Service Businesses: Overseas Markets

International Trade – in the House of Commons on 25th April 2019.

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Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

What steps he is taking to enable service businesses to access overseas markets; and if he will make a statement.

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

The Government support UK services businesses to access foreign markets in a number of ways, including through trade promotion and facilitation. For example, in March 2019, the DIT took a delegation of eight leading UK FinTech companies to exhibit at Money 20/20 in Singapore. The DIT also works with partners overseas to remove access barriers, opening up new opportunities for UK businesses.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

My hon. Friend will know that in this rather complex world environment, there is a confusion at times under WTO rules between goods and services. Once we leave the EU, get a clean break and regain our place at the WTO table, will he make it a priority to make clearer definitions of what are goods and what are services?

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

I thank my hon. Friend for his question. He is right; there are a great many complexities at the WTO. In fact, the world is sliding inexorably towards a future of increased protectionism without changes being agreed to at the WTO to address all problems and to cope with new forms of trade that simply did not exist even 10 years ago and that create the confusion he identifies. As a newly independent voice, the UK will be a champion for change, openness and co-operation, because believe me, Mr Speaker, a failure to deal with the problems the WTO faces is not an outcome that anybody should want to contemplate.

Several hon. Members:

rose—

Photo of Barry Sheerman Barry Sheerman Labour/Co-operative, Huddersfield

Can all those on the Government Front Bench tell me what I should say to my service and manufacturing industries that export overseas? For years, they have been frustrated that the Chinese are stealing their patents and intellectual property, but now this Government are going to open not only the back door but the front door to the Chinese to take their secrets and undercut them.

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

In the past week, the Chinese have agreed a joint communiqué with the EU about the forced transfer of intellectual property, which gives us some comfort. We work extensively with the Chinese Government through joint trade reviews to examine various areas of the economy, particularly in services, where we can address this. I believe that progress is being made on this front, but I go back to the point I made to my hon. Friend Michael Fabricant: this is a complex area. WTO rules make this very difficult to address, and we need to change it.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

Three quarters of our economy is in services, yet over 90% of service firms export nothing. What more can be done to change this underlying culture and systemic issue, so that the majority of service firms export?

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

As I mentioned in answer to the previous question, we are conducting a number of joint trade reviews with India, China and Brazil—some of the largest economies in the world—to ensure that we address some of these access barriers; to ensure that, for example, Chinese-language contracts are translated into an official English version; to ensure that service providers understand what the rules and regulations are; and to ensure that qualifications are matched across the piece. There is a great deal we can do and more that we will do.

Photo of Stephen Gethins Stephen Gethins Shadow SNP Spokesperson (Foreign and Commonwealth Office)

I welcome what the Minister said about trying to open up overseas access to UK service companies. However, is it not hugely disappointing that the continuity agreements with Norway and Switzerland exclude trade in services? Is it not the case that if, post Brexit, we revert to WTO rules trade with the EU, we would see a massive 26% fall in global service trade, with just as bad a fall in the UK’s service trade even if we get that free trade agreement?

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

As we approach the negotiations with the EU on the future economic partnership, services will play a large part in that. We have signed mutual recognition agreements with Australia and New Zealand, and as for the Norway and Switzerland deals, we should never forget that 35% of pretty much all the goods contracts entered into by the UK is contained within services value. This is not just a matter of pure services, but of goods as well.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Service exporters depend on an international workforce, but arbitrary immigration targets limit their ability to recruit the staff they need. Growing our market share in services is essential to the future success of our economy, so if this Government truly have a global strategy, why are businesses that want to export being denied access to a global pool of talent?

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

On the whole, the services businesses that are exporting are doing so by establishing overseas, and therefore recruitment in the UK does not particularly concern them, as they are employing people in foreign countries. That said, we know there is an issue with provision of skilled labour in the UK. The immigration Bill, when it comes forward, will provide reassurance on the ability to recruit people with certain skill levels, and I look forward to seeing that.