Oral Answers to Questions
Liam Fox Excerpts(5 years, 2 months ago)
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Rehman Chishti (Gillingham and Rainham) (Con)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
How are you, Mr Speaker? It has been so long.
I met with Federal Councillor Guy Parmelin during my visit to Switzerland in February. Together we signed the UK-Switzerland trade agreement. This was an important moment, ensuring continuity of a trading relationship worth over £32 billion in 2017.
Rehman Chishti
I thank the Secretary of State for that answer. Recently we had the brilliant ambassador for Switzerland, Ambassador Fasel, visit my constituency looking at the potential for greater trade opportunities between our great countries. Can the Secretary of State clarify this point? He talks about continuity and I welcome the agreement he has signed but, on post-Brexit trading opportunities, the United Kingdom has identified the United States, Australia, New Zealand and trans-Pacific as key priorities. Can he confirm that Switzerland—our bilateral trade totals over £34 billion—will always be a key priority, certainly in looking forward to enhancing sectors such as finance and IT?
Dr Fox
The countries my hon. Friend mentions are for new free trade agreements, whereas of course the agreement with Switzerland was a continuity agreement. In fact, it was an unusual agreement because, rather than being a single agreement to roll over, there were some 58 different ones. It was to the tremendous credit of the Swiss Government that they were able to carry out that work as expeditiously as they did and we owe them a great deal of gratitude.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does not the Secretary of State realise that the Swiss deal is a tiny deal—nothing wrong with it, but it is tiny? Could we have a list of all the trade deals he has secured across the piece because, as I have been tracking them, they are very small indeed? May I also tell the Secretary of State that it was not his finest hour last night when he did not have the courage to take an intervention from the Father of the House?
Dr Fox
Sometimes one wonders how small people can actually become in this House of Commons. The Swiss deal is not small, it is not insignificant; it is worth over £32 billion a year. Switzerland is Britain’s seventh biggest trading partner globally. The hon. Gentleman should know that.
Mr Speaker
I do not want to invest levity into these important proceedings, but equally one must not lose one’s sense of humour. That £32 billion volume of trade with Switzerland is very important, but I always say the best thing about Switzerland is not its watches, its financial services or its chocolate; the best thing about Switzerland is Roger Federer.
Greg Hands (Chelsea and Fulham) (Con)
I must say that I am tempted to answer questions this morning due to the constitutional innovation of Ministers no longer having to resign when they disagree with Government policy, but I will ask this one. Trade with Switzerland represents about 21% of all the trade of all the countries that have the continuity agreement. Does my right hon. Friend agree that it shows the growing success of this programme and the importance of ensuring that we have those trade agreements in place in the event of a Brexit without a deal later this month?
Dr Fox
I half-expected to see my right hon. Friend on the Front Bench with us this morning given the turn of events, but he is absolutely right that this is an important agreement. Over 20% of all the trade done under EU trade agreements is represented by Switzerland.
Mr Speaker, it is unlike me to disagree with you, but I do wonder whether on the morning after Roger Federer has defeated Kyle Edmund it is not a touch unpatriotic to be quite so pro-Swiss.
Tom Brake (Carshalton and Wallington) (LD)
The Secretary of State may have heard an exchange a couple of days ago in which my right hon. Friend the leader of the Liberal Democrats highlighted the fact that, in the existing EU-Swiss trade deal, 19 technical standards have been brought in in common, whereas under the current UK-Swiss trade deal, only five technical standards have been brought in in common. What assessment has the Secretary of State made of the impact of that on UK business?
Mr Philip Hollobone (Kettering) (Con)
My understanding is that, of the 40 potential continuity agreements, five represent 76% of the total trade, of which Switzerland is one. Is not that a good omen for the remaining big four?
Dr Fox
Of course a number of those who are engaged in trade continuity discussions with the UK are waiting to see what we will do in terms of Britain’s approach to the EU. They will be much more likely to sign up to those agreements when this House of Commons is clear about what it is going to do.
Mohammad Yasin (Bedford) (Lab)
Sandy Martin (Ipswich) (Lab)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Government are considering their future approach to investor state dispute settlement. Where included in a trade agreement, ISDS will not oblige the Government to open the NHS to further competition, and overseas companies will not be able to take legal action to force us to do so.
Sandy Martin
The Secretary of State did not rule out the use of legal action against other companies in this country, so what message would he give to all those idealistic people who voted to leave the EU because they thought that the Transatlantic Trade and Investment Partnership would open us up to hostile lawsuits from US companies? Does he think that now that the truth is out they ought to have a chance for another vote?
Dr Fox
I am not sure what the connection was between some of those points. Let me be clear that, through ISDS, investment claims can be made only in respect of established investments; the mechanism cannot be used in relation to an alleged failure to open up public services to a potential investor. It could not be much clearer that what was being put about was a complete myth.
Dr David Drew (Stroud) (Lab/Co-op)
What guarantees can the Secretary of State give us that pharmaceutical companies will not relocate to the EU, meaning that in effect more and more of our drugs would be imported? Will he give a guarantee that that will not happen?
Dr Fox
It would be absolutely ridiculous of any Minister to try to tell businesses what they can and cannot do. I can tell the hon. Gentleman, though, that last year foreign direct investment into the United Kingdom rose by 20%; in continental Europe, it fell by 73%. The hon. Gentleman should draw his own conclusions.
Stewart Hosie (Dundee East) (SNP)
In the recent debate on international trade, I cited two examples of the Canadian Government’s having to withdraw public health measures after legal challenges by businesses under the terms of the North American free trade agreement. When the Secretary of State is considering health protections in future UK FTAs, will he ensure that they go wider than direct NHS provision and encompass wider public health policy?
Dr Fox
We will look to replicate the success we have already had in bilateral investment treaties. UK investors have successfully brought around 70 cases against other Governments. No private company has ever brought a successful case against the United Kingdom in respect of our bilateral investment treaties.
Judith Cummins (Bradford South) (Lab)
The British public are clear that they do not want our national health service to be bargained away as part of trade negotiations, and they do not want foreign companies to have the right to sue our Government for decisions taken in the interests of public health, yet that is exactly what could happen if we accept ISDS and the negative-list approaches in the future agreements that the Government are proposing. Will the Secretary of State now rule out agreeing to a single clause of a single trade deal that could threaten our NHS?
Dr Fox
There are days when I genuinely have to thank God that the Labour party is the Opposition and not the Government of this country. We have £1.3 trillion of outward stock invested, including things like pension funds that British people will depend on for their prosperity. Were we to abandon the concept of investor-state dispute resolutions, what would happen to the protections for our investment overseas? The Labour party needs to start to think about the wider interests of this country.
Ronnie Cowan (Inverclyde) (SNP)
Jo Platt (Leigh) (Lab/Co-op)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
Existing EU trade agreements, such as the EU-Canada comprehensive economic and trade agreement and the EU-Japan economic partnership agreement, contain provisions that ensure that it remains for the United Kingdom to decide how our public services are run. As we leave the EU, the Government will ensure that all future trade agreements continue to protect the UK’s right to regulate public services.
Ronnie Cowan
Technically, there is little that MPs and the public can do to prevent the Government from signing trade deals that could negatively impact on the NHS. Will the Secretary of State assure the House that he will expand the transparency and scrutiny mechanisms that pertain to any future trade deals?
Anneliese Dodds
Conservative Ministers chose to include the NHS in their approach to the Transatlantic Trade and Investment Partnership, which could have made it impossible to bring privatised NHS services back in-house. The Secretary of State will know that privatisation is proceeding apace in the NHS—it certainly is in my constituency, in our cancer-scanning services—so will he give us a cast-iron legal guarantee? That is what we will need to show that his Government are committed to excluding the NHS from future trade deals.
Dr Fox
Where do I start? First, this Government did not negotiate TTIP; the European Union negotiated it on behalf of this country, so it was not for the United Kingdom to determine the mandate. None the less, the hon. Lady should look at the agreements that are already out there. For example, article 9.2 of CETA talks about the exclusion of
“services supplied in the exercise of governmental authority”.
It is quite clear from what the Government included in the CETA ratification that we intend to make provision to ensure that Governments have the right to regulate public services. I think that is a good idea, so I cannot understand why the Labour party voted against it.
Jo Platt
The Secretary of State has publicly stated that he supports CETA as a model for future trade agreements—an agreement that prevents future Governments from tackling the failed privatisation agenda in both our health and transport services. Does he agree that trade agreements cannot be allowed to constrain future policy decisions?
Dr Fox
I do not know where that briefing came from, but the hon. Lady should ask for her money back. There is nothing in CETA that stops the Government regulating their own public services; that is specifically what the exclusion is for. It is in the interests of the country that we get Government regulation of our own public services so that we can have proper scrutiny, including through this House, and that is what is included in the agreement.
Kevin Foster (Torbay) (Con)
Last year I saw at first hand how the New Zealand Parliament handles the scrutiny of trade agreements to ensure that they deliver for the country’s economy and protect key public services. What learnings and reassurances is my right hon. Friend taking from the experience of the New Zealand Parliament in scrutinising trade deals and ensuring that they deliver their promised benefits?
Dr Fox
We have looked widely at what other countries are doing, particularly when they have similar legislatures and legal systems, but what we have set out in the Command Paper is a bespoke arrangement for the United Kingdom. For example, our consultation period is longer than the European Union’s because we thought that it was right to have increased scrutiny in the UK. It is a UK policy, made for the UK.
Tim Loughton (East Worthing and Shoreham) (Con)
Will Quince (Colchester) (Con)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
My Department is responsible for foreign and outward direct investment, establishing an independent trade policy, and export promotion. Following this session, I will be signing the trade continuity agreement between the UK and the Pacific Islands in the event of no deal. This is part of our commitment to reducing poverty through trade, and it will ensure continued supply of key consumer products.
Will Quince
There is a lot of scaremongering on this issue that is concerning a number of my constituents, so will the Secretary of State set out what steps the Government are taking to ensure that contracts for the delivery of NHS services will be excluded from future trade deals?
Barry Gardiner (Brent North) (Lab)
One of our most distinguished former diplomats, the noble Lord Kerr, spoke last week, during the passage of the Trade Bill in another place, of the value of having a mandate as a negotiator. He said:
“Having negotiated against Americans, I know that it greatly strengthens their hand to be able to say, ‘Here is the proof that I cannot give you what you want, because Congress would turn it down’.—[Official Report, House of Lords, 6 March 2019; Vol. 796, c. 671.]
Recently the US trade representative published the negotiating mandate for a US-UK trade deal—no concern about commercial confidentiality here, just openly and transparently setting out all the objectives they have for penetrating UK markets, with American healthcare and agribusiness to the fore. In the same week, the Secretary of State published his Command Paper. It is against mandates. Indeed, the Government tried unsuccessfully to defeat Lord Kerr and others who supported Lord Balmacara’s amendment. What does the Secretary of State know about negotiations that Lord Kerr does not, and will the Government try to reverse their lordships’ decision when the Bill returns to the Commons?
Dr Fox
The Trade Bill was and is about trade continuity, including trade agreements and including the Trade Remedies Authority. It has been used, I am afraid, in the other place to hold debates on future trade agreements that will come in due course here. There is of course a difference between setting out negotiating objectives, which the United States did, and a mandate, which is how the negotiators actually go about it. It seems that the hon. Gentleman has not grasped that point yet.
David T. C. Davies (Monmouth) (Con)
Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)
Dr Fox
The Government’s policy is that we do not have to have these rollover agreements because we want to get an agreement through the House so that we can continue with the Prime Minister’s plan. If the hon. Gentleman wants to help the businesses that he mentions, he can vote for the Prime Minister’s agreement at the next opportunity.
Nigel Huddleston (Mid Worcestershire) (Con)
Douglas Chapman (Dunfermline and West Fife) (SNP)
Dr Fox
I am grateful to the hon. Gentleman for the interest that he has shown in this issue. The experience of other countries in using the ability of free ports to increase economic activity is valuable and something that the Government are considering in an optimistic and positive way.
Mr Mark Prisk (Hertford and Stortford) (Con)
UK Export Finance does some excellent work, but some of its funding capacity goes unused. What can be done to change that to raise British exports?
Dr Fox
We have signed a memorandum of understanding with the five biggest banks so that they can encourage businesses to utilise UK Export Finance. One of the main areas where it is under-utilised is small businesses, but the positive side is that last year more than 70% of the agreements signed by UKEF were with small businesses. That is a trend that we would like to see continue.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
Dr Fox
I take the opportunity to praise the work of the Fairtrade organisation, which is so well led and co-ordinated by my very good friend Lord Price. It is essential that we look at these issues because free trade is not a free-for-all. There need to be rules around it and there needs to be fair trade. The Government will look sympathetically at what the hon. Gentleman suggests.
Sir David Amess (Southend West) (Con)
Following the visit of the Taiwanese representative and the Philippines ambassador, does my right hon. Friend join me in welcoming the announcement that the Qatari ambassador, together with a trade delegation, will visit Southend on 25 March as we move towards city status, to explore the opportunities of trade and business investment as we leave the EU?
Karen Lee (Lincoln) (Lab)
Dr Fox
This is an issue that the Government take seriously because we want to ensure that British companies have the right to trade where we think it is appropriate and where the British Government’s foreign policy indicates that. I have had and will continue to have discussions with my American counterparts on that issue.
Nic Dakin (Scunthorpe) (Lab)
Given the announcement on tariffs, what progress is being made regarding the steel industry in relation to the trade defence instruments in place at European level being transferred across to UK level at the point of departure?
Dr Fox
I am not sure whether the hon. Gentleman missed the statement we had in the House on this, but I made it very clear that those arrangements would be rolled over. It will not be the Government’s intention in any way, shape or form to leave our businesses less protected than they are today, which is why those trade remedies will continue.
Leaving the European Union: Temporary Tariff Regime
Liam Fox Excerpts(5 years, 2 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Government wish to inform the House about plans to implement a temporary tariff regime in the event that the UK leaves the EU without a deal on 29 March 2019. The Government will bring forward the necessary secondary legislation in the light of the votes in Parliament this week.
The temporary tariff would apply equally to all countries where the UK does not have a trade agreement or other preferential agreement in place. In the event of no deal, this would include the EU.
The temporary tariff will apply for up to 12 months. At the end of the temporary period, the Government will introduce a long-term tariff regime. This will be developed over the course of the coming months following a full public consultation process.
The Government faced a choice:
We could maintain our current external tariff regime and apply it to the EU, imposing new tariffs on EU imports and driving up prices for consumers and disrupting business supply chains.
We could maintain the open trade that we have with the EU, but we would then have to extend this to the rest of the world. This would minimise disruption to EU trade but would fully open the UK to competition from other countries.
The Government do not believe either of these options on its own is the right approach. Instead, the temporary tariff would take a balanced approach to support the UK economy as a whole. It would maintain open trade on the majority of UK imports, to support consumers and business supply chains, but retain necessary tariff protection for particular sectors of the UK economy.
Under the temporary tariff, 87% of total imports to the UK by value would be eligible for tariff-free access.
The Government recognise the importance of retaining necessary tariff protection for some sectors of the UK economy. Therefore, tariffs would apply on 13% of total UK imports:
in some agricultural sectors which have been historically protected from non-EU producers through high EU tariffs. Producers in these sectors would face significant adjustment costs should these be immediately liberalised. Therefore, for beef, sheep meat, poultry, pigmeat, butter and some cheeses a mixture of tariffs and quotas will be used, with the aim of being broadly neutral in their impact on production and consumption patterns.
in sectors where tariffs help provide support for UK producers against unfair trading practices. This includes products such as certain ceramics, fertiliser and refinery products.
a set of goods, including bananas, raw cane sugar, and certain kinds of fish, where preferential access to the UK market is important for developing countries.
a number of finished vehicles will retain their tariff in order to support this sector and in the light of global market conditions.
Information on specific tariff rates that would apply under the temporary tariff has been made available through the Government website.
In developing the temporary tariff, the Government have given regard to the five principles set out in the Taxation (Cross-border Trade) Act 2018:
the interests of consumers in the UK;
the interests of producers in the UK;
the desire to maintain and promote external trade of the UK;
the desire to maintain and promote productivity in the UK;
the extent to which goods are subject to competition.
Throughout the temporary period, the Government would also consider exceptional changes where clear evidence is provided by stakeholders against the criteria set out in the Taxation (Cross-border Trade) Act 2018 and would provide a mechanism to hear business and consumer feedback.
This statement should be read in conjunction with the written ministerial statement laid in parallel on the Northern Ireland border.
[HCWS1405]
Trade Remedies Authority
Liam Fox Excerpts(5 years, 2 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
This Government are committed to ensuring the UK has our own trade remedies function in place by the time we leave the EU.
The Trade Bill contains provisions establishing the Trade Remedies Authority (TRA), while the Taxation (Cross-border Trade) Act 2018 (TCBTA) confers trade remedy functions on it. The Trade Bill has completed Committee stage in the House of Lords, and it will begin Report stage on 6 March.
I am pleased to announce that we have today commenced the relevant provisions in the TCBTA and laid secondary legislation giving more detail to the measures set out in the TCBTA, with regards to the trade remedies system. Taken together, these provisions will ensure that the UK has the ability to protect UK industry against injury from unfair trade practices, and unforeseen surges in imports.
The regulations draw from both the relevant WTO agreements (i.e. the general agreement on tariffs and trade, anti-dumping agreement, the agreement on subsidies and countervailing measures and the agreement on safeguards) and are similar in many regards to the EU regulations which have applied throughout our membership of the EU. It therefore follows that the process provided for in these regulations will not be wholly unfamiliar to UK industry, and it will have the certainty of a full suite of legislation in place before we leave the EU; it has previously stressed the importance of having regulations in place sooner rather than later.
In the unlikely scenario that we leave the EU without a deal, it is in the national interest to ensure that the UK has the ability to protect UK industry against injury caused by unfair trade practices or unforeseen surges in imports. To provide this certainty, I have put in place contingency arrangements that will temporarily bring the power in-house, allowing the Department to operate trade remedy functions until the Trade Remedies Authority is legally established via the Trade Bill. The use of transitional powers in the Taxation (Cross-border Trade) Act 2018 will modify that Act to ensure the trade remedies investigations directorate (TRID) will temporarily deliver these functions. The modifications will expire automatically when the TRA is legally established.
The new function will follow the procedures set out in the legislation. In practical terms, the main difference between the operation of TRID and the TRA relates to the decision-making process. When the TRA is established, it will investigate applications to determine whether there is dumping and/or subsidies or unforeseen surges, and whether UK industry has suffered injury as a consequence. If so, it will apply the economic interest test to determine whether measures are in the wider economic interest of the UK. Where the test is met, the TRA will recommend that measures should be applied, and the Secretary of State will then consider whether to accept or reject that recommendation. In doing so, the Secretary of State can only reject the recommendation on public interest grounds, and this includes a limited assessment of the TRA’s consideration of the economic interest test. While the system is operated in-house, these distinct roles will not exist and legally the Secretary of State will take on responsibility for all of these decisions. However, the intention is to keep this two-stage process as far as possible and for the TRID to carry out objective and evidence-based investigations, while the Secretary of State will take the final decision on whether to apply measures. Where the Secretary of State decides not to apply measures on public interest grounds, a statement will be laid before the House of Commons explaining the reasons, to ensure transparency.
The contingency provisions rely on transitional powers in section 56 of the TCBTA. These provisions to modify section 13 and schedules 4 and 5 of the TCBTA, together with the secondary legislation (the Trade Remedies (Dumping and Subsidisation) (EU Exit) Regulations 2019 and the Trade Remedies (Increase in Imports Causing Serious Injury to UK Producers) (EU Exit) Regulations 2019) made under those powers, bring trade remedy functions that would otherwise be carried out by the TRA in-house until the Trade Bill receives Royal Assent. This will legally establish the TRA, at which point the modifications will fall away and the TRA will assume responsibility for investigating cases and making recommendations to the Secretary of State as it considers appropriate.
To minimise disruption, the policies and procedures align to the future function of the TRA as much as possible. The main difference lies in the decision-making process.
When the TRA is established, it will carry out investigations to determine whether there is dumping, subsidy or an unforeseen surge in imports, and whether UK industry has suffered injury as a consequence. If it finds this is the case, it will then consider whether the economic interest test is met before making a recommendation to the Secretary of State to apply a trade remedy measure. The Secretary of State must then consider whether to accept or reject that recommendation. The Secretary of State may only reject the recommendation on public interest grounds, which includes a limited assessment of the TRA’s consideration of the economic interest test.
While the system is operated in-house, these distinct roles will not exist. However, in order to provide continuity for business, we have sought to keep this two-stage process as far as possible. Under the temporary modifications, those staff already recruited to the shadow TRA, including those who have been trained as investigators, will form the trade remedies investigations directorate within the Department and will carry investigations using the same guidelines, as far as possible, as those that would apply if the TRA were established. Measures will still only be imposed if they satisfy the economic interest test (where there is a starting presumption in favour of anti-dumping and anti-subsidy measures), and there are not wider public interest considerations as to why measures should not be imposed.
[HCWS1378]
EU Exit: Free Trade Agreements
Liam Fox Excerpts(5 years, 2 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
Today, I am laying a Command Paper—“Processes for making free trade agreements after the United Kingdom has left the European Union” (CM 63) before Parliament.
The Government are committed to ensuring that Parliament can conduct the right level of scrutiny of our future trade agreements. We have considered carefully the views expressed by parliamentarians in reaching the proposals set out in the Command Paper. This includes the recommendations made by the International Trade Committee in their report “UK trade policy, transparency and public scrutiny”, which was published on 28 December 2018.
The Government’s response to that report will be published shortly.
I will be laying this report in both Houses today and it will be available on DIT’s website at https://www.gov.uk/government/publications/processes-for-making-free-trade-agreements-once-the-uk-has-left-the-eu.
[HCWS1364]
Government Procurement Agreement
Liam Fox Excerpts(5 years, 2 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I wish to update the House on the progress made in securing the UK’s continued participation in the WTO agreement on Government procurement (GPA) as we leave the EU. Yesterday in Geneva, the 19 parties to the GPA formally adopted the decision relating to the UK’s accession to the agreement as a party in its own right. The GPA committee decision on the UK’s accession refers to both the scenario where the UK and EU reach a deal on the terms of the UK’s withdrawal, and one in which the UK is to leave the EU with no deal. If the UK leaves the EU without a deal, the UK will ratify the agreement as soon as possible, once the process set out in section 20 of the Constitutional Reform and Governance (CRaG) Act 2010 completes. This will ensure that our membership of the GPA—an agreement worth £1.3 trillion annually—continues, as now, in a no deal scenario. Should the withdrawal agreement be agreed between the EU and UK, a further decision of the GPA committee would be required to allow for UK accession at the end of the implementation period, but the GPA would continue to apply to the UK as if it were a member state of the EU during that implementation period. Leaving the EU with a deal remains the Government’s top priority. This has not changed.
Yesterday’s decision is a significant milestone for the UK, and it will ensure UK suppliers can continue to bid for Government contracts overseas on substantially the same terms as currently provided to the UK as an EU member state. It will also ensure that the UK continues to benefit from increased choice and value for money in areas where the UK’s procurement opportunities are open to international competition, whilst importantly continuing to protect vital public services such as our NHS.
The Government have already begun the process set out in section 20 of the CRaG Act 2010 for Parliamentary scrutiny of the agreement. The agreement was laid before both Houses of Parliament on 18 February. This includes text of the agreement, the UK’s market access schedules—consistent with our current offer as an EU member state—and the market access schedules of all parties, alongside accompanying explanatory memoranda. In a no deal Brexit scenario, the Government are anticipating a short gap between the UK leaving the EU and its accession to the GPA becoming effective. This is to allow for the completion of the necessary processes that allow for a new GPA accession to become legally effective. The gap is expected to be very short and, as a result, the Government are expecting the impact on UK businesses to be minimal.
[HCWS1365]
International Trade
Liam Fox Excerpts(5 years, 2 months ago)
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Dr Fox
Of 109 existing EU measures, we will maintain 43 where they are directly applicable to the UK and have met the criteria to be maintained. Those measures cover a wide range of goods, from ironing boards to aluminium foil, to ensure continued protection from known unfair trading practices for important industries such as steel and ceramics.
[Official Report, 25 February 2019, Vol. 655, c. 50.]
Letter of correction from the Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox):
An error has been identified in the statement I made to the House.
The correct wording should have been:
Dr Fox
Of 109 existing EU measures, we will maintain 43 of these measures where they are directly applicable to the EU and have met the criteria to be maintained. Those measures cover a wide range of goods, from ironing boards to aluminium foil, to ensure continued protection from known unfair trading practices for important industries such as steel and ceramics.
Trade Remedy Measures: UK Interests
Liam Fox Excerpts(5 years, 2 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
As part of the Government’s preparations for leaving the European Union, the Department for International Trade has been determining which existing EU trade remedy measures should be transitioned once the UK operates its own independent trade policy. From the outset, in the October 2017 trade White Paper, the Government made a commitment to maintain those trade measures currently applied by the EU that matter to UK interests. The subsequent call for evidence published in November 2017 sought to establish which goods covered by EU anti-dumping and anti-subsidy duties are produced in the UK and whether UK production met the criteria to be transitioned. Provisional findings were published in July last year, with interested parties given further time over the summer to respond. Having completed their analysis of those responses, the Government will publish their final findings today.
Of 109 existing EU measures, we will maintain 43 where they are directly applicable to the UK and have met the criteria to be maintained. Those measures cover a wide range of goods, from ironing boards to aluminium foil, to ensure continued protection from known unfair trading practices for important industries such as steel and ceramics.[Official Report, 27 February 2019, Vol. 655, c. 1MC.] The measures will be in place and take effect from either 29 March, in the event of a no-deal UK exit from the EU, or at the end of the implementation period with the EU. That will also apply to any definitive safeguard measures that are in place on exit either on 29 March or at the end of an implementation period.
At the same time, the UK will not transition the remaining 66 EU measures that currently apply, because the measures did not meet our criteria as set out in the call for evidence. I remind the House that those criteria were: first, that the Department received an application from UK businesses; secondly, that the application was supported by a sufficient proportion of the UK businesses that produce those products; and thirdly, that the market share of the UK businesses that produce those products is at least 1%.
This is not about picking favourites. As I said previously, we will provide UK industry with a level playing field, enabling businesses to trade fairly with their international competitors. As I just set out, our decision about whether to maintain measures was based on whether those measures mattered to the UK. We cannot, for example, transition measures where there is no UK production, as that is not compliant with our World Trade Organisation obligations, nor is it in the UK’s wider economic interests. Where measures are not transitioned, that will reduce costs for UK users of these products, lead to lower prices for UK consumers and benefit related industries such as food and construction. To provide just a couple of examples across different sectors, the final findings will see the removal of a 34% tariff on imports of solar glass from China, which is used to produce solar panels, and a 10% tariff reduction on imported sweetcorn from Thailand. This is just one of the benefits of the UK being able to operate its own independent trade policy, tailored to the specific needs of our people, businesses and communities.
The European Union has recently imposed safeguards on several categories of steel products in the form of tariff rate quotas. Safeguards can be used to protect domestic industry from surges in imports. They act as a safety valve and provide industry with some breathing space to adjust to increased imports. Under WTO rules, safeguards can only be used if unforeseen surges in imports are causing serious injury or there is a threat of serious injury to domestic industry. The Department for International Trade is working to ensure that these safeguards can be transitioned effectively, including setting the tariff rate quotas at an appropriate level for the UK market and reviewing the product scope, so that the safeguards only cover steel products made in the UK. I will be in a position to update the House on that shortly.
Turning back to the transition of anti-dumping and anti-subsidy measures, all transitioned measures will be maintained at the same level set previously by the European Commission until the UK Trade Remedies Authority completes a full review. This approach is a clear demonstration to our WTO partners of our continued commitment to a rules-based international trading system. The Trade Remedies Authority review will decide whether transitioned trade remedy measures should continue, and if so, at what level. It is designed to ensure that all interested parties have the opportunity to take part.
Once complete, the resulting measures will fully reflect the UK market situation based on UK-specific market data. The reviews will include an assessment of the risk of dumping or of subsidy recurring if measures are removed, an analysis of injury to UK producers and an assessment against the UK economic interest test. While the time taken for each review and their timing will be a matter for the Trade Remedies Authority to determine, we anticipate each review will take between 12 and 18 months to complete. I would very much like to thank the MPs from across the House who responded to the consultation process and those who made strong representations on behalf of specific interests in their constituencies.
As the House will know, work to establish the Trade Remedies Authority itself is well advanced, with over 80% of staff appointed. As I set out in my letter of 14 February to the International Trade Committee, in the event that the Trade Bill does not receive Royal Assent until shortly after exit day, I have prepared contingency options to ensure that we can deliver a fully operational trade remedy system. This contingency plan means that, until the Trade Remedies Authority is legally established, the staff recruited to and trained for that body can instead carry out their functions as part of the Department for International Trade. Once the Trade Bill receives Royal Assent, the drafting of the contingency regulations is such that trade remedy functions will immediately revert to the Trade Remedies Authority as a non-departmental public body. I intend to lay the secondary legislation giving effect to this option shortly. This will enable staff to begin reviews of transition measures. As far as possible, they will follow the same procedures as those that will apply once the Trade Remedies Authority is finally established.
Whatever the outcome of our negotiation with the European Union, UK industries can be confident that we are taking the necessary steps to ensure we are able to operate our own independent trade remedies framework, avoid exposing them to known unfair trade practices and maintain the existing trade remedies measures that matter to their interests. We are of course committed to ensuring that UK industries receive the protection they need, but I am absolutely aware that trade remedies measures can increase the cost of affected products for user industries and consumers, as well as the competitiveness of both user and producer industries. That is why the principles we have set out for our trade remedy system include the need for proportionality. The system we are introducing ensures appropriate account will be taken of the impacts on users and consumers and on the wider trade agenda. I commend this statement to the House.
Barry Gardiner (Brent North) (Lab)
I thank the Secretary of State for advance sight of the statement today. He is right of course that, as we transition, we will need to have our own trade remedies in place. In his response, he may play fast and loose with our opposition to the Trade Bill, but he will know that our opposition was principled on the basis that we disagreed with many of the measures contained therein. We do, none the less, need to have measures in place.
We are just five weeks away from leaving the UK and possibly operating our own trade remedies, yet the Trade Bill, which establishes the Trade Remedies Authority, is still stuck in the other place due to the Government’s refusal to set out a transparent and democratic approach to trade agreements. Will the Secretary of State confirm that the Manufacturing Trade Remedies Alliance’s suggestion is correct that it would have been possible to maintain the existing EU remedies until they came up for review? Indeed, if he accepted my party’s proposal for a customs union, he would ensure the continuity of trade remedies and that EU safeguard measures would not apply to British exports.
However, the Secretary of State has proceeded, as he wants, to fast-track the UK into the sort of less regulated economy he has always favoured. Rather than presuming to maintain trade remedies and maintain the status quo, so eager is he to begin cutting tariffs and opening up UK markets to cheaper imports that the Government have decided to presume that all such measures will be terminated, unless a case is made to maintain them. Such measures will undoubtedly increase the volume of imports on UK markets at less than fair market cost. After all, that is why the trade remedy measures were imposed in the first instance, following lengthy investigations by the EU. Indeed, at a time when the Department has faced repeated criticism about Brexit preparedness and priorities, when the Secretary of State has failed to bring forward the Trade Bill, when he has failed to discuss the 40 trade agreements that he promised would be ready “one second after midnight” after Brexit, and when the Government have failed to present a workable Brexit deal, why did he choose to ignore the MTRA?
The Government have failed to produce coherent evidence for these policy decisions; nor have they carried out an impact assessment. Indeed, many will be concerned that today’s findings are little more than policy-based evidence to support the Secretary of State’s free trade quest.
The Government’s handling of Brexit has been absolutely chaotic, no more so than in the extraordinary approach taken to delivering the UK’s trade policy. Any claims that the Government are acting in the interests of British business in ensuring continuity of trade on existing terms completely fall apart in the face of the evidence. The Secretary of State is chasing trade agreements with his gold tier friends across the Anglosphere and prioritising efforts to liberalise UK markets as part of his free trade experiment. In carrying out this consultation, the Government have refused to consider evidence from trade unions and civil society groups, instead only accepting arguments presented by a producer or group of producers who collectively meet what originally was an unspecified volume of production and/or who had an unspecified market share in those goods.
The Government’s intended agenda is clear. While they have explicitly stated that only evidence submitted from producers may be considered in the determination of the continuation of an existing measure, they have welcomed the views of downstream producers and consumer interest groups. That further compounds the concerns of our producers that the Government’s primary objective is cheaper prices, no matter how that might decimate manufacturing in the country. If people lose their jobs, cheaper prices will be of scant consolation.
There have also been recent reports that the Secretary of State wishes unilaterally to reduce all tariffs to zero in the event of a no-deal Brexit—a move that has been met with alarm and shock by our producing industries and which I detailed extensively in our debate last Thursday. Unfortunately the Secretary of State has refused to confirm that he has abandoned that folly. On zero tariffs, there has been no comprehensive formal consultation, no comprehensive impact assessment and no prolonged transition proposed. Such a significant decision would have far-reaching consequences for the UK economy and would demand full parliamentary scrutiny.
This Government have long stood against the interests of our producers and the jobs they maintain in our heartlands—from the Potteries to the valleys. The UK Government have repeatedly blocked efforts by the European Union to reform trade defence measures and, through the establishment of the Trade Remedies Authority, have taken a substantially different approach from the existing EU regime. The EU has since modernised those measures, as the UK no longer participates in those discussions. That resulted just last month in the EU introducing a range of safeguard measures to apply to steel imported into the EU, taking into account social and environmental factors in determining distortion in production. UK steel exports to the EU are likely to be subject to the additional measures, which will undermine UK steel competitiveness in those markets. Indeed, the vast majority of UK steel exports are to the EU or to those countries with which the EU has a trade agreement. The Government’s trade policy priorities and failure properly to secure trade continuity arrangements jeopardise that.
The concerns of our producing industries are manifold. How will reviews of the maintained trade remedies be conducted? In determining the UK’s approach, will the Secretary of State accept the findings of any separate EU review? Will he accept evidence submitted by producers in respect of ongoing reviews or investigations by the EU as qualifying for automatic inclusion in any subsequent review or investigation to be carried out by the UK? What analysis has his Department carried out in respect of the impact of terminating trade remedy measures, and what assessment has it made of the unilateral reduction of trade tariffs to zero?
Dr Fox
We got there just before Brexit, Mr Deputy Speaker.
The hon. Gentleman did not say very much about trade remedies, so there is very little to respond to. In fact, it is a great example of “If you haven’t got anything to say, don’t say anything”. The Government’s policy is quite clearly correct and is supported by what he calls producers but I call employers. I know it was a slip of the tongue and that he did not mean that his policy is to leave the UK—I am sure that is the policy of the SNP.
The hon. Gentleman says that I want a less regulated economy. Yes, of course I want a less regulated economy, but it is against the rules of the WTO to impose regulations and trade remedies where there is no UK production or where we do not meet the threshold. Is he actually suggesting that we maintain remedies where there is no UK business and industry to protect, to the detriment of our consumers who will pay higher prices without protecting anything in the UK itself?
The hon. Gentleman talks as though cheaper prices are somehow a bad thing. I would love to see an improvement in the disposable income of people across all income ranges. If we can do that by removing tariffs—which are effectively taxes—by procedures such as this, we should be willing to do so. In fact, this is one of the real advantages of our ability to leave the European Union—to set our own tariffs.
The hon. Gentleman asked about the Trade Bill. Report stage in the House of Lords will be on Monday 4 March. He does not seem to understand the consultation we have had. We have engaged widely with stakeholders. He said correctly that we have spoken to those who produce these products, but we have spoken to those who are involved further downstream and whose costs may be reduced by what we are doing. We have spoken to trade associations, in particular UK Steel and the British Ceramic Confederation. We have had bilaterals, roundtables and technical meetings. We have written to all MPs twice, which one would have thought covered a very wide range of consultation if MPs are doing what they should be doing in their constituencies.
On the European Union, if we go into an implementation period, all trade remedies will be rolled over and we will adopt any new European trade remedies during that period.
John Redwood (Wokingham) (Con)
An excellent statement with a good balance: protecting our industries against dumping where needed, but giving our customers more choice and lower prices where we do not have an industrial interest. Will my right hon. Friend promise me that those same excellent principles will be applied when he sets out our full tariff schedule, where I hope, for example, we will have zero tariffs on imported components to give a really big boost to British industry?
Stewart Hosie (Dundee East) (SNP)
In evidence given about the formation of the TRA, the Law Society of Scotland said:
“it is important that any assessment of impact of particular trade measures takes into account a wide range of stakeholder interests. This should involve balancing the interests of producers and consumers, which may sometimes be directly opposed, as well as consideration of the wider public interest.”
That, of course, means consideration of measures such as the anti-dumping and subsidy measures that were in the provisional report published last July.
The methodology for determining whether measures would be maintained or rescinded, again published last July, included a great deal about production—supporting firms’ production, total domestic production, opposing firms’ production—and a great deal about the market, UK firms’ domestic sales and total domestic sales including imports. Those who have solely producer metrics are in the tables that were published last July—the producer application received, the support threshold met, the market share threshold met—and that led to some apparently contradictory decisions. Reinforcing bar from Belarus would have its measures terminated, but reinforcing bar from China would have its measures maintained. Tubes and pipes of ductile cast iron from India would be terminated, but welded tubes and pipes of iron or non-alloy steel from Belarus would be maintained. There were contradictions in what were apparently similar items.
May I therefore ask the Secretary of State—I know the updated version will be published soon—why was no weight given to the consumer interest explicitly? Why was no weight given to the wider public interest explicitly? Why do those outcomes seem so arbitrary for what would appear at face value to be similar products?
Dr Fox
Our intention is to maintain protection where there is a case to protect British businesses from unfair trading practices. We have looked at the evidence that the EU put in place to have these remedies in the first place and we think there is a suitable case for doing it. The hon. Gentleman asked me a very specific question about rebar steel. The reason that we have maintained measures on China and terminated measures in other cases is because no producer interest was expressed. They made no application for that to happen during the call for evidence and therefore, it did not fall within the criteria that we set out for the consultation and which I reiterated in my statement.
Sir Michael Fallon (Sevenoaks) (Con)
I thank my right hon. Friend for the extensive consultation that he has carried out with both industry and Members of this House. Will he confirm, for the 43 EU remedy measures that we are maintaining, that none the less, his new Trade Remedies Authority will, during the implementation period, be able to start to review those measures to ensure that consumers are not paying any higher prices for goods than strictly necessary?
Dr Fox
I can confirm that and, as I said, we will want to use British market-sensitive data to do that. At all times, we want to maintain the correct level of protection so that our businesses are not subject to unfair trading practices such as subsidies and dumping, but at the same time, we want to ensure that where we can reduce tariffs and therefore prices for consumers without in any way reducing the protection of British business, we will be able to do so. As my right hon. Friend the Member for Wokingham (John Redwood) said, it is a subtle, but important balance.
Catherine West (Hornsey and Wood Green) (Lab)
Will the Secretary of State please explain to the House why the Trade Bill is taking so long to gain Royal Assent? Will he also list which trade unions he has included in his consultation on the trade remedies strategy?
Dr Fox
As I said, the Trade Bill will be on Report in the House of Lords next week. I hope that the Opposition will ensure that it can pass into law as quickly as possible—the Government will certainly not impede it. I cannot tell the hon. Lady which specific trade unions were involved, but I shall write to her with a response.
Mrs Anne Main (St Albans) (Con)
I listened very carefully to the question/statement that the shadow Secretary of State, the hon. Member for Brent North (Barry Gardiner), made, and he sounded so not in favour of the Trade Bill that it was rather worrying. May I ask the Secretary of State what would happen to those protections if the Trade Bill were thwarted somehow by the Opposition?
Dr Fox
As I said in my statement, if we are unable to get the Trade Bill through, which provides legal underpinning of the TRA, we will use mechanisms under the Taxation (Cross-border Trade) Act 2018, but I would want to see the Trade Bill go through as soon as possible, because it gives us the best possible legal underpinnings for the mechanisms that we are putting in place.
Mr Chris Leslie (Nottingham East) (Ind)
When we talk sometimes about national security, we think about military and defensive measures. This is about our economic security and businesses that are potentially under threat of being undercut by unfair subsidies from China or elsewhere, putting our workforce and their livelihoods on the line. Will the Secretary of State give us an absolute guarantee that our economic security is not going to be weakened after 29 March? It is clear that the haphazard way in which he has not managed to give the Trade Remedies Authority a proper, legal basis yet makes this look as though it is all held together by a box of matches and sticky-back plastic. We need strong defences for our country and surely that has to include strong economic defences as well.
Dr Fox
The hon. Gentleman is absolutely correct. We do need to look after our economic interests, which is why we need a Trade Remedies Authority that is able to put these trade remedies in place and review them. We did not vote against the establishment of the Trade Remedies Authority; the Opposition parties did so by voting against the Trade Bill in what would otherwise be an act of economic vandalism, were we not stepping in to ensure that businesses such as steel and ceramics are properly protected.
Sir Desmond Swayne (New Forest West) (Con)
What is it about ironing boards?
Tom Brake (Carshalton and Wallington) (LD)
When does the Secretary of State expect the Trade Remedies Authority to be established, and what additional costs will be incurred before it is?
Dr Andrew Murrison (South West Wiltshire) (Con)
I congratulate my right hon. Friend on his statement. Its value for both business and consumers is plain. Does he agree that it underpins the importance of ensuring that we do not have a forever customs union of the sort that has been highlighted as a very bad thing, inter alia, by the Leader of the Opposition?
Dr Fox
Were we to have a customs union, we would forever have to apply to the UK the trade remedies decided by the European Union, which might apply remedies to areas where there is no production in the United Kingdom, carrying a cost for our consumers but no benefit to our producers. That would seem to me to be one of the strongest arguments for leaving in the first place.
Gareth Thomas (Harrow West) (Lab/Co-op)
The Secretary of State and the House will be aware that trade remedies can equally be imposed against the UK. He will also be aware that in the event of a no-deal Brexit we are likely to see—according to the British Retail Consortium—trade measures linked to WTO tariffs and new regulatory checks hit the cost of sourcing food from overseas by up to 40%. Given that his Trade Remedies Authority is not likely to be able to do anything about that, would it not be a good time for him to announce that he will join other Cabinet Ministers in insisting that the Prime Minister takes a no-deal Brexit off the table this week?
Dr Fox
There were several completely different issues in that question. I think that the hon. Gentleman is to some extent confusing the issue of most favoured nation day-one tariffs with the tariffs that come from trade remedies. No remedies could be applied to the United Kingdom unless we were in breach of WTO rules on subsidies and dumping. I assure him that under a Conservative Government that is simply not going to happen.
Mark Garnier (Wyre Forest) (Con)
I thank my right hon. Friend for his statement. Trade remedies are an incredibly important measure for the protection of British industries, but they should not be used as protectionism. Can I urge my right hon. Friend that as we move forward as an independent nation free of the European Union we use our seat on the World Trade Organisation to highlight and champion the cause of free trade around the world?
Dr Fox
Like my hon. Friend, I am, I would like to think, a great champion of free trade, but that does not mean a free-for-all. There have to be rules to ensure that there is fair trade in the global trading system. That means that those countries that purposely overproduce, dump and subsidise, and are therefore not part of a fair trading system, should be penalised for doing so.
Hywel Williams (Arfon) (PC)
Some 9,000 jobs in Wales depend on the steel industry. Further to the question from my hon. Friend the Member for Dundee East (Stewart Hosie), some steel products figure in the list of 43 measures to be maintained, but others appear in the 66 measures to be terminated. Will the Secretary of State give an absolute guarantee that the measures to be terminated will not lead to steel jobs being terminated in Wales?
Dr Fox
I am encouraged by the reaction of UK Steel, who very much welcome the Government’s measures. In a very small number, such as rebar, we have maintained the remedy, where the industry itself has said that it wants to and it meets the threshold: we have not done so where there is either no production in the UK or there has been no representation from any UK producer that we should carry forward such a remedy.
Tom Pursglove (Corby) (Con)
As my right hon. Friend knows, the steel industry is vital for Corby. Can he say a little more about what these developments today mean for the steel industry in this country and for my constituents in particular?
Dr Fox
I am grateful to my hon. Friend for his constant support for, and defence of, steel interests in his constituency and elsewhere. Today we are setting out to show the industry that we will continue to provide the same level of protection, and the same remedies at the same level, to which it has become used in the European Union, and for the same reasons. Those remedies are in place because there has been very unfair treatment in the global steel industry, especially in the form of overproduction, subsidy and dumping. We will ensure that the British steel industry is never subjected to those pressures.
James Cleverly (Braintree) (Con)
My right hon. Friend mentioned this in his statement, but will he give a more explicit commitment that under a Conservative Government we will always seek to drive down tariff barriers where that is possible—and drive down prices for consumers—while protecting the industries in the United Kingdom from unfair and distorted competition from overseas?
Dr Fox
Wherever we can bring down prices to make the disposable incomes of people throughout the United Kingdom go further, we will do so. That is a sound Conservative principle. We will also cut tariffs where we can do so without any potential disruption or disbenefit to UK business and industry, because tariffs are taxes. We are able to take those measures today because we will no longer have to apply remedies—that is, taxes—to the UK in areas where there is no UK production, but there is currently EU production. It is an act of economic liberation.
Mr Philip Hollobone (Kettering) (Con)
The Trade Remedies Authority sounds like a good idea, but it is a quango. It used to be a “sound Conservative principle” that we would reduce the number of quangos. I think it was our policy at one time that for every new quango introduced, two would be abolished. Before the authority is formally, officially established, will the Secretary of State identify two quangos that will get the chop?
Dr Fox
Given the short time for which my Department has existed, we have not yet developed such bodies. I will convey my hon. Friend’s representations loudly and clearly to my departmental colleagues, but I must say to him that the Trade Remedies Authority is necessary for the protection of key British businesses and the application of international trade law. If we cannot get the Trade Bill through on time, I will take contingency measures to ensure that those protections are given to British businesses, and that international trade law is upheld.
Kevin Foster (Torbay) (Con)
It is always a pleasure to see you in the Chair, Mr Deputy Speaker.
The Secretary of State will be aware of Torbay’s vibrant photonics industry, which manufactures and exports particularly to the United States. I welcome the continuing commitment to protecting industries in which there is production, but does he agree that it would make absolutely no sense to go on protecting industries that do not exist in this country, which would merely drive up prices for consumers?
Dr Fox
I find it bizarre that what I interpret as the position of the Labour Front Bench today is to maintain trade remedies where there is no UK producer interest. It does not comply with WTO law, but even if it did, it would make no economic sense whatsoever to apply increased cost to the United Kingdom unnecessarily. I think that that shows how utterly confused, and confusing, Labour’s policy in this area is.
Jack Brereton (Stoke-on-Trent South) (Con)
I thank my right hon. Friend for his statement, and particularly for his reference to the ceramics industry. Does he agree that it is essential for the ceramics industry in Stoke-on-Trent that we maintain the level playing field in trade against those unfair practices, and prevent those who want to flood the UK market with low-value goods from doing so and threatening British manufacturers?
Dr Fox
One of the reasons I looked forward to making my statement was that I would be protected from the persistent but not unwelcome badgering of my hon. Friend about ceramics in his constituency. In recent months, he has made the point forcefully and frequently in every corner of the building in Whitehall. Yes, I do agree with him: while we want our imports to fall given the cost to consumers, protection is necessary when countries are following policies that are designed to undermine the concepts of international trading law. We will resist those. We are rolling over the protections for the ceramics industry today because it is very vulnerable to the practices of dumping, overproduction and subsidy which we so deprecate.
No Deal: Trade Continuity
Liam Fox Excerpts(5 years, 2 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Government are today publishing revised guidance to UK and international businesses that use preferential trade terms under existing agreements between the EU and third countries to advise them about a scenario in which the UK leaves the EU without a withdrawal agreement. While a number of our continuity agreements are likely to be concluded by exit day, it is the duty of the Government to produce a highly cautious list of those that both may and will not be in place in order that businesses and individuals ensure that they are prepared for every eventuality. A list of these agreements and related advice is available at: https://www.gov.uk/government/publications/existing-trade-agreements-if-the-uk-leaves-the-eu-without-a-deal.
If the UK leaves with a deal, under the withdrawal agreement the EU has agreed that it will notify treaty partners that the UK is to be treated as a member state for the purposes of its international agreements during the implementation period (IP), up until December 2020. This approach provides continuity and gives businesses and international partners the certainty and confidence they want and need.
Delivering a negotiated withdrawal agreement with the EU remains the Government’s top priority. Nevertheless, we continue to prepare for all eventualities, including no deal. Therefore, in recent months, the Government have refocused discussions with third countries to transition trade agreements to come into effect for day one after our EU exit, should the UK leave the EU without a withdrawal agreement. From the outset, we have been open and transparent with the EU about this programme of work.
Scope of the trade continuity programme
The Government are seeking continuity for existing EU trade agreements in which the UK participates as a member of the EU. These agreements constitute around 11% of our trade1. These agreements also cover a wide variety of relationships, including:
free trade agreements (FTAs);
economic partnership agreements (EPAs) with developing nations;
association agreements, which cover broader economic and political co-operation;
mutual recognition agreements (MRAs) and;
trade agreements with countries that are closely aligned with the EU.
Businesses in the UK and partner countries are eligible for a range of preferential market access opportunities under the terms of these agreements. These can include, but are not limited to:
preferential duties for goods, including reductions in import tariff rates and quotas for reduced or nil rates of payable duties;
quotas for the import of goods with more relaxed rules of origin requirements;
enhanced market access for service providers;
protection from discrimination in public procurement opportunities across a range of sectors;
allowing parties to mutually recognise conformity assessment procedures;
the ability to complete mandatory inspections and tests on products close to the place of production; and
common standards on intellectual property.
The Government have been in extensive and constructive discussions with partner countries to transition these agreements to maintain their benefits and deliver as much continuity and stability as possible in our trade with these partners for businesses, consumers and investors as we leave the EU.
Progress update
To date, the Government have signed trade agreements with Switzerland, Chile, the Faroe Islands, members of the eastern and southern Africa (ESA) economic partnership agreement, Israel and the Palestinian Authority.
The Government are also close to formal agreement on text with Fiji and Papua New Guinea (Pacific) and arrangements are being made for their signature. It is likely these agreements will be transitioned in time for day one of exit.
We have also signed mutual recognition agreements that allow continuity of trade with Australia and New Zealand, and the United States. Total UK-US trade in sectors covered by the US MRA agreement is worth up to £12.8 billion, based on recent average trade flows. These important agreements boost trade as UK exporters can ensure goods are compliant with trading partners’ technical regulations before they depart the UK, saving businesses time, money and resources.
Discussions with other partners continue with the aim of replicating the effects of existing EU agreements as far as possible. We are continuing to engage with those other partner countries to conclude agreements in time for exit day. Particularly intensive discussions are, for instance, happening now with partners such as SACU+M, EEA, Canada and South Korea. Other discussions are ongoing.
Where agreements have been signed and there are significant changes to trade-related provisions of trade agreements, including to ensure operability in a UK context, they will be set out in reports to Parliament. As is already the case with the Chile, ESA and the Faroe Islands agreements, the reports will sit alongside the treaty text and explanatory memorandum, when these are laid in Parliament as part of the treaty ratification process, as set out in the Constitutional Reform and Governance Act 2010. These and other relevant documents will be also placed on gov.uk when signed. Implementing legislation, including on the preferential tariffs and related rules of origin in these agreements will also be laid before Parliament. Details of these agreements will be available on gov.uk.
If the full parliamentary scrutiny processes to ratify some UK-third country agreements have not concluded by the end of March, we are considering whether there are other means through which we can bring their provisions into effect to provide the same certainty and continuity to business and stakeholders from day one.
One such option is provisional application, where the UK and the third country agree to apply a treaty, in full or in part, “provisionally” for a period of time before the full domestic scrutiny processes have completed and the treaty enters into force. Where possible, this would bridge a potential gap in coverage of preferential trade terms. The UK has used provisional application on a number of occasions in its independent treaty relations. The use of provisional application is also common practice for the EU’s international agreements.
If the UK leaves the EU without a deal, some agreements will not be concluded in time and therefore will not be in place for exit day. There are a range of reasons for this. Those agreements that will not be in place for exit day are Andorra, Japan, Turkey, and San Marino.
Certain countries raise specific issues in the context of transitioning trade agreements. For example, Turkey is in a unique position, being in a partial customs union with the EU. This is not, therefore, a pre-existing free trade agreement relationship that can be technically transitioned to the UK. For this reason, should the UK leave the EU without a withdrawal agreement it will not be possible to transition these arrangements on day one of exit. However, Turkey is an important partner for the UK, and we want to strengthen our trading partnership once we leave the EU. The Government are committed to exploring all options for enabling continuity of trade and will progress these with Turkey as soon as possible. For the same reasons, we will not reach trade continuity arrangements with San Marino or Andorra by 29 March in the event of a no deal.
The EU-Japan economic partnership agreement only entered into force as of 1 February 2019. In a no-deal scenario, it will not be possible to have a bilateral agreement in place between the UK and Japan for 29 March. Therefore, UK-Japan trade will occur on a most-favoured nation basis under WTO terms, as it did up until 31 January 2019 The Prime Ministers of Japan and the UK have, however, already agreed to secure an ambitious bilateral agreement, building on the deal already agreed between Japan and the EU, and Japan is supportive of future UK membership of the comprehensive and progressive agreement for trans-Pacific partnership (CPTPP). We are continuing to work with Japan to realise these opportunities for a stronger trading relationship.
Additional provisions
The UK’s trade relationships are not just determined by trade agreements; we also participate in the EU’s generalised scheme of preferences (GSP), which allows developing countries, including least developed countries and low to lower-middle income countries to receive preferential access to the UK market. The Government fully intend to continue the existing market access provided by these unilateral preference schemes.
To do so we have taken the necessary powers through the Taxation (Cross-border Trade) Act 2018 to allow us to continue providing non-reciprocal reductions in tariffs to developing countries. Through this, the current beneficiaries of the EU’s GSP will be able to export to the UK after our EU exit on the same terms as at present. We will shortly be laying the necessary secondary legislation in Parliament.
This means that some countries will continue to be eligible for preferential tariff treatment under the UK’s newly established independent trade preferences scheme even if the relevant EU-partner country trade agreement has not yet been transitioned into a UK-partner country agreement.
Details of non-EU countries with whom we currently have in place arrangements for preferential trade, including both free trade agreements and unilateral preferences can be found at: https://www.gov.uk/government/publications/uk-trade-tariff-preferential-trade-arrangements-for-countries-outside-the-eu/uk-trade-tariff-preferential-trade-arrangements-for-countries-outside-the-eu.
1 This 11% figure excludes Turkey (plus San Marino and Andorra) which is part of a customs union with the EU, and excludes Japan, as the economic partnership agreement only came into force on 1 February 2019 and therefore business have only very recently been trading under this agreement.
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Future Free Trade Agreements
Liam Fox Excerpts(5 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I beg to move,
That this House has considered potential future free trade agreements: Australia, New Zealand, US and a comprehensive and progressive agreement for Trans-Pacific Partnership.
It is a pleasure to open the debate on Britain’s potential future free trade agreements as an independent trading nation outside the European Union. The Government have consulted widely on the topic and heard a huge range of views, including from the Select Committee on International Trade, businesses, civil society groups, parliamentarians and the wider public. Today is the opportunity for the Government to hear further from Members of this House what their ambitions are for the first agreements we negotiate as an independent trading nation.
Although the Government’s firm intention is secure an ambitious partnership with the European Union, if we are to deliver on the referendum result instruction given to us by the British people, we must remember that there is a world beyond Europe and there will be a time beyond Brexit. Now, for the first time in over 40 years, the United Kingdom will have the opportunity to step out into the world and forge relationships across the globe by negotiating, signing and ratifying new free trade agreements.
Free trade agreements should not be seen in isolation from the wider economic, strategic and security partnerships that we will need to thrive as a truly global Britain; nor should we ignore the enormous potential of multilateral agreements, which can have even greater liberalising effect than bilateral FTAs. Our ability to influence such agreements will be a major benefit of taking up our independent seat at the World Trade Organisation on leaving the European Union.
Nick Thomas-Symonds (Torfaen) (Lab)
Numerous constituents have contacted me, very concerned about the future of our national health service. If we are to have all these trade deals around the world, can the Secretary of State guarantee that we will never open up our healthcare market to private firms that would deeply damage our NHS?
Dr Fox
I have read a number of representations from a number of organisations, particularly in relation to investor-state dispute settlements on matters such as healthcare, but let me say first that the ISDS system does not and cannot force the privatisation of any public services, and under current UK and EU agreements, claims can be made only in respect of established investments; they cannot be made in relation to an alleged failure to open up public services to a potential investor.
In the comprehensive and economic trade agreement, which has been ratified by this House, there is a clear reservation on healthcare services, which the Government have said we want to use as the template for the future. For the sake of clarity, I will read out the provision. Under the heading “Cross-Border Trade in Services”, it states:
“The United Kingdom reserves the right to adopt or maintain any measure requiring the establishment of suppliers and restricting the cross-border supply of health-related professional services by service suppliers not physically present in the territory of the UK, including medical and dental services as well as services by psychologists; midwives services; services by nurses, physiotherapists and paramedical personnel; the retail sales of pharmaceuticals and of medical and orthopaedic goods, and other services supplied by pharmacists.”
We have made it very clear that there will be nothing in future agreements that will stop the Government being able to regulate our public services, including the national health service. That is set out in statute; it is there for all those who take an interest to read. There is no point having the same old arguments that were raised by the Transatlantic Trade and Investment Partnership, because we have already made that specific proposal; it sits there in CETA, which was ratified by this House, although its provisions, including NHS regulation and services, labour law and environmental services, were not supported by the Opposition. Perhaps the hon. Gentleman would like to explain why.
John Spellar (Warley) (Lab)
I thank the Secretary of State for that clarification. He has made it abundantly clear that the privatisation threat to our health services lies not with trade deals from which we can be fully protected but from his own Government’s privatisation agenda, which is still ongoing.
Dr Fox
While I clearly reject the latter part of what the right hon. Gentleman has said, the rest of it is very important. Trade agreements make it very clear that it is up to the elected Government of the United Kingdom to determine what they do with public services. The matter is therefore decided by the British electorate and not by any forces outside the United Kingdom. I am grateful to the right hon. Gentleman for making that point.
Several hon. Members rose—
Dr Fox
I will make some progress. I will give way again shortly.
New opportunities are clearly available to the United Kingdom, and seeking them will demand some of the agility that is required to respond to the potentially seismic shifts that are taking place in the world economy. The United Kingdom will have to be ready to compete for emerging sources of growth. While our established partners—such as the European Union—will continue to be vital, the locus of economic power is none the less shifting rapidly. It is estimated that 90% of global economic growth in the next five years will occur outside the EU. A centre of gravity that rested in North America in 1990 will have shifted to China and the far east by 2050, and we are already seeing the effects of some of that in the global economy. Those changes in economic development, global trade patterns and population growth in emerging and developing economies will fundamentally alter the opportunities that developed economies will have in the years to come.
Overall, the global population is projected to rise from 7 billion in 2010 to 9.8 billion by 2050, with the increase stemming mainly from Asia and Africa. The world is becoming increasingly well educated, wealthier and more urbanised. It is expected that by 2030, 60% of the world’s population—5 billion people—will be middle-class. In 2009, the figure was only 1.8 billion. In the intervening time, middle-class spending will more than double to $6.38 trillion. The rise of the middle class in Asia means that there is an enormous potential demand for the high-quality products and services in which the UK specialises. By 2030, China alone will have 220 cities with a population of more than 1 million, while the whole of Europe will have only 35.
David Linden (Glasgow East) (SNP)
The Secretary of State is right to refer to the emerging middle class in growing economies—India is one example—but can he give me a cast-iron guarantee that when he is negotiating these trade agreements, human rights and issues such as freedom of religion and belief will be at the forefront of his mind? I am concerned about the possibility that, as we go around negotiating these wonderful free trade agreements, we will start to ignore human rights, particularly in the case of India.
Dr Fox
The importance that the UK ascribes to human rights is extremely well documented in the range of Departments that are involved. The Government do not intend to seek any watering down of concepts of human rights, although it is very reasonable for us to have different provisions in countries such as Canada and the United States, whose legal remedies and legal systems are similar to ours, from those that we would have in some other countries. We will want to be flexible on that, and it is one of the issues that I want to see built into real-time parliamentary scrutiny of our trade agreements so that the House can determine whether the values represented by the United Kingdom are reflected in those agreements.
Stephen Timms (East Ham) (Lab)
Does the Secretary of State expect the beneficial arrangements that the European Union has made with developing countries to be maintained in the deals that his Department will negotiate?
Dr Fox
I am grateful to the right hon. Gentleman, who takes an interest in these issues, for his intervention. Not only would I like to see those maintained, but I would like to see us use our greater freedom to enhance them. For example, I would like to see a greater convergence of our trade and our development policies; I would like to see us use outward direct investment to help some of the poorest countries develop the ability to add value to their primary commodities; and I would like then for us to be able to use our freedoms in tariff policy to be able to reduce those tariffs on those value-added goods. It cannot be right that countries that produce coffee or fish are penalised for roasting their coffee beans or canning their fish when they try to sell them into our markets. By bringing those two elements together, we would be able to bring enormous benefit and enable people to trade their way to prosperity, rather than being as dependent on our aid policies as they are today. I am grateful to colleagues on both sides of the House who have come forward to us with proposals on that, because I think that we could find a strong bipartisan consensus in this country to be able to do some of that work.
Jim Shannon (Strangford) (DUP)
We have already shown that we are very capable of getting contracts, for instance, as the Secretary of State knows and as I saw from direct involvement, with China in terms of the agri-food sector in Northern Ireland. We have a £200 million contract over four years, which is an example of what we can do. Does the Secretary of State feel that the personal, family and business contacts we have with Australia, New Zealand and the USA will inevitably lead to further trade deals that will benefit us all in the UK, and does he share the confidence that I and many others in this House have that the trade deals we will get will benefit all in the United Kingdom of Great Britain and Northern Ireland?
Dr Fox
The hon. Gentleman makes several interesting points, and of course not all of the improved openings will come from former bilateral free trade agreements. The case he makes about opening up the dairy sector in China, which as he correctly suggests is worth about a quarter of a billion pounds to the Northern Ireland economy, came from our bilateral engagement with the Chinese Government and looking at their own regulations, so it was produced by a unilateral change by China, rather than a bilateral agreement. In many ways, it will be the opening up of sectors rather than bilateral agreements that will see the UK be able to increase access. The hon. Gentleman also makes a very good point about some of those other countries, because we have strong bilateral and personal links that I hope in the case of the United States, for example, will enable us to be involved at a state as well as a federal level in improving British trading access into those markets.
Vicky Ford (Chelmsford) (Con)
On scrutiny and transparency, can my right hon. Friend confirm that the legal protections for our NHS that were built into the EU-Canada deal will be replicated in any future UK trade agreement and that, if there was ever a dispute with investors, it would be resolved in a transparent and open manner and not behind closed doors?
Dr Fox
The UK as well as the EU have been at the forefront of improving the investor-state dispute settlement system and its transparency; in particular we supported the UNCITRAL—United Nations Commission on International Trade Law—rules on transparency that became effective in 2014. We have always seen this as being a necessary part of agreements, but we do absolutely agree that transparency is one of the ways to give greater public confidence in the system itself.
It is predicted that the share of global GDP of the seven largest emerging economies—Brazil, China, India, Indonesia, Mexico, Russia and Turkey—could increase from around 35% to nearly 50% by 2050, which would mean that they would overtake the G7, although of course even with more mature economies the International Monetary Fund has predicted that the United States will grow over 50% faster than the euro area this year, at 2.5%. This historic shift in global economic and demographic power will reshape the opportunities of international trade in the years to come, perhaps faster than many expect.
We cannot wish away this change and nor should we. Providing the employment and economic growth the UK needs means navigating this shift successfully. Happily, the United Kingdom is well placed to take advantage of these new opportunities. British businesses are superbly positioned to capitalise on this new environment, as both established and growing economies drive demand in precisely those sectors in which the UK excels. Anyone who has travelled widely will have seen how impressed global businesses and consumers are by the high quality of British goods and the professionalism of British services.
Geraint Davies (Swansea West) (Lab/Co-op)
But surely Team EU collectively, with Britain in it, would have much more negotiating leverage against those very large emerging markets. An extreme example would be China. We are dwarfed by China but, as the EU, we can negotiate the best deal. The EU is negotiating deals with Singapore, Japan and others. Surely the Secretary of State must agree that we would get a better deal as part of the EU than isolated as a dwarf outside it.
Dr Fox
I really find it quite insulting that the United Kingdom, the fifth biggest economy in the world, should be described as a dwarf by the hon. Gentleman. We are one of the most successful global economies. It is also worth pointing out that the European Union does not have a trade agreement with China or with the United States because it was too difficult to get an agreement with the 28 nations in those negotiations. He is right to suggest that economies of scale have a role in trade agreements, but so also does the ability to conclude those agreements and to ratify them. That has shown itself to be easier when dealing with single nations, which is why Australia has a trade agreement with China but the European Union does not.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The Secretary of State has given us a good rundown of eastern growth metrics. This is why the EU is making the free trade deals with Japan and Korea that we are worried we are going to fall out of. The percentage that I would like him to give us is the gain to gross domestic product for the UK in any deals. We know that the UK will probably gain about 0.2% of GDP with a United States deal, as opposed to the 6% to 8% that it is going to lose from the European Union. That is only about one thirtieth or one fortieth of the gain. If the right hon. Gentleman is talking percentages, will he give us the percentages in context? He says that there will be a loss from Europe and gains with the United States of America and other places, but sadly those gains will be dwarfed by the losses.
Dr Fox
But that is a false prospectus, because we want a full and comprehensive trading agreement with the European Union that maintains that trade for the United Kingdom plus the extended opportunities that will come with increased access to those markets that are growing faster. It is possible to do both. It is possible to maintain our trade with the European Union and to improve our trade with the rest of the world. In fact, Britain will have to do that if we want to generate the sort of income that we require for the provision of our public services. Work done by the Institute of Economic Affairs suggests that in 2017 the big increase in UK exports of about £60 billion fed back into the Exchequer at a level of something like £15 billion to £20 billion. That is an example of how, when we come to balance our budget, it is not simply a choice between raising taxes and cutting spending; it is also about earning more money as a country.
Angus Brendan MacNeil
Is the right hon. Gentleman seriously saying that the Treasury’s suggestion that getting out of the European Union and the single market will hit the UK economy by 6% to 8% is not actually the truth? That is what is going to happen; he knows that we will take a GDP hit from that. He also knows that a deal with the USA, which accounts for a quarter of the world’s GDP, will give us only a 0.2% gain. He will need to make about 30 or 40 USA-style deals to make up for that loss. Given that the USA accounts for a quarter of the planet, he is going to have to trade with seven or eight planets to make up the loss resulting from his Government’s policy on Europe.
Dr Fox
I know that the hon. Gentleman feels very strongly about this. He did not like the result of the referendum and he does not like the decision to leave the European Union, but we are leaving the European Union and we need to ensure that we have sufficient access to the European market, but in a way that does not tie our hands in relation to increased access to other global markets. He makes assumptions on growth in other markets that I do not accept. Nor is this purely about access to goods markets; it is also about the growing access to services markets. In the global trading environment, we have simply not seen the sort of liberalisation in services that we have seen in goods since the establishment of the World Trade Organisation. There is huge potential to unlock the economic benefits to the United Kingdom in seeking global liberalisation in services trading, which is not factored into any of the equations that the hon. Gentleman has mentioned.
Stewart Hosie (Dundee East) (SNP)
My hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), the Chair of the International Trade Committee, has got to the nub of this. The National Institute of Economic and Social Research said 18 months or so ago that we would lose around 20% of total UK trade even with an FTA with the EU. However, FTAs with the main English-speaking economies and with all the BRICS countries would only see trade rise by 2% or 3% respectively, which goes nowhere close to filling the gap. The point that my hon. Friend is making in GDP terms and the one that I am making in trade terms is at the heart of this. Liberalisation or not, there is no way that we can fill the gap left by what we are about to lose.
Dr Fox
As I said, the Government’s ambition is to have a full and comprehensive agreement with the EU, as set out in the Prime Minister’s model. Of course, if the Opposition parties want to avoid what they regard as the terrible scenario of no deal, they can vote for the Prime Minister’s deal. In arithmetic terms—if the hon. Gentleman looks at where Britain’s exports are going—just over a decade ago some 56% of our exports were going to the EU, whereas today that is down to about 44%. Why? It is not simply because the EU has grown more slowly, which it has, but because the economy of the rest of the world is growing faster. Clearly, that is where the markets are going to be for a United Kingdom that has an outward, global vision.
Several hon. Members rose—
Dr Fox
I will make some progress.
Standards have been widely debated in relation to future trade agreements, and I am sure that they will be raised throughout today’s debate. The Government have been clear that more trade does not and cannot come at the expense of the deterioration of our world-class regulations and standards, whether they relate to the recognised quality and safety of our products, our labour laws or our environmental protections. Our current approach both protects our own citizens from substandard goods and services and provides the quality assurance that foreign buyers want, which underpins our export success. I remind the House that Britain’s exports are currently at an all-time high.
The United Kingdom has proud and long-standing domestic commitments to protect the environment, to fight against climate change and to uphold high labour standards. We have clear commitments to sustainable development and the protection and advancement of human rights, as mentioned by the hon. Member for Glasgow East (David Linden), who is no longer in his place. We have a proud and long-standing tradition of promoting those values throughout the world, and the Government remain determined to meet our international commitments in that regard. That will not change as we leave the European Union.
To further that agenda, we will also be exploring how those values should be reflected in the design and provisions of future trade and investment agreements. We are absolutely clear in our policy that any future deals must ensure high food safety, animal welfare standards and environmental protections and maintain our excellent labour standards. The Government are committed to ensuring that this House and people across the country will have the opportunity to scrutinise such commitments in any future free trade agreements—a subject on which I will elaborate later.
Helen Goodman (Bishop Auckland) (Lab)
Taking the Secretary of State back to Honda’s decision earlier this week, the company said that one of its reasons for disinvesting from the UK was the new EU-Japan free trade agreement. Britain was fully involved in the negotiating of that agreement, so did the Secretary of State’s officials get the EU to take account of the FTA’s impact on inward investment into this country, because it has turned out to be disastrous?
Dr Fox
That was one of many reasons, with the main reason being changes in the international car market and, for example, the move towards electric vehicles and away from diesel engines. However, the hon. Lady’s argument seems strange coming from the Labour party, because Labour wants to remain in a customs union with the EU, which would keep the EU-Japan agreement in place and prevent us from making changes to it in the future. If it is such a bad agreement, why is it Labour policy to lock us into a customs union with that agreement in place?
Helen Goodman
We would like to stay in the customs union because we export a lot to Europe. That is the simple answer to the Secretary of State. However, the question that I am trying to put to him is about what he, his officials and his Ministers did to prevent an agreement that has been damaging to the British economy. Will he undertake to ensure that future free trade agreements will not involve the same model, because that would have a similar negative impact?
Dr Fox
The liberalisation of global trade is to everyone’s advantage. The hon. Lady says it is a terrible agreement, but her party’s Front-Bench policy is to keep Britain in the customs union, which would mean the agreement is there in perpetuity. Not only that, but we would have no ability to alter it in future, nor would we have the ability to resist any changes made to it, whether or not we think they are to Britain’s advantage. The Labour party cannot have it both ways: it either wants the freedom to create trade agreements or it wants them to be dictated by the European Union. It must be one or the other.
Stephen Timms
The hon. Member for Chelmsford (Vicky Ford) asked the Secretary of State for an assurance that the wording he read out from the agreement with Canada will be included in these future trade deals, too. Can he give the House that assurance?
Dr Fox
I have done so in previous debates of this nature, in which I said that we regard the public provisions in CETA as being the template we would like to see for future trade agreements. We think it is a good agreement, which is why we find it difficult to fathom why the Labour party did not vote for it in the House of Commons.
The world is crying out for the goods and services in which Britain excels, and it will do so even more in future. We have long been a proud and open trading nation. Trade totals some 61% of our GDP, and it is the foundation of an economy that delivers high-quality, high-paid jobs, that delivers better and more affordable products and that creates the conditions for competitive, world-leading businesses to innovate, prosper and grow across all parts of the UK.
Our openness to free trade, founded on a rules-based multilateral trading system with the World Trade Organisation at its centre, is at the heart of our prosperity. The Government have a clear position that multilateral agreements remain the gold standard of international trade agreements and are the ideal means of pursuing prosperity for the UK and globally across all 164 WTO members. However, this does not mean that bilateral or regional agreements cannot be useful complements to the multilateral system as an adjunct to wider liberalisation. That is why we are also pursuing a range of free trade agreements at both a regional and a bilateral level. Through these free trade agreements, the United Kingdom can work with our partners to establish modern, enduring and impactful trading rules that work for British businesses and for people and communities across our country.
One of the most important trade agreements we are considering is, of course, with the United States, which is our largest single-nation trading partner, with £184 billion- worth in the last year accounting for around a fifth of our exports, and is the single biggest source of inward investment into the United Kingdom. The UK and the US have a deep, long-standing relationship with a strong and enduring bond. We have a shared heritage and shared values, and of course we have deep co-operation across a wide variety of security and defence matters.
We have already taken concrete steps towards this potential trade agreement, including the signing of a mutual recognition agreement last week that confirms both Governments’ commitment to maintaining all relevant aspects of the current EU-US MRA when it ceases to apply to the UK. This will help to facilitate goods trade between the two nations and will guarantee that UK and US exporters can continue to ensure goods are compliant with technical regulations before they depart their home country. Total UK trade in the sectors covered by the deal is worth up to £12.8 billion, with the UK exports covered worth an estimated £8.9 billion.
Similar agreements have been signed in recent weeks with Australia and New Zealand. These agreements ensure continuity and safeguard revenues for British businesses and consumers, and they mark a further crucial step in securing and furthering our vital trading relationships. An ambitious free trade agreement between the US and the UK would further cement our existing strong bilateral partnership and further the interests of our highly compatible economies. It will make it easier for UK and US businesses to trade with each other and identify where we can collaborate to promote open markets around the world.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I have been listening carefully to the Secretary of State, and his argument seems to be that, on our own, we will be nimbler and more able to negotiate good trade deals, but he must know that size matters. As a market of 500 million, there is 10 times the opportunity for profit in the European Union than in the United Kingdom. Why should we get a better trade deal with the United States, for example, given the smallness of our market and of the opportunity for profitability compared with the European Union? If we are not going to get a better deal, why are we doing it?
Dr Fox
I hate to point it out, but the EU does not have a trade agreement with the US. Let me give the hon. Lady one example of why it has been unable to have one—data localisation. Although 24 out of the 28 members wanted to move forward with data movement with the US, four countries—France, Germany, Austria and Slovenia—blocked it. That meant that although most of the EU wanted that agreement, it was unable to get it. We would not be restricted in the same way. She is right to say that the bigger the market, the bigger the offer, but that has to be balanced against our ability to be flexible, and how liberal and open we would want to be in that trading environment. We are the fifth biggest economy in the world, and I find it ridiculous that we are being told that we are some sort of economic minnow, when, as the fifth biggest market in the world, most countries want to have access to us. Being smaller economies than the EU has not prevented countries such as Canada and Australia from having trade agreements with much bigger economies, because those trade agreements will be completed and signed only if they provide mutual benefits—otherwise, what would be the point in negotiating them? So I counsel this House against the despair of saying, “We cannot do it on our own.” As the fifth biggest economy on the planet, we are more than able to negotiate strong agreements with other political and economic groupings around the world.
Several hon. Members rose—
Dr Fox
I will make a little progress, because I know other Members wish to speak.
When we leave the European Union, an ambitious UK-US free trade agreement will be a key priority for the Department for International Trade, and we have already been laying the groundwork. The US-UK trade and investment working group has now met five times, with conversations focused on what both sides can do towards ensuring certainty and continuity for business on both sides of the Atlantic, and on identifying opportunities to facilitate bilateral trade and investment, consistent with the UK’s obligations as an EU member. Both the Prime Minister and President Trump have made clear their shared commitment to these bilateral discussions, and they restated that in their most recent meeting in July 2018. As US Ambassador Woody Johnson has said:
“Britain is the perfect trading partner for the United States.”
We very much welcome the letter of intent sent to Congress from the United States trade representative stating that the Administration intend to open a negotiation with the UK once we leave the EU. The President’s statement in the Rose Garden last week, pointing to a very substantial potential increase in UK-US trade, makes it clear that we already have a special trade relationship and that there is real ambition on both sides of the Atlantic to embrace this after we leave the EU.
Matt Western (Warwick and Leamington) (Lab)
Let me come back to a point about UK-US trade. The Secretary of State will be well aware that so many US corporations have favoured UK membership of the EU because it has given them a bridging point in access to the EU. The US Chamber of Commerce in Europe, for example, has long favoured our staying in Europe. Does he not agree with that?
Dr Fox
A lot of US corporations that I speak to are very relaxed about what our relationship with the EU will be, not least when I explain to them the constitutional implications of Britain being in the EU. I say to my American colleagues, “How would you like to have a court that has authority over the Supreme Court but that sits in Ottawa or Mexico City and over which you have no control?” They then soon understand the constitutional reasons why many of us voted to leave the EU.
Vicky Ford
My constituents are very concerned about animal welfare standards. Will the Secretary of State confirm that a future trade agreement with the US would not expose British farmers, who have our high animal welfare standards, to products from the US that may have been produced to a lower animal welfare standard?
Dr Fox
I have already said that we give high priority to those standards, including animal welfare standards. That has been an essential part of what the Government have set out. I know that it would be advantageous for the Opposition if that were not the Government’s position, and they would like it not to be our position so that they could attack it, but we want to maintain our high standards of consumer products, our high environmental standards, our high standard of labour law protection and our high animal welfare standards as part of our approach to global trade. I am not sure that I could be clearer but, no matter how often the Government restate their position, there are those who do not want it to be our position and who want to interpret it in a completely different way.
The Asia Pacific region will be a key engine of global growth in the 21st century. That means that the comprehensive and progressive agreement for trans-Pacific partnership, or CPTPP, is a key interest for the United Kingdom as we leave the European Union. It is an extraordinarily global free trade agreement, spanning 11 countries on four continents: Japan, Vietnam, Singapore, Malaysia, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. Those 11 countries are collectively home to around 500 million people, constituting some 13% of global GDP and more than £95 billion-worth of current UK trade. If the UK were to accede to it, we would be the second-largest economic member within the agreement, which would then cover a sixth, or 17%, of global GDP—nearly equal to the EU minus the UK.
There has been a positive response across CPTPP members to the Prime Minister’s announcement of the UK’s interest in potential accession. In particular, it has been welcomed by both the Japanese and Australian Prime Ministers.
John Spellar
I thank the Secretary of State for mentioning the welcome developments with regard to the partnership. I hope, though, that accession would not be at the expense of trying to move towards a free trade agreement with our great friends and allies in Australia.
Dr Fox
The right hon. Gentleman, as ever, anticipates my very next point. In addition to considering access to that comprehensive international trade agreement, we are at the same time moving forward with ambitious bilateral discussions for future free trade agreements with two of our closest friends and allies: Australia and New Zealand. Both countries are important strategic partners with which the United Kingdom has a deep shared heritage, built on the foundations of democratic values, security, language, our common legal system, culture and, of course, sport—although not all with equal success. It is because of our shared values and our firm belief in free and open trade that we want to strike cutting-edge free trade agreements with Australia and New Zealand, seeking to go further than CPTPP—indeed, further than any FTA ever before—in areas of shared ambition such as services and digital.
Many UK businesses already view Australia and New Zealand as an attractive base for their regional operations, and their proximity to Asia makes them excellent partners for UK firms in a region that stands to deliver nearly two thirds of global growth to 2030. Unlike the EU, Australia and New Zealand have trade agreements with the world’s second largest economy, China.
Mary Glindon (North Tyneside) (Lab)
The Australian Trade Minister has said that other countries in the Asia Pacific region would be considered before us for membership of the trans-Pacific partnership, because we are not in that region. How does the Secretary of State feel about that? Does it dint his confidence at all about any agreements we could reach?
Dr Fox
No. The countries in the CPTPP have been quite clear that they want to finish the ratification process for the 11 countries that are already in the partnership before they consider potential new entrant countries. They have yet to decide whether they want to consider individual countries or to group countries in a timetable for accession. We have simply made it clear that we have an ambition to join the partnership. We have a long way to go in determining what that would look like in respect of both timescale and content.
I am delighted to report that both Australia and New Zealand have shown strong political will to negotiate such agreements. Australia is the 13th largest global economy and has been a flourishing nation in recent times, with an excellent record on GDP growth, and trade already worth some £15 billion per year.
The UK is the second largest investor in Australia while Britain is the second largest destination for Australian overseas investment. Our countries established the UK-Australia trade working group in September 2016 and since that time it has met regularly to lay the foundations for future FTA negotiations in addition to discussing wider trade issues of shared interest. I believe that we can look forward to those discussions with confidence.
Similarly, New Zealand and the United Kingdom enjoy extremely close economic ties. The UK is New Zealand’s largest export market in the European Union. New Zealand exports more goods to the UK than to Germany, France and Italy combined. We are also the largest EU investor in New Zealand. The UK and New Zealand are both ranked in the top 10 countries for ease of doing business and we already boast a strong trade relationship, with UK-New Zealand trade worth around £2.8 billion.
The UK-New Zealand trade policy dialogue has been working since September 2016 to determine how we further strengthen our trade and investment relationship and to prepare the groundwork for the launch of bilateral FTA negotiations. An FTA with New Zealand would be an opportunity to set an ambitious precedent for future agreements and to build our relationship with a key ally in multilateral forums. It will give us the opportunity to pioneer modern and enduring trade rules, to update the global rulebook and to identify where we can collaborate to promote free, fair, rules-based trade in markets around the world.
Free trade agreements also give the United Kingdom the opportunity to design new modern trading rules that play to our unique strengths. To ensure that any future FTA works for the whole of the UK, the Government have sought views from a broad range of stakeholders from all parts of the UK. The Government’s proposal, published last year, set out our approach to pursuing new trade agreements collaboratively by engaging the widest range of stakeholder groups. We are committed to an inclusive and transparent trade policy that benefits the whole of the UK.
We are also creating a new strategic trade advisory group, which will advise Department of International Trade Ministers and trade negotiators on trade policy as we move forward. The group will be co-chaired by the Minister for Trade Policy and we are now finalising the selection process for membership. I will shortly write to the successful candidates, with an announcement to follow. This group is composed of core members, representing a diverse range of interests and expertise, drawn from different groups—from business and the trade unions to consumers and non-governmental organisations among others—but all with an interest in our future trade policy and its impact on the full spectrum of issues facing the UK, from the workplace to consumer choice and the environment. The membership of this group, with its balance of interests and representation from across the UK, is designed to allow the Government to harness advice, insight and evidence from a cross section of experienced voices already actively involved in trade-related issues.
Deidre Brock (Edinburgh North and Leith) (SNP)
I thank the Secretary of State for giving way. Let me go back to the issues around Australia—as an Australian this area is of particular interest to me. The Japan-Australia economic partnership agreement took seven years from start to finish to establish. How long does the Secretary of State estimate it will take to establish a similar agreement with Australia?
Dr Fox
At the other end of the scale, the Australia-US trade agreement was an extremely short one to negotiate. So where there are compatible economies, it is possible to do that. I spoke to my Australian counterpart yesterday, and we hope that, given the openness of our economies and their compatibility in terms of shape, we will be able to conclude an agreement as soon as possible. There is no way, in advance of a negotiation, to say how long it will take. At the beginning of this process, our Australian colleagues are likely to be involved in a general election, which may mean that it will be slightly later when we can get into the process, but I hope to be able to conduct bipartisan negotiations with them to ensure that we can make progress as quickly as possible, which is in our mutual interest.
On 20 July 2018, we launched four online public consultations, providing the public with an opportunity to give their views on potential future trade agreements with the US, Australia and New Zealand and on accession to the CPTPP. All four consultations were open for 14 weeks—two weeks longer than the EU’s trade agreement consultations—and collectively attracted more than 600,000 responses, making it one of the largest consultation exercises ever run by the UK Government.
Alongside the consultations, we ran 12 events across the different regions and nations of the UK to seek their views on how prospective trade agreements could support prosperity and growth. The evidence provided in the responses to those consultations will inform the Government’s overall approach to our future trading relationship with these countries, including our approach to negotiating any trade agreements. Decisions made as a result of the consultations will be published before potential negotiations start.
This is the first time that the United Kingdom has consulted on potential future trade agreements independently. The volume of responses across all four consultations, run simultaneously, means that it is only right that we take time to consider the responses and the views of this House in detail. While there are many other markets that the UK will look to for new agreements, our shared values and our strength of trade with the US, Australia and New Zealand make them the right places on which to focus our initial attention, alongside our interest in potentially negotiating accession to the CPTPP.
Let me turn to future scrutiny of our free trade agreements—a topic that has received much discussion in both Houses, including through the inquiry co-ordinated by the International Trade Committee and the published response.
Angus Brendan MacNeil
Let me provide a little extra scrutiny. The Secretary of State has talked a lot about trade policy and trade agreements, but these are very different from trade; trade is a different thing. I am thinking about my constituency, where there are guys who travel to the European continent on a weekly rotation basis with lorries containing live shellfish. Now, if we have trade agreements with New Zealand, it is not so easy to drive there on a weekly rotation with a lorry of live shellfish. These guys would also face snarl-ups and there would not be the openness that there currently is to access the French, Spanish, Italian and German markets. How will the interface between trade, trade policies and trade agreements actually work in practice for lorry drivers of shellfish? That is what these people need to know.
Dr Fox
The mechanics of the market become immaterial if there is no market to sell into. We are looking to ensure that UK producers have increased market access so they can trade more, sell more of their products and make more profit, which enables us to employ more people. That is what the whole concept of free trade is about. The hon. Gentleman is quite right that the mechanics at borders need to be ensured—not only in the United Kingdom, but in many of the other countries that we are selling into. That is what the trade facilitation agreement that we signed last year was all about. There has to be an improvement in global trading mechanics, including through using new technologies.
The Government are committed to the established principle that Parliament must be able to scrutinise trade agreements at the beginning, throughout and at the end of negotiations. We must have a mechanism that balances real and meaningful scrutiny with the need to maintain the greatest possible security for sensitive negotiating positions and potentially market-sensitive data. I am grateful to Members on both sides of the House for their encouragement and the private conversations that we have been able to have on this issue. The Government are considering how best to balance these elements and I will bring forward further proposals very shortly, not least because we need this for the Trade Bill to make progress on Report in the other place. We will of course take account of views expressed on the subject in this debate.
As we leave the European Union, the United Kingdom will have the opportunity to negotiate, sign and ratify free trade agreements during the implementation period. Working with like-minded partners such as Australia and New Zealand in bilateral agreements and adding our weight to the CPTPP—a modern and ambitious agreement— alongside an agreement with the largest and one of the most innovative countries in the world, the United States, will allow the United Kingdom to take advantage of the opportunities that leaving the European Union affords. This will allow us both to break down barriers that exist with our established partners, and to adapt to the momentous changes taking place in global trading patterns and the growth of the global economy.
Across the world, new markets are emerging that will provide golden opportunities for British goods and services, and it is right that the Government seek out like-minded partners to build the relationships and trading environments that will best maximise those opportunities for the benefit of the United Kingdom and the wider world.
Barry Gardiner
The hon. Gentleman makes two distinct points. Of course, he is right to talk about the impact of Brexit on the automotive sector in the UK. All Members in this House should be concerned about that. The point that my hon. Friend the Member for Bishop Auckland quite rightly made was that Honda said, as the Secretary of State mentioned, that there was no imputation that this decision was made as a result of Brexit, but there was a clear indication that it was as a result of Japan now being able to import tariff-free to Europe—including the UK, but the whole 28 member states. At the point when this Government should have been making representations during the negotiations on that agreement, they were not doing so.
Dr Fox
The Labour party’s position is that it would be inside the customs union, where it would inherit the very agreements it says it does not like—it did not vote for CETA and it does not like the Japan economic partnership agreement. It would not only be bound by those agreements but would have no say in any future policy because it would be applied by the EU through the customs union.
Barry Gardiner
It is always the way with the Secretary of State: when he sees that a valid point has been made and that he is vulnerable to it, he tries to go on the attack. It does not work. It is a pathetic response when he knows and should, with some humility, accept that the proper impact assessments were never made.
Barry Gardiner
I do not know whether my hon. Friend was in the Chamber just prior to the debate starting, but I raised a point of order with Mr Speaker—obviously, you were not here, Madam Deputy Speaker— to say that the fourth written statement due to be laid before the House today had not been made available prior to this debate. I thought that was a great shame. Mr Speaker expressed his view that, of course, these things sometimes happen inadvertently. If it was advertent, he deprecated it. But of course, there is a pattern here, and my hon. Friend is right to point to that pattern. I share her hope that we will not find next week that there are further documents that either would have been vital for today’s debate or are being produced at exactly the wrong point for Parliament to have the maximum opportunity to scrutinise what the Government are doing.
The British Ceramic Confederation letter continues:
“Some members thought if we are importing, say, a raw material, that was not manufactured or quarried in the UK a liberalisation might be acceptable. Our members are clear this should be an exception rather than a general rule and comprehensive consultation would be needed.”
Of course, the chief executive rightly also points out that most other sectors have not had the same level of discussion with officials that ceramics has had, and so are largely unprepared for the potential impact of a unilateral snap move to zero most favoured nation tariff rates. There has been no comprehensive formal consultation, no comprehensive impact assessment and no prolonged transition proposed. Such a significant decision would have far-reaching consequences for the UK economy and would demand full parliamentary scrutiny.
Consultation, impact assessments and parliamentary scrutiny—those are all the things their lordships are still waiting for before returning the Trade Bill to this House, and all the things this debate ought to have been about, rather than putative future agreements whose working groups have been mired in secrecy and which the Secretary of State sees as his vanity project of restoring the Anglosphere.
The letter continues:
“In a no deal Brexit, already highly damaging and disruptive for our sector, the shock of zero tariffs would be devastating, affecting businesses, jobs and communities across the country as well as affecting UK manufacturing more generally.”
Of course, it is not just the ceramics industry that is horrified by the Secretary of State’s proposals. The Manufacturing Trade Remedies Alliance, which is made up of eight national trade associations, as well as three trade unions, only yesterday put out an equally strong press release damning the folly of a wholesale reduction to zero tariffs, saying that
“the move could ruin the home market for many sectors. Increased imports would flood the market, jeopardising tens of thousands of jobs and fundamentally changing the British economy.”
Ian Cranshaw, head of international trade at the Chemical Industries Association, said:
“The idea of a new tariff regime is something which should be subject to proper consultation. With less than 40 days to Brexit, British manufacturers already dealing with Brexit uncertainties are now having to assess how their business might be impacted by an increase in non-EU competition should the government remove MFN tariffs on key chemical products.”
Finally, Jude Brimble, GMB national secretary, said:
“Zero tariffs in the event of a no-deal Brexit is a short-sighted move. While it may lower prices in the short term, it will ultimately put thousands of British manufacturing jobs at risk.”
Barry Gardiner
In a moment. Jude Brimble continued:
“Manufacturers are often based in the heart of their communities and supporting many more indirect and supply chain jobs.
Zero tariffs could destroy the proud history of making and manufacturing”
in this country.
Is this really what the Secretary of State intends? I will happily give way to him now if he will rise to confirm that he has abandoned that folly.
Barry Gardiner
I have two points. First, of course I will vote for a deal, but I will not vote for the Secretary of State’s bad deal. That is why we have put forward our own proposals for a good deal that would protect manufacturing in this country. Secondly, he says that new tariffs will be necessary only if there is no deal. Why then have he and his departmental officials been talking to industry about his proposals for zero tariffs? I will very happily give way if he will come back to the Dispatch Box and explain that. [Interruption.]
Dr Fox
The hon. Lady has asked for my reassurance. As I mentioned earlier, article 23.4 of the comprehensive economic and trade agreement states:
“The Parties recognise that it is inappropriate to encourage trade or investment by weakening or reducing the levels of protection afforded in their labour law and standards.”
The protections for which the hon. Lady has specifically asked are included in a document that has already been ratified by the United Kingdom Parliament. My question is this: why did the Labour party not vote for it?
Liz Twist
I thank the Secretary of State for his comments, and for pointing me to that document. I am sure that my constituents will be glad to hear what he has said, but they will also want me to ensure that the issue continues to be at the heart of our discussions and interventions.
That concern about people and labour standards brings me to my third point. Just before Christmas, I was pleased to be able to lead a debate on Traidcraft and the future of fair trade. One of the issues raised was also raised today by my right hon. Friend the Member for East Ham (Stephen Timms): trading status with less developed and developing countries. We were seeking assurances that those countries would continue to have access; I noted the Secretary of State’s earlier comments on that matter but would welcome further assurances, perhaps by the Minister in summing up this debate. It is important for trading and the economic development of those countries, but there is also an important gender equality element in dealing with those countries to ensure they continue to have that focus.
Finally, people wanted me to raise the issue of scrutiny. There is real concern that trade deals will be signed off behind closed doors. Again, I note that the Secretary of State touched on that, but we need to be very clear that there is the best possible scrutiny of the trade deals being done; Parliament must be able to take a full part in that, and it must be transparent. My constituents must be able to see that that is happening. It is very important that that happens.
These are not the detailed points that many other Members have raised, but they are the issues that most concern my constituents, and they must be addressed in the discussions. Again, I ask the Minister to address clearly the concerns of my constituents.
Bill Esterson (Sefton Central) (Lab)
Thank you very much, Madam Deputy Speaker. It certainly has been a very thorough debate, and I certainly do not intend to go into the Minister’s allocation of time and will be well within my half of what is remaining; I can certainly confirm that.
At the start of the debate, my hon. Friend the Member for Brent North (Barry Gardiner) raised a point of order. He said that a written ministerial statement on trade continuity under a no-deal scenario was due to be published today—it was listed as No. 4 on the Order Paper—but that it was not available by the start of our deliberations. It had still not been published on the internet by 2.30 pm, but happily the Vote Office very kindly delivered a copy to me at about 2.10 pm, which was some time after the Front-Bench speeches to which you have just referred, Madam Deputy Speaker. The document is entirely relevant to our deliberations. It refers to mutual recognition agreements with the United States, Australia and New Zealand, and much more besides that is relevant to the debate. I shall take the time to refer to it during my remarks. It is a shame that it was not here earlier, as it would have enabled other Members to have the relevant information.
Distance is important. The value of our trading relationship with Ireland is higher than the value of UK trade with Italy or Spain, even though Ireland’s economy is much smaller than that of either Italy or Spain. Members should not just take my word for it; that is the view of the Office for National Statistics. If the Government have their way, we will abandon the deal that we have on our doorstep for a deal—or a series of deals—on the other side of the planet. Trade by teleport is not a reality, however. I am glad that the Secretary of State has acknowledged the fact that we are on the other side of the world from the Pacific. It is also a fact that he is proposing that we become a nation that is reliant on carbon-pumping trade deals, which is somewhat at odds with the claim in his opening speech that he is going to uphold our climate change obligations.
Bill Esterson
What an absurd intervention—but we have come to expect nothing less from the Secretary of State. Of course we should have trade around the world, but we should not be prioritising trade on the far side of the world over trade on our own doorstep. He knows that only too well. That has been the theme of this debate.
The Secretary of State quoted the interpretive instrument in CETA. As the hon. Member for Dundee East (Stewart Hosie) mentioned, the Canadians have the highest use of investor-state dispute settlement arrangements anywhere in the world, so they have form when it comes to the use of such systems. The problem is that the instrument does not alter, let alone override, the text of CETA. Article 31 of the Vienna convention states that treaties
“shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”
However, if there is
“any conflict or confusion between CETA’s plain wording and the instrument, it is CETA’s text that prevails…The critical point is that while the parties retain the right to regulate, they must do so in conformity with their CETA obligations and commitments.”
Those are the words of the Canadian Centre for Policy Alternatives. The interpretive instrument that the Secretary of State referred to does not overrule the main CETA documents. Those of our constituents who have written to us with their concerns about the threat of the privatisation of the national health service as a result of the negotiation of deals—the subjects of which have been covered in this debate—are right to be concerned, given the contents of the CETA document and the legal opinions on it. They are right to raise those concerns, as was my hon. Friend the Member for Blaydon (Liz Twist) earlier.
Turning to the opportunities to scrutinise the negotiation of these deals, I wonder whether the Minister could pick up on the thread of the debate about whether this is our one and only opportunity to do that or whether there will be further chances for Members of Parliament to debate and challenge the mandate for negotiation and then to scrutinise any proposals put forward during the negotiations. What is going to replace the current arrangements through the Council of Ministers, the international trade committee of the European Parliament, the European Parliament itself, and our own European Scrutiny Committee? I note that the written ministerial statement refers to
“full parliamentary scrutiny processes to ratify some UK-third country agreements”,
so what are those processes? Do they represent full scrutiny, or are they the Henry VIII powers that the Secretary of State advocated in the Trade Bill, which mean an absence of any meaningful scrutiny of measures, especially given the inability to influence their contents? The same point applies to the new agreements referred to in this debate.
Businesses that want certainty had to change from WTO arrangements with Japan, to which the statement refers, to EU-Japan agreement arrangements at the start of this year. Presumably, they will now have to change back to us trading with Japan through the WTO, which again is mentioned in the statement, and then, once agreed, to UK-Japan bilateral agreement arrangements. That is far from a demonstration of certainty for business, but that is what the written statement appears to confirm, which prompts the question of why there was a delay in the appearance of the missing information.
Bill Esterson
Was he? That is very kind of him.
In 2017, a number of Australian academics warned of the danger that
“Australia’s interests get caught up in the possibly unrealistic worldview of the Brexiteers and thus Australia becomes collateral damage of…British politics.”
Why might they say that with this Secretary of State in charge?
In the real world, my constituents who put their goods on a ship at the port of Liverpool today do not know whether the ship will be able to dock in Tokyo on 30 March and what arrangements will be in place. They want the Government to show that they understand diplomacy, and they want them to avoid causing offence in delicate trade negotiations.
This week, in Swindon, we have seen what is happening in the real world: real workers’ jobs going—3,500 of them—and real communities affected. We are party to a trade agreement with Japan through our membership of the European Union, and the deal has not prevented the disinvestment of Japanese companies such as Honda and Nissan.
“The idea that Brexit uncertainty is irrelevant to this is fanciful. How are Honda supposed to calculate the costs and benefits of staying in the UK in the overall global context against such lack of clarity on the future terms of trade?”
Those are not my words but the words of Sir David Warren, the former UK ambassador to Japan.
Dr Fox
I would have thought that the management of Honda are closer to this issue, and they say it is a result of changes in the international car industry and specifically not a result of Brexit. Why does the hon. Gentleman want to make it so when the company itself says it is not true?
Bill Esterson
As my hon. Friend the Member for Brent North was just saying to me, Honda’s management are far too well-mannered to say these things in public, but a former ambassador will tell it as it is, and I would have thought the Secretary of State wanted to take the advice of somebody with Sir David Warren’s experience.
Bill Esterson
The leave campaign pushed the point rather hard about Turkey’s accession to the EU.
My hon. Friend the Member for Bishop Auckland (Helen Goodman)—this is the bigger point about the Secretary of State’s involvement—spoke about the failure to ensure, when the EU-Japan deal was negotiated, that there was support for the foreign direct investment and its critical place in our car industry, whether at Honda or Nissan. The Secretary of State’s answer is that he will not change his approach in the future trade deals he negotiates once we have left the EU. That is a pretty grim predictor of what is going to happen under this Secretary of State and his colleagues in their support—or rather lack of it—for our industry, our manufacturing industry and our car industry in particular.
Bill Esterson
We have come to an interesting point, with Labour Members citing Margaret Thatcher and the fact that she founded the single market of the European Union to demonstrate just how wrong the current Government, who claim her inheritance, are in their international trade policy.
I have taken a number of interventions and I am very cognisant of your strictures for me to keep things to a minimum, Madam Deputy Speaker. As I was saying, the alternative is to deliver certainty. That alternative can come with a new customs union and a deal with the single market on regulations, standards and common institutions that protects our trade with the EU and with our partners around the world. The difficulties in renegotiating the deals with our partners have been laid bare in recent weeks by the failure of the International Trade Secretary to make progress on more than a handful of such deals, quite apart from the uncertainty over our future trading relationship with the EU. He wants to align with lower standards from the US.
Bill Esterson
Well, the Secretary of State has been saying that for years. The Chair of the International Trade Committee spoke earlier, and the Committee’s report set out the consequences of a deal with the US: it will inevitably lead to a conflict, with the potential for lower standards, impacting our ability to do a trade deal with the EU. That point should be listened to and the Minister should respond to it in his summing up.
We have had an excellent debate and I sincerely hope that the Minister will respond to the challenges set to him about where we have reached. In particular, I hope he will address whether adequate protection is in place for our agriculture, car industry and other manufacturing sectors and whether there will be further opportunity to scrutinise international trade agreements and their preparation with the US, Australia, New Zealand and the Pacific rim. I thank my colleagues for their contributions to the debate. I look forward to scrutinising the Government in the coming months on these points, but the fact that only five roll-over deals have been completed so far does not bode well under this Secretary of State and his ministerial team. [Interruption.]
EU Trade Agreements: Replication
Liam Fox Excerpts(5 years, 3 months ago)
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Barry Gardiner (Brent North) (Lab)
(Urgent Question): To ask the Secretary of State for International Trade to make a statement on the progress he has made in replicating trade agreements between the United Kingdom and those countries with which the EU has a trade agreement.
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
As a member of the EU, the UK currently participates in about 40 free trade agreements with more than 70 countries. In 2018, the trade agreements in force constituted about 11% of our trade. They cover a wide variety of relationships, including free trade agreements, economic partnership agreements with developing nations, association agreements that cover broader economic and political cooperation, and mutual recognition agreements.
The Government’s programme for providing continuity and stability for businesses, consumers and investors in our international agreements is of the utmost importance. We are committed to ensuring that those benefits are maintained, providing for a smooth transition as we leave the EU, but the House will be well aware that the best way to provide that continuity and stability is to ensure that we have a deal with the European Union so the UK remains covered by all those agreements during the implementation period.
We have already signed a number of agreements, including with Switzerland—the largest in terms of our trade flows, representing more than 20% of the value of all our roll-over agreements. We have also signed agreements with Chile and the Faroe Islands, and an economic partnership agreement with eastern and southern Africa. The texts, explanatory memorandums and parliamentary reports for those agreements have already been laid in the Libraries of both Houses.
As we leave the EU, we have no intention of making our developing country partners worse off, as the Opposition would have us do by abandoning EPAs. It is important for the prosperity of their people that we maintain our trading relationships so they have the opportunity to lift themselves out of poverty. We have recently reached agreements with Israel and the Palestinian Authority, and we intend to sign them shortly. Just today, we reached agreement on the UK-Pacific EPA. We have also signed mutual recognition agreements with Australia and New Zealand, and will be closing two with the United States soon. A number of negotiations are at an advanced stage. All international negotiations—indeed, any negotiations—tend to go down to the wire, and I would expect nothing different from these agreements. That is the way that countries do business.
To put the economic value of the agreements in perspective, the countries covered by 20 of the smallest agreements account for less than 0.8% of the UK’s total trade. For the countries with which we may not be able to sign a full agreement by exit day, it is responsible to ensure that we have contingencies in place should we end up, unfortunately, in a no-deal scenario. That is exactly what my Department, alongside the Foreign and Commonwealth Office and the Department for International Development, is doing. We will shortly be updating businesses and the House about the progress on these agreements, and will continue to inform the House as soon as further agreements are signed, in line with our established parliamentary procedures.
Barry Gardiner
Yesterday, the Department’s risk matrix for the so-called roll-over agreements was published in the media. Of the 40 agreements that the Secretary of State famously promised would be ready one second after midnight on exit day, precisely four have been signed. Nine are off track, 19 are significantly off track, four cannot be completed by March 2019 and two are not even being negotiated.
Throughout the passage of the Trade Bill, Members repeatedly said that they were concerned that it would not be possible to replicate the terms of those agreements fully, and that many countries would seek to renegotiate terms in their favour. I therefore ask the Secretary of State to write to me to set out for each country what objections or demands to concluding a new roll-over have been presented, what concessions he has offered in respect of preferential access to UK markets in order to overcome such obstacles, and what assessment he has made of the impact on trade flows with the UK of a failure to conclude a new deal.
Many in the business community feel that the Secretary of State has diverted too many of his Department’s resources to entirely new free trade agreements, and so keen has he been to grandstand with the new that he has ignored the fundamental grinding work of securing what we already have. So I ask the Secretary of State to write to set out: the number of full-time personnel engaged on securing entirely new agreements; the number engaged on securing the roll-overs; and whether he believes his Department has been adequately resourced to handle so many trade negotiations at once.
Recently, the Secretary of State suggested the unilateral liberalisation of tariffs in the event of a no-deal Brexit. Will he explain to the House how he thinks negotiations would go with the remaining roll-over countries once he had given up our key negotiating leverage by reducing all tariffs to zero? Most Members might think that by doing so we were the ones being rolled over. Will he categorically rule out such a proposal? As we speak, goods are being loaded on to vessels that will be arriving in our markets from overseas after 29 March. How does he intend to support business with these transactions, given that nobody knows what tariffs and non-tariff barriers they will face when they arrive at their destination port? Increasingly, the Department for International Trade looks as though it has inadequate resources, focused on the wrong priorities, set by incompetent Ministers.
Dr Fox
As ever, the hon. Gentleman gives us a rich menu of the things on which he is wrong. First, if we want to ensure that all our agreements are rolled over, the best way to do that is by reaching a deal with the European Union so that they will apply one minute after midnight. I voted for that continuity. Did the hon. Gentleman? Did his party? Secondly, he asks about the reasons why countries may not want to continue these things. I have had discussions with a number of Opposition politicians about this. Some countries have said that they did not like some of the human rights elements that were incorporated by the EU and they would like us to drop those in order to roll the agreements over. I am not inclined to do so, because the value we attach to human rights is an important part of who we are as a country. The hon. Gentleman was wrong in that, rather than diverting resources in my Department from roll-over agreements to future free trade agreements, I have done exactly the opposite, reducing the number working on potential future FTAs in order to give maximum resource for this. Finally, he was wrong as I did not advocate unilateral liberalisation of tariffs—that was something mentioned in a newspaper—and the Government will determine what their day one tariffs will be as a collective decision in the event of no deal.
Mr Kenneth Clarke (Rushcliffe) (Con)
My right hon. Friend is right to stress that if we were to leave on 29 March with no deal, it would have a disastrous effect for many industries, because we would suddenly lose very important trading agreements across the world that we have enjoyed for many years. I agree with him on that, but does he not accept that when we get into the transition period he is still going to face enormous difficulties and will need a very long transition period to start negotiating so many trade deals with so many important markets for our economy? Does he not accept that his principal problem is the lack of bargaining power that the UK has on its own compared with what the EU has as a bloc in carrying out bargaining arrangements? He mentions human rights and other things, but very important countries such as Japan and South Korea, and others, are going to expect better terms from the UK, at the expense of the UK, than they have had to give to the EU. He says that they will take it to the wire. He accepts that he is having tough negotiations. Would he contemplate urging on his colleagues, even at this stage, moving to some sort of customs arrangement and regulatory alignment with the rest of the EU which will rescue us from these chaotic negotiations and allow us to enjoy the benefits of trade agreements which, for the most part, were ones that previous Conservative British Governments urged upon our EU partners and took a leading role in getting put in place in the first place?
Dr Fox
As ever, my right hon. and learned Friend raises interesting points. Although there would undoubtedly be a greater risk in the case of no deal, I do not agree that this would be disastrous, because we are likely to maintain a high proportion of the continuity of these agreements. Let me just remind him that five of those 40 agreements represent 76% of the trade, by value, that falls into this category. My Department has developed a great degree of expertise and knowledge in the process of transitioning to new agreements. There are those who say, “If we end up getting a deal, much of this work that has been done will be wasted.” I completely disagree with that, as it has created a body of knowledge, experience and expertise in the Department that will stand us in good stead. As for our ability to negotiate with other countries, we remain the world’s fifth biggest economy and many countries have said to us that it would be much easier to do an agreement with the UK as a single country which would then negotiate and ratify than to have to do it with 28 countries, as they do at the moment. On Japan, we have of course made clear our position and finished our public consultation on potential membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—CPTPP—a subject on which we are likely to have a debate in this House next week. Finally, he asks whether we should not stay in a customs union. That would preclude us from having negotiations on new agreements, such as with the United States, or even with China, with which the EU has no agreement at the present time.
Stewart Hosie (Dundee East) (SNP)
The Secretary of State has just said that countries say it would be easier to do a deal with the UK. One might ask the simple question: if it was so easy, why have we not even been able to roll over more than half a dozen of the deals we currently have? The leaked documents paint a picture of unvarnished failure: with South Korea and Canada we are off track; and with Japan we have no chance of completion. These deals are not simply necessary in the event of a no-deal Brexit; they may well be required at the end of the transition period if the negotiation then is as miserable as what we have seen to date. So why does he not own up? The time to negotiate these deals has run out, and it is highly unlikely that the Prime Minister’s deal, which he supports, will be accepted by this House. This is now the evidence that he and others need to put their weight behind an extension to article 50 so that his Government and his Department at least can complete the simple task of rolling over the deals we currently have.
Dr Fox
Again, I make the point: if Opposition Members want us to get trade continuity, the best way to do so is to vote for the deal that the Prime Minister has already set out. As for future FTAs, we could not negotiate those were we to follow the hon. Gentleman’s advice and remain in a customs union.
Greg Hands (Chelsea and Fulham) (Con)
I have had a careful look at the passage of these agreements through this House in the first place. Every one of them was supported by my right hon. Friend but most of them have been opposed by the hon. Member for Brent North (Barry Gardiner): CETA—the Comprehensive Economic and Trade Agreement—in February 2017; the EU-Japan agreement in June 2018; and the EU-Singapore agreement in September 2018. He voted against those. Does my right hon. Friend share my consternation at this urgent question, given that the hon. Gentleman never wanted us to be in these trade agreements in the first place?
Dr Fox
First, let me thank my right hon. Friend for the work he has done in my Department as part of this overall process. What stands out in this debate is the utter humbug we hear from the hon. Member for Brent North, who talks about the need to roll over agreements such as the one with Canada and asks why the Government are late in doing so. The Labour party voted against the agreement in the first place; Labour did not want us to have the agreement. So now, to come to the House asking why we are not rolling it over on time is, sadly, absolutely typical of the way he does business.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The serious matter here is that on 29 March, transition or no transition, the UK is going to be at the mercy of the sovereignty of 70 other countries in their agreeing to the trade deal roll-over. The EU seems to have been very good at these trade agreements, which include human rights. The Secretary of State wants to maintain those agreements, despite wanting to rip up trade agreements with the most important partners, namely the 27 countries in the EU trading bloc.
The importance of the 40-odd trade agreements with 70 countries is recognised by the Society of Motor Manufacturers and Traders, which warns that even if EU trade agreements are rolled over, advantages will not always be met. For example, the EU-Korea agreement allows for 55% automotive content, but the UK cannot reach 55% automotive content. As the Society of Motor Manufacturers and Traders has warned, that will put the UK at the disadvantage of not being able to fulfil the rates of the trade agreement, and we will be on the more disadvantageous World Trade Organisation terms as well. In the 40 agreements with 70 other countries, how many other instances are there of clauses such as the one on 55% content that cannot be met? People who trade and export from the UK need to know, and they need to know now, with 44 days to go.
Dr Fox
The central premise of the hon. Gentleman’s question is that we intend to rip up our trade agreement with what he describes as our most important trading partner, the EU27. We have no intention of having a breach. We want to have a full, liberal trading arrangement with the European Union. We do not want Britain to be subjugated in a political relationship that the voters have told us to leave. When it comes to continuity, the Government have set out what we will do with the agreements. For each of them, we have set out to Parliament—this is in both Libraries—the text of the agreement, an explanatory memorandum and the political statement on where there is any change between the agreement in place and the one we are rolling over, if utter and complete replication has not been possible. We have done that already, and we shall do that with the others.
Antoinette Sandbach (Eddisbury) (Con)
I heard the Secretary of State give the commitment on the guidance that he is going to give. My constituents who are seeking to export to countries now do not know, at the point of departure, what regime their goods will face on arrival. I note the Secretary of State’s attacks on the Opposition parties, but he may wish to recall that 117 Government MPs did not vote for the Prime Minister’s deal, many because of their ideological commitment to WTO rules. Given that we are 44 days away, when will that guidance be issued to companies in my constituency? I was one of the 40 Back-Bench MPs who supported the Prime Minister’s deal.
Dr Fox
The Government are assessing where we are with each of the agreements. Where we believe that it will not be possible fully to replicate, we will set out a technical notice in the coming days. Let me give my hon. Friend the example of Turkey, which is part of the customs union: unless we get an agreement with the European Union, we will not be able to maintain the current pattern of trade with Turkey, although we would look to see where we could mitigate any problems that came up.
Hilary Benn (Leeds Central) (Lab)
The past two and a half years have been a very painful process, as the wild and optimistic promises about what could be achieved from the Brexit process have collided with reality. That includes what the Secretary of State said to the Conservative party conference in the autumn of 2017. The question I wish to put to him is simply this: why does he think that it has proved so difficult to roll over all these deals, when he told that conference that it would be a very easy thing to do and he was confident of achieving it?
Dr Fox
If we get an agreement via the withdrawal agreement with our European Union partners, that is exactly what will happen: those agreements will roll over. Let me explain to the House why: the United Kingdom will be deemed by the European Union to continue to be party to those agreements. We will get continuity, but we will not get the same continuity if we do not get an agreement with the EU. Those who continue, by their actions, to make no deal more likely will have to be responsible for the consequences.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
I congratulate my right hon. Friend and Somerset neighbour on achieving a deal with Switzerland so effectively. Does he share my enthusiasm that this is the beginning of an opportunity for this country to trade more freely, to be able to cut the cost of goods coming into the country and to stop acting as a protectionist racket for inefficient continental European companies?
Dr Fox
I am grateful to my parliamentary next-door neighbour for his comments. Indeed, we have a great opportunity as we leave the European Union and as we take up our independent seat at the World Trade Organisation to be champions for global liberal free trade at a time when the voices of protectionism are rising. That is important not only for the United Kingdom or, indeed, for the economic wellbeing of the trading world, but for the wellbeing of those we have managed to take out of abject poverty as a result of a liberal global trading environment.
Peter Grant (Glenrothes) (SNP)
We have seen some delusional performances at the Dispatch Box this week, but this has to be among the worst ever. May I take the Secretary of State back to his non-answer to the Father of the House, the right hon. and learned Member for Rushcliffe (Mr Clarke)? The Secretary of State dodged the nub of that question, which was about why anybody should give us a better deal on our own than we have as part of the European Union. He has been asked that question over and again, and he has refused to answer it. Now that we are only 44 days away, may I put the question another way? Can he name one country that he is so confident will give us a better deal than we currently have that if such a deal has not been achieved by 30 March, he will resign?
Dr Fox
I was not able even to follow all that question, never mind answer it. Countries have said to us that there are areas of policy on which they will seek an agreement with the United Kingdom that they cannot get with the European Union. Data localisation is one policy area where the attitude of a number of European countries makes it impossible to reach an agreement, and that is in fact holding up the trade in services agreement. We will take a more liberal view of that and will be able to do things as an independent nation that we cannot do as a member of the European Union.
Julia Lopez (Hornchurch and Upminster) (Con)
It is my understanding, and the Secretary of State has referred to this as well, that the EU has not permitted Turkey to engage in talks with the UK on continuity of trade post Brexit under the terms of its goods-only customs agreement with that country. It is the kind of arrangement that I understand we would fall into under the backstop. Will the Secretary of State please update the House on any progress in talks with Turkey to ensure smooth future trade with this important partner? Does he share my concern about limitations on our ability to negotiate freely with trade partners should we enter into a goods-only customs arrangement with the EU?
Dr Fox
There are issues with Turkey, which is in a customs union, although it is a partial customs union, so we can discuss our future relationship in areas such as agriculture and services. I refer in all humility to the shadow Secretary of State, the hon. Member for Brent North (Barry Gardiner), who put it best. He said of a customs union that
“as an end point it is deeply unattractive. It would preclude us from making our own independent trade agreements with our five largest export markets outside the EU”.
That was then; it is not the policy today.
Tom Brake (Carshalton and Wallington) (LD)
The Secretary of State will recall that last week I asked him to provide this risk matrix to the House, but he would not. Instead, he asserted that if only I listened to his contribution in the International Trade Committee, all would be revealed. I went back and listened to it and nothing was revealed about the content of the matrix. Why would he not make this information, which has now been leaked to The Sun, available to Members of Parliament in the same way that he was happy to make it available to businesses? Is it because he does not believe that we have a role in the scrutiny of his activities? Or was it simply to save him the embarrassment of Members seeing what lack of progress there has been on the 40 trade deals he said would be signed by one minute after midnight on 30 March?
Dr Fox
It is tedious to have to give the same answer, but if the same question keeps getting asked, I will keep doing so. The way that we get continuity at one minute after midnight is to have an agreement with the European Union so that we have continuity of the agreements. A number of the agreements are very close to completion, but there is a level of confidentiality around that. At the same time, the Government clearly want to give business an indication of where we think a trade agreement may not be able to be rolled over on time. I will do that in the coming days, following an assessment of where we are at the present time, and I will make a written ministerial statement to the House as well.
Mr Jonathan Djanogly (Huntingdon) (Con)
Is it not necessary for us to take lessons from the fact that we have failed to land a pre-Brexit trade deal with Japan or with most of the other 70 countries with which the EU enjoys FTAs, such as that actually we would be better off being in a customs union or having some close customs arrangement with the EU, backed up by the firepower of 510 million consumers rather than 65 million?
Dr Fox
But we are leaving the EU. Were we to attempt to have a customs union relationship, which is what the Labour party says, we would have no say in that trade policy; we would actually be worse off than we are today in the European Union. The EU has made it very clear—and the European Union treaty makes it very clear—that a third country outside the EU cannot be involved in setting EU trade policy. At best, it is a fantasy, at worst, a dangerous delusion.
Rachel Reeves (Leeds West) (Lab)
On free trade agreements with Japan and South Korea, the Secretary of State for Business made it clear to the Business, Energy and Industrial Strategy Committee last week that the deadline for companies exporting to Japan and South Korea is this Friday, 15 February, because shipments take six weeks to arrive. What advice would the Secretary of State give to businesses that are exporting to Japan and South Korea? If the Government get their deal through, will the free trade agreements with those countries roll over? If we do not manage to secure a deal, what happens to those shipments when they arrive at the end of March and the beginning of April?
Dr Fox
The hon. Lady raises a very important point. On Japan, the Japanese Government have said to us that if there were a deal with the European Union, they intend to roll over the Japan economic partnership agreement at that point, and the UK would continue to benefit. I have to say, though, that we have been trading with Japan for many years, but trading on World Trade Organisation terms. We have been trading under the Japan EPA for a matter of days. When it comes to British business continuity, firms are used to dealing on WTO terms, and I envisage our trade relationship with Japan to be largely effected by our potential membership of CPTPP, to which the Japanese Government have given enormous encouragement.
Sir Desmond Swayne (New Forest West) (Con)
But from whom were representations had to the effect that remaining in a customs union would be a disaster?
Dr Fox
It would be unparliamentary of me to use the same term as the shadow Secretary of State for some of Labour’s tests that have led it to its policy today. It is nonsensical to say that we can be both in a customs union with the European Union as a third country and still have an effect on trade. Those tests would increase the chances of the UK remaining permanently as a rule taker, which would not be advantageous to the UK.
Emma Little Pengelly (Belfast South) (DUP)
There has been a great deal of focus on the number of trade deals, but, as the Secretary of State has outlined, the value of the trade in each deal varies significantly. He has indicated that many of the deals will go down to the wire. How many is he anticipating will be signed before that date? More importantly, what is their value as a percentage of our current trade value for the entire third-party free trade deals?
Dr Fox
As ever, I am grateful to the hon. Lady for her question. On the UK’s trade, 48% of our trade is with the European Union and 52% with the rest of the world. Of the rest of the world trade, around 11% occurs under EU FTAs. Of the 40 or so agreements, five represent 76% of the 11%, and the bottom 20 represent less than 0.8% of 1%. Therefore, there is very clear advantage in getting those larger agreements across the line first, and we are making excellent progress in that regard.
Richard Graham (Gloucester) (Con)
There are two groups in this House who underestimate the value of free trade agreements. The first includes those Opposition Front Benchers who did not vote for them in the first place and whose leader believes that free trade agreements benefit only multinationals at the expense of everyone else. He should try explaining that on the workshop floor of some of the small and medium-sized manufacturers in my constituency of Gloucester that export around the world. The second group are some Conservative Members who believe that leaving the EU with no deal will be no problem. Will my right hon. Friend confirm that, in the event of no deal, the tariffs that will come into play with the EU will be devastating for farmers and manufacturers and all the rest of the 148,000 companies that export only to the EU and that the simplest way to take this risk off the table is for everybody to get behind the Government’s withdrawal agreement Bill and make sure that all these deals are rolled over without problem?
Dr Fox
It seems that the country is caught between the irrational pessimism of those who fail to be reconciled to the referendum result and believe that everything to do with Brexit will be disastrous for the UK and those who are irrationally optimistic that it would be no problem whatever to leave the European Union with no deal. The truth is that we would be better off with a deal, which is why the Government want to get that deal with the European Union across the line. I still urge Opposition Members to support it. If we do not achieve it, we will end up with the uncertainties that they have identified today.
Mr Pat McFadden (Wolverhampton South East) (Lab)
As the Secretary of State rails against irrational pessimism, I assume that he will tell us that the rest of the world is looking at the United Kingdom right now and saying that Brexit is a great example that it must follow.
I wish to go back to the point that the right hon. and learned Member for Rushcliffe (Mr Clarke) raised yesterday, which is that, under our current arrangements, UK businesses will be part of one of the biggest trade deals ever negotiated between the EU and Japan, but, under the Secretary of State’s policy, UK businesses will not be part of that agreement and we will have to start again. We are told that Tokyo’s trade negotiators are under instruction to extract every advantage possible, as we would expect them to do in a tough trade negotiation. Will he promise UK businesses that their market access to Japan under any deal that he manages to negotiate will be as good as it is under the EU-Japan trade deal, which has already been negotiated?
Dr Fox
As I have already said, the Prime Minister and Prime Minister Abe have both indicated that they want a close trading relationship for our countries after we leave the EU, but the Japanese Prime Minister has been very clear that he is hugely encouraging of the UK’s accession to CPTPP, which would then become a trading bloc of almost exactly the same size as the European Union itself. As for his first point, many people are looking to the United Kingdom and saying what a great example it is of democracy that a country wants to take control of its own constitutional future.
Mr Nigel Evans (Ribble Valley) (Con)
And we buy a lot of goods from Japan anyway, particularly cars, and I am sure that it will want us to carry on doing that. Am I not right in thinking that, during the referendum campaign, David Cameron said that, by leaving the EU, we would be leaving the customs union? He recognised that that would be essential. Although a customs union would have the advantage of allowing all these deals to be rolled over, it would be a betrayal of what the people voted for in 2016 because we would still have to pay to access the customs union and there would still be free movement of labour. Furthermore, we would simply not be allowed to do those trade deals with countries such as China, the United States of America and, indeed, some of the fastest growing economies in the world.
Dr Fox
My hon. Friend, who has considerable knowledge from his work on the Select Committee, is quite right. If we were in a customs union, but a third country outside the European Union—I do not hear people say that we should stay in the EU and simply behave dishonourably towards the referendum—we would not be able to affect European Union trade policy and would become complete rule takers and would in fact be in a worse position than we are today. As a member of the European Union, we were able to affect policy. We have been given a clear instruction by the voters to leave the European Union, and that means leaving the customs union and the single market.
Laura Smith (Crewe and Nantwich) (Lab)
Manufacturers in Crewe and Nantwich have expressed very real concern about the lack of progress in this area. Does the Minister accept that committing to a new customs union as part of our future relationship with the EU would resolve this issue, allowing us to continue to take advantage of our current deals with all major global markets while allowing us the ability to strike our own deals for trade in services, which make up the vast majority of the UK economy?
Dr Fox
Just how would it give us greater certainty in the exercise of our own trade policy if we were a third country outside the European Union in a form of customs union that specifically prohibited us from having a say on that trade policy itself? That would diminish the ability of this Parliament to give certainty to any business in our country, rather than what the hon. Lady suggests.
Rachel Maclean (Redditch) (Con)
Does the Secretary of State agree that, if the Labour party really cared about the continuity of our trade arrangements, it would stop blocking the Trade Bill in the other place?
Dr Fox
I hope that we will see the progress of the Trade Bill, which the Labour party voted against in this House. Those involved in manufacturing, including in the constituency of the hon. Member for Crewe and Nantwich (Laura Smith), will note that the Labour party voted against the establishment of the Trade Remedies Authority, which is how we would protect our businesses from unfair international competition.
Ian Murray (Edinburgh South) (Lab)
The Home Secretary has said in this House on a number of occasions that international student numbers will be uncapped, that the number of skilled workers who are required for the economy will be uncapped and that our public services will be able to get the people that they wish for from all over the world to work in our those services. Can the International Trade Secretary tell us how many of these roll-over agreements—or how many of the post-Brexit agreements—will be rubbished or dictated by the fact that many of our partners that want bilateral trade deals want a lessening of the UK’s hostile environment policy?
Dr Fox
The policy on students is to encourage them to come here, and many do so. For example, we are the No. 1 global destination for Chinese students—ahead of the United States. These students come here because they believe that the quality of education is high. As the hon. Gentleman knows, we have no intention of limiting the number of students coming to the UK. Likewise with migration, as my right hon. Friend the Home Secretary has said, we look to ensure that the levels of skill required for the UK economy are available to us. In a modern, integrated economy, it makes sense that our migration policy gives priority to ensuring the skills needed for our economic growth.
Mr Peter Bone (Wellingborough) (Con)
I was thinking of asking the excellent leave Secretary of State how he managed to maintain such good humour and grace in a remain-dominated Parliament. However, I think what this House wants to know is whether, in the circumstances of no deal—that must be likely, given that the Government’s withdrawal agreement was defeated by the biggest margin in Commons history—his Department will be prepared on 29 March for no deal.
Dr Fox
As I have said, our priority is continuity of trade. We want to ensure that we get the roll-over of as many of those agreements—and as large a proportion—as possible. Where that is not possible for other reasons, we will seek as much mitigation as we can. I make the case again that the best way to achieve full continuity is to leave the European Union with the withdrawal agreement. As for my hon. Friend’s initial point, I take comfort from the fact that although this may be a remain-dominated Parliament, it is a leave-dominated country.
Catherine West (Hornsey and Wood Green) (Lab)
The Secretary of State mentioned Switzerland and the Swiss deal in his response to the urgent question. Could he explain why members of the International Trade Committee had to look on the Swiss Government’s website to understand the detail of the trade agreement, and why members of the Committee were not briefed in advance? What will he do to improve the lack of clarity and the lack of a sense of working together across Parliament to achieve the best for trade?
Dr Fox
I am grateful for the way in which the hon. Lady continues to press the importance of this issue; it is a view that I share. We set out in our legislation that we would publish the text at the point of signature, not at the point of initialling, and that is what this House ultimately voted for. We also said that we would publish the explanatory memorandum, and that we would set out differences between the original agreement and any changes in a statement, given that the original agreement was already scrutinised by this Parliament when it was introduced as an EU agreement. The hon. Lady raises an important point, however, about future trade agreements that were not covered in the Trade Bill; and following the completion of the Government consultation, I will set out the processes by which we will ensure that both Houses of Parliament are able to get active and real-time scrutiny of the future trade agreements.
Tom Pursglove (Corby) (Con)
Is it not the case that, even if we roll agreements over, it is entirely possible to make further enhancements to those agreements in time as an independent trading nation?
Dr Fox
Those of us who have been involved in this process from the beginning will remember that it was initially known as transitional adoption—that is, we would adopt the EU agreement with a view to moving on to a more bespoke agreement later. That is still our aim. For example, in our discussions with the Swiss Government at signature on Monday, we talked about our ambitions to enhance that agreement once Britain has left the EU. Our aim for the moment is continuity; ambition comes later.
Deidre Brock (Edinburgh North and Leith) (SNP)
The UK Government would probably leave DFS with a full-price sofa. Ministers have already indicated that giving up our protected geographical indicators would be a price worth paying for trade deals, wilfully damaging Scotland’s competitiveness in world markets. What guaranteed protections will the Secretary of State’s trade deals offer Scotland’s precious food and drink sector to compensate?
Dr Fox
That is so fundamentally wrong. The Government have said nothing of the sort about geographical indicators. We regard them as having the highest importance, not least in Scotland. On that point, I congratulate Scotch whisky on reaching almost £5 billion of exports last year—exports that we are very keen to protect.
Nic Dakin (Scunthorpe) (Lab)
Ministers have always promised that these trade agreements will mirror the terms that these countries have with the EU and which the UK currently enjoys. Has the Secretary of State achieved this in the provisional agreements with Norway, Iceland and Liechtenstein, and how does he propose to achieve it in respect of Turkey’s trade relationship with the EU?
Dr Fox
We have said that we aim to replicate the terms as closely as possible. There are some issues that mean that it is not entirely possible to do so. The hon. Gentleman correctly raises the issue of Turkey, which is in a particular position because of its partial customs union with the European Union. This of course means that it is difficult to conclude what we are going to do with Turkey until we know the shape of our agreement with the European Union. Again, that simply raises the issues and complications of being in a customs union, rather than being a nation that is able to determine its own independent trade policy.
Helen Goodman (Bishop Auckland) (Lab)
The fundamental point made by both the hon. Member for Huntingdon (Mr Djanogly) and the Father of the House was that the balance of power shifts when we are no longer a member of the EU. This is illustrated by the fact that one of the first agreements that the Secretary of State has achieved is with the Faroe Islands. Will he just tell the House what proportion of UK trade is with the Faroes?
Dr Fox
I will admit that the agreement with the Faroe Islands is a small one, but it is very important for people who work in the fish processing industry in this country because it provides the necessary continuity. Labour Members mock it, but they might want to go to places such as Grimsby and tell people there that the agreement has no value, when it clearly does. Countries that are much smaller than the United Kingdom have been able to get trade agreements. For example, Canada—a smaller economy than the United Kingdom—was able to negotiate a perfectly acceptable trade agreement with the European Union, as it has with many other places. It is the utter lack of ambition, optimism and confidence shown by the hon. Lady that I am happy was defeated by the optimism of the British people in the referendum.
Stephen Timms (East Ham) (Lab)
The Secretary of State has managed to reach agreement with the Faroe Islands, but not with Japan or Canada. Why has this crucial exercise proved so much harder than he said it would be?
Dr Fox
The process continues, but it is worth pointing out that we have reached agreement with Switzerland, which is by far the biggest of all the agreements under this section of our trade. The trade agreement that we have signed with Switzerland this week is, by value, more than 20% of all 40 of the EU agreements. If it is possible to do it with the biggest one, it should be possible to do it with others.
Kirsty Blackman (Aberdeen North) (SNP)
In the unlikely event that the Prime Minister’s deal is agreed, the EU is going to write to the countries that it has agreements with and say, “Please could you agree to treat the United Kingdom as a member of the EU for the transition period?” Will the Secretary of State now admit to the House that there is no guarantee that all those third countries will agree to that request?
David Hanson (Delyn) (Lab)
The Secretary of State, in response to my right hon. Friends the Members for Wolverhampton South East (Mr McFadden) and for East Ham (Stephen Timms), has indicated that the Japanese trade deal will not be replicated at the level it is at now, except that we can join the Trans-Pacific Partnership. How long does he expect us to spend negotiating in order to join the Trans-Pacific Partnership?
Dr Fox
As I said, the Japanese Government have made it clear that in the event that we leave the European Union with the withdrawal agreement, there will be the roll-over. If we want to get continuity with that Japanese agreement, there is one way to do it, and that is to ensure that we back the Prime Minister’s deal. It is also true that the Japan EPA does not come in quickly. A lot of the tariff liberalisation, for example, comes in over a period of years—up to eight years in some cases, which is much longer than I would anticipate it would take for Britain to accede to the CPTPP.
Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)
If the Government fail to replicate existing trade agreements, we may end up finding ourselves having to rely on trading agreements with the USA. Can the Secretary of State reassure my constituents that he will not sacrifice NHS services or workers’ rights to a deal with President Trump?
Dr Fox
This House agreed the agreement with Canada. If the hon. Gentleman goes to the Library and looks at chapters 23 and 24 and annex 2 of that agreement, he will see provisions there that make it against the law for us to water down the workers’ rights or environmental laws we have in order to reach a trade agreement. Annex 2 sets out that we retain our rights to be able to regulate our public services, including the national health service. I would have thought that he would agree with those non-regression clauses. It is therefore sad that he and his party voted against this in the House of Commons.