigger positive changes in a country’s economy, helping to raise incomes, create jobs and lift people out of poverty. The poorest countries have enjoyed some of the benefits of global free trade through receiving preferential access to the UK, the world’s fifth-biggest market.

I thank the Secretary of State for his answer. However, the risk of protectionism is growing and that threatens both free trade and the millions of jobs in developing countries that come with it. May I therefore urge the Secretary of State and his colleagues actively to oppose protectionism, particularly at the WTO and indeed when expressed in this Chamber, so that we can ensure that more of the world’s poorer citizens benefit by trading themselves out of poverty?

Those countries that have benefited from free and open trade, and enjoy the prosperity that we do today, have not only a duty economically to ensure the best outcomes but a moral duty to ensure that those in developing countries are able to benefit from the same trading systems that we have. Simply to say that we are more advanced and are pulling up the ladder behind us would be a betrayal of all those who have believed in free trade and practised it in recent years.

Does the Secretary of State agree that if it is going to end poverty, free trade also has to be fair trade? What steps are the Government taking to ensure that trade deals, whether through the WTO, the European Union or bilaterally, are checked against the sustainable development goals to make sure that they are poverty and development-proofed?

The Government take those elements extremely seriously, which is why we actually seek a closer alignment between our trade and development policies. For example, we are able to invest in countries to give them greater capability to add value to their primary produce, while at the same time potentially being able to take advantage of tariff reduction to increase market access. By bringing the two together, that can be synergistic for this country and for developing countries.

Thank you, Mr Speaker. Does the Secretary of State agree that the European Union is an inward-looking protectionist trading bloc that acts to the detriment of developing countries?

I certainly believe that the European Union’s common external tariff provides barriers to trade for many developing countries, so they are unable to take advantage of adding value to their primary produce. One of the advantages of leaving the European Union will be that Britain will have the ability to reduce tariffs to enable greater access for some of the poorest countries.

G20 Trade Ministers Meeting

At the upcoming G20 trade and digital economy ministerial meeting I will voice the UK’s continued support for the multilateral trading system. I will work with other G20 members to reduce trade tensions, support WTO reform, and advocate new rules on e-commerce and services trade liberalisation.

Relations with Japan matter enormously. Our termination of the Anglo-Japanese treaty 1923 was probably one of the worst geo-strategic mistakes we ever made, propelling that country into autarchy and nationalism. Will the Secretary of State confirm that post Brexit his priority will be to ensure a global free trade world, with us and Japan leading the way?

It is absolutely essential, particularly given the rise of protectionism globally, that we commit ourselves to a rules-based system based on the WTO. Of course, we have abilities to augment that by other regional relationships, which is why we have had the public consultation and the debate in Parliament about the potential accession to the CPTPP—the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The Japanese Government have been key in encouraging the United Kingdom to seek such a membership.

Seventy per cent. of the world’s poorest people live not in the poorest countries but in the middle-income countries, and the G20 has a vital role to encourage these people to work their way out of poverty by free trade. Does the Secretary of State agree?

I do agree, but if the G20 countries are intent on doing so, they need to reverse the recent trend of increasing non-tariff barriers to trade. The largest number of new barriers to trade introduced since the financial crisis have been in G20 countries, so they do not simply have to do the preaching; they have to do the practising, too.

International Education Strategy

8. What progress the Government has made on the implementation of its international education strategy. (911195)

Few do more than my hon. Friend to promote UK education. Since the strategy launch in March, we have established a cross-Government implementation group to turn the strategy’s ambitions into reality, including raising exports to £35 billion by 2030 and lifting student numbers coming here to 600,000. We will appoint an international education champion, and I will chair the education sector advisory group later this month as we build on our plans to deliver the strategy in partnership with the sector.

I am very glad that my hon. Friend will be very busy on that project in the coming weeks. What steps are being taken by his Department to ensure that UK institutions, such as the excellent universities in Manchester, can promote their strong educational brands as world-class centres of teaching and research?

My hon. Friend is right: the UK education sector is world leading. It has four of the top 10 universities in the world and 18 of the top 100. Institutions such as the universities in Manchester stand out for their multicultural campuses and international collaborations, driving global research into important areas such as childhood leukaemia. We plan to work with them and others in the sector to promote it across the world.

Inward Foreign Direct Investment

On almost every measure, the UK has strengthened its position as the most attractive investment destination in Europe since the EU referendum. According to “The fDi Report 2019”, published last month on 3 May, last year saw in-year greenfield investment in the UK grow by 19% to 1,278 projects—more, notably, than France and Germany combined. Despite the slowdown in the world economy, the latest figures show that the total stock of FDI in the UK reached a new high of £1.5 trillion, more than Germany, Poland and Spain combined.

I thank the Minister for that extremely positive and encouraging reply. Is he aware that much of King’s Lynn and west Norfolk’s economy is based on foreign direct investment from a number of firms from America and Europe and that we have some subsidiaries of truly world-class companies? What is his Department doing to liaise with those firms and learn the lessons about why they made that successful decision to come to the UK and Norfolk, in particular?

We have a supplier relationship management programme, where we have built relationships at ministerial and senior official level with the largest investors into the UK. It is notable that in 2017-18, the 2,072 FDI projects that landed in the UK created 75,968 new jobs. Investors are not put off by Brexit, but they are deterred by the threat of nationalisation by the Labour party. It is the fear that job creators most often express to me, which goes to show that Labour does not even need to be in power to damage British jobs and living standards. The threat of Labour is enough.

My father, David Thomas Morgan Davies, was head of economic development at the Welsh Office and got Ford to move to Bridgend in the ’70s, yet this week we find that it is announcing its closure at a time when Donald Trump is saying that we are going to have a great trade deal. Does the Minister agree that the people working in Ford who voted in good faith to leave the EU did not vote to leave their jobs and deserve a say on the final deal, so that they can think again and stay in the EU instead of losing their jobs and being decimated by the Americans?

The hon. Gentleman again wants to frustrate the will of his constituents. The automotive industry is in massive global flux, and trying to link every decision to Brexit leads people astray, just as he and so many of his colleagues do as they come up with these false arguments for a second referendum. The people want the thing they decided to be done and they do not want to hear weasel words from the Labour party, trying to say the opposite.

Export Strategy

The export strategy sets out how the Government will encourage, inform, connect and finance UK businesses so that they can take advantage of the international demand for British goods and services. In February we launched the new export champion community, a network of the UK’s leading exporters which will encourage their fellow firms to start exporting and will offer practical advice.

I am thinking very much of the workers at Ford this morning, because my first job was as a foreman at Ford in Bridgend. I hope that a way through can be found.

When it comes to informing and connecting, the Department needs people on the ground, but its budget in Africa, where I am one of the trade envoys, is very small. It has excellent people, but not nearly enough of them. What is the Minister doing to persuade the Treasury to invest more in “feet on the ground” for our trade missions in Africa and across the world?

One of this Administration’s successes is the establishment of the Department for International Trade. For the first time, we have a dedicated, focused international economic Department that seeks to build our global prosperity. Africa, which is expected to double its GDP between 2015 and 2030 and whose population will nearly double in the not too distant future, is an area in which we need to up our engagement. That is why we are organising an African uplift this year, and we will continue to do more.

Implementing the export strategy also requires us to implement the cyber-security export strategy, which relies heavily on UK Export Finance for direct lending, export refinancing and so on. If cyber-security exports are a genuine strategic priority, what proportion of UK export financing will be committed to its support?

UK Export Finance responds to the market. It is there to ensure that no viable British export fails for lack of finance. Therefore, predicting, let alone fixing, the percentage that will be put into any particular sector—even if it is a strategic priority for the Government —would, I think, be a mistake.

Topical Questions

My Department is responsible for foreign and outward direct investment, establishing an independent trade policy, and export promotion.

Let me take a moment to thank Baroness Fairhead for all her hard work during her time as the Minister for export promotion. She has been an invaluable member of my team: diligent, intelligent and 100% committed, and she will be sorely missed.

I chair the all-party parliamentary group on women and enterprise. We are about to publish our first report, which draws attention to the huge potential for encouraging more female-owned businesses to export. What support can the Government give in that regard, particularly by identifying market-ready opportunities abroad for our female entrepreneurs?

I pay tribute to my hon. Friend for the work that he does in this area. The Government’s export strategy is about breaking down barriers so that everyone can benefit from trade opportunities, but that includes understanding the distinct barriers faced by women. We will ensure that our independent policy is gender-responsive, and will actively seek to increase the role of women in trade and support female exporters in particular.

Today we remember with profound respect the importance of the multilateral alliance, and the sacrifices made 75 years ago today. Did the Secretary of State take the opportunity of the recent state visit involving those commemorations to express his dismay that UK companies might now fall foul of the Helms-Burton Act, which would subject British businesses and investors to unfair legal challenge in the United States simply because that country has a dispute with the people with whom our companies are doing business?

The extraterritorial jurisdiction that the US claims under the Act was declared unenforceable by the EU under a Council regulation which we have recently replicated in the UK, but does it not send a chill through the Secretary of State that by deciding to activate Title III, the US President is threatening companies based outside the US which are simply going about their legitimate business? Does that not make the Secretary of State question whether the great deal that President Trump says he is already discussing with the UK would be great for the UK, or just for the US?

I agree that there are issues around the whole concept of extra-territorial rules on trade, which is why of course it is fundamental that we get a strengthening of the rules-based system at the WTO in Geneva. That will help us deal with some of those issues, but where the United Kingdom believes we have a unique role to play—for example in upholding the joint comprehensive plan of action—we will continue to do so, and we will resist any attempts to force UK trading entities to behave in a way that we do not believe is legal.

T4. What steps is my right hon. Friend taking to showcase the exports of the Greater Manchester area—and may I take this opportunity to invite him and the Department to host an exporting showcase or roadshow in my constituency? (911205)

I am delighted to answer that question again. Our team in the north-west works with international trade advisers and partners across Greater Manchester to enable local exporters to showcase their products and services overseas, including through bespoke trade missions, events and the DIT digital platform. I welcome my hon. Friend’s invitation. We have an established export hub that travels the length and breadth of the UK to give face-to-face support and guidance to first-time exporters. I will ask our team to contact my hon. Friend’s office to explore areas of collaboration and I encourage colleagues from across the House to invite the export hub to their area.

T3 The Minister will be aware of the potential threat to the NHS from any transatlantic trade deal done by the EU. Will he give a cast-iron guarantee that any post-Brexit deal done with the US will maintain the principles of the NHS, free at the point of use? (911204)

Of course post-EU it will be the Government and this Parliament that will determine what trade arrangements we have, not the European Union. I understand the hon. Gentleman’s passionate defence of the NHS: I trained and worked in the NHS as a doctor. Under this Government the NHS will not be for sale, and I would hope that is something we can agree across the House.

The whole issue of the WTO will be at the centre of what we discuss at the G20. The alternative to a rules-based system is a deals-based system, which would suit only the very biggest and most powerful economies, and we would lose the potential to use trade as a means of getting countries out of poverty. The rules-based system is necessary because it applies to everyone—the richest and the poorest, the strongest and the weakest—and we must give every defence to it that we can.

T5. Will Ministers say a word of praise for the work of the Yorkshire and Humber international trade team based in Barnsley? Would it not be even more effective if it was accountable not to Whitehall but to a directly elected Yorkshire mayor? (911206)

I am grateful to my hon. Friend from Yorkshire who is right to highlight the outstanding contribution from the team in Barnsley. I will leave it to other Departments and Ministers to reply on whether or not a Yorkshire mayor would be the right thing to have, but what I can say is that we will continue to work together cross-party to promote business and employment across the Humber and Yorkshire region.

For the benefit of my constituents in Corby and east Northamptonshire will the Secretary of State take the opportunity to knock on the head this nonsense that the NHS will be up for sale in any future free trade agreement?

I am tempted to say “I refer my hon. Friend to the answer I gave some moments ago.” Let me be very clear for the benefit exclusively of his constituents that the NHS is not, and will not be, for sale.

T6. I heard the Secretary of State’s passion as a medic. Will he clarify that he can commit now to excluding the NHS from any future trade deals if the UK leaves the EU, and that no foreign power, no matter how big, will get their hands, no matter how small, on our NHS, no matter who wins the Conservative party’s leadership race? (911207)

Trade with Iceland is of particular importance to my constituency and the ports of Immingham and neighbouring Grimsby. What progress is being made to develop our trading links and investment with Iceland?

I visited Iceland just a couple of weeks ago and had constructive discussions with my counterpart there and with a range of businesses. We have already signed the continuity agreement, which I know will be of enormous benefit to my hon. Friend’s constituency and provide a great deal of comfort to those involved in those industries.

In Blaenau Gwent, we have been working with Fujitsu to encourage our young people to go into cyber-security, but I have learned that there is a real shortage of cyber-security specialists here in the UK. What support can the Government give to training in this key sector so that we can boost our exports for the future?

The hon. Gentleman makes an important point. The value of UK cyber-security exports is set to rise from about £1.8 billion at the moment to £3.2 billion by 2022, and 800 companies are currently involved in the sector. He is right to say that one of the elements we will need to provide is the appropriate education, coming from the sector, to give people the appropriate skills as well as in-house training. The Government, through their wider agenda—the skills agenda, the apprenticeship scheme and what we are doing in the Department—are well aware of the point that he has raised. Without the skills, we will be unable to take advantage of the tech and knowledge that we have.