Future Free Trade Agreements

Chi Onwurah Excerpts

Thursday 21st February 2019 Commons Chamber

[Dr Fox]

I have done so in previous debates of this nature, in which I said that we regard the public provisions in CETA as being the template we would like to see for future trade agreements. We think it is a good agreement, which is why we find it difficult to fathom why the Labour party did not vote for it in the House of Commons.

The world is crying out for the goods and services in which Britain excels, and it will do so even more in future. We have long been a proud and open trading nation. Trade totals some 61% of our GDP, and it is the foundation of an economy that delivers high-quality, high-paid jobs, that delivers better and more affordable products and that creates the conditions for competitive, world-leading businesses to innovate, prosper and grow across all parts of the UK.

Our openness to free trade, founded on a rules-based multilateral trading system with the World Trade Organisation at its centre, is at the heart of our prosperity. The Government have a clear position that multilateral agreements remain the gold standard of international trade agreements and are the ideal means of pursuing prosperity for the UK and globally across all 164 WTO members. However, this does not mean that bilateral or regional agreements cannot be useful complements to the multilateral system as an adjunct to wider liberalisation. That is why we are also pursuing a range of free trade agreements at both a regional and a bilateral level. Through these free trade agreements, the United Kingdom can work with our partners to establish modern, enduring and impactful trading rules that work for British businesses and for people and communities across our country.

One of the most important trade agreements we are considering is, of course, with the United States, which is our largest single-nation trading partner, with £184 billion- worth in the last year accounting for around a fifth of our exports, and is the single biggest source of inward investment into the United Kingdom. The UK and the US have a deep, long-standing relationship with a strong and enduring bond. We have a shared heritage and shared values, and of course we have deep co-operation across a wide variety of security and defence matters.

We have already taken concrete steps towards this potential trade agreement, including the signing of a mutual recognition agreement last week that confirms both Governments’ commitment to maintaining all relevant aspects of the current EU-US MRA when it ceases to apply to the UK. This will help to facilitate goods trade between the two nations and will guarantee that UK and US exporters can continue to ensure goods are compliant with technical regulations before they depart their home country. Total UK trade in the sectors covered by the deal is worth up to £12.8 billion, with the UK exports covered worth an estimated £8.9 billion.

Similar agreements have been signed in recent weeks with Australia and New Zealand. These agreements ensure continuity and safeguard revenues for British businesses and consumers, and they mark a further crucial step in securing and furthering our vital trading relationships. An ambitious free trade agreement between the US and the UK would further cement our existing strong bilateral partnership and further the interests of our highly compatible economies. It will make it easier for UK and US businesses to trade with each other and identify where we can collaborate to promote open markets around the world.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I have been listening carefully to the Secretary of State, and his argument seems to be that, on our own, we will be nimbler and more able to negotiate good trade deals, but he must know that size matters. As a market of 500 million, there is 10 times the opportunity for profit in the European Union than in the United Kingdom. Why should we get a better trade deal with the United States, for example, given the smallness of our market and of the opportunity for profitability compared with the European Union? If we are not going to get a better deal, why are we doing it?

[Dr Fox]

I hate to point it out, but the EU does not have a trade agreement with the US. Let me give the hon. Lady one example of why it has been unable to have one—data localisation. Although 24 out of the 28 members wanted to move forward with data movement with the US, four countries—France, Germany, Austria and Slovenia—blocked it. That meant that although most of the EU wanted that agreement, it was unable to get it. We would not be restricted in the same way. She is right to say that the bigger the market, the bigger the offer, but that has to be balanced against our ability to be flexible, and how liberal and open we would want to be in that trading environment. We are the fifth biggest economy in the world, and I find it ridiculous that we are being told that we are some sort of economic minnow, when, as the fifth biggest market in the world, most countries want to have access to us. Being smaller economies than the EU has not prevented countries such as Canada and Australia from having trade agreements with much bigger economies, because those trade agreements will be completed and signed only if they provide mutual benefits—otherwise, what would be the point in negotiating them? So I counsel this House against the despair of saying, “We cannot do it on our own.” As the fifth biggest economy on the planet, we are more than able to negotiate strong agreements with other political and economic groupings around the world.

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[Barry Gardiner]

My hon. Friend tempts me into a discussion about Brexit, but I am sure that if I were to be tempted, Madam Deputy Speaker, you would be on my case in a flash, urging me to deal with the matter of future free trade agreements instead.

This debate was originally promised at the last International Trade oral questions on 7 February, but anyone reading Hansard will not have been blind to the fact that the commitment was made as a response to an entirely different question. We did not ask for a general debate on putative trade deals with specific countries. What was asked was when the Government would bring forward a debate about the scrutiny of trade deals. Even if the Secretary of State has not yet got round to reading my eight-page letter of 21 January on the subject—there are many copies on this side of the House if he wants a spare—he cannot have been unaware of the matter, because, to his embarrassment, the Trade Bill’s progress in another place has been delayed as the Government lost a crucial vote.

Their lordships required the Government to set out their proposals for the process, the consultation, the mandate and scrutiny of making international trade agreements in the first place, including:

“Roles for Parliament and the devolved legislatures and Administrations in relation to both a negotiating mandate and a final agreement.”—[Official Report, House of Lords, 21 January 2019; Vol. 795, c.506.]

The House will note that no such proposals have yet been brought forward, so perhaps the Secretary of State will tell us what progress he has made in this respect and when he intends to introduce such a debate.

Today’s debate certainly cannot be considered to constitute that important discussion. It is a general debate on a Thursday, in a week that was intended to be recess, talking about potential agreements before Parliament has even debated the whole process of consultation, impact assessment, negotiating mandate, parliamentary debate, transparency of negotiation, ratification and subsequent review and periodic appraisal that should constitute a framework within which the Government intend to bring such agreements into being.

Furthermore, people watching today’s debate will be incredulous that, given that just last week the Secretary of State was forced to come to this House and admit that he had thus far failed to replicate the 40-odd trade agreements that he promised would be ready to sign one second after midnight after Brexit, last week only five had been agreed, nine were off track, 19 were significantly off track, four were said to be impossible to complete by 29 March and two were not even being negotiated. If there has been progress since then, I will happily give way to the Secretary of State if he wishes to advise the House. No. In that case, I take it that his silence is an acceptance that that is the state of play of the agreements that we currently have. Indeed, the fact that we are instead discussing a host of entirely new trade agreements when we have yet to secure trade continuation with all the countries with which we already enjoy a trade agreement by way of our EU membership rather calls into question the Government’s priorities at a time when businesses are screaming for certainty, clarity and continuity.

[Chi Onwurah]

I thank the shadow Secretary of State for giving way and for the excellent speech that he is making. When I asked the Secretary of State earlier whether, given the different sizes of the UK market and the EU market, the UK could succeed in negotiating a better deal than the EU, his response was that the EU had yet to negotiate a deal, seeming to imply that no deal could not be worse than a bad deal that he might negotiate. Does my hon. Friend agree that this is contradictory to the Brexiteers’ position, and that a bad deal for us negotiated with the United States of America could have a really devastating impact on our agriculture and automotive trades specifically?

[Barry Gardiner]

I certainly do agree with my hon. Friend. Some in the Secretary of State’s party have been claiming that no deal would be better than a bad deal. Others have been claiming that going on to no deal would be no problem at all, that we would be trading on WTO terms. I am sure that she also wonders, if working on WTO terms is as good as those Conservative Members believe it to be, what the green sunlit uplands are that the Secretary of State is speaking about in terms of getting rid of the WTO terms in all these new trade agreements. I think he was the one who referred to having it both ways earlier, but it rather seems to me as if he is doing just that.

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[Sir Paul Beresford]

There is a list of ways in which we can look at that. Perhaps I can answer with an old story. I was upbraided by my farmers some time back and they finished with an anti-politician joke. I explained to them that the son of one of my Surrey farmers had gone out to New Zealand and had bought a farm the same size out there. When shearing time came around, he called up the shearing contractor and said, “Will you come and shear my sheep?” The contractor said, “I’ve got two gangs near you. One’s up the Waimakariri and they have 17,000 sheep to go, and the other ones can be with you next week. How many sheep have you got?” He said, “17.” The contractor said, “17,000?” He said, “No, no—17 sheep.” The contractor said, “Oh, are you English?” He said, “Yes.” The contractor said, “Are you from Surrey?” He said, “Yes.” The contractor said, “Right —you’re English, you’re from Surrey, and you have 17 sheep. Can you tell me their names?”

What I am getting at is that we have an opportunity—I will touch on this in a minute—to counteract that. Australia is a huge agricultural producer. The gross value of Australian farm products in 2016-17 was $60 billion. The Australians export about 77% of what they grow and produce. Fortunately, through the TPP and other arrangements, those two nations are pouring their products into Europe, China, the middle east and even the US, and they are not fulfilling their quotas. There is a real opportunity for us to improve our efficiency in farming and everything else, because Australia and New Zealand may well be looking for us to help them to fulfil those quotas, including, particularly, the quota for lamb meat going into the EU.

[Chi Onwurah]

I really appreciate the hon. Gentleman’s anecdotes about sheep farming. He talks about improvements in efficiency, but does he recognise that our landscape—I am thinking particularly about the landscape of Northumberland and County Durham and the beautiful landscape of the north of England—is driven by the scale of farming that we have now? Its beauty would be much affected and, in my view, much diminished by the kind of efficiency that we see in New Zealand farms.

[Sir Paul Beresford]

All I can suggest to the hon. Lady is that she gets disc two of “The Lord of the Rings”, and if she does not find that beautiful, she needs to go to Specsavers.

[Chi Onwurah]

I do not need to get disc two of “The Lord of the Rings”, because I already have it and have watched it on a number of occasions. There are different types of beauty; I am talking about the beauty of Northumberland. I appreciate the beauty of other countries, but I wish to retain the beauty of our gorgeous countryside.

[Sir Paul Beresford]

So would I, but I think it is quite possible to have some dramatic improvements in farming. Part of the reason for that is that, having left the EU, we will be able to have a bonfire of the rules and regulations that the EU has applied to farming. That would make a huge difference. Also—I say this to the Minister—if we are going to continue with farming subsidies, could they be paid on time and without, in the case of my farmers, my having to constantly badger the Department for the payments? We need a total rethink of the subsidies and regulations. We need to provide an opportunity for farmers to meet standards but not have to suffer from the regulations. If we do not do that, we will suffer from some of the gloom and doom that we heard from the Opposition Front-Bench spokesman, except that we will have the help of our allies—Australia, New Zealand and most of the people in the TPP—because they will need us to help them to fulfil their portfolios. That will give us an opportunity to make sure that our farming is up to scratch and can meet standards. However, at the same time, as a few hon. Members have already said, free trade is double-edged.

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[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a pleasure and an honour to follow my hon. Friend the Member for Warwick and Leamington (Matt Western) in speaking in this debate.

This has been a tumultuous week in British politics and, indeed, a very saddening week for a Labour Member like me. However, today’s debate reminds us of the critical task that this Parliament faces as the Brexit deadline approaches. Trade is at the heart of the Brexit debate, and many Members have made very good and detailed points on the challenges for our trade policy as we leave the European Union. I wish to focus my points on three areas: landscape, cars and negotiating power.

Indeed, landscape, cars and negotiating power are related, as I had reason to realise when my car broke down on the road to Craster in Northumberland on Sunday. After I had sought to negotiate getting a bungee lead from a friendly fisherman, who refused to take any money for it, I had ample time to contemplate the exquisite beauties of the Northumberland coastal landscape while I waited for my exhaust to be repaired.

The labour movement is often associated with our cities and great urban centres. In truth, however, access to and enjoyment of our countryside has been a key part of our labour movement for decades and, indeed, centuries. One only has to think of the Kinder Scout trespass to see the way in which our movement has fought to ensure that our glorious countryside remains accessible and can be enjoyed by everyone.

While Newcastle is uniquely privileged in having a moor, the Town moor—or the “Toon” moor—at its centre, we also have the ability to enjoy the wonderful countryside of Northumberland and County Durham. It is perhaps contradictory to say so, but this stunningly beautiful countryside, with its dry stone walls, little fields and fantastic coastal views, is not entirely natural. It is actually a function of our farming and particularly of our small-scale farmers. They are the ones who have created and who protect our beautiful countryside.

This is of course very different from the situation in the United States, where we can find wheat farms the size of small counties here in the UK and pig farms the size of small towns. How does the Secretary of State expect our small-scale farmers to compete with the American agro-industrial machine? If someone drives through areas of the US that have a similar northern, temperate climate, they will see vast swathes of countryside that, having been cultivated in the 19th and 20th centuries, have been given back over to wilderness because of that inability to compete with the vast farms in Texas and other states.

The hon. Member for Mole Valley (Sir Paul Beresford) suggested that New Zealand might be a model to follow, and as I said, I greatly admire its landscape and countryside, as shown so wonderfully in the films of “The Lord of the Rings”. However, the landscape of north-east England, with its drystone walls, hedgerows and its people, is not comparable with that. In the Northumbrian countryside, someone is never more than a few hundred metres from a wall, house, field, home or road. New Zealand has only 4 million people but 20 million sheep, and although I admire and recognise those different forms of landscape beauty, I do not want that imposed on the north-east.

[Sir Paul Beresford]

New Zealand also produces other agricultural products such as wine and fruit—apples, pears and so on. Many of the units in New Zealand are small, but they work together as co-operatives that do not damage the countryside, and something similar could quite easily take place in many areas of this country. The countryside would be preserved; jobs would be created; and the economic value of those small units would be lifted.

[Chi Onwurah]

I thank the hon. Gentleman for that intervention, but let us be clear. He gives the example of wine—we are not huge producers of that in Northumberland—and fruit, but I am talking about lamb, sheep and the other products of small-scale farming in the highly temperate climate that drives our beautiful, natural landscape. That is what I want to continue.

British farmers have been able successfully to compete on both quality and price in markets defined by EU food safety rules. For example, British farmers export far more wheat flour to the European Union—approximately 250,000 tonnes last year—than they do to non-EU countries, at approximately 6,000 tonnes, and the same goes for other agricultural products such as barley and oats. The EU is the largest importer and exporter of food in the world, and as part of an EU member state, our farmers have benefited from preferential access to that market through exemptions from the tariffs and quotas that are imposed on non-member countries, and without dropping our environmental and farming standards.

With 85% of seasonal agricultural workers in the EU coming from Bulgaria and Romania, agriculture is one UK sector dependent on freedom of movement. The immigration Bill will clearly do nothing to enable the continuation of what the Government are pleased to call “low-skilled” workers—those who earn below £30,000— but what about the Agriculture Bill? Will it protect our small farmers? It does nothing to address concerns about competition, and it places no duties on the Secretary of State for Environment, Food and Rural Affairs. It offers no funding and no environmental safeguards. The Government are showing yet again that they are not prepared to deliver a farming environment that protects our environment as well as the standard and quality of our food.

Our automotive sector is a global success story, although, as we saw in the sad announcements from Honda and Nissan, it now faces challenges due to technology, climate change and Brexit. It is clear that this is not all about Brexit. As I said, there is technology and there is climate change. However, the automotive sector is one of the most competitive and highly integrated industrial sectors. When there is one disabling factor that is a unique disadvantage for UK producers—Brexit is a unique disadvantage for UK producers—we are more likely to lose in the competition for future investment. The inability or the decision of this Government to not take a no-deal Brexit off the table means that our investment is falling.

[Matt Western]

My hon. Friend not only beautifully illustrates the north-east of England, but she is making very important points about the farming community and the automotive industry. On Honda’s announcement, this is the first car plant it will have ever closed in its entire 71-year history. That is not coincidental. Brexit is, as she says, just one element, but when working with such thin, narrow margins in such a competitive sector, it is what triggers the review and subsequent decision to disinvest.

[Chi Onwurah]

I thank my hon. Friend for that excellent point. The competitiveness of the sector means that margins are narrow, so any such factor—Brexit and access to markets are significant factors—will place us at a continued disadvantage. The Society of Motor Manufacturers and Traders says that no deal could cost the car industry up to £4.5 billion in tariffs.

[The Parliamentary Under-Secretary of State for International Trade (Graham Stuart)]

The hon. Lady makes the powerful case against no deal, which is why the Society of Motor Manufacturers and Traders, and practically the whole of business, is urging her and her colleagues to vote for the Government’s deal. Why will she not do so? Why does she put so many jobs at risk? Why is she peddling the myth that investment is falling, when overall the latest figures suggest that Britain continues to lead Europe on investment?

[Chi Onwurah]

I thank the Minister for that intervention and for giving me the opportunity to reiterate that, as my hon. Friend the Member for Brent North (Barry Gardiner), the shadow Secretary of State said, the false choice between the Government’s bad deal and no deal is in effect an act of economic blackmail. Industry sectors have said they would prefer the Government’s deal to no deal, but they also said that it is a bad deal. It is a bad deal for British industry. It pushes the key decisions out two years into the future. In two years’ time, we will be facing, with less leverage, exactly the same challenges under his deal.

[Graham Stuart]

Which business organisations have said that they think this is a bad deal?

[Chi Onwurah]

The Minister knows very well that the business organisations that have said that to me—I speak to them extensively as a shadow Minister—do not wish their names to be given. [Interruption.] They have said it. They do not wish to be named in Parliament, because they fear the negative reaction of Ministers such as himself.

[Matt Western]

Very simply, the reality is that this is not just about no deal. Businesses, the manufacturing sector, the CBI, the Federation of Small Businesses and all the others are saying that they would prefer for us to stay in a customs union and a single market. That has been the Labour party position since February last year. It is absolutely clear. That is where the manufacturing sector wants to stay. The CEOs of Jaguar Land Rover, Airbus and others all want us to stay in a customs union and a single market.

[Chi Onwurah]

I thank my hon. Friend for that important point. Many organisations, such as the Manufacturing Trade Remedies Alliance, have explicitly come out against the Government’s deal and repeatedly said that they want a customs union. That is an implicit criticism of the Government’s deal.

[Andrew Griffiths (Burton) (Con)]

Will the hon. Lady give way?

[Chi Onwurah]

I will give way, but I do not wish to emulate others in making long speeches.

[Andrew Griffiths]

The hon. Lady mentioned businesses that are not prepared to go on the record. I quote:

“This is not a Brexit-related issue for us”,

and this decision is “being made” on the basis of “global…changes”—those are the words of Ian Howells, Honda’s senior vice-president for Europe. It is clearly disingenuous to suggest that Honda’s decision was based on Brexit. Does she accept that, because Ian Howells says so?

[Chi Onwurah]

I do not know whether the hon. Gentleman was in his place when I started speaking, but I acknowledge that Honda’s decision is not entirely based on Brexit. However, as we have been discussing, the uncertainty in the business environment caused by Brexit has an impact on investment. The Minister stated that investment was not down, but investment in the automotive industry has gone down by almost 50% in the last year. At the same time, components worth £35 million are delivered from the European Union every day. That partly reflects the way in which our supply chains are integrated.

Government Members, many of whom pride themselves on their business experience, seem to fail to understand that supply chains—as a chartered engineer, I have been involved in many supply chains—such as the automotive supply chain are highly integrated and highly just-in-time. We have automotive supply chains that cross the channel backwards and forwards multiple times—for example, a crankshaft can be made in France, go to the west midlands to be drilled and milled and then sent to Munich to be put in an engine, which then comes back to Oxford—and the channel would be a tariff border. Such integration requires not only frictionless borders, but agreed standards to define everything from the acceptable frequency of electromagnetic radiation to the atomic composition of a given chemical. In leaving the European Union, what the Government apparently want is not less regulation, but simply more duplication, setting up new regulatory bodies to recreate existing European agencies and regulations. Far from Brussels imposing regulation on the European Union, it was often acting as an outsourcer for regulation that we would need in any case.

The automotive industry delivers not gig economy or minimum wage jobs, but good, well-paid jobs, and we in the north-east, particularly as the only region in the country that still exports more than it imports—we are very proud to have the most productive Nissan plant in the world in our region—refuse to envisage the future that the Government seem to desire, whereby our manufacturing is undermined by taking us out of the biggest free trade area in the world, one which is absolutely essential to us.

[Barry Gardiner]

It pains me to advise my hon. Friend of this, but in the last quarterly set of figures, that honourable exception of the north-east being the only region that exports more than it imports is no longer the case. I know that, as a doughty fighter for the north-east, that is not what she wants to hear, but it is testament to what happens under this Government.

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[Chi Onwurah]

I thank my hon. Friend for that intervention. I had not seen the last set of quarterly figures. I hope that in the annual figures, we are still exporting more than we import, but that is testament to the fact that manufacturing is not safe in Tory hands. In particular, manufacturing would be devastated by a Tory Brexit. The Honda announcement was devastating for families and friends of the employees there and we do not want to see any more announcements like that.

The thing that really upsets me is when the Tories claim that to take a no-deal Brexit off the table would be like someone telling a car dealer that they were not willing to walk away. With Brexit, we are not trying to buy a car in a car dealership. We are trying to build cars across the European Union that will deliver good jobs. Choosing to leave a no-deal Brexit on the table is an act of unparalleled economic sabotage by this Government.

[Matt Western]

To highlight the point my hon. Friend is making so well, has she heard and was she as appalled as I was by the comments made by Matthew Lesh of the Adam Smith Institute a couple of weeks ago on the radio, that this is all about free markets, liberalising trade, 0% tariffs, competency and competitive advantage, and if we lost our manufacturing industry in the process of achieving that, so be it?

[Chi Onwurah]

My hon. Friend raises a very unpleasant memory for me of when, as an engineering student at Imperial, back in the ’80s, I heard Margaret Thatcher say that the UK was going to be competitive on the global stage in finance and other services, and the rest of the world could be our manufacturer. The consequences of the lack of support for manufacturing from successive Conservative Governments are seen in the average wages of our constituents, day in, day out.

I want to talk briefly about negotiating power. The car buyer fallacy is not the only Tory fantasy; the idea that we will do so much better in trade negotiations on our own than with the collective power of the European Union is a total fantasy. The Secretary of State said that on our own, we would be nimble, negotiating deals the clunky 27 could not, such as with the United States. European Union gross domestic product is seven or eight times greater than that of the UK, so it offers greater opportunity for profit. Any trade agreement that delivers 1% improved profitability with the European Union would have to do seven times better with the United Kingdom to be as attractive. The Government are arguing that in the margins of the differences between ourselves and other EU members, without damaging environmental standards or working rights, we will be able to deliver seven times the benefits to any trading partner. That is a fantasy we will pay for.

African and other Commonwealth countries are not part of this debate, but the Secretary of State spoke quite extensively about them in his opening speech. One of the many disingenuous—indeed, deceptive—ways in which the leave campaign sought support during the referendum campaign was to promise better immigration and trade opportunities for Commonwealth and African countries in an attempt to draw in Commonwealth and African diaspora citizens to voting leave. Well, the £30,000 salary threshold for skilled immigrants shows clearly that there are to be no greater immigration opportunities for people from Commonwealth and African countries.

As chair of the all-party parliamentary group for Africa, I know how important trade is to African countries. The subject is raised regularly with me by incoming delegations. It is true that the economic partnership agreements between the European Union and African nations are flawed because they lack transparency and because they limit scope for African Governments to make their own development choices and industrialisation plans, but many—indeed, most—African nations see the UK as the entry point to European Union markets, and they are at a loss to understand why we are abandoning the world’s greatest free market area. What they seek is continuity and fair access to our markets, and clearly this Government can offer neither.

In the almost three years since the Brexit vote, we have learned much more about what Brexit involves and what the choices are. Now it is clear that all forms of Brexit involve an economic hit, but this Government’s Brexit trade policies and, in particular, leaving no deal on the table are a form of economic sabotage, and that is something to which I will not be a party.