Exiting the European Union and Global Trade
(Limited Text - Ministerial Extracts only)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I beg to move,
That this House has considered Exiting the European Union and global trade.
This is an important debate, not only because it is our first full debate on global Britain, but because this debate was originally timetabled for the day on which the tragic terrorist attack on Westminster bridge took place. The thoughts of everyone in this House are, as ever, with the families of those who were killed and injured. None of us will ever forget the outstanding bravery of the emergency services and all those who helped to restore law and order, and who work tirelessly to keep us safe at all times.
We stand at a vital juncture for this country, ready to write a new chapter in our history. As we begin the process of withdrawing from the European Union, the Government have promised that we will hold a series of debates to allow the House to have its say on the future of the United Kingdom. I welcome that commitment and look forward to Government and Opposition colleagues being able to engage fully with the proposals of my Department and the Government.
The Department for International Trade was created as a result of the change of Government that followed the country’s vote to leave the European Union in June last year. It has enabled us to take a fresh look at our national approach to trade and investment. Trade is vital to our country’s economic wellbeing, and as we leave the EU we will be able to shape trade policy according to our own national interests. Leaving the EU represents an unprecedented opportunity for the United Kingdom. The EU Commission’s own website on trade states that 90% of global growth in the next 20 years will come from outside the EU. As one of the world’s largest economies, we have the chance to work with old and new partners to build a truly global Britain at the heart of international trade.
We will of course support the conclusion of all the EU’s ongoing free trade agreement negotiations while we are still a member, and seek to transitionally adopt all those existing third-party free trade agreements before we leave. As the Prime Minister has said, we want a deep and special partnership with the EU as we negotiate our exit.
The Department for International Trade will ensure that the promotion of British goods and services abroad is complemented by a continuing effort to keep the United Kingdom as a top destination for inward investment, and will help British companies abroad to make the right investment decisions that will grow our global footprint. As I indicated to the House earlier, figures published this morning showed record foreign direct investment into the UK in 2016-17, proving beyond doubt that Britain has the necessary economic fundamentals to attract investment from all around the world.
Foreign direct investment, as well as trade, creates prosperity and jobs throughout Britain. Free trade increases consumer choice, raises standards of living and makes wages go further, as global competition drives down prices on everyday goods—a point to which I shall return later. In this task, our own history is on our side. For more than a century, our country was the commercial capital of the world, and we were among the first nations to recognise the benefits of free trade and economic liberty.
Kate Hoey (Vauxhall) (Lab)
I share the Secretary of State’s optimism about the future of our country once we leave the European Union. Does he agree that we should break the myth that we need trade deals to trade? Of course trade deals are important, but we can trade without them.
Dr Fox
I would distinguish between trade deals and trade rules. We of course need rules to govern the global trade environment, which is why we are committed to the World Trade Organisation—a subject to which I shall return later—but we do not explicitly need free trade agreements in order to trade. The trading environment is regulated in lots of other ways, such as mutual co-operation agreements. The hon. Lady is quite right that we can use several tools to shape the global environment.
Sir Edward Leigh (Gainsborough) (Con)
My right hon. Friend is right that, even if there is no free trade deal, we will be no worse off than the USA or Japan. May I ask him a direct question? The Lancaster House speech was admirably clear, and I am sure he can confirm that we are leaving the EU and the single market, but there was some doubt and comment about our status inside the customs union. Is he happy to confirm today that we are leaving the customs union?
Dr Fox
Our manifesto talked about what would happen when we had left the customs union. That was the basis on which I was elected, and, I assume, on which all Conservatives were elected.
Most of us in this House and, according to the polls, in this country believe in the principles of free trade and the benefits that it brings, yet in today’s world free trade is in need of a champion. For the first time in decades, the established order of fair, free and open global commerce, which has done so much to enrich and empower the world’s nations, is under threat. In April, the World Trade Organisation noted that, in 2016, world trade in goods grew by only 1.3%—the first time since 2001 that trade has grown more slowly than GDP. Yet the threat to growth and prosperity is going largely unrecognised. Globally, there are signs of an increasing tendency towards protectionism. Barriers to trade are going up across the world. A particularly worrying report by the WTO highlighted the acceleration in protectionist measures since the 2008 financial crash. Some of the worst culprits are the countries of the G7 and G20. The nations, including our own, that have gained the most from free trade are at risk of forgetting their own principles, yet protectionism hurts those whom it purports to help. That is especially important as the expansion of global production chains sees intermediate goods cross multiple borders before a final product is made. It means that barriers on imports damage a nation’s exports.
Hannah Bardell (Livingston) (SNP)
The right hon. Gentleman speaks about the customs union and the Lancaster House speech, but does he not share my concern, and the concern of the Scotch whisky industry, that the customs processes as they stand are creaking under pressure? I should declare an interest as the chair of the all-party group on Scotch whisky, which met for the first time last night. Those processes are being transformed into a new digital process, but there is little confidence that it will be able to cope with the process of Brexit. What guarantees can he give that industry that those issues will be solved?
Dr Fox
The hon. Lady raises a fair point about global trade facilitation. We have just signed the trade facilitation agreement, which aims to reduce border friction across the world. It is estimated that that is worth about £70 billion in the global economy. One of the biggest barriers facing Scotch whisky, however, is tariff barriers. The Department has been trying to talk to Governments such as India’s who have very high tariffs against Scotch whisky, which is not good for their own consumers because it encourages an illicit trade. I encourage all those Governments to indulge liberally in the pleasures of single malt—as I do myself.
By 2010, G7 and G20 countries were estimated to be operating some 300 non-tariff barriers to trade. By 2015, that number had mushroomed to more than 1,200. There are those who, having accrued great wealth, would pull up the drawbridge behind them. We cannot let that happen. This country’s own commitment to free trade was perhaps most clearly illustrated by the repeal of the Corn Laws in 1846. The Conservative Prime Minister Sir Robert Peel rightly saw protectionism as an attempt to preserve the wealth of a privileged few at the expense of the many. Import tariffs were all but abolished and Britain’s free trade principles were created to put bread into the mouths of the hungry majority. Now, as then, it is free trade and competition that will do most to address inequality and safeguard the interests of working people. More than ever, it is up to nations that possess the economic and diplomatic means to reassert the rationale of free trade to do so.
Rishi Sunak (Richmond (Yorks)) (Con)
I thank my right hon. Friend for giving way and for his powerful and optimistic speech on free trade. On reducing protectionism, does he agree that leaving the customs union will give us the ability to reduce import tariffs on many goods that we do not produce here at home, which will reduce costs for ordinary working families and benefit many developing countries by helping them trade into prosperity?
Dr Fox
That is an important point. At this morning’s International Trade questions, we made the argument that being outside the common external tariff will give us freedoms to help many developing countries in a way that we are currently unable to. I hope that that will act as a spur to others taking similar measures, because we will encourage poorer countries to trade their way out of poverty and become less dependent on international aid programmes. I do not think that that is a party political issue, but the question is how best to achieve it in practice.
On the progress that has been made, we have reduced poverty levels to their lowest in history. As the world’s emerging economies have liberalised trade practices, prosperity has spread across the globe, bringing industry, jobs and wealth where once there was only deprivation. According to the World Bank, the three decades between 1981 and 2011 witnessed the single greatest decrease in material deprivation in human history. It was a truly remarkable achievement.
The Leader of the Opposition has accused the Prime Minister of following “free trade dogma”. He went on to say that this has often been pursued at the expense of the world’s most fragile economies. In fact, any economist worth their salt can see that free trade has been one of the most potent liberators of the world’s poor. Let us take India as a specific example. In 1993, about 45% of India’s population sat below the poverty line as defined by the World Bank. By 2011, it was 22%—too many, but a phenomenal achievement. It is no coincidence that, in the intervening period, India had embraced globalisation and started to liberalise its economy. It is hard to imagine an international aid programme—even one as generous as our own—that would or could have been so effective on its own.
Sadly, it is also easy to find examples of where a lack of free trade has harmed the most vulnerable. If we want to see the contrasting results of open and closed economies, we should look across from China to the Korean peninsula, where so much attention is focused today. In 1945, both North and South Korea began from a very similar base, but while South Korea was more embracing of open trade and free markets, despite any shortcomings, Pyongyang turned inwards, with the tragic consequences for its citizens that we see to this day. [Interruption.] I am happy to give way to the hon. Member for Bishop Auckland (Helen Goodman) if she thinks that North and South Korea enjoy the same living standards today.
Helen Goodman (Bishop Auckland) (Lab)
Of course what the right hon. Gentleman says about the situation in those two countries today is absolutely right. The point I was chuntering about was that what he described was not actually happening in South Korea in the 1960s and 1970s. A lot of the south-east Asian economies did have protection in those two decades in order to modernise and build up.
Dr Fox
I accept what the hon. Lady says, but that is why I specifically used the words “more embracing” of free trade and open markets. Despite the shortcomings, South Korea none the less created a far better standard of living for its people. Seoul is now at the heart of a thriving economy and, consequently, a dynamic democracy where freedom and prosperity are shared among its people. It should come as no surprise that, while 80% of South Koreans have access to the internet, less than 0.1% of North Koreans enjoy the same access. Perhaps most tragically, there is a greater than 10-year discrepancy in the life expectancy of those north and south of the demilitarised zone. That is why we recognise that trade and development form a fundamental and synergistic partnership. Trade flourishes where there are high levels of education, developed financial sectors and, hugely importantly, sound governance and minimal corruption. There is still much to do, but we would be both foolish and irresponsible to abandon the direction of travel. An open and free trading system is part of the global and national prosperity agenda.
Jeremy Lefroy (Stafford) (Con)
As always, my right hon. Friend presents a powerful case for free trade, but does he not agree that, sometimes, there is too narrow a vision of it? We tend to think about free trade in goods, because they are visible, and to talk about the problems and opportunities that exist, but we forget about the free trade in services, which are by far the largest part of what the UK has to offer to the rest of the world.
Dr Fox
My hon. Friend makes an excellent—and key—point. Getting the global economy moving requires the major liberalisation of services in the same way as we had the liberalisation of goods as the focus of the Uruguay round. One thing that comes from that is that countries such as the United Kingdom, where about 80% of the economy is service-driven, are less dependent on being part of a geographical bloc for trade. When it comes to trade in services, what matters is that we are dealing and trading with countries that are functionally similar rather than geographically proximate. That is a change in globalisation we would do well to understand in the debate as we leave the European Union.
It is not just about raising living standards in developing and developed countries. There is, I think, an even more compelling case for free trade. The prosperity it can create is the basis of a social stability that underpins political stability. We have seen that around the world. That political stability, in turn, underpins our security. In other words, they are all part of the same continuum, and we cannot disrupt one element without disrupting the whole. That is why Governments of both colours in this country have tended to see development, prosperity and security as a single policy objective. It is a truth that we need to understand in this interdependent, globalised era.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
It is not just us making this case. In the discussions with those who are involved in the World Trade Organisation—even though we are a member, we want to get back our voting rights—they have made it pretty clear that they celebrate the re-arrival of the UK as a voting member of the WTO for one vital reason: they feel that globally it has begun to stall and the UK is the single biggest exponent of free trade. It always has been, and they want to welcome us back for that reason alone, if nothing else.
Dr Fox
My right hon. Friend is absolutely right. It is important that we can show our trading partners globally that whatever our differences in the mechanics through which we go about the task, there is an overwhelming belief in the concept of free trade in this country. As I said at the outset, the global trading environment needs someone to champion free trade at a time when many countries feel that we are rolling backwards, away from the progress that we have made. If we as a country can speak with a strong voice about the principles of free trade, citing examples from history as to why it has benefited some of the poorest people in the world, we will make a moral as well as an economic case.
Kelvin Hopkins (Luton North) (Lab)
I am listening with interest to what the Secretary of State is saying, but one point that he has not touched on yet is exchange rates. Is it not absolutely essential that appropriate exchange rates should be arranged between nations so that trade can operate fairly? If a country depreciates massively, it can develop a big trade surplus, and China has done precisely that in recent decades. Does the Secretary of State not agree that exchange rates are crucial?
Dr Fox
That is an important point, but I would distinguish between artificial and intentional currency manipulation and a free market with floating currencies. I happen to believe that floating currencies are one of the ways in which we allow our economies to have shock absorption so that we do not take all the economic pain through unemployment. One of the problems with the existence of the euro is that some of the countries of southern Europe that might have chosen other mechanisms to adapt to the process of change had, in the end, to opt for high levels of structural unemployment because they were unable to do so. The hon. Gentleman’s point is correct, however. Artificial manipulation of currency is different from the workings of the general economy and floating currencies.
Such is the power of free trade that even if we ignore the social and humanitarian benefits that it has brought to the developing world, it would still be indispensable from a purely economic standpoint. During the 1990s, per capita income grew three times faster in the developing countries that lowered trade barriers than in those that did not. That effect is not confined to the developing world, either. Analysis by the OECD has indicated that a 10% increase in economic openness is associated with a 4% increase in output per head of the working population. In other words, free trade works.
Globalisation has been of huge and sustainable benefit to the world economy, through trade, migration, specialisation and innovation. Those advantages exist at every level, from macroeconomics right down to individual firms. Increased competition, economies of scale and global value chains have all contributed to a productivity revolution, boosting the output of firms across the globe. Although it might not always be noticed, the wider benefits of a liberal trade policy have spread to consumers and households by providing a wider choice of goods at a lower price.
In the decade to 2006, the real import price of clothing fell by 38%. In the same period, the price of consumer electronics, as we all know, fell by 50%, despite the rapid technological improvements that saw mobile phones go from a $4,000 brick that was hard to carry to computers no bigger than the palm of one hand. Those are the tangible benefits of trade, and their importance in improving the lives of the people of Britain must not be underestimated. Of course, in any rapidly changing economic environment, we should ensure that the country’s growing prosperity spreads to all corners of the United Kingdom. It is therefore not only right but important that Governments can mitigate the effects of globalisation and provide the tools through which individuals and economies can adapt and prosper. That is how we provide both economic opportunity and security in an era of sometimes bewildering change.
Deidre Brock (Edinburgh North and Leith) (SNP)
The Secretary of State talks about the interdependent global world. The British Ports Association warned that a hard Brexit could hurt small and medium ports, which rely on short sea trade. Its members, including Forth Ports in my constituency, are very worried about the hurdles of new customs requirements and costly tariff regimes. Given that 95% of international trade by tonnage goes through our ports, what action is being taken to address those concerns and ensure that Brexit will not damage vital industries trading through them?
Dr Fox
The first service we can do is not to add adjectives to the word Brexit, because what the Government intend to achieve is as open a trading relationship as possible. If we think about it, the free trade agreement that we will go on to negotiate with the European Union ought to be the easiest FTA in global history. We are starting in a zero-tariff environment and from absolute 100% regulatory and legal equivalence. The only way we would not reach a free and open trading environment would be if the politics of the process took precedence over the economics, prosperity and wellbeing of the people. That is the challenge.
I will give the hon. Member for Edinburgh North and Leith (Deidre Brock) a second challenge, as this is not just about Europe. The decisions we take will reverberate through the global economy. If we put trade and investment impediments into the European economy that do not exist today, that will cause ripples across the global economy that will be felt well beyond our borders.
Sir William Cash (Stone) (Con)
My right hon. Friend knows that all 47 ports in this country opposed the European Union port regulation, which was inimical to our national interest and the lifeblood of our trading relationships. Ports are central to this whole question, and that is another good reason for our leaving the EU.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Could the Government make it clearer that we want an open trading relationship with our European partners and that it is up to the European Union to decide whether they want that or not? Will the Secretary of State also ask who is arguing for protectionist measures against an independent United Kingdom? I do not hear many voices in the EU arguing for that, and I think that that is just a fear put about by people who want us to stay in the European Union.
Dr Fox
Our debates are watched beyond our shores, so perhaps the first point to make is that we are leaving the European Union. There is not any chance that we will not leave the European Union. The British people have spoken and the process, including the parliamentary process, has begun to make that happen. As we do this, we have to look beyond our membership of the EU and determine what sort of global trading environment we want to live in. We are very clear about the model we want, I have travelled to other countries, and we are encouraging Governments beyond the EU to say to our European partners that it is in everybody’s interests— including in Europe and in the wider global trading environment—that we maintain as open a global trading basis as we possibly can.
At a time when the direction of travel in the rest of the world is towards greater liberalisation, it would make no sense for Europe, for internal political reasons, to introduce impediments to that trading environment in the way some have suggested. I do not believe that that is in the interests of the citizens of Europe, whether in the United Kingdom or on the European continent. If we are guided not by abstraction but by the prosperity and wellbeing of our people in the negotiation, we are likely to come to the right outcomes.
To build a free trading world, the UK must continue to support, strengthen and promote the existing global trading structures. The World Trade Organisation is the home of the rules-based international trading system, as the shadow Secretary of State and I agreed earlier this morning, and we unequivocally support it. Its predecessor, the general agreement on tariffs and trade, was established in 1948 to offer a war-torn world stability, security and prosperity through international trade co-operation. The United Kingdom was there from the beginning, and for half a century we worked with our international partners in a series of ministerial rounds dedicated to removing barriers to trade and liberalising the global economy.
The WTO was established in 1994, following the success of the Uruguay round. For the first time, we had an international body with truly global reach that existed to regulate trade and to encourage nations to adhere to the principle of ever-greater trading freedom. If the WTO did not exist today, we would need to invent it. Britain is a founding member, and we are a member in our own right, but on leaving the EU we will need to update the terms of our WTO membership; at present all our commitments are applied through the EU as a whole. Constancy and continuity will be a key to our approach.
As I set out in the recent ministerial statement, we anticipate that our rights and obligations to other WTO members, as provided under the WTO agreements, will remain largely unchanged. We will achieve that through a process of replicating our current commitments, which will cause the minimum disruption to trade and the maximum certainty and confidence. I am grateful to the secretary-general of the WTO, Roberto Azevêdo, for confirming that the WTO fully supports this aim for stability. I thank him and his staff for the support they have given the United Kingdom in Geneva.
Let me also be clear that replicating the EU-WTO schedules for the UK’s independent use in no way prejudges the outcome of the article 50 negotiations with the EU. The process is largely technical and reflects the close ties of trade and commerce that we will continue to share with the EU, even after our exit. Throughout the process, it is imperative that we maintain transparency both with this House and with our fellow WTO members. I reiterate the offer that I made in private to the Opposition Front-Bench team: should they wish to visit Geneva and get a high-level briefing with our ambassador and the secretary-general, the Government will happily facilitate that. The better informed we all are in the House in these discussions, the better.
James Duddridge (Rochford and Southend East) (Con)
Quite often one hears in the press, and sometimes erroneously in this House, talk of “falling back” on WTO rules. Is that not a falsehood? WTO rules form the basis of any agreement going forward; they are not something to fall back on if there is no deal.
Dr Fox
Indeed, WTO rules are the basis on which the world trades. On top of the basic WTO rules and the most favoured nation status that they represent, we have a number of agreements that give us, in effect, exemptions. However, we trade freely with countries where we do not have a specific free trade agreement. At the present time, the United States is worth just under 20% of our exports—we do not have a specific free trade agreement, but we can trade very freely. That is not to say that through FTAs or mutual recognition agreements, mutual co-operation agreements and the other tools available to us, we cannot improve the functioning of the global trading system. We need to do so, and the Department for International Trade has a highly skilled team dedicated to the technical rectification of our WTO schedules. We are collaborating with businesses and officials within Whitehall and the WTO to ensure that our transition to independent membership is both smooth and fully understood by our trading partners.
James Cartlidge (South Suffolk) (Con)
My right hon. Friend is generous in giving way. He mentioned the word “transition”, which many have now mentioned—including those who supported the vote to leave—in smoothing the process of Britain leaving the EU. Does he support consideration of transitional arrangements in leaving the EU? Is he concerned about Michel Barnier’s comments today that any negotiations on transition will have to be in late 2018 at the earliest, which does not leave us much time?
Dr Fox
If we require a transition to a new environment, it would be common sense to do so, but it would not be acceptable for any of the elements that, in leaving the European Union, we sought to leave to be binding on that transitional agreement. However, that is part of the negotiation. It is a negotiation, and at any point in that I would not take too seriously or literally anything that the negotiators were saying in the public domain.
After we leave the European Union, we will uphold our principles as we negotiate free trade agreements with new partners around the world. Although we cannot negotiate and conclude FTAs while we remain in the EU, the Department has instigated 10 trade working groups with 15 different countries as well as a high-level dialogue with the United States, which will develop into a fully fledged trade working group later this month. Going forward, as I said to the hon. Member for Vauxhall (Kate Hoey), we may find that a new FTA may not be the correct solution for every partner, but we will look at all the measures available to us to ensure the best outcomes for citizens and businesses across the UK. Our dedication to free trade will be constant. With every nation, we will work to remove barriers, liberalise trade and secure market access for British businesses. As we move forward towards ever greater trade liberalisation, we will ensure that our trade remedies continue to protect and promote Britain’s producers.
If the first duty of Government is the protection of its citizens, the Department for International Trade must extend that obligation to our businesses and work to defend the drivers of our prosperity from rule-breaking and anti-competitive measures. Free trade is not a free-for-all; that is why we have the WTO. If we support a rules-based system, we must ensure that those rules are respected and rigorously enforced.
Robert Neill (Bromley and Chislehurst) (Con)
I understand and take on board everything my right hon. Friend says about the WTO and a rules-based system, but, as he observed earlier in his speech, the bulk of our economy, and the bulk of our competitive advantage, lies in the services sector, which in the case of the financial sector is not particularly covered by WTO rules. Will the Government be equally committed to making sure that we have global liberalisation of the services sector, which is so critical to us?
Dr Fox
I think I said that earlier, and I also said that this morning in questions. If there is a real cause for us to champion beyond the basic case for free trade, it is liberalisation of the services sector. That is the way in which we will unlock the potential of many economies around the world—and, incidentally, it is the best way to unlock Britain’s economic potential in trade.
In my discussions around the world I have been struck by the way in which products—either goods or services—that originate in the United Kingdom are regarded as being at the top end of the quality market. That is where we are best able to compete. There are those who would make the case for a Britain with lower regulatory standards and fewer protections in place across the economy for the environment, for workers and for consumers. Let me tell the House that Britain will not put itself at the low-cost, low-quality end of the spectrum, as it would make no sense for this country economically to do so, nor morally would it give us the leadership we seek. I believe there is no place for bargain-basement Britain. High standards and high quality are what our global customers demand, and that is what we should provide. From our food and drink industry to our technological expertise and our financial services, people across the world buy British because they see the Union flag as a kitemark of quality. The key to our long-term prosperity lies not in abandoning our values and standards but in reinforcing them. High-quality, high-reputation goods and services are the route to highly skilled, highly paid jobs and future prosperity in this country.
This Government’s highest ambition is to build a Britain that works for everyone, not just for a privileged few. It must also be a global Britain, willing to support a rules-based trading system and champion the cause of free trade itself. We do not pretend that the era of globalisation is without its challenges, but we must never cease to show our citizens the benefits that free trade brings to their lives and to this country. We realise that the challenges and opportunities of globalisation, allied to the rapid change in technology, can produce their share of problems and insecurity. We must strive to address the negative aspects of globalisation and ensure that no one is left behind by the pace of change, while harnessing the power of the global economy to spread prosperity across Britain and our trading partners. We must ensure that we equip our country with the skills necessary to navigate those challenges and that those who are disadvantaged are given the appropriate support. We must unfailingly uphold the principles of free trade across the world, nurturing prosperity and banishing poverty to the pages of history.
I believe that the vast benefits that global trade can bring to Britain and the world and the way in which my Department is working to secure those benefits across the whole of the UK are the key to success in the future. The Leader of the Opposition has wrongly dismissed free trade as political dogma, but to do so is to betray the very people the Labour party claims to represent. To attack free trade and to undermine our nation’s proud tradition will deny prosperity to those who need it most. I hope that all Members of this House, regardless of their political persuasion, want the benefits to be bestowed on this country and back our vision of Britain as a champion of global free trade and the benefits it brings.
Two centuries ago, Thomas Babington Macaulay described free trade as
“one of the greatest blessings which a government can confer on a people”.
We intend to do just that. It is in our power to build a better and fairer Britain for future generations. We require courage and conviction to do that, particularly at a time when protectionism is rearing its ugly head. Prosperity, stability and security are the prizes for a strong, rules-based international trading order, and that is what we seek to achieve.
Barry Gardiner
I want us to get a deal. Of course we want the best deal for this country, but the hon. Gentleman has to take on board the fact that since the referendum decision our country’s currency has depreciated by 12%. I trust that that is not something that he feels sanguine about.
Dr Fox
Some sectors will respond quickly to devaluation. For example, in food and drink there has been a 7.3% increase in our exports in this quarter. Why, in the light of the uncertainty the hon. Gentleman describes, does he think the figure for foreign direct investment in Britain has been at an all-time record in the past year?
Barry Gardiner
Let me be absolutely clear: we welcome foreign direct investment in this country—of course we do. We want people to be investing in our jobs, our economy and our future—
Bill Esterson (Sefton Central) (Lab)
Labour’s manifesto stated:
“Labour is pro-trade and pro-investment. The UK’s future prosperity depends on minimising tariff and non-tariff barriers that prevent us from exporting and creating the jobs and economic growth we need.”
The negotiations for the UK’s exit from the EU have already begun, and our future prosperity as a nation is vitally dependent on our international trading relationships. Of those relationships, the UK-EU trade deal must be the Government’s priority. A no-deal with the EU is the worst possible deal and must be ruled out. Anyone who has run a business knows that you look after your existing business relationships first—if you do anything else, you do so at your peril.
We have heard many speeches today. The hon. Member for Livingston (Hannah Bardell) spoke about the transitional arrangements and the question of how to deliver frictionless trade.
The right hon. Member for Wantage (Mr Vaizey) gave the first of the many speeches that we could call pro-Chancellor, given the interesting interrelationship between the Chancellor and the Secretary of State for Exiting the European Union.
My hon. Friend the Member for West Bromwich West (Mr Bailey) spoke about the car industry’s importance to the UK economy and the need to ensure that we continue to support car exports. He also spoke of the damage that no deal would do to that industry.
The hon. Member for Hornchurch and Upminster (Julia Dockerill) made her maiden speech; I congratulate her on the enthusiastic way she spoke about her constituency.
My hon. Friend the Member for Bishop Auckland (Helen Goodman) spoke about her commitment to her constituents and their need for a Brexit that supports exports and jobs. She also spoke about the importance of the European Medicines Agency to this country and about the need to support the hill farmers in her constituency.
I think the hon. Member for Rochford and Southend East (James Duddridge) spoke in support of the Secretary of State for Exiting the European Union.
My hon. Friend the Member for Lincoln (Ms Lee) made an excellent and passionate speech and spoke about the importance of the transport hub delivered by the Labour council of which she was part. Support for transport infrastructure is of course crucial to backing the businesses and jobs of her constituents, including those involved in international trade.
The hon. Member for Gloucester (Richard Graham) clearly backed the Chancellor.
The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) reminded us of his late friend, Charlie Kennedy, who was much respected by Members from all parties. I congratulate him on his confident maiden speech; I enjoyed his story about his predecessor, Charles James Fox.
The hon. Member for Bromley and Chislehurst (Robert Neill) was with the Chancellor.
My hon. Friend the Member for Midlothian (Danielle Rowley) made an excellent maiden speech in which she reminded us that she is the first woman to represent her constituency. She comes from a family of miners and is keeping that Midlothian tradition going. I was pleased to hear her remind us that she was elected, as I was, on a platform of hope for the many, not the few.
The hon. Member for South Suffolk (James Cartlidge) was clearly with the Chancellor—[Interruption.] I think he was, anyway. He gave a good example from his constituency of the dangers of a cliff-edge exit and spoke about the importance of transitional arrangements.
The right hon. Member for Carshalton and Wallington (Tom Brake) made a good speech, and the hon. Member for Hitchin and Harpenden (Bim Afolami), who I think was backing the Chancellor, gave another good short speech.
The debate finished with a great speech by my hon. Friend the Member for City of Chester (Christian Matheson), who reminded us of the importance of fair and free trade and how it engenders prosperity and peace. He, like me, will be supporting a Brexit that promotes jobs and retains environmental and consumer protections—
Bill Esterson
I thank the Minister for the correction. No doubt the fee note will be in the post.
The Government have promised to deliver the “exact same benefits” as we currently have inside the single market and customs union, and Labour will hold them to account on that commitment. We recognise that once we leave the EU a transitional period is vital to avoid a cliff-edge for the UK economy.
The Government have still failed to set out a coherent international trade strategy for when the UK has formally left the EU. We have called on them to publish an international trade White Paper. The UK needs clarity on this issue as never before. It is unacceptable to take the country into an uncertain future that includes our exiting the EU without a comprehensive plan on international trade. Such a plan must be presented to and properly scrutinised by the British people and their elected representatives in Parliament.
A White Paper must set out what the Government’s plans are for future international trade, outlining negotiating principles and trade policy objectives, including which industry sectors will be prioritised and which will not. Clarification of what was meant in the Lancaster House speech by hybrid customs arrangements needs to be set out. The Government say that they intend to pursue closer trade links with Commonwealth partners to make up for any lost trade with the EU, which currently accounts for 44% of our exports. However, none of the UK’s top 10 export partners is a Commonwealth country.
The spring Budget statement revealed that this Government are out of ideas when it comes to boosting exports and tackling the productivity slump forecast by the Office for Budget Responsibility. This is a Government who talk big on trade and Brexit, but who have failed to provide the support for British businesses wishing to export and grow into new markets.
The latest Office for National Statistics figures show that the UK’s trade in goods deficit has increased by £2.6 billion. Our imports are on the rise while our exports are failing to catch up. Despite the Government’s bombastic talk of Britain leading the world as a trading nation, our trade performance on their watch has been weak.
British small and medium-sized enterprises and trade bodies have repeatedly called on the Government to do more to deliver real support to potential exporters. The Government have ignored them, focusing instead on the big corporations and on arms sales. They have systematically delayed SME funding for overseas trade shows and have, over the years, decreased the budget for such funding. They should be maintaining the tradeshow access programme and, crucially, delivering it on time—not delaying it by four months as has just happened.
The Government need to maximise support for those wishing to export and make it clear what their mission is and what their vision of trade is. They need to bring forward the White Paper and say what their view is of transitional arrangements, how they will deliver frictionless trade outside the EU with the EU and, above all, to put forward the priority of jobs and British businesses first.
The Minister for Trade and Investment (Greg Hands)
May I thank Members for what has been a very useful debate? I think that 17 Members have spoken in the first general trade debate since the formation of the Department last summer. Let us consider for a moment the significance of this new Department of State. It was 10 years ago, almost to this month, that Labour abolished the word “trade” from the name of every Government Department. One of Gordon Brown’s very first decisions was to eliminate entirely the word “trade”. The creation of this new Department shows the determination of our Prime Minister to put trade at the heart of Government. May I praise the free trade vision that my right hon. Friend the Secretary of State outlined earlier today?
First, let me say a few words on today’s foreign direct investment data, showing a record-breaking number of FDI projects coming into the UK in the financial year just finished. Inward investment into the UK is estimated to have safeguarded nearly 108,000 jobs last year. Our trade officials have helped to secure more deals than ever before—up 7%—so a big thank you to all our staff around the world.
May I just remind Labour Members that the trade deficit, which they talked about at one or two points today, is down considerably since we inherited the position in 2010—down a considerable £5.6 billion? At the same time, exports to the EU have increased by 11.3%, but exports outside the European Union have increased by 34.6%, which is a very significant figure.
We had calls from the Labour Opposition for clarity from the Government—this from a party whose leader calls free trade a dogma. The hon. Member for Brent North (Barry Gardiner) says that Labour Members are “principled free traders”. We remember his clarity on the comprehensive economic and trade agreement. On the Monday in Committee, he supported CETA, but on the Tuesday, he called for a Commons vote on it on a deferred Division. Then on the Wednesday, he urged his party to vote down CETA, but it rebelled against him by a margin of 85 to 67. He says he is in favour of free trade but he seems to be against all free trade deals.
There is one final point that the hon. Gentleman might want to note. He talked about his hon. Friend for Middlesbrough South and East Cleveland. Now, he might not have been watching on 8 June, but the Member for Middlesbrough South and East Cleveland is now on the Conservative Benches and is now my hon. Friend, not the hon. Gentleman’s.
We had some excellent maiden speeches, including a first-class maiden speech from my hon. Friend the Member for Hornchurch and Upminster (Julia Dockerill). She spoke with limited notes, which was welcome, and paid tribute to Dame Angela Watkinson, a friend of mine and many others. My hon. Friend talked eloquently about Upminster, a place I know well as its name is on the front of every single train I take each morning on the District line. I rarely get there, but I am looking forward to visiting one day. She mentioned the sale of council homes in London and how important that still is today, and she presented a positive and uplifting vision for the future of this great country. We thank her and welcome her.
The hon. Member for Lincoln (Ms Lee) talked about her predecessors, whom I knew well, Gillian Merron and Karl MᶜCartney. She did not mention another predecessor, Dick Taverne, who of course left Labour to join the Social Democratic party. From the content of her speech, it sounded like there is little chance of that happening in her case. I congratulate her on her speech and welcome her to this place.
We heard from the new hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone)—one of the longest constituency names and the second largest constituency, too. He clearly knows it well and I am sure that his predecessor but one, the late Charles Kennedy, would have been very proud of his speech in this House today.
We heard from the new hon. Member for Midlothian (Danielle Rowley), who made an accomplished maiden speech. It is refreshing to hear Scottish accents coming back to the Labour Benches. She made some good points on welfare and I think we would all agree that people need a hand up, not a handout.
We heard from my hon. Friend the Member for Stone (Sir William Cash), my right hon. Friend the Member for Wantage (Mr Vaizey) and my hon. Friends the Members for Rochford and Southend East (James Duddridge) and for Gloucester (Richard Graham). My hon. Friend the Member for Stone mentioned the Labour split on the single market. I have seen 11 Queen’s Speeches in this House, and although I have occasionally seen a Government rebellion on an Opposition amendment, I have to say that I have never seen an Opposition rebellion on an Opposition amendment—
Greg Hands
I will not take an intervention, as there is no time.
We heard an entertaining speech from my right hon. Friend the Member for Wantage, who praised me for my language skills—so vielen Dank. He asked in particular about countries—we have 10 working groups covering 15 countries. He talked about the timetable and the analysis of the increase of GDP, and it is impossible to tell at the moment, as it is impossible to know what will be in those agreements.
My hon. Friend the Member for Rochford and Southend East rightly pointed out the increase in value of our exports outside the EU since he and I were first elected in 2005, rising from 48% to 56%. He is also right on the trade deficit.
My hon. Friend the Member for Gloucester was right to say that, whether we campaigned for leave or remain, what is important is to seek the best outcome for the UK as regards success in the negotiations. I praise him for the work he does as our trade envoy in south-east Asia, as well as on the question of the importance of China.
My hon. Friends the Members for Bromley and Chislehurst (Robert Neill) and for Hitchin and Harpenden (Bim Afolami) mentioned the importance of financial services. They are absolutely right, but here we are in a strong position. The City needs access to European customers, but European borrowers and investors also need access to the largest capital market in the European time zone, which is the City of London. That is very important to remember.
From the Opposition Benches, we have heard from the right hon. Member for Carshalton and Wallington (Tom Brake) and the hon. Members for Bishop Auckland (Helen Goodman), for West Bromwich West (Mr Bailey) and for City of Chester (Christian Matheson). They were all good speeches.
Trade is now back at the heart of Government policy making and I hope that all Members will agree that it is back where it belongs. For the first time, the three pillars of trade, finance promotion and policy fall under one roof, allowing us to approach trade in the most co-ordinated way possible. Our three objectives are worth reiterating and their simplicity should not detract from their significance. We will promote British exports the world over, encourage both inward and outward investment and build the strongest possible trading framework for the UK post-Brexit.
Finally, this country has a great free trading future. I am optimistic about a good outcome for the Brexit negotiations and I and the whole Department are looking forward to growing trade and investment in the years to come.
Question put and agreed to.
Resolved,
That this House has considered Exiting the European Union and global trade.