Exiting the European Union and Global Trade

Adrian Bailey Excerpts

Thursday 6th July 2017 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

It is a pleasure to follow the right hon. Member for Wantage (Mr Vaizey), as, perhaps unusually, I agreed with almost everything he said. It is a year since the referendum and three months or so since we triggered article 50. We wasted two months on a general election that has left the Prime Minister enfeebled and the Front-Bench team confused. The impact on our economy is potentially hugely serious, and we are running out of time. The public services are in crisis. We need the sort of confident direction that is necessary to attract investment in our economy, to enable growth and the taxation receipts necessary to bolster our services.

When I participated in the EU referendum debate a year ago, one argument I heard regularly was, “Because of the trading imbalance between us and the EU, they need us more than we need them so they are going to be very favourably inclined to a generous settlement.” I have heard similar sentiments reiterated in today’s debate. If that is the case, I cannot understand why there is a problem with saying that we want to remain part of the single market and the customs union, and we will go for a transitional arrangement until we get it. Somehow we do not seem to be getting that from Ministers, but that it is what is needed to give investors the confidence to invest in our country.

I make it clear that I have a constituency interest: there are more foundries in my constituency than in any other in the country. They are tied into the manufacturing supply chain, particularly that of the car industry. The future welfare of that industry is essential for the future jobs and employment prospects of my constituents. We must be clear about the role the car industry plays in the national economy: 77% of cars manufactured in Britain are exported, 56% of them to Europe. Our overall trading statistics by value show that the contribution of the car industry is huge and significant. It is no coincidence that what I articulated as our objectives earlier are exactly what the Society of Motor Manufacturers and Traders wants.

This idea that no deal is better than a bad deal and that we can fall back on World Trade Organisation tariffs is nonsense. That would add 10% to car prices, and 2.5% to 4.5% for parts. Given the to-ing and fro-ing of car parts in the supply chain in the industry, the potential cost is £2.6 billion for imports and £1.86 billion for exports. The cost of an average car could increase by £1,500.

The Government’s mixed messaging and hostile rhetoric has caused damage. In business questions, my hon. Friend the Member for Bridgend (Mrs Moon) mentioned recent figures on investment in the car industry, which has dropped from £2.56 billion in 2015 to only £322 million in the first half of this year. That is hugely significant for the future of a manufacturing industry that is crucial for our export performance.

In the time I have left, I wish to comment on the approach and potential of some of the alternative scenarios I have heard outlined. To be clear: I am as in favour of trading with other countries as anybody is. Implicit in a lot of the arguments I have heard is that the EU is somehow a barrier to our having good trading relations with other countries.

[Anna McMorrin (Cardiff North) (Lab)]

I agree with what my hon. Friend is saying. Our markets and economy are on a cliff edge because of the Government’s irresponsible behaviour.

May I correct the comments by the hon. Member for Stone (Sir William Cash) on sheep market imports? He misquoted Michel Barnier’s remarks about 12% tariffs. Actually, sheep market imports from outside the EU are subject to tariffs of 12% plus a fixed amount ranging from €900—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I have been lenient with the hon. Lady because I appreciate that she has been in the House only for a matter of days. Nevertheless, she should be intervening on the hon. Member for West Bromwich West (Mr Bailey), not making a speech about something said earlier by someone else. I am sure she will get the hang of it, but I cannot let her go on any longer. I am sorry.

[Mr Bailey]

The ability of my hon. Friend the Member for Cardiff North (Anna McMorrin) to make a speech while intervening demonstrates that she is rapidly acquiring the skills of Parliament.

To return to the point I was making, if being a member of the EU is an impediment to trading with other countries, why do some of our key EU rivals, such as Germany and France, manage to trade far more successfully with other markets than we do? Could it be that, notwithstanding their EU membership, they are doing something right that we are not doing? Our approach should take that into account; we should not blame the EU for the deficiencies in our ability to get the maximum from our trading potential with countries outside the EU.

There is a rather naive and totally fallacious belief that somehow it is going to be easy to trade with other countries when we come out of the EU. If we look at the World Bank ratings on the ease of doing business in the expanding markets of China, India and Brazil, we see that China is ranked 96th, India 149th and Brazil 143rd. The idea that they will become any easier to trade with if we come out of the EU is, quite frankly, self-delusion. The right hon. Member for Wantage outlined some of the practical difficulties in setting up any trade negotiations with other countries, and they will still be alive.

The fact is that by coming out of the EU, we are moving from a trading bloc that is relatively easy to deal with to one that is not. We need to make it clear, at this point, that we want to remain in the EU single market and customs union.