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International Trade

Volume 666: debated on Thursday 17 October 2019

The Secretary of State was asked—

WTO Reform

1. What recent assessment she has made of the extent of the Government’s influence on potential reform of the World Trade Organisation after the UK leaves the EU. (900000)

I am a big supporter of the WTO, but it does need reform. When the UK takes up its independent seat at the WTO for the first time in many years, we will strongly be backing the rules-based multilateral trading system and making the case for reform.

10 December—the date on which the WTO appellate body crisis will come to a head—is looming ever closer. Can the Secretary of State confirm that she will follow the European Union in working to restore an operational appellate body, and will she tell us what conversations she has had with her United States counterpart regarding that urgent need?

When I was at the WTO in Geneva last week, I met David Walker, who is currently leading work to resolve the appellate body crisis. I have given him my full support in that work. It will require movement on behalf of the EU and the US to find a solution to this crisis, but it is vital that we fix this in order to keep the WTO going.

As well as undermining the dispute settlement system, the US is threatening the principles that support developing economies and imposing tariffs for political ends. How does my right hon. Friend propose that the UK stands up for the rules-based order while trying to negotiate a trade deal with the US?

My hon. Friend is right that the rules- based order is very important. Last week we got the support of all the Trade Ministers of the Commonwealth, who represent a third of the world’s population, to make the case for an immediate resolution to the WTO appellate body crisis and for a rules-based order. As she says, it is particularly important for the smaller countries that do not have the muscle to make their way in trade negotiations to be able to rely on the WTO to resolve disputes.

How exactly do the Government intend to reform the WTO? Are they looking at tariffs, for example? What exactly are they trying to achieve?

The WTO needs to reform to reflect trade in the 21st century. It needs to become more transparent. We also need to deal with issues such as state-owned enterprises, forced technology transfer and intellectual property, ensuring that these matters are resolved within the WTO. But we also need an appellate body system that works for all WTO members, which is why I am supporting David Walker from New Zealand, who is conducting the review. I urge the US, the EU and all other parties to work together to resolve this situation.

May I urge the Secretary of State to use our voice at the WTO to champion both free trade and, as she has described them, “orderly” markets? Now is not the time for world trade to revert to old-fashioned protectionism.

My hon. Friend is absolutely right. Since the repeal of the corn laws, the UK has stood up for free trade. We were one of the founding members of the general agreement on tariffs and trade in 1947. There is a huge opportunity for us as we leave the EU to retake our independent seat, to make the case for free trade and to be prepared to stand up for the values that we believe in as a country.

Will the Secretary of State wake up? She sounds almost as if she is in a trance this morning. Instead of talking to significant people in the WTO, will she come to my constituency of Huddersfield to meet exporting companies and top managers there, who believe that she is sticking a dagger into the heart of this country’s exporting companies? We want to know what the future is for exporting businesses in Yorkshire when we leave the EU, if we have to leave the EU.

Well, I can tell the hon. Gentleman that I am going to be in Yorkshire next Friday, visiting and talking to exporting businesses such as Bettys of Harrogate and Burberry in Leeds. If he wants to extend an invitation to me to visit an exporting business in Huddersfield, he should get on with it.

Absolutely. One of the great benefits of trade is the prosperity it can bring to some of the poorest countries in the world. Part of our no-deal tariff schedule is about ensuring that those countries are supported, but we will have a huge opportunity to open up more trade once we leave the EU. At the Commonwealth Trade Ministers meeting, we talked about just that.

We all wish to see reform of the WTO and a functioning dispute resolution system, but given that the UK is responsible for 3.4% of global trade compared with the EU being responsible for 35%—a full third—of global trade, is it not the case that the UK’s influence inside the WTO is now massively diminished?

One of the groups we are working very closely with is our Commonwealth partners. We are developing a Commonwealth caucus at the WTO that represents a third of the world’s population and has a very strong stake in making sure that the WTO works for small states, in particular. Of course we will work with the EU and of course we will work with the US when it is in our mutual interests, but the fact is that the EU has pursued protectionist policies, and that has not necessarily helped some of the least-developed nations. I believe that the UK will have a unique voice, particularly in favour of free trade.

We know that the new Secretary of State can do the impossible, because recently she announced that for the past 45 years the UK had been a member of the WTO—which was only founded in 1995. So will she now inform the House of how she has resolved the challenge that 20 or so members of the WTO have lodged against the UK’s proposed new bound tariff and quota schedules, and of what provisional sum she has agreed with the Chancellor to pay any successful claims?

The UK was a founder member of GATT, which then became the WTO. As the hon. Gentleman knows, by his definition we would only have been in the EU since 1993, because previously we were in the European Community, as I am sure he has said.

Of course we will work through the issues on the goods schedules at the WTO, and we are doing precisely that at Geneva. Those schedules are all ready to go in the event of no deal. Of course, what we want is a deal, and the Prime Minister is currently in Brussels working very hard to get that. If that is what the hon. Gentleman wants, I suggest that he votes for it.

EU Trade Agreements: Roll-over

In preparation for our exit from the European Union, the Government have, to date, secured 16 continuity trade agreements with 46 countries. Trade with those countries represents 72% of the UK’s total trade. I am pleased to inform the House that only last week my right hon. Friend the Secretary of State signed another agreement with the Southern African Customs Union and Mozambique to roll over the existing EU trade agreements that we have with them.[Official Report, 31 October 2019, Vol. 667, c. 4MC.]

The Minister says there are 16 agreements, but given the Government’s clear broken promise to roll over at least 40 trade deals by one minute after midnight on 31 March, two Brexit extensions ago, have they carried out any assessment of the economic loss that will result if—I will say if, not when—we are unable to secure a trade deal with all the countries that the EU already has an existing arrangement with?

I am sorry that the hon. Lady has not welcomed the efforts that the Government and officials have made to make this incredibly successful transition. These deals account for over £100 billion-worth of our current trade, and they are warmly welcomed by the businesses that trade beyond the borders of the European Union. I will tell her what assessment we have made on the European Union: we have made an assessment that it would be deeply damaging for our democracy if we do not honour the referendum of 2016.

Will the Minister explain to the House how, when we leave the EU, his Department will continue to protect UK businesses from unfair trading practices?

We remain absolutely committed to ensuring a level playing field. The United Kingdom has been one of the leading international advocates of a rules-based order. As my right hon. Friend the Secretary of State said, we are committed to playing our full part in the WTO, and we are absolutely committed to having a trade resolution body up and running and formally underpinned by statute. This is the boring bit—the continuity bit. The exciting bit comes when we leave the European Union and we can strike out with new, comprehensive free trade agreements around the world.

Despite the existing architecture, despite not needing to reinvent the wheel, despite not starting from zero—we could just follow the work the European Union has done—and despite the promise to do this by one minute after midnight, the slow progress in these trade agreements surely does not bode well for any of the future trade agreements that the Government talk about ad nauseam. Meanwhile, the UK Government are endangering the trading potential of companies in the UK. When will the other 24 be done?

We are working aggressively to continue the roll-overs, and many are very close to being completed. Despite the hon. Gentleman’s distinguished position as Chair of the International Trade Committee, if optimism were a disease, he would be immune.

The Trade Bill was supposed to govern the roll-over of EU trade deals, but the Government abandoned it in the last Session because they knew that they would lose votes on important amendments, including on scrutiny and parliamentary approval. Can the Minister confirm that the Government will carry over those vital provisions into the new trade Bill, so that elected Members of this Parliament can properly scrutinise all trade agreements, to prevent our NHS, food standards and environmental protections from being traded away to President Trump?

As a distinguished parliamentarian, the hon. Lady knows how this House works. She will have ample opportunity to scrutinise the trade Bill during its passage through Parliament and, if she wishes, to make amendments to the Bill, which can then be considered by the House. I wish that the Opposition would stop peddling this lie, which is worrying people, about the NHS and the United States. The Prime Minister has made it repeatedly clear that the NHS is not on the table in any trade agreement. She should stop scaremongering.

Scotch Whisky Tariffs

3. What recent discussions she has had with her US and EU counterparts on the imposition of tariffs on Scotch whisky. [R] (900003)

We are extremely disappointed that the US has decided to levy tariffs, including on the Scotch whisky industry. I have urged my US counterpart to rethink this, and the Prime Minister has also raised the issue with President Trump.

In the days following this announcement, the Government were asleep at the wheel. We now have only 12 hours before this tariff is implemented. What action will the Secretary of State take in the next 12 hours to delay this? If she cannot delay it, what will she do to mitigate the impact, particularly on small and medium-sized distillers, which rely so heavily on the US market?

I have been raising this issue with my US counterpart since July, when I first met Bob Lighthizer. I have also raised it with Commerce Secretary Wilbur Ross. I have made it clear to the Americans that it is not helpful in terms of our relationship with them to see these tariffs placed on such an iconic industry, among other industries in the UK.

I welcome my right hon. Friend’s efforts. In my recent urgent question I asked the Prime Minister to speak to the President, and he did, but I also asked that consideration be given to an announcement that the UK would not levy tariffs on bourbon when we left the EU. Can she tell us something about her consideration of that?

When we leave the EU, the UK will be responsible for its own tariff policy. At this point we are part of the EU and those overall discussions on tariffs, so we cannot make that type of statement. The point I have been making to the US is that this will not help our relationship. We are also being threatened with £1.2 billion of car tariffs, which could hit the UK on 14 November, and I have raised that with my US counterpart. If the US wants the British public to have a positive view of our trading relationship with it, it needs to reverse these decisions.

Scotch whisky producers will have difficulties with the tariffs that will fall on their whiskies, but the Republic of Ireland will have no tariffs whatsoever. Echlinville distillery in my constituency is an Irish whiskey producer. What is being done to help Bushmills and Echlinville distilleries, which are very important to jobs in my constituency and across Northern Ireland?

My understanding is that the Republic of Ireland has been hit with tariffs on other products. These retaliatory tariffs following the Airbus dispute have been levied on a number of European countries. The point I have been making to the Americans is that the UK has complied with the WTO ruling. We are not in breach of that ruling any more, and we have met all the compliance stats.

The Secretary of State is aware that my constituency is severely affected by a number of the tariffs applied by the US. What will she be doing in the next 12 hours to at least delay these tariffs being implemented? If they are, unfortunately, implemented, what can be done to get them removed as quickly as possible?

I am aware of the fantastic whisky distilleries—in fact, I visited Macallan with my hon. Friend very recently—and they are an incredibly important part of the Scottish economy, but also an iconic brand for the UK. I am hosting a roundtable with affected industries this afternoon, and the Chancellor is currently over in the US speaking to his counterpart as well. We are putting as much pressure as we can on the United States on this issue. We will also be looking at measures to help the industry here in the UK.

Welsh Exports

4. What recent assessment she has made of the potential effects of WTO tariffs on Welsh exports after the UK leaves the EU. (900004)

The best way to avoid potential tariff barriers is to support good free trade agreements with both the EU and the US. I hope the hon. Lady will support any deal the Government bring forward to make sure we can leave the EU with a deal.

I have spoken before about the impact of export tariffs on Welsh lamb and beef exports, which would be seriously damaging for the Welsh farmers I represent in Brecon and Radnorshire. We have heard the Government recently talk up Japan as a tariff-free export destination, but only £4,000 of lamb goes to that particular country. Can the Secretary of State provide a guarantee—yes or no—that the livelihood of Welsh farmers, such as those in Brecon and Radnorshire, will not suffer as a result of the imposition of these export tariffs?

I know that very high-quality lamb is produced in the hon. Lady’s constituency. In fact, I have visited the Rhayader sheep market and seen it for myself. I can assure her that the Department for Environment, Food and Rural Affairs is working with the Treasury to make sure there is support for lamb farmers in the eventuality of potential issues. However, we also need to open up more markets for British lamb. I have particularly got my eye on the US market—it is the second largest importer of lamb by value in the world—and we need to make sure that Welsh lamb farmers have more places to which they can export.

Tariff Policies: US and China

5. What assessment she has made of the effect on EU trade policy of recent changes in tariff policies between the US and China. (900005)

The European Union has made very clear its opposition to tariff escalation and its support for the international rules-based trading system. As a vocal champion of that very system, the United Kingdom endorses the EU approach. Low tariffs and free trade are the underpinning guarantor of prosperity and jobs in the UK; tariff wars are in no one’s interest.

Does my right hon. Friend agree, given the growing disruption in the EU’s trade relationship with both the US and China, that now is not the time to have disruption in the EU-UK trade relationship? The UK will become, overnight, the EU’s second largest trade partner. Does that not show all of us the need to get a trade deal with Brussels that we can live with and move on?

I am grateful to my right hon. Friend. As a distinguished former occupant of the job I now have, he understands these matters incredibly well. He is absolutely correct: the United Kingdom is about to become the EU’s second largest trading partner, with £357 billion of goods and services exported to the UK last year. A good Brexit deal is in the interests of the EU and in the interests of the UK, and I am sure the whole House—at least, I wish the whole House—would wish my right hon. Friend the Prime Minister every success today in trying to get that agreement.

Recently, the Secretary of State said she would be

“unapologetic in fighting the forces of protectionism, in favour of genuinely free trade.”

Will she put this into action now for one of my constituents, a specialist publisher of historical aviation books, who from tomorrow will pay 25% tariffs on his materials, a large proportion of which are shipped to the US?

I absolutely give the hon. Gentleman the assurance that we will work tirelessly to promote trade, investment and the prosperity of the United Kingdom. On the hon. Gentleman’s particular point, I would be delighted to meet him to talk about his constituency business.


6. What recent discussions she has had with Cabinet colleagues on the economic merits of freeports. (900007)

I am working closely, as are my colleagues across Government, to make sure that the freeport policy will be successful, and will help bring regeneration, jobs, opportunity and prosperity to every part of this United Kingdom.

Given Aberdeen’s new harbour expansion, which is supported in part by UK Government investment, and a growing cluster of subsea businesses near Aberdeen International airport, does my hon. Friend agree that freeport status for Aberdeen could help to turbocharge the engine room of the Scottish economy?

My hon. Friend is correct in his assertion that freeports have the potential to drive growth in towns and cities across the UK, enabling them to make the most of Brexit opportunities. We are working hard to design a model that delivers optimal benefit for the UK and specific locations. Where appropriate, we will work with the devolved Administrations on this matter, but it would be helpful if the SNP showed more enthusiasm for something that could make a big difference.

Does my hon. Friend agree that freeports could hugely benefit and provide great opportunities for the south-west regional economy? What plans will he put in place to ensure that local communities around freeports benefit economically?

I am grateful to my hon. Friend—no one in the House works harder to promote their area than him. Freeports offer an opportunity to unleash enterprise. We want to set forth all the principles and wealth creation that the Labour party stands against, and to allow my hon. Friend’s constituents, and the communities he represents, to prosper and grow through free enterprise, and we will carry on doing that.

The Prime Minister has suggested that there would be about six freeports. What assessment has the Minister made of the impact that that would have on ports that are not chosen to be freeports?

The hon. Lady makes a serious and important point. We are working hard and closely with our Treasury colleagues and others to ensure that we design the policy in the right way so that we minimise displacement and bring in additional activity and prosperity. We do not expect, and we will not design, a system that will damage those ports that do not become freeports.

Topical Questions

I am delighted to have been appointed as Trade Secretary at this vital time in our nation’s history. For the first time in 46 years, we will have an independent trade policy and be able to set our rules and regulations, which means that we will be able to strike deals with likeminded countries such as the United States, Japan, Australia and New Zealand. We will also be able to take up our independent seat at the World Trade Organisation, leading the fight for free trade and participating in the battle against protectionism.

Ninety per cent. of the world’s illegal deforestation takes place in the Amazon rainforest—something that the Paris agreement explicitly sets out to tackle and reduce. Does the Secretary of State agree that if we are serious about tackling climate change, the ratification and implementation of the Paris agreement must be a precondition for any country that wishes to make a trade deal with the United Kingdom?

I am a great believer that free trade and free enterprise help us to achieve our environmental goals through better technology, more innovation and more ingenuity. The Minister of State, my right hon. Friend the Member for Bournemouth West (Conor Burns), recently visited Brazil and discussed those precise issues with its Trade Minister.

Sylatech is a precision engineering business in Kirkbymoorside in my constituency, but it is suffering a significant business impact due to control delays on its export licence applications. Will my hon. Friend update the House with a timescale to resolve that problem?

I congratulate my hon. Friend on working so hard to promote businesses in his area. I am delighted that our performance in dealing with licence applications is good, and I pay tribute to those who work in the Export Control Joint Unit. Some 80% of applications are concluded within 20 days, and 96% within 60 days. In some cases, complex issues have to be assessed, but we will do everything that we can to facilitate and accelerate the decision on the case raised by my hon. Friend.

The House recently passed a statutory instrument to extend EU protection against extraterritorial lawsuits under the US Helms-Burton Act. The Secretary of State will know that investors are already speaking with law firms to launch dispute proceedings against the UK under long dormant bilateral treaties. What estimates has she made of the quantum of such suits, and what protections will she introduce to safeguard the public purse and public policy?

T6. Will my right hon. Friend join me in congratulating Southend on the initiative of welcoming ambassadors from countries such as Thailand, the Philippines, Taiwan, the Maldives and India to boost trade once we leave the European Union? (900022)

It sounds like my hon. Friend is drawing up a very exciting programme of autumn travel. He is absolutely right that our departure from the European Union will offer huge opportunities for the United Kingdom in the vast and growing Asian market, which I saw at first hand only a couple of weeks ago in Vietnam.

T3. The annual number of customs declarations established by Her Majesty’s Revenue and Customs under a no-deal scenario is estimated to be 270 million. The current number is 55 million. How do the Government expect to process the additional workload when they are shutting down vital HMRC centres such as Lynx House in Portsmouth? (900019)

I can assure the hon. Gentleman that an incredible amount of work has been going on across Government to make sure that we are fully prepared for all scenarios. The Chancellor of the Duchy of Lancaster has been holding daily meetings—there have been 60 so far—and we are performing well, particularly on making sure that actions at the borders are in place.

Our biggest export sector is services, which are invisible, and particularly financial services. Our biggest export market is the US. What discussions has the Secretary of State had about opening up financial services exports to the US and removing some non-tariff barriers?

My hon. Friend is absolutely right—this is a fantastic opportunity for the UK. When I was out in the US, I met Bob Lighthizer, and I also met the Treasury Secretary to discuss those potential opportunities with him. The UK is not just going to roll over in a trade deal with the US. We will make sure that our industries are promoted. We want barriers removed in the US to our successful service industries.

T4. Back when we were told that we hold all the cards, the post of British trade negotiator had been obsolete for 45 years. Would the Secretary of State recommend it as a long-term career path? We are, as we know, at the beginning. When does she envisage the negotiations ever being over? (900020)

I hope that the hon. Lady will be supporting the Prime Minister in his negotiations in Brussels, where he has already secured significant advances to where we were, in particular by ensuring that Britain is able to have its own independent trade policy once we leave the EU, and to control our own rules and regulations.

To avoid freeports just displacing activity, does the Minister agree that freeport activity should be based on the existing unique and distinctive capabilities of a port, such as Milford Haven, the UK’s leading energy port, which has an unrivalled skills base and infrastructure?

My right hon. Friend is quite right. The design of the policy is vital. Optimising existing strength is an important part of ensuring that the policy is a success.

T5. Despite the 2016 Colombia peace agreement, murders of trade unionists, human rights defenders and community leaders continue in very large numbers. Can the Secretary of State assure the House that there will be no free trade agreement with Colombia until it fully complies with its international human rights obligations? (900021)

As a result of devastating African swine fever, 130 million pigs have recently been slaughtered in China, which is home to half the world’s pigs. Is this not a great opportunity for my right hon. Friend, who did so much to open this market to British pig farmers, to promote the merits of British products from our pigs, including, of course, the unrivalled Gloucester Old Spot?

My hon. Friend is right. I was very proud to open the market for pigs trotters into China when I was Secretary of State for Environment, Food and Rural Affairs. Market access is very important. We have seen a massive increase in pork exports to China over the past five years. He is right that our high welfare standards and quality produce are valued across the world. There are lots of new opportunities, including for the Gloucester Old Spot.

Leaked documents from Operation Kingfisher showed that York would be the worst-hit place in the country in the event of no deal. What discussions is the Secretary of State having with my city to ensure that we will be able to trade after 31 October?

No doubt the hon. Lady will be supporting a deal to ensure that the good people of York have the trading opportunities that they deserve.

Returning to the issue of freeports, the Secretary of State visited Immingham in my constituency last year and saw for herself the great opportunities that exist to improve the local economy. Will she continue working with me to ensure that the Humber ports do indeed receive freeport status?

As I represent a constituency in the Humber area, I will continue, without giving any special status, to ensure that we liaise with my hon. Friend, but he is so right. Conservative Members are focused on trying to find policies that open up investment and bring in further jobs, but the Labour party’s manifesto sets out policies that would destroy inward investment and cost tens of thousands of jobs.

Does the Secretary of State accept the Food and Drink Federation’s analysis that, with a complex and confusing no-deal tariff schedule, investment made right across the supply chain in preparing for a no-deal Brexit means that food prices will likely increase?

The best way of avoiding no deal is for the—[Interruption.] The hon. Gentleman shakes his head, but this is common sense: the best way to avoid no deal is to vote for a deal.

Will the Secretary of State give us an update on where we are on joining the comprehensive and progressive agreement for trans-Pacific partnership?

I discussed that with Trade Ministers when I visited New Zealand, Japan and Australia. They are all very interested in the UK’s joining, and I want to progress that alongside the bilateral discussions that we are having with the countries. It will give us access to 11 fast-growing markets in Asia, so it is a massively exciting opportunity.

Will Ministers assure us that, in their desperation to sign any trade deal to justify their Brexit policy, they will not give a green light, or a nod and a wink, to President Bolsonaro to continue the destruction of the Amazon rain forest?

As my right hon. Friend the Secretary of State alluded to some moments ago, I visited Brazil recently. In addition to conversations about trade, we discussed with the Brazilian Government how the United Kingdom can assist them in their move to a low-carbon, greener energy production model. We have spent over £150 million of climate finance in forest programmes across Brazil, and I was delighted, in the light of my recent visit, that the Prime Minister announced a further £10 million to help the Brazilian authorities in forestation and deforestation.

The National Audit Office said yesterday that if the UK leaves the EU without a deal, cross-border shipments could be reduced by more than 50% and would take 12 months to return to normal. Can we stop this charade? Is it not the case that no responsible Government would do that to our businesses, and that if there is no agreement with the EU by Saturday, the Prime Minister will send the letter requesting an extension, not least because if he fails to do so he will be in contempt of court, given the proceedings in the Court of Session?

As well as birthday congratulations to the hon. Gentleman, I have other good news: we are taking steps to support businesses in all scenarios and to ensure that, with or without a deal, we minimise any negative disruption. But as my right hon. Friend the Secretary of State just said—this is an appeal to Members right across this House—we will have the opportunity to vote for a Saturday sitting, and we will have the opportunity, I hope, to see a deal put through that will mean that we can move forward. I hope that the hon. Gentleman, finally, will support and respect the decision of the British people in 2016.