Multilateral Free Trade

Question

14:38:00

Asked by

To ask His Majesty’s Government what initiatives they plan to take internationally to support multilateral free trade and to draw attention to the risks posed to the world economy by tariffs and protectionism.

My Lords, first, I wish a very happy new year to all noble Lords, clerks and doorkeepers. The UK is committed to multilateralism and a rules-based trading system with the WTO at its core. The system provides stability and predictability for global growth and prosperity. We are working with international partners to strengthen the multilateral trading system and to reform the WTO so that it remains relevant in the evolving global scenario.

My Lords, I thank the Minister for both his good wishes and his reply. Does he agree that protectionism and tariffs are very great threats to growth both here and internationally, as we learned in the 1930s? If President Trump proceeds with his dangerous idea of imposing more tariffs, I urge the Government not to join the EU in any tit-for-tat retaliation but to maintain an open trading system. Above all, I urge them not to align with the EU on future industries such as AI when Europe so badly lags behind the United States in those areas, and will only incur the wrath of President Trump.

My Lords, the noble Lord makes a very important point. We are concerned about any potential threat of a shift towards protectionism and tariffs. The Government will continue to make a very strong case for free trade. After all, we are an open trading economy, and we benefit from that in our trading relationships with other countries. On the point about President Trump, let us not get ahead of ourselves; we will just have to wait and see when he gets into government.

My Lords, first, I express the immense sadness on these Benches at the passing of our noble friend Lady Randerson. She was a wonderful colleague and a great contributor to your Lordships’ House. She will be sadly missed. While the UK’s recent accession to the CPTPP may have had strategic importance, in market terms it was, in essence, insignificant, not least because that market is many thousands of miles away. I ask the Minister to reaffirm the importance of a huge market just several tens of miles away from our shores, not least given what we are starting to get from the United States. Can he tell your Lordships’ House what practical steps the Government are taking for better trade with the EU? Specifically, will the makers and manufacturers of the UK have their access to the EU eased this year?

My Lords, we on these Benches send our deepest condolences to Baroness Randerson’s friends and family. The UK’s accession to the CPTPP takes a plurilateral Pacific deal and makes it a truly global one, bringing new opportunities for British businesses and supporting jobs across the country. The UK is the first country to accede to the CPTTP and the first European member of the CPTPP, demonstrating the Government’s commitment to multilateral trade. As far as the EU is concerned, the Prime Minister has stated many times that we are resetting our relationship with Europe. We want to ensure that our businesses have a much better working relationship with Europe. We will have to wait and see what happens from there.

My Lords, in the context of a dispute about subsidies between Airbus and Boeing, in 2019 the United States imposed a 25% tariff on single malt Scotch whisky, which was levied between October 2019 and March 2021. It cost the Scottish whisky industry £1 million of revenue a day. In total, £600 million in exports was lost to the United States. This was suspended in June 2021 for five years and is due to come in again in June 2026. What steps are the Government taking to ensure that the Scottish whisky industry does not once again suffer collateral damage in a trade war that is not of its making?

I thank the noble Lord for that question. The Scottish whisky industry is the second most productive sector in Scotland, ranked just after renewable energies, and contributes £7 billion towards the UK economy. People from right across the world, in India, China and Japan, enjoy the flavoursome nature of Scotch whisky. We should encourage more people to enjoy Scotch whisky. I might need a stiff one after this.

My Lords, what is the Government’s policy on whether free trade agreements should include a human rights clause?

My Lords, the noble Baroness makes a very important point. The Government’s policy is to engage with countries whose human rights records fall short, as opposed to isolation and the removal of our ability to support high standards. By having strong economic relationships with partners, the Government can have more open discussions on a range of issues, including human rights. We will push for this in any future FTAs.

My Lords, can the Minister bring us up to date with the latest developments on the critical minerals negotiations between the US and the UK? When they began, they seemed to have a very strong protectionist element in them against British exports and particularly the British motor industry—has there been any improvement? Are we getting to a better situation than the initial one, which was very hostile to our exports and interests?

My Lords, the noble Lord makes a very important point; regretfully, I do not have substantive details on that, and I will come back to him. In general principles, the UK is a very supportive and open trading economy, and we will push for that in any of our trade relationships and negotiations with other countries.

My Lords, does the Minister agree that “tariff” is merely a synonym for “tax” and that it does not apply simply to the producers of the exporting countries but also to the consumers of the importing countries? That goes in the direction of the Question asked by the noble Lord, Lord Lamont.

The noble Lord makes a very interesting point. Tariffs are not good for trade: they will make things more expensive. We have benefited from tariff-free trading relationships with many countries, and consumers have also benefited from cheaper prices, so we must constantly engage with our trading partners to have tariff-free trade.

Do the Government accept that there must be a level playing field and free trade also has to be fair trade? Given that nearly all other countries’ public sector purchases give priority to their own domestic producers, is it not time that we did the same and supported British firms and British workers?

My Lords, the general principle is that free trade has benefited many, many countries. It has lifted millions out of poverty globally, and it has brought in many goods at really competitive prices to people across the country, so we should champion free trade. Successive Governments have failed to defend and reinvest in those sectors that have more or less moved away to other countries. We must do more to invest in new manufacturing and the new industries of the future.

My Lords, the Minister will be aware that the most important and fastest-growing part of UK exports is services. Can he assure us that the Government will put equal emphasis on non-tariff barriers, which tend to restrict service exports?

Absolutely. I assure the noble Lord that services will be included in any of our conversations with our partners.

My Lords, does the Minister agree that too often populists have appealed for protectionism because too often trade agreements have not been designed to protect jobs and level up labour standards? Is he aware that the international trade union movement is calling for fair trade based on placing improving labour standards at the heart of trade agreements?

The noble Baroness is right. In any of our trading agreements we need to look at workers’ rights and how the country treats its employees. At the same time, we must also advocate the whole concept of free trade and non-tariff goods and services because that actually opens up the market for more competition.