International Trade and Geopolitics

Wera Hobhouse Excerpts

Thursday 20th April 2023 Commons Chamber

[Richard Fuller]

Actually, the hon. Gentleman is exactly right. He and I share a concern for the defence of taxpayers’ money: if it is going to be spent, it should be spent wisely. If a strategy is not working, that is fine, but the point that I raised at the start of my speech was that we hold different points of view on whether industrial strategy per se will be an answer to the problems. My general position is that leaving the market and businesses to themselves and allowing the free allocation of capital in open and competitive markets has proven time, time and time again to be the best way to achieve progress, with better living standards for households in this country and around the free world. That is why the developed nations are the developed nations: because we have supported that approach.

[Wera Hobhouse (Bath) (LD)]

rose—

[Richard Fuller]

I know you are being very lenient today, Madam Deputy Speaker, so I give way.

[Wera Hobhouse]

Nobody—certainly no Liberal Democrat —would pretend that wealth is created by the state. It is created by businesses, but what business leaders have said time and again is that the Government need to set a direction. Is it not true that this Government are currently giving no purposeful direction to business, particularly when it comes to the green economy and the transition to net zero?

[Richard Fuller]

The hon. Lady is right that businesses like certainty—that is absolutely true. Setting a direction, inasmuch as it creates certainty, is useful; more than that, it is a strong part of the foundations. If we go on to talk about climate change in this debate, it may be that questions about national and international strategies and about what our response should be to issues among British businesses, businesses in other countries and multinationals will drive us apart again.

--- Later in debate ---

[Richard Fuller]

I am grateful to the right hon. Gentleman for taking part in the debate. I do not think I agreed with anything else in the Labour party’s 2017 manifesto, but the point that he has just made is a point for the ages for whoever is in the Treasury.

In addition to my concern about taxpayers’ money, behind the big funding race between the EU and the US to put amounts of money at risk in a casino of green discovery is an open question about the trajectory of unit costs for the materials that will be required by those sectors that will assist us to achieve net zero. When others are rushing to do something, it is a natural human urge to rush to do it too. We can all remember the shortages of toilet paper at the start of covid, which was a shortage for no apparent reason. Because everyone else was buying loo paper, we all thought we should buy it. As we know, that created a surge in unit cost, which abated and—although I have not checked recently—the cost is now back down to a normal market price. As goes toilet paper—perhaps I should not use that phrase—so goes the unit cost for other items. A significant cost will be experienced by early adopters. My question is whether we would be better off participating in that surge in unit costs in an era of technological discovery, or keeping our money in our pocket until the unit costs come down once the successful discoveries have been made.

We should remember that there will always be opportunities for economic gain and financial success, even if the initial discoveries and the bulk of investment are elsewhere. There will always be international flows of trade. For example, in the 1940s and 1950s, most of the motor industry was in the United States, but in the 1970s the UK benefited because it needed to reshore to the UK. That will be the same in other sectors. Look at value-added: iPhones are made in developing countries, historically mostly in China, but most of the value added is in Apple’s design, and the UK has advantages in that area. We can be thoughtful about such areas, but I wanted to put on the record some questions for the Chair of the Select Committee who introduced this welcome debate.

I know that I have tested everyone’s patience with my opening remarks, so I will address another couple of points before allowing time for others. This issue tilts to the Indo-Pacific region, both through the trade arrangements and the infrastructure. The global review that the Government have done is welcome. Much like the hon. Member for Liverpool, Walton, who talked about the issues in Latin America, before getting involved in politics I spent a lot of time in the Philippines, Korea and Australia. It was clear that in those areas of the world, there is not only great opportunity for the United Kingdom, but a great recognition of the talents that we have and a great need for the various skills that we can provide in economics, defence and other areas.

When I hear politicians pooh-pooh the impact of CPTPP as a small percentage of GDP, I worry that they are missing the deeper point that it is a bigger connection. It is part of a globalisation of what the United Kingdom does. It is a recognition not that the UK is a big global superpower, but that it is seen by people around the world as having its place and having things to offer. We should look at this trade agreement as just the start of us pushing further into that part of the world in all the ways that we can.

I yearn for the day when we can do a similar deal across Africa. Trading with countries in Africa and opening up our markets to goods and services from Nigeria, Ghana, South Africa, Kenya and other growing economies is surely not only in our economic interests but in the interests of humanity. The greatest benefit to humanity in economic terms over my lifetime was made by Nixon’s visit to China and its redirection from Russia towards the west, and the consequent movement of hundreds of millions of people in China and surrounding areas into the global trading system. It has been a great sadness to me that the countries in the continent of Africa have not been part of that. For this generation of politicians over the next 10 or 20 years, I hope that we can look to play our small part in achieving that.

[Wera Hobhouse]

As we have a little time and we are debating seriously, does the hon. Gentleman not recognise that cutting ourselves off from the biggest trading partner in the world directly on our shore was the complete opposite of his vision of a global Britain? Of course the European Union also seeks to be open to other trading blocs, other countries and other big nations, and Britain is losing out by having left it.

[Richard Fuller]

The hon. Lady has made her point clearly. She asks if I agree, and the straight answer is, “Absolutely not.” Ahead of the referendum in 2016, one of the most important reasons I felt we should look for a different arrangement from our EU colleagues was that I wanted us to focus on trade and economic interests with the laser-like focus of the UK. People can differ on this, but for me being part of the EU was a compromise too far in the pooling of those interests in an ever more competitive world. That is one of the reasons I felt it was right for us to leave.

Beyond that, we just need to look at the subsequent reactions—and I am critical of the UK in some ways, but I am certainly critical of the EU—in the artificial period that we have now thankfully mostly got past, when everyone was trying to be difficult with everyone else. We are all pleased that the Prime Minister has not only achieved in the Windsor framework the resolution, in large part, of many of the concerns in that frictionful period, but indicated his desire that the EU and the UK should do precisely what the hon. Lady seeks—to work together where we can. In our current position, we do that primarily because we are looking to promote our own focused interests.

It has been a pleasure to contribute to this debate. I have been very complimentary about the Chair of the Select Committee, despite the fact that he is a Labour Member. By leading the debate as he has, he has demonstrated that we can agree in substantial areas even if fundamentally our philosophies start from a different place.

[Wera Hobhouse (Bath) (LD)]

I congratulate my friend, the hon. Member for Bristol North West (Darren Jones), on securing this important debate, which I co-sponsored, and on making such an excellent speech that has sparked such an interesting debate.

I know the Government do not want to hear about the loss of international reputation, but I know it to be true. I have lived in the UK since 1990, and I became a proud British citizen in 2006. I am proud to be a citizen of a country that played such an important role on the global stage, and which I have looked up to all my life. I weep that Britain’s global reputation is now in such peril. If only the Government would listen to our neighbours and to people across the world about the loss of international reputation they face. That would be a good way forward.

Is it not lamentable that no Conservative Members put in to speak in this important debate, with only one putting in to speak retrospectively, albeit interestingly? No other Conservative Member felt it was important to participate in this debate.

The world is in crisis. War engulfs Europe. China is asserting itself on the world stage. Protectionism is on the rise, certainly in this country. The doomsday clock, which measures how close the world is to global catastrophe, is now at 90 seconds to midnight, which is the closest it has been to midnight since its inception in 1947.

The President of the United States has defined this century as a battle between autocracy and democracy, and I am sure everyone in this House agrees. Taiwan is one of the world’s most democratic countries. It is an independent country whose people have the freedom to express themselves, and it provides a striking contrast with its autocratic Chinese neighbour. I do not always laud what is done in the European Union, and the French President has stated that Europe should distance itself from the brewing tension between the US and China over Taiwan. Will the Minister please restate the UK Government’s support for Taiwan? I see the Minister nodding, for which I thank her, but I would like her to make a statement in her winding-up remarks.

People are not only threatened by other countries. Climate change is the biggest risk to people worldwide, and it will only exacerbate the world’s insecurity. Climate change is a threat multiplier. A 27 cm rise in sea levels is now inevitable, and it will be devastating for the 150 million people who live less than 1 metre above sea level. Some 1.2 billion people are set to be displaced due to climate change by 2050. If people are concerned about migration and immigration now, they have not seen anything yet.

Conflict will worsen as resources disappear. Research has shown that every 1°C increase in temperature increases the chance of a riot or civil war by 11.3%. NASA has said that climate change is making droughts more frequent, more severe and more pervasive. This means less fresh water is available to each country, causing major problems in the middle east and Africa. Observers have warned that conflict over the Grand Ethiopian Renaissance dam could erupt into a water war.

We need global responses to global threats, so international co-operation is vital. We cannot fight the climate crisis by isolating ourselves from the world. The UK must be a leader and use all available avenues to strengthen global commitments. Trade deals are a crucial avenue to push countries to adopt better environmental standards. Unfortunately, this Government failed to guarantee British standards on environmental protection in the recent trade deals they negotiated.

It has been reported that the Government have already bowed to Malaysian demands to lower tariffs on palm oil in the CPTPP negotiations. That is terrible for the climate because palm oil-related deforestation and conversion of carbon-rich peat soils is throwing millions of tonnes of greenhouse gases into the atmosphere. The trade deals we negotiate have an impact on the climate emergency.

The Government must not set a precedent that our climate commitments are disposable. If we fail to protect our own interests in trade deals, we will be forced to accept lower standards. The UK must implement a set of minimum environmental standards to benchmark future trade deals and to ensure the environment is a priority when negotiating such agreements.

Prioritising the climate emergency would also improve the UK’s global standing. If the UK is to be a significant actor in the world, it must show far more ambition in its green policies. Putin’s war has shown how long-term dependence on fossil fuels can empower hostile regimes. Russia has used Europe’s dependence on its natural gas as a weapon. If the UK had moved harder, faster and earlier towards renewables, Putin would not have had that leverage and our constituents would not be paying the price for his war.

We must invest in the UK’s renewables sector to secure our energy supply, and we must do much more than is currently being done. The Prime Minister has labelled China as

“the biggest long-term threat to Britain.”

China is currently the biggest investor in renewable energy, accounting for just under half of global energy transition investment. We are already seeing the effects on energy supply chains. Cumulative growth in Chinese wind power between 2021 and 2022 was more than three times greater than in the US and more than seven times greater than in Europe. China’s share of manufacturing for solar power already exceeds 80%. If we want to be a global competitor, we have to get our act together.

By 2029, China could have 70% of the world’s lithium-ion battery gigafactories. Without competition, it is set to dominate electric vehicle supply chains. If we fail to prioritise renewable investment now, we risk moving our energy dependence from one autocratic power to another.

Unfortunately, the Government seem content to sleepwalk into energy dependence. At a time when both the EU and the US are introducing massive stimulus packages, this Government have refused to match the US Inflation Reduction Act. Although the hon. Member for North East Bedfordshire (Richard Fuller) spoke for more than half an hour, I still do not quite understand the connection between toilet paper and investment in the green transition.

There is no investment in renewables, and the Government have slashed their contracts for difference auction budget for renewables by 28%. These are not the actions of a Government who understand the peril we are in. I hope they finally realise that there will be no coming back and no next time if we miss the 1.5°C target to avert climate catastrophe. The Government must show climate leadership in their investment and their dealings with other countries. Our actions now will determine the future of both the UK and the planet.