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Topical Questions

Volume 614: debated on Thursday 8 September 2016

This is the first time that I have had an opportunity to set out the new Department’s responsibilities. We have three tasks: promoting UK exports of goods and services to support a growing economy that serves the whole of the United Kingdom; maximising opportunities for wealth creation through supporting foreign direct investment with a renewed focus on overseas direct investment to support the current account; and delivering the best international trading framework for the UK outside the European Union, including through building our capacity to negotiate and administer a national trade policy. Like the UK as a whole, the Department for International Trade is open for business, and I am pleased to say today that we will now demonstrate that by launching an open international recruitment for a new permanent secretary, which gives me an opportunity to thank very much Sir Martin Donnelly for his fantastic work in helping build the new Department.

I congratulate the Secretary of State and his ministerial team on their appointments. Later today, the fourth industrial revolution will be debated in the Chamber for the very first time. Will my right hon. Friend commit to helping small and medium-sized enterprises involved in new and emerging technologies to export and to secure more overseas clients?

May I first congratulate my hon. Friend on securing a debate later this afternoon? The Department for International Trade supports cutting-edge British technology companies to take advantage of overseas opportunities. Working closely with industry partners such as Tech City UK, techUK and our network of international trade advisers, we assist SMEs to scale up, reach their export potential and win overseas business. Companies have the opportunity to take part in focused trade missions, key tech industry events and meet potential buyers, and we will be setting out new ways in which we intend to maximise that in the coming months.

The Secretary of State will be aware that, in the automotive business, the original equipment manufacturer focuses on the stability of its supply chain, which is typically sourced from many different countries. Has he identified those supply chains in the automotive sector in which the involvement of UK companies would violate country of origin rules once the UK has left the EU, and what advice has his Department given to those companies?

The country of origin complications is of course tied up with the point that was made earlier about the World Trade Organisation and the EU schedules. The WTO is still working on EU 15 schedules having not yet ratified EU 28, so the way in which it operates still has some way to go. The hon. Gentleman is quite right in looking at country of origin; it is one of the issues that the Government will look at as a whole when considering the options for our future relationship with European Union and outside.

T2. Despite the difficult political situation with Russia, there are still many British companies exporting to Russia and investing in that country in sectors not affected by sanctions. Bearing that in mind and also the need to prepare for a post-sanctions relationship with Russia, will my right hon. Friend ensure that an appropriate trade envoy is appointed for this very important country? (906176)

I am grateful for all job applications—formal and otherwise. Whether we have a post-sanctions relationship with Russia will depend on Russia’s international behaviour, and we can only look forward to that business opportunity when we get the appropriate international behaviour by the Putin regime. When that occasion arises, if it does, I am sure that my hon. Friend has now made his well-known interest in that area a formal job application.

The latest quarterly review published by Scottish Engineering shows a slump in orders, a sharp fall in output volume and a drop in employment levels, with companies blaming the uncertainty caused by the decision to leave the EU. Can the Secretary of State tell us what he expects the effects will be on Scottish business exports if the UK withdraws from the single market?

Industry dislikes uncertainty, as the hon. Lady says, but I would add two uncertainties into the equation. The first is the uncertainty over Scotland’s fiscal position. We have seen the deterioration in the position, which makes me very grateful that the people of Scotland took the sensible decision to remain in the United Kingdom. The second is the uncertainty posed by the Scottish Government and their constant reference to a second independence referendum. I can think of no greater cause of uncertainty for Scottish business investment.

T3. Can my right hon. Friend, whom I congratulate on his appointment, confirm that were we to remain in the EU we would stand little prospect of trade deals with the two largest countries in the world—India and China? China is not agreeing to open negotiations with the EU and India has broken them off. Outside, we can follow the example of Switzerland, which already has a free trade agreement with China and is going ahead to negotiate one with India? (906177)

Switzerland is still negotiating its trade agreement with India, but my right hon. Friend is correct that leaving the EU will give the UK greater freedom to strike its own trade agreements, including with some of the largest and fastest-growing economies in the world. As he will well know, these will not necessarily be straightforward, as these countries are tough negotiators, but it would be much simpler to negotiate a bilateral agreement, and they have shown greater willingness to negotiate a bilateral deal outside the complications that sometimes come with an EU free trade agreement, which is often a political agreement rather than a pure FTA.

Switzerland also has its own unique selling point, called Roger Federer. Just thought I would mention that.

The Japanese Government have thrown a huge cold bucket of water over Brexit, with their announcement that UK investment from Japan might be threatened. Is not access to the single market key to calming Japanese nerves?

I had a constructive meeting with the Japanese ambassador earlier this week. It might be worth reiterating what he said in his “Today” interview:

“There is no indication so far I have received from Japanese industries that they are contemplating an exit from the UK economy because they like it here and they have benefited from working in the UK.”

That will continue because the economic fundamentals of this country remain extremely strong thanks to this Government and no thanks to the Opposition.

We know that politicians love to don high-vis jackets, walk around factories and stand next to manufacturing goods, but the reality is that 79% of our exports are in services. The UK is the world’s second biggest exporter of services, and all the most successful export nations play to their strengths. Will my right hon. Friend assure me that, in setting the strategy for his Department and choosing personnel and trade missions for the future, he will focus on services as much as on goods?

I will not call people for topical questions if they abuse the system. The hon. Gentleman is a very good parliamentarian, and that question was not just too long but far too long.

My hon. Friend makes a good point. I met him in July in his capacity as joint chair of the all-party parliamentary group on trade and investment. He is right that services are vital to our economy. They provide 78% of our GDP and 80% of our jobs. It was often a frustration with the EU that it failed to deepen the single market in services. It is important to realise that we are talking not just about financial services but about digital and other services. We will make sure that they are all at the heart of our efforts as we move forward into the free trade world.

Following the questions asked earlier by my right hon. Friend the Member for Warley (Mr Spellar) and my hon. Friend the shadow Secretary of State more recently, has the Secretary of State met representatives of the UK automotive industry? If so, what clarifications have they sought and what have been his responses, and if he has not, when will he do so?

The UK has a highly successful automotive industry, and Ministers are seeking input from that industry on an ongoing basis in order to make sure that we are very attentive to the needs of that industry. I cannot stress too much the importance we attach to the automotive industry. It is one of our leading and most fabulous industries, as evidenced not least by the fact that nine out of 11 Formula 1 racing teams choose to come and build their cars in this country.

Order. I know that we have overrun, but I want to accommodate remaining questions if they are extremely brief.

T5. Pendle is home to a number of key aerospace businesses, such as Rolls-Royce. What discussions has my hon. Friend had with the aerospace sector to ensure that we continue to support this vital industry? (906179)

The Government, with industry, are working with the Aerospace Growth Partnership to boost growth and exports. Together we have committed £3.9 billion to aerospace research up until 2026. I will shortly be visiting Rolls-Royce in Derby, and I look forward to holding a separate round-table meeting with aerospace companies later this month in Toulouse.

The Secretary of State will know that there is a very healthy all-party manufacturing group. Will he come and speak to us soon, and also look at our Manufacturing Commission and our campaign, Exported by Britain? We would love to talk to him.

On behalf of the team, I will give full agreement to that. If I am unable to do that because of diary commitments, another member of our ministerial team will certainly do so.

T6. We heard this morning about a focus on the positive opportunities for free trade with the Commonwealth and Australia. Does the Minister agree that that gives a great opportunity to reassure businesses in our constituencies that this Government can make a great success of the bold choice made by our voters? (906180)

As my right hon. Friend the Secretary of State has made clear, we are encouraged by comments coming from across the Commonwealth, from leaders and Ministers of countries such as Australia. Several additional ministerial visits are planned in Commonwealth and non-Commonwealth markets—for example, Australia, New Zealand and Singapore. I will be in South Korea and Taiwan, and other Ministers in China, Japan and Vietnam in the coming months.

I warmly endorse what the Secretary of State has just said about Russia. I am glad he is adopting that attitude, but may I urge him to extend the same attitude towards North Carolina? I think it bizarre that he has opened a new office in North Carolina, when Deutsche Bank, PayPal and a string of other businesses and many US states are boycotting North Carolina because of its ludicrous homophobic new policy in relation to transgender people.

I made the point earlier that what we need to do to provide certainty about jobs and profits in the United Kingdom is to be in the markets where we have the greatest maturity and the greatest potential for value. That means, in the United States, not just looking at the established areas where we have personnel, but looking to where we have growing markets that can prove to be of value to the United Kingdom, its people and its businesses.

Given that in two decades’ time, one in four people on this planet will be African, will my right hon. Friend give an assurance that his Department will focus on trade in Africa, because that is a sure way to keep the economies of that continent fully functioning and stable?

My hon. Friend is right. We will also require to see greater co-operation between Government Departments and a cross-Government approach to Africa. I expect to make an announcement shortly about a joint visit by myself and the Secretary of State for International Development to Africa in the coming months.

I am most grateful to the Secretary of State and to colleagues. There is no shortage of demand in this session, and I dare say that that will continue.