Future International Trade Opportunities

Debate between Gareth Thomas and Angus Brendan MacNeil

Wednesday 1st May 2019 Westminster Hall

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I congratulate the hon. Member for North Warwickshire (Craig Tracey) on what so far has been an interesting debate. I gently remind the House of the promise that the International Trade Secretary made to have signed some 43 trade deals by the end of March 2019. Not surprisingly, that has not been achieved, and we are some way from seeing those 40 so-called roll-over EU trade agreements signed. That is an indication of the complexity of trade. While, as the hon. Member for Hornchurch and Upminster (Julia Lopez) alluded to, many things can affect future trading opportunities for British businesses, the instability of not having sorted out proper trade agreements with both the European Union and other key markets is likely to inhibit the international trading opportunities for British businesses.

I raise in particular concerns about trade in services, because the vast majority of the jobs done by my constituents that directly involve international trade are related to services. The few bits of detailed thinking from independent trade experts about the impact of Brexit on trade in services highlight the huge significance of such trade between the UK and the EU, and therefore what is at risk, in terms of scale, for the UK economy from any inhibitions of trade in services.

In 2017, according to the Centre for European Reform, services accounted for some 45% of total UK exports, or almost £300 billion. The EU received 40% of those exports, the highest proportion of any UK trading partner. Research by the Centre for European Reform suggests that if Britain leaves the single market and trades services under the provisions of an ambitious free trade agreement, on an annual basis UK exports to the EU of financial services will none the less be 60% lower, UK exports of insurance and pension services will be almost 20% lower, and exports of other business services, including law, accountancy and professional services, will be 10% lower. Those are all sectors in which Britain has a significant comparative advantage, so jobs, investment and tax revenues are all at risk in the case of withdrawal from the single market.

[Angus Brendan MacNeil]

I am grateful to the hon. Gentleman for giving way on that point, which leads me to the point raised by the hon. Member for North Warwickshire (Craig Tracey). The stats he just gave lead to the 6% damage there would be to GDP. When I pointed out that we would need 30 or 40 America-style agreements, he said we can find more countries and more deals. The only problem is that the USA is a quarter of the world’s GDP, so we would need seven to 10 planets to make up for the damage the UK is inflicting on itself with Brexit.

[Gareth Thomas]

I agree; the hon. Gentleman makes a good point. Without dwelling on that point, the CER report helpfully points out that it is significantly more difficult to open services markets than goods markets to trade, because many barriers to trade are regulatory in nature. The quality and safety of a service is difficult to decide at the border.

As I pointed out in my intervention on the hon. Member for North Warwickshire, no group of countries has gone further than the European Union in making it easier to sell services produced in one country in another in a bloc, yet still barriers remain. Therefore, pulling out of the single market and negotiating a free trade agreement, however ambitious it ultimately is, would inevitably throw up new barriers to trade, particularly if we withdraw from the EU’s collective rulebook, shared institutions and cross-border enforcement regimes, as it appears the Prime Minister wants. Some of the impact of withdrawal from the single market for services could be offset with, for example, significant mutual recognition of qualifications and—more controversially—the temporary movement of people.

It is not fashionable to worry about the future of financial services—the case for further regulatory reform of the industry can easily be made—but it remains one of the few world-class industries we have in the UK, and it is clearly set to be damaged significantly, putting jobs in my constituency at risk. For that reason, I urge the House to vote for us to stay in the single market as part of a soft Brexit deal, put back to the British people in a public vote with the option, nevertheless, to remain in the EU.