Trade and Customs Policy
Lord Price Excerpts(6 years, 5 months ago)
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Lord Price (Con)
My Lords, as this is the first time that I have spoken in your Lordships’ House since I stepped down as the Minister for Trade Policy, I will start by congratulating the Minister on her appointment and wish her every success. I also thank the dedicated, hard-working and extremely able civil servants who supported me during my time in office, in particular Rob Cook and latterly Matt Fry, who ran my private office, and the senior team in trade policy led ably by John Alty, who oversaw an increase in their department number from 45 at the time of the EU referendum to around 550 this autumn. They will need all that resource as they take on the unprecedented task of establishing the UK’s independent schedules at the WTO, rolling over the current EU third-party trade agreements, establishing new trade agreements, supporting DExEU in its work on a new trade deal with the EU, and putting in place a UK trade remedies regime.
The trade Bill and the customs Bill will provide the necessary framework for the department to carry out that work, and I am wholly supportive of the Government’s approach. The Bills bring to life the Prime Minister’s clearly stated objectives: that Brexit means Brexit and we are leaving the EU; that we will strike a comprehensive free trade agreement with the EU; that we will strike new FTAs with other countries; and that we will avoid a cliff edge for businesses. Although I voted to remain, I can see that the UK, as the world’s fifth-largest economy, is perfectly capable of having a successful, independent trading future. It is clear to me that continued membership of the single market is not consistent with the vote to leave the EU. No fewer than 18 European Trade Ministers told me independently that the four freedoms and single market membership are indivisible—you cannot cherry pick, in their words.
Alternatively, membership of the European Economic Area or the Customs Union will constrain the UK’s economic opportunities around trade. We will be followers on regulation and will be obliged to offer third-party countries the same inward tariffs as Europe negotiates—but will then have to independently negotiate our own export and investment agreements with the same third-party countries, putting UK businesses at a disadvantage.
All of that makes a comprehensive FTA with the EU the most economically literate outcome. Our first step must therefore be to try to maintain what we already have. To ensure that there is no cliff edge and to make things as straightforward as possible for business, the Government plan to set out our independent schedules at the World Trade Organization which will replicate, as closely as possible, our current EU schedules. This will provide continuity for businesses that trade with countries not currently covered by bilateral agreements, such as the USA, China, India and others.
You cannot drop out of the multilateral trading system, and I am sure that the tried and trusted approach of using actual historic usage to determine future tariff rate quotas will be hard to overturn if any appeal is forthcoming. I welcome the Government’s approach to signing the UK up to existing plurilaterals in the WTO such as the GPA. These will continue to provide consistency for UK businesses. I cannot find common cause with those who suggest that we should adopt unilateral tariff reductions at the WTO. While it would undoubtedly reduce the cost and increase the range of goods and services open to consumers, it would produce a damaging shock to a currently underproductive UK economy and make the chances of reciprocal arrangements almost impossible, creating a permanent disadvantage for UK businesses.
Lest we forget, around 75% of all taxes are raised directly or indirectly from business. Its success pays for our schools and hospitals. There is an inextricable link between the success of business and what a society can sustainably afford. That is why I applaud the further consistency of trade that will come from rolling over or grandfathering our current EU third-party FTAs, EPAs and association agreements, as set out in the White Paper.
Following the referendum, I visited 35 countries and met 75 Foreign Ministers. They all agreed that they wanted continuity of trade, and for the existing arrangements to apply post March 2019. They all committed to a process of working to secure that, not wanting a break and to fall back to less favourable WTO terms. I welcome the Government’s continuing support of EU FTAs not yet fully ratified with Canada, Singapore, Japan and Vietnam, and I hope that these, too, can be grandfathered once we have left the EU. There is certainly an appetite for that to happen.
Then there are the new agreements. The Prime Minister has announced nine working groups to explore new FTAs covering 15 countries. They will take time to deliver, post Brexit, but they are real. As I travelled the world, there was an enthusiasm to trade with Great Britain. I welcome the fact that the Government will continue to offer the poorest countries duty-free, quota-free access to the UK and adopt the generalised scheme of preferences for the next tier, as well as grandfathering the existing asymmetric economic partnership agreements in Africa, the Caribbean and the Pacific.
Lastly, I welcome the Prime Minister’s commitment to a transition period to allow time for all these things to fall into place. It is a sign of understanding to business that the challenges as well as the opportunities are recognised. The vision that the Government paint of an open, liberal, free-trading Britain competing on a global scale with reciprocally reduced tariffs and access is economically compelling, but not something that I suspect businesses or employees are yet prepared for. Our productivity needs to increase by around 18 percentage points just to meet the average of the G7 countries—let alone be a global leader. This may not be the vision of Brexit that many voted for, and expectations will need to be carefully managed.
The whole endeavour will not be easy. Many say that it is the most difficult peacetime challenge that we have faced. Some realism as to the scale of the task would be welcome on all sides. However, I see little point in adopting an “I told you so” approach to the inevitable and previously debated challenges of Brexit or in repeating points on how difficult it all is—save in a way to constructively improve our position or to check understanding.
The EU nations have rallied in common cause to enhance their economic position and we should now do the same. Hopefully, having tackled Brexit as swiftly as we can, we can move on to the substantial social issues that this country faces at the beginning of the 21st century: those of fairness for all and how we adjust to benefit successfully from the new digital era.
Brexit: Commonwealth, Trade and Migration
Lord Price Excerpts(7 years, 2 months ago)
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Baroness Berridge
To ask Her Majesty’s Government what is their assessment of future trade and migration from and to Commonwealth countries after the United Kingdom leaves the European Union.
The Minister of State, Department for International Trade (Lord Price) (Con)
Our links with the Commonwealth are extremely important. We enjoy excellent trading relationships with Commonwealth partners and are committed to strengthening these further. As we leave the EU, openness to international talent will remain one of this country’s most distinctive assets. The process will be managed properly so that our immigration system serves the national interest. The precise arrangements are yet to be determined.
Lord Price
My noble friend asks an excellent Question and clearly one that many in the House want to rise quickly to ask further questions on. I am delighted to say that trade with the Commonwealth has grown sharply over recent years, in fact by about 10% a year since 1995. Trade with the Commonwealth stood at almost $700 billion last year and is projected to hit $1 trillion by 2020. Last week I am delighted to say that we had the inaugural meeting of Commonwealth Trade Ministers here in London, co-hosted between the UK and Malta. One thing that we talked about was the need to continue to have the very best movement of the brightest between Commonwealth countries to continue to build that trade. It is a point that the Secretary-General and the Commonwealth Secretariat will take away to work on with all 52 members of the Commonwealth.
Lord Mendelsohn
My Lords, I apologise for my enthusiasm earlier for this topic. I am sure that the whole House recognises and congratulates the noble Lord, Lord Marland, on his excellent work to organise the Commonwealth Trade Ministers’ meeting. When will the Government reply to his letter with an apology for claiming credit for organising it, as was outlined in the White Paper, when it was the Commonwealth that did so? Furthermore, do the Government understand that our chances of success in trade with the Commonwealth will be enhanced if we treat it as the modern free association of nations that it is, rather than as a British possession, as the incorrect claim seems to suggest to other Commonwealth nations?
Lord Price
I am delighted to put on record our thanks to the noble Lord, Lord Marland, for organising the first day of the two-day conference. I think the White Paper said that the conference was going to be held in the UK rather than it being organised by the UK. If it did not make that clear, my apologies once again. My noble friend did a wonderful job in bringing together 37 Trade Ministers from across the Commonwealth and we had very fruitful meetings.
On the noble Lord’s second point, the meeting drew out the fact that there are a wide range of economic opportunities and challenges across those 52 countries. Some are subject at the moment to GSP schemes from the EU, others have economic partnership arrangements, and a number have free trade agreements. All need to be treated differently so that we can achieve the best outcome for all 52 countries.
Viscount Waverley (CB)
My Lords, does the Minister agree that there is certainly a role for government, not least to create the environment to allow the private sector to thrive? However, UK industry and multipliers should be looking to partnership with their peers across the Commonwealth for corporate opportunities.
Lord Price
I very much agree with the noble Viscount that this is best handled on a business-to-business level. However, the Government have a role to ensure that we have the very best framework to allow businesses to prosper by trading with each other.
Lord Purvis of Tweed (LD)
My Lords, the United Kingdom currently enjoys free trade agreements with 32 out of the 52 Commonwealth countries by virtue of our membership of the European Union customs union. The Commonwealth Secretariat has said that if we leave that union and revert to World Trade Organization rules, such positive trading relations with those countries cannot be guaranteed, and not only that; the secretariat has also calculated that, on 2015 figures, the least developed Commonwealth countries would have faced $800 million of increased tariff payments to export to the United Kingdom if we were on WTO rules. Which part of that does the Minister agree would be, to quote the Foreign Secretary, “perfectly OK”?
Lord Price
The main point of our meeting last week with Trade Ministers from around the Commonwealth was to agree a smooth transition, whether there will be an association agreement, a GSP scheme, an EPA or even an FTA. As the noble Lord pointed out, there are a number of countries in the Commonwealth with which we currently do not have FTAs, or any agreement other than WTO. At the moment, we are on WTO terms with Australia, New Zealand, Canada, India and many others. We believe that in the new world all those can be improved to the benefit of the UK and the Commonwealth as a whole.
Lord Pearson of Rannoch
My Lords, do the Government agree that the EU single market will continue in long-term and irreversible decline, whereas the Commonwealth contains many of the markets of the future?
Lord Price
I thank the noble Lord for his question. I am not able to predict the future of any part of the world, but I can say that the UK’s trade outside the EU has grown more quickly in recent years. Over the last five years or so it has grown by 6% inside the EU but by more than 14% outside it. We therefore feel very optimistic that in a new world of trading more powerfully individually outside the EU we can boost UK exports.
Lord Anderson of Swansea
My Lords, New Zealand, for example, is currently negotiating a comprehensive free trade agreement with the European Union. If, after Brexit, which will be at least two years hence, we also seek to have a separate free trade agreement with New Zealand, in what way will we benefit more than if we had remained a member of the European Union?
Lord Price
It is incredibly difficult to answer that question, because we do not know the shape of the EU agreement with New Zealand and what it will agree nor whether in fact it can do it within two years or whether it will take much longer. Equally, I cannot say today what the deal will be with New Zealand. The Prime Minister has announced a working group, which will begin in due time. I am confident that the UK will be in a position to strike comprehensive and beneficial trade deals for the United Kingdom.
Bilateral Trade: Sri Lanka
Lord Price Excerpts(7 years, 3 months ago)
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The Minister of State, Department for International Trade (Lord Price) (Con)
As the UK leaves the EU, our aim is to avoid disrupting the strong trade relationship we have with Sri Lanka. In the future we will consider all opportunities to deepen this relationship and expand bilateral trade. I look forward to discussing this with the Sri Lankan Government at the meeting of Commonwealth Trade Ministers in London this March.
Lord Sheikh (Con)
My Lords, I thank my noble friend the Minister for his reply. Sri Lanka is expecting economic growth of 5.5% this year, and has signed free and regional trade agreements with other nations, with another under negotiation with China. Does the Minister agree that Sri Lanka should be an integral part of our global business strategy to approach new international markets? Will he consider the possibility of appointing a trade envoy for Sri Lanka and of sending a ministerial-led trade delegation to the country?
Lord Price
I agree with my noble friend that the economic situation in Sri Lanka is improving. We are delighted to see the growth forecast of 5.5%. It is also heartening that exports from the UK to Sri Lanka increased by 46% in 2015 and exports from Sri Lanka to the UK stood at £1.1 billion. More than 100 UK companies have an affiliation in Sri Lanka. I am delighted that the UK Government are keen to support Sri Lanka moving to the GSP Plus scheme, which will remove tariffs on 66% of goods. At the Commonwealth meeting that we are holding next month we hope to think more about how we can strengthen those ties. There are no plans to have a trade envoy for Sri Lanka but we will continue to work with it to improve our trade relationships.
Lord Wallace of Saltaire (LD)
My Lords, the Minister puts a great deal of stress on the Commonwealth as a framework. We have heard a great deal from the Government about how the Commonwealth, as a network, is going to replace Europe as the driver for British exports. Will he give us some specific examples of cases where membership of the Commonwealth has inclined the Sri Lankan Government or companies in Sri Lanka to favour the British against others in particular contracts?
Lord Price
We believe that there are extensive opportunities to improve trade throughout the Commonwealth, and that is what our meeting next week is going to draw out. The Prime Minister has already announced working groups with Australia, New Zealand and India. We want to work with all 52 countries in the Commonwealth on how we can drive forward the best possible trading relationships. There are many ways that can be done. They can be unilateral arrangements; they can be EPAs or FTAs. We need to consider for each country what is in their best economic interests and those of the Commonwealth.
Lord Rogan (UUP)
My Lords, Sri Lanka had a torrid time with civil unrest for many years. Thankfully, those terrible times have ended. Does the Minister agree that trade with Sri Lanka, and improving the economy of that country, will strengthen and help cement that peace process?
Lord Price
I agree. Trade indeed brings peace and prosperity and, through that, improves living standards. Improving our trade links with Sri Lanka and other Governments will lift people from poverty and bring a peace benefit.
Baroness Symons of Vernham Dean (Lab)
My Lords, I declare an interest as the chairman of the Arab-British Chamber of Commerce. These free trade agreements—not just in Sri Lanka, but elsewhere—are a crucial part of government strategy over Brexit. In your Lordships’ House there is a great deal of interest in how they will develop. Will the Minister consider convening a meeting of interested Peers to brief us on how free trade agreements are going and what has to be taken into consideration?
Lord Price
My Lords, I am convinced that, over the next two years, there will be an awful lot of briefings for Members of this House and the other House about our trade arrangements. I reassure noble Lords that at some point we will be able to talk about our trading relationships and trade policy.
Baroness Berridge (Con)
My Lords, I am sure that my noble friend the Minister will draw to the attention of fellow Commonwealth Trade Ministers the recent research which revealed that it is about 19% cheaper to trade within Commonwealth countries. But, as the noble Baroness, Lady Symons, outlined, could we please have an assurance that human rights will also be raised at the meeting? If not, we face the same government department having different compartments dealing with different issues, rather than all the issues around the table at the same time.
Lord Stevenson of Balmacara (Lab)
Further to my noble friend’s question, is there not an earlier opportunity to have a bit of a debate about this issue? Do we not have on the horizon an agreement with the Canadians, the CETA agreement, which was signed with the EU recently and which is now going around national parliaments? I do not see a date for it coming up on our agenda but no doubt the Minister will be able to advise us when it will happen.
Lord Price
My Lords, there have been lots of discussions about CETA. It has been discussed in the other place and in this House. If there are any new dates I shall, of course, present those to the noble Lord and others.
Lord Naseby (Con)
Is my noble friend aware that I visited Sri Lanka in January and had discussions with the high commissioner? I declare an interest as president of the all-party group. It seems to me that we are rather late at the party. As has been mentioned, Sri Lanka already has more than three new agreements with other countries. Can we please get a move on and listen further to my noble friend’s suggestion that we send out a trade envoy, even if only on a short-term basis?
Lord Price
My Lords, I thank my noble friend for that encouragement. As part of the EU, we currently have a trade agreement with Sri Lanka under the GSP scheme. As I said earlier, we are very keen now to upgrade that to the GSP Plus scheme. I am sure that at the Commonwealth meeting next week we will talk about how we take forward the trade agenda with all 52 countries, including Sri Lanka.
Brexit: World Trade Organization Rules
Lord Price Excerpts(7 years, 5 months ago)
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Lord Spicer
To ask Her Majesty’s Government what assessment they have made of the impact of the acceptance of World Trade Organization standard rules on the United Kingdom’s negotiations for leaving the European Union.
The Minister of State, Department for International Trade (Lord Price) (Con)
The United Kingdom is a founding member of the World Trade Organization. The UK is fully compliant with all the rules of the WTO and will continue to be as we leave the European Union. This has no bearing on the UK’s exit negotiations.
Lord Spicer (Con)
My noble friend will be aware that air service agreements do not fall within the remit of the WTO. When we come to leave the European Union, undoubtedly there will be major negotiations to ensure and preserve open skies in Europe. Will those be a good example of the negotiations that will have to take place outside the Brexit negotiations and therefore outside the timetable set by Article 50?
Lord Price
My noble friend is right that a whole host of service agreements fall outside the WTO arrangements. The Department for Exiting the EU and the Department for International Trade are aware of those and will work diligently to ensure continuity when we exit the EU.
Lord Pearson of Rannoch (UKIP)
My Lords, do the Government agree with the Civitas research which finds that, if we are forced to accept WTO tariffs, EU exporters will pay some £13 billion per annum on their exports to us while our exporters will pay only some £5 billion on their exports to the single market? Given that the EU also has some 3 million more jobs through selling things to us than we have through selling things to the single market, is it not in the interests of the people of the EU, as opposed to the Eurocrats in Brussels, not to interfere with any of this but to agree to carry on as we are?
Lord Price
The noble Lord mentions some research. At the moment much research and many figures are bandied around, all based on assumptions about a future which right now none of us is clear about. However, I can agree with the noble Lord that any disruption in trade will be to the disadvantage of people both in Europe and in the UK, of whom there are 500 million. That is why this Government have talked about a smooth path to the new order post-Brexit, and we will work diligently to achieve that.
Lord Purvis of Tweed (LD)
My Lords, it is exactly six months this week since the referendum and we are still waiting for the Government to be clear about their stance on the customs union. We are also still awaiting urgent clarification, for which last week’s Lords Committee report specifically asked, of the legal position regarding when the UK can start negotiating any trade agreements—while we are discussing the exit terms with the European Union, or afterwards. When will the Government provide that legal clarification? It does not have to wait on any of the politicking we have seen in the last week, with the Secretary of State talking about making a case in Cabinet rather than in Parliament.
Lord Price
My Lords, we are very clear on the position. We are clear that, while we are a member of the EU, we cannot negotiate or sign free trade agreements but we can have exploratory discussions, which we are having at the moment. Once we leave, we will be free to negotiate and sign free trade agreements for the United Kingdom.
Lord Hannay of Chiswick (CB)
When considering the question asked by the noble Lord, Lord Pearson of Rannoch, does the Minister recognise that it is not Governments who pay tariffs when they are imposed but manufacturers and consumers, and that British consumers will either pay tariffs or have to pay higher prices for products if the very unacceptable and unwelcome situation were to arise in which WTO rules had to be applied by default?
Lord Price
My Lords, the Government have set out their position: we do not wish to apply tariffs; we wish to be a free trading nation, and that is what we will work towards. We will try to ensure continuity of approach for our businesses, for the EU and for third-party countries. That is what we are trying to achieve right now.
Lord Howarth of Newport (Lab)
My Lords, given that the proportion of total UK exports going to the EU has fallen from over 50% 10 years ago to around 40% now, should not our continuing strategy, both as a Government and as an industrial nation, be to continue to increase the proportion of our exports that go to areas of the global economy that have better growth prospects than, unfortunately, the EU does? Has the Minister noticed the noises coming recently from the United States of America, Australia and South Korea encouraging us to do precisely that?
Lord Price
I agree with the noble Lord that our ambition should be to increase our exports. At the moment the UK, regrettably, bats below where it should. We are sixth in the league table, below France and Germany, and we hope to rise above that through a number of initiatives. Pursuing all trade options with all countries should be the Government’s approach, to make it easy and straightforward for businesses to export and to make sure that we are equally open to other businesses, both in the EU and elsewhere, which want to export into the United Kingdom.
Lord Howell of Guildford (Con)
My Lords, further to my noble friend Lord Spicer’s question, as we are now told that more than half the total earnings of world exports come from services, intellectual property, information products, digital transfer and shared processes and not from traditional goods transfer, are we not reaching the point where the WTO rules—let alone the more outdated rules of the former single market and the customs union, which belong to past trade patterns—are of decreasing relevance to our trade prospects?
Lord Price
The noble Lord is certainly right that services are an increasingly important part of the UK economy, representing 80% of our GDP and 40% of our exports to the EU. However, I would not want to diminish the importance of goods transfer. The north-east of England is the second largest exporter of cars in the EU—it exports more cars than Italy. It is important for us to hold on to the fact that we produce goods in the UK and export goods from the UK. That must not be diminished as we pursue our agenda to increase our services around the world.
Lord Stevenson of Balmacara (Lab)
My Lords, I have listened to the Minister carefully but I am still not clear what the Government’s position is. Mr Fox is openly briefing that WTO arrangements would be quite satisfactory. Mr Hammond commented recently that the WTO option would not be the most favoured outcome. Which is it? Can the Minister say precisely?
Lord Price
As the noble Lord knows well, the Government are still working towards their position for Article 50. They take in views from all sides. As I understand it, we have 20 different Select Committee reports coming to the Government in January alone. I have visited 21 countries over the past four months and I have spoken to 200 businesses and over 2,000 business people. We are open to listening to all parts of the debate and I welcome the report from the noble Lord, Lord Whitty, and this House, which was considered and thoughtful.
Lord Leigh of Hurley (Con)
What capacity does my noble friend’s department have for these negotiations in terms of experienced and competent negotiators?
Lord Price
In June of this year, the Trade Policy Group had 45 people working in it. We have now quadrupled that number, and we plan to increase it further next year to around 300 people. More than 1,000 people from outside have applied to work in the department, feeling that it is an exciting place to work at this time.
Lord Newby (LD)
My Lords, the Minister said that we would be able to negotiate our own free trade agreements once we have left the European Union. Does that mean we will not be part of the customs union—we would not be able to negotiate our own free trade agreements if we were—and, if so, why did the Secretary of State for International Trade say yesterday that he was rather taken by the Turkish agreement which involves being part of the customs union?
Lord Price
I can only repeat what has been said in the Statements of my noble friend Lord Bridges to this House on a number of occasions, which is that the Government have not reached a position and are considering all options. Until they do so, we will not be in a position to reveal our plans further.
Lord Anderson of Swansea (Lab)
My Lords, can the noble Lord cite any precedents for being part in and part out of the customs union?
Lord Price
I am aware that Turkey has arrangements whereby agricultural goods and food products are excluded from the goods provision, but that obviously does not include services.
Lord Foulkes of Cumnock (Lab)
My Lords, is it not becoming increasingly clear that day by day and week by week, Nigel Farage, Michael Gove, and to be fair, Gisela Stuart, have got us into an unholy mess? We do not know where we are on trade, on the movement of labour—or indeed on anything. Would not the billions of pounds we are spending on trying to organise this Brexit be better spent sorting out the crisis in social care?
Lord Price
The people of the United Kingdom were very clear when they voted on 23 June. Harping back does none of us any good and it does not do the United Kingdom any good. We need to move forward in a united way to get the best deal for the United Kingdom.
Lord Dubs (Lab)
My Lords, can we move forward in a united way if Cabinet Ministers are putting forward different points of view? I was brought up to understand that the Government speak with one voice. Surely these arguments should be kept within the Cabinet instead of being ventilated publicly?
Lord Price
I come from the world of business and what we believe in is having boards with different experiences and whose members are able to express different views in a measured and considered way. I believe that that is exactly what is happening. Along with input from this House and the other place, as well as from businesses, that will lead us to the most considered and beneficial outcome for the United Kingdom.
Lord Hamilton of Epsom (Con)
Does my noble friend accept that there is nothing the Opposition can teach us about having differing views on one subject or another?