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Worldwide Free Trade

Volume 790: debated on Monday 16 April 2018

Question

Asked by

To ask Her Majesty’s Government whether they have prepared an analysis of the benefit to the United Kingdom of participation in worldwide free trade; and if so, whether they will publish that analysis.

As part of its preparations for future trade negotiations, the Department for International Trade is conducting analysis of potential agreements with other countries. The DIT has provided a qualitative summary of existing literature on the impact of signing FTAs in the impact assessment accompanying the Trade Bill.

My Lords, whatever happened to the European Union? In these troubled times, it has almost completely disappeared. Could it be that, when there is a real crisis, the nation state—when it supports democracy, individual rights and, indeed, free trade—counts for everything?

Clearly, in the Department for International Trade we are great believers in the benefits of free trade. We believe that free trade must be fair and conducted within a rules-based environment. When we look to exiting the EU, we are looking for a strong ongoing trading partnership with it, and we are looking for a strong ongoing trading partnership with the Commonwealth and other nations. That is why it is particularly important this week, with the Commonwealth Heads of Government Meeting, that we concentrate on a number of areas, one of which is free trade and the trading relationships we have.

My Lords, does the Minister recognise that 44% of our exports now go to the rest of the European Union and a further 17% of them go to the 50-odd countries with which the EU currently has free trade agreements, and that this constitutes in excess of 61% of British sales to other parts of the world? There is no substantial evidence to suggest that our departure from the European Union will in any way enhance the possibility of increasing our trade, under free trade terms or otherwise, with the remainder of the world.

Let me take that in two parts. On the relationship with the EU, it will clearly remain a very important trading partner for us. We need to make sure that we have as frictionless an environment with the EU as we possibly can. We believe that the freedom to be able to make free trade agreements with other countries will allow us to have the trading agreements in the future that can boost our trade further. Regarding those qualitative assessments that we made as part of the impact assessment, we looked at one report from Head and Mayer which had looked at 159 academic reports about the benefits of FTAs. All I can say is that from that information, while it depends on the scale, the relationship and the supply side, the median increase is around 32% from a free trade agreement.

My Lords, the official international trade in goods statistics, which were published on Friday, show that in the year to February there was a growth of 1.7% in the EU’s trade with the rest of the world. Worryingly, those same statistics show a decline of 8% in UK trade with the rest of the world. As we embark on the first trade agreement in history with the EU 27 which will make trade harder rather than easier, if this House votes for the UK to remain part of the customs union with the EU—which, incidentally, saw a growth in our exports of 6% over the same period—we will be acting in the national economic and strategic interests of our country.

If we look at the exports total for the UK last year, it increased by over 11%. We therefore have seen export growth. We believe that the EU has to remain an ongoing and really important trading partner. We are working with trade and investment working groups across a number of countries—14 working groups involving 21 countries—in which we are exploring where we can improve trade further. As I said earlier, the CHOGM this week is particularly important because, in many ways, the Commonwealth is an area where we have underinvested in trading relationships. This is a great opportunity for all members of the Commonwealth to change that.

My Lords, can the Minister confirm that the figure of 44% of our exports going to the EU includes trans-shipments, mostly via Holland, and that if those are excluded, which they should be, the figure is more like 39%?

I can confirm that. Having come into the department, I have to say that some of our information at the granular level has to be improved, particularly for the exports of services. But my noble friend is correct; I do not know the exact number, but it is probably something of that order.

My Lords, does the Minister accept that one area of some concern with regard to increased imports from outside the European Union which may follow is in relation to food stuffs and the safety standards that will be applied in the countries of origin of the food that will be coming here? Can she give an assurance that the UK Government will maintain the current safety standards for food to protect consumers in these islands?

Yes. We are obviously committed to mutually beneficial trading relationships, but we have been very clear that we will maintain our high consumer and food standards. Without exception, any trading partner must meet all the relevant UK rules and regulations. Maintaining safety and public confidence in food is paramount.

My Lords, the Government set great store by their trade with the Commonwealth and the need to improve it. I would be grateful for the Minister’s comments on the fact that Britain does more trade with Belgium and Luxembourg than with Canada and Australia and that the UK does six times more trade with the EU than with the 10 Commonwealth countries for which data is held? How is the UK going to increase that trade?

Those facts are correct. We will want to continue and strengthen the relationship with the EU. In the more involvement and engagement we have with these working groups we are seeing potential for deepening and widening our relationships with our Commonwealth partners. We will be working on building our share of markets and on our trading relationships right across Europe and with our Commonwealth partners.