Commonwealth: Trade

Shailesh Vara Excerpts

Wednesday 22nd February 2017 Westminster Hall

[Mr Shailesh Vara (North West Cambridgeshire) (Con)]

It is a pleasure to serve under your chairmanship, as always, Mr Davies. I commend my hon. Friend the Member for Rossendale and Darwen (Jake Berry) on securing this important debate. To the extent that it is relevant, I declare that I am co-chairman of the Conservative Friends of India group.

Our existing trade with the Commonwealth is not insignificant. In 2015, our exports to the Commonwealth totalled £47.4 billion, and our imports from the Commonwealth totalled £45.5 billion. The Commonwealth is comprised of 53 member states, representing a quarter of the world’s landmass and 2.2 billion people. Some 60% of the Commonwealth’s population is under the age of 30. There can be no doubt about the massive opportunities that lie ahead for our country. Forecasts by PwC suggest that India will be the world’s third largest economy in 2030, behind China and the USA. That is hardly surprising—according to the most recent United Nations global population estimates in 2015, people aged under 35 comprised 64% of the population of India.

Some say we should concentrate on only a handful of Commonwealth countries. UK trade is heavily focused on a small number of countries. For example, in 2015, Australia, Canada, India, Singapore and South Africa accounted for 70% of UK exports to Commonwealth countries and 65% of UK imports from the Commonwealth countries. It is important to remember that, as members of the European Union, we did not simply concentrate our efforts on Germany, France and Italy, but also made efforts with the smaller nations. Likewise, it is important that we do not just concentrate on the larger nations of the Commonwealth, big though they may be.

[Oliver Colvile]

Will my hon. Friend consider that America could be invited to join the Commonwealth, thereby allowing for a trade deal to be done much more simply, as with other Commonwealth countries?

[Mr Vara]

My hon. Friend makes a valid point, but I hope he will appreciate that it is not for us to invite countries to join the Commonwealth.

We are equal partners, and it is important to remember that, in the Commonwealth, we should not pick favourites. We should give the smaller nations equal treatment, particularly given that our aim is to increase trade. There is the potential to increase trade with those smaller countries, too. I will not abuse the extra minute I have received by virtue of that intervention and will make hasty progress.

Britain remains a popular destination for Commonwealth citizens, both for business and non-business purposes. It is right and proper that the Government take seriously the suggestion of my hon. Friend the Member for Rossendale and Darwen on making things easier at our airports. It would send a powerful message to the rest of our Commonwealth partners. Next month’s Trade Ministers meeting seems an appropriate place. I hope the Minister will not say that it is logistically not possible because we are only days away from the meeting. It is perfectly feasible to make the announcement at the Ministers meeting and say it will take effect in three months, six months or whenever we have gone through the logistical procedures.

The Prime Minister has said that we want to build a

“truly global Britain… one of the firmest advocates for free trade anywhere in the world.”

At the Commonwealth Trade Ministers meeting next month, we have the perfect opportunity to make a powerful statement to our Commonwealth partners by doing just that.

--- Later in debate ---

[Barry Gardiner (Brent North) (Lab)]

Your firm guidance and chairmanship, Mr Davies, are always much appreciated by Members.

This has been an excellent debate. I pay tribute to my hon. Friend the Member for City of Durham (Dr Blackman-Woods) and to the hon. Member for North West Norfolk (Sir Henry Bellingham), both of whom spoke very powerfully about the importance of education and visas connected with education. I especially want to draw out the remarks of the hon. Member for Mole Valley (Sir Paul Beresford), who spoke with great knowledge and understanding of the dangers that exist for our farmers.

I pay tribute, too, to the hon. Member for Rossendale and Darwen (Jake Berry) for initiating the debate. I thought it could have been subtitled “The importance of old friends”, because long before the Common Market became a twinkle in Edward Heath’s eye we had the Commonwealth. At a time when we are loosening the bonds with our nearest friends after a 40-year partnership in the EU, we have come to realise the value of those old friends. We seek to strengthen our ties with India, Canada, New Zealand, Jamaica, Australia, Pakistan, Bangladesh, South Africa, Kenya, Nigeria and all 52 Commonwealth members.

Trade is one of the most effective means of creating shared prosperity and decent jobs. Opposition Members understand the power of fair and open trade. We share the dream of the vast majority of people around the world who want to see closer ties between countries. We want to build trade links, not protectionist walls. We are therefore emphatic in our support for promoting trade with the Commonwealth and in welcoming the Commonwealth Trade Ministers conference to London next month. In that regard, I pay tribute to the work of the right hon. Member for East Devon (Sir Hugo Swire).

[Albert Owen in the Chair]

It would be foolish, however, to think that we in the UK may simply pick up where we left off before we joined the EU. The world has changed, the power balance has changed and the nature of global trade has been transformed beyond recognition. Yesterday, His Excellency Y. K. Sinha, the new high commissioner for India in London, made that absolutely clear at a conference in East Anglia. He said that the key to a post-Brexit free trade agreement would be to resolve the issue of workers’ mobility—how familiar does that sound from our Brexit debate? He made it clear that, for India, it is essential to ensure that its financial services and IT professionals could come to and go from the UK freely. He said:

“For India mobility is key”

and went on to point out that a recent study suggested that a free trade agreement could increase UK-India trade by 25%—I use that figure, but the hon. Member for Rossendale and Darwen said 26%. That would boost UK exports by only 0.4% of total exports. The hon. Gentleman spoke of the “huge prize” that that would be, but let us be clear and do the maths: none of the UK’s top 10 export partners is a Commonwealth country. Indeed, in respect of those Commonwealth countries for which the Government have announced trade working groups and dialogues, the volume of exports from the UK is extremely low. India accounts for 1.7% of our exports, Australia 1.7%, Canada 1.2% and New Zealand approximately 0.2%. Let us add Singapore, given the Secretary of State’s recent visit—that accounts for an additional 1.2%.

[Mr Vara]

Will the hon. Gentleman give way?

[Barry Gardiner]

Because of the time, I will not.

The Conservative Free Enterprise Group think-tank identified those countries as the priority target for trade agreements. It also recognised that the 10 largest Commonwealth export markets for the UK account for no more than 8% of our total exports but almost three quarters of our exports to the Commonwealth. Clearly, any shift away from the EU would require a substantial uplift in our export growth to make up for the potential loss from the European Union.

It has properly been said that trade between Commonwealth countries is enhanced and facilitated by the context of shared languages, cultural familiarity and particularly common legal and regulatory frameworks. The various communities in the UK from Commonwealth countries, including those in my borough, Brent, are our very best trade advantage. It is estimated that the so-called Commonwealth effect reduces overhead costs for businesses trading between markets by up to 15%.

However, there has been a move to greater regional co-operation through formalised partnerships and institutions very like the European Union, and the increased regulatory harmonisation that goes with that, which has unlocked similar benefits for those Commonwealth countries. It can be no coincidence that the countries mentioned by the hon. Member for Rossendale and Darwen are all members of the Trans-Pacific Partnership agreement. That drive to regional partnerships is significant. We must consider that, although the United Kingdom has determined that it will withdraw from the EU, many Commonwealth countries seek precisely to strengthen their own participation in such regional agreements, and not to recreate the Commonwealth’s old links with the UK. Two Commonwealth countries—Malta and Cyprus—remain members of the EU and will find themselves similarly restricted from pursuing the trade agreements that the UK now seeks.

I will try to move to a close in the next couple of minutes, Mr Owen, as I was asked to. That means leaving out a great deal, but let me pick up one essential thing. By withdrawing from the European Union, we will leave the EU’s generalised system of preferences, which allows developing countries favourable market access through generous tariff reductions, which essentially remove tariffs on approximately two thirds of imports from those countries.

I want to ask the Minister about the GSP-plus enhanced preference scheme for countries that have ratified and implemented core international conventions relating to human and labour rights, the environment and good governance, and the “Everything but Arms” arrangement for least developed countries, which grants duty-free and quota-free access to all products from those countries except arms and ammunition. Will he give us a strong reassurance that, when the UK leaves the EU, those very poorest countries, many of which are Commonwealth countries, will not see their exports to the UK effectively fall off a cliff edge? Will he assure us that the Government will continue the generalised system of preferences arrangements after the UK leaves the EU?