Asked by
To ask His Majesty’s Government what plans they have, if any, to
meet representatives of small and medium-sized enterprises to
discuss non-tariff barriers to trade between the United Kingdom
and European Union.
The Parliamentary Under-Secretary of State, Department for
Business and Trade and Scotland Office () (Con)
I thank the noble Baroness for her Question. We engage
extensively with representatives of small and medium-sized
enterprises and trade associations across the UK. This includes
engagement that I and my fellow Ministers undertake. As Minister
for Small Business, Minister Hollinrake routinely meets these
representatives and business leaders. As Minister for Exports, I
spend a lot of effort meeting SME exporters. We are leading a
whole-government effort to break down barriers, including
non-tariff barriers with our partners in the EU and across the
world.
(Lab)
When the former Prime Minister, , announced his trade deal
with the EU in 2020, he said there would be no non-tariff
barriers to trade between us and the EU. That claim has turned
out to be spectacularly false, given the extra bureaucracy and
costs that many businesses, particularly small businesses, are
facing as a result of that deal. As we know, these burdens are
due to get worse, not better, in the coming months. Given that in
a supplementary question I cannot list all the businesses that I
know have been badly impacted, I ask the Minister whether, if I
send the details of those firms, his department will look at
these things urgently and see in what ways the burdens can be
reduced or removed.
(Con)
I thank the noble Baroness. There is no question that there has
been friction in our trade, especially with the EU 27. We have
tariff-free trade; a lot of the friction is not of our doing, but
we must deal with it.
Noble Lords
Oh!
(Con)
There is a huge amount of effort going on in the department to
break down these trade barriers. We have already removed 178
trade barriers—48 of those are worth £6.5 billion alone. Within
all our country embassies we have a team working directly with
our SMEs to remove these barriers. This will ease the
process.
The (CB)
My Lords, the trade and co-operation agreement has a structure of
24 committees, trade specialised committees included, which are
meant to work together to produce mutually beneficial
improvements in the process of trade. The snappily named Trade
Specialised Committee on Technical Barriers to Trade looks into
this area, I assume. That committee met only once last year. I
realise that committees can work when they do not meet, but will
the Minister comment on the fact that it met only once? Can he
assure the House that all of the mechanics of the trade and
co-operation agreement are sweating hard to try to improve the
situation?
(Con)
I thank the noble Earl. Yes, indeed, there are many committees in
Europe—it is one of the reasons we decided to come out. Where we
are working most effectively is country by country, and we are
finding that, for example, when we deal with Belgium we can solve
the problem with British lawyers working in Belgium. We can do
the same in Luxembourg. With Sweden we work hard directly with
its team on our chilled and frozen food. With Austria we are
working on training permits for our staff to move there. We are
much more effective on a country-by-country basis than at the
higher committee level.
(LD)
My Lords, the Minister will have seen yesterday’s reports in the
FT that average businesses are facing extra costs of £100,000 to
navigate this friction. The Minister has painted a very
optimistic and active picture of what his department is doing,
but the effects do not seem to be working through. The British
Chambers of Commerce and Make UK say that nine out of 10
organisations have seen little progress over the last three
years. Does the Minister accept that more has to be done and that
perhaps he does have to engage with those committees he just
derided?
(Con)
I thank the noble Lord. We have 5.5 million companies in the UK,
of which 3 million are sole traders which operate underneath the
VAT threshold. We have 2.5 million SMEs, of which 300,000 export.
I meet exporters regularly and what I find when I do the Made in
the UK, Sold to the World roadshows in Cardiff, Belfast, Lisburn,
Glasgow, Dundee, Birmingham and around the country is that the
SMEs are the most innovative when it comes to selling
internationally. They are getting around these problems. DBT is
working with them. We have a network of international trade
advisers who come to their businesses regularly. We have the
in-house teams in the embassies. We are working through these
issues and, when we move through it, trade will be greatly
expanded.
(Con)
My Lords, does my noble friend recall that when the single market
began in the early 1990s, the Secretary of State for Trade and
Industry at the time—it was me—made many bullish speeches about
the beneficial impact this would have on our exports to the EU.
Sadly, over the ensuing quarter of a century, our goods exports
to the EU stagnated, growing by less than 1% per annum. By
contrast, our exports under WTO terms to the rest of the world
grew by 90%. Would it not be surprising if, given that membership
was not a great benefit to our exports, leaving would do us much
harm? Indeed, the Library figures show that our exports to Europe
have held up better than our exports to the rest of the world
since the referendum.
(Con)
I thank my noble friend for sharing his great expertise in this
area. As we discussed yesterday, Europe’s share of global trade
is declining: it has halved from one-third to 16%, and it is
heading towards 10%. That is why we are striking trade deals
around the world, such as the CPTPP and with India, which we
could not do when in the EU. SMEs are enthusiastically taking
full advantage of that. I met a company recently that sells
high-end tennis wear to US consumers; when it was built during
Covid, it could not sell to Australia because it was too
expensive and difficult. Now that we have signed a free trade
agreement with Australia, the margins have gone up, the time
limit has come down and it is trading successfully there.
(Lab)
My Lords, small businesses have reported that access to export
markets has been hindered lately by import licences and EU
regulations and they have either retreated or considered
retreating to domestic markets. In addition to the Minister’s
meetings with exporters, have the Government made any assessment
of the impact of such decisions, and what consideration have they
given to possible ways of maintaining access to European markets
for these businesses?
(Con)
I thank the noble Lord. As I said yesterday, Europe remains a
massive part of our trade—41% with the EU 27 and 48% with the
euro 34—and that will continue to be the case. However, the
growth areas for our markets will be the US and the rest of the
world. SMEs recognise that and are pivoting to the Indo-Pacific
region. DBT is putting a lot of effort into helping them get
there fast and profitably.
(Con)
Will my noble friend make sure that there is complete fairness
between exports of food and agricultural products from Great
Britain to the EU and those from the EU to this country? Will he
update the House on the position of seed potatoes? Can we export
them directly to the EU at this time?
(Con)
I thank my noble friend. Seed potatoes are a specialised area so
I will need to write to her on that.
(Lab)
My Lords, the Minister says that trade with Europe is as
important today as it was three years ago, and it is. However,
the Government’s refusal to negotiate positively with the
European Union is causing major problems for many industries. Is
that not what we are hearing from every source other than the
Government?
(Con)
The reality, as we said yesterday, is that our economy is 80%
services and 20% goods, but our exports are 50/50, because our
goods are good. We make things that people, especially in Europe,
want to buy. European countries are coming to us and saying that
they want to get rid of these barriers because they want our
goods imported. We are working on a country-by-country basis and
it is improving all the time.
(LD)
My Lords, yesterday the Minister admitted to me that UK trade
with the EU has declined but said that UK trade in services and
goods with the rest of the world was going “gangbusters”. I
looked up two things this morning. First, UK trade with the EU
has declined by 1.4%, which is regrettable, but UK trade with the
rest of the world has also declined, by more than 4%. The second
thing I looked up was the definition of “gangbusters”, which
means “very well”. Would he like to correct the record? Given
that EU trade with the rest of the world has gone up while ours
has gone down, why does he think that that is the case?
(Con)
I thank the noble Lord for that stat-fest. I said yesterday that
the most difficult part of the pie chart is the 24% of our
manufactured goods to the EU 27, but the other 70% is increasing
in particular services, which have gone up by 19% over the last
five years, relative to inflation. That is why I said that the
rest of our exports are trading very well.
(CB)
My Lords, will the Minister reassure the House that we will now
spend far more time working with the European Union to enhance
our trade with our closest trading neighbours, particularly
bearing in mind that the EU represents a pretty high proportion
of our trade?
(Con)
I can absolutely assure the noble Baroness of that. My DBT
colleague in the other place, Minister Hands, is putting a huge
amount of effort into breaking down these barriers with
individual European countries, getting faster access and getting
rid of the friction in Europe.
