Foreign Affairs (Trade): Post-Council Statement
Liam Fox Excerpts(6 years, 4 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The EU Foreign Affairs Council (Trade) met twice in Buenos Aires during the 11th ministerial conference of the World Trade Organisation (WTO).
The first meeting of the FAC (Trade) took place on 10 December before the formal opening of the WTO ministerial. The second meeting of the FAC (Trade) took place on 13 December just before the conclusion of the ministerial. At both meetings, the Council adopted conclusions. Both sets of conclusions are available as an attachment online.
At the ministerial conference WTO members committed to securing a deal on disciplining certain forms of fisheries subsidies by the end of 2019. They also committed to improve the reporting of existing fisheries subsidy programmes. In addition, Ministers decided to extend the practice of not imposing customs duties on electronic transmissions for another two years, and to continue negotiations in all areas. In addition, WTO members agreed to the creation of the working party on accession for South Sudan.
The ministerial met key UK objectives by setting the foundation for discussions on a number of new issues. A significant number of WTO members agreed to advance discussions on: digital trade, domestic regulation in services, SMEs, and investment facilitation. The UK will work closely with the EU and other WTO members to ensure that the momentum behind these initiatives is maintained in 2018.
At the 11th WTO ministerial conference, 118 WTO members adopted a joint declaration on trade and women’s economic empowerment, committing to promote women’s economic empowerment through trade. The UK supported this initiative.
Attachments can be viewed online at: http://www. parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2018-01-10/HCWS396/
[HCWS396]
Trade Bill
Liam Fox Excerpts(6 years, 4 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I beg to move, That the Bill be now read a Second time.
Free and fair trade is fundamental to the prosperity of the United Kingdom—that is something on which both sides of the House can agree. As globalisation and new technology have changed the face of the world economy, the old barriers of distance and time have been eroded. In an age in which data, knowledge and expertise are traded as readily as cars and steel, even the simplest transactions are no longer confined to one country or even one continent. The United Kingdom is one of the world’s leading trading nations. The total value of our trade with the rest of the world is equivalent to over half our gross domestic product. The UK is the most popular destination for foreign direct investment in Europe, and last year FDI created or safeguarded an estimated 108,000 new jobs. British companies operate across the globe with an international reputation for quality and expertise that few nations can match. That has enabled us to boost the total value of our exports by around 14% in the past year to some £617 billion.
Our current success is built on a long and proud trading tradition. From our unilateral adoption of free trade in the 1840s to our instrumental role in founding the World Trade Organisation, the United Kingdom has been at the heart of international trading innovations. Often, we have led the way, using our economic and diplomatic influence to guide the world towards a free trading future, confident in the benefits that the rules-based global trading system can bestow. For more than four decades, the United Kingdom has been unable to fulfil that leadership role, but soon this country will once again be able to pursue an independent trade policy, whether unilaterally or within bodies such as the WTO. We will be able to unlock some of the key areas of global growth, to offer preferential market access to developing nations of our choosing, to develop closer economic links with our Commonwealth partners and to influence, as we once did, the future of international trade.
Kate Hoey (Vauxhall) (Lab)
One of the real problems with the EU in trade agreements was the lack of transparency and openness. Does the Secretary of State believe that we will be able to be much more open and transparent when we become involved in getting trade deals going between this country and other parts of the world?
Dr Fox
I do. As the hon. Lady knows, this Bill is not concerned with new trading agreements, but when the Government come forward with the mechanics for such agreements, I believe that it will be in the interests of all to have as open and wide a consultation as possible—perhaps even more open than has been traditional in other countries.
Mr Nigel Evans (Ribble Valley) (Con)
There has been much speculation over several weeks about the possibility of the United Kingdom staying in the single market or the customs union. The Secretary of State talks about an exciting world in which we will be able to do trade deals with a number of other countries. Would we be able to do that if we stayed in the single market or the customs union?
Dr Fox
We know that we would not be able to do that if we were constrained by the customs union, but I say to my hon. Friend that we need to look at where the growth in global trade is going to come from. According to the International Monetary Fund, about 90% of global growth in the next 10 to 15 years will occur outside the continent of Europe. It therefore makes sense for the United Kingdom to have the freedom to maximise our ability to trade with those countries whose economies are growing the fastest, if we want to generate the income that this country will need for the spending projects that we all seem to value.
Frank Field (Birkenhead) (Lab)
This House voted overwhelmingly to begin the process of implementing the referendum decision. Since then, we have had two major Bills—this being the second—where the Order Paper looks as though the main aim is to interrupt the Government’s carrying out that intention to follow through on the referendum decision. In the Secretary of State’s opinion, what image does that give to people outside, given that 75% of the electorate now want the Government to get on with the job of taking us out of the EU?
Dr Fox
I was encouraged to hear reports yesterday that the Leader of the Opposition had made it clear that there was no chance of continuing in the single market or the customs union. It was therefore with some disappointment that I saw the reasoned amendment today, which seems to go in an entirely different direction. I am not sure what the reasoned amendment was drafted for, but it does not seem to have been drafted for this Bill, given that it concentrates on future free trade agreements, which are not covered in the Bill at all.
Several hon. Members rose—
Dr Fox
I will give way later.
The Government believe that we have an unprecedented opportunity to regain our former influence in trade policy. The United Kingdom will be able to put in place a trade policy that acts in our own interest and that of our friends and allies, but trade is not only about self-interested commercial gain. It is also about nurturing developing economies, eliminating poverty and building partnerships for the future. Closer to home, trade ensures that British consumers can access quality goods at a reasonable price, and foreign investment creates jobs and protects livelihoods the length and breadth of the country. Fundamentally, we will have the power to choose our own economic destiny and chart our own course to a brighter, more prosperous future.
Yet for all the high political ideals, we recognise that trade is carried out not by Governments but by individual enterprises. To operate, they require certainty and stability. Confidence is a very valuable commodity indeed, and the UK has been economically successful in part because our stability, our labour market flexibility and skills, and our regulatory environment all inspire confidence in investors and international firms. That is why we attracted the highest number of new foreign direct investment projects in our history last year.
Graham Stringer (Blackley and Broughton) (Lab)
The Secretary of State mentioned increasing trade with the developing world. Does he agree that the European Union has been the greatest single mechanism for exporting poverty to the third world, with its high tariffs on foodstuffs, and that when we leave the European Union we will be able to give our own consumers the benefit of cheaper citrus fruits, as well as helping poorer farmers in Africa and elsewhere?
Dr Fox
Where I would particularly agree with the hon. Gentleman is on the European Union applying high tariffs to value-added exports from developing countries. In other words, those countries are able to export basic commodities into the European Union with zero tariffs, but if they try to add value, they face considerable penalties. One of the areas that I would like the United Kingdom to explore as we leave the European Union is our ability to help those countries to export with added value, so that they can trade their way out of poverty rather than depend on aid. I believe that such a policy would carry widespread support across the United Kingdom.
Alan Brown (Kilmarnock and Loudoun) (SNP)
As the Secretary of State says, the Bill is about existing trade. It will need a legislative consent motion from the Scottish Government, but the Scottish Government say that it is not fit for purpose in its current form. He is probably also aware that yesterday the Holyrood Finance and Constitution Committee, including three Tory MSPs, voted to withhold a legislative consent motion for the European Union (Withdrawal) Bill. What will he and other Ministers do to ensure that both Bills are fit for purpose, so that they can get an LCM from Holyrood?
Several hon. Members rose—
Dr Fox
I will give way later.
Before we can begin to forge new trading relationships, we must act to prevent disruption to our existing trade environment. As the Prime Minister has said, our ambition is to forge a deep and special new partnership with our European friends and allies; we will retain the bonds of friendship, security and trade that have united Britain and Europe for so long. If we want to achieve that, before we leave the European Union we must put in place the essential legal powers and structures that will enable the UK to operate an independent trade policy. That is what our trade legislation is designed to achieve. In this, as in all our legislation, the Department for International Trade will be guided by what delivers the greatest economic advantage to the UK and ensures the continued confidence of our partners and allies.
The Bill contains six delegated powers allowing the Government to make regulations to support and develop their trade policy. Two of the powers allow the Government to amend primary legislation; they relate to ensuring the continuity of EU trade agreements into a UK-only context and to the collection of exporter information by Her Majesty’s Revenue and Customs. Both powers are subject to significant restrictions on how they can be used. The trade agreement continuity powers are limited in scope; in particular, they can be used to amend primary legislation only when it forms part of retained EU law. We intend to use the powers to make necessary amendments to domestic legislation as part of the transition project. By taking those powers, we can be sure that we have the ability to implement efficiently all obligations of existing trade agreements in our new context.
The EU’s trade agreements, which we intend to transition and which are within the scope of this Bill, will have already been scrutinised by Parliament’s EU Committees. Free trade agreements that the UK has already ratified have also been through the normal parliamentary scrutiny process. The Bill simply aims to enable us to continue those existing trading arrangements, allowing us to provide certainty and to reassure international partners, businesses and investors.
Sir William Cash (Stone) (Con)
I am glad to hear everything that my right hon. Friend has said not only today, but throughout his tenure as Secretary of State. I am so glad that he is still in that post and that he will carry on.
Will my right hon. Friend confirm that we are running a trade deficit with the other 27 member states of the EU that has been accumulating for a long time? It increased from £71 billion to £82 billion in one year alone, which gives some indication of the fact that we are now looking outwards towards the rest of the world and that continuing to pursue a policy of exclusively working in the context of a strategy run by the EU Commission does not work for us.
Dr Fox
First, the fact that there is a large EU trade surplus with the UK is one reason why it is in the interests of the EU to want a good and open trading agreement with the UK. Secondly, on my hon. Friend’s point about the direction of travel, it is certainly true that the proportion of UK exports that go to the EU has diminished from some 54% at the beginning of the millennium to about 42% today, so it is already true that the UK is exporting into other growing parts of the global economy.
Lady Hermon (North Down) (Ind)
I want to bring the Secretary of State back to legislative consent. He gave some advice to the SNP Members, but he has more difficulty in Northern Ireland, where we have not had a functioning Assembly for a year. That is totally frustrating for the people of Northern Ireland, but how do the Government think they are going to obtain legislative consent from the Northern Ireland Assembly—or are they preparing for direct rule in Northern Ireland? It is one or the other.
Dr Fox
The hon. Lady gives me a good opportunity to pay tribute to my right hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), who stood down from the post of Secretary of State for Northern Ireland yesterday, for his work in trying to achieve a deal in Northern Ireland. We all hope that there will be a functioning Government that the UK Government are able to deal with, because it is in the best interests of all concerned in Northern Ireland that we get a functioning democratic Government in Stormont.
John Redwood
Will my right hon. Friend confirm that all the countries that have trade deals with the EU either have indicated that they would like to have a similar agreement with the UK or have certainly not indicated the opposite, so we can look forward to those deals novating, or transferring, to us?
Dr Fox
I can indeed confirm that there is considerable interest in the continuation of those trading agreements with the UK, for one overwhelming reason: we are the fifth biggest economy in the world and provide a large market to countries that want to trade with us, so they have every interest in wanting to continue those agreements.
Several hon. Members rose—
Dr Fox
I have given way a number of times, so I will make some progress.
The new legislation has four primary aims. First, as I have already mentioned, it aims to prevent disruption to UK businesses and consumers. I alluded earlier to the importance of the UK’s ability to access other markets across the world. Currently, as a member of the European Union, we are part of about 40 free trade agreements across the world, as my right hon. Friend just mentioned. Maintaining that market access for UK companies is a priority. That is why, as we leave the EU, we seek continuity and have therefore been public about our aim to enter into our own agreements with our partner countries that maintain the effects of the free trade agreements currently in place with the EU. The Bill will create new powers to make regulations, where required, to ensure that we can fully implement these free trade agreements and our other existing trade agreements as we leave the EU. By ensuring continuity in our existing trade arrangements, we will provide certainty and stability for workers, consumers, businesses, and our international trading partners.
Secondly, we want to maintain UK businesses’ guaranteed rights to access global public procurement markets worth approximately £1.3 trillion per year. The GPA, or government procurement agreement, is a plurilateral agreement within the framework of the WTO that aims to create an open market for Government procurement among participating nations. They include many of the world’s major economies, such as the United States, Japan and Canada, as well as the EU states. Currently, we participate in the GPA through our membership of the EU. It is worth pointing out that the UK creates around £68 billion of procurement opportunities within the GPA annually—over 25% of the total EU offering. After we leave the EU, the UK will need to join the GPA as an independent member, not only to safeguard continuity of access for UK companies overseas, but to ensure that we can tap into international expertise and obtain the best deal for the taxpayer here in the UK. The powers in clause 1 will allow us to make regulations implementing our obligations under the GPA as an independent member, reflecting our new status within the GPA. Parliament will be able to scrutinise the terms of our membership of the GPA through the Constitutional Reform and Governance Act 2010 before we join.
Mr Jonathan Djanogly (Huntingdon) (Con)
I totally support my right hon. Friend’s aims in clause 1 and the need for us to re-engage with the GPA. The clause also shows how vital it is that we leave the EU with agreements in place, rather than just falling off a cliff. We are not a member of the GPA through our membership of the EU, and we will have to rejoin in our own right—in the same way as we will have to re-engage with our schedules, which we have through the EU rather than in our own right.
Dr Fox
As a doctor, I have never thought that falling off a cliff is sensible. It is certainly clear that it is beneficial to the UK to have a number of agreements in place, which is why we have introduced the legislation—to provide maximal continuity and security. That is the whole point of the legislation. My hon. Friend is correct that we will have to do the same exercise with our schedules in Geneva, but if I may make one slight correction, we are already an independent member of the WTO in our own right and we simply operate our schedules through the EU. We are not a member of the WTO by virtue of our membership of the EU in the same way as we are with the GPA.
Caroline Lucas (Brighton, Pavilion) (Green)
Given that the Bill covers only existing EU trade agreements, will the Secretary of State guarantee that there will definitely be a second trade Bill in due course to cover new trade deals with non-EU countries? If he cannot guarantee that, will he accept that it is even more important that the openness and transparency that he claims to support are reflected in this Bill? One way to do that would be to ensure that, like the European Parliament and the US Congress, this Parliament has the right to reject trade agreements. The negative procedure does not provide a real opportunity to say no.
Dr Fox
As I think I already said, we will use separate vehicles for new free trade agreements, and we will introduce a separate proposal on consultation. I am keen not to get to the position we got to in, for example, the Transatlantic Trade and Investment Partnership, where a whole negotiation was undertaken only to find there was insufficient public support. It is much better to seek support for a trade agreement mandate by having as wide a consultation as possible across the country with various ranges of stakeholders before we enter such negotiations. That is more democratic, and the process is more efficient. Consumers will in future take a greater interest in trade agreements than they have perhaps taken in the past, so consultation is also politically prudent.
Andrew Percy (Brigg and Goole) (Con)
The Secretary of State is absolutely right that the Bill will prevent anybody from falling off any sort of cliff edge. One of our most important trading relationships is, of course, with Canada, which is covered by the comprehensive economic and trade agreement. Will he confirm that the Canadian Government have committed themselves to reaching a free trade agreement with the United Kingdom once we leave the European Union and have established a joint ministerial council with us? Contrary to what we hear from some who seem unable to accept the result, many of our bigger trading partners, such as Canada, have quite a lot of enthusiasm for ensuring that we have a new relationship that perhaps goes further than the current arrangement through the EU.
Dr Fox
I confirm that we have had very positive discussions with the Canadian Government, and I also confirm it is our intention, as we have said, to ratify CETA before we leave the European Union. Once we have left the European Union, CETA will form a good basis for any future agreement with Canada, while taking advantage of the increased trading freedoms the United Kingdom might have, unrestricted by elements such as the data localisation restrictions that are currently placed on us by the EU’s negotiating position.
Hilary Benn (Leeds Central) (Lab)
This Bill is a consequence of the Government’s decision to leave the customs union. Will the Secretary of State explain why, as we learned from his colleague the Secretary of State for Exiting the European Union, the decision was taken without any economic assessment of the consequences of leaving the customs union? Will he now set out why he thinks the gains will outweigh any potential losses?
Dr Fox
I hate to correct the right hon. Gentleman, but this Bill is a consequence of the British public’s vote to leave the European Union. Leaving the European Union means that we are leaving our current trading agreements. If we want stability to continue for our businesses, we have to put the legislative framework in place for it to do so. That is exactly what we are doing.
Several hon. Members rose—
Dr Fox
I have given way a number of times. I will give way again later.
It is worth reminding the House that, on a number of occasions, we have made a commitment that decisions about public services, such as the national health service, will be made by UK Governments, including the devolved Administrations, and not by our trade partners. As we leave the EU, the UK will continue to ensure that rigorous protections for the NHS and other public services are included in all trade agreements to which it is a party.
The third aim of the Trade Bill, together with the Taxation (Cross-border Trade) Bill, is to create a new UK trade remedies framework overseen by an independent body, the Trade Remedies Authority. It is important to remember that free trade does not mean trade without rules. Free trade is not a free-for-all. Trade remedies are a vital safety net for firms operating in the global marketplace, protecting them from injury caused by unfair trading practices such as dumping or trade-distorting subsidies, as well as from unforeseen surges of imports.
After its creation, the TRA will be required to prepare both an annual report on the performance of its functions and an annual statement of accounts. Those documents will be laid before the House of Commons, ensuring that Parliament is able to fully scrutinise the TRA’s functions and financial activity.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I am sure, when the Secretary of State visited Stoke-on-Trent, he heard from Wade Ceramics about the importance of a proper trade remedy body. May I press him regarding the report in today’s Daily Telegraph that when trade remedies are considered, they will be weighed against any potential negative impact on a broader free trade deal? In the case of ceramics, we need protection from Chinese tiles and Chinese tableware. Can the Minister assure me that if that has an impact on a larger trade deal with China, British industry will be protected before trade deals are put in place?
Dr Fox
I totally agree with the hon. Gentleman on the need to set up such trade remedies, so I hope he will support the Bill today. Without the Bill, we would be unable to have such trade remedies as we leave the European Union. It is essential that we have a mechanism to protect the United Kingdom and that we do not allow unfair dumping or subsidy to harm UK businesses. That is why we are setting up the TRA. The details will be set out after the passage of the Taxation (Cross-border Trade) Bill. He is right that we need to have such trade remedies in place, but I reiterate that, if we do not approve Second Reading today, we will not have the ability to create those remedies to protect British business. If Opposition Members oppose the Trade Bill, they will be opposing the very measures that will be able to protect British businesses and British jobs.
James Duddridge (Rochford and Southend East) (Con)
The good burghers of Southend will be glad that the Secretary of State is delivering the Brexit that they supported wholeheartedly. Will he confirm that the Trade Remedies Authority will be wholly independent? Will he give us an indication of how quickly some of the detail will come together once the Bill is enacted? What forms of consultation will there be on how to set up the Trade Remedies Authority, given that we have so little experience of trade remedies other than through the EU?
Dr Fox
As my hon. Friend knows, detail on the implementation of the Trade Remedies Authority will be in secondary legislation subsequent to the passing of the Taxation (Cross-border Trade) Bill, which we debated in this House last night. The Trade Bill merely creates the framework for creating the Trade Remedies Authority, which will be an arm’s length authority. These issues are often commercially sensitive and market sensitive, so it is important that we are seen not to have overt political intervention. Likewise, if we want to be WTO compliant, we have to be as transparent as possible. We will want to consult further, but we want to set out the details as soon as possible.
Closely related to that is the Bill’s fourth aim. We want to enable HMRC to collect and share essential data on the United Kingdom’s trade flows, which will enable DIT and bodies such as the Trade Remedies Authority to perform essential trade functions such as providing evidence to WTO panels that rule on trade disputes. It will also provide a vital insight into our export performance during our development of trade policy.
Hannah Bardell (Livingston) (SNP)
Can the Secretary of State give us an idea of how much more resource HMRC will get so it can do that job of collecting data? Will the Government expand the number of HMRC offices, rather than reducing the number of offices, as he and his Government are currently doing?
Dr Fox
My understanding is that HMRC was given extra resource in advance, before we reached this point. It seems strange that we do not already collect this data. If we want better-informed policy, we need better datasets. It is merely a sensible option for any Government to collect this data as widely as possible, so that we operate on the basis of better information.
Before I further explain the process, this is a good juncture to correct some of the misunderstandings that seem to have grown, deliberately or otherwise, around the Trade Bill. As I have explained, the Bill contains two powers that allow the Government to amend primary legislation: the power in clause 2 to implement the trade agreements that the UK adopts; and the power in clause 7 to allow HMRC to collect the export information that the hon. Lady has just mentioned. Both these powers are limited in scope and restricted in their use. Contrary to the belief of some in this House and beyond, seemingly including the shadow Secretary of State for International Trade, this Bill does not legislate for powers that could be used when implementing new free trade agreements with countries with which the EU does not have a free trade agreement before exit day. An article in The Guardian—I do not avidly read it, but this was brought to my attention—written by him incorrectly asserted that the Government would only be obliged to present the text of new trade agreements under the convention of the Ponsonby rule. As I mentioned earlier, the scrutiny of new agreements requiring ratification is ensured by the Constitutional Reform and Governance Act 2010.
Barry Gardiner (Brent North) (Lab)
Will the Secretary of State confirm that the 2010 Act proceeds by negative resolution and it is not open to any debate, any scrutiny, any vote and may not even be amended? Therefore, the sort of scrutiny that most Members of this place would expect to take place for any new trade agreements will not occur in the way he has led the House to believe.
Dr Fox
This Bill is not about trade agreements; I can only explain it to the hon. Gentleman—I cannot understand it for him. This Bill is about continuity of existing agreements. In any case, the 2010 Act effectively gives the Commons the power to block ratification, notwithstanding the fact that we have already scrutinised these agreements in the past. He ought to know that, as the 2010 Act was passed by the Labour Government and he voted for it.
There is no attempt here to bypass parliamentary scrutiny or to obtain sweeping new authority for the Government over this country’s trading structures. Rather, the Government seek powers in clause 2 that we think necessary for us fully to implement in UK law non-tariff obligations of the transitioned existing EU-third country trade agreements that we adopt. Any tariff-related obligations in such transitioned agreements will be implemented using powers conferred by the Taxation (Cross-border Trade) Bill, which had its Second Reading in this House yesterday.
Chuka Umunna (Streatham) (Lab)
Will the Secretary of State answer three questions? First, on the existing agreements the EU has with third countries, which he says will be transposed, will he guarantee that those 65 agreements will be transposed by the exit day? Secondly, this Bill does touch on new agreements, to the extent that the Trade Remedies Authority will have a locus and oversight on those agreements. He was part of the campaign that promised that we would have all these new agreements, with Canada, the US and Japan, and would immediately start negotiating with all these countries. It is right, is it not, that none of those negotiations has actually started?
Dr Fox
I look forward to the hon. Gentleman’s extension of that intervention in his speech. Let me deal with the last of those issues. He is well aware that, under our duty of sincere co-operation, while we remain a member of the EU we are not able to negotiate new trade agreements. We will want, first, to get continuity of the existing agreements, which number about 40. We will want to have as many of them as possible—all of them, if possible—transitioned before we leave the EU. I absolutely confirm that. We already have 14 working groups with 21 countries in preparation for future negotiations in the trade agreements that we want to take advantage of when we leave the EU.
Dr Fox
I will make some progress.
When the UK enters directly into its own arrangements with our partner countries, the Government will seek, as far as possible, to maintain the effects of the existing arrangements they have with the EU. This means we will be able to deliver the continuity that businesses, consumers and our trading partners, and this House of Commons, desire. It will maintain market access and allow us to continue to abide by our obligations to our international trading partners. The UK has used the European Communities Act 1972 to implement existing EU trade agreements and the GPA. The European Union (Withdrawal) Bill will repeal the 1972 Act. This means that the UK will require a new way to ensure that our transitioned agreements are fully implemented in UK law and remain operable over time. Clauses 1, 2, 3 and 4 of the Trade Bill will give the Government the necessary powers to do so in relation to the non-tariff elements of those transitioned agreements, including amending legislation, where necessary. They will also grant these powers to the devolved Administrations to ensure that they, too, can implement transitioned agreements and reflect the UK’s independent GPA membership in areas that fall within their devolved competence.
The powers to implement free trade agreements will be available only if the partner country has signed an FTA with the EU before exit day. In other words, and as I said earlier, this Bill does not legislate for powers that could be used when implementing new FTAs with countries with which the EU does not have an FTA before exit day.
Helen Goodman (Bishop Auckland) (Lab)
Will the Secretary of State explain to the House why, if this is just to roll over existing FTAs, he will need the power to change primary legislation?
Dr Fox
We have said that where we needed to change legislation to bring into UK law the non-tariff elements of existing agreements, we would do so, but these powers exist for no other reason. They are very limited, and I make it very clear today that they are limited to these particular circumstances.
Mr Grieve
I wish my right hon. Friend well in this task of ensuring continuity of the trade relationships we currently have within the EU. I fully understand the point he has made about the fact that this is about those relationships and not new ones, but does the delegated powers memorandum not make it absolutely clear that the powers are broad enough to enable not just the implementation of these agreements, but their substantial amendment, including the creation of new obligations? Does that not then make it sensible—I urge him to do this—for the Government to look, as the Bill progresses, at ways to ensure that those can be properly scrutinised, because the methods we currently have of the European Scrutiny Committee and the European Parliament will no longer exist? That is a relevant issue for this House, and if the Government were to look at it in a sensible light, the Bill would be improved.
Dr Fox
I am sure that in Committee my right hon. and learned Friend will again wish to bring his expertise to bear, but I say to him again that the Government do not seek to make any substantial changes to the agreements that already exist. There are some unavoidable changes—for example, the disaggregation of tariff-rate quotas—that we will have to introduce, but they will simply be done to bring the greatest continuity possible to arrangements. As I have said several times, when it comes to new agreements, the Government will bring forward new proposals, where we can ensure that there will be adequate scrutiny of any new agreements that we want with countries once we have left the EU.
Ian Murray (Edinburgh South) (Lab)
I wish just to push the Secretary of State on one point. What will be the process in this House if, for example, the South Korea trade deal, which is currently an EU trade deal, is transposed to UK law to be a UK trade deal and the South Koreans decide to renegotiate the deal on Scotch whisky? What goes through this House?
Dr Fox
Having had substantial discussions already with the South Koreans, I can tell the House that there is no plan to do anything such as the hon. Gentleman suggests. That is why I say to him that this is not about new trade agreements; it is about continuity of what we have at the present time.
Several hon. Members rose—
Dr Fox
I will make a little progress.
The Government are taking a similar approach on the transitional trade agreements and on the GPA, looking to maintain the guaranteed access created by our current participation to ensure stability and continuity for UK businesses. As I mentioned earlier, the UK participates in the GPA through our membership of the European Union. Clearly, if we are to retain the benefits of the GPA, we will soon have to join as an independent participant. This legislation will enable the UK Government to make any changes required in domestic law as part of the UK becoming an independent member of the GPA and provide the power to make changes in future to reflect new countries joining the GPA or existing countries withdrawing from it. It is in the UK’s best interests for its businesses to continue to have guaranteed access to the GPA’s global procurement markets and for us to continue to work with our partners in the GPA to address trade barriers within the government procurement sector. We intend the UK to join the GPA, while maintaining our existing terms of participation. Clause 1 will allow the UK to legislate to reflect our new independent GPA status.
John Redwood
Will the Secretary of State confirm that a helpful and comprehensive trade facilitation agreement came into effect at the WTO in spring last year? It should be reassuring to all those who are worried about possible disruption to UK-EU trade—pending any agreement—that a lot of it will be governed by those helpful provisions because we and the EU will of course remain members of the WTO.
Dr Fox
My right hon. Friend is right. That agreement was the first multilateral trade agreement for decades, which shows how difficult it is to get such multilateral agreements. It does reduce friction for customs arrangements worldwide, but although, as he said, the benefits are great, it is still in the best interests of the UK to come to an open and comprehensive trading agreement with the EU itself.
The Bill provides powers for HMRC to collect and share trade data, as has been mentioned. Those powers include the one in clause 7 that allows primary legislation to be amended to provide for HMRC to collect exporter information. Clause 8 will grant HMRC the authority to share data with those bodies that require those data to carry out a range of public functions relating to trade. Currently, HMRC collects a range of data from import and export declarations that is shared with the European Commission, as well as with other Departments and public bodies, under information gateways governed by EU law. Such gateways will, of course, cease to apply once we leave the European Union, and numerous functions that are currently carried out by the European Commission will be transferred back to the United Kingdom. HMRC will therefore need to be granted the legal authority to request data from exporters and share that data to ensure the continued smooth operation of the UK’s trade frameworks and clear and informed policy making from my Department, as I said to the hon. Member for Livingston (Hannah Bardell). The powers in clauses 7 and 8 will grant that authority, and nothing more.
Lady Hermon
Thank goodness I am blessed with bundles of patience. I am exceedingly grateful to the Secretary of State for giving way. I am really worried about clause 7, which is extremely broad and gives enormous powers to HMRC. The Secretary of State will be well aware that there are hundreds of farms that straddle the border in Northern Ireland. Under clause 7, if those farms trade in machinery and cattle across the border—as they do daily—they will be obliged to give information to HMRC. The clause says that “any person” may be asked for such information. Would Sinn Féin MPs who represent border constituencies be obliged to give HMRC such information, as well as farmers?
Dr Fox
When we discussed this proposal with the Treasury and HMRC, we were keen to ensure that it applied to information related only to those elements needed to continue what we currently do and to gain the information that we believe we need for better trade policy making. HMRC was insistent that before it made any changes we restricted the power as much as possible, because HMRC did not want to become a huge bureaucratic organisation, as the hon. Lady suggests. We intend to define the power tightly when we set the regulations. I have had discussions with HMRC on the basis that we will not want to carry out a hugely bureaucratic exercise. Nevertheless, it makes sense for us to know exactly how much we are importing and exporting and which businesses are doing that. That is the basis for good future policy making.
The time will come when we can begin to forge new trading relationships around the world, building a truly global, outward-facing Britain—a country at the very heart of international trade—but this Bill is not about those new relationships. Instead, it is about preserving and ensuring continuity. We want to protect the access to global markets that is so vital to thousands of British businesses. We want to abide by our obligations to those economies that have already negotiated free trade agreements and other trade agreements with the European Union. The Bill grants us the powers necessary to achieve those aims.
We present the Bill for Second Reading with an eye to the future. It is explicitly designed to prepare for our departure from the European Union, while building the foundations that will facilitate successful future trading relations with the wider world. I hope Members from all parties recognise the value of the Bill and the measures it contains, as well as its importance in helping to provide much-needed certainty to businesses and consumers as our departure from the EU next year approaches. Trade is an issue that transcends party politics: it is an intrinsic part of our very way of life and our prosperity. The Bill is just the beginning, but it is a first step towards a stable, secure and prosperous future for the United Kingdom and our friends beyond.
Barry Gardiner
I will happily give way to my hon. Friend once I have answered our hon. Friend the Member for Nottingham East (Mr Leslie).
As we will no longer be a signatory to the European treaties and no longer come under their territorial scope, we cannot formally be a member of the EU’s customs union. As the EU’s treaties currently stand, only EU member states, and territories attached to those states, are actually members of the customs union. However, it is possible for the UK to enter into a customs union with the EU after Brexit, whereby we choose to have a joined external tariff and no tariffs on trade between the EU and the UK. That would, in effect, mirror the current arrangements. I think that my hon. Friend the Member for Nottingham East, like me, will have been interested to find that provision to do just that was incorporated in clause 31 of the Taxation (Cross-border Trade) Bill, which we debated last night.
Barry Gardiner
No, I am not telling the House that at all. I am happy to try to answer not only the letter of the Secretary of State’s question, but the spirit. Those on the Labour Front Bench have always tried to make it clear that we recognise the benefits of the single market to this country, and the benefits that traditionally the customs union has brought and that a customs union could bring. However, we are focused in the negotiations on achieving the benefits, rather than putting red lines around the structures, which is what the Government have done, and ruling those off the table.
Trade Remedies
Liam Fox Excerpts(6 years, 5 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
On 28 November the Government published a call for evidence to identify UK interest in existing EU trade remedy measures. Currently, there are a number of trade remedy measures being applied by the EU, some of which are relevant and significant to UK industry. In preparation for the UK being an independent trading nation, it is important that we provide certainty and continuity to UK businesses, and avoid exposing them to injury from known unfair trade practices.
The call for evidence will obtain the necessary information from UK businesses to enable the Government to assess which measures matter to the UK and therefore can be maintained when the UK begins to operate its own independent trade remedies framework. The Government will take account of the terms of any time-limited implementation period agreed between the UK and the EU.
We recognise that new EU measures may be put in place after the call for evidence closes and before the UK begins to operate its independent trade remedies framework. We will approach those interested parties ahead of the UK operating its independent trade remedies framework to understand whether there is an interest for any future measures to be maintained.
We will assess whether the transition of an existing measure is important to UK industry, and can be retained based on three criteria:
We have received an application from UK companies which produce products subject to trade remedies measures;
The application is supported by a sufficient proportion of the UK companies which produce those products;
The market share of the UK companies which produce those products is above a certain level.
The Government are committed to ensuring continuity to UK industry as the UK prepares to leave the EU. We are also committed to maintaining a fair and transparent approach to the handling of these existing remedies and aligning them as far as possible with our WTO obligations.
[HCWS273]
Trade Matters
Liam Fox Excerpts(6 years, 5 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Secretary of State has announced the Government’s decision to appoint nine Her Britannic Majesty’s Trade Commissioners (HMTCs) to head the overseas operations for the Department for International Trade (DIT). These HM Trade Commissioners will lead export promotion, investment (inward and overseas direct investment) and trade policy overseas.
These are Senior Civil Service appointments and a fair and open recruitment competition will begin shortly, in line with Civil Service Commission principles.
[HCWS271]
Oral Answers to Questions
Liam Fox Excerpts(6 years, 5 months ago)
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Robert Jenrick (Newark) (Con)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
Before I begin, I would like to offer my sincerest condolences to the family and friends of Simon Speirs, who tragically lost his life while on board the Great Britain yacht during the Clipper round the world race last weekend. Our thoughts and prayers are with his family at this very sad time.
The Department for International Trade is building a world-class trade policy and negotiation capability for the long-term future of our country. Since July 2016, our trade policy group has grown significantly, from 45 to more than 400 today, and it is continuing to grow. We have also established a series of working groups and high-level dialogues with key trade partners to explore the best ways of progressing our trade and investment relationships. Those partners include the United States, Australia, Mexico and Japan.
Martin Vickers
I thank my right hon. Friend for his reply. The business community in my constituency is eagerly looking forward to the opportunities the new trade agreements will bring. Will he clarify which elements of the Trade Bill refer to the free trade agreements?
Dr Fox
The Trade Bill is about maintaining the effects of our current trading arrangements to ensure continuity for businesses, workers and consumers as we leave the European Union. That means the powers in the Trade Bill will be used only to transition our existing trade agreements that the EU has already signed prior to exit. Work is ongoing to establish how we will deal with future free trade agreements, but I am afraid that to claim that the current Bill allows Ministers a free hand to write future FTAs is simply untrue.
Robert Jenrick
Businesses and constituents in Newark believe it is essential that the existing EU FTAs are transferred and rolled over as expeditiously as possible, but we should not confuse that with signing new FTAs. Will the Secretary of State therefore confirm that there will be an entirely separate consultation with the public and with Parliament on how we handle those separate new FTAs?
Dr Fox
Yes, there will be. The trade White Paper, which is of course very separate from the Trade Bill, asked for views on what a future engagement and scrutiny framework should look like on trade. We are considering the responses and we will engage in the coming months. Given the changes we see, with Pascal Lamy describing a move away from the protection of producers to consumer precaution, we will have to take the views of consumers far more into account in future trade agreements than we have in the past.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
When I was a little boy, my grandmother used to say, “Shame the devil and tell the truth.” When will this Secretary of State tell the truth? He has been, with his colleagues, going around the world begging for a trade deal and everyone is telling him, “We want to trade with the European Union, a much bigger trading group.”
Mr Speaker
No further explanation is required. We are immensely interested in the hon. Gentleman’s grandmother, and his ruminations on that matter will doubtless be found in his memoirs, which will be deposited in the Library and we can consult in the long winter evenings that lie ahead.
Dr Fox
We will want to see what the best deals we can get for the UK are, how we can get our trading volumes and value up, and what opportunities we can take as we leave the EU. Of course we are pleased to continue to go along with the British public’s view on the referendum, and the hon. Gentleman will no doubt want to do the same, as his constituency voted overwhelmingly to leave—that is no doubt a view he will endorse.
Sir Vince Cable (Twickenham) (LD)
Can the Secretary of State explain the likely impact of a no deal Brexit in respect of the 57 or so countries with which we already have association agreements through the European Union?
Bob Blackman (Harrow East) (Con)
Will my right hon. Friend confirm the position on trade agreements when we leave the EU: after April 2019, we will be negotiating such trade deals and look forward to actually signing them when we break free from the shackles of the EU?
Dr Fox
Again, to make it clear, before we leave the European Union we have to be able to transition the existing EU free trade agreements to give ourselves the legal basis to trade. Of course, up to that point and beyond, we will want to see what new opportunities are available. If, during an implementation period, we decide that we are not going to introduce and put into effect new trade agreements, we will still want to negotiate and sign them.
Patrick Grady (Glasgow North) (SNP)
The Secretary of State is repeating what he told Politico recently: that his Department wants to copy and paste the trade deals because it does not yet have the capacity to negotiate new ones. As there cannot really be a better trading relationship with the European Union than membership of the single market, is that not actually the best idea? If taking back control simply means duplicating what we already have, why not take the easy and obvious path and stay in the single market?
Mr Philip Hollobone (Kettering) (Con)
Do the Secretary of State’s officials trudge into work, full of doom and gloom-laden, thinking it is all going to be too difficult, or do they bounce into his office, full of energy and enthusiasm, seeing Brexit as a wonderful opportunity for Britain to be at the forefront of leading the world into the bright sunlit uplands of freer trade?
Dr Fox
Not all that many people bounce into my office, although they regularly bounce out of it. We are an incredibly optimistic Department and we look to the future with great confidence. Let me give some figures: the most recent time we advertised jobs in the Department, there were 1,698 applicants for the 92 jobs available. That suggests to me that there is a great deal of optimism, even in our civil service.
Barry Gardiner (Brent North) (Lab)
The Secretary of State is indeed an optimist, and it is good to hear him so upbeat about all the trade opportunities that he thinks await us in the post-Brexit world. Perhaps he can explain why, when the Red Book shows trade in the world economy increasing year-on-year by 4% over the next five years, it shows the UK’s export growth decline from 3.4% next year to 1.2% in 2019, and then plummet to just 0.1% in each of the following three years. Is the Secretary of State perhaps an optimist who can find no rational grounds for his optimism?
Dr Fox
It is nice to see that “Project Fear” never dies. Rather than going on projections, let me tell the hon. Gentleman what our economy has actually done. He is right that global trade has been growing at around 3%, but UK exports have been up 13.1% in the past year—in goods they are up by more than 16%. That is the real performance of the UK economy. There is incredible slack in our ability to export further and we should be encouraging British exporters to do so.
Kevin Foster (Torbay) (Con)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I am glad my hon. Friend asks about our export promotion capability. In 2016, exports of goods from the region, which includes my own constituency, grew by 10.6% compared with 2015, with double-digit growth for markets such as Singapore and South Korea. DIT stands ready to support these businesses, including through the global growth pilot, which offers deeper export support, or through a targeted export programme alongside Torbay Development Agency.
Kevin Foster
I thank my right hon. Friend for his answer, not least because he is a fellow south-west MP. Gooch & Housego’s Torquay factory recently won national recognition for how its staff and management have worked together to grow their business. What support does my right hon. Friend intend to give to that and other companies in Torbay’s vital photonics sector so that they can grow further by increasing their exports?
Dr Fox
Photonics is about the science of light generation and manipulation, Mr Speaker—of course, you and all other Members already knew that. DIT’s local international trade adviser engages with businesses in the photonics sector and with the Torbay Development Agency, and will soon address the Torbay manufacturing forum. DIT specialists will meet the Torbay Development Agency in January to review the marketing proposition for the sector, and a DIT sector specialist will visit Japan to promote UK photonics capability.
Rebecca Pow (Taunton Deane) (Con)
The south-west traditionally grows very fine livestock and has a buoyant export market. Will the Secretary of State give me and the farmers of Taunton Deane some assurance that if export certification demands increase as we leave the EU, the Government will give the right support to the agricultural industry, and will they look into the development of electronic systems to help the certification process?
Dr Fox
Yes. The Government are committed to ensuring as smooth as possible an exit from the EU, including for all our business sectors, which obviously covers agriculture. Beyond that, the Department is particularly focused on finding new markets for our agricultural sector. There is substantial growth in demand for agricultural products in countries such as China and India. Given that the UK’s are the finest in the world, we should be at the forefront of those export markets.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Tom Brake (Carshalton and Wallington) (LD)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Foreign and Commonwealth Office is responsible for policy on human rights across the whole of Government. The UK has a strong history of protecting human rights and promoting our values globally. We will continue to encourage all states to uphold international human rights obligations, including when we meet them both in the UK and on overseas visits.
Tom Brake
I thank the Secretary of State for that answer. I am going to put to the test the statement he made a few seconds ago—that the UK always promotes human rights in trade talks. Did he raise the case of Andy Tsege, and the prison visit that the UK Government have promised, with his Ethiopian counterparts? What progress is being made on releasing him?
Dr Fox
In my official meeting with the Ethiopian Prime Minister, we discussed the need for long-term political and economic stability, as well as the political space. We did, indeed, raise the consular case mentioned by the right hon. Gentleman in private and with our ambassador. I hope that we will see the results of that interaction soon.
Jeremy Lefroy (Stafford) (Con)
I declare an interest as the Prime Minister’s trade envoy to Ethiopia. Does the Secretary of State agree that the work of Her Majesty’s ambassador in Addis Ababa is really tremendous—she has arranged for visits and has personally visited Andy Tsege—but that the situation needs to come to an end? At the same time, will he acknowledge the work that the Ethiopian Government are doing with the Department for International Development to try to get more than 1 million refugees throughout the country into work in a jobs compact?
Dr Fox
It is always the aim of our Government to get other Governments to replicate our values in a clear and practical way. I second my hon. Friend’s vote of thanks to our ambassador for the work that she and her staff are doing. He makes a valid point that we need to take into consideration some of the extreme pressures that some countries are under. Taking 1 million refugees is not an easy task for the most developed country, never mind a country such as Ethiopia that is moving forward in development.
Mr Philip Hollobone (Kettering) (Con)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
My Department has three tasks: promoting UK exports of goods and services, investment both inwards and outwards, and trade policy. In furtherance of this, since we last met for departmental questions on 12 October, Ministers have undertaken visits to Europe, the Gulf, Asia and Africa. Today I shall be travelling to New Zealand and then Australia.
I would also like to formally welcome Baroness Rona Fairhead to the Department. She has joined as Minister responsible for trade and export promotion, and she will be making her maiden speech in the other place on Monday.
Mr Hollobone
Will the Secretary of State convene a great Commonwealth trade conference in 2018 for all 52 Commonwealth nations, to harness the rising tide of good will, optimism and support for enhanced intra-Commonwealth trade post-Brexit?
Dr Fox
I know my hon. Friend takes a strong interest in this, and he makes a valuable point. As the host of the Commonwealth Heads of Government meeting next April, the UK is committed to highlighting the value of, and increasing, intra-Commonwealth trade. Businesses will have an opportunity to meet in a three-day forum that will see a diverse range of sectors represented. This will help us promote our vision for global Britain and to celebrate and grow the vital intra-Commonwealth trade that he mentions.
Barry Gardiner (Brent North) (Lab)
America’s Trade Secretary Wilbur Ross told the CBI this month that the essential precondition of a trade deal with the USA was to move our regulation standards and environmental protections away from the EU and closer to those of the Americans. Last week, Michel Barnier said that the essential precondition of a good trade deal with the EU was to keep our regulation standards and environmental protections close to the European model. The Government say their top priority is securing barrier-free trade with the EU, so does the Secretary of State accept that he can have American cake or European gateau, but he cannot have both?
Dr Fox
Sack the writer.
When it comes to standards, we have made it very clear that we will not see a reduction in the quality or safety of products—either goods or services—made available to UK consumers. We will determine in the United Kingdom what we think those should be, and then we will negotiate with any countries that are willing to negotiate on those terms. We will determine what we choose for Britain’s future. Unlike the Opposition, we will not be dictated to by Mr Barnier.
Rehman Chishti (Gillingham and Rainham) (Con)
Dr Fox
As we leave the EU, we will be able to shape trade policy in our national interest and take advantage of things that are not available to us as a member of the EU. Free ports are one possible tool in that context, and we will want to look closely at the implications. Another thing that might help my hon. Friend, who has a large fish processing capability in his constituency employing some 5,000 people, is discussing with the Department what overseas direct investment might do for expanding that business’s potential.
Martin Whitfield (East Lothian) (Lab)
Will the Secretary of State confirm how the devolved Administrations will be consulted during the process of these future free trade agreements?
Dr Fox
I had discussions recently with all the different parts of the devolved Administrations. They will clearly be very important partners in putting together our future free trade agreements, and they should be treated with due respect in that. However, I would say that they are not the only voices in Scotland, Wales and Northern Ireland. We will want to consult businesses, consumers, unions and the general public, and we will need to have a much wider consultation in future than we have had in the past.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
Small Business Saturday is an increasingly important business day in the run-up to Christmas. How are the Secretary of State and his Department helping small businesses in my constituency to export more?
Dr Fox
Small Business Saturday is in its fifth year. It is a celebration of our small businesses, and I imagine that all Members of the House will be taking part and celebrating businesses in their own constituencies. I shall be with the UK export hub, which some Members have had experience of, in Portishead in my constituency. I encourage as many as possible of the members of the public who may be paying attention to these proceedings to attend.
Heidi Alexander (Lewisham East) (Lab)
Clause 2 of the Trade Bill gives powers to Ministers, potentially for the whole of the next decade, to sort out the issue of the 60 or so trade agreements that we currently benefit from with third countries by virtue of our membership with the EU. Far from being resolved in the next 16 months, is it not the case that that issue—dividing up tariff quotas and so on, and defining a new UK-EU trading relationship—rather than the fiction of the Secretary of State’s fantasy trade deals elsewhere, will dominate the work of the Department over the next few years?
Oral Answers to Questions
Liam Fox Excerpts(6 years, 7 months ago)
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Mr Jim Cunningham (Coventry South) (Lab)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
Since he is a conscientious and committed Member of the House of Commons, the hon. Gentleman will know that the Government published a trade White Paper on Monday 9 October 2017. The trade White Paper establishes the principles that will guide future UK trade policy and sets out the preparatory steps that we are taking. The paper can be found in the Libraries of both Houses and on the gov.uk website.
Mr Cunningham
What transitional plans does the Secretary of State have for the transitional period if he cannot necessarily do the trade deals that he wants to do?
Dr Fox
If the hon. Gentleman is referring to the transitional adoption of existing EU agreements, I can tell him that we have had a very positive response from other Governments, who, like us, want to ensure that there is no disruption of trade at the point of departure from the European Union. We will want to get as many of those in place as we can. That depends partly on the willingness of partners to get that ready on time; there are obviously contingency measures available to us under the World Trade Organisation to ensure continued market access in any case.
Sir Desmond Swayne (New Forest West) (Con)
Can we just declare for free trade?
Dr Fox
This Government constantly declares for free trade. In fact, as we leave the European Union and take up our independent seat on the World Trade Organisation, this country intends to champion the cause of global free trade, especially at a time when the growth in trade has been slowing down in recent years.
Tony Lloyd (Rochdale) (Lab)
Does the International Trade Secretary recognise that people fear that in the event of, for example, a very right-wing, ideological Government, we could see the erosion of social standards through our trade agreements or even the erosion of our ability to protect our national health service with the wrong type of trade treaty? Will he guarantee parliamentary scrutiny of every trade deal done?
Dr Fox
I would like the Government to be judged by their actions. Therefore, as I indicated to the hon. Member for Coventry South (Mr Cunningham), as we want to transition the already agreed EU free trade agreements into UK law—which will include, for example, workers’ rights and environmental standards—I hope that we will get the full support of the Opposition in doing that and in getting the legislation available to give us the powers to do so.
Mr Mark Prisk (Hertford and Stortford) (Con)
The White Paper sets out a strong case for free trade: it is good for growth, and it is good for jobs—but occasionally other countries will act in unfair ways, such as through the dumping of goods. Will the Secretary of State therefore confirm that it will always be the Government’s approach to respond to that in a proportionate, carefully targeted and time-limited fashion?
Hannah Bardell (Livingston) (SNP)
White Papers are all good and well, but yesterday the Scottish Government published a report showing what is at stake for business as the UK edges closer to the Brexit cliff edge. We know that the Secretary of State has consulted the business community to find out how it will be affected, but will he commit today to publishing the findings, as called for by a range of MPs across the House, even if they show that business wants to stay in the single market and customs union? At what point will this Government stop governing in secret and publish the reality of the impact of Brexit?
Dr Fox
The Government are of course extremely concerned about any perceptions of instability. We will consult widely, particularly when it comes to new free trade agreements, but of course the greatest threat to stability, particularly in Scotland, is the insistence of the Scottish Government on threatening a second referendum on independence.
Chris Williamson (Derby North) (Lab)
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I am very happy for the Minister to go around the world selling Britain, but will he come to see the real economy in, for instance, Huddersfield, where we have a strong manufacturing sector, or Leeds, where we have a financial sector? Not one person I meet in those sectors wants us to continue with this folly of Brexit. [Interruption.]
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
What about the voters?
Mark Garnier
Yes, what about all those voters throughout the UK, 52% of whom voted for Brexit? I was a remainer, but we have to uphold the fundamental principle of democracy in this country, and it is the job of all of us in the Government to do our level best to embrace the opportunities—the optimistic opportunities—that Brexit presents.
Kerry McCarthy (Bristol East) (Lab)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I discussed the UK’s independent membership of the WTO with the US trade representative Robert Lighthizer when I visited the US in July, and I have had several productive conversations with the WTO director general Roberto Azevêdo, most recently on my visit to Geneva in July.
Kerry McCarthy
I understand that Britain and the EU have now formally informed WTO members of how they would like quotas to be split after Brexit, but the Trump Administration and seven WTO members have already rejected the proposals. What will the Secretary of State do to ensure that a deal on quotas is achieved?
Dr Fox
I am grateful to the hon. Lady for giving me the chance to explain our methodology. We decided to split the quotas that we have up to now shared with the EU on a market basis. In other words, we would not divide by 28 or by 15, but by the UK’s share of a market. We did that to avoid disadvantaging exporters from other countries, as well as our own producers or consumers. That is the best route to avoid disputes in Switzerland.
Mr Peter Bone (Wellingborough) (Con)
As we are talking about the WTO, if this country cannot reach a deal with the EU, what are the Department’s plans if we do not get an agreement on quotas?
Dr Fox
As I have said, we first have to get our trading schedules agreed and then we have to agree free trade agreements with third countries, which involves the division of quotas. We are making good progress on that. We want a comprehensive agreement, because that is in the interests of all concerned. However, the Government are preparing contingencies should there be no agreement, which is the only responsible thing for a Government to do.
Barry Gardiner (Brent North) (Lab)
The Secretary of State knows full well that a technical rectification would disadvantage other members, which is why seven member states of the WTO have written to Azevêdo specifically setting out that that is unacceptable to them. On 6 July, the Secretary of State said that he was confident that a technical rectification of WTO schedules would be
“smooth and fully understood by our trading partners.”—[Official Report, 6 July 2017; Vol. 626, c. 1364.]
Well, it is not. What is he going to do about that? What assessment has he made of the delays and of the impact on our businesses that will result from that?
Dr Fox
I do not anticipate that that will happen. The hon. Gentleman clearly does not understand what the process is, or what a negotiation is. It is quite clear that our first offer is not the final thing that we expect to be accepted. For example, we have no agreement yet on what will happen with unused quotas or aggregate measures of support. Those issues will be dealt with during the negotiation—[Interruption.] I know that the hon. Gentleman likes to multitask, but being able to speak and listen simultaneously is not among his abilities.
Henry Smith (Crawley) (Con)
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Department has three tasks: promoting UK exports to support a growing economy that serves the whole country; maximising opportunities for wealth creation, including through overseas direct investment; and negotiating the best international trading framework for the UK outside the EU.
I welcome Crawford Falconer to the Department as chief trade negotiation adviser—he brings a wealth of knowledge—and I can announce the convening of the Board of Trade today, which will ensure that the benefits of trade and investment are spread across the whole UK.
Henry Smith
The EU Commission seems hellbent on damaging the economies of the remaining member states through its Brexit negotiations, so will my right hon. Friend say what preparations are being made for no deal?
Dr Fox
The best thing for the whole of Europe is for us to reach a deep and comprehensive agreement on trade. We are committed to doing so, and we hope that our European partners will commit to move on to the second stage of negotiations as soon as possible, not least to remove any uncertainty to businesses and workers across Europe. However, if we are unable to do so, the Government have already undertaken a wide range of contingency plans.
Wera Hobhouse (Bath) (LD)
Following the Bombardier tariff crisis, can the Secretary of State guarantee that Airbus in Bristol, which employs many people in my constituency, will not have new tariffs to pay once Britain leaves the EU?
Dr Fox
There are two elements to that. Of course we want to maintain a completely tariff-free trading environment in Europe, and that is what we should be able to do, given that it is the starting point—that, of course, is unique in any trade negotiation. On the Bombardier case, we have made our views very clear to the United States. I spoke to Wilbur Ross, the Secretary of Commerce, only last week.
Sir Edward Leigh (Gainsborough) (Con)
Dr Fox
I do not really wish to trumpet this to other Departments, but our Department has a unique agreement with the Treasury: we are able to increase staffing levels when that relates to Brexit issues, and we will continue to do so. As I said, we want to ensure that we get a good deal. There is no difference between the Chancellor and me. The Chancellor says that we need to spend money only as necessary. I think that that is correct, but we also need to ensure that we spend money on all areas where contingency plans are necessary.
Mr Speaker
I call Barry Gardiner—[Interruption.] The hon. Gentleman looks perplexed.
Neil Parish (Tiverton and Honiton) (Con)
Dr Fox
We will take the same approach to New Zealand lamb as we do to all other tariff-rate quotas: allocate them on the basis of usage. As I have already explained, that will keep the market stable and mean that we are not disadvantaging New Zealand exporters or our domestic market. That is not only the fairest thing to do, but the best way to prevent the UK from being taken to dispute at the WTO, which is again to our mutual advantage.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
If the EU27 do not give the two-year extension that the Prime Minister begged for in Florence, trade barriers will rise between the UK and how many other countries? Does the Department have a number?
James Cleverly (Braintree) (Con)
Dr Fox
We have made it clear that we see our trade policy and our developmental policy as going hand in hand. We want countries to have the power to trade their way out of poverty. That will be one of our key themes at CHOGM and we will be setting out processes by which we think that can be made more possible in the future.
David Hanson (Delyn) (Lab)
Many businesses in my constituency, particularly sheep and dairy farmers, are signing contracts early in the new year for exports in 2019. What certainty can the Secretary of State give them about pricing for 2019?
Dr Fox
As I have said, our aim is to maintain market stability, but of course the good news is that the UK is continuing to export extremely well—we had an increase of about 15% in our exports in the 12 months to August 2017. We want to encourage that and to ensure that we get bigger market penetration, irrespective of what deal we get with the EU.
Mr Peter Bone (Wellingborough) (Con)
Trade Matters
Liam Fox Excerpts(6 years, 8 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)
EU-Canada comprehensive and economic trade agreement (CETA)—provisional application
The Government wish to inform the House that on 21 September 2017, the comprehensive and economic trade agreement (CETA) between the EU and Canada will be provisionally applied. The date of provisional application was confirmed by the European Commission to EU member states in the last meeting of the Trade Policy Committee.
The UK has always been a strong supporter of CETA and remains a constructive partner in support of EU free trade agreements.
Canada is one of the world’s most developed economies and a significant trading partner for the UK. The provisional application of CETA will benefit consumers and provide opportunities for British businesses with 98% of all Canadian tariff lines being eliminated.
This will create major opportunities for UK businesses across the whole economy and the Government are now working with our Canadian partners to ensure that UK businesses take full advantage of the provisional application of this agreement.
[HCWS132]
Export Licensing: High Court Judgment
Liam Fox Excerpts(6 years, 10 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
With permission, Mr Speaker, I would like to make a statement on the High Court judgment on export licensing. We welcome the divisional court’s judgment today dismissing the claim by the Campaign Against Arms Trade for a judicial review of decisions regarding exports to Saudi Arabia for possible use in the conflict in Yemen. We are grateful to the court for the careful and meticulous way in which the evidence from both sides has been considered in reaching this judgment.
The judgment recognises the rigorous and robust processes that we have in place across Government to ensure that UK defence exports are licensed consistently with the Government’s consolidated EU and national arms export licensing criteria. These criteria give effect to an EU common position setting out rules for assessing military exports. They were introduced in October 2000 and last updated in March 2014. The consolidated criteria, used to assess each export licence application, cover: our international obligations, including sanctions; human rights and international humanitarian law; armed conflicts; regional peace and security; national security and the security of our allies; terrorism; risk of diversion; and the technical and economic capacity of the recipient country.
The claim challenged decisions not to suspend extant licences for the sale or transfer of arms or military equipment and to continue to grant new licences for such transfers. The judgment states that these decisions were lawful and rational. It describes the Government’s decision making about export licensing as
“highly sophisticated, structured and multi-faceted”.
We note the application to appeal and will continue to defend the decisions challenged. We remain confident that the UK operates one of the most robust export control regimes in the world.
The central issue in relation to defence exports to Saudi Arabia in the context of the conflict in Yemen is Criterion 2c of the consolidated EU and national arms export licensing criteria—that is, that the Government will not grant a licence if there is a clear risk that the items might be used in the commission of a serious violation of international humanitarian law. We have sufficient information to carry out proper risk-based assessments against Criterion 2c. The situation has been kept under close review and to date we have not refused licences on Criterion 2c grounds because we have assessed—based on all the information available to us, including information not publicly available—that the clear risk threshold has not been reached. The judgment says that, on the evidence, we were rationally entitled to conclude that this threshold has indeed not been reached.
The exercise undertaken to inform these assessments has, in the words of the judgment,
“all the hallmarks of a rigorous and robust, multi-layered process of analysis carried out by numerous expert Government and military personnel, upon which the Secretary of State could properly rely”.
In addition to a considered analysis by the Ministry of Defence of allegations of breaches of international humanitarian law, there has been intensive engagement with the Saudis at the highest level, stressing the need to comply with international humanitarian law, to investigate all incidents of concern and ensure that lessons are learned. Through this engagement, and our long-standing relationship with the Saudis, the UK Government have developed a higher degree of insight into Saudi military processes and procedures adopted in Yemen than might be expected for a country that is not party to the conflict. We have also considered public commitments to comply with international humanitarian law made by the Saudis, and monitored and analysed developments on the ground.
Each of these strands takes into account a wide range of sources and analyses, including those of a sensitive nature to which other parties, such as non-governmental organisations and the UN, do not have access. Taken together, these strands of information and analysis, which are reviewed regularly by the Foreign and Commonwealth Office in comprehensive reports to the Foreign Secretary, have enabled Ministers to take informed decisions about the overall Criterion 2c position and individual export licence applications. They provide a sound basis on which the Foreign Secretary is able to advise me, as the Secretary of State for International Trade, on these points.
That the assessment has been that the issue of military exports to Saudi Arabia is “finely balanced” is seen by the judgment as instructive and points to the
“anxious scrutiny…given to the matter and the essential rationality and rigour of the process in which the Secretary of State was engaged.”
As the judgment states, on the basis of this information and analysis, we were rationally entitled to conclude that Saudi Arabia has put processes in place to secure respect for compliance with international humanitarian law, and that Saudi Arabia has been, and remains, genuinely committed to compliance with international humanitarian law. The Saudis have engaged and continue to engage constructively with the UK on these matters.
We do not receive this court judgment as a signal to do anything other than to continue to take our export control responsibilities very seriously. Our policy is to assess licence applications on a case-by-case basis against the rigorous tests set out in the consolidated EU and national arms export licensing criteria. We will not grant a licence if to do so would be inconsistent with these criteria. We will continue to keep the situation in Yemen under close scrutiny and base our export licensing assessments on the most up-to-date information and analysis available. If we assess that the clear risk threshold under Criterion 2c of the consolidated EU and national arms export licensing criteria has been reached, we will not hesitate to refuse export licences and suspend licences already in circulation. I commend this statement to the House.
Barry Gardiner (Brent North) (Lab)
I thank the Secretary of State for his statement and early sight of it. I know that he and the whole House will agree that the war in Yemen is a humanitarian tragedy. Thousands of people, including women and children, have been its victims both directly and indirectly through the loss of life-saving infrastructures such as hospitals and water supplies. All of us should, and do, mourn that keenly.
The question for the High Court was whether the Secretary of State was entitled to conclude that there was no risk that British weapons might be used in the commission of serious violations of international humanitarian law. Since the bombing of Yemen began in March 2015, the UK has licensed more than £3.3 billion of arms to the Saudi regime, including: £2.2 billion of ML10 licences, dealing with aircraft, helicopters and drones; £1.1 billion of ML4 licences, dealing with grenades, bombs, missiles and countermeasures; and £430,000-worth of ML6 licences, dealing with armoured vehicles and tanks.
The Secretary of State knows that indiscriminate use of air strikes, the destruction of a country’s means of food production and the targeting of civilians are all classed as war crimes under international humanitarian law. Does he recall that a United Nations panel of experts reported in January 2016 that Saudi Arabian forces had engaged in “widespread and systematic” targeting of civilians? Does he recall that, on 21 July last year, the Government corrected their previous declarations that they had no evidence of any violations, and that the Foreign Secretary stated in September last year that the Government’s new position was that they had been unable to make an assessment and that the Saudi authorities were best placed to make such an assessment? Does he accept that the Foreign Secretary was wrong to franchise out our obligation in this way, and that we, not the Saudis, have the duty to assess whether there is a risk that British arms sold to the Saudis might be used in contravention of international humanitarian law?
Does the Secretary of State recall that evidence revealed in the High Court in February this year showed that the civil servant at the head of export control had provided advice to a previous Secretary of State recommending that the UK suspend arms sales to Saudi Arabia
“given the gaps in knowledge about Saudi operations”?
Can he explain to the House why that recommendation was overruled by the then Secretary of State, the right hon. Member for Bromsgrove (Sajid Javid), who sits alongside him?
Does the Secretary of State agree that the Committees on Arms Export Controls should be set up in this Parliament without delay so that export licensing for arms sales can come under the necessary parliamentary scrutiny?
Does the Secretary of State agree that today’s judgment did not seek to rule on whether the Government were correct in concluding that there was no clear risk of a serious breach of international humanitarian law, but rather on whether, in so concluding, they had reached a decision that could be considered rational, given the procedures they had adopted and the evidence they had considered? Does he further accept that if those procedures themselves were defective, or the evidence the Government considered was insufficient, misleading or even simply not comprehensive, it follows that the decision, however rational within its own parameters, could be deeply flawed, and this country might be at grave risk of violating our obligations in international humanitarian law?
The Government relied on material they brought forward only in closed hearing. That evidence could not be seen or heard by the claimant—the Campaign Against Arms Trade—or its lawyers, Leigh Day. As such, the court ruling that the Government’s decision was a rational one, given the procedures and evidence they considered, was based on secret evidence, which it was impossible to challenge. Does the Secretary of State accept that the court judgment makes specific reference to the substantial body of evidence presented in open session, which in fact suggests that a clear risk does exist that British arms might be used in violation of international humanitarian law? Will he agree to make the evidence that was available only in closed session available to Members of this House on Privy Council terms or, indeed, to the Intelligence and Security Committee?
Does the Secretary of State agree that we would all wish this country not only to adopt the highest ethical standards and controls but to be seen to adopt them, and that it would be helpful if he could now give his assurance to the House that it is his considered view that not only were the Government rational in adopting the view they did, given the procedures they followed and the evidence they considered, but that there is, to his certain knowledge, no risk whatever that UK arms might be used by Saudi Arabia in the Yemen war in any way that might constitute a violation of our obligations in international humanitarian law?
Dr Fox
May I say, first, that I agree with the hon. Gentleman that Yemen is indeed a humanitarian disaster that is begging for a political solution, to enable us to carry out our diplomatic efforts and our humanitarian efforts? I doubt whether anyone in the House would disagree with that.
The hon. Gentleman was not quite accurate in terms of what the court case was about. There were three grounds of challenge in court: first, failure to ask the correct questions and to make sufficient inquiries; secondly, failure to apply the suspension mechanism; and, thirdly, irrationally concluding that there was no clear risk under Criterion 2c. All these grounds have been dismissed by the court.
The hon. Gentleman makes the point about targeting. As a former Defence Secretary, I say to him that the MOD has gone to the nth degree to improve the ability of the Saudis to target more effectively, including through training by UK personnel. That is one of the biggest advances we have helped the Saudis to make in this.
The hon. Gentleman says that the UN and the NGOs had set out their own reservations about what had happened, but as the judgment made clear, they did not have sight of all the information that the judges were able to look at. He said there were gaps in the Government’s knowledge, but the court again made it clear that the Government had not only the ability to assess what the gaps in that knowledge might have been, but the appropriate means of redressing that. I remind him that the criteria we operate are part of the EU consolidated criteria—they are not UK Government unilateral criteria.
I take exception to the hon. Gentleman’s final point. I simply do not accept that if we have closed sessions it somehow makes the judgment less valid. I do not accept that we cannot have closed sessions that protect our national security or the personnel involved in our national security. Our sources need to be protected. I listened to the argument he makes but I simply cannot bring myself to accept it.
Dr Julian Lewis (New Forest East) (Con)
At the end of his statement my right hon. Friend referred to steps that could be taken if it were found that Saudi Arabia were misusing the arms that we supply. Will he expand on that a bit? The issue has come up before in the Committees on Arms Export Controls. If we supplied a consignment of sophisticated weapons for use in one way and it was used differently, or abused in defiance of the laws of war, what could we do to rectify the situation?
Dr Fox
As my right hon. Friend knows from his experience, there are a number of criteria for refusals and revocations; if he has not seen the list, I will ensure that he is sent it. If we believed that we were not able to convince ourselves that we were operating entirely within the consolidated criteria, we could suspend extant licences and refuse new ones. As I made very clear, if we believed that we were not fully in line with the criteria, we would do so.
Hannah Bardell (Livingston) (SNP)
I thank the Secretary of State for advance notice of the statement. I apologise for my hoarse voice—I think I shouted a bit too much in excitement at London Pride on Saturday.
Amnesty International, Human Rights Watch and other human rights campaign groups believe that UK and US weapons have been used against Yemeni civilians. As things stand, 10,000 civilians have been killed, 50,000 wounded and 3 million displaced. Today’s judgment raises a number of questions. We pay tribute to Campaign Against Arms Trade, which has taken the Government to court and forced them to explain themselves. We acknowledge CAAT’s plan to appeal this decision and wish it well, but the UK Government should be coming to this house with the facts at all times, not having to be dragged through the courts for the public to get a full explanation.
Does the Secretary of State accept that it cannot be beneficial if the public lose confidence in the Government over their relationship with a supposed ally—one that is in flagrant breach of international humanitarian law in Yemen? Let us not forget that Saudi Arabia, the UK’s largest weapons client, has bought more than £3 billion-worth of British arms in the past two years. UK and EU arms sales rules state that export licences cannot be granted if there is a “clear risk” that the equipment could be used to break international humanitarian law.
The Secretary of State says that he takes this very seriously. He will know that our former colleagues Angus Robertson and Tasmina Ahmed-Sheikh were strong advocates for the re-establishment of the Committees on Arms Export Controls, which the UK Government promised before the election would be reconvened. When will that happen, and when will the first meeting take place? Can he give us categorical assurances that the election does not mean that such an important Committee will be kicked into the long grass?
Dr Fox
I thank the hon. Lady for her comments. As the judgment set out, the case focused on the airstrikes conducted by a coalition led by Saudi Arabia in support of the legitimate Government of Yemen against the Houthi rebellion. We need to put on record that that is the origin of the conflict. Of course the humanitarian issues in Yemen are deeply troubling to all of us; we have all seen the pictures. The United Kingdom, through our various agencies and Government Departments, has been fulfilling as much of our diplomatic and humanitarian actions as we can in the circumstances. This will only be brought to an end by a political settlement, not by a military settlement.
The hon. Lady talks about the “clear risk” test. The judgment could not have been clearer that the Government met the “clear risk” test of criterion 2c in the way they carried this out.
On the hon. Lady’s point about the Committees on Arms Export Controls, I have absolutely no objection to such a Committee being set up. In fact, I think it is beneficial to us to ensure at all times the highest reputation of our probity in these matters. I would have absolutely no objection whatsoever to such a Committee being in place.
Crispin Blunt (Reigate) (Con)
Does the Secretary of State agree that the detail of the judgment makes clear what a great job his civil servants, and other civil servants and officials in both the Ministry of Defence and the Foreign Office, have done and the rigorous way in which they have gone about their responsibilities? The judgment states that the process was “highly sophisticated, structured” and “multi-faceted”. They deserve congratulations today.
Dr Fox
I do not think that the judgment could have been more unequivocal. I am grateful to my hon. Friend for his comments. We have been utterly vigorous in the process. The Foreign and Commonwealth Office, the MOD and the Department for International Trade have worked extremely closely. Our officials have done a wonderful job. I am not sure that they necessarily appreciated the number of letters between us to ensure that the process worked as tightly as it has, but I am sure that they will all feel totally vindicated by the judgment on the way in which they have carried out their duties on behalf of this country’s international reputation and law.
Mr Kevan Jones (North Durham) (Lab)
I welcome the judgment, which demonstrates the robustness of the Export Control Act 2002, which was introduced by a Labour Government. It also supports the hard-working defence workers in our industry. The judgment states that the coalition did not deliberately target civilians and that the Saudis have procedures to abide by the principles of international humanitarian law. In the light of that, may I urge the Secretary of State to make representations to the Saudis to publish the outcomes of their own inquiries into the alleged incidents?
Dr Fox
I thank the hon. Gentleman for his comments. As I have said, I think we have the most robust system in existence on defence exports. We have been very clear with the Saudis that they have to carry out investigations into incidents and make those investigations clear to the United Kingdom Government, and we had to be very clear that, if we were to license further defence exports, those lessons had been learned and that mechanisms had been put in place to ensure that they would not happen again.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
Given that the High Court has today found that the Government have been meticulous in their export licensing processes, will the Secretary of State inform the House how much this court case is going to cost the taxpayer in legal fees?
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Secretary of State and the Government may have won this legal skirmish, but they certainly have not won the moral case and there are still many unanswered questions about the relationship and the terrible situation in Yemen. He said that he was confident, but the court judgment makes it clear that he was anxious. In fact, he wrote to the Foreign Secretary:
“I am concerned that the issue…continues to be finely balanced... I ask that you commission a further detailed assessment…and send me updated advice”,
and
“that you seek advice from”
senior Government lawyers “before making your recommendation.”
Why was the International Trade Secretary anxious? Was it because of the civilian deaths, the use of cluster bombs or the attacks on humanitarian supplies in operations, including water and sanitation supplies that could have been so critical in preventing the cholera epidemic?
Dr Fox
I know that the hon. Gentleman takes a close interest in the matter, but I really would not describe today’s landmark case as a “skirmish”. I think that everyone in the House would be well advised to read the full judgment. It is my job to be anxious about these things. It is my job to give the nth degree of scrutiny, because lives are potentially lost if we make the wrong judgments. It is the judgment of myself, the Foreign Secretary and other senior Ministers that gives us such anxiety. Were we to be cavalier, the hon. Gentleman would be absolutely right to criticise us. When we take the nth degree of care about the judgments we make, as previous Governments have done, he ought to be very grateful that we are doing so in the country’s interest.
Simon Hoare (North Dorset) (Con)
I welcome my right hon. Friend’s statement. The judgment comes from an independent judiciary and underscores the robustness of the assessment of export licence applications. He will be aware, I hope, that Saudi Arabia is going through self-authored and hugely welcome modernisation and change. Can he assure me that those changes within the kingdom will be taken into account when considering future export licence applications to our strong and reliable ally in the middle east?
Dr Fox
We take all information into account when coming to a judgment. We look across the information from the FCO, the MOD and my Department to see what is happening, and we put the whole picture together before we come to a judgment. We can hardly be accused of spending too little time or looking at too little evidence in coming to the right conclusion.
Keith Vaz (Leicester East) (Lab)
Of course we accept the judgment of the court, because we believe in the rule of law. However, how does this help the Yemeni people? So far, 10,000 people have died, 14 million people have been displaced and 200,000 people are suffering from cholera. The Secretary of State is a former Foreign Minister and a former Defence Secretary. After the statement, will he go back to the Foreign Office and get everyone back around the negotiating table—please?
Dr Fox
The Government, through the Foreign and Commonwealth Office, are leaving no stone unturned in their attempts to get the peace process driven forward. Many attempts have been made to do so, and it is in all our interests to stop this dreadful humanitarian disaster. The right hon. Gentleman is absolutely right. The parties need to understand that the solution cannot be a purely military one; it has to be political.
Mark Menzies (Fylde) (Con)
I, too, welcome today’s landmark ruling on a very difficult case. There are tens of thousands of defence workers, many of them in my constituency, whose jobs depend on the deals that are done. Can the Secretary of State assure me that we will continue to work with the Saudis to ensure accurate targeting and robust terms of arms sales?
Dr Fox
Of course we will continue to work with the Saudis to get an improvement in the position, to make sure that any decisions we take are within the criteria. My hon. Friend is absolutely right that a lot of jobs in this country depend on our defence industry. Were campaigns such as that of the CAAT to be successful, there would be a rapid proliferation of new defence companies trying to set up around the world, and there would actually be less control over proliferation, rather than more.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
Parliamentary scrutiny of arms exports is crucial, so I welcome what the Secretary of State said in response to challenges on the Committees on Arms Export Controls. It is vital that those Committees are re-established soon. May I ask the Government to look again at the question of an independent UN-led investigation into all alleged violations of international humanitarian law, by both sides, in the Yemen conflict?
Dr Fox
We have never had any objection to an independent UN inquiry into that. Part of the trouble, however, as set out in the judgment, was the availability of evidence—especially in open session—to such an inquiry. When Members read the full judgment, they will see why there is such significance to it. I am entirely open-minded about any future UN inquiry.
Sir Desmond Swayne (New Forest West) (Con)
How many licences have been refused?
Dr Fox
There are a number of different criteria, and they are assessed on a regular basis. There were 366 refusals or revocations in 2016. Eight different categories of refusals and revocations are set out. To be helpful, I will make a copy of those categories available in the Library, if it does not have one already.
Tom Brake (Carshalton and Wallington) (LD)
Will the Secretary of State confirm that the judgment does not affirm that there was no risk of IHL breaches in Yemen; that the judge acknowledged significant evidence that suggested that there was, or is, a risk of such breaches; and that the UK Government remain very heavily dependent on the Saudis’ guarantees that they are not targeting civilians?
Dr Fox
It is impossible to sell anything to anybody with no risk attached. That is why we have a clear risk test in the consolidated criteria. We are in close touch with the Saudis, to a degree that I have never known before with a country that is party to a military dispute, in seeing how they do their targeting and understanding their methods and information. We have been closely helping to instruct them in ways to minimise civilian casualties in future.
Leo Docherty (Aldershot) (Con)
I have had the opportunity to travel to Saudi Arabia and visit the targeting centre in Riyadh, where targets in Yemen are allocated. Does the Secretary of State agree that as well as exporting hardware, we export a doctrine of responsible use, which, at the end of the day, saves lives?
Alison Thewliss (Glasgow Central) (SNP)
Médecins Sans Frontières is reporting today that Yemenis are afraid to go to and to stay in the cholera treatment centre in Abs, 50 km from the frontline, since it was bombed by Saudi Arabia last August, killing 19 people. The Joint Incidents Assessment Team declared this atrocity an “unintentional mistake”, as it did in relation to the facilities at Haydan and Razeh in Saada and Houban in Taiz, all of which were hit by Saudi bombs. How many hospitals protected by international humanitarian law will the Secretary of State allow to be hit by Saudi Arabia before he stops selling it bombs?
Dr Fox
The hon. Lady talks as though there is only one party in this dispute in that part of the world. Unfortunately, that is not the case. As I say, we take the key risk criteria very seriously. I am afraid that making the sort of rather uninformed points she has made for propaganda purposes does not actually help the humanitarian situation.
Robert Jenrick (Newark) (Con)
Does my right hon. Friend agree that among our many security objectives and values, keeping faith with important allies and being a reliable security partner should be among the most important, so that our allies can see that we take such important decisions rigorously, with the due process that they deserve and under the rule of law?
Dr Fox
My hon. Friend is absolutely right. Protection of our allies and working with our allies is extremely important, but it is also important that our allies themselves understand that we will rigorously apply the criteria that we have set out and on which we are parties to an international agreement. Getting the balance right between those things is exactly what the Government have sought and are set to achieve.
Thangam Debbonaire (Bristol West) (Lab)
Will the Secretary of State please enlighten us about why he does not take more notice of the Foreign and Commonwealth Office’s reports on countries of concern for human rights and repression?
Alex Chalk (Cheltenham) (Con)
Does my right hon. Friend agree that closed sessions are absolutely standard in litigation of this nature, and that it is absolutely wrong to make such a point to seek to undermine a clear and impartial ruling of the High Court that has confirmed the rigorous and detailed scrutiny applied to sensitive arms export decisions?
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The Secretary of State will be aware of reports by the BBC and the Danish newspaper Dagbladet Information in relation to the sale of surveillance and decryption technology to Saudi Arabia by British companies via their Danish subsidiaries. This technology has been used to crush internal dissent, and it arguably contravenes Criterion 5 restrictions due to the potential impact on UK security. Will the British Government review the legislation and oversight procedures governing sales of surveillance and decryption technology?
Wendy Morton (Aldridge-Brownhills) (Con)
Today’s judgment clearly shows that the UK is very robust in its licensing criteria, but in the light of this decision will the Secretary of State reassure the House that under this system decisions to grant such licences are undertaken and assessed in line with international humanitarian law?
Dr Fox
The judgment makes it very clear that that is the case. I think that those who criticise the UK system should look at how robust we are in comparison with other countries. It would do everybody in this country good to recognise how robust and clear we are in the decisions that we make and how transparent we are in our conduct.
Mike Gapes (Ilford South) (Lab/Co-op)
The Secretary of State rightly draws attention to the robust nature of the wording in the document produced by the court. This judgment relates to a decision under the EU consolidated criteria. Does he agree that it will be extremely important that we continue to maintain controls of arms exports that are as least as strong in future as they are under the existing EU consolidated criteria?
Dr Fox
It is slightly worrying to me how often I agree with the hon. Gentleman, and I find myself doing so again today. It is not what the criteria are called, but what they contain that matters. Their content has clearly stood the rigour of the Court’s scrutiny today. I completely agree with him that it would be wayward, to say the least, for any Government to consider criteria any less rigorous than those we have today.
Mr Speaker
The hon. Member for Ilford South (Mike Gapes) does not look worried at all; he looks in a state of high contentment that the Secretary of State agrees with him. Anybody would think, as far as the hon. Gentleman was concerned, that Christmas had come early, but I suppose it is always rather good when people agree with one.
Robert Courts (Witney) (Con)
Will my right hon. Friend please tell the House whether, in his view, the High Court had before it all the information it needed to reach the judgment that has been handed down today?
Andy Slaughter (Hammersmith) (Lab)
May I ask the Secretary of State, as he continues to promote the sale of arms to Saudi Arabia, what regard his Government have to the fact that 157 people were executed there last year, including minors, and that four young men who were arrested as minors, Dawoud al-Marhoon, Abdullah al-Zaher, Ali al-Nimr and Abdulkareem al-Hawaj, remain at imminent risk of execution by crucifixion?
Amanda Milling (Cannock Chase) (Con)
In the last Parliament, it took quite some time for the Committees on Arms Export Controls to be set up. Will my right hon. Friend speak to the Leader of the House to see whether that important Committee can be set up as quickly as possible?
Dr Fox
The usual channels will have heard my hon. Friend’s view. As I have made clear, I have no objection to such a Committee being in place. It is a balanced judgment as to whether we have such a Committee or not. As I said, any Committee that looks into the probity of Ministers’ decisions should be welcomed by Ministers as well as by the House as a whole.
Kerry McCarthy (Bristol East) (Lab)
In 2013, the Government launched their action plan on business and human rights with great fanfare, but subsequent questions by me and others revealed that it appears to be little more than a piece of paper. It is certainly not an action plan. How does that supposed action plan inform our business relationship with Saudi Arabia, and how will it inform that relationship after this judgment?
Mr Philip Hollobone (Kettering) (Con)
I visited Saudi Arabia as part of a cross-party delegation in April and have declared that in the register. It is right that our arms exports are subject to legal challenge, and everyone agrees about the humanitarian crisis in Yemen, but I was surprised to learn, as were other members of the delegation, that 65,000 shells and rockets have been fired from Yemen into Saudi Arabia; that there have been civilian deaths and injuries in Saudi Arabia; and that civilians have been evacuated and displaced, and hospitals damaged, all in Saudi Arabia. Would my right hon. Friend welcome more balanced coverage of this distressing conflict?
Dr Fox
My hon. Friend makes the very important point that this is not a conflict that Saudi Arabia or the coalition sought. They have a legitimate right of self-defence and a legitimate right to acquire the means of conducting that self-defence. It is clear that this is a bloody and brutal conflict and, as I said earlier, it requires a proper political settlement. That requires us to continue with our humanitarian and diplomatic efforts. He is absolutely right that it would not do any harm to have a little more of an objective view, rather than the one-sided blast that we see rather too often in this House and elsewhere.
Graham Jones (Hyndburn) (Lab)
Today’s judgment was unequivocal: where the Government have failed is in advancing the peace process in Yemen and, of course, that includes Saudi Arabia. When will the Government make progress on a peace settlement for that country?
Dr Fox
The Government are doing all they can to take that process forward. Would that it were so simple that we could unilaterally create a solution in that war-torn part of the world. We are doing what we can to help our allies reach that settlement and will continue to do so. It is a humanitarian disaster but, sadly, it is not unilaterally within our power to simply bring it to an end.
Exiting the European Union and Global Trade
Liam Fox Excerpts(6 years, 10 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 Exiting the European Union and global trade.
This is an important debate, not only because it is our first full debate on global Britain, but because this debate was originally timetabled for the day on which the tragic terrorist attack on Westminster bridge took place. The thoughts of everyone in this House are, as ever, with the families of those who were killed and injured. None of us will ever forget the outstanding bravery of the emergency services and all those who helped to restore law and order, and who work tirelessly to keep us safe at all times.
We stand at a vital juncture for this country, ready to write a new chapter in our history. As we begin the process of withdrawing from the European Union, the Government have promised that we will hold a series of debates to allow the House to have its say on the future of the United Kingdom. I welcome that commitment and look forward to Government and Opposition colleagues being able to engage fully with the proposals of my Department and the Government.
The Department for International Trade was created as a result of the change of Government that followed the country’s vote to leave the European Union in June last year. It has enabled us to take a fresh look at our national approach to trade and investment. Trade is vital to our country’s economic wellbeing, and as we leave the EU we will be able to shape trade policy according to our own national interests. Leaving the EU represents an unprecedented opportunity for the United Kingdom. The EU Commission’s own website on trade states that 90% of global growth in the next 20 years will come from outside the EU. As one of the world’s largest economies, we have the chance to work with old and new partners to build a truly global Britain at the heart of international trade.
We will of course support the conclusion of all the EU’s ongoing free trade agreement negotiations while we are still a member, and seek to transitionally adopt all those existing third-party free trade agreements before we leave. As the Prime Minister has said, we want a deep and special partnership with the EU as we negotiate our exit.
The Department for International Trade will ensure that the promotion of British goods and services abroad is complemented by a continuing effort to keep the United Kingdom as a top destination for inward investment, and will help British companies abroad to make the right investment decisions that will grow our global footprint. As I indicated to the House earlier, figures published this morning showed record foreign direct investment into the UK in 2016-17, proving beyond doubt that Britain has the necessary economic fundamentals to attract investment from all around the world.
Foreign direct investment, as well as trade, creates prosperity and jobs throughout Britain. Free trade increases consumer choice, raises standards of living and makes wages go further, as global competition drives down prices on everyday goods—a point to which I shall return later. In this task, our own history is on our side. For more than a century, our country was the commercial capital of the world, and we were among the first nations to recognise the benefits of free trade and economic liberty.
Kate Hoey (Vauxhall) (Lab)
I share the Secretary of State’s optimism about the future of our country once we leave the European Union. Does he agree that we should break the myth that we need trade deals to trade? Of course trade deals are important, but we can trade without them.
Dr Fox
I would distinguish between trade deals and trade rules. We of course need rules to govern the global trade environment, which is why we are committed to the World Trade Organisation—a subject to which I shall return later—but we do not explicitly need free trade agreements in order to trade. The trading environment is regulated in lots of other ways, such as mutual co-operation agreements. The hon. Lady is quite right that we can use several tools to shape the global environment.
Sir Edward Leigh (Gainsborough) (Con)
My right hon. Friend is right that, even if there is no free trade deal, we will be no worse off than the USA or Japan. May I ask him a direct question? The Lancaster House speech was admirably clear, and I am sure he can confirm that we are leaving the EU and the single market, but there was some doubt and comment about our status inside the customs union. Is he happy to confirm today that we are leaving the customs union?
Dr Fox
Our manifesto talked about what would happen when we had left the customs union. That was the basis on which I was elected, and, I assume, on which all Conservatives were elected.
Most of us in this House and, according to the polls, in this country believe in the principles of free trade and the benefits that it brings, yet in today’s world free trade is in need of a champion. For the first time in decades, the established order of fair, free and open global commerce, which has done so much to enrich and empower the world’s nations, is under threat. In April, the World Trade Organisation noted that, in 2016, world trade in goods grew by only 1.3%—the first time since 2001 that trade has grown more slowly than GDP. Yet the threat to growth and prosperity is going largely unrecognised. Globally, there are signs of an increasing tendency towards protectionism. Barriers to trade are going up across the world. A particularly worrying report by the WTO highlighted the acceleration in protectionist measures since the 2008 financial crash. Some of the worst culprits are the countries of the G7 and G20. The nations, including our own, that have gained the most from free trade are at risk of forgetting their own principles, yet protectionism hurts those whom it purports to help. That is especially important as the expansion of global production chains sees intermediate goods cross multiple borders before a final product is made. It means that barriers on imports damage a nation’s exports.
Hannah Bardell (Livingston) (SNP)
The right hon. Gentleman speaks about the customs union and the Lancaster House speech, but does he not share my concern, and the concern of the Scotch whisky industry, that the customs processes as they stand are creaking under pressure? I should declare an interest as the chair of the all-party group on Scotch whisky, which met for the first time last night. Those processes are being transformed into a new digital process, but there is little confidence that it will be able to cope with the process of Brexit. What guarantees can he give that industry that those issues will be solved?
Dr Fox
The hon. Lady raises a fair point about global trade facilitation. We have just signed the trade facilitation agreement, which aims to reduce border friction across the world. It is estimated that that is worth about £70 billion in the global economy. One of the biggest barriers facing Scotch whisky, however, is tariff barriers. The Department has been trying to talk to Governments such as India’s who have very high tariffs against Scotch whisky, which is not good for their own consumers because it encourages an illicit trade. I encourage all those Governments to indulge liberally in the pleasures of single malt—as I do myself.
By 2010, G7 and G20 countries were estimated to be operating some 300 non-tariff barriers to trade. By 2015, that number had mushroomed to more than 1,200. There are those who, having accrued great wealth, would pull up the drawbridge behind them. We cannot let that happen. This country’s own commitment to free trade was perhaps most clearly illustrated by the repeal of the Corn Laws in 1846. The Conservative Prime Minister Sir Robert Peel rightly saw protectionism as an attempt to preserve the wealth of a privileged few at the expense of the many. Import tariffs were all but abolished and Britain’s free trade principles were created to put bread into the mouths of the hungry majority. Now, as then, it is free trade and competition that will do most to address inequality and safeguard the interests of working people. More than ever, it is up to nations that possess the economic and diplomatic means to reassert the rationale of free trade to do so.
Rishi Sunak (Richmond (Yorks)) (Con)
I thank my right hon. Friend for giving way and for his powerful and optimistic speech on free trade. On reducing protectionism, does he agree that leaving the customs union will give us the ability to reduce import tariffs on many goods that we do not produce here at home, which will reduce costs for ordinary working families and benefit many developing countries by helping them trade into prosperity?
Dr Fox
That is an important point. At this morning’s International Trade questions, we made the argument that being outside the common external tariff will give us freedoms to help many developing countries in a way that we are currently unable to. I hope that that will act as a spur to others taking similar measures, because we will encourage poorer countries to trade their way out of poverty and become less dependent on international aid programmes. I do not think that that is a party political issue, but the question is how best to achieve it in practice.
On the progress that has been made, we have reduced poverty levels to their lowest in history. As the world’s emerging economies have liberalised trade practices, prosperity has spread across the globe, bringing industry, jobs and wealth where once there was only deprivation. According to the World Bank, the three decades between 1981 and 2011 witnessed the single greatest decrease in material deprivation in human history. It was a truly remarkable achievement.
The Leader of the Opposition has accused the Prime Minister of following “free trade dogma”. He went on to say that this has often been pursued at the expense of the world’s most fragile economies. In fact, any economist worth their salt can see that free trade has been one of the most potent liberators of the world’s poor. Let us take India as a specific example. In 1993, about 45% of India’s population sat below the poverty line as defined by the World Bank. By 2011, it was 22%—too many, but a phenomenal achievement. It is no coincidence that, in the intervening period, India had embraced globalisation and started to liberalise its economy. It is hard to imagine an international aid programme—even one as generous as our own—that would or could have been so effective on its own.
Sadly, it is also easy to find examples of where a lack of free trade has harmed the most vulnerable. If we want to see the contrasting results of open and closed economies, we should look across from China to the Korean peninsula, where so much attention is focused today. In 1945, both North and South Korea began from a very similar base, but while South Korea was more embracing of open trade and free markets, despite any shortcomings, Pyongyang turned inwards, with the tragic consequences for its citizens that we see to this day. [Interruption.] I am happy to give way to the hon. Member for Bishop Auckland (Helen Goodman) if she thinks that North and South Korea enjoy the same living standards today.
Helen Goodman (Bishop Auckland) (Lab)
Of course what the right hon. Gentleman says about the situation in those two countries today is absolutely right. The point I was chuntering about was that what he described was not actually happening in South Korea in the 1960s and 1970s. A lot of the south-east Asian economies did have protection in those two decades in order to modernise and build up.
Dr Fox
I accept what the hon. Lady says, but that is why I specifically used the words “more embracing” of free trade and open markets. Despite the shortcomings, South Korea none the less created a far better standard of living for its people. Seoul is now at the heart of a thriving economy and, consequently, a dynamic democracy where freedom and prosperity are shared among its people. It should come as no surprise that, while 80% of South Koreans have access to the internet, less than 0.1% of North Koreans enjoy the same access. Perhaps most tragically, there is a greater than 10-year discrepancy in the life expectancy of those north and south of the demilitarised zone. That is why we recognise that trade and development form a fundamental and synergistic partnership. Trade flourishes where there are high levels of education, developed financial sectors and, hugely importantly, sound governance and minimal corruption. There is still much to do, but we would be both foolish and irresponsible to abandon the direction of travel. An open and free trading system is part of the global and national prosperity agenda.
Jeremy Lefroy (Stafford) (Con)
As always, my right hon. Friend presents a powerful case for free trade, but does he not agree that, sometimes, there is too narrow a vision of it? We tend to think about free trade in goods, because they are visible, and to talk about the problems and opportunities that exist, but we forget about the free trade in services, which are by far the largest part of what the UK has to offer to the rest of the world.
Dr Fox
My hon. Friend makes an excellent—and key—point. Getting the global economy moving requires the major liberalisation of services in the same way as we had the liberalisation of goods as the focus of the Uruguay round. One thing that comes from that is that countries such as the United Kingdom, where about 80% of the economy is service-driven, are less dependent on being part of a geographical bloc for trade. When it comes to trade in services, what matters is that we are dealing and trading with countries that are functionally similar rather than geographically proximate. That is a change in globalisation we would do well to understand in the debate as we leave the European Union.
It is not just about raising living standards in developing and developed countries. There is, I think, an even more compelling case for free trade. The prosperity it can create is the basis of a social stability that underpins political stability. We have seen that around the world. That political stability, in turn, underpins our security. In other words, they are all part of the same continuum, and we cannot disrupt one element without disrupting the whole. That is why Governments of both colours in this country have tended to see development, prosperity and security as a single policy objective. It is a truth that we need to understand in this interdependent, globalised era.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
It is not just us making this case. In the discussions with those who are involved in the World Trade Organisation—even though we are a member, we want to get back our voting rights—they have made it pretty clear that they celebrate the re-arrival of the UK as a voting member of the WTO for one vital reason: they feel that globally it has begun to stall and the UK is the single biggest exponent of free trade. It always has been, and they want to welcome us back for that reason alone, if nothing else.
Dr Fox
My right hon. Friend is absolutely right. It is important that we can show our trading partners globally that whatever our differences in the mechanics through which we go about the task, there is an overwhelming belief in the concept of free trade in this country. As I said at the outset, the global trading environment needs someone to champion free trade at a time when many countries feel that we are rolling backwards, away from the progress that we have made. If we as a country can speak with a strong voice about the principles of free trade, citing examples from history as to why it has benefited some of the poorest people in the world, we will make a moral as well as an economic case.
Kelvin Hopkins (Luton North) (Lab)
I am listening with interest to what the Secretary of State is saying, but one point that he has not touched on yet is exchange rates. Is it not absolutely essential that appropriate exchange rates should be arranged between nations so that trade can operate fairly? If a country depreciates massively, it can develop a big trade surplus, and China has done precisely that in recent decades. Does the Secretary of State not agree that exchange rates are crucial?
Dr Fox
That is an important point, but I would distinguish between artificial and intentional currency manipulation and a free market with floating currencies. I happen to believe that floating currencies are one of the ways in which we allow our economies to have shock absorption so that we do not take all the economic pain through unemployment. One of the problems with the existence of the euro is that some of the countries of southern Europe that might have chosen other mechanisms to adapt to the process of change had, in the end, to opt for high levels of structural unemployment because they were unable to do so. The hon. Gentleman’s point is correct, however. Artificial manipulation of currency is different from the workings of the general economy and floating currencies.
Such is the power of free trade that even if we ignore the social and humanitarian benefits that it has brought to the developing world, it would still be indispensable from a purely economic standpoint. During the 1990s, per capita income grew three times faster in the developing countries that lowered trade barriers than in those that did not. That effect is not confined to the developing world, either. Analysis by the OECD has indicated that a 10% increase in economic openness is associated with a 4% increase in output per head of the working population. In other words, free trade works.
Globalisation has been of huge and sustainable benefit to the world economy, through trade, migration, specialisation and innovation. Those advantages exist at every level, from macroeconomics right down to individual firms. Increased competition, economies of scale and global value chains have all contributed to a productivity revolution, boosting the output of firms across the globe. Although it might not always be noticed, the wider benefits of a liberal trade policy have spread to consumers and households by providing a wider choice of goods at a lower price.
In the decade to 2006, the real import price of clothing fell by 38%. In the same period, the price of consumer electronics, as we all know, fell by 50%, despite the rapid technological improvements that saw mobile phones go from a $4,000 brick that was hard to carry to computers no bigger than the palm of one hand. Those are the tangible benefits of trade, and their importance in improving the lives of the people of Britain must not be underestimated. Of course, in any rapidly changing economic environment, we should ensure that the country’s growing prosperity spreads to all corners of the United Kingdom. It is therefore not only right but important that Governments can mitigate the effects of globalisation and provide the tools through which individuals and economies can adapt and prosper. That is how we provide both economic opportunity and security in an era of sometimes bewildering change.
Deidre Brock (Edinburgh North and Leith) (SNP)
The Secretary of State talks about the interdependent global world. The British Ports Association warned that a hard Brexit could hurt small and medium ports, which rely on short sea trade. Its members, including Forth Ports in my constituency, are very worried about the hurdles of new customs requirements and costly tariff regimes. Given that 95% of international trade by tonnage goes through our ports, what action is being taken to address those concerns and ensure that Brexit will not damage vital industries trading through them?
Dr Fox
The first service we can do is not to add adjectives to the word Brexit, because what the Government intend to achieve is as open a trading relationship as possible. If we think about it, the free trade agreement that we will go on to negotiate with the European Union ought to be the easiest FTA in global history. We are starting in a zero-tariff environment and from absolute 100% regulatory and legal equivalence. The only way we would not reach a free and open trading environment would be if the politics of the process took precedence over the economics, prosperity and wellbeing of the people. That is the challenge.
I will give the hon. Member for Edinburgh North and Leith (Deidre Brock) a second challenge, as this is not just about Europe. The decisions we take will reverberate through the global economy. If we put trade and investment impediments into the European economy that do not exist today, that will cause ripples across the global economy that will be felt well beyond our borders.
Sir William Cash (Stone) (Con)
My right hon. Friend knows that all 47 ports in this country opposed the European Union port regulation, which was inimical to our national interest and the lifeblood of our trading relationships. Ports are central to this whole question, and that is another good reason for our leaving the EU.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Could the Government make it clearer that we want an open trading relationship with our European partners and that it is up to the European Union to decide whether they want that or not? Will the Secretary of State also ask who is arguing for protectionist measures against an independent United Kingdom? I do not hear many voices in the EU arguing for that, and I think that that is just a fear put about by people who want us to stay in the European Union.
Dr Fox
Our debates are watched beyond our shores, so perhaps the first point to make is that we are leaving the European Union. There is not any chance that we will not leave the European Union. The British people have spoken and the process, including the parliamentary process, has begun to make that happen. As we do this, we have to look beyond our membership of the EU and determine what sort of global trading environment we want to live in. We are very clear about the model we want, I have travelled to other countries, and we are encouraging Governments beyond the EU to say to our European partners that it is in everybody’s interests— including in Europe and in the wider global trading environment—that we maintain as open a global trading basis as we possibly can.
At a time when the direction of travel in the rest of the world is towards greater liberalisation, it would make no sense for Europe, for internal political reasons, to introduce impediments to that trading environment in the way some have suggested. I do not believe that that is in the interests of the citizens of Europe, whether in the United Kingdom or on the European continent. If we are guided not by abstraction but by the prosperity and wellbeing of our people in the negotiation, we are likely to come to the right outcomes.
To build a free trading world, the UK must continue to support, strengthen and promote the existing global trading structures. The World Trade Organisation is the home of the rules-based international trading system, as the shadow Secretary of State and I agreed earlier this morning, and we unequivocally support it. Its predecessor, the general agreement on tariffs and trade, was established in 1948 to offer a war-torn world stability, security and prosperity through international trade co-operation. The United Kingdom was there from the beginning, and for half a century we worked with our international partners in a series of ministerial rounds dedicated to removing barriers to trade and liberalising the global economy.
The WTO was established in 1994, following the success of the Uruguay round. For the first time, we had an international body with truly global reach that existed to regulate trade and to encourage nations to adhere to the principle of ever-greater trading freedom. If the WTO did not exist today, we would need to invent it. Britain is a founding member, and we are a member in our own right, but on leaving the EU we will need to update the terms of our WTO membership; at present all our commitments are applied through the EU as a whole. Constancy and continuity will be a key to our approach.
As I set out in the recent ministerial statement, we anticipate that our rights and obligations to other WTO members, as provided under the WTO agreements, will remain largely unchanged. We will achieve that through a process of replicating our current commitments, which will cause the minimum disruption to trade and the maximum certainty and confidence. I am grateful to the secretary-general of the WTO, Roberto Azevêdo, for confirming that the WTO fully supports this aim for stability. I thank him and his staff for the support they have given the United Kingdom in Geneva.
Let me also be clear that replicating the EU-WTO schedules for the UK’s independent use in no way prejudges the outcome of the article 50 negotiations with the EU. The process is largely technical and reflects the close ties of trade and commerce that we will continue to share with the EU, even after our exit. Throughout the process, it is imperative that we maintain transparency both with this House and with our fellow WTO members. I reiterate the offer that I made in private to the Opposition Front-Bench team: should they wish to visit Geneva and get a high-level briefing with our ambassador and the secretary-general, the Government will happily facilitate that. The better informed we all are in the House in these discussions, the better.
James Duddridge (Rochford and Southend East) (Con)
Quite often one hears in the press, and sometimes erroneously in this House, talk of “falling back” on WTO rules. Is that not a falsehood? WTO rules form the basis of any agreement going forward; they are not something to fall back on if there is no deal.
Dr Fox
Indeed, WTO rules are the basis on which the world trades. On top of the basic WTO rules and the most favoured nation status that they represent, we have a number of agreements that give us, in effect, exemptions. However, we trade freely with countries where we do not have a specific free trade agreement. At the present time, the United States is worth just under 20% of our exports—we do not have a specific free trade agreement, but we can trade very freely. That is not to say that through FTAs or mutual recognition agreements, mutual co-operation agreements and the other tools available to us, we cannot improve the functioning of the global trading system. We need to do so, and the Department for International Trade has a highly skilled team dedicated to the technical rectification of our WTO schedules. We are collaborating with businesses and officials within Whitehall and the WTO to ensure that our transition to independent membership is both smooth and fully understood by our trading partners.
James Cartlidge (South Suffolk) (Con)
My right hon. Friend is generous in giving way. He mentioned the word “transition”, which many have now mentioned—including those who supported the vote to leave—in smoothing the process of Britain leaving the EU. Does he support consideration of transitional arrangements in leaving the EU? Is he concerned about Michel Barnier’s comments today that any negotiations on transition will have to be in late 2018 at the earliest, which does not leave us much time?
Dr Fox
If we require a transition to a new environment, it would be common sense to do so, but it would not be acceptable for any of the elements that, in leaving the European Union, we sought to leave to be binding on that transitional agreement. However, that is part of the negotiation. It is a negotiation, and at any point in that I would not take too seriously or literally anything that the negotiators were saying in the public domain.
After we leave the European Union, we will uphold our principles as we negotiate free trade agreements with new partners around the world. Although we cannot negotiate and conclude FTAs while we remain in the EU, the Department has instigated 10 trade working groups with 15 different countries as well as a high-level dialogue with the United States, which will develop into a fully fledged trade working group later this month. Going forward, as I said to the hon. Member for Vauxhall (Kate Hoey), we may find that a new FTA may not be the correct solution for every partner, but we will look at all the measures available to us to ensure the best outcomes for citizens and businesses across the UK. Our dedication to free trade will be constant. With every nation, we will work to remove barriers, liberalise trade and secure market access for British businesses. As we move forward towards ever greater trade liberalisation, we will ensure that our trade remedies continue to protect and promote Britain’s producers.
If the first duty of Government is the protection of its citizens, the Department for International Trade must extend that obligation to our businesses and work to defend the drivers of our prosperity from rule-breaking and anti-competitive measures. Free trade is not a free-for-all; that is why we have the WTO. If we support a rules-based system, we must ensure that those rules are respected and rigorously enforced.
Robert Neill (Bromley and Chislehurst) (Con)
I understand and take on board everything my right hon. Friend says about the WTO and a rules-based system, but, as he observed earlier in his speech, the bulk of our economy, and the bulk of our competitive advantage, lies in the services sector, which in the case of the financial sector is not particularly covered by WTO rules. Will the Government be equally committed to making sure that we have global liberalisation of the services sector, which is so critical to us?
Dr Fox
I think I said that earlier, and I also said that this morning in questions. If there is a real cause for us to champion beyond the basic case for free trade, it is liberalisation of the services sector. That is the way in which we will unlock the potential of many economies around the world—and, incidentally, it is the best way to unlock Britain’s economic potential in trade.
In my discussions around the world I have been struck by the way in which products—either goods or services—that originate in the United Kingdom are regarded as being at the top end of the quality market. That is where we are best able to compete. There are those who would make the case for a Britain with lower regulatory standards and fewer protections in place across the economy for the environment, for workers and for consumers. Let me tell the House that Britain will not put itself at the low-cost, low-quality end of the spectrum, as it would make no sense for this country economically to do so, nor morally would it give us the leadership we seek. I believe there is no place for bargain-basement Britain. High standards and high quality are what our global customers demand, and that is what we should provide. From our food and drink industry to our technological expertise and our financial services, people across the world buy British because they see the Union flag as a kitemark of quality. The key to our long-term prosperity lies not in abandoning our values and standards but in reinforcing them. High-quality, high-reputation goods and services are the route to highly skilled, highly paid jobs and future prosperity in this country.
This Government’s highest ambition is to build a Britain that works for everyone, not just for a privileged few. It must also be a global Britain, willing to support a rules-based trading system and champion the cause of free trade itself. We do not pretend that the era of globalisation is without its challenges, but we must never cease to show our citizens the benefits that free trade brings to their lives and to this country. We realise that the challenges and opportunities of globalisation, allied to the rapid change in technology, can produce their share of problems and insecurity. We must strive to address the negative aspects of globalisation and ensure that no one is left behind by the pace of change, while harnessing the power of the global economy to spread prosperity across Britain and our trading partners. We must ensure that we equip our country with the skills necessary to navigate those challenges and that those who are disadvantaged are given the appropriate support. We must unfailingly uphold the principles of free trade across the world, nurturing prosperity and banishing poverty to the pages of history.
I believe that the vast benefits that global trade can bring to Britain and the world and the way in which my Department is working to secure those benefits across the whole of the UK are the key to success in the future. The Leader of the Opposition has wrongly dismissed free trade as political dogma, but to do so is to betray the very people the Labour party claims to represent. To attack free trade and to undermine our nation’s proud tradition will deny prosperity to those who need it most. I hope that all Members of this House, regardless of their political persuasion, want the benefits to be bestowed on this country and back our vision of Britain as a champion of global free trade and the benefits it brings.
Two centuries ago, Thomas Babington Macaulay described free trade as
“one of the greatest blessings which a government can confer on a people”.
We intend to do just that. It is in our power to build a better and fairer Britain for future generations. We require courage and conviction to do that, particularly at a time when protectionism is rearing its ugly head. Prosperity, stability and security are the prizes for a strong, rules-based international trading order, and that is what we seek to achieve.
Barry Gardiner
I want us to get a deal. Of course we want the best deal for this country, but the hon. Gentleman has to take on board the fact that since the referendum decision our country’s currency has depreciated by 12%. I trust that that is not something that he feels sanguine about.
Dr Fox
Some sectors will respond quickly to devaluation. For example, in food and drink there has been a 7.3% increase in our exports in this quarter. Why, in the light of the uncertainty the hon. Gentleman describes, does he think the figure for foreign direct investment in Britain has been at an all-time record in the past year?
Barry Gardiner
Let me be absolutely clear: we welcome foreign direct investment in this country—of course we do. We want people to be investing in our jobs, our economy and our future—
Oral Answers to Questions
Liam Fox Excerpts(6 years, 10 months ago)
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Chris Davies (Brecon and Radnorshire) (Con)
7. What recent discussions he has had with his counterparts in other Commonwealth countries on the future of trade and investment between the UK and those countries.
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
Ministerial colleagues and I regularly engage with business stakeholders and policy makers in Commonwealth partner countries. In March, my noble Friend Lord Price and I met over 20 visiting Trade Ministers at the inaugural Commonwealth Trade Ministers meeting in London, and we discussed strengthening collaboration and deepening intra-Commonwealth trade and investment. We are now preparing for the Commonwealth summit in 2018.
James Duddridge
I thank the Secretary of State for that answer. The Commonwealth is particularly up for doing trade with the UK, especially in Africa. The Secretary of State referred to intra-Africa trade. Can we be even bolder and encourage a continental—intra-Africa—free trade deal not only with our Commonwealth friends but going beyond our Commonwealth friends?
Dr Fox
We are sympathetic to the concept of an African continental free trade area, and we are in favour of a range of initiatives to help foster wider and greater intra-Commonwealth trade. There is a great deal to be gained for all Commonwealth partners from closer co-operation. The Government’s aim—including through the development agenda championed by my right hon. Friend the Secretary of State for International Development—is to create sustainable prosperity, and helping developing countries to enable them to trade their way out of poverty is an essential and key element of that strategy.
Chris Davies
Britain and the Commonwealth nations share a great history, and over the years have formed many great links across academia, sport, culture and numerous other areas. What steps has my right hon. Friend taken to expand this co-operation with Commonwealth countries to include a free trade agreement, so that we can add business and commerce to the long list of Commonwealth co-operative endeavours?
Dr Fox
As my hon. Friend knows, the Commonwealth is not a trading bloc, and it actually contains a number of very disparate economies. We are liaising with several Commonwealth partners about bilateral agreements in the future, and my Department is working with stakeholders to develop initiatives that will stimulate UK and intra-Commonwealth trade and investment in the lead up to and beyond that vital Commonwealth summit next year.
Toby Perkins (Chesterfield) (Lab)
Members on the Conservative Back Benches are desperate for the Secretary of State to give us more confidence that we will massively increase trade with the Commonwealth, but I think he is wise not to do so. India, Australia and Canada collectively account for less than 5% of our exports, and research shows that the most enduring statistic is that trade halves whenever the distance between nations doubles. Is it not foolhardy for us to be turning away from our closest trading partners and relying on increasing trade with countries so very far away?
Dr Fox
I am sorry to hear such a lack of understanding of how the modern economy works. Particularly for countries that have a large proportion of their trade in services, services trade does not depend on distance. In fact, what we need is increasingly close co-operation with countries that are similar to us in their economic status, not necessarily geographically proximate, although I entirely understand that for goods the geographical distance does have a greater bearing.
John Spellar (Warley) (Lab)
One country with which negotiations on trade have been very advanced is Canada, with the EU discussions on the Canadian trade deal. Obviously, the Secretary of State will want to seek to replicate that fairly quickly after our exit from the EU, but that has been subject to a huge amount of disinformation regarding the costs and benefits of the deal. When are the Government actually going to take on this issue and set the record straight?
Dr Fox
What we do not know at present is what the state of the EU-Canada agreement will be at the point at which we exit the European Union. It may well be that all countries have ratified it, but as the right hon. Gentleman is well aware, as a result of the Singapore judgment every single Parliament and some regional parliaments will have to ratify the deal. If the deal is not ratified at the point at which we leave the European Union and has only provisional application, it will have no basis in UK law, in which case we will have to have the fall-back position of using that as the basis for a future UK-Canada agreement.
Mr Nigel Evans (Ribble Valley) (Con)
I think that the potential for trade with Commonwealth countries is very exciting—they are growing and strong economies—but every time I open a newspaper or listen to the radio or TV, the story is presented very negatively, as though it will be almost impossible for us to do these trade deals. Does the Secretary of State feel that that is wrong, and that it undermines the work he is doing?
Ian Paisley (North Antrim) (DUP)
Our agri-food producers see the Commonwealth as an exciting, wonderful and expansive new market for their powdered milk products, red meats, pig and poultry. Will the Secretary of State assure us that he is in discussions with the Commonwealth countries about increasing the opportunities for trade in our agri-food products to give encouragement to our producers at home?
Dr Fox
I entirely agree. To underpin the confidence in the agricultural sector, it needs to know that there are increasing markets out there. One of the key roles of the Government is to help our agricultural sector to have the confidence that it requires for investment by showing that we can help it into markets. It is worth pointing out that according to the European Commission’s own website, 90% of global growth in the next 10 years will be outside the European Union. Those are the markets we have to help British business get into.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
2. What steps he is taking to encourage businesses to take advantage of new opportunities for international trade.
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Department for International Trade has three main tasks: promoting British goods and services overseas, supporting inward and outward direct investment and creating a trade policy that benefits our businesses and citizens across the whole UK. To that end, I am delighted to welcome Antonia Romeo as our new permanent secretary and Crawford Falconer as our new chief trade negotiation adviser. Both bring excellence and expertise to the Department at this crucial time.
Hywel Williams
Fisheries and agriculture, the environment and transport are all key competencies of the National Assembly that could be affected by any future trade deal. Does the Minister concede that the National Assembly must have the power to endorse or reject any trade deal that would so profoundly affect its basic duties?
Dr Fox
We have made it clear all along that we intend to have maximum consultation and collaboration in that area and, to emphasise the point, in our manifesto we set out a plan to create a new board of trade, which will ensure that trade and investment is equally spread, as far as we can, across all parts of the United Kingdom—the devolved Administrations, as well as the English regions.
Robert Courts (Witney) (Con)
T3. As well as an economic opportunity, there is a moral opportunity in trade with the developing world. Will the Secretary of State please tell the House what steps he is taking to support trade with developing countries?
Dr Fox
We have made it clear that, post Brexit, we will continue with duty-free access for the least-developed countries, but we need to see whether we can go further and reduce some of the burdens, particularly as we leave the customs union and are outside the common external tariff, by stopping the distortions on value added, which diminish the chance of investment in some of those developing countries.
Barry Gardiner (Brent North) (Lab)
In his recent talks in the United States, did the Secretary of State discuss President Trump’s initiation of a section 232 investigation into the effect of steel imports on US national security? What concerns does the Secretary of State have about the impact such a protectionist ruling might have on the UK’s steel sector and on jobs in our steel industry due to lost exports and trade deflection of dumped goods on our market?
Dr Fox
We are all concerned about the overproduction of steel, largely coming from China, and what we have seen as possibly unacceptable subsidies into that sector, but it needs to be addressed in a way that is compliant with the WTO rules-based system. I raised with Secretary Ross and the trade representative, Mr Lighthizer, the impact that could have on the United Kingdom, and it is fair to say that our views landed. We now await the publication of the report, on which the President has up to 90 days to act.
Chris Davies (Brecon and Radnorshire) (Con)
T4. Brecon and Radnorshire is full of excellent small business owners who are looking to trade with the rest of the world, but many are concerned that the trade deals the UK is looking to make with the rest of the world will focus on big, rather than small, businesses. What assurance can my right hon. Friend give to small business owners that their voice will not be lost in negotiations?
Christian Matheson (City of Chester) (Lab)
T2. The Secretary of State wants to leave the EU because he felt it was undemocratic and unaccountable, so why is he happy for the UK to trade under World Trade Organisation rules, given that the WTO is more undemocratic and more unaccountable?
Mr Marcus Fysh (Yeovil) (Con)
T5. My constituency has one of the largest export clusters in the south-west, and it is focused on the rest of the world as much as it is on the EU. What assurance can my right hon. Friend give that we will focus on doing global trade deals and not just on the EU?
Dr Fox
My hon. Friend makes a very valid point, and of course it is not just about exports; it is also about inward investment. Therefore, let me bring the House up to date by saying that at 9.30 this morning we published figures showing that a record-breaking number of foreign direct investment projects came into the UK in 2016-17—2,265—safeguarding nearly 108,000 jobs or creating new jobs in the UK. No doubt, the usual suspects will describe this by saying, “despite Brexit”.
Kerry McCarthy (Bristol East) (Lab)
T7. I thank the Ministers for the written answers they have given me this week on the EU-Japan free trade agreement. They were at pains to reassure me that existing animal welfare and environmental standards would be maintained, but can they give me further reassurance that we will use this as an opportunity to address with Japan the illegal timber trade and commercial whaling?
Mr Speaker
Order. It is a great pleasure to welcome the hon. Lady to the Chamber again. She is already a prodigious and assiduous contributor, but may I politely say to her that she must not inherit the bad trait of her hon. Friend the hon. Member for Strangford (Jim Shannon) of referring to the Minister as “you”? The word “you” in this Chamber refers to the Chair, and I have no plans to adopt any policies on these matters. She should refer to the Minister. I am still trying to train the hon. Member for Strangford, but I think his apprenticeship has some distance to travel.
Dr Fox
The words “tricks” and “old dogs” definitely come to mind on that one. The hon. Lady makes a good point: there are not only challenges, but great opportunities. It is essential that we look at our trade and investment programmes across the whole of the UK. As I said in answer to an earlier question, that is why we are bringing in the new Board of Trade to help ensure that we have that balance, but I can tell her that in the figures that we announced today Northern Ireland secured 34 new projects, totalling 1,622 new jobs. That is a big gain and this is exactly the sort of programme that we want to encourage to ensure that investment goes to all parts of the UK, ensuring that we create an economy that works for everyone.
Mr Peter Bone (Wellingborough) (Con)
You will be delighted to learn, Mr Speaker, that British tie manufacturers’ exports are worth millions of pounds. Can the Secretary of State suggest how this House could help promote the wearing of ties, to increase exports?
Mr Speaker
I cannot claim that mine was; I am not sure. But I am sure that if they are so popular, it will not be necessary to compel people to wear them. We shall move on.