Exiting the European Union and Global Trade

James Duddridge Excerpts

Thursday 6th July 2017 Commons Chamber

[James Duddridge (Rochford and Southend East) (Con)]

Quite often one hears in the press, and sometimes erroneously in this House, talk of “falling back” on WTO rules. Is that not a falsehood? WTO rules form the basis of any agreement going forward; they are not something to fall back on if there is no deal.

[Dr Fox]

Indeed, WTO rules are the basis on which the world trades. On top of the basic WTO rules and the most favoured nation status that they represent, we have a number of agreements that give us, in effect, exemptions. However, we trade freely with countries where we do not have a specific free trade agreement. At the present time, the United States is worth just under 20% of our exports—we do not have a specific free trade agreement, but we can trade very freely. That is not to say that through FTAs or mutual recognition agreements, mutual co-operation agreements and the other tools available to us, we cannot improve the functioning of the global trading system. We need to do so, and the Department for International Trade has a highly skilled team dedicated to the technical rectification of our WTO schedules. We are collaborating with businesses and officials within Whitehall and the WTO to ensure that our transition to independent membership is both smooth and fully understood by our trading partners.

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[Barry Gardiner (Brent North) (Lab)]

First, I join the Secretary of State in paying tribute to PC Keith Palmer and all the other victims who suffered on that fateful day in March when this debate was last scheduled.

The Secretary of State is at the Dispatch Box fielding for the first time since the creation of his Department almost a year ago a debate on Government trade policy in Government time. It is not exactly normal practice for Trade Ministers to hasten to the Dispatch Box when the country has just posted one of the worst sets of balance of payments figures in its recorded history. Although I admire the right hon. Gentleman’s chutzpah, I am not entirely convinced about his timing. The figures released just last week by the Office for National Statistics show that in quarter 1, the UK’s current account deficit was £16.9 billion—a widening of £4.8 billion from a deficit of £12.1 billion in the previous quarter—most of which is due to the widening of the trade deficit. Despite sterling being so low, exports increased by only £1.7 billion, whereas imported goods increased by £4.3 billion—a widening of £2.6 billion.

[James Duddridge]

When we are importing more than we are exporting, surely it is easier to get a deal with our European colleagues, whose interest appears to be in continuing to export to us.

[Barry Gardiner]

I want us to get a deal. Of course we want the best deal for this country, but the hon. Gentleman has to take on board the fact that since the referendum decision our country’s currency has depreciated by 12%. I trust that that is not something that he feels sanguine about.

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[Mr Vaizey]

That is the point. The idea that we can take free trade deals off the shelf and not face lobbying from different sectors of our economy on the possible threats to their position from a free trade deal—the idea that all sectors of our economy are crying out for free trade deals—is a misconception. These are extremely complicated arrangements. [Interruption.] My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) says that we do not have a free trade deal with the EU, but at least we have access to the market without quotas, tariffs or non-tariff barriers.

Remember that free trade deals are constructed by human beings. This week I met a former US trade negotiator who is well plugged into the entire scene and who told me that the US trade representative organisation is already at full stretch and is demoralised by President Trump canning the Trans-Pacific Partnership. It has to renegotiate the North American Free Trade Agreement, and the Transatlantic Trade and Investment Partnership has been put back on the agenda. When President Obama said that we were at the back of the queue, the language may have been unfortunate but we should be realistic about where we are in the line with the US and realistic about the capacity of the US Administration to negotiate with us.

I have a few asks of the Minister, who is free to reply in German or Russian, as he sees fit, to show his capacity, for which I have nothing but admiration. Which countries are we targeting, and why have we chosen them? I know that we have 10 trade groups. I would like to hear his thoughts on a timetable for free trade deals with those countries. Is there any economic analysis of what the growth of GDP will be once those free trade deals have been negotiated?

I am a great supporter of the work of the Secretary of State for International Trade, who mentioned the welcome inward investment we have seen in the past year or so. As a former Minister with responsibility for the digital industries, I particularly welcome the investment by companies such as Facebook and Google. There are many, many issues, but we welcome their inward investment. Does the Minister agree that that inward investment is predicated on their ability to recruit people with specialist abilities?

[James Duddridge]

From around the world.

[Mr Vaizey]

Will the Minister assure us that companies that want to invest in the UK will, as my hon. Friend the Member for Rochford and Southend East (James Duddridge) says, be able to continue recruiting people with the right skills both from the European Union and from across the world? One of the benefits of the single market is that for a person recruited from the European Union, having their partner and family members able to come here to work is a huge incentive.

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[James Duddridge (Rochford and Southend East) (Con)]

I will shock the Front Benchers by saying that I agree with absolutely everything the hon. Member for Bishop Auckland (Helen Goodman) said—about my hon. Friend the Member for Hornchurch and Upminster (Julia Dockerill), who is indeed truly fabulous. Hon. Friends and new friends, we all cuddled around her in what is now known as doughnut. I am used to being part of a doughnut, but never before have I been called a penguin. None the less, I have waddled back to my usual place and am happy to have caught your eye in this Brexit debate, Madam Deputy Speaker.

I am proud to have supported Brexit. Although there were many reasons to support Brexit, and for many of my constituents the principal one was about taking back control of our laws, mine was a different one—the economic future of Britain. Before being elected to this place, I was a banker in Africa and the City. I ran banks in various African countries, and I saw that the backbone of those countries and the banks was commodities and trade in goods. I therefore have some experience with trade finance, letters of credit, debt financing, raising finance, export guarantees and doing business and trading across different territories. As such, I think it is quite good that this Parliament is not to be jam-packed full of detailed legislation beyond Brexit. Brexit will be complicated enough.

I believe we will look back with a degree of selective memory and not see Brexit as a great revolution. It feels problematic at the moment, and I feel for the Minister for Trade and Investment, who has day-to-day responsibility for delivering Brexit. In many ways I am grateful to be on the Back Benches, having campaigned for Brexit, so that I can let him do some of the detailed lifting, but over the next 18 months I would like to do more on trade and customs-related Bills, both in the Chamber and in Committee.

My hon. Friend the Member for Stone (Sir William Cash) gave us a history lesson, but an A-level history student might be confused by some of the debates we have here. A student looking at the corn laws and gunboat diplomacy—attempts to build up trade and markets—and reading Adam Smith would see a trajectory of ever more open free trade and that being seen as a good thing, separate from capitalism and sometimes having its wings clipped. In a time of global uncertainty about quantitative easing, sub-prime lending, eurozone collapse and so on, perhaps my greatest concern is Donald Trump’s comments on trade. The big nation states, the G7 or G20, need to take responsibility and look at free trade not only for our own benefit but for the benefit of others, particularly in the Commonwealth and Africa, which I will discuss if there is time.

Since 2005, when I became an MP, the proportion of our goods exported to places outside Europe has increased from 48% to 56%. As speakers on both sides of the House have noted, the growth areas are outside the Europe Union. In an intervention on the hon. Member for Brent North (Barry Gardiner), I highlighted the fact that we import more than we export. Understandably, we in the UK look at Brexit from our own standpoint, because it was we who voted on it and we who wanted it as a nation, although there were clearly a lot of debates across all the parties. If we look at it more from the perspective of continental Europe—from the point of view of exporters of German BMWs, or of prosecco and champagne, which the Foreign Secretary discussed—Brexit could seem a lot closer to being delivered.

I welcome the Department’s meeting of Commonwealth Trade Ministers. I was fortunate enough to attend some of the earlier meetings. There is a real appetite for refreshing relationships with the Commonwealth. It should have been happening anyway, but Brexit gives us a further opportunity. I am glad that in Africa more generally, we are taking a step back from the European partnership agreements. I encourage the Government, especially the Department for International Trade, to pursue policies to grow countries out of poverty. That has a great impact on us by cutting migration and terrorism, as well on the people who escape poverty. To be frank, that is as important, if not more so, than getting the short-term benefit of export trade. There is a good opportunity there.

I have some concerns about how the Department is organised, at a time when the Foreign Office is joining up with the Department for International Development at ministerial level to encourage a united regional and country-by-country approach. The trade envoys will have a country approach, but Ministers are taking a more sectoral approach. When I was a banker in Ivory Coast, gold miners would come to me and ask about the country. Oil producers would ask me about the country and how easy it was to do business. Tech companies would come to me, but not to ask about technology; they would ask about regional issues and how easy it was to do business. Perhaps the Government can provide those services in the round. I would love to see more of Lord Price’s high value opportunities study, which we can really leverage. I think that the blockage in Downing Street on the trade envoys should be freed up and we should appoint more trade envoys as soon as possible.

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[Richard Graham (Gloucester) (Con)]

It is a pleasure to follow the hon. Member for Lincoln (Ms Lee). I congratulate her on her passionate maiden speech. Many of us will also remember her predecessor fondly.

This debate is at the heart of the challenge for us all in this Parliament, for although leaving the EU is by no means the only task before us—many of our constituents may have a clearer focus on seeing their local school and hospital well-funded, and their own standard of living gradually increasing—if we lose our access and tariff-free trade with the EU and fail to grow our global business enough to compensate, much else is at risk, because business generates, directly and indirectly, 75% of the total tax revenue that funds vital services. That also means that there is a particular responsibility on all of us here who voted against leaving the EU not to sit back in our chairs and say, “I told you it would be a disaster”, but rather to do our best in making sure that the process works and succeeds because jobs, the economy and, ultimately, the lives of our constituents are at stake. But if I ask remainers to be pragmatic in seeking the opportunities and not overplaying the risks, I would also ask leavers to be pragmatic in their approach. Let me give one example.

The Prime Minister did not commit us in her Lancaster House speech to a position on the customs union. She said that

“I want Britain to be able to negotiate its own trade agreements. But I also want tariff-free trade with Europe…Whether that means we must reach a completely new customs agreement, become an associate member…or remain a signatory to some elements…I have an open mind…It is not the means that matter, but the ends.”

So the Secretary of State was right earlier to focus on prosperity as his guiding light. What works best for business is what will be best for us, because it is business that has delivered the 2.9 million new jobs since 2010—more than all the other 27 EU nations put together.

Today we should all rejoice that exports are up sharply and inward investment is at record highs from 2016’s results. It is a far cry from the prediction made by some of 800,000 unemployed, a deep recession, and real economic hardship by now. But nor should we be complacent, for the figures show a strong surplus of exports and services but a continued deficit in traded goods. In a year of significant currency depreciation, that means we have to do much more. This implies success in retaining the more than 40% of our trade with the EU, and success, too, in exporting to high-growth markets.

As chairman of the all-party parliamentary group on China, let me touch on China, and south-east Asia.

[James Duddridge]

I compliment my hon. Friend on his work as chair of the all-party group and in facilitating greater knowledge of Hong Kong. I urge him to touch on the trading relationships between mainland China and Hong Kong, and how the latter can be seen as setting the pace for the former.

[Richard Graham]

I thank my hon. Friend for his comments. I am not going to talk too much today about the differences between, and indeed the closeness of, Hong Kong and China.

Our exports to China doubled between 2010 and 2016, but they are very dependent on the success of a handful of companies, especially Jaguar Land Rover. What holds us back, and where we have to make much greater progress, is market access. With an excellent new director general of trade and investment in Beijing, recruited from industry, I hope that Ministers will drive real progress in this strategic partnership to deliver greater access for British services, in particular.