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EU Trade Agreements: Replication

– in the House of Commons at 12:55 pm on 13th February 2019.

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Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade 12:55 pm, 13th February 2019

(Urgent Question): To ask the Secretary of State for International Trade to make a statement on the progress he has made in replicating trade agreements between the United Kingdom and those countries with which the EU has a trade agreement.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

As a member of the EU, the UK currently participates in about 40 free trade agreements with more than 70 countries. In 2018, the trade agreements in force constituted about 11% of our trade. They cover a wide variety of relationships, including free trade agreements, economic partnership agreements with developing nations, association agreements that cover broader economic and political cooperation, and mutual recognition agreements.

The Government’s programme for providing continuity and stability for businesses, consumers and investors in our international agreements is of the utmost importance. We are committed to ensuring that those benefits are maintained, providing for a smooth transition as we leave the EU, but the House will be well aware that the best way to provide that continuity and stability is to ensure that we have a deal with the European Union so the UK remains covered by all those agreements during the implementation period.

We have already signed a number of agreements, including with Switzerland—the largest in terms of our trade flows, representing more than 20% of the value of all our roll-over agreements. We have also signed agreements with Chile and the Faroe Islands, and an economic partnership agreement with eastern and southern Africa. The texts, explanatory memorandums and parliamentary reports for those agreements have already be laid in the Libraries of both Houses.

As we leave the EU, we have no intention of making our developing country partners worse off, as the Opposition would have us do by abandoning EPAs. It is important for the prosperity of their people that we maintain our trading relationships so they have the opportunity to lift themselves out of poverty. We have recently reached agreements with Israel and the Palestinian Authority, and we intend to sign them shortly. Just today, we reached agreement on the UK-Pacific EPA. We have also signed mutual recognition agreements with Australia and New Zealand, and will be closing two with the United States soon. A number of negotiations are at an advanced stage. All international negotiations—indeed, any negotiations—tend to go down to the wire, and I would expect nothing different from these agreements. That is the way that countries do business.

To put the economic value of the agreements in perspective, the countries covered by 20 of the smallest agreements account for less than 0.8% of the UK’s total trade. For the countries with which we may not be able to sign a full agreement by exit day, it is responsible to ensure that we have contingencies in place should we end up, unfortunately, in a no-deal scenario. That is exactly what my Department, alongside the Foreign and Commonwealth Office and the Department for International Development, is doing. We will shortly be updating businesses and the House about the progress on these agreements, and will continue to inform the House as soon as further agreements are signed, in line with our established parliamentary procedures.

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

Yesterday, the Department’s risk matrix for the so-called roll-over agreements was published in the media. Of the 40 agreements that the Secretary of State famously promised would be ready one second after midnight on exit day, precisely four have been signed. Nine are off track, 19 are significantly off track, four cannot be completed by March 2019 and two are not even being negotiated.

Throughout the passage of the Trade Bill, Members repeatedly said that they were concerned that it would not be possible to replicate the terms of those agreements fully, and that many countries would seek to renegotiate terms in their favour. I therefore ask the Secretary of State to write to me to set out for each country what objections or demands to concluding a new roll-over have been presented, what concessions he has offered in respect of preferential access to UK markets in order to overcome such obstacles, and what assessment he has made of the impact on trade flows with the UK of a failure to conclude a new deal.

Many in the business community feel that the Secretary of State has diverted too many of his Department’s resources to entirely new free trade agreements, and so keen has he been to grandstand with the new that he has ignored the fundamental grinding work of securing what we already have. So I ask the Secretary of State to write to set out: the number of full-time personnel engaged on securing entirely new agreements; the number engaged on securing the roll-overs; and whether he believes his Department has been adequately resourced to handle so many trade negotiations at once.

Recently, the Secretary of State suggested the unilateral liberalisation of tariffs in the event of a no-deal Brexit. Will he explain to the House how he thinks negotiations would go with the remaining roll-over countries once he had given up our key negotiating leverage by reducing all tariffs to zero? Most Members might think that by doing so we were the ones being rolled over. Will he categorically rule out such a proposal? As we speak, goods are being loaded on to vessels that will be arriving in our markets from overseas after 29 March. How does he intend to support business with these transactions, given that nobody knows what tariffs and non-tariff barriers they will face when they arrive at their destination port? Increasingly, the Department for International Trade looks as though it has inadequate resources, focused on the wrong priorities, set by incompetent Ministers.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

As ever, the hon. Gentleman gives us a rich menu of the things on which he is wrong. First, if we want to ensure that all our agreements are rolled over, the best way to do that is by reaching a deal with the European Union so that they will apply one minute after midnight. I voted for that continuity. Did the hon. Gentleman? Did his party? Secondly, he asks about the reasons why countries may not want to continue these things. I have had discussions with a number of Opposition politicians about this. Some countries have said that they did not like some of the human rights elements that were incorporated by the EU and they would like us to drop those in order to roll the agreements over. I am not inclined to do so, because the value we attach to human rights is an important part of who we are as a country. The hon. Gentleman was wrong in that, rather than diverting resources in my Department from roll-over agreements to future free trade agreements, I have done exactly the opposite, reducing the number working on potential future FTAs in order to give maximum resource for this. Finally, he was wrong as I did not advocate unilateral liberalisation of tariffs—that was something mentioned in a newspaper—and the Government will determine what their day one tariffs will be as a collective decision in the event of no deal.

Photo of Kenneth Clarke Kenneth Clarke Father of the House of Commons

My right hon. Friend is right to stress that if we were to leave on 29 March with no deal, it would have a disastrous effect for many industries, because we would suddenly lose very important trading agreements across the world that we have enjoyed for many years. I agree with him on that, but does he not accept that when we get into the transition period he is still going to face enormous difficulties and will need a very long transition period to start negotiating so many trade deals with so many important markets for our economy? Does he not accept that his principal problem is the lack of bargaining power that the UK has on its own compared with what the EU has as a bloc in carrying out bargaining arrangements? He mentions human rights and other things, but very important countries such as Japan and South Korea, and others, are going to expect better terms from the UK, at the expense of the UK, than they have had to give to the EU. He says that they will take it to the wire. He accepts that he is having tough negotiations. Would he contemplate urging on his colleagues, even at this stage, moving to some sort of customs arrangement and regulatory alignment with the rest of the EU which will rescue us from these chaotic negotiations and allow us to enjoy the benefits of trade agreements which, for the most part, were ones that previous Conservative British Governments urged upon our EU partners and took a leading role in getting put in place in the first place?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

As ever, my right hon. and learned Friend raises interesting points. Although there would undoubtedly be a greater risk in the case of no deal, I do not agree that this would be disastrous, because we are likely to maintain a high proportion of the continuity of these agreements. Let me just remind him that five of those 40 agreements represent 76% of the trade, by value, that falls into this category. My Department has developed a great degree of expertise and knowledge in the process of transitioning to new agreements. There are those who say, “If we end up getting a deal, much of this work that has been done will be wasted.” I completely disagree with that, as it has created a body of knowledge, experience and expertise in the Department that will stand us in good stead. As for our ability to negotiate with other countries, we remain the world’s fifth biggest economy and many countries have said to us that it would be much easier to do an agreement with the UK as a single country which would then negotiate and ratify than to have to do it with 28 countries, as they do at the moment. On Japan, we have of course made clear our position and finished our public consultation on potential membership of the Comprehensive and Progressive Agreement for Trans-Pacific PartnershipCPTPP—a subject on which we are likely to have a debate in this House next week. Finally, he asks whether we should not stay in a customs union. That would preclude us from having negotiations on new agreements, such as with the United States, or even with China, with which the EU has no agreement at the present time.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Trade)

The Secretary of State has just said that countries say it would be easier to do a deal with the UK. One might ask the simple question: if it was so easy, why have we not even been able to roll over more than half a dozen of the deals we currently have? The leaked documents paint a picture of unvarnished failure: with South Korea and Canada we are off track; and with Japan we have no chance of completion. These deals are not simply necessary in the event of a no-deal Brexit; they may well be required at the end of the transition period if the negotiation then is as miserable as what we have seen to date. So why does he not own up? The time to negotiate these deals has run out, and it is highly unlikely that the Prime Minister’s deal, which he supports, will be accepted by this House. This is now the evidence that he and others need to put their weight behind an extension to article 50 so that his Government and his Department at least can complete the simple task of rolling over the deals we currently have.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

Again, I make the point: if Opposition Members want us to get trade continuity, the best way to do so is to vote for the deal that the Prime Minister has already set out. As for future FTAs, we could not negotiate those were we to follow the hon. Gentleman’s advice and remain in a customs union.

Photo of Greg Hands Greg Hands Conservative, Chelsea and Fulham

I have had a careful look at the passage of these agreements through this House in the first place. Every one of them was supported by my right hon. Friend but most of them have been opposed by Barry Gardiner: CETA—the Comprehensive Economic and Trade Agreement—in February 2017; the EU-Japan agreement in June 2018; and the EU-Singapore agreement in September 2018. He voted against those. Does my right hon. Friend share my consternation at this urgent question, given that the hon. Gentleman never wanted us to be in these trade agreements in the first place?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

First, let me thank my right hon. Friend for the work he has done in my Department as part of this overall process. What stands out in this debate is the utter humbug we hear from the hon. Member for Brent North, who talks about the need to roll over agreements such as the one with Canada and asks why the Government are late in doing so. The Labour party voted against the agreement in the first place; Labour did not want us to have the agreement. So now, to come to the House asking why we are not rolling it over on time is, sadly, absolutely typical of the way he does business.

Photo of Angus MacNeil Angus MacNeil Chair, International Trade Committee

The serious matter here is that on 29 March, transition or no transition, the UK is going to be at the mercy of the sovereignty of 70 other countries in their agreeing to the trade deal roll-over. The EU seems to have been very good at these trade agreements, which include human rights. The Secretary of State wants to maintain those agreements, despite wanting to rip up trade agreements with the most important partners, namely the 27 countries in the EU trading bloc.

The importance of the 40-odd trade agreements with 70 countries is recognised by the Society of Motor Manufacturers and Traders, which warns that even if EU trade agreements are rolled over, advantages will not always be met. For example, the EU-Korea agreement allows for 55% automotive content, but the UK cannot reach 55% automotive content. As the Society of Motor Manufacturers and Traders has warned, that will put the UK at the disadvantage of not being able to fulfil the rates of the trade agreement, and we will be on the more disadvantageous World Trade Organisation terms as well. In the 40 agreements with 70 other countries, how many other instances are there of clauses such as the one on 55% content that cannot be met? People who trade and export from the UK need to know, and they need to know now, with 44 days to go.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

The central premise of the hon. Gentleman’s question is that we intend to rip up our trade agreement with what he describes as our most important trading partner, the EU27. We have no intention of having a breach. We want to have a full, liberal trading arrangement with the European Union. We do not want Britain to be subjugated in a political relationship that the voters have told us to leave. When it comes to continuity, the Government have set out what we will do with the agreements. For each of them, we have set out to Parliament—this is in both Libraries—the text of the agreement, an explanatory memorandum and the political statement on where there is any change between the agreement in place and the one we are rolling over, if utter and complete replication has not been possible. We have done that already, and we shall do that with the others.

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

I heard the Secretary of State give the commitment on the guidance that he is going to give. My constituents who are seeking to export to countries now do not know, at the point of departure, what regime their goods will face on arrival. I note the Secretary of State’s attacks on the Opposition parties, but he may wish to recall that 117 Government MPs did not vote for the Prime Minister’s deal, many because of their ideological commitment to WTO rules. Given that we are 44 days away, when will that guidance be issued to companies in my constituency? I was one of the 40 Back-Bench MPs who supported the Prime Minister’s deal.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

The Government are assessing where we are with each of the agreements. Where we believe that it will not be possible fully to replicate, we will set out a technical notice in the coming days. Let me give my hon. Friend the example of Turkey, which is part of the customs union: unless we get an agreement with the European Union, we will not be able to maintain the current pattern of trade with Turkey, although we would look to see where we could mitigate any problems that came up.

Photo of Hilary Benn Hilary Benn Chair, Committee on Exiting the European Union

The past two and a half years have been a very painful process, as the wild and optimistic promises about what could be achieved from the Brexit process have collided with reality. That includes what the Secretary of State said to the Conservative party conference in the autumn of 2017. The question I wish to put to him is simply this: why does he think that it has proved so difficult to roll over all these deals, when he told that conference that it would be a very easy thing to do and he was confident of achieving it?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

If we get an agreement via the withdrawal agreement with our European Union partners, that is exactly what will happen: those agreements will roll over. Let me explain to the House why: the United Kingdom will be deemed by the European Union to continue to be party to those agreements. We will get continuity, but we will not get the same continuity if we do not get an agreement with the EU. Those who continue, by their actions, to make no deal more likely will have to be responsible for the consequences.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

I congratulate my right hon. Friend and Somerset neighbour on achieving a deal with Switzerland so effectively. Does he share my enthusiasm that this is the beginning of an opportunity for this country to trade more freely, to be able to cut the cost of goods coming into the country and to stop acting as a protectionist racket for inefficient continental European companies?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

I am grateful to my parliamentary next-door neighbour for his comments. Indeed, we have a great opportunity as we leave the European Union and as we take up our independent seat at the World Trade Organisation to be champions for global liberal free trade at a time when the voices of protectionism are rising. That is important not only for the United Kingdom or, indeed, for the economic wellbeing of the trading world, but for the wellbeing of those we have managed to take out of abject poverty as a result of a liberal global trading environment.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union)

We have seen some delusional performances at the Dispatch Box this week, but this has to be among the worst ever. May I take the Secretary of State back to his non-answer to the Father of the House, Mr Clarke? The Secretary of State dodged the nub of that question, which was about why anybody should give us a better deal on our own than we have as part of the European Union. He has been asked that question over and again, and he has refused to answer it. Now that we are only 44 days away, may I put the question another way? Can he name one country that he is so confident will give us a better deal than we currently have that if such a deal has not been achieved by 30 March, he will resign?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

I was not able even to follow all that question, never mind answer it. Countries have said to us that there are areas of policy on which they will seek an agreement with the United Kingdom that they cannot get with the European Union. Data localisation is one policy area where the attitude of a number of European countries makes it impossible to reach an agreement, and that is in fact holding up the trade in services agreement. We will take a more liberal view of that and will be able to do things as an independent nation that we cannot do as a member of the European Union.

Photo of Julia Lopez Julia Lopez Conservative, Hornchurch and Upminster

It is my understanding, and the Secretary of State has referred to this as well, that the EU has not permitted Turkey to engage in talks with the UK on continuity of trade post Brexit under the terms of its goods-only customs agreement with that country. It is the kind of arrangement that I understand we would fall into under the backstop. Will the Secretary of State please update the House on any progress in talks with Turkey to ensure smooth future trade with this important partner? Does he share my concern about limitations on our ability to negotiate freely with trade partners should we enter into a goods-only customs arrangement with the EU?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

There are issues with Turkey, which is in a customs union, although it is a partial customs union, so we can discuss our future relationship in areas such as agriculture and services. I refer in all humility to the shadow Secretary of State, Barry Gardiner, who put it best. He said of a customs union that

“as an end point it is deeply unattractive. It would preclude us from making our own independent trade agreements with our five largest export markets outside the EU”.

That was then; it is not the policy today.

Photo of Tom Brake Tom Brake Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union)

The Secretary of State will recall that last week I asked him to provide this risk matrix to the House, but he would not. Instead, he asserted that if only I listened to his contribution in the International Trade Committee, all would be revealed. I went back and listened to it and nothing was revealed about the content of the matrix. Why would he not make this information, which has now been leaked to The Sun, available to Members of Parliament in the same way that he was happy to make it available to businesses? Is it because he does not believe that we have a role in the scrutiny of his activities? Or was it simply to save him the embarrassment of Members seeing what lack of progress there has been on the 40 trade deals he said would be signed by one minute after midnight on 30 March?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

It is tedious to have to give the same answer, but if the same question keeps getting asked, I will keep doing so. The way that we get continuity at one minute after midnight is to have an agreement with the European Union so that we have continuity of the agreements. A number of the agreements are very close to completion, but there is a level of confidentiality around that. At the same time, the Government clearly want to give business an indication of where we think a trade agreement may not be able to be rolled over on time. I will do that in the coming days, following an assessment of where we are at the present time, and I will make a written ministerial statement to the House as well.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

Is it not necessary for us to take lessons from the fact that we have failed to land a pre-Brexit trade deal with Japan or with most of the other 70 countries with which the EU enjoys FTAs, such as that actually we would be better off being in a customs union or having some close customs arrangement with the EU, backed up by the firepower of 510 million consumers rather than 65 million?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

But we are leaving the EU. Were we to attempt to have a customs union relationship, which is what the Labour party says, we would have no say in that trade policy; we would actually be worse off than we are today in the European Union. The EU has made it very clear—and the European Union treaty makes it very clear—that a third country outside the EU cannot be involved in setting EU trade policy. At best, it is a fantasy, at worst, a dangerous delusion.

Photo of Rachel Reeves Rachel Reeves Chair, Business, Energy and Industrial Strategy Committee

On free trade agreements with Japan and South Korea, the Secretary of State for Business made it clear to the Business, Energy and Industrial Strategy Committee last week that the deadline for companies exporting to Japan and South Korea is this Friday, 15 February, because shipments take six weeks to arrive. What advice would the Secretary of State give to businesses that are exporting to Japan and South Korea? If the Government get their deal through, will the free trade agreements with those countries roll over? If we do not manage to secure a deal, what happens to those shipments when they arrive at the end of March and the beginning of April?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

The hon. Lady raises a very important point. On Japan, the Japanese Government have said to us that if there were a deal with the European Union, they intend to roll over the Japan economic partnership agreement at that point, and the UK would continue to benefit. I have to say, though, that we have been trading with Japan for many years, but trading on World Trade Organisation terms. We have been trading under the Japan EPA for a matter of days. When it comes to British business continuity, firms are used to dealing on WTO terms, and I envisage our trade relationship with Japan to be largely effected by our potential membership of CPTPP, to which the Japanese Government have given enormous encouragement.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

But from whom were representations had to the effect that remaining in a customs union would be a disaster?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

It would be unparliamentary of me to use the same term as the shadow Secretary of State for some of Labour’s tests that have led it to its policy today. It is nonsensical to say that we can be both in a customs union with the European Union as a third country and still have an effect on trade. Those tests would increase the chances of the UK remaining permanently as a rule taker, which would not be advantageous to the UK.

Photo of Emma Little Pengelly Emma Little Pengelly Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Equality), Shadow DUP Spokesperson (International Trade)

There has been a great deal of focus on the number of trade deals, but, as the Secretary of State has outlined, the value of the trade in each deal varies significantly. He has indicated that many of the deals will go down to the wire. How many is he anticipating will be signed before that date? More importantly, what is their value as a percentage of our current trade value for the entire third-party free trade deals?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

As ever, I am grateful to the hon. Lady for her question. On the UK’s trade, 48% of our trade is with the European Union and 52% with the rest of the world. Of the rest of the world trade, around 11% occurs under EU FTAs. Of the 40 or so agreements, five represent 76% of the 11%, and the bottom 20 represent less than 0.8% of 1%. Therefore, there is very clear advantage in getting those larger agreements across the line first, and we are making excellent progress in that regard.

Photo of Richard Graham Richard Graham Conservative, Gloucester

There are two groups in this House who underestimate the value of free trade agreements. The first includes those Opposition Front Benchers who did not vote for them in the first place and whose leader believes that free trade agreements benefit only multinationals at the expense of everyone else. He should try explaining that on the workshop floor of some of the small and medium-sized manufacturers in my constituency of Gloucester that export around the world. The second group are some Conservative Members who believe that leaving the EU with no deal will be no problem. Will my right hon. Friend confirm that, in the event of no deal, the tariffs that will come into play with the EU will be devastating for farmers and manufacturers and all the rest of the 148,000 companies that export only to the EU and that the simplest way to take this risk off the table is for everybody to get behind the Government’s withdrawal agreement Bill and make sure that all these deals are rolled over without problem?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

It seems that the country is caught between the irrational pessimism of those who fail to be reconciled to the referendum result and believe that everything to do with Brexit will be disastrous for the UK and those who are irrationally optimistic that there would be no problem whatever to leave the European Union with no deal. The truth is that we would be better off with a deal, which is why the Government want to get that deal with the European Union across the line. I still urge Opposition Members to support it. If we do not achieve it, we will end up with the uncertainties that they have identified today.

Photo of Pat McFadden Pat McFadden Labour, Wolverhampton South East

As the Secretary of State rails against irrational pessimism, I assume that he will tell us that the rest of the world is looking at the United Kingdom right now and saying that Brexit is a great example that it must follow.

I wish to go back to the point that Mr Clarke raised yesterday, which is that, under our current arrangements, UK businesses will be part of one of the biggest trade deals ever negotiated between the EU and Japan, but, under the Secretary of State’s policy, UK businesses will not be part of that agreement and we will have to start again. We are told that Tokyo’s trade negotiators are under instruction to extract every advantage possible, as we would expect them to do in a tough trade negotiation. Will he promise UK businesses that their market access to Japan under any deal that he manages to negotiate will be as good as it is under the EU-Japan trade deal, which has already been negotiated?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

As I have already said, the Prime Minister and Prime Minister Abe have both indicated that they want a close trading relationship for our countries after we leave the EU, but the Japanese Prime Minister has been very clear that he is hugely encouraging of the UK’s accession to CPTPP, which would then become a trading bloc of almost exactly the same size as the European Union itself. As for his first point, many people are looking to the United Kingdom and saying what a great example it is of democracy that a country wants to take control of its own constitutional future.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

And we buy a lot of goods from Japan anyway, particularly cars, and I am sure that it will want us to carry on doing that. Am I not right in thinking that, during the referendum campaign, David Cameron said that, by leaving the EU, we would be leaving the customs union? He recognised that that would be essential. Although a customs union would have the advantage of allowing all these deals to be rolled over, it would be a betrayal of what the people voted for in 2016 because we would still have to pay to access the customs union and there would still be free movement of labour. Furthermore, we would simply not be allowed to do those trade deals with countries such as China, the United States of America and, indeed, some of the fastest growing economies in the world.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

My hon. Friend, who has considerable knowledge from his work on the Select Committee, is quite right. If we were in a customs union, but a third country outside the European Union—I do not hear people say that we should stay in the EU and simply behave dishonourably towards the referendum—we would not be able to affect European Union trade policy and would become complete rule takers and would in fact be in a worse position than we are today. As a member of the European Union, we were able to affect policy. We have been given a clear instruction by the voters to leave the European Union, and that means leaving the customs union and the single market.

Photo of Laura Smith Laura Smith Shadow Minister (Cabinet Office)

Manufacturers in Crewe and Nantwich have expressed very real concern about the lack of progress in this area. Does the Minister accept that committing to a new customs union as part of our future relationship with the EU would resolve this issue, allowing us to continue to take advantage of our current deals with all major global markets while allowing us the ability to strike our own deals for trade in services, which make up the vast majority of the UK economy?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

Just how would it give us greater certainty in the exercise of our own trade policy if we were a third country outside the European Union in a form of customs union that specifically prohibited us from having a say on that trade policy itself? That would diminish the ability of this Parliament to give certainty to any business in our country, rather than what the hon. Lady suggests.

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch

Does the Secretary of State agree that, if the Labour party really cared about the continuity of our trade arrangements, it would stop blocking the Trade Bill in the other place?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

I hope that we will see the progress of the Trade Bill, which the Labour party voted against in this House. Those involved in manufacturing, including in the constituency of Laura Smith, will note that the Labour party voted against the establishment of the Trade Remedies Authority, which is how we would protect our businesses from unfair international competition.

Photo of Ian Murray Ian Murray Labour, Edinburgh South

The Home Secretary has said in this House on a number of occasions that international student numbers will be uncapped, that the number of skilled workers who are required for the economy will be uncapped and that our public services will be able to get the people that they wish for from all over the world to work in our those services. Can the International Trade Secretary tell us how many of these roll-over agreements—or how many of the post-Brexit agreements—will be rubbished or dictated by the fact that many of our partners that want bilateral trade deals want a lessening of the UK’s hostile environment policy?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

The policy on students is to encourage them to come here, and many do so. For example, we are the No. 1 global destination for Chinese students—ahead of the United States. These students come here because they believe that the quality of education is high. As the hon. Gentleman knows, we have no intention of limiting the number of students coming to the UK. Likewise with migration, as my right hon. Friend the Home Secretary has said, we look to ensure that the levels of skill required for the UK economy are available to us. In a modern, integrated economy, it makes sense that our migration policy gives priority to ensuring the skills needed for our economic growth.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I was thinking of asking the excellent leave Secretary of State how he managed to maintain such good humour and grace in a remain-dominated Parliament. However, I think what this House wants to know is whether, in the circumstances of no deal—that must be likely, given that the Government’s withdrawal agreement was defeated by the biggest margin in Commons history—his Department will be prepared on 29 March for no deal.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

As I have said, our priority is continuity of trade. We want to ensure that we get the roll-over of as many of those agreements—and as large a proportion—as possible. Where that is not possible for other reasons, we will seek as much mitigation as we can. I make the case again that the best way to achieve full continuity is to leave the European Union with the withdrawal agreement. As for my hon. Friend’s initial point, I take comfort from the fact that although this may be a remain-dominated Parliament, it is a leave-dominated country.

Photo of Catherine West Catherine West Labour, Hornsey and Wood Green

The Secretary of State mentioned Switzerland and the Swiss deal in his response to the urgent question. Could he explain why members of the International Trade Committee had to look on the Swiss Government’s website to understand the detail of the trade agreement, and why members of the Committee were not briefed in advance? What will he do to improve the lack of clarity and the lack of a sense of working together across Parliament to achieve the best for trade?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

I am grateful for the way in which the hon. Lady continues to press the importance of this issue; it is a view that I share. We set out in our legislation that we would publish the text at the point of signature, not at the point of initialling, and that is what this House ultimately voted for. We also said that we would publish the explanatory memorandum, and that we would set out differences between the original agreement and any changes in a statement, given that the original agreement was already scrutinised by this Parliament when it was introduced as an EU agreement. The hon. Lady raises an important point, however, about future trade agreements that were not covered in the Trade Bill; and following the completion of the Government consultation, I will set out the processes by which we will ensure that both Houses of Parliament are able to get active and real-time scrutiny of the future trade agreements.

Photo of Tom Pursglove Tom Pursglove Conservative, Corby

Is it not the case that, even if we roll agreements over, it is entirely possible to make further enhancements to those agreements in time as an independent trading nation?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

Those of us who have been involved in this process from the beginning will remember that it was initially known as transitional adoption—that is, we would adopt the EU agreement with a view to moving on to a more bespoke agreement later. That is still our aim. For example, in our discussions with the Swiss Government at signature on Monday, we talked about our ambitions to enhance that agreement once Britain has left the EU. Our aim for the moment is continuity; ambition comes later.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales)

The UK Government would probably leave DFS with a full-price sofa. Ministers have already indicated that giving up our protected geographical indicators would be a price worth paying for trade deals, wilfully damaging Scotland’s competitiveness in world markets. What guaranteed protections will the Secretary of State’s trade deals offer Scotland’s precious food and drink sector to compensate?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

That is so fundamentally wrong. The Government have said nothing of the sort about geographical indicators. We regard them as having the highest importance, not least in Scotland. On that point, I congratulate Scotch whisky on reaching almost £5 billion of exports last year—exports that we are very keen to protect.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

Ministers have always promised that these trade agreements will mirror the terms that these countries have with the EU and which the UK currently enjoys. Has the Secretary of State achieved this in the provisional agreements with Norway, Iceland and Liechtenstein, and how does he propose to achieve it in respect of Turkey’s trade relationship with the EU?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

We have said that we aim to replicate the terms as closely as possible. There are some issues that mean that it is not entirely possible to do so. The hon. Gentleman correctly raises the issue of Turkey, which is in a particular position because of its partial customs union with the European Union. This of course means that it is difficult to conclude what we are going to do with Turkey until we know the shape of our agreement with the European Union. Again, that simply raises the issues and complications of being in a customs union, rather than being a nation that is able to determine its own independent trade policy.

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs)

The fundamental point made by both Mr Djanogly and the Father of the House was that the balance of power shifts when we are no longer a member of the EU. This is illustrated by the fact that one of the first agreements that the Secretary of State has achieved is with the Faroe Islands. Will he just tell the House what proportion of UK trade is with the Faroes?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

I will admit that the agreement with the Faroe Islands is a small one, but it is very important for people who work in the fish processing industry in this country because it provides the necessary continuity. Labour Members mock it, but they might want to go to places such as Grimsby and tell people there that the agreement has no value, when it clearly does. Countries that are much smaller than the United Kingdom have been able to get trade agreements. For example, Canada—a smaller economy than the United Kingdom—was able to negotiate a perfectly acceptable trade agreement with the European Union, as it has with many other places. It is the utter lack of ambition, optimism and confidence shown by the hon. Lady that I am happy was defeated by the optimism of the British people in the referendum.

Photo of Stephen Timms Stephen Timms Labour, East Ham

The Secretary of State has managed to reach agreement with the Faroe Islands, but not with Japan or Canada. Why has this crucial exercise proved so much harder than he said it would be?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

The process continues, but it is worth pointing out that we have reached agreement with Switzerland, which is by far the biggest of all the agreements under this section of our trade. The trade agreement that we have signed with Switzerland this week is, by value, more than 20% of all 40 of the EU agreements. If it is possible to do it with the biggest one, it should be possible to do it with others.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader

In the unlikely event that the Prime Minister’s deal is agreed, the EU is going to write to the countries that it has agreements with and say, “Please could you agree to treat the United Kingdom as a member of the EU for the transition period?” Will the Secretary of State now admit to the House that there is no guarantee that all those third countries will agree to that request?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

All I can say is that I am not aware—nor, as far as I know, is the European Union—of a single country that has said it does not want to continue with the trading arrangements that it currently has with the United Kingdom and the European Union. Why would they?

Photo of David Hanson David Hanson Labour, Delyn

The Secretary of State, in response to my right hon. Friends the Members for Wolverhampton South East (Mr McFadden) and for East Ham (Stephen Timms), has indicated that the Japanese trade deal will not be replicated at the level it is at now, except that we can join the Trans-Pacific Partnership. How long does he expect us to spend negotiating in order to join the Trans-Pacific Partnership?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

As I said, the Japanese Government have made it clear that in the event that we leave the European Union with the withdrawal agreement, there will be the roll-over. If we want to get continuity with that Japanese agreement, there is one way to do it, and that is to ensure that we back the Prime Minister’s deal. It is also true that the Japan EPA does not come in quickly. A lot of the tariff liberalisation, for example, comes in over a period of years—up to eight years in some cases, which is much longer than I would anticipate it would take for Britain to accede to the CPTPP.

Photo of Hugh Gaffney Hugh Gaffney Labour, Coatbridge, Chryston and Bellshill

If the Government fail to replicate existing trade agreements, we may end up finding ourselves having to rely on trading agreements with the USA. Can the Secretary of State reassure my constituents that he will not sacrifice NHS services or workers’ rights to a deal with President Trump?

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

This House agreed the agreement with Canada. If the hon. Gentleman goes to the Library and looks at chapters 23 and 24 and annex 2 of that agreement, he will see provisions there that make it against the law for us to water down the workers’ rights or environmental laws we have in order to reach a trade agreement. Annex 2 sets out that we retain our rights to be able to regulate our public services, including the national health service. I would have thought that he would agree with those non-regression clauses. It is therefore sad that he and his party voted against this in the House of Commons.