Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Liam Fox Excerpts

Thursday 24th June 2021 Commons Chamber

[Dr Liam Fox (North Somerset) (Con)]

It seems a long time since 18 July 2018, when I first announced to the House that we were beginning the public consultation phase that would inevitably lead to where we are today, so I congratulate the Secretary of State and her Ministers on getting us to this point so expeditiously, and I thank all those at the DIT who have done so much to get us into this position, particularly Crawford Falconer and John Alty, who is to stand down as permanent secretary. I wish him all the best and give him my very grateful thanks for all the work he has done.

Especially in the light of the speech by the shadow Secretary of State against international trade, it is right to say why we believe in free trade. We believe in free trade because it allows countries to use comparative advantage within an international rules-based system for the benefit of their own people and those outside their own borders. It is essential for developing countries to be able to trade their way out of poverty in the long term, and the rise of non-tariff barriers among the world’s richest countries over the past decade is a disgrace that we should hear a lot more about.

As I have said before, in Q1 of 2009, only 0.7% of all the G20’s imports were covered by restrictive measures; it is now 10.3%. That is putting an almost insurmountable barrier particularly to small and medium-sized enterprises in developing countries. We need to get a grip on that because whatever we talk about in the aid debate we are counterbalancing in the restrictions that we are putting on in the trade debate. If we want to have a morally consistent policy on development, we need to deal with both sides of the equation.

Free trade is also about consumers. I want the incomes of working families in Britain to go further. I want them to have greater choice, and for them to be given greater information about the products that they buy so that they can decide for themselves how to spend their money, not so that the Government can determine what choices they can and cannot make. It is essential that we say that, because some people even in my own party seem to have forgotten why free trade is so important.

[Marco Longhi]

Does my right hon. Friend agree that consumers will therefore have cheaper access to white vans and St George’s flags, which particularly our self-employed make use of in the construction industry?

[Dr Fox]

I cannot think what my hon. Friend is alluding to, but it is certainly true that consumers will have access to far greater choice. Look at the range of consumer goods that we have—all sorts of white goods, not just vans. Look at the quality of what we have in terms of household appliances. They are cheaper and better quality, and they have a greater technology than they would otherwise. That is what free trade means. The trouble with free trade is that its benefits are very widely spread to consumers, whereas any difficulties to producers tend to fall on very narrow sectors and are therefore used politically by the Opposition to promote their anti-trade policies.

[John Spellar (Warley) (Lab)]

Will the right hon. Gentleman give way?

--- Later in debate ---

[Dr Fox]

I will in a moment. Five years ago this morning, those of us who campaigned to leave the European Union were awakening on that great historic day to realise that we had won the referendum and that Britain would have a very different future. The free trade policy that it allowed us was very specific in terms of the benefits that we could have: it would allow us to shape a policy in the interests of not only the United Kingdom but free trade, in which we as a country profoundly believe, or at least used to all believe, in the political consensus in this country.

It is a freedom to shape global policy that leads to greater liberalisation in all its forms. I am glad to see the Chair of the International Trade Committee present. He has heard me say this before, so I apologise to him for repeating myself, but there is a clear hierarchy in liberalisation. The greatest liberalisation comes from multilateral global agreements, which is where we should all be going; it is the gold standard. The next level down is the level of plurilateral agreements; if we cannot get multilateral agreement, we can at least make progress towards it with those who are willing to see liberalisation take place. The next level down is the geographical grouping, where countries can come together to create a more open market. Finally, there are the bilateral free trade agreements, which, although they are easier to get, tend to produce less in terms of liberalisation. It is important that we understand that there is a hierarchy in all of that.

[John Spellar]

Will the right hon. Gentleman give way?

[Dr Fox]

I will, as I said I would; my memory is not yet that short. It is important that we understand what the opportunities are in a free trade policy outside the European Union in relation to those four categories in that free trade hierarchy.

[John Spellar]

The right hon. Gentleman knows that I am very supportive of trade and trade agreements. Equally, I was rather surprised by his response to the hon. Member for Dudley North (Marco Longhi). Should we not be encouraging people to buy white vans made in Luton, and trying to ensure that St George’s flags are made and sold in the United Kingdom?

[Dr Fox]

The right hon. Gentleman is quite right that we should ensure that as much is made in the United Kingdom as possible. The point is that consumers should be free to choose what they buy with their own money. If we can manufacture goods and services in the United Kingdom of the appropriate quality, and at the appropriate price, I am quite sure that British consumers would choose to buy those, but I do not believe in restricting the choice for British consumers because we are unable in certain sectors to produce those things.

Another important element of policy outside the European Union is our ability to help rebalance the global trading economy. That is why CPTPP is so important. The CPTPP, were the United Kingdom to join it, has about the same proportion of global GDP as the European Union minus the UK. It will provide us with an ability to rebalance within that. Why does that matter? It might help us get momentum in some of the areas that matter, where we were unable to get traction inside the European Union. We might get traction on a global agreement on e-commerce, for example, or an agreement on environmentally friendly goods—the environmental goods agreement—which is barely in existence or has any life at the moment. In this era, if we cannot agree to take tariffs off solar panels or wind turbines, what can we agree at a multilateral level? Putting our energies into groupings that may drive that forward is extremely important, not just for the UK, but beyond.

The final point that I want to make is that the real advantage of CPTPP is not what proportion of GDP it adds in value; it is strategic. CPTPP is primarily, in my view, a strategic alliance, and it relates to how we think about the issue of China. China promotes its agenda of state capitalism—though “state capitalism” is an oxymoron; capitalism has to be independent of state control—but, at present, sits inside the World Trade Organisation without having made the adjustments to market mechanisms that are required for the proper functioning of members inside the organisation. The measures that we have tried have not been successful in bringing China into a more acceptable position. The WTO has been unable to cope effectively with the abuse of state subsidies. The OECD has done a lot of work studying the data available across borders and looking at measurements of production, which offer some help, but the WTO seems incapable at present of dealing with the China question.

The United States was unable to deal with the China question through tariffs. All that President Trump’s tariffs on China did was reduce the trade deficit with China, but it did not reduce America’s trade deficit overall, because when consumers did not buy Chinese goods because they were too expensive in the United States, they bought them from elsewhere. The use of tariff policy to drive global trade in a particular way only results in trade distortion and diversion, exactly as we discovered.

If we were able to join CPTPP, there would be another prize, which the Secretary of State did not mention but I am sure she believes in: the ability to attract the United States back to the partnership. The decision by the Trump Administration to leave the trans-Pacific partnership was, in my view, a completely wrong decision. If we are able to get United Kingdom membership, the United States joining CPTPP becomes a lot more attractive to Members across the parties in Congress. The UK plus the United States joining CPTPP would take us to about 40% to 43% of global GDP, which is a much better counterbalancing measure to China than anything that we have seen so far.

I am therefore 100% behind my right hon. Friends the Secretary of State and the Minister for Trade Policy in taking this policy forward. Five years ago, we were on different sides of the debate in the European Union referendum, but there is nothing like the zeal of converts to take us forward. I congratulate the Secretary of State and the Minister of State—one of the finest Ministers I ever worked with—on taking this agenda forward. It is the right thing for the United Kingdom and, much more importantly, it is the right thing for global trade and to ensure that the developing world has a chance of finding a sustainable way out of poverty in the long term.

[Madam Deputy Speaker (Dame Eleanor Laing)]

After the spokesman for the SNP, I will come directly to the Chairman of the Select Committee. At that point, there will be a time limit of five minutes, but that will then reduce to three minutes.