Exiting the European Union and Global Trade

James Cartlidge Excerpts

Thursday 6th July 2017 Commons Chamber

[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.

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[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—

[James Cartlidge]

Will the hon. Gentleman give way?

[Barry Gardiner]

Perhaps if I can finish responding to the Secretary of State’s intervention, at an appropriate juncture the hon. Gentleman might catch my eye.

There is no difference between the Secretary of State and me on those matters. In fairness, I will say that in the past 50 years there have been 15 sets of quarterly balance of payments figures that have been worse than last week’s, and one of them was under a Labour Government, just after the global financial crisis. The other 14 have all been in the past five years, under the Conservatives.

It would be mean of me to give the right hon. Gentleman too hard a slapdown because the Chancellor has been doing it so effectively on behalf of us all. Only yesterday, we read that the Chancellor is demanding that the Secretary of State prove the case that our ability to strike trade deals after Brexit will make up for losing tariff-free access to the EU. In other words, the right hon. Gentleman is being asked to justify his job as the Secretary of State for International Trade once leaving the customs union gives us the competence—perhaps in this case I should say the right—to negotiate our own independent trade agreements.

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[Sir William Cash]

He is my right hon. Friend—my very good friend. [Laughter.] I have great respect for him, although we do not always agree about everything. The same is true of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who is, I suspect, on much the same track as him.

We enjoy a trade surplus of £34.4 billion with the rest of the world. As I said, yes, 44% of our trade is with the EU—

[James Cartlidge]

Will my hon. Friend give way on that point?

[Sir William Cash]

Yes, all right.

[James Cartlidge]

Is the surplus to which my hon. Friend has referred not smaller than our surplus in services with the EU?

[Sir William Cash]

It is the aggregate of goods and services. When we consider whether we are making a deficit or a surplus, we have to look at the totality of the position.

Mr Crawford Falconer, the chief trade negotiation adviser, has an enormous amount of experience, and I am extremely glad to hear that he has been given the job of negotiating with countries such as the USA, Canada and Australia. Last year, our trade surplus with the USA was £39.6 billion and our trade surplus with Canada was £1.3 billion. In 2015, we had a trade surplus of £3.7 billion with Australia. They have all said that they want to trade bilaterally with us. It is absolutely right that we should go into those negotiations on the basis that they will lead to greater prosperity for everybody, including ourselves.

Such trading arrangements are the means by which our economic growth and our prosperity will increase exponentially. They will provide security and stability, which will allow us to deliver an effective economy and public services from the taxation of the companies involved. It is a virtuous circle and we are dedicated to it not out of ideology or from any sense of anti-Europeanism, but simply because it works. It is a good policy. The Prime Minister has put her will behind it, and my right hon. Friend the Secretary of State has explained it thoroughly and well today.

Whatever the circumstances, and whether we were remainers or leavers, we must continue with our current policy. Angela Merkel says that what matters is the future of Europe, not Brexit. That is the policy of the German Chancellor. Let us seize the opportunity to make Brexit work in our national interest.

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[James Cartlidge (South Suffolk) (Con)]

It is a pleasure to follow the hon. Member for Midlothian (Danielle Rowley). I congratulate her on her very fine maiden speech. She speaks with great passion, which shines through, and I am sure she will be a huge asset to the people of Midlothian by representing them in the way she set out.

I am also pleased to follow my hon. Friend the Member for Bromley and Chislehurst (Robert Neill). Some of the points that I make will be very similar to his, particularly on the issue of the transition, on which I agree with him strongly.

I will start by setting that in the context of my constituency of South Suffolk. I am optimistic about this country being outside the EU once it has secured a comprehensive trade agreement, which must at all costs include services. We must not forget that we have a £20 billion surplus in services with the EU.

In the immediate term, when I go around my constituency, I find that companies are optimistic. There is a company called Challs International, which I will be visiting next Friday, and which is opening a new plant. The company is not a household name, but it has a product that is one: Buster Sink Unblocker, which some Members might have seen in the supermarkets. Its boss is optimistic, as are other companies, if they have trade deals, about selling in countries outside the EU, and I think there is a great future for this country when we get to that stage.

There are concerns in my constituency, however. Our biggest manufacturing employer, certainly in Sudbury, is Delphi Diesel Systems, a major exporter to the EU, which is currently consulting on its plant closure. That would result in the loss of 520 full-time skilled jobs in Sudbury. I am grateful to the Under-Secretary of State for International Trade, my hon. Friend the Member for Wyre Forest (Mark Garnier)—who is in his place—for the help he is giving me to work with the company to try to find a way forward. I look forward to meeting his officials to talk about that.

If that firm closes—I hope that does not happen—we will then have to talk about how we get in new business and inward investment to replace it. My right hon. Friend the Secretary of State is right that we have fantastic figures on inward investment, but if we want to attract new inward investment, I agree with other hon. Members that we must avoid this cliff edge at all costs.

The hon. Member for West Bromwich West (Mr Bailey) referred to the automotive industry, which, of course, includes my company Delphi. Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, says:

“We accept that we are leaving the European Union. But our biggest fear is that, in two years’ time, we fall off a cliff edge—no deal, outside the single market and customs union and trading on inferior World Trade Organisation terms.”

His worry is that that will hit our ability to attract the investment that is critical to future growth, and that is my concern.

My concern is that we are not taking seriously enough the threat of leaving the EU without a deal. In my opinion, we should look for cross-party support on the whole issue of a transitional deal. We should realise that the national interest is best served by trying to reach a transitional deal in the event that we do not have our new trade deal arranged in time.

I strongly agree with my hon. Friend the Member for Bromley and Chislehurst that we must not move from one cliff edge to set up another. To have a transitional deal with another arbitrary time limit would be potentially foolish. It is my understanding that that is what the EU would at present want from any transition. However, we start by talking about our interests, and the best thing for this country would be to have a transitional deal that lasts from when we leave until a new deal is signed. That is common sense and sensible.

I have two more points to make on the issue of transition, because, understandably, there has been a lot of talk about that in recent weeks. Any deal must be a trusted transitional deal. We must not use transition as some kind of Trojan horse for remaining or as a way of fudging the issue of securing a good long-term deal. A transition must be precisely that—covering from where we are now until we have a new comprehensive deal in place. It must be trusted by those on both sides of the argument—those of us who argued to remain and those of us who argued to leave.

I noticed today that Mr Barnier said that there would be no negotiation on transition until at least late 2018. I raised this point in an intervention on the Secretary of State earlier, because that is extremely worrying. As a Parliament, we should be trying to come together around a position we can agree on, and the transitional deal is part of that. We should look at how we can press perhaps even for a parallel process, so that in the event that this country does not secure a deal by March 2019, it has an insurance policy in place to ensure that business stability and confidence is maintained and we do not crash out with the effect that would have on our economic future.