International Trade Opportunities

Baroness Neville-Rolfe Excerpts

Thursday 7th July 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)]

My Lords, I am very grateful to my noble friend Lady Mobarik for calling this debate and for her wide-ranging, interesting and perceptive speech. I associate myself with the words of the noble Lord, Lord Mendelsohn, in relation to all that has been said about other speakers.

Our economic position in the world is at a point of inflection. As we turn to the future, the overwhelming need is to rise to the occasion, seize the initiative and make the most of the new opportunities. In my noble friend’s words, we must not allow a state of paralysis. We must engage with the rest of the world, building on existing relationships and, I would say, creating new ones.

While I wanted the UK to remain a member of the EU, the British people have spoken, and it is the Government’s job to implement their decision. In contrast to some noble Lords who have spoken, my vision for the future is positive, because there are opportunities as well as threats in Brexit. We must capitalise on new export opportunities, attract inward investment and build UK dynamism by making the UK the best place in the world to do business. As the noble Lord, Lord Mendelsohn, said, we will no doubt be returning to that later in the year.

I sense that those who have spoken in today’s debate are already looking forward and thinking about how to turn opportunities into action. As my noble friend Lord Patten said, the Chancellor has announced that he is looking into cutting corporation tax to encourage investors. I was very interested by my noble friend’s analysis, which underlined the strength of mutual trade between the UK and the EU and the tariff opportunities if we go that way. We also need to factor in the depreciation of sterling as a positive, which we have seen reflected in the relative share prices of, for example, Rolls-Royce and GSK and some of the best British companies. However, I take the point made by my noble friend Lord Green that, because of changes in supply chains, this is slightly less significant in its impact than what we saw, for example, after Black Wednesday.

As someone who has worked in business, I have some sympathy with my noble friend Lady Mobarik’s point about the need for a robust, results-focused plan on international trade, and I agree with my noble friend Lord Green that this needs to be properly resourced. The noble Lord, Lord Mendelsohn, said that we need to scale up, and I can see the case for that. As a start, the Government have established a new EU unit in Whitehall, drawing in the best and brightest from inside the Civil Service. To respond to the noble Lord, Lord Stoneham, we are also looking outside the Civil Service for talent—as we did in the Second World War. I remember my mother, who worked at the Board of Trade as part of the war effort, talking about the brilliance of the academics who came in and what a difference they made. I have already had approaches from colleagues I knew doing deals around the world, in Asia and elsewhere, asking whether there is an opportunity for their talent to be offered to government. We need to look at all these kinds of angles in the stepping up of resourcing.

There will be no immediate changes to our relationship with the EU. While the UK is still a member, all rights and obligations will apply. We continue to support the EU’s trade agenda, and the UK will participate constructively in EU decision-making on trade issues. Indeed, I am off to the Council, in Slovakia, next week. As the current Single Market Minister, I know how hard we need to work on the issues involved. I assure the noble Baroness, Lady Burt of Solihull, that we are doing just that. We are engaging in a series of sector roundtables to make sure that we are identifying the challenges as well as the opportunities. My door is always open, as she knows.

One of the most important tasks for the Government going forward is forging deeper trade relationships with the US, China and Japan, for example, and rekindling long-standing ones, such as those with Australia, New Zealand and Canada. To respond to my noble friends Lady Mobarik and Lord Patten, I agree that a strong Commonwealth, with enhanced economic prospects for all members, is good for UK business. The United Kingdom Government are represented across the Commonwealth, and UKTI has offices in around half of the Commonwealth countries, including in Pakistan, where there is the fast-growing market which my noble friend Lady Mobarik talked about—I know well the opportunities there and, indeed, Pakistan is an important source of textiles in this country. There are shared systems in the Commonwealth and a shared language, which means that the cost of trade between Commonwealth countries is some 19% lower than with non-Commonwealth countries. We are committed to helping the Commonwealth unlock its vast potential in the area of trade. I am very glad to say that Commonwealth Trade Ministers will meet in London in March 2017. That has now become a much more important meeting.

Getting these trade relationships right is at the heart of the Government’s vision for the UK after we leave the EU, but it will be equally important to maintain existing trade relationships, for instance with Korea, to provide stability for UK businesses. We are not starting from scratch. We already have strong international relationships, which are underpinned by our network of more than 270 posts in 160 countries around the world. As has been said, many countries have already been in touch to express their desire to maintain and build on existing trading relationships with the United Kingdom. We have laid good foundations with China and India, exemplified by the visits of President Xi Jinping and Prime Minister Modi last year. As has been said, my noble friend Lord Price is not in his place today because he is in China. I will be visiting China next month and will be focusing on resolving intellectual property matters, which are a key issue for UK investors.

Of course, we can build on the relationship we already have with one of our most important trading partners, the United States, where I was in January—I followed that up recently when I was at the OECD in Cancun last month. The US is the largest export market for British goods and services outside the EU, including in key sectors such as machinery and transport equipment, especially aero-engines, chemicals, food, live animals and, of course, financial services.

I agree with my noble friend Lady Mobarik that infrastructure investment is very important to a successful economy. As the Transport Secretary has said recently, it is right that the vital matter of airport expansion is resolved in a decision to be made by our incoming Prime Minister.

Britain’s economy is fundamentally strong, and we are a great trading nation. The UK is the seventh-largest trader in goods and fourth-largest trader in services globally. We have strong sectors to drive our trade forward. In 2015, Britain exported £4.56 billion in medical technology, £25 billion in pharmaceuticals and £19 billion in food and drink. As an aside, pharmaceuticals, which was raised by the noble Lord, Lord Mendelsohn, is always a priority area for the UK, and he is right that we need to respond to that. The European Medicines Agency is an issue, although not an immediate issue for the reasons that I have said.

I agree with the noble Lord, Lord Bhattacharyya, that manufacturing is vital to our country. It has been a great strength and must continue to be one. We also have established strengths in aerospace and vehicles, and in 2014 exports of finished manufacturing goods rose to a record level of £148 billion. I commend the noble Lord’s work in bringing Tata to the UK and in helping Jaguar Land Rover, which has helped to revitalise our car industry in this country.

The noble Lord is also right that innovation is key to growth. We are a nation of great inventors, we have great universities and a world-respected IP regime and we will be setting forward our ideas in an innovation plan in the coming months.

The UK is the world’s largest exporter of financial services, exporting more than the US, Switzerland and Luxembourg. In 2014, our total financial services, pensions and insurance exports were worth £69 billion. They have grown 7.9% compound over the past decade. We will need to ensure that all those industries are capable of thriving and prospering on the world stage.

It is important to remember that we are a member of the UN Security Council, NATO, the G7, the G20, the OECD, the WTO and our Commonwealth, and our voice will always be prominent in those fora.

Trade of course goes two ways, and the UK has many strengths which make us an attractive place in which to invest and do business. As Minister at the Department for Culture, Media and Sport, I am particularly proud of the global reach of our tourism sector, our creative industries, which are growing at 9%, and the strength and innovation of our digital economy.

My noble friend Lord Selsdon talked about the importance of foreign investment and some past successes. He will be glad to know that investment continues. Even after the referendum result, Singapore’s Centurion this week committed £20 million to fund new student accommodation in Newcastle, Manchester and Bristol, citing the UK’s education sector as strong and resilient.

I remind noble Lords of the benefits of free trade—I speak as an economist. The WTO remains the bedrock of international trading, and I must mention that recent successes have included the Bali ministerial conference in 2013, where the trade facilitation agreement was reached, which will be implemented next year. I record my thanks to my noble friend Lord Green, whose expertise, diplomacy and brilliance was at the heart of that success when he was Trade Minister. The 10th WTO ministerial conference in Nairobi in December last year agreed a good outcome on agriculture—a very difficult area—with WTO members agreeing to remove trade-distorting forms of agriculture export subsidy. Successful free-trade agreements are concluded outside the EU. The Canada-Korea FTA came into effect in January 2015. This will eventually make virtually all their bilateral trade duty-free.

As was said, our new whole-of-government approach to boosting exports was announced by my noble friend Lord Maude of Horsham in January. UKTI is at the heart of this new approach, bringing together all government players and overseeing export performance on behalf of the cross-government exports implementation taskforce, which is led by Sajid Javid, the Business Secretary. This will be doubly important in the circumstances in which we find ourselves, looking strategically but also at the nitty-gritty—sector by sector—both in trade and in discussion with the EU, because both will be so important in where we get to.

UKTI has recently completed a business forecasting exercise to determine priorities for the next five years, pulling together data from teams across different sectors and markets around the world. That identified 191 new export campaigns which we believe can increase exports by up to £70 billion by 2020. UKTI is also working with partners in the UK, such as the chambers of commerce, which my noble friend Lord Green mentioned, and overseas. We are also bringing in business—a point made by the noble Viscount, Lord Waverley—so we have new partnerships. We are working with Barclays and Lloyds banks, for example, who have pledged to help 40,000 businesses to export by 2020, which will help us to reach our target of 100,000 exporting businesses, which now becomes even more important. We are working closely with businesses of all sizes and other stakeholders to ensure that the UK’s trade strategy works for them and that we continue to be a leader in free trade around the world. We recently announced that John Alty, CEO of the IPO, has been appointed to lead a team for stakeholders to liaise with to discuss their immediate priorities.

To conclude, these are challenging times but also rich in opportunity. Our priorities in the months ahead will be to limit uncertainty during the transition, ensure that our new relationship with the EU works for business and keep Britain open to international trade and to the world. International trade and investment have been integral to the history of this country and will be central to our future. Britain is open for business. Our ambition remains to be the best and easiest place to do business and to be an excellent global trading partner.