Future International Trade Opportunities

Debate between Angus Brendan MacNeil and Stewart Hosie

Wednesday 1st May 2019 Westminster Hall

[Stewart Hosie (Dundee East) (SNP)]

I shall be brief; I love these one-hour debates, but we are now seeing the limitations of them.

I agree with the hon. Member for North Warwickshire (Craig Tracey) in one or two regards: we will most certainly face stiff competition, there will be substantial growth outwith the EU, and there is a range of opportunities. Where I disagree with him is that I do not believe we are ready. In terms of the opportunities that exist—as I will explain later, and as my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), who is Chair of the Select Committee, said—I do not believe that they will fill the gap we are about to create.

Along with many Members, including the hon. Member for North Warwickshire, I am keen to talk about services in this regard; they have been ignored so far in the debate over customs, tariffs and checks at the border. They are the largest part of our economy and they are a substantial minority of our total exports, but the starting point about services does not fill me with confidence. If one looks at the Swiss deal, the House of Lords report said:

“Most trade in services, which make up 52 per cent of all UK-Swiss trade, is not covered by the deal.”

Lord Boswell went on to say that the deal with Switzerland

“in many aspects differs significantly from the EU-Swiss agreements it replaces.”

Likewise, after the deal with Norway was announced it was confirmed that it did not cover service trade or technical regulations for food, animals or plants. If we cannot replicate in the continuity agreements what we already have with friendly trading partners, it does not augur well for cutting new and innovative deals. I hope the Minister will say a word or two about how he intends to get around that obstacle when we start negotiating in earnest.

[Angus Brendan MacNeil]

My hon. Friend was very kind, when he started his speech, in agreeing with the hon. Member for North Warwickshire (Craig Tracey). I am sure there is much to agree with, but I would like to pull the hon. Member for North Warwickshire up on the point he made about Scottish independence and the SNP. Scotland is not talking about walking out of trade blocs or ripping up trade agreements; it is talking about completing the process of political devolution, which would be independence. A country that has done that already and devolved from the UK—namely Ireland—is now in a trading bloc that represents about 22% of global GDP and it has an equal voice, while Scotland is stuck as a hostage in a little place that represents only 4% of global GDP.

[Stewart Hosie]

My hon. Friend makes his point himself; I will not spend time agreeing with him, although I do entirely.

The Swiss and Norway continuity agreements demonstrate what happens when negotiations take place from a position of weakness. In the EU-US negotiations we have seen the US adamant that agriculture would be included in any deal, but the EU trade commissioner Cecilia Malmström told the US trade representative that they could not negotiate on agriculture. She has been quoted as saying:

“We have made very clear agriculture will not be included.”

She can do that from a position of strength. My great concern is that the UK is negotiating from a position of profound weakness, as evidenced by the failure of the continuity agreements, meaning that we may well face all the downsides of the US and others seeking an agricultural deal that will weaken food, hygiene and environmental standards. How does the Minister respond to that? It would be useful to know.

I finish by making a key point that was mentioned by my hon. Friend the Member for Na h-Eileanan an Iar when he talked about export figures. The National Institute of Economic and Social Research suggested that any Brexit would see a loss of around 20% in total UK trade. Cutting a deal with the main English-speaking economies would see an increase of 2% to 3% and cutting a deal with the BRIC countries would see an increase of 2% to 3%. If we lose 20% of our total trade, the best we can do with the biggest economies in the world is to claw back maybe 5% or 6%. It is a pretty bad starting point. How does the Minister intend to ensure that there is a real focus on filling the gap and making sure that no part of the country, no part of the economy and no workforce is sacrificed on the altar of Brexit ideology?

Trade Bill

Debate between Angus Brendan MacNeil and Stewart Hosie

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 17th July 2018 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I should like to speak to new clause 20, which is in my name and those of my hon. Friends. I shall also speak to new clauses 22, 23 and 24 and make brief reference to new clause 21. New clauses 20 to 24 combined are an attempt to provide and further strengthen a comprehensive framework for future trade negotiations. This is to ensure that the devolved nations are respected, consulted and fully engaged in trade deals, and that their voices and national interests are properly reflected in trade deals, from determining the negotiating mandate right through to reviewing progress on deals after ratification and implementation.

That is important because although the UK devolution Acts grant Westminster full power over international trade, the domestic impact of many trade agreements extends beyond the competence of Westminster. The devolved Administrations have responsibility for a broad range of policy issues including health, education, agriculture and the environment, and many modern trade agreements include provisions with the potential to lower environmental standards, open up public services to privatisation, expand intellectual property rights or risk increasing the cost of medicines. Those agreements can encroach on the devolved Administrations’ policy space, restricting their ability to make public policy in those areas. That is something that none of us wants to see.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

My hon. Friend is making an important point, and he is not asking to reinvent the wheel. In Canada, the International Trade Committee heard evidence from John Weekes, who is an ambassador to the World Trade Organisation and also a Canadian negotiator. He said that squaring off the provinces of Canada, though adding to complexity, made for better trade deals and a more harmonious Canada. Canada is obviously more interested in keeping itself together than the current United Kingdom is.

[Stewart Hosie]

My hon. Friend the Chair of the International Trade Committee makes an important point. We have already seen the impact of sub-state Parliaments in Europe on previous European trade deal discussions. Indeed, my hon. Friend is right that we have seen the impact of provincial governments in Canada, and we would do well to take that on board here. In a sense, that is what my new clauses are about.

New clause 20 sets the role of the devolved Administrations in helping to approve the negotiating mandate. It suggests that a joint ministerial committee on trade be set up with representatives from all the devolved Administrations, that that committee be required to reach consensus on any draft negotiating mandate, and that it be revisited if the mandate changes during the negotiations. New clause 20 also requires that the consent of the Scottish Parliament and the other devolved Administrations be secured specifically for areas under devolved control that may be affected by a trade deal. That is not a veto, as the Labour Front-Bench team would describe it; it represents responsibility for the areas that the devolved Governments have responsibility for. In short, new clause 20 ensures that any negotiating mandate is first approved by the devolved legislatures and that a joint ministerial committee is created to co-operate and agree the mandate.

--- Later in debate ---

[Barry Gardiner]

I am pressed for time. I know that you want me to conclude my remarks very shortly, Madam Deputy Speaker.

While other amendments are about consent before the making of regulations implementing obligations arising under a trade agreement, that clause would prevent the trade agreement from ever having legal effect, as it could not be ratified unless the devolved authorities had consented. It has been carefully worded, but its intent is clear: it is not limited only to matters of devolved competence, but covers all trade agreements in their entirety even if no aspect of that agreement would touch on devolved competence and even if absolutely no regulations were required to implement that agreement. New clause 23(3)(b) would ensure that any trade agreement

“having an impact within the territory over which the devolved authority presides”

was subject to this consent power. Quite clearly, every single trade agreement will be, as there will be exporters across the UK who can trade under the terms of that agreement. It is a thinly veiled attempt at securing the Wallonian veto power that the hon. Member for Kilmarnock and Loudoun (Alan Brown) told us in the Committee was his intention.

The Committee took many more pieces of evidence. I will not detain the House with them today, but simply say that new clause 4 absolutely respects the devolution settlement. It sets out the right relationship so that Government cannot overreach into devolved competence nor the devolved authorities reach up into powers that are reserved for this sovereign Parliament.

I also support new clause 19, but I will not detain the House any longer.

[Stewart Hosie]

I shall speak to amendment 25 in my name and to amendments 26, 27, 28 and 29. New clause 21 is in this group, but I referred to it earlier so will not do so again now.

First, however, let me make an observation about the Labour party’s position. It seems to rely on the new form of words that the UK Government would not normally legislate or do this or do that in relation to anything that was a devolved competence. If we were talking about normal, reasonable people in normal, sensible times when they did not interfere at all except in extremis, perhaps we could accept that. However, they have taken the Scottish Government to court to undermine a democratic decision of the Parliament, so, of course, we accept the principles of devolution, but to make them work there now must be formal arrangements and consent must be sought. We can no longer rely on the formulation of the UK Government not normally doing x, y or z.

[Angus Brendan MacNeil]

Does it not also show, sadly, a centrist approach from the Labour party, which cannot adopt the maturity of Trudeau’s Canada and scoffs at the fact that Belgium is not such a control-freak state that it can allow Wallonia some say in the governance of Belgium?

[Stewart Hosie]

“International” only goes so far—perhaps just to the white cliffs of Dover.

The Trade Bill among other things ensures that the UK can implement any procurement obligations that arise from it being a member of the GPA—agreement on Government procurement—in its own right and ensures that agreements with partner countries corresponding to the EU’s free trade agreements are in place prior to Brexit. If that is all the Bill did, and it maintained all the rights and responsibilities, it might not be great, but it would make sense and probably go through on the nod. The problem is that it goes further than that: it carries on from the provisions in the EU withdrawal Bill limiting the actions of the Scottish Government and other devolved Administrations in areas that are, or ought to be, devolved, and—this goes to the first point about the GPA—that includes procurement.

That is why when the Scottish Government lodged a legislative consent motion in the Scottish Parliament initially, it explained their objections to the Trade Bill with the recommendation that Parliament could not consent to it being introduced. While they welcomed the powers being conferred on Scottish Ministers, the LCM made it clear that they could not accept the constraints placed on the use of those powers, which were analogous to those in the EU withdrawal Bill.

Legislative consent is required for part 1 of the Bill, but is not required for some of the other parts. Specifically, consent is required for the purposes within the devolved competence of the Parliament, which is that the Trade Bill seeks to maintain continuity in the UK’s trade and investment relationships through two implementation powers: implementation of the agreement on Government procurement as an independent member of the WTO; and assisting in the transition of current trade arrangements by enabling, so far as may be required, the implementation in UK domestic law of trade agreements the UK intends to conclude after withdrawal from the EU. These powers may be exercisable within devolved areas, and that is why this is important.

Budget Resolutions

Debate between Angus Brendan MacNeil and Stewart Hosie

1st reading: House of Commons
Tuesday 28th November 2017 Commons Chamber

[Stewart Hosie]

I agree with the first part of that intervention entirely. The big story from the Budget was that the growth figures were marked down over the entire forecast period that productivity per head was almost halved for that period and that pay growth was marked down, which has an impact on real people. As for a debate, we have been having debates about the productivity conundrum and growth since before I was an MP, and given that I am now about 110, that was some time ago. I suspect that we need to look at the work that has gone into the White Paper. Let us get behind the things we can support and make suggestions when we can improve things—my goodness, there are some we can most certainly improve—but we do not need to go back to the drawing board again.

I think that each and every one of us, if given a blank piece of paper, would come up with broadly the same plan with regard to fairness about investment, infrastructure, education, and supporting R and D and exports. I do not think that there is anything particularly new there. The question for me is: can we deliver that this time, or will this be to no avail if Brexit undermines the potential of any of these plans?

[Angus Brendan MacNeil]

Both Labour and the Conservatives recently voted in this House to come out of the customs union. That will increase trade barriers with 27 countries, as well as another 67 countries that rely on 38 to 40 other deals with the European Union, so we stand a very real risk of increasing trade barriers with up to 94 countries. Surely to goodness that is putting an already perilously placed UK in an even more perilous position? That was supported by the Labour and Conservative parties, hand in hand, damaging together.

[Stewart Hosie]

My hon. Friend is right. Every single assessment that we have seen, starting with the leaked Treasury document of a couple of years ago, says that the worst-case scenario—if there are tariffs, other regulatory barriers and an immediate reversion to World Trade Organisation rules—is a 10% hit on GDP, full stop, before we start. I do not understand why anyone—even Tories, and certainly the bulk of the Labour party—voted to come out of the customs union. That was an idiotic thing to do. If we must leave at all, we should look to have the closest possible formal links, so that we maintain as much trade as possible on current terms.

--- Later in debate ---

[Stewart Hosie]

Of course, leaving the world’s most successful trade body and access to half a billion customers, tariff-free, would be an idiotic thing to do at any point. The fact that we are doing it now—and, more importantly, unprepared—is key. I will say a little more about that.

The existing trade agreements that are being discussed are vital if our economy is to thrive. The Government have suggested more support for exporters to new markets, but that seems to be at the expense of the trade routes that companies already have. To put some flesh on the bones of the last intervention, the EU accounts for 43% of the UK’s goods and services exports, and 54% of imports. The UK Government have failed in their intention of starting to negotiate the future economic relationship with the EU at the same time as negotiating the divorce settlement. The delays in the first phase of the negotiations are deeply worrying and undermine the plan. We risk approaching a Brexit deadline without having concluded negotiations, and without a transitional arrangement.

In case anyone is in any doubt about how our friends in the EU view this, Federica Mogherini has said:

“It is absolutely clear on the EU side that as long as a country is a member state of the EU, which is something that the UK is at the moment…there are no negotiations bilaterally on any trade agreement with third parties. This is in the treaties and this is valid for all member states as long as they remain member states until the very last day.”

We have heard all the rhetoric from the Trade Secretary, who has conceded that his staff do not have the ability to cut the deals. At the same time, the EU is continuing talks with multiple countries across the globe, including Australia and New Zealand, which many Members point to as post-Brexit allies. That means that we will be playing catch-up with the EU’s trade policy, and it will take years—possibly decades—simply to replicate the arrangements we already have, if we can even do that. Doing so is vital to the trading future of Scotland and the UK and to our future economy.

Another point to make about the EU concerns the free movement of people. Part of the plan is to attract the best and brightest. In my view, we must not just continue to attract them, but keep the ones we have. The 128,500 EU citizens employed in Scotland contribute some £4.2 billion to the Scottish economy. We must not send a signal to people—to those who are here, to those from the EU or around the world who want to come here, or to those who seek the collaborative partnerships in research and development contained in the plan—that the door is now closed. That would be catastrophic, whether it is said officially or that impression is given. It would add to the potential loss of 7% of gross value added to Aberdeen, of 6% to Edinburgh and of 5.5% to Glasgow—a £30 billion loss of GVA to the cities of the UK alone. We will therefore continue to defend Scotland’s economic interests now and in the future, and we will prioritise maintaining membership of the single market and the customs union for Scotland—and, so far as I am concerned, the free movement of people, on which this plan, to a large measure, is predicated.

I do, however, welcome much of what the Secretary of State has said alongside the publication of the industrial strategy, which aims to tackle the productivity slowdown and address the challenges and opportunities brought about by technological advance. We agree with many of the five foundations of productivity that he has laid out and many of the key policy areas that he has suggested, including raising R and D investment to 2.4% of GDP by 2027 and the increase in R and D tax credits rate to 12%, as well as the £725 million industrial strategy challenge fund.

We also welcome some of the smaller things, because although many of them are England-only or England and Wales-only, they are still good for the Secretary of State to do. They include the introduction of the T-levels, the additional money for maths, technical and digital education, and the £64 million for retraining. We welcome many investment announcements, including for infra- structure, broadband, energy and transport.

We would not disagree with the four main challenges—artificial intelligence and the data revolution; clean growth; mobility; and an ageing society—although I am rather at a loss to see how the Government can trumpet clean growth when they have refused for a decade or more to address the challenge of the imbalance in connectivity to the grid, which damages the potential of offshore wind in the north-west of Scotland. If the Government could finally resolve the imbalance, which means that a charge is paid by the Western Isles whereas central London receives a subsidy, there might be unequivocal support for the policy of clean growth.

[Angus Brendan MacNeil]

My hon. Friend brings up a fantastic point, on which his view is shared by the SNP and the Scottish Government. The UK Government choose to penalise the place where the wind resource is, but unfortunately the wind just will not blow at the whim of the bureaucratic pen of the UK Government. I would have thought that they would have realised that after all these years.

[Stewart Hosie]

One would have thought so, given the number of times the Government have been told that this is an ongoing problem. I could almost repeat it verbatim: there is £23 per kWh charge in the north-west of Scotland and a £7 per kWh subsidy down in the south of England. At some point soon, now that the Government have a clean energy strategy as part of the future economy, I hope that even they might think to address that fundamental inequity.

I want some real joined-up thinking. I know that the industrial strategy recognises, as the Secretary of State said in his statement yesterday, the contribution of the Scottish Government and the other devolved institutions. It is worth putting on record that the Scottish Government already have an economic strategy, with strategic plans for trade, investment, manufacturing, innovation and employment. Following the recent enterprise and skills review, they are aligning their agencies and resources behind those plans. The UK Government should have such a joined-up approach.

The Scottish Government are taking action to support the economy and to counter some of the uncertainty brought about by Brexit, despite the real-terms Budget cuts. This includes the £500 million Scottish growth scheme to target high-growth, innovative and export-focused small and medium-sized enterprises. The first tranche of that money was delivered in June, and a further tranche will be made with an expansion of the SME holding fund, along with the leveraging in of private capital. The Scottish Government are also taking forward infrastructure investment plans, with projects valued at more than £6.5 billion either in construction or starting this year.

In addition to the innovation and investment hubs in London and Dublin, the Scottish Government have established hubs in Berlin and Paris. They are maximising the opportunities there while also developing our existing presence in Brussels into a hub. That is important because there is no point in just supporting big businesses that already export. If we are ever to mitigate the potential loss of export trade with the EU, we need to have the people and resources in place to hold the hands of businesses and ensure that more of them start to export. The Scottish Government are establishing a new south of Scotland enterprise agency.

The Scottish Government are implementing a number of other measures, the most important of which is the roll-out of digital connectivity. Had the roll-out of 4G been left to the market and the UK Government, I understand that we would be about 60% of the way there. However, because of the additional hundreds of millions put in by the Scottish Government, we are at 95%, and we are driving forward the “Reaching 100%” project to deliver superfast broadband access to all residential and business premises by 2021.

[Angus Brendan MacNeil]

My hon. Friend is giving a long list of impressive boasts by the SNP Government, but he may not know that people on the west side of one of the smallest islands in the Outer Hebrides can get 48 megabits per second. I believe that central London and many other places cannot match what the SNP Government have achieved in the west of the highlands and islands of Scotland.

[Stewart Hosie]

That sounds to me like a pitch for inward investment for Barra, given what my hon. Friend says about 48 megabits per second. The whole point is that it is possible to deliver to some of the most remote communities the kind of access to technology that every business and individual needs.

We welcome the fact that the UK Government have published their industrial strategy, and we are committed to working with them to ensure that the strategy delivers the maximum benefits for Scotland. However, as my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) said yesterday, we are disappointed that the Scottish Government were not formally consulted ahead of the publication of the strategy, even though the White Paper recognises the critical role that the Scottish Government have to play. That is a worry in areas such as life sciences, in which Scotland is a world leader, because a sectoral deal seems to have been agreed without any consultation with the Government in Scotland.

We have set out our programme for government in Scotland, which includes a commitment to create a Scottish national investment bank to deliver infrastructure development, finance for high-growth businesses and strategic investments in innovation. That mirrors much of what the UK Government have said—[Interruption.] I am conscious of the time. I have had 20 minutes, but I will finish soon; I am sure there will be plenty of time for Labour Back Benchers. We are also committed to a transition to a low-carbon economy, as this is an important economic opportunity for Scotland.

Finally, let me make a point that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey also made yesterday. We welcome the plan and the substantial sums that are being invested, but we note that the £7 billion for the extension of the innovation fund will not to be spent until 2022-23. If it is important to spend that money, and it is, and if it is important to mitigate the damage that Brexit might do, and it is, I simply say to the Secretary of State that he should perhaps bring forward that spending.