Liam Fox
Main Page: Liam Fox (Conservative - North Somerset)Department Debates - View all Liam Fox's debates with the Department for International Trade
(6 years, 10 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I beg to move, That the Bill be now read a Second time.
Free and fair trade is fundamental to the prosperity of the United Kingdom—that is something on which both sides of the House can agree. As globalisation and new technology have changed the face of the world economy, the old barriers of distance and time have been eroded. In an age in which data, knowledge and expertise are traded as readily as cars and steel, even the simplest transactions are no longer confined to one country or even one continent. The United Kingdom is one of the world’s leading trading nations. The total value of our trade with the rest of the world is equivalent to over half our gross domestic product. The UK is the most popular destination for foreign direct investment in Europe, and last year FDI created or safeguarded an estimated 108,000 new jobs. British companies operate across the globe with an international reputation for quality and expertise that few nations can match. That has enabled us to boost the total value of our exports by around 14% in the past year to some £617 billion.
Our current success is built on a long and proud trading tradition. From our unilateral adoption of free trade in the 1840s to our instrumental role in founding the World Trade Organisation, the United Kingdom has been at the heart of international trading innovations. Often, we have led the way, using our economic and diplomatic influence to guide the world towards a free trading future, confident in the benefits that the rules-based global trading system can bestow. For more than four decades, the United Kingdom has been unable to fulfil that leadership role, but soon this country will once again be able to pursue an independent trade policy, whether unilaterally or within bodies such as the WTO. We will be able to unlock some of the key areas of global growth, to offer preferential market access to developing nations of our choosing, to develop closer economic links with our Commonwealth partners and to influence, as we once did, the future of international trade.
Kate Hoey (Vauxhall) (Lab)
One of the real problems with the EU in trade agreements was the lack of transparency and openness. Does the Secretary of State believe that we will be able to be much more open and transparent when we become involved in getting trade deals going between this country and other parts of the world?
Dr Fox
I do. As the hon. Lady knows, this Bill is not concerned with new trading agreements, but when the Government come forward with the mechanics for such agreements, I believe that it will be in the interests of all to have as open and wide a consultation as possible—perhaps even more open than has been traditional in other countries.
Mr Nigel Evans (Ribble Valley) (Con)
There has been much speculation over several weeks about the possibility of the United Kingdom staying in the single market or the customs union. The Secretary of State talks about an exciting world in which we will be able to do trade deals with a number of other countries. Would we be able to do that if we stayed in the single market or the customs union?
Dr Fox
We know that we would not be able to do that if we were constrained by the customs union, but I say to my hon. Friend that we need to look at where the growth in global trade is going to come from. According to the International Monetary Fund, about 90% of global growth in the next 10 to 15 years will occur outside the continent of Europe. It therefore makes sense for the United Kingdom to have the freedom to maximise our ability to trade with those countries whose economies are growing the fastest, if we want to generate the income that this country will need for the spending projects that we all seem to value.
Frank Field (Birkenhead) (Lab)
This House voted overwhelmingly to begin the process of implementing the referendum decision. Since then, we have had two major Bills—this being the second—where the Order Paper looks as though the main aim is to interrupt the Government’s carrying out that intention to follow through on the referendum decision. In the Secretary of State’s opinion, what image does that give to people outside, given that 75% of the electorate now want the Government to get on with the job of taking us out of the EU?
Dr Fox
I was encouraged to hear reports yesterday that the Leader of the Opposition had made it clear that there was no chance of continuing in the single market or the customs union. It was therefore with some disappointment that I saw the reasoned amendment today, which seems to go in an entirely different direction. I am not sure what the reasoned amendment was drafted for, but it does not seem to have been drafted for this Bill, given that it concentrates on future free trade agreements, which are not covered in the Bill at all.
Several hon. Members rose—
Dr Fox
I will give way later.
The Government believe that we have an unprecedented opportunity to regain our former influence in trade policy. The United Kingdom will be able to put in place a trade policy that acts in our own interest and that of our friends and allies, but trade is not only about self-interested commercial gain. It is also about nurturing developing economies, eliminating poverty and building partnerships for the future. Closer to home, trade ensures that British consumers can access quality goods at a reasonable price, and foreign investment creates jobs and protects livelihoods the length and breadth of the country. Fundamentally, we will have the power to choose our own economic destiny and chart our own course to a brighter, more prosperous future.
Yet for all the high political ideals, we recognise that trade is carried out not by Governments but by individual enterprises. To operate, they require certainty and stability. Confidence is a very valuable commodity indeed, and the UK has been economically successful in part because our stability, our labour market flexibility and skills, and our regulatory environment all inspire confidence in investors and international firms. That is why we attracted the highest number of new foreign direct investment projects in our history last year.
Graham Stringer (Blackley and Broughton) (Lab)
The Secretary of State mentioned increasing trade with the developing world. Does he agree that the European Union has been the greatest single mechanism for exporting poverty to the third world, with its high tariffs on foodstuffs, and that when we leave the European Union we will be able to give our own consumers the benefit of cheaper citrus fruits, as well as helping poorer farmers in Africa and elsewhere?
Dr Fox
Where I would particularly agree with the hon. Gentleman is on the European Union applying high tariffs to value-added exports from developing countries. In other words, those countries are able to export basic commodities into the European Union with zero tariffs, but if they try to add value, they face considerable penalties. One of the areas that I would like the United Kingdom to explore as we leave the European Union is our ability to help those countries to export with added value, so that they can trade their way out of poverty rather than depend on aid. I believe that such a policy would carry widespread support across the United Kingdom.
Alan Brown (Kilmarnock and Loudoun) (SNP)
As the Secretary of State says, the Bill is about existing trade. It will need a legislative consent motion from the Scottish Government, but the Scottish Government say that it is not fit for purpose in its current form. He is probably also aware that yesterday the Holyrood Finance and Constitution Committee, including three Tory MSPs, voted to withhold a legislative consent motion for the European Union (Withdrawal) Bill. What will he and other Ministers do to ensure that both Bills are fit for purpose, so that they can get an LCM from Holyrood?
Several hon. Members rose—
Dr Fox
I will give way later.
Before we can begin to forge new trading relationships, we must act to prevent disruption to our existing trade environment. As the Prime Minister has said, our ambition is to forge a deep and special new partnership with our European friends and allies; we will retain the bonds of friendship, security and trade that have united Britain and Europe for so long. If we want to achieve that, before we leave the European Union we must put in place the essential legal powers and structures that will enable the UK to operate an independent trade policy. That is what our trade legislation is designed to achieve. In this, as in all our legislation, the Department for International Trade will be guided by what delivers the greatest economic advantage to the UK and ensures the continued confidence of our partners and allies.
The Bill contains six delegated powers allowing the Government to make regulations to support and develop their trade policy. Two of the powers allow the Government to amend primary legislation; they relate to ensuring the continuity of EU trade agreements into a UK-only context and to the collection of exporter information by Her Majesty’s Revenue and Customs. Both powers are subject to significant restrictions on how they can be used. The trade agreement continuity powers are limited in scope; in particular, they can be used to amend primary legislation only when it forms part of retained EU law. We intend to use the powers to make necessary amendments to domestic legislation as part of the transition project. By taking those powers, we can be sure that we have the ability to implement efficiently all obligations of existing trade agreements in our new context.
The EU’s trade agreements, which we intend to transition and which are within the scope of this Bill, will have already been scrutinised by Parliament’s EU Committees. Free trade agreements that the UK has already ratified have also been through the normal parliamentary scrutiny process. The Bill simply aims to enable us to continue those existing trading arrangements, allowing us to provide certainty and to reassure international partners, businesses and investors.
Sir William Cash (Stone) (Con)
I am glad to hear everything that my right hon. Friend has said not only today, but throughout his tenure as Secretary of State. I am so glad that he is still in that post and that he will carry on.
Will my right hon. Friend confirm that we are running a trade deficit with the other 27 member states of the EU that has been accumulating for a long time? It increased from £71 billion to £82 billion in one year alone, which gives some indication of the fact that we are now looking outwards towards the rest of the world and that continuing to pursue a policy of exclusively working in the context of a strategy run by the EU Commission does not work for us.
Dr Fox
First, the fact that there is a large EU trade surplus with the UK is one reason why it is in the interests of the EU to want a good and open trading agreement with the UK. Secondly, on my hon. Friend’s point about the direction of travel, it is certainly true that the proportion of UK exports that go to the EU has diminished from some 54% at the beginning of the millennium to about 42% today, so it is already true that the UK is exporting into other growing parts of the global economy.
Lady Hermon (North Down) (Ind)
I want to bring the Secretary of State back to legislative consent. He gave some advice to the SNP Members, but he has more difficulty in Northern Ireland, where we have not had a functioning Assembly for a year. That is totally frustrating for the people of Northern Ireland, but how do the Government think they are going to obtain legislative consent from the Northern Ireland Assembly—or are they preparing for direct rule in Northern Ireland? It is one or the other.
Dr Fox
The hon. Lady gives me a good opportunity to pay tribute to my right hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), who stood down from the post of Secretary of State for Northern Ireland yesterday, for his work in trying to achieve a deal in Northern Ireland. We all hope that there will be a functioning Government that the UK Government are able to deal with, because it is in the best interests of all concerned in Northern Ireland that we get a functioning democratic Government in Stormont.
John Redwood
Will my right hon. Friend confirm that all the countries that have trade deals with the EU either have indicated that they would like to have a similar agreement with the UK or have certainly not indicated the opposite, so we can look forward to those deals novating, or transferring, to us?
Dr Fox
I can indeed confirm that there is considerable interest in the continuation of those trading agreements with the UK, for one overwhelming reason: we are the fifth biggest economy in the world and provide a large market to countries that want to trade with us, so they have every interest in wanting to continue those agreements.
Several hon. Members rose—
Dr Fox
I have given way a number of times, so I will make some progress.
The new legislation has four primary aims. First, as I have already mentioned, it aims to prevent disruption to UK businesses and consumers. I alluded earlier to the importance of the UK’s ability to access other markets across the world. Currently, as a member of the European Union, we are part of about 40 free trade agreements across the world, as my right hon. Friend just mentioned. Maintaining that market access for UK companies is a priority. That is why, as we leave the EU, we seek continuity and have therefore been public about our aim to enter into our own agreements with our partner countries that maintain the effects of the free trade agreements currently in place with the EU. The Bill will create new powers to make regulations, where required, to ensure that we can fully implement these free trade agreements and our other existing trade agreements as we leave the EU. By ensuring continuity in our existing trade arrangements, we will provide certainty and stability for workers, consumers, businesses, and our international trading partners.
Secondly, we want to maintain UK businesses’ guaranteed rights to access global public procurement markets worth approximately £1.3 trillion per year. The GPA, or government procurement agreement, is a plurilateral agreement within the framework of the WTO that aims to create an open market for Government procurement among participating nations. They include many of the world’s major economies, such as the United States, Japan and Canada, as well as the EU states. Currently, we participate in the GPA through our membership of the EU. It is worth pointing out that the UK creates around £68 billion of procurement opportunities within the GPA annually—over 25% of the total EU offering. After we leave the EU, the UK will need to join the GPA as an independent member, not only to safeguard continuity of access for UK companies overseas, but to ensure that we can tap into international expertise and obtain the best deal for the taxpayer here in the UK. The powers in clause 1 will allow us to make regulations implementing our obligations under the GPA as an independent member, reflecting our new status within the GPA. Parliament will be able to scrutinise the terms of our membership of the GPA through the Constitutional Reform and Governance Act 2010 before we join.
Mr Jonathan Djanogly (Huntingdon) (Con)
I totally support my right hon. Friend’s aims in clause 1 and the need for us to re-engage with the GPA. The clause also shows how vital it is that we leave the EU with agreements in place, rather than just falling off a cliff. We are not a member of the GPA through our membership of the EU, and we will have to rejoin in our own right—in the same way as we will have to re-engage with our schedules, which we have through the EU rather than in our own right.
Dr Fox
As a doctor, I have never thought that falling off a cliff is sensible. It is certainly clear that it is beneficial to the UK to have a number of agreements in place, which is why we have introduced the legislation—to provide maximal continuity and security. That is the whole point of the legislation. My hon. Friend is correct that we will have to do the same exercise with our schedules in Geneva, but if I may make one slight correction, we are already an independent member of the WTO in our own right and we simply operate our schedules through the EU. We are not a member of the WTO by virtue of our membership of the EU in the same way as we are with the GPA.
Caroline Lucas (Brighton, Pavilion) (Green)
Given that the Bill covers only existing EU trade agreements, will the Secretary of State guarantee that there will definitely be a second trade Bill in due course to cover new trade deals with non-EU countries? If he cannot guarantee that, will he accept that it is even more important that the openness and transparency that he claims to support are reflected in this Bill? One way to do that would be to ensure that, like the European Parliament and the US Congress, this Parliament has the right to reject trade agreements. The negative procedure does not provide a real opportunity to say no.
Dr Fox
As I think I already said, we will use separate vehicles for new free trade agreements, and we will introduce a separate proposal on consultation. I am keen not to get to the position we got to in, for example, the Transatlantic Trade and Investment Partnership, where a whole negotiation was undertaken only to find there was insufficient public support. It is much better to seek support for a trade agreement mandate by having as wide a consultation as possible across the country with various ranges of stakeholders before we enter such negotiations. That is more democratic, and the process is more efficient. Consumers will in future take a greater interest in trade agreements than they have perhaps taken in the past, so consultation is also politically prudent.
Andrew Percy (Brigg and Goole) (Con)
The Secretary of State is absolutely right that the Bill will prevent anybody from falling off any sort of cliff edge. One of our most important trading relationships is, of course, with Canada, which is covered by the comprehensive economic and trade agreement. Will he confirm that the Canadian Government have committed themselves to reaching a free trade agreement with the United Kingdom once we leave the European Union and have established a joint ministerial council with us? Contrary to what we hear from some who seem unable to accept the result, many of our bigger trading partners, such as Canada, have quite a lot of enthusiasm for ensuring that we have a new relationship that perhaps goes further than the current arrangement through the EU.
Dr Fox
I confirm that we have had very positive discussions with the Canadian Government, and I also confirm it is our intention, as we have said, to ratify CETA before we leave the European Union. Once we have left the European Union, CETA will form a good basis for any future agreement with Canada, while taking advantage of the increased trading freedoms the United Kingdom might have, unrestricted by elements such as the data localisation restrictions that are currently placed on us by the EU’s negotiating position.
Hilary Benn (Leeds Central) (Lab)
This Bill is a consequence of the Government’s decision to leave the customs union. Will the Secretary of State explain why, as we learned from his colleague the Secretary of State for Exiting the European Union, the decision was taken without any economic assessment of the consequences of leaving the customs union? Will he now set out why he thinks the gains will outweigh any potential losses?
Dr Fox
I hate to correct the right hon. Gentleman, but this Bill is a consequence of the British public’s vote to leave the European Union. Leaving the European Union means that we are leaving our current trading agreements. If we want stability to continue for our businesses, we have to put the legislative framework in place for it to do so. That is exactly what we are doing.
Several hon. Members rose—
Dr Fox
I have given way a number of times. I will give way again later.
It is worth reminding the House that, on a number of occasions, we have made a commitment that decisions about public services, such as the national health service, will be made by UK Governments, including the devolved Administrations, and not by our trade partners. As we leave the EU, the UK will continue to ensure that rigorous protections for the NHS and other public services are included in all trade agreements to which it is a party.
The third aim of the Trade Bill, together with the Taxation (Cross-border Trade) Bill, is to create a new UK trade remedies framework overseen by an independent body, the Trade Remedies Authority. It is important to remember that free trade does not mean trade without rules. Free trade is not a free-for-all. Trade remedies are a vital safety net for firms operating in the global marketplace, protecting them from injury caused by unfair trading practices such as dumping or trade-distorting subsidies, as well as from unforeseen surges of imports.
After its creation, the TRA will be required to prepare both an annual report on the performance of its functions and an annual statement of accounts. Those documents will be laid before the House of Commons, ensuring that Parliament is able to fully scrutinise the TRA’s functions and financial activity.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I am sure, when the Secretary of State visited Stoke-on-Trent, he heard from Wade Ceramics about the importance of a proper trade remedy body. May I press him regarding the report in today’s Daily Telegraph that when trade remedies are considered, they will be weighed against any potential negative impact on a broader free trade deal? In the case of ceramics, we need protection from Chinese tiles and Chinese tableware. Can the Minister assure me that if that has an impact on a larger trade deal with China, British industry will be protected before trade deals are put in place?
Dr Fox
I totally agree with the hon. Gentleman on the need to set up such trade remedies, so I hope he will support the Bill today. Without the Bill, we would be unable to have such trade remedies as we leave the European Union. It is essential that we have a mechanism to protect the United Kingdom and that we do not allow unfair dumping or subsidy to harm UK businesses. That is why we are setting up the TRA. The details will be set out after the passage of the Taxation (Cross-border Trade) Bill. He is right that we need to have such trade remedies in place, but I reiterate that, if we do not approve Second Reading today, we will not have the ability to create those remedies to protect British business. If Opposition Members oppose the Trade Bill, they will be opposing the very measures that will be able to protect British businesses and British jobs.
James Duddridge (Rochford and Southend East) (Con)
The good burghers of Southend will be glad that the Secretary of State is delivering the Brexit that they supported wholeheartedly. Will he confirm that the Trade Remedies Authority will be wholly independent? Will he give us an indication of how quickly some of the detail will come together once the Bill is enacted? What forms of consultation will there be on how to set up the Trade Remedies Authority, given that we have so little experience of trade remedies other than through the EU?
Dr Fox
As my hon. Friend knows, detail on the implementation of the Trade Remedies Authority will be in secondary legislation subsequent to the passing of the Taxation (Cross-border Trade) Bill, which we debated in this House last night. The Trade Bill merely creates the framework for creating the Trade Remedies Authority, which will be an arm’s length authority. These issues are often commercially sensitive and market sensitive, so it is important that we are seen not to have overt political intervention. Likewise, if we want to be WTO compliant, we have to be as transparent as possible. We will want to consult further, but we want to set out the details as soon as possible.
Closely related to that is the Bill’s fourth aim. We want to enable HMRC to collect and share essential data on the United Kingdom’s trade flows, which will enable DIT and bodies such as the Trade Remedies Authority to perform essential trade functions such as providing evidence to WTO panels that rule on trade disputes. It will also provide a vital insight into our export performance during our development of trade policy.
Hannah Bardell (Livingston) (SNP)
Can the Secretary of State give us an idea of how much more resource HMRC will get so it can do that job of collecting data? Will the Government expand the number of HMRC offices, rather than reducing the number of offices, as he and his Government are currently doing?
Dr Fox
My understanding is that HMRC was given extra resource in advance, before we reached this point. It seems strange that we do not already collect this data. If we want better-informed policy, we need better datasets. It is merely a sensible option for any Government to collect this data as widely as possible, so that we operate on the basis of better information.
Before I further explain the process, this is a good juncture to correct some of the misunderstandings that seem to have grown, deliberately or otherwise, around the Trade Bill. As I have explained, the Bill contains two powers that allow the Government to amend primary legislation: the power in clause 2 to implement the trade agreements that the UK adopts; and the power in clause 7 to allow HMRC to collect the export information that the hon. Lady has just mentioned. Both these powers are limited in scope and restricted in their use. Contrary to the belief of some in this House and beyond, seemingly including the shadow Secretary of State for International Trade, this Bill does not legislate for powers that could be used when implementing new free trade agreements with countries with which the EU does not have a free trade agreement before exit day. An article in The Guardian—I do not avidly read it, but this was brought to my attention—written by him incorrectly asserted that the Government would only be obliged to present the text of new trade agreements under the convention of the Ponsonby rule. As I mentioned earlier, the scrutiny of new agreements requiring ratification is ensured by the Constitutional Reform and Governance Act 2010.
Barry Gardiner (Brent North) (Lab)
Will the Secretary of State confirm that the 2010 Act proceeds by negative resolution and it is not open to any debate, any scrutiny, any vote and may not even be amended? Therefore, the sort of scrutiny that most Members of this place would expect to take place for any new trade agreements will not occur in the way he has led the House to believe.
Dr Fox
This Bill is not about trade agreements; I can only explain it to the hon. Gentleman—I cannot understand it for him. This Bill is about continuity of existing agreements. In any case, the 2010 Act effectively gives the Commons the power to block ratification, notwithstanding the fact that we have already scrutinised these agreements in the past. He ought to know that, as the 2010 Act was passed by the Labour Government and he voted for it.
There is no attempt here to bypass parliamentary scrutiny or to obtain sweeping new authority for the Government over this country’s trading structures. Rather, the Government seek powers in clause 2 that we think necessary for us fully to implement in UK law non-tariff obligations of the transitioned existing EU-third country trade agreements that we adopt. Any tariff-related obligations in such transitioned agreements will be implemented using powers conferred by the Taxation (Cross-border Trade) Bill, which had its Second Reading in this House yesterday.
Chuka Umunna (Streatham) (Lab)
Will the Secretary of State answer three questions? First, on the existing agreements the EU has with third countries, which he says will be transposed, will he guarantee that those 65 agreements will be transposed by the exit day? Secondly, this Bill does touch on new agreements, to the extent that the Trade Remedies Authority will have a locus and oversight on those agreements. He was part of the campaign that promised that we would have all these new agreements, with Canada, the US and Japan, and would immediately start negotiating with all these countries. It is right, is it not, that none of those negotiations has actually started?
Dr Fox
I look forward to the hon. Gentleman’s extension of that intervention in his speech. Let me deal with the last of those issues. He is well aware that, under our duty of sincere co-operation, while we remain a member of the EU we are not able to negotiate new trade agreements. We will want, first, to get continuity of the existing agreements, which number about 40. We will want to have as many of them as possible—all of them, if possible—transitioned before we leave the EU. I absolutely confirm that. We already have 14 working groups with 21 countries in preparation for future negotiations in the trade agreements that we want to take advantage of when we leave the EU.
Dr Fox
I will make some progress.
When the UK enters directly into its own arrangements with our partner countries, the Government will seek, as far as possible, to maintain the effects of the existing arrangements they have with the EU. This means we will be able to deliver the continuity that businesses, consumers and our trading partners, and this House of Commons, desire. It will maintain market access and allow us to continue to abide by our obligations to our international trading partners. The UK has used the European Communities Act 1972 to implement existing EU trade agreements and the GPA. The European Union (Withdrawal) Bill will repeal the 1972 Act. This means that the UK will require a new way to ensure that our transitioned agreements are fully implemented in UK law and remain operable over time. Clauses 1, 2, 3 and 4 of the Trade Bill will give the Government the necessary powers to do so in relation to the non-tariff elements of those transitioned agreements, including amending legislation, where necessary. They will also grant these powers to the devolved Administrations to ensure that they, too, can implement transitioned agreements and reflect the UK’s independent GPA membership in areas that fall within their devolved competence.
The powers to implement free trade agreements will be available only if the partner country has signed an FTA with the EU before exit day. In other words, and as I said earlier, this Bill does not legislate for powers that could be used when implementing new FTAs with countries with which the EU does not have an FTA before exit day.
Helen Goodman (Bishop Auckland) (Lab)
Will the Secretary of State explain to the House why, if this is just to roll over existing FTAs, he will need the power to change primary legislation?
Dr Fox
We have said that where we needed to change legislation to bring into UK law the non-tariff elements of existing agreements, we would do so, but these powers exist for no other reason. They are very limited, and I make it very clear today that they are limited to these particular circumstances.
Mr Grieve
I wish my right hon. Friend well in this task of ensuring continuity of the trade relationships we currently have within the EU. I fully understand the point he has made about the fact that this is about those relationships and not new ones, but does the delegated powers memorandum not make it absolutely clear that the powers are broad enough to enable not just the implementation of these agreements, but their substantial amendment, including the creation of new obligations? Does that not then make it sensible—I urge him to do this—for the Government to look, as the Bill progresses, at ways to ensure that those can be properly scrutinised, because the methods we currently have of the European Scrutiny Committee and the European Parliament will no longer exist? That is a relevant issue for this House, and if the Government were to look at it in a sensible light, the Bill would be improved.
Dr Fox
I am sure that in Committee my right hon. and learned Friend will again wish to bring his expertise to bear, but I say to him again that the Government do not seek to make any substantial changes to the agreements that already exist. There are some unavoidable changes—for example, the disaggregation of tariff-rate quotas—that we will have to introduce, but they will simply be done to bring the greatest continuity possible to arrangements. As I have said several times, when it comes to new agreements, the Government will bring forward new proposals, where we can ensure that there will be adequate scrutiny of any new agreements that we want with countries once we have left the EU.
Ian Murray (Edinburgh South) (Lab)
I wish just to push the Secretary of State on one point. What will be the process in this House if, for example, the South Korea trade deal, which is currently an EU trade deal, is transposed to UK law to be a UK trade deal and the South Koreans decide to renegotiate the deal on Scotch whisky? What goes through this House?
Dr Fox
Having had substantial discussions already with the South Koreans, I can tell the House that there is no plan to do anything such as the hon. Gentleman suggests. That is why I say to him that this is not about new trade agreements; it is about continuity of what we have at the present time.
Several hon. Members rose—
Dr Fox
I will make a little progress.
The Government are taking a similar approach on the transitional trade agreements and on the GPA, looking to maintain the guaranteed access created by our current participation to ensure stability and continuity for UK businesses. As I mentioned earlier, the UK participates in the GPA through our membership of the European Union. Clearly, if we are to retain the benefits of the GPA, we will soon have to join as an independent participant. This legislation will enable the UK Government to make any changes required in domestic law as part of the UK becoming an independent member of the GPA and provide the power to make changes in future to reflect new countries joining the GPA or existing countries withdrawing from it. It is in the UK’s best interests for its businesses to continue to have guaranteed access to the GPA’s global procurement markets and for us to continue to work with our partners in the GPA to address trade barriers within the government procurement sector. We intend the UK to join the GPA, while maintaining our existing terms of participation. Clause 1 will allow the UK to legislate to reflect our new independent GPA status.
John Redwood
Will the Secretary of State confirm that a helpful and comprehensive trade facilitation agreement came into effect at the WTO in spring last year? It should be reassuring to all those who are worried about possible disruption to UK-EU trade—pending any agreement—that a lot of it will be governed by those helpful provisions because we and the EU will of course remain members of the WTO.
Dr Fox
My right hon. Friend is right. That agreement was the first multilateral trade agreement for decades, which shows how difficult it is to get such multilateral agreements. It does reduce friction for customs arrangements worldwide, but although, as he said, the benefits are great, it is still in the best interests of the UK to come to an open and comprehensive trading agreement with the EU itself.
The Bill provides powers for HMRC to collect and share trade data, as has been mentioned. Those powers include the one in clause 7 that allows primary legislation to be amended to provide for HMRC to collect exporter information. Clause 8 will grant HMRC the authority to share data with those bodies that require those data to carry out a range of public functions relating to trade. Currently, HMRC collects a range of data from import and export declarations that is shared with the European Commission, as well as with other Departments and public bodies, under information gateways governed by EU law. Such gateways will, of course, cease to apply once we leave the European Union, and numerous functions that are currently carried out by the European Commission will be transferred back to the United Kingdom. HMRC will therefore need to be granted the legal authority to request data from exporters and share that data to ensure the continued smooth operation of the UK’s trade frameworks and clear and informed policy making from my Department, as I said to the hon. Member for Livingston (Hannah Bardell). The powers in clauses 7 and 8 will grant that authority, and nothing more.
Lady Hermon
Thank goodness I am blessed with bundles of patience. I am exceedingly grateful to the Secretary of State for giving way. I am really worried about clause 7, which is extremely broad and gives enormous powers to HMRC. The Secretary of State will be well aware that there are hundreds of farms that straddle the border in Northern Ireland. Under clause 7, if those farms trade in machinery and cattle across the border—as they do daily—they will be obliged to give information to HMRC. The clause says that “any person” may be asked for such information. Would Sinn Féin MPs who represent border constituencies be obliged to give HMRC such information, as well as farmers?
Dr Fox
When we discussed this proposal with the Treasury and HMRC, we were keen to ensure that it applied to information related only to those elements needed to continue what we currently do and to gain the information that we believe we need for better trade policy making. HMRC was insistent that before it made any changes we restricted the power as much as possible, because HMRC did not want to become a huge bureaucratic organisation, as the hon. Lady suggests. We intend to define the power tightly when we set the regulations. I have had discussions with HMRC on the basis that we will not want to carry out a hugely bureaucratic exercise. Nevertheless, it makes sense for us to know exactly how much we are importing and exporting and which businesses are doing that. That is the basis for good future policy making.
The time will come when we can begin to forge new trading relationships around the world, building a truly global, outward-facing Britain—a country at the very heart of international trade—but this Bill is not about those new relationships. Instead, it is about preserving and ensuring continuity. We want to protect the access to global markets that is so vital to thousands of British businesses. We want to abide by our obligations to those economies that have already negotiated free trade agreements and other trade agreements with the European Union. The Bill grants us the powers necessary to achieve those aims.
We present the Bill for Second Reading with an eye to the future. It is explicitly designed to prepare for our departure from the European Union, while building the foundations that will facilitate successful future trading relations with the wider world. I hope Members from all parties recognise the value of the Bill and the measures it contains, as well as its importance in helping to provide much-needed certainty to businesses and consumers as our departure from the EU next year approaches. Trade is an issue that transcends party politics: it is an intrinsic part of our very way of life and our prosperity. The Bill is just the beginning, but it is a first step towards a stable, secure and prosperous future for the United Kingdom and our friends beyond.
Barry Gardiner
I will happily give way to my hon. Friend once I have answered our hon. Friend the Member for Nottingham East (Mr Leslie).
As we will no longer be a signatory to the European treaties and no longer come under their territorial scope, we cannot formally be a member of the EU’s customs union. As the EU’s treaties currently stand, only EU member states, and territories attached to those states, are actually members of the customs union. However, it is possible for the UK to enter into a customs union with the EU after Brexit, whereby we choose to have a joined external tariff and no tariffs on trade between the EU and the UK. That would, in effect, mirror the current arrangements. I think that my hon. Friend the Member for Nottingham East, like me, will have been interested to find that provision to do just that was incorporated in clause 31 of the Taxation (Cross-border Trade) Bill, which we debated last night.
Barry Gardiner
No, I am not telling the House that at all. I am happy to try to answer not only the letter of the Secretary of State’s question, but the spirit. Those on the Labour Front Bench have always tried to make it clear that we recognise the benefits of the single market to this country, and the benefits that traditionally the customs union has brought and that a customs union could bring. However, we are focused in the negotiations on achieving the benefits, rather than putting red lines around the structures, which is what the Government have done, and ruling those off the table.