Exiting the European Union and Global Trade

Helen Goodman Excerpts

Thursday 6th July 2017 Commons Chamber

[Dr Fox]

That is an important point. At this morning’s International Trade questions, we made the argument that being outside the common external tariff will give us freedoms to help many developing countries in a way that we are currently unable to. I hope that that will act as a spur to others taking similar measures, because we will encourage poorer countries to trade their way out of poverty and become less dependent on international aid programmes. I do not think that that is a party political issue, but the question is how best to achieve it in practice.

On the progress that has been made, we have reduced poverty levels to their lowest in history. As the world’s emerging economies have liberalised trade practices, prosperity has spread across the globe, bringing industry, jobs and wealth where once there was only deprivation. According to the World Bank, the three decades between 1981 and 2011 witnessed the single greatest decrease in material deprivation in human history. It was a truly remarkable achievement.

The Leader of the Opposition has accused the Prime Minister of following “free trade dogma”. He went on to say that this has often been pursued at the expense of the world’s most fragile economies. In fact, any economist worth their salt can see that free trade has been one of the most potent liberators of the world’s poor. Let us take India as a specific example. In 1993, about 45% of India’s population sat below the poverty line as defined by the World Bank. By 2011, it was 22%—too many, but a phenomenal achievement. It is no coincidence that, in the intervening period, India had embraced globalisation and started to liberalise its economy. It is hard to imagine an international aid programme—even one as generous as our own—that would or could have been so effective on its own.

Sadly, it is also easy to find examples of where a lack of free trade has harmed the most vulnerable. If we want to see the contrasting results of open and closed economies, we should look across from China to the Korean peninsula, where so much attention is focused today. In 1945, both North and South Korea began from a very similar base, but while South Korea was more embracing of open trade and free markets, despite any shortcomings, Pyongyang turned inwards, with the tragic consequences for its citizens that we see to this day. [Interruption.] I am happy to give way to the hon. Member for Bishop Auckland (Helen Goodman) if she thinks that North and South Korea enjoy the same living standards today.

[Helen Goodman (Bishop Auckland) (Lab)]

Of course what the right hon. Gentleman says about the situation in those two countries today is absolutely right. The point I was chuntering about was that what he described was not actually happening in South Korea in the 1960s and 1970s. A lot of the south-east Asian economies did have protection in those two decades in order to modernise and build up.

[Dr Fox]

I accept what the hon. Lady says, but that is why I specifically used the words “more embracing” of free trade and open markets. Despite the shortcomings, South Korea none the less created a far better standard of living for its people. Seoul is now at the heart of a thriving economy and, consequently, a dynamic democracy where freedom and prosperity are shared among its people. It should come as no surprise that, while 80% of South Koreans have access to the internet, less than 0.1% of North Koreans enjoy the same access. Perhaps most tragically, there is a greater than 10-year discrepancy in the life expectancy of those north and south of the demilitarised zone. That is why we recognise that trade and development form a fundamental and synergistic partnership. Trade flourishes where there are high levels of education, developed financial sectors and, hugely importantly, sound governance and minimal corruption. There is still much to do, but we would be both foolish and irresponsible to abandon the direction of travel. An open and free trading system is part of the global and national prosperity agenda.

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[Barry Gardiner]

My hon. Friend does not want to see a decline in jobs in any sector of this country. It is really not right simply to dismiss the fact that, if we do not secure friction-free, tariff-free arrangements with the European market, those jobs could be prejudiced in this country. I am sure that he would want to take cognisance of that.

Cross-border data flows are a key cornerstone of the digital economy. They help to drive UK innovation, economic growth and business efficiency through facilitating data transfers between organisations located in different countries. To help our economy grow and create jobs in the UK, we need to create a trade environment that drives innovation and positions the UK as a leader in the digital economy. techUK speaks for business when it says that the Government need to facilitate access to both the European market and the rest of the world, but this requires appropriate cross-border data flow arrangements with our different trading partners. It sounds simple. It is not.

The Transatlantic Trade and Investment Partnership negotiations on the EU’s privacy shield framework to replace the safe harbour privacy principles demonstrated that facilitating cross-border data flows between the European system and the American system is a genuine challenge that will not be addressed overnight in future free trade agreements. We cannot simply create a separate trade policy on this issue for the EU and a different one for non-EU countries. The direction we take on one influences our options on the other. Will the Minister set out what discussions he has had with industry on this and what decision, if any, he has taken about the appropriate way to go forward? He will appreciate that the issue of cross-border data flows is not just about facilitating market access. It is also about the regulatory framework to provide data protection for privacy and human rights.

The second example of the inseparability of EU trade and our policy for trade with the rest of the world relates to the future support that we provide our agricultural industry. The UK’s food and farming industry is not only important to our national identity; agriculture also contributed £9.7 billion to the UK economy in 2016. Our food and farming industry is the product of decades of shaping by the European single market and the £3 billion-plus of support from the common agricultural policy.

The EU’s combined rights and shared obligations under the WTO include a specified limit on the amount of agricultural subsidies that the EU may utilise. The UK is entitled to a share of these as part of the Brexit divorce and could, in theory, continue with a modified version of the CAP. But the Secretary of State will know that there are rumours that his Government are considering a deal whereby the UK would give up a share of its agricultural subsidies to the EU in order to secure a more favourable deal for other sectors of our economy. Will he guarantee today that our future trading relationships will not be based upon the sacrificing of British farmers and their livelihoods?

It is not just the EU that will be pressurising the UK to drop its share of agricultural subsidies. A number of countries have already expressed interest in free trade agreements with the UK on the basis of liberalising our agricultural market. Countries such as Australia, Canada, New Zealand and South Africa are active members of the Cairns Group, which is a WTO negotiating group precisely for agricultural trade liberalisation and the reduction of subsidies. Does the Secretary of State regard this liberalisation as positive for our farmers?

[Helen Goodman]

I am extremely concerned to hear what my hon. Friend is saying given that there are 400 sheep farmers in my constituency, who would be very badly affected were we to have a flood of cheap lamb imports from Australia and New Zealand. Does he agree that there can be no virtue in our destroying the hill farmers in our country to benefit the sheep farmers in wealthy countries such as Australia and New Zealand?

[Barry Gardiner]

My hon. Friend is absolutely right to point out that, were we to go on to WTO terms—from memory, the tariff rate for sheepmeat is about 44%—we would absolutely destroy the capacity of our hill farmers in particular to compete with foreign imports.

The Government need to come clean and give clarity to the British food and farming industry on our future trade policy options and what that means for the industry. It is not good enough to tell farmers that the status quo will be maintained until 2020 and then leave an abyss as to what options are available for their future. These people need a comprehensive international trade policy, and they need to know what it is.

Beyond Brexit, as the United Kingdom once again assumes competence for its own independent trade agreements, the Secretary of State must set out how he is pursuing agreements that share the benefits of globalisation more equitably. One can only wonder that this Government thought it sensible to embark upon a new industrial strategy without first publishing a White Paper on trade, so will he publish a trade White Paper? He has introduced a trade Bill in the Queen’s Speech but, as of this moment, he has not set out to Parliament or to business any policy on which to base it.

The Secretary of State has been travelling around the world holding preliminary talks with his counterparts. In fact, he has recently returned from a visit to the USA. When the Prime Minister first announced the start of preliminary talks with the USA, the American Farm Bureau Federation wasted no time in confirming that it would seek food hygiene changes in any UK-US deal, namely to end restrictions on US exports of chlorine-washed chicken and hormone-grown beef. Will the Secretary of State confirm to us that, in any talks about future trade deals, the sovereignty of our food safety and environmental protection standards will be not be sacrificed in the name of regulatory harmonisation?

An industrial strategy and international trade White Paper should have come together precisely because of the interdependence of trade, job creation, and economic growth. That makes Labour Members fearful that the Government have not done the proper assessment of the danger that future trade arrangements could pose for job losses and wage depression. The Government have put the cart before the horse. A trade White Paper should set out what the UK’s future policy on trade defence instruments will be. The EU currently has in place a series of trade defence measures, such as anti-dumping measures against China—and, to a lesser degree, India and Malaysia—on steel, other metals, and solar panels. The UK has famously opposed such measures at the EU. Now that we will be able to set our own trade policy, the Government must tell us whether they will stick to that line. If they do not plan to introduce trade defence measures, they need to set out whether and how they will protect and support sensitive sectors such as the steel industry and the solar panel industry from cheap imports.

The Government must also weigh whether they can afford to take a tough stance with countries like China and India with which they will be looking to conclude trade deals—or will they sell out our steel sector and others? The UK steel sector is in an existential crisis. My hon. Friend the Member for Middlesbrough South and East Cleveland, who chaired the all-party parliamentary group on steel, and my hon. Friend the Member for Aberavon (Stephen Kinnock), who launched the “Steel 2020” report earlier this year alongside my hon. Friend the Member for Redcar (Anna Turley), expressed outrage at the Government’s leaked memo that suggested steel would not be a priority industry post Brexit, threatening to destroy the very livelihoods of communities across England and south Wales. Similar concerns were raised by my hon. Friend the Member for Stoke-on-Trent Central, as the ceramics industry in the Potteries faces increasing competition from Chinese dumping on world markets. The British Government have for the past number of years been blocking efforts by the EU to introduce the sort of anti-dumping measures employed by the US by repeatedly exercising a veto and actively encouraging a blocking group of other nations. One official in Brussels is reported as saying:

“The British are sacrificing an entire European industry to say thank you to China for signing up to the nuclear power project at Hinkley Point, and pretending it is about free trade.”

It is right that we reach out to our international counterparts, but travelling around the world to hold “pre-negotiations” is no substitute for clear policy that sets out what our negotiating armoury is. An international trade White Paper should set out the Government’s principles—a clear plan of what the UK intends to achieve through future trade negotiations.

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[Helen Goodman (Bishop Auckland) (Lab)]

I begin, of course, by congratulating the hon. Member for Hornchurch and Upminster (Julia Dockerill) on her maiden speech. She demonstrated how attached she feels to her constituency, and that really is the best start for being an effective Member of Parliament. It also shows what progress we are making when a Member can stand up and say that they are the second woman Member in their constituency.

This is the first time I have spoken since the general election and, of course, I want to begin by thanking my constituents for taking part in the election—especially those who voted Labour. The majority of my constituents voted to leave the European Union in the referendum last year, and when I discuss that with them they tell me that they want a Brexit that controls immigration but boosts exports and secures long-term jobs, particularly in manufacturing. What they like about the European Union is the social chapter, the common market—what we call the customs union—the environmental protections, co-operation on research and development, and the European arrest warrant.

Their views on migration mean that I have to say that I think that it is inevitable that as part of leaving the European Union, we will have to leave the single market, but I think the issues on the customs union are rather different. I was pleased by the speech made by my hon. Friend the Member for Brent North (Barry Gardiner) and the remarks made by my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) about keeping the customs union on the table. I do not know why the Chancellor was suggesting the other day that there are legal difficulties with that; Turkey belongs to the customs union and not the European Union and that was the position that this country was in between 1975 and 1992. It offers not just tariff-free trade but barrier-free trade.

When I went to talk to the North East England chamber of commerce, its members were particularly worried about how firms would handle the rules of origin if we were to leave the customs union. It is not enough for HMRC to have a computer system. That does not deal with the bureaucracy, because each individual firm has to apply to get the status they need to use the system. That is immensely bureaucratic and time-consuming, and the OECD has found that that increases costs by about 25%.

Another very important thing is what we will do about all the European agencies—the Government have not been clear about that at all. In my constituency there is a Glaxo plant that employs 1,000 people and produces half a million packs of drugs a day. I have been working with Glaxo, both locally and nationally, on what kind of Brexit deal would be good for the pharmaceutical industry. It wants a level playing field with the other drugs manufacturers across Europe, and that means staying inside the European Medicines Agency. The agency has been located in London because Britain is one of the best producers of pharmaceuticals, and we helped to draft almost all the rules that the agency applies. Glaxo has sent me its paper on priorities for the UK’s exit, in which it said:

“Any UK withdrawal from the EU that ends or damages the UK’s ability to benefit from the EU framework”—

the medicines agency framework—

“could significantly impact patients, and hinder GSK’s operations in the UK and across the EU. Any future regulatory processes…must avoid introducing delays, significant new costs or unpredictable outcomes.

It is critical that an agreement is reached early in negotiations between the UK and EU that the European regulatory framework will continue to apply to medicines, vaccines, medical devices and cosmetics that are already authorised or undergoing clinical trials, to ensure that supply or development of these products is maintained without disruption.”

[Vicky Ford]

I am interested in what the hon. Lady says about medicines and vaccines. Yes, the mutual recognition principle is extremely helpful in allowing British companies to work with others across Europe and a single market for medicines, but I understand there are issues that make it more difficult for those same pharmaceutical developers to share data with, say, American counterparts. Under the comprehensive economic and trade agreement, which as I have said before in the House is not perfect for the UK, there are potential benefits to mutual recognition not only with Europe but with other countries. Does she not agree that we want both types of agreement if possible?

[Helen Goodman]

What we really want is minimal regulatory costs on businesses. That means that we should stay in the European Medicines Agency. If we leave and have to set up our own, we will be imposing a third regulatory system on them, and as I am sure the hon. Lady knows, that would be immensely expensive. We have a lot of exports and jobs in the sector. I tabled a lot of parliamentary questions to the Department before the general election and got content-free answers. I now want Ministers to be clear about what they will do not just about the European Medicines Agency but about the 40 other agencies we belong to, ranging from aviation safety to plant health, all of which facilitate trade on a level playing field for British businesses.

The second group of people I am concerned about, as I pointed out in my intervention, are hill farmers—I have 400 hill farmers. After Brexit, it seems that three things will matter for them: the new trade rules; the support systems; and the regulations on food safety and the environment. Again, we have had no clarity from Ministers. If they agree to the import of meat with lower animal welfare and consumer safety standards and lower prices, they could decimate British agriculture, which would be a disaster for farmers and a disaster for the environment.

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[The Minister for Trade and Investment (Greg Hands)]

May I thank Members for what has been a very useful debate? I think that 17 Members have spoken in the first general trade debate since the formation of the Department last summer. Let us consider for a moment the significance of this new Department of State. It was 10 years ago, almost to this month, that Labour abolished the word “trade” from the name of every Government Department. One of Gordon Brown’s very first decisions was to eliminate entirely the word “trade”. The creation of this new Department shows the determination of our Prime Minister to put trade at the heart of Government. May I praise the free trade vision that my right hon. Friend the Secretary of State outlined earlier today?

First, let me say a few words on today’s foreign direct investment data, showing a record-breaking number of FDI projects coming into the UK in the financial year just finished. Inward investment into the UK is estimated to have safeguarded nearly 108,000 jobs last year. Our trade officials have helped to secure more deals than ever before—up 7%—so a big thank you to all our staff around the world.

May I just remind Labour Members that the trade deficit, which they talked about at one or two points today, is down considerably since we inherited the position in 2010—down a considerable £5.6 billion? At the same time, exports to the EU have increased by 11.3%, but exports outside the European Union have increased by 34.6%, which is a very significant figure.

We had calls from the Labour Opposition for clarity from the Government—this from a party whose leader calls free trade a dogma. The hon. Member for Brent North (Barry Gardiner) says that Labour Members are “principled free traders”. We remember his clarity on the comprehensive economic and trade agreement. On the Monday in Committee, he supported CETA, but on the Tuesday, he called for a Commons vote on it on a deferred Division. Then on the Wednesday, he urged his party to vote down CETA, but it rebelled against him by a margin of 85 to 67. He says he is in favour of free trade but he seems to be against all free trade deals.

There is one final point that the hon. Gentleman might want to note. He talked about his hon. Friend for Middlesbrough South and East Cleveland. Now, he might not have been watching on 8 June, but the Member for Middlesbrough South and East Cleveland is now on the Conservative Benches and is now my hon. Friend, not the hon. Gentleman’s.

We had some excellent maiden speeches, including a first-class maiden speech from my hon. Friend the Member for Hornchurch and Upminster (Julia Dockerill). She spoke with limited notes, which was welcome, and paid tribute to Dame Angela Watkinson, a friend of mine and many others. My hon. Friend talked eloquently about Upminster, a place I know well as its name is on the front of every single train I take each morning on the District line. I rarely get there, but I am looking forward to visiting one day. She mentioned the sale of council homes in London and how important that still is today, and she presented a positive and uplifting vision for the future of this great country. We thank her and welcome her.

The hon. Member for Lincoln (Ms Lee) talked about her predecessors, whom I knew well, Gillian Merron and Karl MᶜCartney. She did not mention another predecessor, Dick Taverne, who of course left Labour to join the Social Democratic party. From the content of her speech, it sounded like there is little chance of that happening in her case. I congratulate her on her speech and welcome her to this place.

We heard from the new hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone)—one of the longest constituency names and the second largest constituency, too. He clearly knows it well and I am sure that his predecessor but one, the late Charles Kennedy, would have been very proud of his speech in this House today.

We heard from the new hon. Member for Midlothian (Danielle Rowley), who made an accomplished maiden speech. It is refreshing to hear Scottish accents coming back to the Labour Benches. She made some good points on welfare and I think we would all agree that people need a hand up, not a handout.

We heard from my hon. Friend the Member for Stone (Sir William Cash), my right hon. Friend the Member for Wantage (Mr Vaizey) and my hon. Friends the Members for Rochford and Southend East (James Duddridge) and for Gloucester (Richard Graham). My hon. Friend the Member for Stone mentioned the Labour split on the single market. I have seen 11 Queen’s Speeches in this House, and although I have occasionally seen a Government rebellion on an Opposition amendment, I have to say that I have never seen an Opposition rebellion on an Opposition amendment—

[Helen Goodman]

rose—

[Greg Hands]

I will not take an intervention, as there is no time.

We heard an entertaining speech from my right hon. Friend the Member for Wantage, who praised me for my language skills—so vielen Dank. He asked in particular about countries—we have 10 working groups covering 15 countries. He talked about the timetable and the analysis of the increase of GDP, and it is impossible to tell at the moment, as it is impossible to know what will be in those agreements.

My hon. Friend the Member for Rochford and Southend East rightly pointed out the increase in value of our exports outside the EU since he and I were first elected in 2005, rising from 48% to 56%. He is also right on the trade deficit.

My hon. Friend the Member for Gloucester was right to say that, whether we campaigned for leave or remain, what is important is to seek the best outcome for the UK as regards success in the negotiations. I praise him for the work he does as our trade envoy in south-east Asia, as well as on the question of the importance of China.

My hon. Friends the Members for Bromley and Chislehurst (Robert Neill) and for Hitchin and Harpenden (Bim Afolami) mentioned the importance of financial services. They are absolutely right, but here we are in a strong position. The City needs access to European customers, but European borrowers and investors also need access to the largest capital market in the European time zone, which is the City of London. That is very important to remember.

From the Opposition Benches, we have heard from the right hon. Member for Carshalton and Wallington (Tom Brake) and the hon. Members for Bishop Auckland (Helen Goodman), for West Bromwich West (Mr Bailey) and for City of Chester (Christian Matheson). They were all good speeches.

Trade is now back at the heart of Government policy making and I hope that all Members will agree that it is back where it belongs. For the first time, the three pillars of trade, finance promotion and policy fall under one roof, allowing us to approach trade in the most co-ordinated way possible. Our three objectives are worth reiterating and their simplicity should not detract from their significance. We will promote British exports the world over, encourage both inward and outward investment and build the strongest possible trading framework for the UK post-Brexit.

Finally, this country has a great free trading future. I am optimistic about a good outcome for the Brexit negotiations and I and the whole Department are looking forward to growing trade and investment in the years to come.

Question put and agreed to.

Resolved,

That this House has considered Exiting the European Union and global trade.