Exiting the European Union and Global Trade

Patrick Grady Excerpts

Thursday 6th July 2017 Commons Chamber

[Hannah Bardell]

I absolutely agree with everything my hon. and learned Friend says.

The Secretary of State alluded in his opening comments to trade deals with countries such as India, particularly on whisky. Are he and his colleagues not concerned that when the Foreign Secretary visited India recently he was advised that:

“Mobility issues are of importance to us; we cannot separate free movement of people from the free flow of goods, services and investments”

Trade agreements are about give and take. The Government, the Ministers on the Front Bench and others who have spoken do not seem to understand that concept.

The plans for a hard Tory Brexit have already immersed the UK economy in uncertainty, with inflation escalating and companies preparing to move their operations outside the UK. [Interruption.] Conservative Members chunter from a sedentary position, but they only need to open the papers every day to see examples of that. Figures from the National Institute of Economic and Social Research suggest that Scotland’s exports could be cut by more than £5 billion if we fail to retain full membership of the single market. The research also shows that trade in goods could decline by 35% to 44%. If exports of Scottish goods were to fall by a similar amount, the additional cost would be about £3 billion. According to the UK Government’s own analysis, leaving the single market could reduce Scotland’s GDP by more than £10 billion.

At the end of this process, when we have clarity on whether there is a deal or no deal, if the Government have not taken on board Scotland’s position, which I will come on to later, we must have an insurance policy. We must have a say over our own future and be able to decide whether we want to be an independent nation within Europe. That is why Scotland’s main business organisations issued a joint statement on 8 July last year, confirming that Scotland’s businesses need continued access to the single market and free movement of labour.

Since then, those organisations have all repeatedly raised concerns about the impact of Brexit on business, including on access to labour, both skilled and non-skilled. For example, the loss of EU nationals will seriously harm our rural economy. About 8,000 EU nationals come to live in Scotland and work in the food and drink industry, and 15,000 seasonal migrant workers harvest our world-class fruit and vegetables. We cannot put their futures or the future of our vital sectors at risk. EU nationals also make a huge contribution to our NHS. One in 20 NHS doctors in Scotland comes from the EU. More than 1,000 companies owned in the EU employ over 127,000 people in Scotland and about 181,000 EU citizens live in Scotland, bringing vital skills and expertise. We heard only last week that the rate of applicants for nursing posts from the EU has dropped by 96%. That will be devastating across the UK.

Scotland is an open and modern economy. Our exports of goods and services account for about 50% of our GDP. That is why our membership of the single market is so crucial to our economy. Through the EU, Scotland trades with the world. The EU has signed free trade agreements with nearly 90 non-EU countries. Free trade agreements are already in place with 62 countries and the agreements with 28 countries are still to be applied. The Secretary of State said in his comments that he hoped they would be ratified soon. Those agreements are driving growth in Scotland’s trade with the rest of the world, which increased by 55% between 2007 and 2015.

If we are not able to continue with those trade agreements—we know how long many of them may take—then cumulatively it could be decades before we even reach the position we now have with full access to the single market. Scotland’s businesses are well placed to take advantage of the opportunities to sell their products across Europe and the world. If we leave the single market, we gamble with a market of 500 million people and free trade deals with 90 countries around the world.

The Tory manifesto contained a pledge to leave the single market and the customs union. Given that the Tories failed to gain a clear majority, they must think again, put those options back on the table and make them central to their negotiating position. It just went to show the contempt the UK Government have for Scotland when we heard the Brexit Secretary admitting to the Exiting the European Union Committee and, indeed, the rest of the UK in March 2017 that no economic analysis—none—had been done to address the impact of Brexit on the UK economy. How can we have been in a position whereby not only was an impact study not done before we went into the referendum, but in all of the time between then and coming to that Committee no work had been done? This was compounded by comments on “The Andrew Marr Show” recently, where the right hon. Gentleman, who is opening negotiations for the UK, was unable to confirm that the UK would get a free trade agreement with the EU; it was very much a case of, “Mebbe’s aye, mebbe’s no.” The Secretary of State’s comments show just how disorganised he and the Tory party are on Brexit and our future trading relationship with the EU.

Just this week, the Financial Times reported that the City of London was sending a delegation to Brussels to present a secret blueprint for a post-Brexit free trade deal on financial services. The City is left to do the work of the Government for itself.

Concern mounts over the damage facing employers if they are forced to move operations to the continent. Not every sector is able to do that, or should do that. We should have a Government who are listening to the devolved nations and all those sectors. This is just the latest indication that businesses do not trust the Tory Government.

The SNP Scottish Government put forward a very sensible compromise agreement on Scotland’s place in Europe, respecting the results in 2014 and of the EU referendum. It laid out a sensible and pragmatic approach to the situation we now find ourselves in: that Scotland could retain its membership of the single market and remain within the UK.

In Scotland, we are working hard to support SMEs and corporates with initiatives like the Borders enterprise agency, which was just launched, with a focus on meeting the region’s distinctive economic needs. We have also launched the Scottish-European Growth Co-investment Programme, the first part of the Scottish growth scheme, with £50 million from Scottish Enterprise and £50 million from the European Investment Fund, which will leverage at least £100 million from private sector fund managers. Evidence of the fruits of the Scottish Government’s labours were borne out by yesterday’s GDP data, which showed the Scottish economy defying recession concerns and growing at 0.8%, compared with the UK average of 0.2%.

But this is set against a backdrop of Brexit uncertainty giving businesses much pause for thought in investment decisions. The Chancellor has conceded that a “large amount” of UK business investment is being postponed, and urged early agreement with the EU on transitional arrangements. Our growth is under threat, and we need to hear more than warm words from the Government Benches. The Governor of the Bank of England, Mark Carney, spoke of “anaemic wage growth” and said he would like in coming months to see

“whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.”

Scotland’s voice is being ignored. That is not democratic, and it is not acceptable. Scotland is the top destination in Europe for exports from the rest of the UK, so it is in everybody’s interests to have a close trading relationship, because the European single market is Scotland’s real growth market, and is eight times bigger than the UK market alone.

The Secretary of State for Exiting the European Union said on a recent visit to Ireland:

“Ireland will not have to choose between having a strong commitment to the EU or to the UK—it can and should have both.”

Why, then, can that not apply to Scotland?

In a press conference in Dublin on 30 January 2017, the Prime Minister said that the UK would maintain

“the common travel area and excellent economic links with Ireland.”

Again, I ask why that cannot apply to Scotland?

There must be a meeting of the UK and devolved Governments to decide objectives before the next cycle of negotiations with the EU this month, and there must be a commitment to take seriously, and act upon, the interests of Scottish businesses, universities and a range of other groups becoming increasingly alarmed at the way Brexit is being handled.

Scotland’s voice must be heard during the Brexit negotiations. Only recently we heard from a surprise supporter of that long-held SNP view. The Labour party leader, the right hon. Member for Islington North (Jeremy Corbyn), took time out from partying at Glastonbury to write for the Sunday Herald saying that Scotland needs a clear input into the Brexit negotiating process. He said:

“The Scottish Government must have regular and systematic access to the British negotiating team so that the Scottish perspective, especially in those areas for which the Scottish Parliament is responsible, is fully taken into account.”

That is very welcome; it is just a shame that his party cannot be united on access to the single market and the customs union. Will this Government finally acknowledge the overwhelming support for a Scottish seat at the Brexit table and extend the hand of friendship to all the devolved nations to enable them to take part in these negotiations, which will affect their people, their economies and their future?

This Conservative Government are cowed and reduced; they failed resolutely to start negotiating a trade deal with the EU at the same time as the exit deal. We in the SNP believe that it is important to maintain our international development goals and ensure an ethical trade policy. To ensure that our international development goals are maintained, the Scottish Parliament must have a real say on any trade deal that is negotiated. ActionAid has ranked the UK joint worst in the world for having the largest number of treaties with developing countries that most restrict the rights of poor countries to tax UK companies operating there. That is not acceptable and it does the UK’s reputation no good on the world stage. The SNP will continue to defend Scotland’s interests and prioritise maintaining Scotland’s membership of the single market and the customs union in the Brexit negotiations.

[Patrick Grady (Glasgow North) (SNP)]

My hon. Friend mentions our relationships with developing countries. Resolving the tax treaty with Malawi was a priority for many Members in the last Parliament. Malawi is neither too small nor too poor to be independent, despite its many challenges. Today is its independence day, and I am sure that we all wish it a happy independence day.

[Hannah Bardell]

I share my hon. Friend’s sentiment in wishing Malawi a happy independence day. I note the work that many Members across many different parties have done on Malawi, not least the former Labour First Minister, Jack McConnell, who I know continues to champion that work in the other place.

It is vital that the Brexit negotiations are carried out alongside a firm commitment to developing an ethical trade policy. I say to the Prime Minister and her Government that they will not get any kind of unity or agreement by ignoring the issues that they find in front of them. It is time to take their heads out of the sand, face the music and work with the devolved Administrations and other Members across the House so that we can get the best possible deal.