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Leaving the EU: Tariffs

Volume 618: debated on Tuesday 13 December 2016

1. What steps the Government are taking to protect industries based in (a) East Lancashire and (b) the UK from the potential effect of tariffs after the UK leaves the EU. (907816)

My Department is working closely with the Department for Exiting the EU to understand the impacts that leaving the EU will have on businesses, consumers and other economic actors across the UK, including in east Lancashire. As the Prime Minister has said, we will work hard to get the best deal for Britain.

Although not quite as eye-catching as the motor industry, the construction products, furniture-making and chemical industries, represented by Crown Paints, J & J Ormerod and others in my constituency, employ more people. Will my hon. Friend ensure that these strategic industries to east Lancashire can trade on no less favourable terms than any other industry following Brexit?

As my hon. Friend will know, I am closely involved with the construction products sector, and the construction industry in general, through the Construction Leadership Council. It would be premature to comment on any deal to be struck, but he can take it from me that it has my closest attention, as does the future of the construction industry itself.

As a fellow MP for Rossendale, I echo the comments and concerns about leaving the EU and what the tariff framework would be if there was a hard Brexit. When I visited Simon Jersey, which did the formal wear for our Olympic team, I was told that the cliff-edge tariffs on textiles are between 9% and 12%. This is a real concern. What assurances can the Government give to companies that they will not be taxed out of business through leaving the EU?

As I have said, it is premature to give any kind of assurance. What is striking, though, is the amount of new investment that has been taking place in this country, irrespective, one might think, of any concerns about Brexit. That includes investments in BAE Systems, Nissan, Jaguar Land Rover, Honda, Associated British Ports and many other large industrial players.

Will my hon. Friend explore how World Trade Organisation-compliant tariff drawback mechanisms and inward processing measures can ensure that the objectives of my hon. Friend the Member for Rossendale and Darwen (Jake Berry) are met?

That is a formidably technically sophisticated question, for which I thank my hon. Friend. I think that it probably lies to be answered between ourselves and the Department for International Trade. We will certainly consider it carefully.

Food production and food processing is an important part of the north-west economy that is not necessarily susceptible to export beyond the European Union because of different consumer tastes and preferences in the rest of the world. What negotiations are the Government considering or already undertaking to protect this important industry? Can the Minister confirm that specialist negotiators who understand the industry are in place to carry out those negotiations?

That question is really as much for the Department for Environment, Food and Rural Affairs as it is for us. Nevertheless, it is true that tastes are expanding around the world, and therefore one sees every opportunity for British food producers to expand their world markets in the days to come.

Given that we have a massive trade deficit with the European Union, surely it would be economic suicide for the EU not to agree a free trade deal with us. However, Civitas has calculated that if it did go down that line, British business would have to pay about £5 billion a year in tariffs under WTO rules to access the EU market, and EU businesses would have to pay about £13 billion in tariffs to access the UK market. Given that, could we not agree to cover all tariffs for British businesses exporting to the EU, so that they do not have to pay anything, and still be quids in?

Alas, long experience has taught me to distrust some of these speculative estimates of cost and benefit, so I will not comment on that.

We are all aware that the cross-border trade between Ireland and Northern Ireland is absolutely vital, and if tariffs are put in place, it could be a complete disaster. Can we please make sure that the Northern Ireland voice is heard and embedded in any negotiations?

I assure the hon. Gentleman that that question is being taken extremely seriously in my Department. Northern Ireland is an area for which I have a ministerial responsibility. I have met, on several occasions, Northern Ireland Economy Ministers and senior figures in industry there. We will continue to look at this question very closely.