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Customs Union and Free Trade Agreements

Exiting the European Union – in the House of Commons at 12:00 am on 15th March 2018.

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Photo of Alister Jack Alister Jack Conservative, Dumfries and Galloway 12:00 am, 15th March 2018

What assessment he has made of the effect of remaining in the EU customs union on the ability of the UK to seek free trade agreements with non-EU countries.

Photo of Henry Bellingham Henry Bellingham Conservative, North West Norfolk

What assessment he has made of the effect of remaining in the EU customs union on the ability of the UK to seek free trade agreements with non-EU countries.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

What assessment he has made of the effect of remaining in the EU customs union on the ability of the UK to seek free trade agreements with non-EU countries.

Photo of Suella Fernandes Suella Fernandes The Parliamentary Under-Secretary of State for Exiting the European Union

If the UK were to remain in the customs union, we would be unable to implement our own trade deals or set our own tariffs. The EU would be able to offer other countries access to our market, but we would not necessarily get access to other countries’ markets in return. This would not give us control over our trade policy and it would not respect the referendum result. We have a great chance for the first time in decades to develop a new trade policy by leaving the EU customs union.

Photo of Alister Jack Alister Jack Conservative, Dumfries and Galloway

Will the Minister ensure that the final deal allows the UK to agree new trade deals around the world on day one after we leave the EU?

Photo of Suella Fernandes Suella Fernandes The Parliamentary Under-Secretary of State for Exiting the European Union

That is one of the big prizes of Brexit: the freedom and chance to develop and sign new free trade deals around the world outside the EU, and it is our commitment that once we leave the EU we will be able to enjoy that freedom to the fullest.

Photo of Henry Bellingham Henry Bellingham Conservative, North West Norfolk

Is the Minister aware that there are a large number of small and medium-sized enterprises in Norfolk that are absolutely determined to increase their exports to new markets? These are dynamic, forward-thinking companies. Further to the question asked by my hon. Friend Mr Jack, what progress is being made with the EU to ensure that we are actually able to negotiate bilateral treaties with third countries during the transition?

Photo of Suella Fernandes Suella Fernandes The Parliamentary Under-Secretary of State for Exiting the European Union

It has been the clear commitment of this Government that during the implementation period we will be able to take concrete steps forward in negotiating and signing new free trade agreements with countries outside the EU, although of course they would not come into force until after the end of the implementation period. My hon. Friend is right that leaving the customs union and forging a new trade policy is a chance to open up to British businesses new markets that they have not previously had access to. That will help consumers, increase investment and only lead to prosperity.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

I thank my hon. Friend for her answers. India currently enjoys a growth rate of 7.5% and is on course to be the fifth biggest economy in the world. Given our cultural links and shared history with our friends in India, does my right hon. Friend—my hon. Friend; I am getting ahead of myself—agree that we have an opportunity to forge a trade deal with India, which will be excellent news for the UK and India?

Photo of Suella Fernandes Suella Fernandes The Parliamentary Under-Secretary of State for Exiting the European Union

My hon. Friend is absolutely right. India represents a great opportunity in trade for Britain and British consumers and for our Indian counterparts. It is no coincidence that the Prime Minister made a point of visiting India early on in her premiership. The Department for International Trade has recently completed a trade audit with India to look at the particular barriers, and the joint economic and trade committee has decided to look at four sectors—food, life sciences, IT and services—to see where opportunities can be explored.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Transport)

At a recent meeting in this place, the director general of the CBI highlighted that Germany sells 4.7 times more to China than the UK does. Therefore, being in a customs union does not prevent countries from extending trade with global partners. Does the Minister agree with her?

Photo of Suella Fernandes Suella Fernandes The Parliamentary Under-Secretary of State for Exiting the European Union

Well, being in the customs union also puts up prices for consumers in food, footwear and clothes. I am often surprised that the Opposition do not champion the benefits of leaving the customs union, which this Government are doing.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

I do not often cite the International Trade Secretary favourably, but he was right when he was in China with the Prime Minister in February and accepted that a customs union with the EU “self-evidently” does not prevent us from increasing bilateral trade with countries such as China. What assessment have the Government made of the comparative benefits for the UK of being in a customs union and not being in a customs union when it comes to trade with non-EU countries?

Photo of Suella Fernandes Suella Fernandes The Parliamentary Under-Secretary of State for Exiting the European Union

As we have a trade deficit with the EU that is increasing—it is currently £70 billion—and a trade surplus with the rest of the world that is growing, our prospects for increased demand clearly come from the rest of world, where some of the fastest-growing economies lie. Our future prosperity lies with trade both with the EU but, very importantly, with countries outside the EU.