Future International Trade Opportunities

Julia Lopez Excerpts

Wednesday 1st May 2019 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

I shall be brief. It will be a massive challenge to recover the trade that we shall lose. We currently negotiate as Team EU; standing alone as Britain, negotiating with other countries—particularly large ones, such as the United States and China—will be very difficult. There is a debate about climate change in the main Chamber at the moment. It seems to me that we shall have to trade further afield, which will harm our climate. I hope we see the introduction of carbon pricing to save the climate, but that will not be good for trade.

The hon. Member for North Warwickshire (Craig Tracey) mentioned the WTO. There are 160 countries in the WTO, many of which have dictators and so on, and they will jointly make rules that govern us. It is a massive organisation, with a panel of unelected judges that will impose rules on our courts. We will not, for instance, be able to bring the railways and water companies into public ownership, as some in the Labour party would like to.

There will also be a great threat to our standards from things such as hormone-impregnated meat, chlorinated chicken and the sale of asbestos, all of which we see in the United States. The United States is likely to put pressure on us to allow the lowering of standards in exchange for access to digital and financial markets, for example.

[Julia Lopez (Hornchurch and Upminster) (Con)]

I just note that when the International Trade Committee went to Japan and South Korea, the thing that sparked most concern among Japanese investors was the nationalisation of industries under a potential future Labour Government. That caused greater alarm than any discussion about Brexit. Does the hon. Gentleman agree that nationalisation may cause wider worry among international investors?

[Geraint Davies]

Ironically, the architect of the single market was largely Margaret Thatcher. As has been pointed out, it is one of the most perfect marketplaces in the world. She enabled the Japanese to platform into the European marketplace. Of course, they are all leaving now, because we are Brexiting. There is an EU-Japan deal, which we will be cut out of, and the car manufacturers are moving for that reason, too. Historically, the Japanese brought together the Government and industry in a way that allowed platforming, and used active government to help industry. That is what a Labour Government would want. The Japanese are not very happy about Brexit, and they are basically pulling out, which is a complete disaster for Britain.

On how we move ahead with the Trade Bill, I want assurances from the Minister about the scrutiny, accountability and transparency of future trade deals. It seems to me that there will be enormous pressure on standards, human rights, the environment, workers’ rights, consumer rights—everything. The Department is denying access even to the aims and objectives of trade negotiations, which are transparent in the United States and the EU. In fact, as I understand it, there is currently a freedom of information case in court because the Department is resisting providing access to that information. That is appalling. It bodes very badly, and I am very concerned.

I also want assurances from the Minister about investor-state dispute settlements, especially as fracking companies, for example, presumably will want to continue the appalling work that this Government have started. We are debating fracking to a certain extent today in the main Chamber. It is so destructive. The Minister may know that 5% of the methane is leaked, and that methane is 85 times worse than carbon dioxide for global warming, making fracking worse than coal. Under investor-state dispute settlements, big fracking companies such as Lone Pine have fined the Canadian Government hundreds of millions of dollars for imposing a moratorium on fracking in Quebec. Will he therefore rule out investor-state dispute settlements?

Will the Minister ensure that Parliament can fully scrutinise and agree on the negotiating aims of future trade deals? Will he allow MPs to access some of the documentation, and to have debates and votes? We do not want, week after week, to be presented with a deal versus no deal choice in which the Government say, “Here’s the deal with Chile. If we don’t sign it, even though it’s not as good as the one we’ve got already, we won’t get anything. Come on,” and force through appalling trade deals that are not in our interests and may undermine human rights abroad and environmental protections here and elsewhere.

[Julia Lopez (Hornchurch and Upminster) (Con)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I am sure that, given your passion about Brexit, you would like to speak in the debate yourself. I am grateful to my hon. Friend the Member for North Warwickshire (Craig Tracey) for securing the debate. What a refreshing change it is to talk about opportunity rather than threat—it is just a shame that we do not have longer to do so.

I do not wish to retread well-worn ground, but one of my abiding concerns about the withdrawal agreement is that it will, in effect, preclude us from drawing up an independent trading strategy, with the customs arrangements in the backstop effectively becoming the blueprint for the future relationship. That would cause us to enter a de facto customs union with the EU and be tethered to the EU’s regulatory regime without a seat at the table, as was confirmed by the Prime Minister’s admission about the commonalities between her customs position and that of Mr Corbyn. I do not see that loss of power as compatible with the public’s decision to leave the EU.

It is a myth that the customs arrangements in the withdrawal agreement would deliver frictionless trade with the EU. One freight forwarder told the International Trade Committee that

“a softer Brexit would deliver a harder Brexit for us”.

Indeed, with UK wet stamp certifications or similar for every consignment to or from the EU and Northern Ireland, and a customs arrangement tantamount to Turkey’s, in which the EU’s trading partners would benefit from access to the UK market without our deriving reciprocal access, the withdrawal agreement would preclude us from signing meaningful new FTAs and open up huge potential for tax leakage when it comes to tariff collection. I believe that would come very quickly to be understood as a substandard arrangement from which we would have no unilateral right of exit.

That is not to say that our future trading relationship with the EU should be deprioritised, or that to move away from the EU’s regulatory orbit will be plain sailing, or necessarily desirable in every sector. However, our future relationship must be placed on a sustainable footing, and such an asymmetric arrangement would not allow for that.

My desire has always been for us to strike a comprehensive free trade agreement with the EU, accept and then manage any trading friction that would cause, and offset costs through a competitive tax and regulatory regime and a broader range of new trading agreements that would—over time, admittedly—allow UK companies better to plug into growth markets or to enhance access to countries with which we already have strong trading relationships. Until that EU-UK relationship is determined, however, we have effectively put on ice the opportunities available with third countries, many of which are necessarily waiting to see the extent to which we are tied into EU structures to assess how deep a trading relationship they can have with us.

Looking to the future, it is important to underline that free trade agreements are not a panacea, but can none the less be used as a catalyst to deepen bilateral ties or simply to kick-start workstreams. We had a fascinating discussion at the International Trade Committee this morning about how Brexit has already had a positive impact simply through the creation of the Department for International Trade, which provides momentum and focus, and by sparking often overdue audits by UK companies of their agility, productivity and exposure to risk. The creation of a DIT database of trading opportunities for UK businesses has been enormously valuable, while the packaging of UK investment prospects in brands such as the northern powerhouse and the midlands engine has helped companies and trade bodies better articulate opportunities to prospective investors.

Companies have generally been impressed by the skills and energy of DIT teams in our embassies, but now they want those teams to enhance their regulatory knowledge, extend their networks to lobby more effectively and gear themselves to long-term relationships with key decision makers to act as experienced Sherpas to UK businesses. That will require lower churn of staff and a more extensive network of offices, particularly in different regions of China and states in America, where we can only achieve so much at federal level. The big prize would be in assisting mid-cap UK firms, where we currently fall short of the extensive assistance offered to the German Mittelstand by the powerful German chambers of commerce. We should also look to capitalise on and complement the existing networks of UK bodies such as the Corporation of London, which has developed city-to-city agreements with the likes of Tokyo and Shanghai on green finance, asset management and more.

With trade these days stifled much less by tariff than non-tariff barriers—admittedly the context is changing somewhat under the Trump Administration and the deteriorating relationship with China—future free trade area negotiations can be a focal point for, but need not hold up, wider country-to-country discussions on issues such as recognition between respective trade bodies of professional qualifications that would allow for the easier transfer of skilled staff; swifter, less costly visa regimes; research co-operation between universities; and working groups on regulatory harmonisation, such that close ties with countries like the United States, Australia and Singapore could create momentum for a move towards global standards in key industries of interest to us such as financial services, tech and the digital economy. Those are especially important issues for a services economy such as ours, and the coming together of powerhouses in financial services and life sciences such as the US and the UK could have a tremendous impact on the setting of those standards.

Should we ever get to the point where we can negotiate new FTAs, we ought to have completed an analysis of the errors made in the Brexit and Transatlantic Trade and Investment Partnership negotiations. I recommend, and I know the Minister agrees, that we ensure that Parliament has scoped out and agreed to a broad mandate for any new FTA and is able to access information about ongoing negotiations via a new, confidential parliamentary committee that could access relevant paperwork, trade expertise and legal advice.

Meanwhile, we should seek immediately to knock on the head unhelpful canards about chlorinated chicken or US healthcare companies being able to sue the NHS. Modern bilateral agreements are flexible and can permit carve-outs for sensitive areas of trade. The FTA between China and Australia, for instance, does not allow access to certain aspects of Australia’s pharmaceutical and healthcare system, while investor dispute settlement mechanisms are absent from large parts of the Canadian and American trading relationship. Ultimately, however, in being able to determine our own trade policy, we can be compelled neither to enter nor remain in any FTA or investment treaty that we do not believe to be in our interests, subject to notice.

There is so much more to say on this subject, but other Members wish to speak. Finally, I hope that this realignment of UK trading prospects is not hindered by the signing of a substandard withdrawal agreement that places us either implicitly or explicitly in a customs union, and that this debate marks the start of a more positive, creative discussion about the new trajectory on which we can place our nation in the years ahead. Ours is the world’s fifth-largest economy, strong in so many expanding areas such as services, science and digital technology, and able to attract huge amounts of investment despite the uncertainty that Parliament has created over Brexit. With skill, verve and leadership, the UK can eventually emerge a nimbler, more dynamic economy, not only better positioned to plug into growth markets but better able to deliver tangible benefits to the people and businesses we represent.