Greg Hands contributions to the Taxation (Cross-border Trade) Act 2018

Mon 16th July 2018 Taxation (Cross-border Trade) Bill (Commons Chamber)
3rd reading: House of Commons
Report stage: House of Commons
10 interactions (1,014 words)

Taxation (Cross-border Trade) Bill

(3rd reading: House of Commons)
(Report stage: House of Commons)
Greg Hands Excerpts
Monday 16th July 2018

(2 years, 4 months ago)

Commons Chamber

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HM Treasury
Caroline Lucas Portrait Caroline Lucas
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16 Jul 2018, 7:12 p.m.

I am afraid that I do not share the hon. Gentleman’s faith in our own Government continuing to keep higher standards. We have already heard clear criticisms of new clause 36 for many other reasons, including the way in which it drives a coach and horses through the kind of customs union that we want, so I will not be supporting new clause 36.

I was going on to give examples of ways in which food standards in the US are much lower than our own. Many may find the prospect of eating chlorine-washed chicken disturbing. Although there appears to be no clear scientific evidence that it poses a substantial risk to human health, it is linked to poor animal welfare on farms and at slaughter. Similarly, ractopamine is a feed additive used to promote growth in pigs, and its use is permitted in the United States, but prohibited in the EU. There is evidence that it has a detrimental impact on pig welfare, with the Humane Society of the United States stating that it

“causes death, lameness, stiffness, trembling and shortness of breath in farm animals”.

Concerns have been expressed about its impact on human health as well.

My amendment 71 would simply require the Treasury, when considering the rate of import duty that ought to apply to any goods, to have regard to the interests of UK producers, such as farmers and to the desirability of ensuring that UK standards of animal welfare, food safety and environmental protection are not undermined by imports produced to lower standards. I will wrap up my comments about it there.

I am supporting a number of other measures, including that on dealing with impact assessments, which are vital when we talk about impacts on the economic situation in this country and on the Northern Ireland border. However, I just thought that it was important to put something on record in this debate about the impact on animal welfare and environmental standards, too.

Greg Hands Portrait Greg Hands (Chelsea and Fulham) (Con)
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16 Jul 2018, 7:13 p.m.

Let me start by saying that I agree with my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) that the Bills we are considering today and tomorrow are vital pieces of legislation. I rise to speak against new clauses 1 and 12, which stand in the name of my right hon. Friend the Member for Broxtowe (Anna Soubry); new clause 6, which stands in the name of the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper); and new clause 11, which stands in the name of the Leader of the Opposition.

I speak as someone who voted remain in June 2016. However, having had time to study these matters at close hand, and having an objective, pragmatic and reasonable approach—I agree with my right hon. Friend the Member for Broxtowe that being objective and pragmatic is vital—I believe that it would be a grave error to enter into a customs union with the EU while being outside the EU. I shall give five reasons why I believe that to be the case.

Much of the debate has focused on narrow considerations about how a border works. Important though that is, there is much more to a customs union than simply the operation of a border or set of borders, and it is very important to bring that into this debate. Before anyone proposes going down the route of entering into a customs union with the EU, we should ask whether anyone currently does that. Turkey does; it is not in the customs union for everything or a customs union for everything, but it is for most goods, with the exception of agricultural goods. The Turkish example is very instructive. Some 23 years ago, when Turkey joined this customs union, its direction of travel was the entire opposite of ours. Turkey was looking to enter the EU and saw joining a customs union, with all its disadvantages and imperfections, as a staging post to joining the EU. We are operating in the opposite direction. What happens when a country is in a customs union with somebody and it goes into a trade agreement? Well, Turkey must give access to its markets under that trade agreement, because it has signed up to the common external tariff. However, because Turkey is not subject to that trade agreement, as that agreement is with the EU—

Greg Hands Portrait Greg Hands
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16 Jul 2018, 7:15 p.m.

I am going to carry on and explore this point. Because Turkey is not subject to that agreement, as it is not a member of the European Union, Turkey must negotiate its own trade agreement with counterparts. It is not obliged to do so, and various counterparts have agreed a trade agreement with the EU but not agreed one with Turkey.

Jonathan Djanogly Portrait Mr Djanogly
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16 Jul 2018, 7:16 p.m.


Greg Hands Portrait Greg Hands
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16 Jul 2018, 7:15 p.m.

No, I am not giving way as I am going to explore my points in the available time.

The lesson here is that these partners will be less likely, in many ways, to do a deal with such an economy, and ours is the fifth largest economy in the world. If they can get access to that economy through a trade agreement with the EU such that Britain would be forced to lower its tariffs, the people they might want to speak to are more likely to be in Brussels than in London.

My second reason relates to the pursuit of an independent trade policy and trade agreements. If we are no longer setting our own tariffs and they are set by somebody else, that weakens our ability to have a trade negotiation and to come to a trade agreement—by definition, we have a lot less to offer.

Remarkably, the third area—trade remedies—has not been explored at all tonight. I am amazed that the Labour party wants us to join—I am not sure what the official Front-Bench view is, but I think it is this—a customs union with the EU. Who would do our trade defences? Trade defences are incredibly important; they are the topic de jour in the current disputes between the United States, China and other counterparts. If we were in a customs union, it would be likely that Brussels would be making the decisions on trade remedies that would apply to the UK. We would not have a seat at that table when those decisions, which would affect our industry, were being made. Moreover, it would be likely to be against WTO rules for Brussels to make decisions that might affect the UK, because under WTO rules, people have to show the impact on their own market, not somebody else’s. So it is not at all clear to me—

Jonathan Djanogly Portrait Mr Djanogly
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16 Jul 2018, 7:18 p.m.

Will my right hon. Friend give way?

Greg Hands Portrait Greg Hands
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16 Jul 2018, 7:18 p.m.

I am going to use my three remaining minutes.

The fourth area—again, it is remarkable that Labour is ignoring this—is the potential regulation of the NHS and other public services. I think that Labour Members have forgotten the TTIP debates of four or five years ago. They got very agitated about TTIP and the prospect of granting access to the NHS and other key public services in this country via a EU trade agreement. Now they seem to be happy for the EU, through a customs union, to negotiate potential access to the NHS and our markets. Even worse, we would not have a seat at the table when that trade agreement was set up. I find it remarkable that the Labour party is prepared to do that.

My final point has also not been raised in this debate, but it is a vital aspect of the Bill: trade preferences for the developing world. Again, I think that there is cross-party support for this country doing more and better in this area. The Bill allows for the transition of the scheme of trade preferences, meaning that the UK will have its own scheme of trade preferences. It will transfer overnight the European Union GSP—generalised scheme of preferences—and GSP+ and include everything but arms. Crucially, there will be the ability to improve on that scheme. If we stay in a customs union with the European Union, we will strangle in its infancy that ability to do better than the European Union on trade preferences.

The Trade Ministers to whom I have spoken in the Governments of countries such as India, Pakistan and Bangladesh—they are all really important markets for this country and really important friends—would welcome the UK having the ability to offer better access for their goods than the European Union currently does. I am not saying that we will make a policy decision today, but it is extremely important that the Bill contains the ability for us to do that, and it is an underrated aspect of the legislation. Whatever we think of the access currently offered by the European Union, I do not think that anybody would say that the UK would be unable to offer better access if we had our own preference scheme under the Bill. That has been neglected in this debate.

Whatever we think of the original decision in June 2016, it would be a grave error to enter into a customs union with the European Union. It is not just a question of formalities and practicalities at the border; there many other really important issues, such as trade remedies and trade preferences with the developing world, that make entering a customs union with the European Union a very bad idea. I very much support the Bill and urge the House to reject the new clauses.

Nic Dakin (Scunthorpe) (Lab)
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16 Jul 2018, 7:21 p.m.

I apologise for the fact that I had to attend a Statutory Instrument Committee, but I was present at the beginning and I am here now. It is a pleasure to follow the right hon. Member for Chelsea and Fulham (Greg Hands), who brought us back to the detail of the Bill, which is where I wish to focus my remarks.

I was concerned that the proposed dumping methodology might not address the UK steel industry’s concerns, so I am pleased that the hon. Member for Stafford (Jeremy Lefroy) has tabled amendment 25. I am also pleased that the Government have engaged with Members from all parties and that last week, in response to a written parliamentary question from the hon. Member for Middlesbrough South and East Cleveland (Mr Clarke), they underlined their commitment to

“protecting UK industry where it is suffering injury as a result of dumped imports.”

The Government went on to say that they would not allow that to happen and would use mechanisms for the calculation of dumping methods that, on the face of it, seem to have the support of industries such as steel and ceramics. I very much welcome the fact that the Government have listened and have worked with key industries during the Bill’s progress through Parliament.

I am less convinced by the situation in relation to the economic interest test. I was rather hoping that, in line with the rhetoric that we heard throughout the whole argument for leaving the European Union, we would take advantage of the opportunity that leaving the European Union offered to reduce any bureaucratic pressure on industries such as steel, rather than adding to their bureaucratic pressures. The economic interest test in the Bill adds extra layers compared with what currently exists in the European Union, so we have the genius of a Government bringing forward something even more complex than what we already have in the European Union. I did not think that was the purpose of what we were doing; perhaps I was naive.

In Committee, we expressed concerns about the proliferation of economic interest tests that have been built into the regime and that measures must pass before tariffs can be introduced. Of particular concern was the fact that such tests will first be conducted by the independent Trade Remedies Authority and then again by the Secretary of State, theoretically on a completely different basis. As such, we have pushed for the Secretary of State’s power in relation to the tests to be curtailed and at most to act as a sense-check on what the TRA has conducted. Anything more than that will introduce an unacceptable level of potentially political interference into the process. It will be an unnecessary block on what is happening. The real worry is that it will delay the introduction of trade remedies and thereby potentially subject industry to more damage. However, the Government have tabled amendments 103 and 108, which go some way towards addressing the concerns I have just outlined.

Government amendments 110 to 112 and 116 to 118 seek to deal with the replication of tests, but they would not do that sufficiently well, so I shall support amendment 21, tabled in the name of the Leader of the Opposition, which would achieve a better outcome.

Finally, let me say a little about safeguard measures and adjustment plans. I am concerned that the Government intend to require any industry that requests safeguard measures to submit adjustment plans to demonstrate how it will adjust to new market circumstances, before any safeguard investigation can be launched. In essence, that would require an industry to demonstrate what changes it was making to its operations, including efficiencies and rationalisations, before a safeguard investigation could even start. UK Steel and others have pointed out that in situations such as those we currently face in relation to US section 232 tariffs, such a requirement would be unjustified. Industry should not have to make major adjustments to deal with what is likely to be a temporary situation introduced by the non-WTO-compliant actions of another Government. I am therefore pleased that the Government have tabled amendment 113 to modify the requirement, allowing the TRA to waive the requirement when it deems it necessary or suitable. It would, though, be better if that pressure on industry—at a point at which it is already under significant pressure—were not there.

I wanted to put those concerns on the record so that the Government have the opportunity to make further improvements to the Bill as it makes progress in the other place and before it comes back to this House.