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Brexit: Trade

Volume 776: debated on Tuesday 1 November 2016


Asked by

To ask Her Majesty’s Government what assessment they have made of the announcement by the Australian Minister for Trade, Tourism and Investment that Australia will not commence negotiations on a trade deal with the United Kingdom, and of the implications for all future post-Brexit trade negotiations whilst the United Kingdom remains a member of the European Union.

My Lords, the Australian Trade Minister was clear that both Governments have agreed to start work on scoping out a future ambitious and comprehensive Australia-UK free trade agreement. The UK and Australia have agreed that this joint working will help us move as quickly as possible formally to conclude negotiations on a free trade agreement once the UK has left the EU.

My Lords, I thank the Minister for that helpful Answer. The Australian Trade Minister may or may not be right in saying that formal negotiations cannot start until such time as this country leaves the European Union, but in practical terms, and given the number of countries in the rest of the world—more than 50 in the Commonwealth and everybody else—does she believe that the process of undertaking negotiations for trading arrangements with all the other countries in the world will take place quickly after this country leaves the European Union? Is there not a real risk of a very unsatisfactory and dangerous limbo arising in most cases? What will the Government do about that?

My Lords, we are doing absolutely everything we can to achieve a smooth transition with no gap. The Australian Trade Minister has said that he would want to conclude a free trade agreement as quickly as possible after Brexit. This is the UK Government’s position, too. We are in the position of scoping discussions to move as quickly as possible.

My Lords, will my noble friend confirm that there is no EU free trade agreement with Australia; that for years it has tried and failed to achieve one; that one does not need a trade agreement in order to trade; and that once we have left the European Union, we will be able to negotiate our trade without having to satisfy 27 other countries?

Has the Minister seen the website of the Australian Government Department of Foreign Affairs and Trade website, which states:

“What does Brexit actually mean? … Leaving the EU will take the UK years. How many is unclear”?

If noble Lords will forgive me, I will read from the website a little further:

“The UK will need to complete Article 50 exit negotiations with the EU, and determine its domestic trade and regulatory settings before it is able to negotiate FTAs with third countries, such as Australia”.

Does the Minister agree? The Australian Government also say—

The Australian Government also say:

“The Government is seeking clarity from the UK Government on its expected approach to EU departure”.

Are the UK Government providing that clarity to the Australian Government and, when they do so, will they provide it to this Parliament, too?

I am sorry, but I only half-heard that question, first, because of the enthusiasm of my noble friends behind me but also because of the length of the question or questions. Perhaps the noble Lord would pick out one question and then I will answer.

What estimate has my noble friend made of the value of the additional trade that would be available to the United Kingdom through a free trade agreement or agreement under very special arrangements with Australia that is not now available to us as a member of the world’s largest trading community, the European Union?

I do not have figures for what might happen. All I can say is that we currently have about £10 billion worth of trade in goods and services with Australia. We are in the fortunate position of having the same legal system, the same language and the same culture, which are all positive factors in negotiating a free trade agreement further to enhance what we already have.

My Lords, the noble Lord, Lord Pearson, has been trying to get in on a number of occasions, so we will go to him and then to the Labour Benches.

I am most grateful, my Lords. Further to the penetrating question from my noble friend Lord Forsyth, could I ask the Government whether they are aware—

Are the Government aware that the aggregate GDP of the countries with which the EU has managed to sign trade agreements is a mere $7 trillion, but that four much smaller economies than ours, Chile, Korea, Singapore and Switzerland, have signed agreements with an average GDP value of $42 trillion each—or six times more than the EU? Does this not suggest that the United Kingdom, as the world’s fifth largest economy, will be able to do very much better on its own than when it is shackled to the failing EU?

I agree that there is still much potential for the United Kingdom once we leave the EU. We obviously want to retain the business that we already have with the EU, but beyond that there is scope for increase and that is why we are embarking on these scoping exercises. My noble friend Lord Price has visited more than 15 countries in the last few months and spoken with 200 businesspeople. We will continue to do that good work ahead of leaving the EU.

Can the Minister give an example—one example—of trade with Australia that is forbidden now because of our membership of the European Union?

As far as I am aware there is no forbidden trade with Australia. We want to enhance what we already have, in terms of regulatory reforms and so on.

My Lords, it is sometimes suggested that the EU inhibits trade, so why does Germany, a member of the EU, do far more trade with India than we do? The EU is not stopping us. Is it not true that the EU levers open markets with the clout of 27 members, which is a great deal more than the clout of one member?

All I can say is that the UK remains committed to being a world leader in free trade. That is our goal. We want to secure open and productive trading relationships with all our trade partners. It is not a matter of choosing one or the other; we are focusing on everyone.

Is the Minister aware that Australia has stated that it is keen to have a trade agreement with the United Kingdom so that its wine will enter this country cheaper than at present?

Of course Australia will have its own interests in terms of exporting its wine, its beef or its dairy products, but we too have our own interests in terms of exporting our motor cars and so on. Of course it has to be of mutual benefit to both countries.

My Lords, could it be by some quite unimaginable stretch of the imagination that those noble Lords who keep moaning about Brexit are trying to justify the dire warnings about what would happen if we did leave—for instance, a third world war? As the Minister and I come from the fair city of Glasgow, would it be appropriate to say to these people, “Haud yer wheesht”?

My Lords, I declare an interest as the chairman of the Arab-British Chamber of Commerce. Can the Minister confirm that there is nothing to inhibit discussions, and indeed agreements, on memoranda of understanding over trade even while we are a member of the European Union and that such memoranda of understanding might well then form the basis for trade agreements after we leave?