International Trade Opportunities

Baroness Burt of Solihull Excerpts

Thursday 7th July 2016 Lords Chamber

[Baroness Burt of Solihull (LD)]

My Lords, I congratulate the noble Baroness, Lady Mobarik, on securing this debate today and all noble Lords, who have made very thoughtful and perceptive contributions, including the noble Lord, Lord Selsdon, who I will henceforth think of as our man in Havana on account of his exploits in our now mostly gone world of international trade. I now know more than I ever wanted about the Patagonian toothfish. We have heard a lot about the difficulties of renegotiation and about the gloom and doom, including how the pound is down to a 31-year low from the noble Lord, Lord Green, in his excellent and thoughtful contribution.

This is very unhelpful when our balance of payments deficit is so large that we are spending more to buy imports than we are reaping in improved attractiveness of our exported goods. We have moved from being the fifth to the sixth-largest economy in the world— displaced by the French, which is galling in more ways than one.

We have to look at our place in the world from a new perspective, as many contributors to the debate have done this morning. We no longer have the might of the largest market in the world on our side when it comes to negotiating power, as my noble friend Lord Stoneham mentioned. Like it or not, we have to strike out at new or at least underdeveloped markets and, to get those markets to take us seriously, we have to have a plan. Indeed, it would have given more comfort to Britain’s industry if we had had an industrial strategy in the first place, but Mr Javid, the Business Secretary, apparently does not like the words “industrial” and “strategy” in the same sentence. The noble Lord, Lord Bhattacharyya, echoed this in his excellent contribution and talked about the importance of manufacturing and innovation, both of which are very endangered amid the possible outcomes ahead.

It is time to stop reacting and to start planning to help industry to cope with the changed economic landscape that it finds itself in. The option suggested by the noble Lord, Lord Patten, of going straight to the World Trade Organization in two years if we have not got a deal, would be disastrous for British manufacturing. A 10% tariff on cars and 12% tariff on clothing and food do not bear thinking about.

I am sure I was not the only Member of your Lordships’ House to experience dismay to discover that, as far as trade was concerned, there was no post-Brexit plan in place from the Brexiteers. Bold statements like, “We’ll soon have our own, better deals with the rest of the world” were not, it seems, backed up by anything other than rhetoric. The world we face, and the opportunities that exist within it, may not be quite as enticing as they might have appeared from the other side of the pre-Brexit fence.

Our Chancellor has laid great store by doing trade with China. Trade with China is rapidly expanding, but still constitutes only 3.7% of our exports, and growth in China is slowing, as we know. India, another great focus of government optimism, constitutes only 1.7% of our exports. Several Members mentioned trade with Commonwealth countries and the importance of reinforcing the links that we have with our friends in the Commonwealth. To look on the positive side, at least there is lots of room for improvement.

Let us look at countries where our balance of trade is positive: Australia, South Korea, Singapore, Japan, Switzerland—in EFTA—and of course our good old pals, the US of A, our largest single trading partner. I for one would be very willing to put my best suit on and go to any country to proudly sell the British brand. In the coalition, we boasted that no Minister was allowed out of this country without a business brief in their little red box. We need the same get-go focus today, right now more than ever. The noble Lord, Lord Stoneham, in his excellent contribution, said he likes a crisis and that it galvanises business to make changes. I hope it galvanises the Government as well, because otherwise we could be in a great deal of difficulty.

We must have a plan, but the plan needs to take account of what kind of deal we will be doing with our erstwhile European partners. Some of the other trading models which give a degree of access to the single market impose restrictions on trade deals with other non-EU countries. The noble Lord, Lord Green, gave an excellent explanation of the models and analysis of the situation, and I conclude from his comments that none of them is as good as what we have at the moment. The noble Viscount, Lord Waverley, included in his contribution the lost opportunities in public procurement, alongside a number of other very thoughtful and perceptive comments.

As we will become the EU’s largest trading partner—a bigger trader even than America—I am sure we will have a lot of negotiating power. The deal that we will be able to obtain should be unique, not least because we buy more from the rest of Europe than we sell to it. Several noble Lords have made the point that it is very much in its interests to trade with us too. In my view, and in the view of my party, access to the single market is the most important thing we should be striving for. But here is the quandary: we need a plan—fast—to restore confidence and our attractiveness in the eyes of investors, but equally we need access to the single market, otherwise our attractiveness to non-EU countries aiming to invest here, at least in part to gain access to the single market, is lost. It is the old chicken-and-egg question.

Business thrives on certainty, and right now that is in very short supply. The two major political parties are so busy tearing themselves apart that their focus on the needs of their country has been lost. Who would have imagined, six months ago, two months ago or even two weeks ago, that things would have ever come to such a state? However, there is one political party whose focus has not been lost; one party that is undivided in our appreciation of the need of our country for stability and certainty. We know what we stand for: a Britain strong in Europe and strong in the world. We say that our priority must be to remain within the single market, so companies can have confidence to stay here, invest here and trade from here. We say to the Government: do not pour what money we have into tax breaks for the rich by reducing corporation tax, when it could be put to better use supporting British business by bolstering the British Business Bank and supporting innovation, business growth, and those businesses that may not any longer attract funding from even more risk-averse banks. As long as we retain access to the single market, Britain is the best place in the world to trade with and from. We have the flexible, skilled workforce, we have a “can do” attitude towards supporting business and we are still the best place in the world to do business.