The Secretary of State was asked—
Free Trade and WTO Reform
This weekend, it will be three years since my Department was formed, and in that time the UK has worked with partners to ensure that the World Trade Organisation is equipped with the tools needed to tackle present challenges and address 21st-century trade issues at a time of significant global headwinds. I emphasised the urgent need for WTO reform in discussions with my counterparts at the G20 trade and digital economy ministerial meeting in Japan a few weeks ago.
Continuity of existing trade terms is in everybody’s interests. I have to say that when the House of Commons gives mixed signals about the possibility of a no-deal exit, quite understandably some of our trading partners wonder whether it is worth investing in getting those continuity agreements. What I would say to those trading partners is that a no-deal exit is not entirely within the control of the United Kingdom; we might end up with a no-deal exit from the European Union. It is in everybody’s interests to have those safety nets in place.
I would go further than my hon. Friend and say that free trade is beneficial for prosperity, stability and security, in the United Kingdom and beyond. The creation of Her Majesty’s trade commissioners is one of the most important elements of the Department for International Trade, and I am passionate about increasing the size of the DIT’s overseas network, including in the Commonwealth. Therefore, this morning I am proud to announce the creation of a new HM trade commissioner for Australasia. The post will be a senior civil service 2 director role and will be externally advertised later this year, to attract the best and brightest talent.
To return to the subject of continuity agreements, a number have been put in place but they do not apply to some of our biggest trading partners. Does the Secretary of State really think that by the end of October we will have a significant number of agreements in place with those countries with which we do the most trade?
Well, 10.7% of our trade is done under EU trade agreements with third countries. In fact, the largest of those, with Switzerland, and some of the other largest—for example, with the European economic area and South Korea—have already been concluded or signed, and I expect further agreements to be reached.
I do not know whether the Secretary of State saw the alarming report in yesterday’s Financial Times on the impact on the Amazonian rain forest of the EU-Mercosur trade deal. Of course free trade is a good thing, but not if the cost is climate change. Does he agree?
This Government have been very consistent in our approach to this matter. In fact, next week I will be setting out, at a slightly lesser level, moves that the Department for International Trade intends to take to mitigate our own international travel. We all have a responsibility, at international, national and personal level, to take climate change absolutely seriously. In international agreements, the environmental impacts are very much looked at. Of course, that agreement has not yet been finally concluded.
I congratulate the Secretary of State and his Department on the latest export figures, which have reached another new high, but there is clearly potential for further growth, particularly post Brexit. What plans does he have to ensure that we have sufficient staff and personnel in high commissions and embassies throughout the world looking for those opportunities and feeding them back to British firms?
For Britain to be able to sell abroad, we need to be able to do two things simultaneously: understand what Britain has to sell abroad and understand the markets we are selling into. That is why my Department is bringing in a major change to rotate our staff from our international posts through our sectors in the UK, so that they can understand what the UK can do in terms of services and goods in a real-time way as well as understand the markets. It is not just about how many people we have in the market, but about how well they understand what is happening in the UK. I hope that this innovation will lead to an increased capability for the UK and improve our competitiveness vis-à-vis other exporting countries.
We recognise the need to reform the WTO, not least in the area of speeding up dispute resolution. We also recognise the benefits of regional trade agreements and bilateral agreements that can be WTO-compliant. However, it remains essential that we have a fully functioning WTO implementing globally agreed trade rules, so may I ask the Secretary of State to take on board and to agree with me that in these negotiations on reform he should reject some of the approach of the United States, which is to suggest that it will walk away from the WTO if it does not get its own way?
I absolutely agree that we need an international rules-based system based on the WTO. It does require reform, but the fact that it needs reform is not an excuse to leave—it is an excuse to be more engaged in those reforms. It is worth pointing out that the United States has done very well, winning around 90% of the cases it has taken to dispute at the WTO. I hope that we all understand that the alternative to a rules-based system is a deals-based system, and the biggest casualties of that will be developing countries.
Renewable Energy Exports
Promoting renewables is, of course, one more function of a dedicated trade Department, and we have export campaigns targeting renewable energy opportunities across Europe, Latin America and south-east Asia, along with support programmes. For example, the offshore wind sector deal commits the Department for International Trade and industry to increase offshore wind exports fivefold to £2.6 billion by 2030 and puts in place support mechanisms to help UK suppliers grow.
I thank the Minister for his answer. In Wales, the low-carbon and renewable energy economy employs nearly 10,000 people. However, as he has already said, this could be hugely expanded if there were more opportunities to explore and to export renewable energy, so what steps are the UK Government taking to boost the economy and export more to provide more jobs across Wales and the wider UK?
I congratulate the hon. Gentleman on championing those employers and, more importantly, employees in his constituency across the world. We are absolutely dedicated to doing that. As I said, the offshore wind sector deal puts a lot of that in place. UK Export Finance now has a dedicated team to support renewables. Colleagues from across the Department worked with Taiwan, and I was there last year at the signing of a memorandum of understanding that opens up its offshore wind opportunities for local companies.
The Society of Maritime Industries says that export finance support in the UK lags behind what is available in other countries. It is calling for a much-needed follow-up detailing the specifics of the export strategy. If the Government are serious about the UK being a zero-carbon economy, where is the detail, the coherent plan and the investment into exports of our world-leading renewables sector? Labour believes in the industry; when will the Government start to?
I shall try to give a straight answer to a not entirely straight question. As I said, we have the sector deal. We have the export strategy and we are putting enormous effort into that. I am pleased to say, Mr Speaker, that in this 100th centenary year of UK Export Finance, it has, under this dedicated trade Department, been rated the best export credit agency in the world.
Leaving the EU: UK Trade Policy
Re-establishing the Board of Trade has been one of this Department’s major achievements over the past three years, and it will continue to meet in all UK nations and regions. Included as advisers to the board are the Secretaries of State for Northern Ireland, for Scotland and for Wales, and it has representation from business advisers from across the UK. We will make sure that all parts of the UK benefit from the jobs and investment that come with an independent UK-wide trade policy.
There are a number of ways in which we can do that. The traditional trade agreements are one of them, but market access is another. For example, countries such as China are huge markets for Northern Ireland dairy products and Scottish beef, and the Department is focusing increasingly on identifying regulations that, if removed, will automatically increase market access for UK exporters.
When the Foreign Affairs Committee met businesses in Hirwaun, south Wales, they were very critical of the Board of Trade. They said that it simply did not listen to Welsh concerns and did not project Wales on the international market. Is there not a danger that the Welsh Assembly might take it into its head that it wants to do that work instead of—and, I would argue, less effectively than—the United Kingdom?
The hon. Gentleman may be slightly confusing the Board of Trade with the Department for International Trade. They have slightly different functions. When the Board of Trade met in Wales recently, we presented a number of awards to Welsh exporters, but the Board of Trade is an augmentation of the DIT in that it is able to take its own trade missions abroad. The advantage of the DIT to Wales is that it provides access to a much bigger network than could ever be achieved by the Welsh Government, and thus gives Welsh business a far greater capability than it would otherwise have.
I am delighted to say that the outcomes of the Department’s efforts have already been pretty beefy. The important point is, however, that because Scotland is part of the United Kingdom and therefore has access to a Department of State with a very large international footprint, we are better able to tackle issues such as market access to Scottish beef than Scotland would ever be if it were an independent state.
The north-east is the one region that consistently exports more than it imports, but its voice in international trade policy and its representation on trade missions do not reflect that. What is the Board of Trade doing to support the voice of the north-east, rather than providing a platform for the Secretary of State so that he can tour the regions without delivering change?
The point of the Board of Trade’s visits to the regions is gathering information that the Department can use for the purpose of export policy and recognising the excellence of those who have already succeeded in exporting. I should have thought that the hon. Lady considered it a worthwhile exercise for the Government to recognise the excellent exporters in her own region.
If trade is to work for all parts of the UK, all parts of the UK—including Kettering—must be heard before, during and after trade negotiations. The Government have announced the creation of a ministerial forum for international trade, but they have provided no information about its membership, how often it will meet, or what its exact terms of reference will be. Will the Secretary of State now give us some much-needed detail on how both the nations and the regions of the UK will be included in the entire trade negotiation process?
As I have said, the Board of Trade’s advisers—which is what they are technically called—are the Secretaries of State for Scotland, Wales and Northern Ireland. We have visited all the English regions, and I intend in future to be constantly moving around the regions and nations of the UK, to thank the businesses that have contributed to Britain’s record export performance, to consult those businesses and to create a network of business people who will act as champions and mentors for companies that want to export.
This summer marks three years since the DIT was established and one year since the publication of the Department’s export strategy, which sets out how the Government will encourage, inform, connect and finance UK businesses to take advantage of the international demand for British goods and services. Last month, we announced a new package of financial support from UK Export Finance to help businesses, and small and medium-sized enterprises in particular, to do just that.
Yes, the offshore wind sector deal announced earlier this year will support UK companies to seize the export opportunities generated by the rapidly expanding market. The DIT is working with markets such as Taiwan, with which I recently hosted an offshore wind roundtable last month, to support their engagement with the UK supply chain. On oil and gas production, the DIT is engaging with the industry and stakeholders on export opportunities across the full industrial lifecycle.
We have already heard that our trade agreements with the EU amount to about 11% of our trade, which is significant. Will my hon. Friend update the House on where he expects to have got with rolling over all the existing trade agreements by the time we are able to make our own independent trade policy?
Since the Department’s formation three years ago, the DIT has grown its trade negotiating capability from a standing start to a fully trained core of specialists. That has allowed us to negotiate the transition of EU free trade agreements, representing almost two thirds of trade covered by these agreements, and we continue to work intensively on the balance.
What is the Secretary of State doing in relation to manufacturing in the west midlands, which has the Jaguar Land Rover and black cab companies, to increase their exports given the market has had a slight downturn as a result of Trump’s sanctions on China?
Of course, Jaguar Land Rover remains an extraordinarily important company to the UK. It has faced some challenges recently, but the announcement of the new electrification programme in the west midlands is extremely welcome. As the hon. Gentleman might expect, the DIT has been very heavily involved in that process.
But what has the DIT been doing through its export strategy about the automotive sector in Wales and in particular in Bridgend, with the announcement that Ford will close the engine plant? What can the Department do to try to persuade Ford to change its mind about this and to ensure that we have a thriving export sector?
The hon. Gentleman will know that the Department for Business, Energy and Industrial Strategy has been very heavily involved with Ford at Bridgend; in the end this is a matter for the company itself, but I have no doubt that BEIS has had productive conversations with it. The DIT is, along with BEIS, investing very large amounts of money across Government in electrification and the automotive market of the future. That involves huge amounts put into research and development at universities, and we believe that will put the UK car industry in a very good position for the future.
UK-US Trade and Investment
Over the past three years, the DIT has laid the groundwork for an ambitious free trade agreement with the US once we have left the EU, including through the UK-US trade and investment working group, which met for the sixth time in London yesterday. This week, I have been in Washington to discuss the progress of these preparations with my American counterparts and make sure we are ready to grasp this golden opportunity once we have left the EU.
Is it not the case that, notwithstanding the little local difficulty—or even large local difficulty—in Washington DC at the moment, the underlying facts remain that the United Kingdom is the biggest investor in the United States and vice versa, that military and intelligence integration between the United Kingdom and the United States is bigger than any other in the rest of the world and that our strength remains with the United States?
My hon. Friend is correct. The UK and the US have a deep long-standing relationship with a strong and enduring bond. We have a shared heritage, legal system and language, and we co-operate extensively in security, prosperity and defence, and at many levels of our society, culture and economy, our co-operation is closer than that of any other two countries—something that my hon. Friend contributed to in his time as shadow Trade Minister.
Has the Secretary of State woken up to the fact that when we trade with America, and with other countries, we have to take manufacturing very seriously indeed? This also involves our universities. I have a good memory and I remember that, on his first outing, he refused to meet the all-party parliamentary group on manufacturing. He has still not met it. Why does he not take manufacturing seriously? It matters for our trade relationship with America, which is very close.
When it comes to the manufacturing element, we take it very seriously. Our goods exports have actually exceeded the growth in our service exports in recent times, which is testament to the way in which the manufacturing sector has been encouraged and grown under this Government, in stark contrast to what happened under the previous Labour Government, when it shrank substantially.
The Secretary of State is obviously aware of the unprecedented way in which our ambassador in Washington was removed from his post yesterday by the former Foreign Secretary and the President of the United States. Does he think that that will harm or hinder our trade investment with the United States?
I deeply regret the resignation of Sir Kim Darroch, whom I was with actually in the time before his resignation. He was a great, dedicated and professional public servant. I hugely decry the leak that led to that resignation. The leak was unprofessional, unethical and unpatriotic, and I hope that, if we are able to discover the culprit, we will throw the book at them.
Arms Sales: Saudi Arabia
We disagree with the judgment and are seeking permission to appeal. Alongside this we are considering the implications of the judgment for decision making. While we do this, we will not issue any new licences for exports to Saudi Arabia or its coalition partners which might be used in Yemen.
Given the evidence from organisations such as the Red Cross, and given what we know about the humanitarian violations in Yemen, does the Secretary of State not think it is time, once and for all and regardless of any review, to look at the international evidence, and stop selling arms to Saudi Arabia to break international law?
We take a rigorous and robust view in this country, as the court said, and we are very aware of any potential breaches of international humanitarian law. I think the hon. Lady will find that the United Kingdom has one of the most stringent sets of rules around arms exporting anywhere in the world.
My Department is responsible for foreign and outward direct investment, establishing independent trade policy and export promotion. I am proud to announce that, on 17 July, my Department will be launching the MP Exporting toolkit. This will highlight the role that all MPs can play in helping to promote local businesses in their own constituencies. It says “Become a Trade Minister for your constituency”, and 650 Trade Ministers would be even more effective than the Department for International Trade.
My right hon. Friend is a brave man to let us all loose like that. He will be aware that the Royal Navy has done incredible work in the past couple of days to protect our British shipping as it moves through the Strait of Hormuz. Does he agree that, given that 95% of our goods travel by sea, it is imperative that our armed forces have the resources they need to keep all those exports and imports safe?
Contrary to international law, three Iranian vessels attempted to impede the passage of a commercial vessel, British Heritage, through the Strait of Hormuz. HMS Montrose was forced to position herself between the Iranian vessels and British Heritage and to issue verbal warnings, which caused the vessels to turn away. Our thanks go to the crew of HMS Montrose and to all those who protect the safety of vital international maritime traffic. It is our duty as a Parliament to ensure that all those forces are adequately resourced.
Last month, the Department released the worst foreign direct investment statistics in five years. New projects were down 14%, new jobs were down 24%, and investment to safeguard existing jobs was down 54%. I know that the Secretary of State will want to explain the reasons for this to the House, but will he also tell us whether he still thinks he was right to announce that, in the event of a no deal, he would unilaterally drop more than 80% of our tariffs to zero for a period? I ask this because Canada has said that it will not now conclude a roll-over agreement conceding preferences to the UK because the Secretary of State is offering market access for free. In June, he boasted to the Select Committee that the roll-over was 99% there. Now, it is 100% not there. Was he right, or is Canada?
As ever, it is nice to know that the hon. Gentleman is consistently wrong. He talks about our investment figures, but investment into the United Kingdom was the third highest of any country in the world, and it was the highest in Europe. At a time when global foreign direct investment fell, it continued to rise in the UK. When it comes to tariffs, one reason the Government introduced the temporary tariff scheme was to stop a price shock in the UK, and one of the reasons for that is that those on lower incomes spend more on goods than services. Introducing liberalisation will help to protect consumers on lower incomes, and I would have thought even today’s Labour party might have supported that.
My right hon. Friend is absolutely right. There are some huge opportunities in market access. Indeed, we have identified one potential change in China that, if negotiated, might be worth £10 billion of turnover over a considerable period through one regulation alone. Resources at the Department at the moment are necessarily skewed towards FTAs, because of the trade agreement continuity process, but they will in due course shift towards market access, which is terribly important.
I had a number of discussions in the United States about that issue this week, as the hon. Gentleman may have guessed. It is likely that tariffs will be applied following the WTO determination of the level of tariffs that the US is allowed by law to set following the judgment on Airbus. Of course, the judgment on Boeing, to which he alluded, is also coming. At some point, we must ensure that both European countries and the United States are able to give appropriate support to their aircraft industries, because the alternative will be market access for China, which will be in the interests of neither.
The transition agreement will replicate the effects of the preferential market access in the existing EU-South Korea FTA, providing certainty for businesses and allowing them to continue trading on preferential terms. It will provide a firm basis for the further strengthening of our ambitious trade and investment relationship as we work together in future.
I could just ask the hon. Gentleman to look up the answer that I gave a few moments ago. We have signed roughly two thirds of the deals already and we expect there to be more. As for the number, it is well over 50%, and a large number of the countries in there are agglomerated into blocs, but we are confident in terms of trade that we will have two thirds or thereabouts.
My hon. Friend makes an important point, but an article 24 agreement would cover tariffs and quantitative restrictions; it would not cover services, standards and regulations. An agreement covering those latter elements would have to be negotiated separately and would probably take longer to strike. In the meantime, the UK would be subject to the full array of existing third-country checks and controls carried out as standard by the EU. In other words, even if we both did agree an article 24 continuation, it would not cover access to the single market—it would not be trading as usual.
Further to the question from the hon. Member for North Ayrshire and Arran (Patricia Gibson), is it not time that the Department for International Trade undertook a thorough review of all 29 or 30 countries identified as countries of concern for human rights by the Government’s own Foreign Office?