During yesterday's debate on Exiting the European Union and Global Trade, Bill Cash made the following interventions:
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.
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.
Dr Fox: I do not really need any more reasons for the decision we have already made, but I am always happy to take another on board.
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.
Sir William Cash (Stone) (Con): I would like to quote what Angela Merkel has said quite recently, but first I would like to say that I entirely endorse every single word that my right hon. Friend the Secretary of State said—not to flatter him, but because it is practical. He has shown a command of the subject that completely belies the tittle-tattle that the hon. Member for Brent North (Barry Gardiner) talked about. It has been my happy experience to notice that my right hon. Friend has a complete command of the subject.
What my right hon. Friend said is enormously important. That includes, in particular, the historical—but not nostalgic—background to his remarks. This country has, for the past 400 years, built up a policy of external, global trading, right the way through from the Elizabethan period—in fact, even earlier than that, in the late 15th century. He mentioned Robert Peel. I hope he will not mind my mentioning the fact that Peel was driven into the repeal of the corn laws by no less than Richard Cobden and John Bright during the massive battle over that issue. That liberalised the whole trading system. Indeed, the French commercial treaty of 1860—the first ever free-trade treaty in the world—was negotiated on the initiative of John Bright by Richard Cobden, with Michel Chevalier, who was the president of the French board of trade at the time. This is the basis on which our history has been developed. We have been right all the time that we have stuck with free trade.
I have been much encouraged by the attitude of other countries, including in my right hon. Friend’s meeting with Mr Ross in the United States only a few days ago. With regard to the United States, only one and a half hours ago I watched a live speech by Donald Trump from Poland. Among other things, he said that we must get rid of Government bureaucracy, deal with over-regulation and insist on sovereignty. He said that is the basis of freedom for sovereign nations. My right hon. Friend spoke about our ability to conclude our own trade agreements. That is why we have to unshackle ourselves, by virtue of leaving the customs union, from the fact that the European Commission determines our trade policies—there is no getting away from that.
The hon. Member for Brent North is in a bit of a pickle because, as he knows perfectly well, only last week the hon. Member for Streatham (Chuka Umunna) tabled an amendment on the single market, and it was defeated by the Opposition themselves—they were not prepared to go along with it. I have heard similar remarks made with regard to the noble Lord Adonis’s debate in the House of Lords. There is a kind of schizophrenia on these questions among Labour Members. They do not really know where they stand, and they are completely confused, but I think that a sense of realism is coming into it. I pay tribute to the extremely sensible Opposition Members who are beginning to realise that we cannot stay in the single market and the customs union and leave the European Union, because the two things are completely inconsistent. I know that the hon. Member for Brent North accepts that now.
Sir William Cash: (…) The speech by Mr Barnier today is extremely relevant, and I have the benefit of having the full text here. I will not go through every detail of it, I can assure you, Madam Deputy Speaker, but I note that some of the things that he said are highly relevant to what my right hon. Friend the Secretary of State rightly pointed out in his speech. On the question of what happens if there is no deal, Mr Barnier said:
“Here also, I want to be very clear: in a classic negotiation, ‘no deal’ means a return to the status quo. In the case of Brexit, ‘no deal'”,
“would be a return to a distant past.”
He is wrong—that is not the case. I think the hon. Member for Brent North said that under the World Trade Organisation tariffs, there would be a 40% tariff on lamb, but even Mr Barnier says that custom duties would include
“an average of 12% on lamb and also fish”,
which is very different from what the hon. Gentleman asserted. I do not blame him—he was speaking from memory, so I am not criticising him—but I am just pointing out what Mr Barnier said.
Mr Barnier also made the extraordinary assumption:
“In practice, ‘no deal’ would worsen the ‘lose-lose’ situation which is bound to result from Brexit.”
Again, he is wrong. He went on to say:
“And I think, objectively, that the UK would have more to lose than its partners.”
That is just not so. He then went on to reveal what is really going on at the EU and with his negotiating position:
“I therefore want to be very clear: to my mind there is no reasonable justification for the ‘no deal’ scenario. There is no sense in making the consequences of Brexit even worse. That is why we want an agreement.”
They want an agreement because they know, just as Allister Heath, the distinguished editor of The Sunday Telegraph, pointed out in an article two weeks ago, that German car makers are getting really worried about the idea that there will not be an agreement, because that is not in their interests either.
On trading relationships, it is absolutely essential to remember that, while we will continue to have some 40% of our trade—although the figure is declining—with the internal market, or the framework of the remaining 27 member states, we run a monumental deficit of £71 billion a year with the EU, as the hon. Member for Luton North (Kelvin Hopkins) has said. That figure went up by £10 billion last year alone, and we do not even have this year’s figures, which will be even greater. The Office for National Statistics may have indicated to my right hon. Friend the Secretary of State how much worse they will be by this time next year.
By the same token, our global trade surplus with the rest of the world, in goods and services, imports and exports—that is the golden thread and the parameter that international trade statistics rely on—is expanding at an enormous, accelerating rate. That is the basis of our future prosperity. I say with respect to Opposition Members that more effective trade with the rest of the world, including taxing companies, will result in greater profitability. Out of that enormously growing prosperity zone, we will be able to pay for the public services that the public want and we want. The national health service will actually have more money at its disposal as a result of our successful international trading relationship with the rest of the world.
Mr Barnier went on to make an interesting observation:
“To my British partners I say: a fair deal is far better than no deal.”
That may be how it looks, but the truth is that they have to be very careful that they do not put us in the position of having to accept the idea of no deal. If that happens, as my right hon. Friend the Secretary of State has said, the advantages to us of trading on WTO terms are simply not unsatisfactory at all—quite the opposite. We all need to be realistic.
Interestingly, Mr Barnier then referred to the great port of Zeebrugge, which he said he will visit shortly,
“and for which the UK is the primary market with 17 million tonnes of roll-on roll-off traffic in 2016”.
He went on to say that he could not imagine, in the interests of the UK, Flanders and Belgium, that it would be a good idea to have
“an interruption of supply or a highly efficient organisation being called into question.”
We do not want a trade war over ports with the rest of the European Union. As I pointed out in an intervention, it was the EU that introduced the ports regulation. We had a massive row in the House of Commons, including in Committee, and I have been dealing with the issue as Chairman of the European Scrutiny Committee for the past two years. It is, however, going ahead, and the reason for that is that there is no way we can stop it. That is the response to the questions that have been asked. The reality is that until we get our sovereignty back and get the ability to run our own ports system on our own terms, we will be subjected to things like the ports regulation, which was put through by a majority vote behind closed doors. Nobody really knows who decided what. I tried to find out, but we could not make any serious progress in discovering who was making decisions. A lot of it, I think, was coming from Hamburg, because it has an enormous interest in preserving its own position.
The imposed rules were rejected by every single one of our 47 ports—not just the employers but the trade unions, which all piled in and said, “We can’t tolerate this new ports regulation.” Yet there it is, going through, if it has not gone through already while we were away for the general election. The bottom line is that our ports are the arteries for the lifeblood of our international trade, and they have been such for four centuries, as my right hon. Friend the Secretary of State said.
Mr Jenkin: I remind my hon. Friend and the House that the reason it is a ports regulation is that when it was a directive it was blocked by the European Parliament. So undemocratic is the EU’s legislative system that the Commission can force it through as a regulation, so even the European Parliament cannot block it. What kind of democracy is that, and is it not a good thing that we are getting back control over our laws?
Sir William Cash: My hon. Friend and I have been battling on these questions for 30 years, including since Maastricht. He hits the nail on the head. Democracy is lacking in the European Union. The freedom of choice to which Donald Trump referred today—the freedom of sovereign nations to decide their own democratic decision-making processes, including the right to determine their own trade policies—does not mean that there is anything negative about our ability to deliver what is in our national interest. All our history, and every single aspect of our life in this Parliament for centuries, has depended on our ability to make up our own minds about what is in the interests of our own electorate, based on the general elections at which they exercise their freedom of choice. That freedom of choice is based on the word “freedom”.
The key point is that, as the likes of John Bright and Richard Cobden understood, freedom includes freedom of choice—freedom of choice in the marketplace and economics, and freedom of choice to make electoral decisions in the ballot box. That is why they worked towards giving working people the right to vote in 1867. It is all about freedom; when we have that freedom, we will be able to make decisions in our own national interest. My right hon. Friend the Secretary of State is right to say that we have done so successfully for centuries.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP):The hon. Gentleman complains that the European Union is not democratic, while at the same time worrying about it being a superstate. The reality is that the European Union is a regional trade agreement, of which there are many in the world. One hundred and eighty-eight states of the United Nations are in regional trade agreements. Only five are not in regional trade agreements, and thus have the type of sovereignty that he has been talking about. The hon. Gentleman is taking the UK towards the type of sovereignty enjoyed by East Timor, Somalia, South Sudan, Mauritania and São Tomé and Príncipe, and many people wonder whether he really understands what he is doing.
Sir William Cash: I know where the hon. Gentleman is coming from, but I simply say that even the leader of his party has had to abandon the pursuit of the independence of Scotland, which is what underpins that question. [Interruption.] That is the bottom line. Comparisons between our great country and Somalia and Sudan are simply absurd, because this is a great country that has been making its own laws for centuries.
We went into the European Community with hope, and I voted yes in the 1975 referendum because I wanted to see whether it could work. My 30 years in the European Scrutiny Committee have proven absolutely that it does not. It is undemocratic and operates behind closed doors, and I doubt whether even that applies in some of the countries to which the hon. Gentleman has referred.
I now want to conclude—
Mr Edward Vaizey (Wantage) (Con): Hear, hear!
Sir William Cash: I always know that I am making an impact when the hon. Member for Wantage starts wanting to get to his feet.
Mr Vaizey: Right hon. Friend.
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: 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.