Duties of Customs

Gareth Snell Excerpts

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The Minister will be aware that there were many responses by manufacturing organisations to the White Paper on the Trade Bill. The British Ceramic Confederation, which is based in my constituency, is genuinely concerned about the market and trade remedies that will exist post-exit, particularly for dumped goods such as tiles and tableware, which could undermine the indigenous manufacturing base. Will he clarify what those remedies might look like once we leave the EU? The time between the closure of the consultation on the White Paper and the publication of the Trade Bill was very short, so we cannot really be sure whether those representations were considered.

[Mel Stride]

The bulk of the measures to which the hon. Gentleman refers will be in the Taxation (Cross-border Trade) Bill, including trade remedy measures on dumping, excessive subsidy and safeguarding. He will know that we take those issues extremely seriously. In the event that there is evidence of dumping or the other things to which I have referred, there will be a trade remedies authority, the details of which have already been disclosed to the House in the Trade Bill. That body and the Secretary of State for International Trade will be able to work together to ensure that, when there are problems due to activities such as dumping, we will be able to take appropriate action in the normal manner.

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[Ross Thomson]

No. I want to make some more progress.

Scotland’s exports are world-renowned—I am sure the hon. Member for Edinburgh South (Ian Murray) and I can absolutely agree about that—and whisky is just one example of a British export success story, with more than 90% of Scotch whisky being sold outwith the UK.

[Gareth Snell]

Will the hon. Gentleman give way?

[Ross Thomson]

No. I want to make some more progress.

The city I represent, Aberdeen, is a global leader in some of the most innovative sectors, such as life sciences, new oil and gas technology, and food and drink. As the oil capital of Europe, Aberdeen is a global city and new bilateral trade deals—whether with the US, South America, Africa or even the middle east—will help the granite city to grow and to take advantage of trade inward and outbound investment.

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[Ross Thomson]

No.

Furthermore, the Government will ensure, as they do at present, that their future customs regime is consistent with internationally agreed rules and arrangements. What does this mean in practice? As we all know, trade is not just about the trade deals that we strike or where the growing markets are in the world; it is also about the tariffs, regulatory barriers and terms of trade that we decide to set as part of a new UK policy. The Bill therefore enables the UK to establish a new UK tariff, charge customs duty on goods, set and vary rates of customs duty, and suspend or relieve duty at import in certain circumstances. The UK will be able to set preferential duties and additional duties—for example, to implement a preferential tariff applicable to developing countries.

[Gareth Snell]

Will the hon. Gentleman give way on that point?

[Ross Thomson]

No, I want to make this important point: free and fair trade is the greatest poverty alleviation policy. As the Secretary of State for International Trade has already highlighted, over the last generation more than 1 billion people have been taken out of abject poverty, thanks to the success of global trading. The Bill will therefore enable the development of policy that helps some of the world’s poorest and developing countries to trade their way out of poverty, rather than simply to depend on aid.

As we set an independent UK trade policy for the first time in 40 years and take up our own seat at the World Trade Organisation, we as champions of free trade can be at the forefront of ensuring that, across the world, there is an ever widening sharing of prosperity. Such prosperity encourages and develops social cohesion, underpins political stability and supports conflict resolution, which in turn supports Britain’s own national security aims. The Bill also includes powers for the Government to introduce trade remedies and to protect domestic industries from injury caused by dumped, subsidised or unexpected surges of imports.

In all of this debate, the key point to bear in mind and to stress is that once the UK is outside the EU’s customs union, we will take our destiny into our own hands and be able to determine our own overall independent trade policy. We will no longer be bound by the EU’s protectionist tariff structure. Free of this, we will have the choice to lower duties on goods. In leading the world on free and fair trade, we can take forward a policy that liberalises trade. I am excited and optimistic about the new deeper and freer trade deals we will be able to strike that will support businesses and services in my constituency.

The golden opportunity of Brexit is the opportunity to open up our markets and lead the world in liberalising trade across the globe. It is not every day that an economy the size of the UK gets to set up a new Department for trade, or to draw up and set its own trade policy. This opportunity will not come again, so let us seize it with both hands.

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[Ian Murray]

Indeed, and I will come to more of those arguments later in my speech. The Foreign Affairs Committee, of which I am a member, visited the border regions in Ireland and Northern Ireland just last week, and one of the key concerns we heard from the businesses that employ many thousands of workers on both sides of the border was that they use the UK as the transit route into the European Union. We are the landing strip for all the goods they export through the United Kingdom into the European Union, because it is the fastest way; the alternatives are not suitable for their businesses. It will be exactly the same for businesses in Coventry, in Aberdeen and in Edinburgh South. The hon. Member for Aberdeen South spoke eloquently about the Scotch whisky industry, which we all defend and champion. That industry needs easy access to the markets in which it sells its products, so it too is pushing for as close a deal as possible to the customs union.

[Gareth Snell]

My hon. Friend will be aware that the finest Scotch whisky in the world is sold in ceramic bottles made in my constituency. Exiting the European Union without a proper trade deal will result in not only the price of the whisky but the cost of the bottle going up, which will threaten jobs in my constituency. What does he make of the Government’s proposals so far on market and trade remedies?

[Ian Murray]

I am glad my hon. Friend makes that point because the Scotch whisky industry is not just a Scottish industry. It is a UK-wide industry involving bottling, packaging and delivery companies—a whole UK supply chain. If the main driver of that supply chain, which is the whisky coming out of Scotland, is disturbed, the jobs in my hon. Friend’s constituency are potentially disturbed, too.

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[Ian Murray]

I am happy with the intervention—I am delighted with it—because it allows me to say three things: first, the reason the Scotch whisky industry is doing so well is partly because of EU free trade arrangements, particularly with countries such as South Korea; secondly, we are already in 57 free trade agreements; and thirdly, the hon. Gentleman’s Government have failed wholeheartedly to start to negotiate just one free trade agreement, despite all the bluff and bluster about being at the front of the queue, about their happening easily, about our seamlessly entering into these wonderful free trade agreements all over the world.

I say also to the hon. Gentleman that his intervention completely contradicts his first intervention. If he votes against my amendment and we end up trading with WTO rules, and we end up without tariffs with the EU, we will have tariffs with no one and we will ride the waves—rule Britannia—setting up more than 57 free trade agreements with every country banging at our door to trade with us. He is not listening to his Foreign Secretary or Trade Secretary when they say this is becoming much more difficult, if he thinks that free trade agreements with more than 57 countries will just appear as low-hanging fruit from this magic money tree the Government seem always to produce.

[Gareth Snell]

To pick up on the point from the hon. Member for Gainsborough (Sir Edward Leigh), of course free trade is to be welcomed, but in certain sectors, such as the ceramics industry, what we need is protection against the illegal dumping of tiles and white goods, which affects our industry and puts our jobs at risk. In some sectors, the unilateral free trade and open markets that some talk about would harm employment and make my constituents poorer.

[Ian Murray]

Absolutely. Illegal dumping is something that the House will have to come back to and debate at length, because it is one of the key issues around what might happen when we leave the EU and do not have that bloc to defend us. On my hon. Friend’s point about free trade, I have a great idea for how to advance free trade in this country: we could have a customs union and a single market, and that would certainly advance free trade, would it not? Or we could come out, as the hon. Member for Gainsborough wants, and end up with no free trade agreements, rather than 57.

I wanted to mention a whole list of sectors, but I will not in the interests of time. I will briefly mention two or three of the very big ones that have raised concerns. Pharmaceuticals is a key area bringing a lot of tax and corporation tax into the public purse. The Association of the British Pharmaceutical Industry has called for free trade with the EU on terms

“equivalent to those of a full member of the Customs Union”.

I would rather believe the pharmaceuticals industry, an industry that has brought so much economically—in terms of jobs and growth—than the Minister, and it says it wants free trade on terms equivalent to those of a full member of the customs union. Well, the Government will be ruling that out tonight when they pass the motion, so what will he say to the pharmaceuticals industry, which says it needs it to trade as it does now?

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[Mr Leslie]

That may be so, but this is not an either/or situation. This is not about selling a fantastic Scottish whisky product to China or to Europe; we should be doing both. German car manufacturers and French food producers are trading exceptionally well with the far east, while remaining a member of the customs union and of the single market. My quibble with Ministers and some Government Members is that they give an impression that this is a binary, either/or arrangement. They say, “Oh well, we can ditch our trading relationships and partnerships with our nearest neighbours, because we might eventually be able to do something with China, India, Australia or Brazil,” but we should be able to do all those things. We can do all those things simultaneously, while remaining part of the greatest free trade area of any set of nations anywhere in the world, but we are about to throw that overboard for no reason resulting from the referendum, but due to Government policy.

We all obviously hope that we can salvage that relationship within the single market and the customs unions in a short transitional period, but that will take quite a lot of negotiation and depends on several different things. It is a shame that the German Government are in an unstable situation, because I suspect that that will make things far harder. I did not vote in favour of triggering article 50 because I thought that doing so was premature. I thought we should have secured a better timetable than the one we ended up with, because of course the clock ticks down. We could end up with unforeseen diplomatic wrinkles in the process and be backed into a corner, possibly finding ourselves with an inferior transition arrangement and a snap general election that nobody anticipates, least of all Conservative Members.

Let us bear in mind what this Ways and Means motion might presage for tariffs on our different imports and exports. [Interruption.] I know the Whip, the hon. Member for Beverley and Holderness (Graham Stuart), and the Minister are listening very carefully. A 7% tariff would be introduced on ceramic products. On cars, the tariff would be 10%.

[Gareth Snell]

Will my hon. Friend give way?

[Mr Leslie]

Of course I give way to my hon. Friend, who is a great campaigner for the ceramics sector.

[Gareth Snell]

I thank my hon. Friend for raising ceramics. He will know that the best ceramics in the world are made in this country, but the Ways and Means motion, which talks so much about how we will trade around the world, talks very little about the protections that can be afforded to the ceramics industry, so that it remains one of the best producers in the world. Is he, like me, worried that with this motion the ministerial team appears to be completely devoid of any intention to help this country’s manufacturing bases?

[Mr Leslie]

That, of course, is exactly why the amendments tabled by my hon. Friend the Member for Edinburgh South should be accepted and embraced by Ministers and by Labour party Front Benchers. I am sure my hon. Friend the Member for Oxford East (Anneliese Dodds) will reflect on that. We should fear such tariffs, because they might not just be one-offs. Products can sometimes cross a border multiple times and accumulate tariffs.

There would be an 11% tariff on footwear, 20% on beverages, potentially 45% on cereals and 50% on meat products. Those are serious impediments to some major industries in the United Kingdom. We can prepare for a tariff regime, but as stated in the amendments tabled by my hon. Friend the Member for Edinburgh South, we do not wish to impose tariffs on goods traded with our nearest neighbours in the European Union. In essence, we want to replicate the customs union arrangement we currently have.

I am delighted with the amendments, and I want to ensure the House has the opportunity to voice support for them this evening. It is a shame that, in Committee on the European Union (Withdrawal) Bill, the amendments on the customs union have not been selected, so we will not get a chance to vote on customs union issues in Committee. In many ways, we now have an opportunity to do so.

Taxation (Cross-border Trade) Bill

Gareth Snell Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

Let me start by commending the work of the Manufacturing Trade Remedies Alliance, an organisation that is being serviced in a secretariat format by the Ceramics Confederation in my constituency. Working with a number of other trade bodies and trade unions, it has put together comprehensive work to try to make the Bill better. It is not seeking to torpedo the Bill, or to say that the status quo is what we should have. It has genuinely tried to engage to highlight the practical problems with the Bill and to propose solutions that it knows, both as workers and as employers, will benefit its manufacturing industry. I just wanted to put that on the record.

I wish to commend the hon. Member for Aberdeen North (Kirsty Blackman) for her speech, which covered, although in some depth, a number of quite technical points. This is where we are getting to in the Brexit negotiations: the time of painting in primary colours has almost gone, and we are now talking about the individual details that mean so much to our constituents. In my constituency, in Stoke-on-Trent, in the heart of the potteries, no more broadly will the impact of trade remedies and a proper customs arrangement be felt than in the ceramics industry.

In my constituency, around 5,000 jobs are directly related to manufacturing. Across the city, there are 15,000 such jobs, and even more when we tie in the supply chains and support services that make those industries flourish. Madam Deputy Speaker, if you go to any decent hotel around the world, to our own Tea Room, or to any high-class restaurant and turn over the plate, you will undoubtedly see, stamped with pride on the back of that piece of ceramic, “Made in Stoke-on-Trent” by Steelite, Churchill or Dudson. Those companies have been an ambassador for British business around the world for many years.

Only today in our local newspaper, The Sentinel, Jon Cameron from Steelite noted that 75% of every product that he makes is exported around the world. Therefore, the free trade arrangements that we have around the world, some of which are secured through the European Union, are important because they are about jobs in our constituency and jobs in our city. The hon. Member for Walsall North (Eddie Hughes) asked about South Korea. South Korea is one of the largest emerging markets for British ceramics in the world, and we are increasingly selling it more and more tableware and tiles than anywhere else. It is important that we recognise that countries that may seem obscure for some parts of the broader trade arrangements have huge impacts on smaller manufacturing areas where exports are becoming an increasingly important part of what we do.

What I wish to focus on today is the arrangements for market trade remedies. At the moment, the ceramics industry has a certain level of protection via the EU’s market protection arrangements, which affect tableware and tiles. Both are being looked at right now. They are being renewed through the European Parliament, so they are being scrutinised and looked at. The intention is that, where we know that there are market distortions caused by non-market economy countries such as China and Russia, the playing field is levelled.

We talk about free trade, but we should also be talking about fair trade. It is not fair on British manufacturing if Chinese companies are able to produce below-market value, cheap, low-quality tableware, import it into the UK, undermine the local manufacturing base and then distort the market and get away with it. Such practices cause job losses in Stoke-on-Trent and do serious long-term damage to the local market and the local industry. They also mean that, essentially, we are handing over domestic production to Chinese companies. What happens then? Once those companies have driven local producers out of the market, they put up their own prices, and suddenly there is no alternative. The next time I go on holiday, I do not want to turn over my plate and see that it is not made in Stoke-on-Trent. For me, that would be a symbol that we have got it wrong in terms of how we approach British manufacturing.

One in seven of the jobs in my constituency is linked to manufacturing, so making sure that we have those correct protections in place is vital. Across my neighbouring constituency of Stoke-on-Trent North and in Kidsgrove, nearly 19% of the workforce are involved in manufacturing. There are still parts of our country where manufacturing is the fundamental base of the work that we do. Making sure that we have those correct protections in place is vital to ensuring that we still have a manufacturing base that we are proud of in Britain.

Under schedule 4, the Bill will provide a number of mechanisms for the Manufacturing Trade Remedies Alliance, but, unfortunately, they are lacking. This is not a political point; it is a point of fact. As the hon. Member for Aberdeen North pointed out, they do not include a system for how we calculate injury from non-market economy countries. They do not point out how we calculate injury. The Bill commits us to the mandatory lesser duty rule, which is something that the EU is moving away from. It is looking at a conditional lesser duty rule.

The lesser duty rule basically says that, if we can demonstrate that there is injury to our market because of subsidy by a non-market economy country’s activities, we will only seek to remedy the lesser of those two injuries. We may still have goods being imported into our country below market value, distorting our market in a way that is unfair and we will be happy to accept that because it is the lesser of the two duties. That is fundamentally wrong. It is something that the EU is moving away from. We could easily have adopted the wording that was chosen by the EU and put it into the Bill, because it was supported by this Government in the European Council and by our MEPs across the piece.

[Mr Jim Cunningham]

This is not necessarily on ceramics, but when it comes to research and development for industry, the United States uses the defence budget. Does my hon. Friend agree that that is what we are up against if we pull out of the single market?

[Gareth Snell]

My hon. Friend is trying to tempt me down a particular course of discussion around single market membership, which I do not really wish to address as part of the Bill, but I do understand his point. In this Bill, not only do we have a set of Trade Remedies Authority procedures that are not particularly well defined and an attempt to wed ourselves to a mandatory lesser duty rule, we are also seeking to include an economic interest test—again, something that very few countries use. The only time we would see either a public interest test or an economic interest test is when we have multinational organisations such as the EU. We will not be in that position, yet we will be wedding ourselves to an extra layer of bureaucracy and complication to our trade remedy process that does not necessarily give the best outcome for British industry.

Unfortunately, there are a lot of the areas where this Parliament and this House should have some right of scrutiny, but where that is being brushed aside. This will all be done through written ministerial guidance, secondary legislation and statutory instruments. There is nothing in the Bill that immediately gives this House and all Members present the opportunity to properly define what we want to see regarding market and trade remedies.

There are a number of matters, which I am sure will come up during Second Reading of the Trade Bill tomorrow, that relate to the membership of the Trade Remedies Authority, the way in which it will be run and its budget. There are also questions around the cost of the investigations and who will be responsible for that cost. In the EU process at the moment, the trade itself makes up a good proportion of the cost, but it does so knowing that whatever remedy it gets out will more than offset the cost of the remedy process. There is no guarantee that that is the case for whatever system we set up once we are outside the customs union and the single market. That could simply result in a situation where industry does not take the risk—where it does not want to put the funding in place to do the investigation and to work out the dumping and injury levels because it does not know what they will look like beforehand. Therefore, any remedy would be of no benefit to the industry once it has made up those initial costs, so it simply will not do it. We will have a situation where we are not able to protect British industry and British business because the system is complicated and opaque.

The Financial Secretary to the Treasury is no longer in his place, but he has agreed to meet the British Ceramic Confederation to talk about some of the issues I have raised. I am grateful to him for doing so, and I hope that he will hear sense in the comments made this evening. When we leave the EU and come out of the customs union and the single market, there are a number of things that we can do to strengthen British business, put us in a better position and demonstrate to the world that Britain is still a manufacturing nation. We still make things. Nowhere is that more evident than in Stoke-on-Trent, where we make things and sell things of great beauty and high art around the world. We can continue do that, but only if we put the protections in place. Once we are outside the EU, we will have the freedoms and flexibilities to put in place the protections we want.

Having read this Bill, I fear that the Government are trying to come up with the lowest level of protection that they possibly can, which is of interest economically to only a few groups of people and whereby the Minister himself would have the ability to override future decisions. Therefore, I support the reasoned amendment; I hope that the Government have heard my comments; and I look forward to scrutinising this legislation further.