My Lords, with neat symmetry, it is two years to the week that we again have a trade Bill before us. The Minister has been engaging and proactive since his appointment in the spring, and I personally appreciate his way of doing this. I can tell that he was a very successful member of a private office, because his own private office is supremely efficient and helpful in its engagement. He is the third Lords Minister during the passage of the Bill and its predecessor—it will be third time lucky for him, I am certain. Having been at the Dispatch Box a few times before his maiden speech, he is a rather experienced maiden already in this House, but his maiden speech and that of the right reverend Prelate were greatly welcomed, and justifiably so.
We on these Benches want the UK to prosper. We want free, open and fair trade based on rules around the world, to allow, as my noble friend Lady Burt said, our businesses to take advantage of opportunities to export, whether across the Channel or around the world. We want our consumers to have access to the fairest-priced and best-quality goods from anywhere, and we want the UK to lead an ethical trade, helping to implement the sustainable development goals and support human rights and supply change, ever driving up standards and supporting the least developed countries in the world so that they can develop and trade with us on an equal basis. I disagree respectfully with the noble Baroness, Lady Bennett of Manor Castle, who said that fair trade is antiquated. I do not agree, and I think many people will be disappointed to hear her say that. As Winston Churchill summed it up—when he was a Liberal:
“We want to have free competition upwards; we decline to allow free competition to run downwards.”
It is a pleasure to follow the noble Baroness, Lady Hayman. Reflecting on her speech, it is sad to see that the Government have removed from the Bill their amendment to the predecessor Bill, which was new Clause 2, on guaranteeing standards. Can the Minister explain why they have done that?
Our support for free and open trade is a founding principle to our cause, as my noble friend Lady Kramer said. We ensured the repeal of the corn laws and the benefit for poorer consumers, and we opposed the protectionist tariff reform campaign of 1903 and split from the national Government in 1932 when the Conservatives introduced the Import Duties Act, with
10% tariffs all around. We supported the common trading market in Europe as a vehicle to advance global freer trade, and we saw the average UK import tariff rate fall from 7.9% in 1972 to part of the average EU tariff this year of 2.8%. It was the biggest and most continuous fall in British import tariff rates in a century.
Because Liberals believe in free, open and fair trade, we are anxious about the prospect of starting 2021 with the highest rates of trade barriers, tariffs and burdensome customs procedures for our businesses. The massive and unavoidable new friction on our trade with new customs red tape will, as HMRC itself has estimated, cost UK exporters £7 billion a year and those importing £7 billion a year. We know our borders will not be ready in January, so the Government have deferred export processes by six months to buy time. Why the need to buy time? It could be the reason contained in an email from HMRC on 30 July:
“To date, HMRC has made a total investment of £34 million available to support the sector, which has supported more than 20,000 training courses, nearly 15,000 units of IT and the recruitment of over 600 new customs agents.”
At a cold reading of that your Lordships may be impressed, but Michael Gove said that we needed 50,000 customs agents by January next year. Spending £34 million has given us 600, a figure that is rather short of 50,000. If the Minister could say how many we have currently recruited, that would be welcome.
However, this was of course part of an indication that we would already have all our continuity trade agreements in place by March—March 2019, that is. Information on the Department for International Trade website today shows that the countries where we have continuity agreements, referred to by the Minister, represent £111 billion of UK trade in 2019. Total UK trade in goods and services in 2019 was £1.5 trillion. To put that into context, as we finish this Second Reading debate today, the UK is currently placed to trade on a free trade agreement basis that represents only 8% of our overall trade. This would be the worst trading relationship for the UK since 1932.
Some tout themselves as free-traders, but are happy to see a massive reduction in UK free-trading relationships and a massive increase in trading bureaucracy and costs. It is an irony that some Conservatives, who for three-quarters of a century proposed protectionism, were finally persuaded of reducing tariffs by entering the common market—our largest market—and now think that by leaving it, they can grow trade.
As referred to by my noble friend Lord Oates in his very lucid speech, some conservatives, such as Tony Abbott, think that the solution to this is to shed environmental and climate standards and to allow competition to run downwards, as Churchill put it. As a global ambassador for the UK approach to trade, his credentials make perfectly clear what he thinks. As the EU-Australia trade talks themselves show, the Australian Government have rebuffed Tony Abbott’s call to leave the Paris Agreement because a deal with the EU would be impossible without it. However, Abbott told a global policy foundation in conference in London, in October 2017, that
“it’s climate change policy that’s doing harm; climate change itself is probably doing good”.
Is that the attitude for a British adviser for 21st-century UK trade? I think he will probably be doing our country harm, not good.
We on these Benches were concerned that leaving the single market for services would potentially bring about capital flight and reduce competitiveness in our services sector. We were told by some that we were simply moaning and had basically no idea what we were talking about. The Government’s slogan that we see at the moment—“Let’s get going”—could have been used to describe what Barclays did last year, for example. A Reuters report notes that Barclays
“spent 100 to 200 million pounds… moving operations and staff out of Britain to prepare for Brexit, its UK chairman Gerry Grimstone said on Wednesday… Barclays has moved its European headquarters and almost 200 billion euros in assets to Dublin and last year began shifting 40 to 50 investment banking jobs to Frankfurt from London.”
Mr Grimstone then said:
“We believe this will give us a competitive advantage on the continent”.
Would the Minister please explain what the competitive advantage is from leaving London for Dublin or Frankfurt?
When it comes to scrutiny, much has been said. I simply want to give one example, because I thought the radical saboteur speech of the noble Lord, Lord Lansley, about wanting to improve this Bill was very constructive. On scrutiny and accountability, I will give one example of a measure that we ratified: the Japanese agreement. The simple fact is that for the Japanese agreement, which we ratified in Parliament, British parliamentarians sitting in the European Parliament had a greater say in the setting of the mandate for it, had access to materials through the negotiating rounds and had a say on its approval. British parliamentarians sitting in this Parliament for the new Japan agreement will not have the same say as those who sat in on the agreement that we have ratified ourselves. This cannot be right. Surely the Government, who want continuity on everything but not parliamentary accountability, have to make some movements. I hope that the Government will see sense and respond constructively to those requests.
We also want to see the wider aims of trade enveloped in our overall approach. That is why we believe very strongly in supporting the least developed countries to develop and in ethical trade, and we want to see improvements. My noble friend Lord Chidgey asked this question, but can the Minister explain why, for example, Kenya and the east African states have now been dropped from the list of those that are likely to see ratification? Why have the Government cut support to help countries implement continuity agreements that we ourselves asked them to put in place? Why has the Department for International Trade said that it has no responsibility for aid for trade and that that responsibility lies purely with the new Foreign, Commonwealth and Development Office?
We want to link our trade policy with an ambitious international strategy, but fundamentally this is about us and British businesses prospering. Therefore, we need to link our trade policy with an ambitious export strategy, so that British businesses can take advantage of new trading opportunities, whether with the US or
Japan. The Government’s paper itself said that with an American or Japanese trade deal, we would likely see only 0.16% growth.
I want to give a brief example before I conclude. The noble Lord, Lord Lilley, and others have indicated that we can now see great opportunities because we are out of the European Union. US trade census data shows that UK exports to the United States grew from $39 billion in 1999 to $63 billion in 2019. That is a 61% increase, which is great. French exports to America grew from $25 billion to $57 billion—a 123% increase. Over the same period, German exports to America grew by 131%. It has not been membership of the European Union that has held us back. Will the Government therefore link our trade policy with an export policy, because nowhere in the Japan or American deal was the word “deficit” included? We have a deficit with America of £5.9 billion in goods; France has a surplus of £18 billion and Germany has a surplus of £67 billion.
To address these points, we will seek to persuade noble Lords on sensible and proactive amendments to improve the Bill and to make it a better vehicle to support UK business and exports, to meet our international ambitions and to continuously reduce barriers. In his very welcome letter to me on 9 April, on his appointment, the Minister said that he believes in cross-party working and working as collaboratively as possible with noble Lords across the House. We agree with that: that is how we will conduct the Committee and Report stages of this Bill to make it better.
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