International Trade and Geopolitics

Gareth Thomas Excerpts

Thursday 20th April 2023 Commons Chamber

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I join the House in congratulating my hon. Friend the Member for Bristol North West (Darren Jones), the Chair of the Business, Energy and Industrial Strategy Committee, on securing this debate. I am sure that the whole House would agree that he chairs the Select Committee with considerable distinction. The way that he approached this debate and his thoughtful and provocative speech—provocative in the best sense—are testament to him and to his expertise in this area.

We had a very interesting contribution from my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams). My hon. Friend the Member for Liverpool, Walton (Dan Carden) spoke in particular about the significance of trade with Mexico and Latin America—a matter that no one else had focused on until that point. We were lucky to have the hon. Member for North East Bedfordshire (Richard Fuller) in the Chamber. The whole House will have cherished his contribution as there was no other Conservative Member available. We were 30 minutes into his speech when he made a particularly interesting point on the trade and geopolitical significance of Africa, which I want to return to, if I can, later in my speech. The hon. Member for Bath (Wera Hobhouse) underlined the fundamental importance of considering the climate emergency for our trade and geopolitical agenda, and she was absolutely right to do so.

The prediction by the Office for Budget Responsibility that exports will plummet this year, will drop again next year, and will manage only anaemic growth in the next three years underscores the importance of this debate and the 13 years of economic failure that have seen trade targets repeatedly missed, rampant inflation, taxes through the roof and huge numbers of businesses in real difficulty.

The OECD expects the UK to suffer the worst performance on economic growth this year of any G7 country. As my hon. Friend the Member for Bristol North West alluded to in his opening remarks, today’s global figures from the UN specialist trade body revealed that Britain has dropped out of the world’s top five for exports of goods and services. That underlines the fact that there is still no White Paper on trade; no clear plan to boost green trade; no industrial strategy to help address supply chain issues; and certainly no consultation on what Britain’s strategic trade goals should be, or what funding and other resources should be allocated to support a UK-wide trade strategy that delivers for all the nations and regions of the UK. That was a point that the hon. Member for Gordon (Richard Thomson) also made.

Our trade relationship with our nearest neighbours remains in serious need of improvement. It is clear that the much-promised trade deal with the United States will not happen while the current crop of Ministers are in post. Furthermore, the Indo-Pacific tilt, at least in trade terms, does not look like being the great solution to our economic woes that various Conservative Prime Ministers once promised. Progress on a trade deal with India seems to have been considerably hampered by tensions between the Home Office and the Department for Business and Trade, and Africa has largely been ignored.

The invasion of Ukraine has had considerable trade and geopolitical consequences. It is a reminder of the importance of our allies in eastern Europe; of working through NATO; of the continuing significance of global supply chains; and of maintaining close relationships with both America and the European Union, even while we look for other trade opportunities, too.

My hon. Friend the Member for Bristol North West made the point that Europe remains our biggest, nearest market. It is home to crucial allies, and making Brexit work better ought to be a fundamental strategic priority for both trade and geopolitical reasons in the coming months. It is clear that the Trade and Cooperation Agreement, which the first of last year’s Prime Ministers negotiated with the European Union, is not working, as we were once promised that it would.

Three quarters of firms that trade with Europe and that are members of the British Chambers of Commerce say that the Government’s trade deal is not helping them increase sales or grow their businesses. The Institute of Directors has reported similar problems, too. As my hon. Friend the Member for Middlesbrough (Andy McDonald) alluded to in one of his early interventions, the rules of origin, which are expected to get tighter at the start of next year, pose real problems for the automotive industry. It would be good to hear from the Minister on how she and her colleagues intend to address those points.

Although Ministers may like to ignore these difficulties in general, Europe remains our biggest export market. Therefore, while progress on the Windsor framework is welcome, if we are to make Brexit work better, Ministers need a clear plan to make trading with the European Union less cumbersome and difficult, in particular for small and medium-sized businesses. A veterinary agreement with the European Union would be a good starting point, helping to reduce the considerable red tape and trade barriers that many of our agri-exporters now face. More direct Government assistance to support different business groups negotiate mutual recognition agreements of professional qualifications would be sensible, too. We also need to find new, flexible labour mobility arrangements for those making short-term work trips and for musicians and artists seeking short-term visas to tour within the EU. We also need to resolve the position on Britain’s data adequacy status, so that there is no threat to UK digital services companies’ ability to compete in the EU.

The failure to negotiate a trade deal with the US, as Conservative Members promised in their 2019 manifesto would be struck, is being compounded by the failure to grasp the scale of the potential risk to British business from the US Inflation Reduction Act, while the EU’s own response, published in February, could further divert green investment from the UK unless Ministers act. I hope we will hear from the Minister how her Department is responding to those threats.

I welcome the apparent progress made on the Indo-Pacific tilt and the Government’s decision to accede to the CPTPP, albeit we will need to examine the agreement in considerable detail. The Secretary of State’s comments on Monday suggest that she may well have made very significant concessions to secure that accession agreement. The Minister will know only too well that, while I am sure membership of the CTPPP will bring benefits in geopolitical terms, it is not clear that the trade benefits will be huge. The Government’s own predictions suggest it will add just 0.08% to our GDP, so it will not make up for the failure to deliver a trade deal with Europe or all the extra red tape, customs deals and higher costs that the poorly negotiated deal with the EU has delivered.

It is striking, too, that we have still not seen a trade deal signed with India, despite the promises that it would be done by Diwali last year. The concern on India is that other countries are racing ahead to get their business interests in front of Indian Ministers. With India set to be the world’s third largest economy by 2030, we need to step up significantly our trade efforts there.

Why, for example, is there not a greater effort to engage with Gujarat, where the fastest growth is taking place? We have a large Gujarati diaspora in the UK, with many highly successful businesses that already have links to Gujarat, yet we appear to be doing very little to capitalise on that knowledge and expertise. Other countries, notably France, have significantly stepped up their diplomatic and trade efforts with India in recent years. I have to say that there has been a notable failure of late by Ministers to back up negotiations to secure trade deals with the resources to help businesses to take advantage of all the claimed benefits of those deals.

Lastly, on Africa—a point that the hon. Member for North East Bedfordshire brought to the attention of the House—the lack of trade and geopolitical attention that Ministers are giving to that remarkable continent is striking. The cuts in development assistance, in particular cutting back on key programmes of trade assistance such as the TradeMark Africa programme, have created the sense that Britain is less interested than it once was in Africa’s future.

As my right hon. Friend the Member for East Ham (Sir Stephen Timms) constantly reminds me, the International Monetary Fund says that in just eight years’ time, fully half of all the young people entering the labour market globally will be in Africa. The continent still faces huge challenges, notably on the climate crisis, poverty and conflict, but the establishment of the African continental free trade area is an indicator of increasing African self-confidence, and new partnerships to support mutual growth and development are surely in Britain’s long-term interest.

The Conservatives’ record on trade is one of failure and broken promises, a point my hon. Friend the Member for Bristol North West made explicitly in his excellent opening contribution. In 2012 the Conservative party pledged to reach £1 trillion of exports by 2020. Six Chancellors and four Prime Ministers later, the OBR is predicting that the target will be hit 15 years late. I am very much an optimist about our country—Britain will do better—but I gently suggest to the House that it will take a Labour Government to get Britain back on the road to the brighter and better future that the British people most definitely deserve.