EU Customs Union

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

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Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

What assessment he has made of the implications for the responsibilities of his Department of including UK membership of the EU customs union in the EU-UK political declaration.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

What assessment he has made of the implications for his policies of the UK’s continuing membership of the EU customs union.

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

The Government’s intention, as provided for in the political declaration, is to secure a tariff-free trading relationship with our European partners, alongside an ambitious independent trade policy with the rest of the world. A customs union would prevent the UK from varying its tariffs and could leave the UK subject, without representation, to the policy of an entity over which MPs had no democratic control.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

If we were to be part of the EU customs union after Brexit, the United Kingdom, as the world’s fifth biggest economy, could kiss goodbye to any realistic chance of an independent trade policy. For this very good reason, being a member of the customs union was ruled out in the last Conservative party manifesto. Were this to become Government policy, would not the Secretary of State and his entire ministerial team be honour bound to resign?

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

It is very clear that we do not want to see a customs union being put in place for one of the reasons that my hon. Friend has already given, which is that, with us as a third country, the EU would be able to negotiate access to the UK market—the world’s fifth biggest market—without any due consideration of the impact on the United Kingdom. We would find ourselves in a totally new trading position in that access to our market would be traded for us.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

One of the principal benefits of Brexit is of course the ability to set our own trade policies, and many businesses in my constituency—it includes Immingham, the largest port in the country—want to take advantage of the freedoms that will be forthcoming. What additional support will the Secretary of State’s Department offer those businesses?

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

I know that my hon. Friend has taken a very close interest in free ports. We are close to finalising a report on their potential benefits, and he will be one of the first with whom I will share that information.

Photo of Nick Smith Nick Smith Opposition Whip (Commons)

Some 9,000 people work in the Welsh steel industry, so can I ask the Secretary of State to think again, and support a permanent customs union and commit to a common external tariff on steel imports to support steel jobs in south Wales?

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

No, I will not commit to that. I have set out the reasons why I believe the application of a common external tariff will be limiting on the UK’s ability to carry out an independent trade policy. What I would say is that we already have the Trade Remedies Authority up and running, and that is the best way to deal with any disputes over steel through WTO rules.[This section has been corrected on 30 April 2019, column 2MC — read correction]

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

Does the Secretary of State accept that even outside the European Union, some other countries will seek to restrict their trade? For instance, has not the United States said about its negotiating objectives that it will seek to restrict the trading ability of any country that seeks to trade with China?

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

The United States is perfectly entitled to set out trade objectives, as are we. We believe that trade is best operated through the rules-based international system based on the WTO. Countries can have their own opinions, but that is still the safest, best and most predictable way to carry out global trade.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Department for Business, Energy and Industrial Strategy) (Industrial Strategy)

We know the benefit of a permanent customs union, particularly for the integrated supply chains on which so much of our manufacturing success is based. What assessment has the Secretary of State made of the net economic benefit of an independent trade policy in the short, medium and long term?

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

We believe it is possible to get the benefits of a customs union—no tariffs, no quotas and no rules of origin checks—through the mechanism set out in the Government’s proposal on our future relationship with the European Union. The ability to access growing markets will depend on our ability to create trade agreements with those markets. A report by the United Nations Conference on Trade and Development suggested that by 2030 the Asian proportion of trade will be above 50% for the first time since the 19th century, and we must be in a position to take advantage of that.