As a member of the European Union, the UK currently participates in around 40 free trade agreements with more than 70 countries. These free trade agreements cover a wide variety of relationships, including economic partnership agreements with developing nations; association agreements, which cover broader economic and political co-operation; and trade agreements with countries that are closely aligned with the EU, such as Turkey and Switzerland. Of course, more conventional free trade agreements are also part of the package.
Businesses in the UK, EU and partner countries are eligible for a range of preferential market-access opportunities under the terms of the free trade agreements. Those opportunities can include, but are not limited to, preferential duties for goods, including reductions in import tariff rates across a wide variety of products, quotas for reduced or nil payments of payable duties, and quotas for more relaxed rules-of-origin requirements; enhanced market access for service providers; access to public procurement opportunities across a range of sectors; and improved protections for intellectual property.
For continuity and stability for businesses, consumers and investors, we are committed to ensuring that the benefits I have outlined are maintained, providing a smooth transition as we leave the EU. The Department for International Trade, the Foreign Office and the Department for International Development are working with partner countries to prepare to maintain existing trading relationships.
With just 64 days to go, will the Minister confirm that not only is there the well-known Brexit risk of catastrophic disruption to 44% of our country’s trade, but now, on top of that, a further 12% of our trade could be thrown into chaos because of the Government’s failure to roll over our 40 trade agreements with 70 countries around the rest of the world in time for exit day?
Does the Minister recall the promise made by his Secretary of State at his party conference in October 2017, when he boasted:
“I hear people saying, ‘Oh, we won’t have any’”
free trade agreements
“‘before we leave.’ Well, believe me, we’ll have up to 40 ready for one second after midnight in March 2019”?
Was that bragging not made worse when the former trade Minister Lord Price tweeted falsely in October 2017:
“All have agreed roll over”?
Will the Minister explain why expectations were raised so high back then, when today’s reality is so dangerously disappointing? Can he confirm that the leaked memo reported in the Financial Times was accurate, and that he has been warned by his officials that most of the deals Britain is covered by will lapse because there is no transition period to keep Britain under the EU umbrella once Brexit occurs? Does he agree with the Government official quoted in the FT that
“Almost none of them are ready to go now”?
As well as the 40 free trade agreements, there are more than 700 other trade-related treaties and mutual recognition agreements, so when will we get an accurate update from the Government on how many of those will lapse in March as well? Some 2% of our trade is via the European economic area free trade agreement, with Norway and Iceland, which has still not been settled for roll-over; Canada accounts for 1.4% of our trade; Turkey, with which we currently have a form of customs union, accounts for 1.3%; South Korea accounts for 1%; and Switzerland accounts for 3.1%. All these and more add up to £151 billion of export and import markets. Will the Minister confirm that if we do not roll over the trade arrangements we enjoy by virtue of our EU membership, the full range of World Trade Organisation tariffs will start to apply?
What is the real situation in respect of Australia and New Zealand? Are the press claims that a full free trade agreement has been signed accurate, or are these just mutual recognition agreements being passed off as FTAs? On Switzerland, can the Minister place full details of the allegedly initialled agreement in the Library of the House? It is still not clear which aspects of the existing UK-Swiss relationship are due to be replicated. Will UK-based firms continue trading into Switzerland on exactly the same basis, including the free movement of people, or are there differences? For example, can he rule out tariffs on imported Swiss goods from March?
If British cars are exported, could they face 10% WTO tariffs? What will the tariffs be on Norwegian salmon, Canadian maple syrup, and food and veg from Turkey? When will the Government start telling Parliament about these things? Is it not the truth that all these countries first want to know what the UK’s relationship will be with our largest trading partner, the EU, and that we have little hope of pinning down brand new agreements until we have pinned down that agreement? Will the Minister face reality, slay these fantasy unicorn promises, and admit that Brexit is not going well and presents a clear and present danger to the free trade agreements our economy desperately relies on?
That was a pretty long shopping list, and I am not in a position to answer all the hon. Gentleman’s questions, but I will make one point. I told him in Committee back in November that there was a wide range of reasons why some of these agreements had been challenging in many instances. For example, there have been changing incentives. If this House cannot make up its mind on what Brexit looks like, it will obviously be difficult for some of our interlocutors to decide whether we will be leaving the EU on 29 March. That said, a responsible Government make plans for any eventuality, and we are working extremely hard to make sure that the 40 agreements we have in place are available to those companies that use the preferences they guarantee.
I told the hon. Gentleman earlier that I believed the majority of these agreements would be in place by 29 March, and I continue to believe that, but it would not be appropriate to go into further details on an individual country basis, because these conversations are necessarily confidential, and our partners wish them to be confidential. To go into them, therefore, would not be proper. I am very happy to tell the House, however, that I believe we will have the majority of agreements rolled over, and it is absolutely our objective to have them all rolled over.
Finally, one small detail worth clearing up—it has been a matter of some press speculation—is that the Swiss agreement does not include any provisions on free movement.
It has always been very likely that the counterparties to these deals would want to keep them operable, as it is in their interests to do so, but may I highlight the stinking hypocrisy of the Labour party on this? It voted against adopting many of these deals in the first place—it voted against adopting the comprehensive economic and trade agreement in February 2017 and against adopting the EU-Singapore agreement in September 2018—and now Labour Members complain that the deals will no longer be operable next month. Does my hon. Friend agree that this shows the Labour party at its absolute worst on Brexit, with its members unable to agree among themselves, and unable to do what is in the UK national interest?
The Minister at least pays obeisance to, and I think has genuine respect for, etiquette, protocol and the principle of parliamentary courtesy, so it would not occur to him for a moment to descend into the swamp, disregard his ministerial responsibility to the House, and start prating on about the policy of the Opposition, but let us put it to the test and hear from the Minister.
First, let me pay tribute to my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) for all the work that he did in preparing this country for striking new trade deals, and indeed in maintaining the continuity of our existing free trade deals. He points out an inconsistency in the Opposition’s position on this matter. I agree with him that it is a fairly pointed one, and ask them to contemplate a bit. Yes, he is correct in his assessment.
The tiger that was previously in the library has now been removed, and the immediate danger has been averted. I think the Minister will be familiar with the Merchant Ivory film in which that exchange occurs. [Interruption.] It is fairly obvious, if one applies one’s mind to it.
My hon. Friend the Member for Nottingham East (Mr Leslie) asked a very simple and sensible question. The Minister’s long and rambling answer had a simple summary—clearly, it was no. The Secretary of State repeatedly told us that it was a simple matter to roll over deals on trade with approximately 70 countries, which constitutes 13% of our exports and 12% of our imports—it would be a cut-and-paste job. The Government would be ready on day one after Brexit, he told us. That was never true, was it? Those deals are entirely separate and independent from any deal that we may have with the EU.
If we leave with no deal, can the Minister confirm that these arrangements with third-party countries will fall away, as we have consistently warned? Will he confirm that, without new agreements in place, we could, in the absence of a deal with the EU, have no basis of trade with these countries after 29 March, and would fall back on World Trade Organisation rules? That is an argument for taking no deal off the table if ever there was one.
Will the Minister confirm that many of the terms of those agreements will need to be amended, and could be changed substantively as countries seek to improve on the terms that they have with the EU? Will he also confirm that agreements with countries that have economic partnership agreements are often regarded as being not fit for purpose and are alleged to have been signed under economic duress? The Minister will do well to listen to some of this, as this is the reality of what is going on in his Department. For example, North African countries want to sell their oranges and olive oil to us in far greater quantities than is allowed by the EPAs with the EU, which protect southern European producers.
In the Trade Bill debate in the Lords yesterday, the Minister conceded that the Department had no idea how many countries were ready to roll over their free trade agreements, how many would not, how many would have to adjust their constitutional arrangements, and how long that might take. Will the Minister for Trade Policy confirm that his colleague was right to say so?
The Secretary of State is busy socialising in Davos. Is that not a reminder of the incompetence and overconfidence that he has shown over the past two and a half years?
The hon. Gentleman opened his question by expressing his view that I had given a long and rambling answer. I am pretty confident that the question was longer and more rambling than my previous answer.
Will there be no basis of trade if we fall out without an agreement? No. There will continue to be the basis of trade that exists for everybody, which is the World Trade Organisation. [Interruption.] Indeed, I do confirm that. That is why we are putting such an enormous amount of effort into transitioning these agreements. Will the terms be amended? Yes; plainly, the bilateral partners with whom we are negotiating have different motivations. That is something that I have made very clear to members of the International Trade Committee when I have talked to them. That has led to some extension of the discussions that we are having, but many of those discussions are going extremely well. I reiterate to the House that I am confident that the majority of these trade arrangements will be put in place by the time we leave the European Union.
The hon. Gentleman also treated us to his analysis of EPAs, saying that they were not fit for purpose. He gave us the example of oranges. The last time I stood opposite him in a debate, he gave us the example of the difficulty that EPAs cause Ghana and its chicken, and indeed Tanzania and its fish. On the Ghana agreement, the fact is—I remember this—that chicken had been completely excluded from the EPA. The point about Tanzania and fish is not entirely relevant to EPAs, as there is no EPA with Tanzania.
My confidence is strong on this issue. I believe that we will have the majority of these arrangements in place. Yes, some of them are challenging. One or two of them are even more than challenging; they are close to impossible. Turkey has clearly been identified as an area where the issue of a customs union makes a deal with it very difficult indeed. I have made these things absolutely plain to the House before. However, I believe that we will have the vast majority of these other arrangements in place. We will protect our consumers and our businesses, which will be able to carry on using preferences.
Obviously, behind the debate about the concept of trade are jobs. What assessment has the Minister made of the number of jobs at risk if these agreements are not put in place? Has he identified the companies that will struggle? Is he working with the Department for Work and Pensions on contingency plans for those communities that might be particularly affected by any failure to roll over the agreements?
We are in constant contact with all the businesses that trade on these preferences; we have written to them many times. We have issued technical notices advising businesses on the steps they need to take to ensure that they are prepared for that scenario. Plainly, it is much better to have these agreements in place than not, but as I have just discussed with the hon. Member for Sefton Central (Bill Esterson), a change in the arrangements does not mean that trade with those countries will stop; it simply means that the terms will change. I believe that we are doing all we can and should to prepare businesses for some of the deals potentially not being passed, and we continue to do that.
The EU has 14 service agreements with third-party countries and blocs, which UK professional services companies benefit from. Notwithstanding potential tariffs, non-tariff barriers and other regulatory burdens, can the Minister confirm for professional services companies whether there is even the legal basis for that trade with third-party countries and blocs to continue?
As we have already made clear, it is entirely possible to trade on WTO terms. However, it is far more preferable to reach trade agreements with third parties, because then we can trade on a preferential basis that allows us access to markets, the lowering of tariffs and the reduction in non-tariff barriers behind the border, which makes life much easier for our companies.
I want to be absolutely clear with the House that although it is possible to interpret my last answer as meaning that there has been absolutely no progress on the agreements, that would be an entirely, completely and utterly unfair interpretation of where we find ourselves. There are agreements that have had initialling; there are agreements that are very close to having initialling; and there are very many agreements that we believe will have a signature at the appropriate time. There is not an agreement that has had a formal signature yet, but to focus only on that is to misunderstand, or at least mispaint, how these agreements work. I have said to the House that we believe that we will transition the majority of the agreements by exit day, which necessarily means that they will have a signature, and I have every confidence that they will.
To put this into perspective, is it not right that just five countries—Switzerland, Canada, Korea, Norway and Turkey—account for three quarters of UK exports to the 70 countries that the Minister mentioned? Does he agree that it is just a little tiresome that the Opposition are always revelling in highlighting problems and it might be more constructive if they wanted rather to help to work on some of the solutions?
My hon. Friend is correct in his analysis of the scale of these deals, and of course we are putting the most resource into the deals of the largest size. However, I want the House to be clear that we are also signatories to a great many development agreements—EPAs. While those agreements may not be of the greatest importance to the UK economically, they are enormously important to the participant countries with whom we have signed them, and we are putting effort into making sure that they are also transitioned.
I think that people outside this place listening to the Minister’s remarks will be troubled to hear him refer to a “shopping list” of countries. Many people’s livelihoods in this country rely on those countries. People will also be very concerned to hear that he has not today committed to honouring the promise that was previously made on each of these 40 trade agreements. Will he now confirm to the House that he will not be able to honour the promise of every single one being signed by exit day?
I am sorry that this is slightly like “Groundhog Day”, Mr Speaker, but I will repeat what I have said before. We are confident that we will roll over a majority of these agreements. We are working to try to ensure that they are all rolled over by exit day. There are clear indications that in some cases that is going to be challenging. Let me be absolutely clear: if I used the term, “shopping list”, and that was deemed in any way pejorative about any of these important deals, I wish to withdraw and rephrase it. It was simply shorthand for saying that there are a great many of them and they are all important to us. As I just said, EPAs are as important to us as the largest deals, simply because we understand that we have a role in the world in development and understand the importance of these deals to those countries. We also understand the number of jobs and businesses that rely on these preferences. That is another reason why we are so keen to get as many of the transition deals across as we can.
Shopping lists are actually quite important, as are people’s livelihoods. Is it not the case that these 40 roll-over countries represent just 12% of our trade? Can I tell the Minister that we are the biggest nation in Europe, and second in the world only to China and the United States, for investment, and we are the largest export market in the world for German cars and for French agriculture? Unlike remainers, who tend to be rather pessimistic sorts, I and most people are very optimistic about our future outside the European Union.
I thank my hon. Friend for his question. It is interesting to observe, and the House should understand, that a good proportion—I do not have the exact number in my head—of the 12% of trade that is represented by the countries with which the European Union has existing free trade deals is not carried out under preferences in any event because the particular lines in which they trade are not covered by the agreements, so the figure is actually quite a lot less. [Interruption.] The hon. Member for Huddersfield (Mr Sheerman) says from a sedentary position, “So it’s all just fine.” No, of course that is not the case. I have tried to make the point again and again that we regard this as extremely important.
On my hon. Friend’s reference to inward investment, Deloitte recently pointed out that the UK is the leading location in Europe for foreign direct investment. In the three years from 2015 to 2017, we enjoyed £140 billion-worth of direct investment from overseas—more than France, at £44 billion, and Germany, at £50 billion, combined.
We now know that we will not have 40 of these deals ready to roll over on the stroke of midnight. Some of these deals will be worth proportionately more than others, so it could be said that we have a majority ready to go, but they might be ones of very low value. Can the Minister give us more clarity about the most valuable of these trade deals?
Donald Rumsfeld’s words spring to mind in relation to roll-overs. We have the known knowns: the countries that are up for a deal, such as Switzerland. We have the known unknowns: the countries that have said yes to a roll-over, but the Government will not give us their name. And we have the unknown unknowns: the countries that will not tell our Government whether they will roll over the deals. For the sake of clarity, is the Minister willing to publish the names of countries that fall into those three categories?
To publish an unknown unknown seems challenging. I regard the Department’s job as putting all the effort it can into rolling these deals over. That is one of the many things we do, but it is a very important part of what we do. It is equally important that we allow British businesses to understand when and if there may be a real and present danger to the preferences that they use. When we judge that we are in a situation where that information needs to be disseminated, we will do so.
The hon. Member for Liverpool, Wavertree (Luciana Berger) was quite right to point out the seriousness of this issue. I am most grateful to the Minister for tackling this with equal seriousness. Can he clarify whether it makes a difference to the roll-overs if we leave with a deal, as I very much hope we do, or without a deal, which I could never support?
The Government policy, as my hon. Friend knows, is to leave with a deal, and I very much agree with that; it is by far and away the most sensible thing to do. I think most of the House will understand that if we have a deal and an implementation period, it takes the time pressure off and allows us to negotiate these deals in a more orderly fashion. Order has been created, and we are making progress, but if we have a deal and an implementation period, which is crucial to that, it will make negotiation of these deals a great deal more straightforward.
I feel sorry for the junior Minister. This must be one of the worst cases of neglect of duty since Nero fiddled while Rome burned. His boss is in the fleshpots of Davos, rubbing shoulders and having a lovely time, while he is slaving here at the Dispatch Box, on a day when the media tell us that many more companies are fleeing to Holland, Ireland and France. He is not trying to mislead the House—I am not saying that—but he is being very careful with his answers in terms of how many of these agreements have been signed. He is not giving any information to the House or our constituents, while his boss is having a lovely time in Davos.
I anticipated that that subject might arise, and I speculated that the timing of this urgent question was quite deliberate, for that very purpose. Let me tell the hon. Gentleman exactly what the Secretary of State is doing in Davos. Believe me, he has not taken his ski suit; he has taken his business suit. He met yesterday with the Israeli Government, from whom he elicited an agreement that our arrangements with Israel will be rolled over. He met the Egyptians, from whom he had a very positive reaction. He met with the Peruvians and the Colombians, and he further met with the South Korean Government. Today he will meet with the Ecuadorian Government, the Canadian Government and the South African Government, and later today—[Interruption.] The hon. Gentleman pretends to be playing a violin; I suppose he is saying that it is a sob story.
What I am trying to tell the hon. Gentleman is that the Secretary of State is in Davos doing exactly what this House would want him to do. He is at the negotiating coalface, ensuring that our partners in these countries who have not necessarily taken a no-deal Brexit seriously do so. He is incentivising them to sit down around the negotiating table, and he is making good progress. Later this afternoon, he will attend the trade stewards committee, where he will meet nearly every single trade Minister in nearly every single jurisdiction where we are attempting to create continuity in our trade agreements. I hope the hon. Gentleman will withdraw his implication that the Secretary of State is not doing his job, because that is exactly what he is doing.
There is a deal on the table that the Government have negotiated with the EU, and it provides a transition period that would provide certainty for all these trade agreements to be completed in time for our exit. It is my understanding, although I have not checked his voting record, that the hon. Member for Nottingham East (Mr Leslie), who has posed this urgent question, voted against that deal.
The hon. Gentleman voted against having a transition agreement because he voted against the deal. Does the Minister agree that it might be better for the hon. Gentleman to pose his urgent question to the leader of his own party and ask him why he did not engage in talks with the Prime Minister to get through the deal that would provide certainty for our businesses?
I thank my hon. Friend for her question, and as we have already discussed, there is plainly some very real inconsistency in the Opposition position. I point out to my hon. Friend that the hon. Member for Nottingham East (Mr Leslie) is a champion of free trade and actually spoke in this House in the debates on the EU-Japan EPA and CETA back in June, when I have to say he voted with the Government and, indeed, for the deals in that case, unlike his Front Benchers.
Businesses, including one in my constituency, are already moving operations to mainland Europe because of doubts about whether they will have market access to places such as South Korea. There are hints that we will focus on the higher value trade agreements and at least get them in place come Brexit day. However, if an SME’s trade is with one of the smaller countries, that is every bit as important for it and for the people it employs as the trade deal with South Korea. We need all 40 in place, and the Minister did assure us that that would happen. Has he not completely let down those people?
We have staff in post in all the markets where we are attempting to transition these deals. An enormous amount of internal resource has been applied to what we in the Department call TAC—trade agreement continuity. Indeed, we have taken resource out of parts of the other workstreams we do to concentrate on exactly this issue. We have been negotiating on all these agreements, not just the larger ones. There is of course a financial incentive to concentrate on the larger ones, for the sake of our own businesses and for the sake of employees and families who want to put food on their table. At the same time, however, there are small businesses, as I know perfectly well, that trade under the preferences enjoyed through EPAs. There are also developmental reasons why we want to continue those arrangements, because it is the right thing to do, and the hon. Lady may be reassured that we are putting effort into all these agreements.
I must say that I welcome the work the Secretary of State is doing out in Davos to push forward the UK’s trade policy. His work is certainly far more welcome than the pontification of the former Member for Sedgefield there. To put these deals into perspective, will the Minister confirm that the Swiss trade deal on its own is worth 21% of the value of all trade done under these 40 agreements?
The Minister waxes lyrical about foreign inward investment into the UK. May I remind him that, in north Wales alone, we have had two devastating announcements in the past seven days? Last week, Hitachi said that it is pulling out of Wylfa Newydd, a £16 billion project in north-west Wales, and today, Tom Enders, the CEO of Airbus International, said that it will pull out of the UK, including out of its Airbus factory in north-east Wales, if there is a no-deal Brexit. What type of message does it send out to current and future international trading partners and investors when the UK Government cannot successfully engage with some of the most successful businesses in the world?
It is a complex web we weave, and there are clearly incentives in many different directions for many different companies. I have every sympathy with workers in Wales and others who find their jobs threatened by the decisions that companies make. The UK Government continue to engage with those companies, and to try to mitigate any moves they may make. We engage widely through POST with the parent companies of many of those organisations, and we are doing everything we can to ensure that foreign direct investment continues in the UK. Indeed, the United Nations Conference on Trade and Development announced a week or two ago that the UK remains Europe’s primary choice for foreign direct investment.
The withdrawal agreement and political declaration are clear: we will be able to negotiate with third-party countries once we have gone through the process of withdrawal and after Brexit day, but we will not be able to sign and implement those agreements until the end of the implementation period.
Some 24 countries have lodged their opposition to the schedules on goods and services that we have placed with the World Trade Organisation. Does that indicate how complex it is to deal under WTO rules, and was it always misleading to suggest that it would be easy to have 40 trade deals ready on the day we leave the European Union?
There are, give or take, some 165 members of the World Trade Organisation, and if 24 object to new schedules laid by a new partner, that is a relatively small number and there is a well-understood formal process through which those objections will be dealt with. Most objections are on the basis of loss of privilege through the existing relationship with the EU—and therefore access to the UK—being changed, and such things are not unusual. Indeed, the EU operated on uncertified WTO schedules from 1995 until the present.
The Minister tries to reassure us by saying that a majority of these deals will rollover on Brexit day, but that is as reassuring as knowing that the majority of my constituents will not lose their jobs, or that a majority of businesses in my constituency will not shut down. For every deal that stops on 29 March, a business or businesses somewhere in these islands will suffer, and each deal that does not continue in its entirety after Brexit means that businesses lose money and go bust, and people lose their jobs. Is that the cost of this chaotic Brexit?
Nobody wants any family to be affected or anybody to lose their job as a result of us not being able to transition these free-trade deals, and that is why we are making every possible effort to ensure that all deals are transitioned. I have explained to the House why, in some cases, that is extremely difficult, but the Department is ensuring that every effort goes into ensuring as few adverse consequences as possible, and I am confident that the majority of the deals will be passed. It would help to ensure smooth continuity if Opposition parties were not so resolute in trying to vote down the Trade Bill.
Previously, the Secretary of State said that he would robustly defend the UK steel industry, yet a bombshell report today says that only half the steel bought by the UK Government comes from Britain. What is the Department doing for the UK steel industry, given that there is insufficient support from the Government at home?
The Department for International Trade will be responsible for the Trade Remedies Authority, when established. As the hon. Gentleman knows, the principal job of the TRA will be to ensure a level playing field internationally for products where there is potential for unfair international competition, as there is from several source countries. We are clear that the TRA must be in place as soon as possible, and as I said previously, it is not helpful for the terms of the Trade Bill to be blocked by all sorts of manoeuvres in both Houses. The Bill will allow us to establish the TRA, which will produce a robust defence of our industries, and particularly those that are most vulnerable, such as steel. I encourage him and his colleagues who represent areas of steel manufacturing, or indeed car manufacturing and ceramics, to get behind the Bill and put the TRA on a statutory footing, as it is there to help exactly those industries.
Bearing in mind that the EU has 36 other free trade agreements with non-EU countries, coupled with the £40 billion divorce settlement we look set to pay, could the Minister outline why he believes that we will not have access to those free trade agreements, other than some of the bitterness we have heard in this Chamber today, and how does the Minister intend to turn this bitter lemon into sugar-free lemonade?
I will be completely straight with you, Mr Speaker: I am not entirely sure that I totally understand the hon. Gentleman’s question, but I shall give it a go. There are a number of agreements that are negotiated exclusively between the European Union and third-party countries. Those are between the European Union and those countries, and we will not be a member of the European Union, and therefore will not be able to benefit from their preferences. The whole point of the trade agreement continuity programme is to transition those into a UK-only form, such that we can continue to benefit from those preferences.