International Trade Committee Oral evidence: The work of the Department for International Trade, HC 534 Wednesday 24 June 2020 Ordered by the House of Commons to be published on 24 June 2020. Watch the meeting Members present: Angus Brendan McNeill (Chair); Robert Courts; Mark Garnier; Paul Girvan; Sir Mark Hendrick; Mark Menzies; Taiwo Owatemi; Martin Vickers; Matt Western; Mick Whitley; Craig Williams. Questions 1 – 91 Witnesses I: Elizabeth Truss MP, Secretary of State for International Trade and President of the Board of Trade; and Andrew Mitchell, Director General, Global Strategic Sourcing and Engagement Project, Department for International Trade. Examination of witnesses Witnesses: Elizabeth Truss and Andrew Mitchell. Q1 Chair: In today’s session we will hear from the Secretary of State for International Trade and President of the Board of Trade, the right hon. Liz Truss MP. The Secretary of State will be giving evidence on our inquiry into the Covid-19 pandemic and international trade. In addition, Ms Truss will answer questions on current issues, including the future of her Department in light of recently announced changes in the machinery of government. Welcome, Secretary of State. Before we kick off, I believe you would like to make a statement. That will extend your session slightly but, with the agreement of members, I am glad to say you have five minutes. We look forward to your statement. Over to you, Secretary of State. Elizabeth Truss: Thank you very much, Chair, and thanks for inviting me today. I look forward to talking to you about the important work my Department is doing around the world. For the first time in many generations, the UK can strike free trade agreements with the rest of the world and export the best of Britain abroad in ways we have not always been able to. The work is beginning with our closest allies, like the United States of America, Australia, New Zealand and Japan, as well as seeking entry to the wider Pacific alliance, CPTPP. Throughout the negotiations, this Government will fight for Britain’s best interests. To coin a once familiar phrase, no deal is better than a bad deal. We are not going to rush into a deal and there is no deadline. We will be tough in pressing our interests. The US talk a good game about free trade and low tariffs, but the reality is that many UK products are being kept unfairly out of their market. UK steel has been hit by 25% tariffs due to claims of security issues and our cars have also been threatened, despite the fact we are a close security ally. UK lamb has been banned through the small ruminants rule, and many of our excellent products, like ceramics, face steep tariffs. There are onerous testing regimes on everything from toys to machinery, not to mention the Buy American procurement policy and other restrictions, which mean UK companies cannot access two-thirds of the US Government market. Let me be clear. I am not going to strike a trade deal with the US unless all these points are dealt with. We want to upgrade our trade relationship to match the closeness of our security partnership. There is no doubt to me that when these barriers are removed it will be a big boost for British industry, alongside better access to the Asia-Pacific market. Membership of CPTPP will help realise the vision of a global Britain that looks far beyond our own shores, coupling us to one of the most dynamic and vibrant trading areas in the world. We can do that now we are no longer stuck behind the EU tariff wall. It presents a huge opportunity in Britain’s industrial story. Over the coming months my Department will work tirelessly to deliver deals that are in the best interests of British families, British jobs and the British economy. A family-first trade deal, a jobs-first trade deal and trade deals that help turbocharge our recovery. Over the past few weeks, the first rounds of negotiation have taken place with the US. I am aware that some members of the Committee are concerned that a US deal will undermine our food standards or somehow undercut the UK farming industry. Today I want to reiterate that, when it comes to food, we will never lower our standards in order to sign a trade deal and, contrary to claims in the press, these standards—the ban on chlorinated chicken and hormone-injected beef—are already in UK law through the Withdrawal Act. Not only that, but we will not sign a trade deal that leaves our farming industry, with its high animal welfare standards, worse off. In fact, the opposite is true. My officials and I are working round the clock to ensure any trade deal we strike has British farmers at its heart and is one that British shoppers have confidence in. To me, the debate needs to be based on fact. Take one small example. The UK currently imports chicken from Thailand and Brazil. We have zero tariff quotas on Canadian agriculture, and we are able to do this without the UK farming industry being negatively impacted. This is because, at its heart, trade is about spreading prosperity and growing British farming not crushing it. As a forma DEFRA Secretary, and someone who represents a rural constituency, I understand the positive impact farming has on our country, so by putting British farming first we will give our food producers the best opportunity to export their world-class food and grow their businesses. Trade deals can open up new markets and new opportunities for Welsh lamb, British beef and Scotch whisky. Any trade deal that locks British produce out of the market is one that we will leave on the shelf. As for Japan, I am very clear that we will not be bounced into a deal that is not in British interests. While I understand the media’s interest in trade matters, we would do well to remember that statements are negotiating positions not indisputable fact. Covid-19 has upended many of our economic assumptions. Indeed, the only known known, when it comes to the economy, is that we face a time when we need to revitalise and revive. My right hon. Friend, the Chancellor, and I view international trade as an important tool during the economic recovery. A US deal could boost trade by £15 billion and wipe almost £0.5 billion off tariffs, benefiting Scotland, the Midlands and the north-east the most and helping level up our country. Whisky is worth almost £4 billion to the Scottish economy, employing more than 10,000 people, but faces tariffs of 25% to the US. We export £8 billion of cars to the US. Ceramics manufacturing, one of the biggest traditional industries in the Midlands, faces tariffs of 28% to the US, and the south-west dairy industry—worth about £3 billion—faces tariffs of up to 25%. Lamb and beef contribute £1.3 billion to Northern Ireland’s economy but farmers face tariffs of 38% into Japan. These are not abstract numbers. Cutting these tariffs means more jobs, higher wages, better standards of living and more vibrant local economies and communities, and an industrial revival in all our regions. I look forward to taking your questions. Q2 Chair: Thank you very much indeed, Secretary of State. I hear the fighting talk there. I hope Donald Trump wasn’t listening, or else you might be starring on his Twitter in the next five or 10 minutes. Who knows? Secretary of State, to add fighting talk, you will be aware that the WTO ruled last week on the stealing of intellectual property from the UK, particularly involving UK football and Saudi Arabia. What exactly do you propose to do about that? Elizabeth Truss: We have been very concerned about the stealing of IP. We have taken it up directly with Saudi Arabia. I understand this activity has now stopped, but we will make sure that we always work to protect our vital intellectual property, both in any trade deals we strike and also at the WTO. Q3 Chair: It may have stopped in Saudi Arabia, but I do not think beoutQ has ceased transmission. Elizabeth Truss: My understanding is that particular issue has been dealt with, but I am happy to look into it further. I am very concerned about what has happened. We have raised it directly with Saudi Arabia, and we will continue to pursue Britain’s intellectual property interest. Q4 Chair: Thank you. It will be something we can all keep an eye on, then. The Department for International Development, as you know, has merged with the Foreign and Commonwealth Office, or the Foreign, Commonwealth and Irish Office it should perhaps be called. Trade commissioners have been transferred from the DIT to the new Department, and the Prime Minister was bamboozled when I asked him about South America where he has 12 ambassadors and one trade commissioner. Leaving that to one side, there has been speculation about your own Department. Where do you think that is going, Secretary of State? Elizabeth Truss: The Department for International Trade was created three years ago and already has a huge amount of achievements under its belt, negotiating £110 billion of transition deals, but has really stepped up in recent months. We are now negotiating with four trade partners. We are looking for accession to CPTPP. We have launched the first UK global tariff for many, many decades, setting out a new tariff that is simpler to— Q5 Chair: Have you been given any assurances about your Department? Elizabeth Truss: What I am focused on is making sure we deliver on the promises we made for Brexit: getting these new trade deals, making sure we get more British businesses exporting and making sure we attract investment into the country.