China: Investment into the United Kingdom
Lord Livingston of Parkhead Excerpts(10 years, 7 months ago)
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The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, I am pleased that we still have some of the Scottish contingent in for the debate. I start by thanking my noble friend Lord Wei for initiating this important debate and for the report from the All-Party Parliamentary Group for East Asian Business. China’s rise is indeed an opportunity, not just for the UK but for China, and I very much believe that this will be the decade of the Asian multinational. Our two Premiers described our two countries as “partners for growth” and we have seen notable progress in Chinese investment into the UK.
The noble and learned Lord, Lord Davidson of Glen Cova, raised a number of questions about the UK’s performance in relation to trade with China. I regret that some of the statements are perhaps a little out of date: our performance has certainly been weak historically but we are now making significant progress. Initial results for 2013-14 show a substantial increase in the level of inward investment from China. As my noble friend Lord Wei said, this is across a number of sectors, from property investment to infrastructure, manufacturing and nuclear, to name but a few. Announcements in press releases indicate commitments of upwards of £8 billion—a very substantial increase on past experience.
This growth reflects the efforts not only of the Government but of many groups and individuals including the APPG. It also reflects the success of government policy in making the UK an attractive place for businesses to establish themselves, to invest and to grow. However, I fully accept that there is clearly still much to do. The report highlights a number of areas, and I would like to address some of the particular points made in it.
The report recommended that we should provide additional regional support for inward Chinese investment. I should stress that the policy we operate, which I think has operated for some time, is based on the UK-first principle, where we try to attract inward investment to the UK and then spend time with the potential investor showing them regions that may be suitable for that type of investment. That said, we are doubling the number of partnership managers to work alongside local enterprise partnerships and enterprise zones to assist them in attracting inward investment. UKTI will continue to work with bodies to improve the local proposition, based around a region’s particular capabilities. We welcome, for instance, initiatives such as the Manchester-China Forum, championed by my noble friend Lord Wei, to promote regional co-operation and relationships.
UKTI does not typically recruit advisers with specific language skills but those with sector skills. However, we have in place sector specialists who are bilingual. In addition, we use the resources of UKTI in individual countries and have a large number of advisers in China as well as, of course, the FCO network. They assist with inward investment opportunities and marketing.
The report also recommends that the Government work together with NGOs to encourage inward investment and market the UK. I take the point that there are a number of these NGOs but the Government certainly work with a wide range of organisations, such as the China-Britain Business Council, the CEC—which was mentioned earlier—the 48 Group Club, UK-China CEO Dialogue and, of course, the APPG. I also recognise and welcome the point made about the diaspora community. As a Government, and as part of our trade effort, we should be seeking to use diaspora communities far more widely, in relation to trade not just with China but with a number of other countries.
Noble Lords, including my noble friend Lord Cotter, also raised issues of immigration policy. I have heard many of the same concerns directly. Although there are definitely issues, some of it is also perception. I will set out a few facts. First, the UK has more visa application centres in China than in any other country and 96% of Chinese visa applications are approved. The UK issued a third more visas to Chinese citizens in 2013 than we did in 2012, so we are making progress. There was a 9% increase in the number of study-related visas.
Lord Davidson of Glen Clova
I wonder whether the Minister could focus not so much on the numbers of visas, but on the problems that the visa process creates: delay and complexity. That is what sends the message that you, the Chinese investor, are not welcome.
Lord Livingston of Parkhead
My very next words were going to be that the average time to process a visa is seven working days. Of course, there will be more difficult cases, but we also have a three-day to five-day priority service available. The Prime Minister, during his well thought through trip to China, announced that we would be trialling a 24-hour service this year. That received a standing ovation in the room he was in.
Lord Davidson of Glen Clova
The Minister did say that I was out of date, but possibly he did not necessarily mean that in relation to visas. Only last week I had a party of Chinese investors saying that they were having considerable problems with delays in getting visas. These are people who wish to invest in the United Kingdom but are experiencing delays. Perhaps the information that the Minister is obtaining is out of date.
Lord Livingston of Parkhead
I am sure that if the noble Lord would provide me with some details of that particular party, we can look into what their challenges were. We are trying hard to make the process of applying for a UK visa easier. We have a pilot scheme allowing selected travel agents to make offline applications for tour groups using the same forms that are used for Schengen—with a small additional form—so that people do not have to enter the same information twice. We also have a select business scheme to provide key businesses wanting to invest in the UK with special services. There are currently around 140 members. The Home Secretary has announced the launch of the GREAT Club, an invitation-only account management service for the very highest-level investors.
I recognise that there are issues in relation to graduates. All graduates have a four-month period in which to apply for a graduate-level job, which allows skilled, well paid graduates to stay in the UK. I accept that the situation is not perfect. Significantly, we talk with the Home Office about how we can improve perception and what we can do around both policy and process. However, the situation has improved significantly. From talking to Chinese businessmen, which I do regularly, I know that they recognise some of that improvement. However, there is still more work to do.
I now turn to taxation. A competitive and clear tax regime has a role to play in attracting inward investment and is seen as a UK strength. I know the policy recommendation was that HMRC should translate its guidance into Mandarin, but it is not HMRC’s policy to translate tax returns into foreign languages, partly due to costs but also for reasons of equality of treatment. Having been a tax accountant in the long-distant past, I can confirm that nuances of languages can be very difficult at times, although there is of course an opportunity for professional services to advise on these issues. I will pass the comments regarding foreign languages on to HMRC, but it is not an issue that I have had raised directly by inward investors.
I welcome the comments from noble Lords on the importance of setting up as an offshore RMB centre. Over the past few years, we have made a lot of progress in changing some of the regulations and policy and in giving encouragement. We can debate whether London is a leading offshore RMB centre, but many would say it is the leading centre. We have certainly seen progress, but we know that there is more to do and we will be looking for further—
Lord Davidson of Glen Clova
The Minister indicated I was out of date. He was perhaps not referring to the surpassing of London by Singapore as an RMB trading centre, which was noted at the end of February. Perhaps he would care to comment on that.
Lord Livingston of Parkhead
In currency trading, there are different time zones. I was a spot trader once upon a time in my life and used to take over from Singapore. We shall see how the figures on RMB trading come out for the full year. The UK has established a very strong presence in RMB, which is as a result of the Government’s policies and the changes they have made.
UKTI has created a number of sector organisations focusing on increased investment in areas such as automotive, life sciences, financial services, offshore wind, regeneration and innovation. They will help individual sectors and investment, not just from China but from other countries. They are not aimed just at China, but we think these sectors are important to show expertise in individual areas. In addition, we have a specialised group aimed at regeneration opportunities: RIO. This has been particularly attractive to Chinese investors and provides a pan-UK list of opportunities for regeneration in every region around the UK. RIO not only presents a playbook of opportunities but will guide potential investors through some of the barriers rightly raised by the noble and learned Lord, Lord Davidson.
This Government has a strong focus on building relationships with China. There have been numerous trade and ministerial visits, which are well thought out and well appreciated by the Chinese hosts. The highlight was the Prime Minister’s visit with the biggest business delegation ever assembled. More than half the companies that went on that were small companies. One of the important agreements signed during that visit was with the National Development and Reform Commission, to enhance trade and investment between the UK and China. As a result, and with the support of the British embassy in Beijing, the NDRC has launched the Chinese Enterprises Investment Guide to the UK, which is the first guide that it has published written for Chinese companies looking to invest in another country.
I shall pick up some points raised by the noble Baroness, Lady Falkner. The UK is proud of its position as an open economy, which we think has benefited the UK. It has created millions of jobs. When we talk about overseas investment, we have to look at JLR as an example of an acquisition that has helped the UK immensely and created value added and jobs. It is far less about the nationality of the company involved than its quality. We have public interest tests, particularly related to security, a key area which the noble Baroness raised, and areas such as media plurality. It is important that we look at the context of how much we have benefited. The UK will continue to position itself as open and to consider some of the challenges. I remind noble Lords that when we talk about AstraZeneca, Astra was a Swedish company; when we talk about GlaxoSmithKline, Smith, Kline & Co. was from Philadelphia. When we talk about openness, we have to remember that it is a two-way street.
The noble Baroness referred to diversifying into China too much. The challenge we have today is that we are not diversified enough. The EU has 45% of our trade and the US is our largest single market. It is this Government’s aim that the fast-growing markets should represent a larger proportion of our trade. The EU-China trade talks are just one of many trade talks. There are trade agreements being made and discussions going on with Japan, India, Singapore and the USA. We have recently concluded talks at the political level with Canada and we are discussing EPAs with many countries around the world. There is of course the Bali WTO agreement. This country is championing free trade around the world and will continue to do that on a plurilateral and multilateral basis, as well as on a WTO basis.
In conclusion, the UK has been very successful at attracting inward investment—we must remember that we are the number one in Europe for inward investment. It is the aim of this Government to improve our position in gaining inward investment from high-growth economies where historically we have not been successful, and of course China is number one in that list. We made significant progress in 2013 with multibillion pound investment across a range of sectors. We agree with the report that there is more to do, and we will do more. I thank all noble Lords who have spoken today for attending and for their interest in this subject. We have considered the report in detail and will continue to look at its recommendations. We will continue to engage strongly with government and non-government organisations in the UK and in China to make further progress and to make the UK the most attractive and successful investment destination for China in Europe.
Businesses: Small and Medium-Sized Enterprises
Lord Livingston of Parkhead Excerpts(10 years, 7 months ago)
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The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, I thank my noble friend Lord Cope for initiating this important debate and I thank all noble Lords for their contributions, particularly those who were members of the committee which produced such an excellent report last year. I particularly thank my noble friend Lord Popat, who not only initiated the report but chose to keep me company on the Front Bench.
It is clear that those who have spoken this evening understand the challenges small and medium-sized businesses face and the advantages to be gained from trade not just for them but for the UK economy more widely. Many good points were made, and I will try to pick up as many as I can. Noble Lords will understand if I focus particularly on exports rather than on wider economic policy, given the time available.
The noble Lord, Lord Grade, raised sales and salesmanship. I can assure him that in the Government I have seen a huge focus on selling the UK and UK trade around the world. In fact, the Prime Minister is one of the best salesmen for Britain, and the reason I am standing here doing this job today is that he is such a good salesman. We note the need for very good salesmen. I come from a family background of sales, a bit like the noble Lord does.
UKTI recently issued Britain Open for Business: The Next Phase. It was called The Next Phase because it builds on the very good work of my predecessor, my noble friend Lord Green, who spoke in the debate today. We are seeing progress. We are seeing more companies than ever being helped by UKTI. That means that more companies are receiving advice on how to enter new markets; more companies, particularly small ones, are being helped to go to trade shows; and more are using UKTI to improve their digital presence around the world—again, particularly small companies. Indeed, in the current year, we are looking to double the numbers of companies assisted four years ago. It will be a substantial improvement, and that means more small and medium-sized companies are getting help.
The noble Baroness, Lady Cohen, asked about overseas chambers of commerce, and my noble friend Lord Green highlighted the point. We are supporting chambers of commerce around the world to improve the services they offer to exporters. As part of this initiative, I have been travelling around the world. In the past few months, I have opened British business centres where British businesses, particularly small businesses, can go, meet people, use the facilities and get advice. I have been to Mexico City, Dubai and Budapest, to name but three. We will continue to work with the chambers of commerce and see the overseas business networks as very important. We will encourage those chambers which do not exist to exist and those which do exist to be better, and those which are good to become real champions of exporting for UK companies.
My noble friend Lord Leigh stated that Britain’s diplomatic network overseas is now a real asset to British business. Our diplomats and UKTI officials are helping new businesses export every day. I have had so many unsolicited comments from companies of all sizes about the help they receive from embassies or people in post. Of course there is more work to do, but the improvement over the past five years has been outstanding. We are also seeing a positive impact from some of these changes. We have seen surveys from the CBI and chambers of commerce showing a high degree of confidence among manufacturers in exporting.
A number of noble Lords raised the point about recent falling exports. This is of course one of the impacts of the high pound. Just translating goods sold in foreign currencies into sterling has an impact. For instance, in dollar terms, in February our exports actually rose by 8%. Certainly, a 10% increase in the value of the pound will have an impact on the translation of foreign currency exports, which many of them are, into sterling. Indeed, despite all the improvements, I recognise, as many noble Lords in the House have said, that there is a lot more to do. That is what I want to talk about.
Before I get into the details, I want to make an important distinction. We talk about SMEs but, actually, medium-sized companies—the “M”—are different from the small. Medium-sized companies are typically small versions of large companies rather than large versions of small companies. They have to be treated differently. They are also the area, as was highlighted by some noble Lords, where the UK underperforms our competitors. This is what the CBI calls “the forgotten middle” and focusing on them as a country, the CBI believes, could be worth to our economy overall somewhere between £20 billion and £50 billion.
That is why I recently wrote, as was mentioned by a number of noble Lords, to the 8,900 MSBs in the UK to raise awareness of how UKTI can assist them. A UKTI team will then contact each and every one of them, as long as they can get through on the phone, and find out, first, if they are exporters, and, if they are not, whether they could be exporters. If they can, they will offer them a tailored programme and a named account manager. Simply, there should not be a medium-sized company in the UK that does not fulfil its potential as an exporter because it is unaware of the help that government can provide. That named adviser will also be able to point them to other government assistance; the noble Lord, Lord Leigh, raised this point. That may be relevant to their business, because they will get to know them as salesmen and account managers do. They will also form a first point of contact for many government issues for these businesses.
Moving more generally to companies of all sizes, I say that the issue of awareness is very important. It was raised by my noble friends Lord Cope and Lord Cotter, among many others. We are very much revising our marketing strategy, first to ensure that we understand what smaller, often first-time, exporters need, and improving our communications to make them, frankly, more relevant for businesses. We will also be significantly improving our use of the internet. The “Exporting is Great” campaign, of which many noble Lords will be aware, will raise awareness of the benefits of exporting and of the support available. Export weeks continue to bring in new customers. Last year, we held two export weeks which brought in 8,600 customers to UKTI. Our latest export week took place just a few weeks ago and reached over 3,000 companies on its own.
We are also working with intermediaries, whether they are business representative bodies—such as the CBI, the Engineering Employers Federation, the FSB or the British Chambers of Commerce—professional service firms and even the banks, to increase awareness of UKTI among their members or customers. We are also co-ordinating with other government bodies to ensure that this is a cross-government effort to raise the profile of our export efforts.
My noble friend Lord Storey kindly advertised some of the conferences we are holding. I echo his comments on the Liverpool International Festival for Business: noble Lords should visit it. I will be speaking there, but there will be other, better speakers. The noble Lord advertised Liverpool, and if he does not mind, I will advertise Glasgow. At the Commonwealth Games we will have the British Business House and a business conference which will encourage both inward investment and exports. Also, so Yorkshire does not feel left out, I mention that the Tour de France is leaving from Yorkshire—Le Grand Départ. I was up there recently and we will shamelessly use this as an opportunity to sell the UK around the world.
As my noble friend Lord Leigh highlighted, government could generally simplify the business assistance proposition. I can assure him that senior BIS Ministers are currently engaged in a Star Chamber process to look at how we can improve matters. UKTI itself, however, talks directly to companies and tries to provide a tailored service which depends on what they need rather than trying to sell them individual products.
On the question of access to finance, availability of finance is a topic that arises whenever the issue of companies—in particular our smaller companies—is debated. That issue was raised by many noble Lords, including the noble Lords, Lord Giddens and Lord Stevenson. While there is some improvement in the position, bank lending remains muted at best. The Government have introduced a number of schemes to assist with this, such as Funding for Lending, the Start-Up Loan Scheme and the establishment of the British Business Bank. We are also trying to encourage a number of challenger banks and non-traditional sources of finance. Unfortunately, to discuss all those initiatives in depth would take a full debate on its own, so I hope noble Lords will excuse me if I concentrate on what UK Export Finance is doing to help exporters.
Our aim is to make UK Export Finance one of the most competitive export credit agencies in Europe and to substantially increase the numbers of companies it supports. It is a reasonable criticism that it concentrates on the large companies, but we are seeing some improvement in that position. The number of companies that UKEF helped last year has risen by 50%. However, there is more to do. We have doubled UKEF’s lending facility to ensure that more businesses are able to take advantage of it. We have improved and widened UKEF’s product range to better support exporters and their customers who want to buy British. We are doubling the number of export finance advisers that are available to UK companies. They will not only advise on what UK Export Finance can do but will also provide advice to smaller companies on how to structure their help from banks, which is very important.
We also have a marketing campaign to raise awareness of UK Export Finance, which is, unfortunately, somewhat lower than UKTI—which in turn needs to improve its awareness. Further, we hope to introduce new legislation next year that will enable UKTI to lend to exporters rather than just supporting individual contracts, which it cannot currently do under the law. It will also widen the type of exports that can be covered by UKEF in future. We are consulting with businesses and business groups such as BExA on further improvements to both products and processes within UKEF and are in close contact with the banks to ensure that they are geared up to play their part in expanding our activities.
My noble friend Lord Cope raised the issue of intellectual property. UKTI works closely with the Intellectual Property Office. There is a significant amount of joint working both with the UKTI regional network of international trade advisers and the geographical desks. IPO trains business advisers through its IP Master Class, which is integrated into UKTI programmes. UKTI posts overseas also provide help locally through our IPO advisers in key markets and the regions around them such as Brazil, China and India and south-east Asia. They work with local IP enforcement agencies to protect British products, alerting companies to IP exposure and supporting UK businesses with IP issues. Indeed, they helped over 200 companies in the last year alone.
Many noble Lords highlighted the issue of confusion among companies around the Bribery Act; I can provide some help on that. The MoJ and BIS are currently engaged in a project which seeks to obtain feedback from small companies on the impact of the Act and the MoJ’s guidance on it. I hope that that will provide some guidance to us on our next steps to make matters clearer for smaller businesses.
I turn now to the digital economy, which is becoming more and more important for exporters. We should be proud that the UK is the leader in the whole of the EU in online selling, but we should note that we can build on that position. That is why UKTI has launched the Grow Online, Expand Worldwide campaign, which delivers training and advice to exporters and provides funding to help to improve their web capability and capitalise on the rapid growth of mobile technology and social media.
In addition, UKTI’s digital acceleration programme is designed to enable companies to exploit the opportunities in the world’s online shopping malls. For example, the Prime Minister and I, on our trip to China in December mentioned by the noble Lord, Lord Leigh, announced a partnership with the massive online shopping platform Alibaba Tmall, which will support UK brands and have a UK channel. In doing that, we see a great opportunity; in just a few months since we announced the deal, 100 companies have applied to join the scheme and roughly a quarter have their products online.
I turn to free trade agreements, which this Government are championing between the EU and its trading partners around the world. One of the most important of these would be with the US. TTIP, as it is known, is a huge opportunity, but there is often a misconception with it, in that people think that it is about large companies—and that is the same for free trade agreements more generally—but, actually, it is the smaller companies that cannot cope with regulatory differences between countries, non-tariff barriers or the impact of tariffs on their businesses. Our role in championing free trade agreements is most important for small businesses, and that is what we will continue to do.
My noble friend Lord Green pointed out that completing the single market was a very important part of that. Again, this will help small businesses. Often the UK is painted in terms of what it is against with regard to the EU; I would like to state what it is for. It is championing the single market, free trade and competiveness for EU companies, and we will continue to do that for companies of all sizes.
A number of noble Lords mentioned languages. Of course, the English language is used around the world, but we need to improve the language capabilities of our exporters to give them an edge in competitive markets. UKTI recently commissioned an academic report to review the impact of language skill deficiencies on UK exports. I have to tell noble Lords that it was significant. We have provided funding to each English region to create language and culture adviser posts, which will deliver advice to small and medium companies who are exporting. UKTI also provides small companies with an export communications review, a bespoke report that will look on how they can overcome language and cultural barriers when working overseas. Over 700 companies are expected to take advantage of this service in 2014-15.
In direct response to this report and debates in this Chamber, we have recently announced the launch of the Postgraduates for International Business scheme. This aims to improve language capacity for smaller and mid-sized businesses by placing postgraduates with language skills, who usually have come from other countries, in companies to undertake project work, either during or shortly after their degree. I also remind noble Lords that we have a large number of locally engaged FCO and UKTI staff in posts around the world who are expert in the local language and business culture and who offer day-to-day practical advice to new companies on doing business in the countries that they are based in.
I shall pick up a number of other comments that were made. My noble friend Lord Storey raised the issue of LEPs and the RGF. It is up to LEPs to bid for funds, and we will continue to work with them to raise the funds that they need to improve exports and inward investments. The LEPs, the chambers of commerce and UKTI regional staff work together very well in a number of regions. However, I will not pretend that it is uniform or effective in all places; we are certainly looking to bring the best as a model and bring the others up to that standard.
The noble Lord, Lord Giddens, raised the issue of reshoring. The Prime Minister announced at Davos that we would establish Reshore UK, a one-stop shop, as part of UKTI and the Manufacturing Advisory Service, to enable UK companies to come back to the UK and set up again. I believe that, with the attractiveness of the UK as a market, this presents a real opportunity to reinvigorate our manufacturing and supply base.
The noble Lord, Lord Cotter, referred to OMIS, which is a heavily subsidised service. The cost is usually about £1,000 to £1,500, which I think is reasonable for a very valuable service. As always, we have to balance priorities. We will continue to review its use, and our support for it, along with the many other services we support, virtually all of which are done on a subsidised basis.
The noble Lord, Lord Haskel, and, I think, the noble Lord, Lord Stevenson, mentioned business advisers and trade envoys. I should clarify that we have business advisers who are usually business experts who travel round the world on behalf of their companies. They tend to be the CEOs and chairmen of large companies. When they do so, they raise the profile of British businesses free of charge, particularly in the sectors they represent, whether that be professional services, automotive or whatever, and do an excellent job. The trade envoys are geographically based. In fact, many of them are Members of this House and also do an excellent job. They seek to promote the UK in countries which do not get the level of ministerial visits that others do. I would be very happy to provide a list of them, as requested by the noble Lord, Lord Stevenson, and take this opportunity to thank all of them for the very difficult work that they do. It is unpaid and sometimes thankless but is very important.
A number of noble Lords raised the possibility of introducing some sort of tax credit for exporters. As anticipated by the noble Lord, Lord Stevenson, of course I would say that this is a matter for the Treasury but I know that it is aware of this suggestion. There are challenges with such a scheme, not least that of people exporting and reimporting but, as I say, I know that the Treasury is aware of this suggestion.
I apologise if there are any matters that I have not covered. I have tried to pick up the main issues and will follow up any others in writing. I end as I began by thanking my noble friend Lord Cope and his committee for the report. I also thank all noble Lords who have taken part in the debate. I thank noble Lords for their continued interest and for being salespeople—that seems to be the phrase of the day—for our export effort and ask them to continue to be so.
I echo what my predecessor said. I expected him to say that this issue is not a sprint but a marathon, and, sure enough, he said just that. We have suffered for decades from a weak trade performance over a number of Governments and it will take some years of sustained effort to change this. I assure the noble Lord, Lord Haskel, that we will continue with this effort and work tirelessly. Irrespective of what the figures may say, we will continue to push to make exports and our export efforts for companies of all sizes, but particularly for small and medium businesses, a key priority of our Government.
International Trade
Lord Livingston of Parkhead Excerpts(10 years, 10 months ago)
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The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, I thank the noble Lord, Lord Harrison, for initiating this important debate. I am very much aware of the noble Lord’s contribution in this area, and his expertise has been shown by his thoughtful comments. I will seek to outline our Government’s approach to trade, as requested by the noble Lord, Lord Liddle, and other noble Lords.
International trade is, of course, essential to the world economy. It creates growth and employment, and enhances consumer choice and value. It is not just something for “rich” countries or big business. Trade is the greatest single tool to bring hundreds of millions of people out of poverty and set countries on the path of development. Trade is vital to the UK’s economy. We have an open economy and seek to champion that; we have a global outlook and a strong and proud history of commerce. Exports are equivalent to over 30% of UK GDP and, in the last financial year alone, FDI into the UK supported in excess of 100,000 jobs.
The noble Lords, Lord Giddens and Lord Davies of Stamford, outlined their support for free trade agreements, which I very much welcome. It is important that the whole global community can benefit from trade, and to do that we require a functioning global trade regime. It should reduce or, ideally, remove the barriers to imports and exports and provide convergence of standards so customers around the world can choose the best of what the world has to offer. I hope that they will choose “Made in the UK”, and it is part of my role to make sure that they do that more regularly.
This Government are proud of their position at the forefront of European and global efforts to facilitate free-trade growth. My predecessor, the noble Lord, Lord Green, whose outstanding work in his two and a half years as Trade Minister I commend, was a vice-chair at the World Trade Organisation Conference in Bali in December, where the important trade facilitation package was agreed. This agreement will cut red tape and unnecessary processes and streamline customs procedures at borders. It will benefit the UK by around £1 billion per annum. However, crucially, most of the gain is global, with around $100 billion accruing particularly to emerging nations such as those in Africa.
My noble friend Lord Sharkey asked how we balance reducing barriers with supply-chain issues. Both are important, but I would also mention convergence: in many areas we have already reduced or removed trade barriers in terms of tariffs, but we also have to have convergence of standards so that manufacturers can produce global products and customers can enjoy them. Each and every one has its place and perhaps a different emphasis, depending on which area and which country we are negotiating with.
The UK has used its influence with both our EU colleagues and a wide range of other countries to help create a global consensus—we most definitely have such influence while in the EU. However, it has to be recognised that this was the first multilateral agreement in 20 years. It is appropriate, in the mean time, that the EU and other economies around the world have also pursued plurilateral and bilateral deals as well as regional routes to trade liberalisation. As the noble Lord, Lord Harrison, pointed out, those do not contradict each other; they can be mutually reinforcing and help build overall a system of improved trade, with higher volumes and prosperity.
Again, the UK has been at the forefront of efforts here. We were influential in shaping the EU-South Korea Free Trade Agreement, which was mentioned. This came into force in the summer of 2011 and was widely considered the first of a new generation of EU free trade agreements, in that it is genuinely deep and significantly more comprehensive than previous agreements. It has eliminated 97% of tariffs and addressed many of the non-tariff barriers. It makes doing business with South Korea much more straightforward. The results and successes of this agreement are clear, with trade between the UK and South Korea doubling over the course of the year following the agreement compared to the years before. Part of that is oil, but even excluding oil we saw a 40% increase in trade with South Korea. It may surprise many noble Lords that the UK now runs a £2.6 billion surplus in trade with South Korea. Before the agreement, it was broadly neutral.
Negotiations are also under way with a wide range of markets—east and west, large and small, developed and emerging. The largest of these is of course TTIP, which was mentioned by a number of noble Lords. This agreement was described by the US ambassador to the UK as,
“an important trade deal with a lousy acronym”.
He has a point, but what is more important is that it could be worth up to £10 billion to the UK. It is correct, as the noble Lord, Lord Harrison, mentioned, that we helped to sponsor a study to show the positive impact of the agreement in various US states. Why did we do that? Because it is very easy to spot the losers, but it is important that it is understood, on both sides of the Atlantic, where the winners are. Within the UK we have a clear view of the winners: for example, if we conduct a comprehensive TTIP, we expect the car industry to increase by 4.1% and financial services by 1.1%. There are real benefits for UK industry. However, critically, the point has been made previously in this House, including in Questions I have answered, that it will also benefit consumers, giving them better choice and lower prices.
The noble Lord, Lord Davies, raised a number of questions regarding TTIP, which I will do my best to try to answer. First, audio-visual services are initially excluded from negotiations at the behest of the French Government. The negotiation mandate was, unfortunately, leaked, so the US is of course already aware of it. However, we are just starting negotiations and setting out initial positions, and we will have to see how that is reflected and any interrelationship. The Jones Act might well be one of the quid pro quos but discussions will almost definitely continue and the UK will make its points. UK business is of course keen to see the removal of the Jones Act. We are raising this with the US Administration directly and through negotiations.
GIs are in scope, and the US and EU are taking different approaches to protecting geographical items. As the EU has done in other agreements, such as with Canada, it will seek protection of a list of geographical indications. However, to give comfort to the Scottish contingent, of which I am one, Scotch whisky is already protected in the US.
The US wants the EU to adopt a more science-based approach to treatments of food and the approval, for instance, of GM items. Her Majesty’s Government agree that the EU could improve its currently slow approval system but it is early days for all of these matters and, we should stress, there is a lot to be done on TTIP.
The EU has also launched other negotiations, including with Japan and India. It has also, as I mentioned earlier, reached—
Lord Davies of Stamford
Before the Minister leaves the topic of EU-US negotiations, will he perhaps address the questions I asked about insurance?
Lord Livingston of Parkhead
I will write separately regarding the matter of insurance. I have tried to pick up the various issues that have been raised and if I have missed any other detailed questions put by noble Lords I will be more than happy to discuss them or write separately on them. I will also come back to the role of Parliament in approving such agreements.
As I was saying, the EU has launched negotiations with Japan and India and reached an agreement with Canada. We believe that is worth over £1 billion and could be a good model for the start of discussions on TTIP. Our role in and membership of the EU is important to that, along with, as the noble Lord, Lord Harrison, said, our role in the Commonwealth. Canada is of course a member of the Commonwealth, and discussions are ongoing with India. We also want the EU to use trade policies to support development by putting in place economic partnership agreements with African and Caribbean countries. I hope to see good progress on EPAs this year at the same time as making progress on FTAs.
The role of Parliament is very important and I was interested in comments from noble Lords that they do not feel they discuss trade very much. I have been in this role for about four weeks and have had three Questions here in the House and a debate. It does feel, as a Minister, that we are discussing this issue on quite a regular basis. However, I shall also make an appearance in front of a Select Committee to discuss TTIP. TTIP and any other agreement will go through the appropriate scrutiny process, while it is recognised, of course, that the EU has competence in many of the areas involved here.
We are discussing these matters also with many other lobbying groups; for instance, small businesses and consumer groups. We meet regularly with Which? to hear its views, because it is important that we represent large businesses, small businesses and, of course, consumers in these discussions.
While these trade deals provide real benefit to the UK, the EU remains a cornerstone of our prosperity. The single market remains the most important trading area: 45% of our exports are to the EU and seven of the UK’s top 10 trading partners are EU member states. The UK is a passionate believer in the single market, and a key part of the reforms that we are seeking is to support and extend that. In the negotiations that we seek with the EU, free trade, prosperity and growth will be a cornerstone.
I fully agree with the noble Lord, Lord O’Neill, regarding the risk posed to Scotland by a departure from the UK and consequent departure from the EU and the free trade agreements. I have made this point passionately already—if your Lordships read the Herald and the Scotsman, you will see me quoted—and will continue to do so, as will government and, I hope, noble Lords.
I should also mention Africa, which is one of the fastest-growing regions and will be an increasingly important market for the UK. Many UK-based firms have already spotted the opportunities for business in Africa. Total UK exports to Africa in 2012 were worth £20 billion, which was more than to Russia and Turkey combined. But that is only a starting point. Many more UK-based firms could be doing business in Africa. There are opportunities in all sectors, particularly in energy, infrastructure, healthcare, ICT, professional services, and education and skills. We will work across government, particularly with DfID and the FCO, to maximise our efforts in Africa, and help in the implementation of the agreements reached in Bali on free trade and reducing barriers. Africa will be the big beneficiary; it is important that the UK uses its knowledge, influence and relationships to help achieve this.
Another area that is often raised in regard to trade is human rights. The Government strongly believe that the promotion of business should go hand in hand with respect for human rights. It is now more important than ever for us to help British companies succeed but to do so in a way that is consistent with our values. I believe strongly that personal freedoms contribute to economic development and vice versa. The thread of safeguards running through society that are good for human rights—good governance, the rule of law and property rights—usually go hand in hand with economic growth and trade.
We also recognise the issues raised by my noble friend Lady Miller regarding the impact of trade on food. One of the most basic human rights is the right to eat. Trade and economic development are the most effective ways of raising people out of starvation and poverty. The World Bank estimates that developing countries that have opened up their economies to trade grow three times faster than those which have not. The opening-up of trade particularly in agricultural products will be an important next stage in many of the trade negotiations, particularly between the EU and African countries. I note the comments on food production made by my noble friend and they are well taken.
I note also the points made by the noble Baroness, Lady Symons, and thank her for her very hard and productive work in the Arab world promoting British trade and development. We note the points made about jobs. We will want to raise more trade with the Arab countries. Progress there on various trade negotiations and FTAs falls behind what we are doing in other areas of the world and should be looked at.
I have so far focused on the impact of trade at the global level. A key priority of this Government is to deliver economic growth and jobs in the UK. Business success in international markets is central to our economy. This is as true today as it was in May 2011 when UKTI launched its five-year strategy. That strategy set out how we were going to improve our trade position. We are targeting high-growth companies to encourage more exports and help existing exporters penetrate high-growth and emerging markets. We are winning business contracts for high-value opportunity. These are often in excess of £250 million each. We are delivering high-quality foreign direct investment to the UK, which I shall say more about shortly. Finally, we are building high-level relationships with inward investors and exporters. The Government are committed to build on this strategy and the many good initiatives that we have started.
Having taken up my new role just a month ago, this speech allows me to outline some of our priorities further to strengthen our trade efforts. We will support medium-sized businesses. I made an announcement yesterday that we will commit to contact all 9,000 medium-sized businesses to help them with trade. More than a third of them do not export today and, in an even greater number, exports account for less than 10% of their trade. Only 17% of them export outside the EU. If we are successful with them, the CBI believes that this forgotten sector of our economy could raise UK GDP by up to £50 billion by 2020.
We will enhance our support for small companies through better marketing. UKTI does a great job, but I have to recognise that it is not as well known as it might be. We will conduct targeted marketing exercises and improve our web capability. I note the comments made by the noble Baroness, Lady Thornton, about social enterprises. We will think about how we include them. Small companies, large companies and social enterprises all have their role in the UK’s overall trade efforts.
We will continue to focus on China, India and other high-growth markets. I am told that I am running out of time, so we must conclude. We will do a number of things to improve our overall position. We recognise so many of the opportunities. The UK has had many successes in exporting and we have some great companies. We are exporting cheese to France and spices to India. We will build on that. We will grow exports and we will continue to champion free trade as a Government and move it forward.
EU: Free Trade Agreements
Lord Livingston of Parkhead Excerpts(10 years, 11 months ago)
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Lord Trimble
To ask Her Majesty’s Government what progress is being made in European Union free trade agreements.
The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
The EU is currently negotiating 12 free trade agreements, including those with major trading partners such as the United States and Japan. The EU has also reached conclusion on 10 more agreements that have yet to enter force, adding to the 50 that have already been agreed and are now active. These negotiations are complicated endeavours, but I believe that the EU has made good progress. The Government will continue to be a champion for free trade and of the benefits that it brings to this country.
Lord Trimble (Con)
I thank the Minister for that Answer, which draws our attention to the huge number of free trade agreements that are in course. I would direct his attention to the EU-US free trade agreement. In that connection, has he seen the projections that were issued of the benefit there would be to both the EU and the US, which, interestingly, appears to be roughly evenly divided? Does he agree that the assumption of a virtually equal division of the benefits should be revisited in the light of the huge competitive advantage that the US now enjoys, thanks to its access to abundant supplies of cheap energy, whereas we are increasingly locked into expensive energy to the disadvantage of our businesses?
Lord Livingston of Parkhead
My noble friend is right to draw attention to TTIP, the US-EU agreement, which will indeed bring substantial benefits. I believe that the UK is expected to gain around £10 billion a year, which is about £400 for every family in the UK, the US is expected to gain about £80 billion and the EU about £100 billion, so there are very substantial gains. In addition, there will be very substantial gains for the rest of the world, which are believed to be in excess of £80 billion.
I take my noble friend’s point that energy presents some challenges. Certainly, we hope to see the US exporting energy, so that the benefits of shale to global energy prices would help all industry rather than just those in the US. In any event, we believe that helping to have openness and convergence of standards will assist all citizens, not just in the EU but in the US and around the world.
Lord Pearson of Rannoch (UKIP)
My Lords, if we left the political construct of the European Union, is there any reason why, as one of the world’s largest economies, we could not maintain our existing trade agreements and sign new ones with Commonwealth countries and the markets of the future? Surely we would enjoy our own seat on the World Trade Organisation.
Lord Livingston of Parkhead
If we were to exit the EU, there would be no certainty that any of the free trade agreements would actually continue. While the UK is a significant economy in its own right—and that is important—these agreements take many years to negotiate. Even assuming that we could renegotiate them, we would not have the leverage that the EU has, as the single largest trading bloc in the world, to make such agreements. Therefore, I think that it would be very difficult to replicate them, particularly within a short space of time.
Baroness Kinnock of Holyhead (Lab)
My Lords, will the Minister comment on progress on the negotiations between the European Union and African, Caribbean and Pacific countries, which have now been going on for 10 years and are meant to focus on development and reciprocal free trade? Is it not the case that there is a strong chance that, unless the October deadline is met, we will see an unprecedented situation wherein African countries will lose their preferential access to European markets?
Lord Livingston of Parkhead
The noble Baroness makes a good point in raising those countries. There has been a lot of focus on the most developed nations, but we also have an obligation to continue to push the economic partnership agreements that we have been trying to make with Caribbean and African countries. However, I would stress that there was a major breakthrough with the WTO agreements. The WTO agreement to aid trade facilitation is worth around £100 billion to the world economy as a whole and the vast majority of that will go to developing nations, which I think is to be welcomed. Certainly the UK will continue to push for trade agreements with Caribbean, African and ASEAN countries. We are great proponents of free trade and of the benefits that it brings for all nations involved in it.
Baroness Suttie (LD)
My Lords, does my noble friend the Minister agree that concluding the EU-India free trade agreement would bring enormous benefits to the economies of both sides and, therefore, that finding solutions to the remaining obstacles should be a priority this year?
Lord Livingston of Parkhead
Indeed, the Indian agreement would be of great benefit. Of course, India is one of the major powers and is growing fast. However, as we know from our debates in this House, there are challenges with internal Indian beliefs on trade and there are elections in India in, I believe, April this year. Discussions are ongoing, and I believe there will be discussions in Davos with the Indian trade Minister regarding progress on this agreement. We will certainly be pushing the Indian Government for a wide-ranging agreement, but whether that will be feasible this side of the Indian election is extremely doubtful.
Lord Davies of Stamford (Lab)
Will the EU-US prospective trade agreement as currently envisaged continue to allow the United States to ban the export of crude oil or natural gas, as they do at the present time?
Lord Livingston of Parkhead
The discussions are still ongoing. Clearly, we would like to see free trade of all descriptions, but the TTIP agreement will be largely focused on reducing import tariffs and particularly on the convergence of rules, which will help all countries. We would certainly like to see its energy exports being made available all around the world, as is the case with UK exports from the North Sea.
Lord Tugendhat (Con)
Does the noble Lord agree that the advantages of TTIP to the consumer need to be more emphasised? At the moment, most of the emphasis is on the benefits to producers on both sides of the Atlantic, but in terms of price reduction and a widening choice of products and goods the TTIP stands to do the consumer a great deal of good as well.
Lord Livingston of Parkhead
My noble friend is entirely right that the TTIP will bring a lot of benefit to consumers. When you get a convergence of standards, global models being made and lower tariffs, prices will come down and consumers will have more choice, not just in the UK or the EU but in the US as well. Certainly, we feel it is very important—Her Majesty’s Government have done a number of pieces of good work on this—to highlight the benefits that free trade will bring to consumers on both sides of the Atlantic. I absolutely agree with my noble friend that it is very important to highlight the positive impact that will arise.
Lord Hannay of Chiswick (CB)
Does the Minister agree that it is a very encouraging sign that the US Administration are now pressing for fast-track authority for this agreement, as with the Pacific one, and that this is essential if the agreement is to go through in a reasonable amount of time? Will the Government do what they can to let their friends in Washington know that this fast-track authority is really important and to let our friends in Brussels know that this is a sign that the negotiation really is for serious?
Lord Livingston of Parkhead
Indeed it is. The timetable for TTIP is very aggressive, with the aim of completion by 2015, which would be almost unprecedented. I met with the US ambassador to the UK just before Christmas and we discussed TTIP at some length. Certainly, his enthusiasm for it is there, albeit that I recognise that not everyone in the American political system feels that way. However, we made that point very clearly. The Prime Minister said at the G8 conference that this is a once-in-a-generation opportunity and, understandably, I would not disagree with the Prime Minister on this issue.
Lord Howarth of Newport (Lab)
Is the Minister confident that free trade agreements would be good for African economies? Historically, did not the US, our own country and the countries that are now successful—the industrialised countries of south-east Asia—build up their economic strength behind protectionist barriers? Is it not the case that when the countries of the advanced West pressure African countries into free trade agreements, they are doing so not for the benefit of those African economies but for themselves?
Lord Livingston of Parkhead
As I indicated earlier, from the free trade agreement that was recently conducted in Bali, for example, the biggest beneficiaries by far will be the developing nations. The improvement of trade facilitation will yield £100 billion in benefit, most of which will come to them. Actually, a lack of free trade, rather than the absence of it, has been the challenge for a lot of developing nations. The UK will continue to push to see free trade around the world, not just with developed countries but with developing countries.
Lord Avebury (LD)
My Lords, in all these agreements that the European Union makes with third parties, there is a standard clause on human rights. Can he tell me of any such agreement in which that clause has ever been invoked?
Lord Livingston of Parkhead
My noble friend is correct that EU agreements, including for instance the one with Canada, have standard clauses on human rights. I am not aware that any of these clauses have been invoked, although it is feasible to suspend all or part of the agreement if human rights have got worse in a particular country. I think that the engagement in free trade and the free movement of people, services and goods, is something that should help human rights. I certainly think that ensuring that human rights are on the agenda when we try to negotiate is a major help.
Lord Alton of Liverpool (CB)
My Lords, without doubting the importance of free trade agreements to lifting an estimated 800 million people in the world out of starvation, despair or poverty, will the noble Lord nevertheless take into account the exploitation of children in a country like India, for instance, or exploited labour elsewhere in the world? Will he tell the House what balance is struck in determining free trade agreements in relation to protecting the rights of those who are likely to be exploited?
Lord Livingston of Parkhead
The challenge of child labour in certain countries can happen irrespective of free trade, but I think that free trade will actually help through the exposure and openness of the economies, which is a major help to improving the conditions of workers in individual countries. That is something we will continue to push for. As I said earlier, we also put human rights clauses in the various agreements and the UN has certain statements on human rights, which we also look to comply with. It is an important subject, but it is not peculiar to free trade agreements.
Lord Hamilton of Epsom (Con)
My Lords, is it not inevitable that, as long as European energy prices are double—or, in the case of Germany, triple—that of the United States, there is inevitably going to be a transfer of manufacturing to the United States?
Lord Livingston of Parkhead
As I said earlier, energy prices are a significant issue for EU-US relations, but they are not the only issue and there are many industries that are not wholly reliant on energy prices. In fact, energy prices are just one part of the total package. We would also look to see the exploitation, for instance, of alternative energy sources in the UK, which will hopefully act to balance some of that. With that in mind, I was delighted to see the comments from the Prime Minister about looking for alternative energy sources. The UK, which is already an energy producer through conventional means, is also looking at alternative sources of energy, and that is going to be very important for the future of the UK.
Exports
Lord Livingston of Parkhead Excerpts(10 years, 11 months ago)
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Lord Sherbourne of Didsbury
To ask Her Majesty’s Government what steps they are taking to encourage more United Kingdom businesses to export goods and services.
The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, the Government have significantly increased their support for exporters. UKTI expects to assist 40,000 businesses in this fiscal year, an increase of 50% over the past two years. The Government have also provided additional funding to increase support for exporters in key fast-growing markets such as India and China. In addition, the Chancellor recently announced a significant increase in UK Export Finance’s capacity to support our exporters.
Lord Sherbourne of Didsbury (Con)
My Lords, I welcome that. In particular, I welcome what my noble friend said just before Christmas about consulting medium-sized companies on what further help they might need. When he does that, will he have in mind the additional support that can and should be provided by chambers of commerce and other business organisations? Will he also look carefully at what lessons we can learn in that regard from other successful exporting countries such as Germany?
Lord Livingston of Parkhead
My noble friend makes a very good point. We have indeed looked at successful exporting countries such as Germany, Japan and the US. One feature in a number of them is, and has been over the past 20 or 30 years, the use of chambers to assist companies in overseas markets; we are indeed adopting this model. We have targeted 41 more-difficult-to-reach markets where chambers will assist us in providing support for particularly our smaller exporters, as well as the large companies that are often represented. In addition, we are looking at the success of middle-sized companies in Germany, where the UK does not do as well, and there will be a number of initiatives with them. In addition to the chambers, we are working closely with the Institute of Directors, the CBI and the Federation of Small Businesses—to name three organisations.
Lord Giddens (Lab)
My Lords, we are in the early stages of some of the greatest transformations possibly ever to affect manufacturing and even service industries, with the advent of digital production. By that I mean 3D printing, what has come to be called by some 4D printing and beyond. As a result, it may be possible for us not only to make many things here that are at the moment made abroad but to export them to other countries. What are the Government doing to ensure that the UK is in the forefront of these extraordinary possible transformations?
Lord Livingston of Parkhead
The noble Lord is indeed correct that we are seeing much change in manufacturing capability. The Government are investing significantly and have ring-fenced a science budget to assist in many UK projects. We have the “eight great technologies” that we will be investing in, and we are increasing the links between companies and universities; I commend the universities on that. We are certainly supporting the advanced manufacturing capabilities as well as a number of other technologies that we believe will really help the UK to go forward, investing in the right industries that will grow in the future.
Lord Naseby (Con)
Is the Minister aware that the extra resources being put into exports are enormously welcome, but that the weakness is still the marketing of those resources and the facilities that they provide, particularly on export finance to the SME market in general? Secondly, the Queen’s award for exports is looking exceedingly tired and is long overdue a revamp. Finally, if we are sending and attending conferences overseas on exports, can we please appoint a Minister early in the process and not turn up at the last moment, as my poor noble friend Lord Marland had to do in Colombo? He still did a very good job, but it was late in the day.
Lord Livingston of Parkhead
There are a number of questions there. At this point, I am probably not looking to rebrand the Queen’s award for exports, as the Queen does seem to be the right person to award it. In terms of UK Export Finance, my noble friend does make a good point; UK Export Finance has predominately supported larger companies. We have, however, doubled the number of regional advisers for UK Export Finance, and we have launched a new product aimed at assisting smaller companies. In fact, I was at the meeting of the all-party parliamentary group on this issue, and I heard a number of small and medium-sized businesses commending the work of UK Export Finance, but there is more work to be done.
Lord Stevenson of Balmacara (Lab)
My Lords, I welcome the noble Lord to his Front-Bench appearance and look forward to working with him in future. He will be aware of the publication of Good Business in September 2013, which is welcome because it puts into effect the Government’s commitment to implement the UN guiding principles on human rights. It is somewhat long on rhetoric, and a bit short on action, but one of the commitments it makes is to adjust government rules to allow human rights-related matters to be reflected in the procurement of public goods, works and services. Will he explain what is happening on this matter?
Lord Livingston of Parkhead
In terms of procurement rules—and I will talk in relation to exports, as procurement within the UK will be a different matter—we absolutely look at human rights, and discuss the subject regularly with many of the NGOs involved. We look at the relevant UN guidelines, and we will of course look to and abide by the appropriate and relevant guidelines from the UN. Government procurement is another matter and perhaps should be left for a different question.
Lord Wright of Richmond (CB)
My Lords, does the Minister accept that it is wrong to talk about encouraging businesses to export without drawing attention to the worldwide resource provided by the Diplomatic Service? It is very anxious to do everything it can to help both businesses and chambers of commerce wherever they want that help.
Lord Livingston of Parkhead
That is an excellent point. I commend the ambassadorial network; I have seen its work both as a Minister and as an exporter. Its enthusiasm and positivity to assist the UK in increasing exports is to be commended. In fact, the work of the FCO and its focus on our export efforts has been excellent. We will continue to work very closely; of course, as a Minister I am part of FCO as well as being part of BIS, and that reflects the important role that the Foreign Office has in exports.
Lord Stoneham of Droxford (LD)
The Government have set out a system of trade ambassadors to promote exports in particular countries, involving a number of Members of this House. Has an assessment been made of the effectiveness of this system and initiative, and what plans are there for its future expansion?
Lord Livingston of Parkhead
Trade envoys have been established to assist in countries to which government Ministers do not make regular visits. I commend the various Members of the House who act as trade envoys and thank them for their hard work. We are reviewing the success of the trade envoy programme, and how we could perhaps expand it slightly into new areas. When it works well, it is certainly helpful. We combine enthusiasm, expertise and knowledge in particular countries to assist us in increasing our overall exports and relationships with those countries.
China: Exports
Lord Livingston of Parkhead Excerpts(11 years ago)
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The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)
My Lords, last week I was delighted to help the Prime Minister lead the largest ever UK business delegation to China. Our bilateral trade and investment relationship with China is improving. Exports to China have almost doubled since 2009 and more Chinese investment has come into the UK in the past 18 months than in the past 30 years combined. However, there is more to be done, especially in focusing on areas where the UK has particular strengths and where these match China’s emerging demands. Many of these strengths—healthcare, education, the creative industries and agri-tech, to name but a few—were showcased last week. Several agreements in these sectors were signed during the visit and these will open further opportunities for UK exporters.
Lord Wei (Con)
I thank my noble friend the Minister for his response. I look forward to the future growth in exports that will result from these significant and much needed visits, and congratulate him on the role that he played in the most recent one. We know that inward investment from countries overseas such as China and India can help build our capacity for exporting, with Jaguar Land Rover, Aquascutum and many other companies showing the way. However, our current measures of success do not necessarily capture the interactions between such investment and exporting. What are the Government doing to encourage, measure and link investment and exporting activities from countries such as China to grow total trade?
Lord Livingston of Parkhead
I thank my noble friend Lord Wei for that point and his efforts in promoting UK-Chinese trade. He is right to raise a number of areas, including export from the UK, imports from China and our relationship as regards investment. During the trip, I was delighted that we announced programmes that will help UK investment in China and Chinese investment in the UK, particularly in the area of the supply chain. We have found that, in a number of areas, to be important in improving our overall trade performance.
Baroness McIntosh of Hudnall (Lab)
My Lords, the noble Lord mentioned the creative industries. He will be aware that the delegation of which he was part included members from the cultural sector, including Sir Peter Bazalgette, chair of Arts Council England, Nick Starr, executive director of the National Theatre, and Joey the Horse, the puppet star of the National Theatre’s production of “War Horse”. Does he agree that the cultural sector in this country, particularly the performing arts, is widely respected the world over for the skills and products that it can export? Does he also agree that this is a good reason for the Government to continue to give the cultural sector the maximum possible support?
Lord Livingston of Parkhead
I thank the noble Baroness for her comments and absolutely agree that this was one of the highlights of the trip, particularly Joey the Horse, who got a standing ovation at the gala lunch that we held. Joey was the star of the trip, after the Prime Minister of course. It was not just in culture that our DNA was represented, but in the Premier League as well. This not only has export potential in its own right but is an expression of British soft power and its opportunities. We will certainly make sure that we include the creative industries as part of our overall export effort, and I thank the noble Baroness for her comments about our support of the cultural sector.
Lord Clement-Jones (LD)
My Lords, I warmly welcome my noble friend to his new role, and the success of the Prime Minister’s visit to China. I declare an interest as a partner of a law firm. Why did the Prime Minister not find room in his huge delegation for any representative of the UK legal services sector? The sector contributes some £3 billion to our professional services exports; it provides crucial commercial and dispute-resolution services and support for British businesses around the world; and, not least, will help them to take advantage of the new Shanghai free trade zone. I realise that not everybody wants to be accompanied by a lawyer on their travels.
Lord Livingston of Parkhead
My noble friend is correct that the legal services sector is one of the most important sectors for the UK. He may not be comforted by the fact that we took some accountants on the trip. The law firms were represented, particularly in discussions on the Shanghai free trade zone, in which the UK is going to provide excellent support. The UK legal sector is a great strength, not just as an export in its own right but as a reason for FDI into the UK, because it shows that the rule of law and support from professional services are very strong. I will certainly seek to champion the legal sector going forward.
Lord Davies of Coity (Lab)
My Lords, we know that nothing happens in China except by the leave of the Communist Party, which controls the whole of China. We know what the British delegation wants from China. Can the Minister tell the House what the Chinese want?
Lord Livingston of Parkhead
The Chinese refer to us as partners for growth. Particularly since the third plenum, the Chinese see a real opportunity to partner the UK in key areas, as China expands its cities and needs to make its environment greener—there are a lot of environmental issues in China. UK products are loved in China. The cultural sector was mentioned earlier. Yes, we can mention whisky. We have even been selling tea to China, which is remarkable. Going forward, the UK’s products and services are ideal for what China needs as a result of the change in its economy. We look forward to continuing to increase our exports to China, because we have a lot of ground to make up.
Lord Howe of Aberavon (Con)
No doubt my noble friend is aware that during the past year, the China Investment Corporation—a sovereign wealth fund—has taken a 9% stake in Thames Water and a 10% stake in Heathrow. This year, another Chinese corporation, Advanced Business Park, has said that it will undertake a £1 billion redevelopment of the Royal Albert Dock. Is it not clear that we are looking not at a single arrangement but at a joint, substantial, two-way partnership between the two countries?
Lord Livingston of Parkhead
I thank my noble and learned friend for that comment. We are certainly seeing substantial investment from China into the UK—and, indeed, vice versa. We visited a city where Diageo has made a large acquisition. WPP is a very strong firm in China. It certainly is a partnership. China, as one of the most powerful nations in the world, having a stake in the success and growth of the UK economy is certainly no bad thing either.