Russia: Trade

Lord Grimstone of Boscobel Excerpts

Tuesday 28th July 2020 Lords Chamber

[Lord Rooker]

To ask Her Majesty’s Government what is the current balance of trade between the United Kingdom and Russia.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, total trade between the UK and Russia stood at £15.8 billion in the year to March 2020, an increase of £290 million over the same period last year. UK exports to Russia in this period amounted to £5.9 billion, with Russian imports in the same period totalling £9.9 billion.

[Lord Rooker (Lab) [V]]

I thank the Minister for his Answer, but will those figures be improved by the Prime Minister prostituting himself and his office in the interests of getting Russian money through the London laundromat and into Tory party funds?

[Lord Grimstone of Boscobel]

My Lords, let me make it quite clear that money obtained through criminality or corruption is not welcome in the UK. We have long recognised the corrosive risk of dirty money, including from Russia, being laundered in the UK. We continue to bring the full capabilities of law enforcement to bear against serious criminals, corrupt elites and their assets.

[Baroness Rawlings (Con) [V]]

My Lords, it is encouraging that HMG hold that

“trade and investment can be a lever for stabilising relations”

and

“increasing UK prosperity”.

What trade arrangements and investments are being planned and developed with Russia for after 2020? The Prime Minister said that he did not want to become a Sinophobe; does that mean nor a Russophobe either?

[Lord Grimstone of Boscobel]

My Lords, the Department for International Trade team at our embassy in Moscow is working with a pipeline of over 90 Russian companies that have expressed an interest in the UK. This work is taking place this year and will continue in the following year, notwithstanding external factors.

[Lord Kilclooney (CB)]

My Lords, having spent a month travelling between Moscow and St Petersburg, I recognise how important Russia is to the future of Europe, especially with the advance of China. Trade is one way of improving relations between Russia and the United Kingdom. Can the Minister say that real trade, excluding energy products, is increasing between the United Kingdom and Russia? Will he confirm that, as a result of Brexit, Russia will be a priority in our new trade agreements?

[Lord Grimstone of Boscobel]

My Lords, trade between Russia and the UK is broadly stable. Our objectives for Russia are driven by our Russia strategy, which holds that trade and investment can be a lever for stabilising relations, increasing prosperity, supporting deeper ties and binding Russia to the rules-based international order. There are no plans at present to attempt to negotiate a free trade agreement with Russia.

[Lord Foulkes of Cumnock (Lab Co-op) [V]]

My Lords, with respect, the Minister has not answered my noble friend Lord Rooker’s Question. Does he accept that our trade negotiations with Russia are being compromised because of a total of £3.5 million in donations to the Tory party and payments to 14 government Ministers from Russian sources?

[Lord Grimstone of Boscobel]

My Lords, I thought that I had made it clear that there are no trade negotiations going on at the moment with Russia. I resent the assumption that Ministers would in any way be influenced by the matters to which the noble Lord refers.

[Lord Purvis of Tweed (LD)]

There have been strict sanctions on trade with Russia because of the Putin Government’s authoritarian actions and human rights abuses since 2014. Now, as mentioned, China could be added to that category. In April 2018, the Minister told Bloomberg News, regarding China:

“The fact that Xi is prepared to give such strong authoritarian guidance within the context of a market economy is great for companies like mine”.


What assurances can the Minister give that he does not similarly admire the Putin regime and its approach to repression and human rights abuses and that UK trade should not be blind to this?

[Lord Grimstone of Boscobel]

My Lords, the quotation to which the noble Lord refers was a selective quotation picked up by Chinese newspapers from a much longer speech. I hold no candle for any authoritarian regime and I am pleased to confirm that in front of the House.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, Her Majesty’s Government recently confirmed that the attendance and participation of UK companies at the St Petersburg International Economic Forum was entirely a matter for their decision. Can the Minister explain how such unmoderated attendance at SPIEF is compatible with ensuring that we continue sanctions, and compliant trade and investment, with Russia?

--- Later in debate ---

[Lord Grimstone of Boscobel]

My Lords, UK companies are well aware of what aspects of trade are covered by sanctions. I would be most surprised if any of them do not abide by those rules strictly. We believe that trade that is not covered by sanctions can, as I have said before, be a lever for stabilising relationships.

[Lord Balfe (Con) [V]]

I point out to the noble Lords, Lord Foulkes and Lord Rooker, that the last Labour Government were also very keen to get Russian government money into Britain, but the Russians have clearly got their measure now, because they do not give them any money. Trade involves interaction. If we are going to keep Russia onside, we need to remember not only the human rights side of things but the need to promote trade and encourage western values, and we need to encourage people to go to the St Petersburg fair. Can I have the Minister’s assurance that we will pursue an even-handed strategy, as opposed to a prejudiced one, when dealing with Russia?

[Lord Grimstone of Boscobel]

My Lords, we are quite clear that trade does not have to come at the expense of labour, the environment, human rights or sustainable development. We use trade because we want to ensure that economic growth and development and environmental protection can go hand in hand.

[Baroness Falkner of Margravine (Non-Afl) [V]]

My Lords, the Minister will know that financial services are in surplus in our trade with Russia. Does he agree that however desirable that might be, it does not benefit the City of London to be referred to as a laundromat for Russians to wash their dirty money? Will he call together the City institutions to discuss how the measures in the Sanctions and Anti-Money Laundering Act 2018 can be tightened, as clearly the current institutions do not seem to have either sufficient funding or the powers to regulate them?

[Lord Grimstone of Boscobel]

My Lords, as a previous banker, I abhor illicit finance working its way through the City. It benefits nobody, and no respectable City firm would want to touch it. At every opportunity, I will certainly raise the points that have just been made.

[Baroness Smith of Newnham (LD) [V]]

My Lords, the Library’s note to us suggests that of UK services’ trade with Russia in 2019, the fifth largest item in imports and exports was government services. Will the Minister tell us what government services were provided to Russia?

[Lord Grimstone of Boscobel]

My Lords, I am afraid that I do not have the fine print on that with me, so, if I may, I will write to the noble Baroness.

[Baroness McIntosh of Pickering (Con)]

My Lords, can my noble friend explain to the House whether he thinks that the trade deficit with Russia will widen or narrow in the next year? Will he also celebrate with me the fact that the Russian audience for the Russian digital service offered by the BBC World Service is up by 32%, which can only help to boost our trade with Russia?

--- Later in debate ---

[Lord Grimstone of Boscobel]

My Lords, the UK reported a total trade deficit of £4 billion with Russia in the year to March, compared to a figure of £4.6 billion in the previous year. External factors such as Covid-19 may have an impact on the UK’s international trade in 2021, so at this moment it is impossible to forecast. I very much applaud the fact that the voice of the BBC can be heard clearly and loudly by the Russian people.

[The Deputy Speaker (Lord Lexden) (Con)]

My Lords, the time allowed for this Question has elapsed. We now come to the fourth Oral Question.