UK-India Trade

Geoffrey Clifton-Brown Excerpts

Wednesday 25th January 2012 Westminster Hall

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Thank you very much, Mr Walker, for allowing me to catch your eye and speak in this debate. I will follow the lead of my hon. Friend the Member for Banbury (Tony Baldry) and make a few points briefly. I hope that someone else might be able to speak before the wind-ups begin.

The first thing to note is that I think that this is one of the first parliamentary debates that we have had on trade in the past five years, and the popularity of this debate shows the importance of trade. As Britain learned in the 17th and 18th centuries, trade is not a zero-sum game. The more that nations trade, the more that they create prosperity and jobs, so trade is hugely important.

The problem for us is that 65% of our trade is with countries in north America and Europe, but between now and 2020, the gross domestic product of those countries as a proportion of world GDP will decline by 40%. By contrast, between now and 2030, GDP in the BRIC countries—Brazil, Russia, India and China—as a proportion of world GDP will increase by 40%. Basically, we are not trading with the right people; we need to increase our trade with the BRIC countries, whose economies are growing.

I entirely agree with my hon. Friend the Member for Banbury that both UK Trade & Investment and the Department for Business, Innovation and Skills need to do a proper job of work to determine why the UK’s trade deficit with India has increased hugely during the past 10 years, as demonstrated by the statistics that the hon. Member for Brent North (Barry Gardiner) has just cited. UKTI needs to benchmark itself against rival successful operations around the world, such as the trade organisations in Germany and Hong Kong, to find out what it could do better to encourage more trade with India and other countries.

Trade is a two-way thing; it is not only about exporting but about foreign direct investment. One or two Members, including my hon. Friend the Member for Stafford (Jeremy Lefroy), have mentioned FDI already. FDI is incredibly important to this country. Why did Li Ka-shing, the Hong Kong property tycoon, invest in Felixstowe, our biggest port, and transform our port industry? Why did the Japanese invest in our car makers, effectively bailing them out, in the 1960s and 1970s? FDI—inward investment—is incredibly important for jobs. Not only do we need to encourage more FDI, but we need to encourage those foreign companies that have already invested here to invest more here than they have already.

I want to mention education. My right hon. Friend the Minister will be interested to know that 38,500 Indian students came here to study last year, but guess what the number was for China: 110,000. In India, 600 million people are under the age of 30—a demographic that will propel India into the world lead for centuries to come. Consequently, we should pay much more attention to educational links with India. I went to the university of Madras, which is one of the “Nehru five” universities. It is emerging on the world stage in terms of its research, including the number of patents that it files. Indian higher education is becoming a really important factor in the world.

I also want to pick up on the point made by my hon. Friend the Member for Cities of London and Westminster (Mark Field) that unless we maintain internationally competitive infrastructure, we will not remain internationally competitive in trade. I am afraid to say that the Government need to rethink High Speed 2. There is nothing wrong with HS2, but there is nothing right with it either. There are much better solutions to the transport problem. We need to think of a holistic approach, which incorporates connectivity right around the country and getting freight on to the railways, which in turn incorporates getting people out of their cars. Having internationally competitive infrastructure is really important.

We also need to think about trade barriers, both here and in India. When I was in India in 2008, there was no doubt that there were still considerable trade barriers in India for our legal services, accountancy services, insurance and banking. Everyone is quite right that, when Manmohan Singh comes to this country later this year, we need to erase those trade restrictions with his country.

Equally, we must retain our own trading competitiveness. There is no doubt that our immigration structures are problematic. I am not advocating to my right hon. Friend the Minister that we should join the Schengen agreement, but we must recognise it as a fact that is limiting our trade. Why did Huawei, which is now the second largest manufacturing company in the world, move its European headquarters from the UK to Dusseldorf? It was because of the Schengen arrangements. We must recognise the fact that we have a problem with our visa system.

Finally, I just want to say again that trade is vital to our country. If we are going to get out of the economic problems that we are in, we must reorient our trade with the rest of the world. Trade is good for our country, and for our companies as well. Between 1996 and 2004, companies that traded increased their productivity by 34% and the average figures for those companies that did not trade showed that their productivity decreased by 7%. There is an overwhelming and compelling case for trade. We need to have more of these debates, and this is an advanced bid for the Backbench Business Committee to consider having more debates on trade.