Exiting the European Union and Global Trade

Tom Brake Excerpts

Thursday 6th July 2017 Commons Chamber

[Sir William Cash (Stone) (Con)]

I would like to quote what Angela Merkel has said quite recently, but first I would like to say that I entirely endorse every single word that my right hon. Friend the Secretary of State said—not to flatter him, but because it is practical. He has shown a command of the subject that completely belies the tittle-tattle that the hon. Member for Brent North (Barry Gardiner) talked about. It has been my happy experience to notice that my right hon. Friend has a complete command of the subject.

What my right hon. Friend said is enormously important. That includes, in particular, the historical—but not nostalgic—background to his remarks. This country has, for the past 400 years, built up a policy of external, global trading, right the way through from the Elizabethan period—in fact, even earlier than that, in the late 15th century. He mentioned Robert Peel. I hope he will not mind my mentioning the fact that Peel was driven into the repeal of the corn laws by no less than Richard Cobden and John Bright during the massive battle over that issue. That liberalised the whole trading system. Indeed, the French commercial treaty of 1860—the first ever free-trade treaty in the world—was negotiated on the initiative of John Bright by Richard Cobden, with Michel Chevalier, who was the president of the French board of trade at the time. This is the basis on which our history has been developed. We have been right all the time that we have stuck with free trade.

I have been much encouraged by the attitude of other countries, including in my right hon. Friend’s meeting with Mr Ross in the United States only a few days ago. With regard to the United States, only one and a half hours ago I watched a live speech by Donald Trump from Poland. Among other things, he said that we must get rid of Government bureaucracy, deal with over-regulation and insist on sovereignty. He said that is the basis of freedom for sovereign nations. My right hon. Friend spoke about our ability to conclude our own trade agreements. That is why we have to unshackle ourselves, by virtue of leaving the customs union, from the fact that the European Commission determines our trade policies—there is no getting away from that.

The hon. Member for Brent North is in a bit of a pickle because, as he knows perfectly well, only last week the hon. Member for Streatham (Chuka Umunna) tabled an amendment on the single market, and it was defeated by the Opposition themselves—they were not prepared to go along with it. I have heard similar remarks made with regard to the noble Lord Adonis’s debate in the House of Lords. There is a kind of schizophrenia on these questions among Labour Members. They do not really know where they stand, and they are completely confused, but I think that a sense of realism is coming into it. I pay tribute to the extremely sensible Opposition Members who are beginning to realise that we cannot stay in the single market and the customs union and leave the European Union, because the two things are completely inconsistent. I know that the hon. Member for Brent North accepts that now.

[Tom Brake (Carshalton and Wallington) (LD)]

rose—

[Sir William Cash]

I will not give way just yet.

The speech by Mr Barnier today is extremely relevant, and I have the benefit of having the full text here. I will not go through every detail of it, I can assure you, Madam Deputy Speaker, but I note that some of the things that he said are highly relevant to what my right hon. Friend the Secretary of State rightly pointed out in his speech. On the question of what happens if there is no deal, Mr Barnier said:

“Here also, I want to be very clear: in a classic negotiation, ‘no deal’ means a return to the status quo. In the case of Brexit, ‘no deal'”,

he claimed,

“would be a return to a distant past.”

He is wrong—that is not the case. I think the hon. Member for Brent North said that under the World Trade Organisation tariffs, there would be a 40% tariff on lamb, but even Mr Barnier says that custom duties would include

“an average of 12% on lamb and also fish”,

which is very different from what the hon. Gentleman asserted. I do not blame him—he was speaking from memory, so I am not criticising him—but I am just pointing out what Mr Barnier said.

Mr Barnier also made the extraordinary assumption:

“In practice, ‘no deal’ would worsen the ‘lose-lose’ situation which is bound to result from Brexit.”

Again, he is wrong. He went on to say:

“And I think, objectively, that the UK would have more to lose than its partners.”

That is just not so. He then went on to reveal what is really going on at the EU and with his negotiating position:

“I therefore want to be very clear: to my mind there is no reasonable justification for the ‘no deal’ scenario. There is no sense in making the consequences of Brexit even worse. That is why we want an agreement.”

They want an agreement because they know, just as Allister Heath, the distinguished editor of The Sunday Telegraph, pointed out in an article two weeks ago, that German car makers are getting really worried about the idea that there will not be an agreement, because that is not in their interests either.

On trading relationships, it is absolutely essential to remember that, while we will continue to have some 40% of our trade—although the figure is declining—with the internal market, or the framework of the remaining 27 member states, we run a monumental deficit of £71 billion a year with the EU, as the hon. Member for Luton North (Kelvin Hopkins) has said. That figure went up by £10 billion last year alone, and we do not even have this year’s figures, which will be even greater. The Office for National Statistics may have indicated to my right hon. Friend the Secretary of State how much worse they will be by this time next year.

By the same token, our global trade surplus with the rest of the world, in goods and services, imports and exports—that is the golden thread and the parameter that international trade statistics rely on—is expanding at an enormous, accelerating rate. That is the basis of our future prosperity. I say with respect to Opposition Members that more effective trade with the rest of the world, including taxing companies, will result in greater profitability. Out of that enormously growing prosperity zone, we will be able to pay for the public services that the public want and we want. The national health service will actually have more money at its disposal as a result of our successful international trading relationship with the rest of the world.

Mr Barnier went on to make an interesting observation:

“To my British partners I say: a fair deal is far better than no deal.”

That may be how it looks, but the truth is that they have to be very careful that they do not put us in the position of having to accept the idea of no deal. If that happens, as my right hon. Friend the Secretary of State has said, the advantages to us of trading on WTO terms are simply not unsatisfactory at all—quite the opposite. We all need to be realistic.

Interestingly, Mr Barnier then referred to the great port of Zeebrugge, which he said he will visit shortly,

“and for which the UK is the primary market with 17 million tonnes of roll-on roll-off traffic in 2016”.

He went on to say that he could not imagine, in the interests of the UK, Flanders and Belgium, that it would be a good idea to have

“an interruption of supply or a highly efficient organisation being called into question.”

We do not want a trade war over ports with the rest of the European Union. As I pointed out in an intervention, it was the EU that introduced the ports regulation. We had a massive row in the House of Commons, including in Committee, and I have been dealing with the issue as Chairman of the European Scrutiny Committee for the past two years. It is, however, going ahead, and the reason for that is that there is no way we can stop it. That is the response to the questions that have been asked. The reality is that until we get our sovereignty back and get the ability to run our own ports system on our own terms, we will be subjected to things like the ports regulation, which was put through by a majority vote behind closed doors. Nobody really knows who decided what. I tried to find out, but we could not make any serious progress in discovering who was making decisions. A lot of it, I think, was coming from Hamburg, because it has an enormous interest in preserving its own position.

The imposed rules were rejected by every single one of our 47 ports—not just the employers but the trade unions, which all piled in and said, “We can’t tolerate this new ports regulation.” Yet there it is, going through, if it has not gone through already while we were away for the general election. The bottom line is that our ports are the arteries for the lifeblood of our international trade, and they have been such for four centuries, as my right hon. Friend the Secretary of State said.

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[Tom Brake (Carshalton and Wallington) (LD)]

I also congratulate the hon. Member for Midlothian (Danielle Rowley) on her excellent speech and the priorities she has set for herself and her constituents. I also congratulate my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on making a confident and polished maiden speech; clearly that particular Stone will be playing a significant role in the cairn of democracy.

I am disappointed that the Secretary of State is not here, because I would have liked to point out to him that the business of attacking national broadcasters is something that Putin and Trump do, and that it is not something that our Secretary of State should be doing.

[Mr Vaizey]

Will the right hon. Gentleman therefore join me in welcoming Robbie Gibb from the BBC, who has just become the director of communications at No. 10?

--- Later in debate ---

[Tom Brake]

I am sure that there will be some excellent cross-fertilisation going on there. Of course I congratulate Robbie Gibb on his new role.

As the Minister will know, the Liberal Democrats favour staying in the single market and the customs union, and we are disappointed that the Government made no attempt to secure that while talking to the other EU countries about freedom of movement. We need to hear the Minister’s assessment of the cost of leaving the single market and the customs union. What would be the cost of reaching no deal? What would be the cost of a bad deal or a good deal? The Secretary of State for Exiting the European Union has said that he cannot tell us what these costs are because we do not know what the deal is, yet we hear successive Ministers saying that leaving the European Union is going to be absolutely brilliant and a bonanza for British business. They can tell us that, yet they cannot say what the cost of leaving the European Union with either no deal or a bad deal would be. Will the Minister tell us what those costs would be, or is there a cover-up going on?

We also need to hear how many deals the Minister expects to be struck when we leave the European Union. How many does he expect to be secured in the first, second, third and fifth years after our departure? We have heard from other Members what the average time is for securing a trade deal. I would also like some feedback from the Minister on the countries with which the European Union has already struck a deal or is about to finalise one. Canada and South Korea are examples, and I understand that Japan is now close to securing such a deal. I would like to know how long those countries think it would take to secure a new deal with the UK at some point in the future. Given that informal discussions have started, I also think we are entitled to know what countries such as China, India and Brazil have been saying to the British Government about their expectations of how many more Chinese, Indian and Brazilian citizens will be able to come to the UK on the back of any trade deals. People will be interested to know those facts.

The Minister has heard from many contributors this afternoon about the importance of freedom of movement. He will have been lobbied by a series of companies and organisations across the board about their concerns over the impact of restricting freedom of movement. He will have heard from companies that innovate, and from companies similar to the one in my constituency that is worried that it cannot gain access to engineers from the UK, because we simply do not have enough of them, and that the number of engineers from the European Union, on whom it relies, is already decreasing because those people are seeking opportunities elsewhere. Such companies know that it will cost them more to secure engineers from outside the European Union because they will have to pay visa costs. That is already happening with the recruitment of nurses. My local hospital is no longer recruiting nurses from the European Union because they do not want to come here, partly because of the fall in the value of the pound. Instead, it is securing nurses from India and the Philippines. However, it is now having to pay roughly £1,000 per visa for each of those nurses—a cost that it did not have to meet for nurses from the EU.

We also need to hear what the Government are trying to embed in these trade deals. We have heard the Secretary of State for International Trade talk about the shared values he has with President Duterte of the Philippines. I do not have that many shared values with someone who is on record as saying that he has gone around his country using extrajudicial killings to dispose of drug dealers, but maybe the Secretary of State does share values with him. We need to hear from the Minister how he is going to embed issues such as human rights and environmental rules into the trade deals. We need to be sure that they will be decent deals and that they will not simply be secured at any cost.

Earlier today I asked the Leader of the House to confirm whether the Government will release the report on the funding of extremists in the United Kingdom. I am worried that the report may not be published simply because it might jeopardise the trade deals we have secured with Saudi Arabia.

[Bim Afolami (Hitchin and Harpenden) (Con)]

rose—