23 January 2018
Originally published by Brexit central.
International Trade Minister, Greg Hands, may have backed his now boss Liam Fox in the Conservative leadership election immediately after his election to Parliament in 2005, but most Westminster observers would historically associate him as a close ally of George Osborne.
The New York-born Chelsea and Fulham MP was on his Treasury team prior to the 2010 general election, served as parliamentary aide to the then Chancellor during the first year of the Coalition and after a long spell in the Whips’ Office became Osborne’s deputy as Chief Secretary to the Treasury after the Tories’ election victory in 2015. With that pedigree, it was hardly a surprise that he backed the Remain campaign at the 2016 referendum.
He was then appointed to Fox’s Department for International Trade (DIT) in Theresa May’s first Government in the summer of 2016, where he remains to this day. But there’s no denying that he has embraced the Brexit agenda with gusto.
When I sat down with him in his departmental office last week, he refused to engage in hypotheticals about how he would vote in a re-run of the June 2016 vote – “there isn’t going to be another referendum” – but was absolutely clear about the mandate he and the Government are expected to deliver:
“We had a very high rate of turnout, I think 72%… Ultimately more people voted to Leave the European Union in this country than have ever voted for anything in UK electoral history… The result was clear: 1.3 million more people voted Leave than to Remain.”
“The most important thing for us is to get on with the job and make sure that we rise to the challenges of Brexit but also meet the opportunities and that is a key part of the work of the Department for International Trade – it’s making sure that we profit from those opportunities that Brexit provides in being able to pursue an independent trade policy.”
The ability to pursue that policy does of course stem directly from our departure from the EU’s Customs Union – something else on which he is totally clear. “We wouldn’t be able, if we were still in the Customs Union,” he says, by way of a reminder, “to strike a significant agreement with all of our other trading partners outside of the European Union.”
In order to be able to operate that independent trade policy, the Government is in the process of passing two important pieces of trade legislation: the DIT’s Trade Bill and the Treasury’s Taxation (Cross-Border Trade) Bill, as Hands explains:
“Both of them enable the UK to set up the architecture for the UK’s independent trade policy once we leave the European Union and between them they cover things like the establishment of a Trade Remedies Authority; they create the ability for the UK to have its own schemes of trading preferences for the developing world; they allow us to access the Government Procurement Agreement, which is a plurilateral multi-country agreement at the WTO over access to each others’ procurement markets; and they enable us to seek continuity in existing trading relations as regards EU trade agreements – so turning an EU trade agreement into a UK trade agreement as well. On the customs side, there are also various powers there to enable the UK to have the operational side of an independent customs regime.”
Yet despite the cries from Jeremy Corbyn, Sir Keir Starmer et al. that Labour “respects the referendum result”, Her Majesty’s Loyal Opposition whipped their MPs to vote against these crucial pieces of the post-Brexit legislative jigsaw at Second Reading. Hands told me that he had expected Labour merely to abstain, but that voting against the bills outright was, if nothing else, “consistent with a party that is in a state of chaos and unable to determine which way it really wants to go”:
“It was an absolutely extraordinary move from Labour – and the Lib Dems and the SNP – to vote against both bills. On the Trade Bill, Labour have voted against the establishment of a Trade Remedies Authority, so in other words they don’t think the UK should have it own trade remedies regime after Brexit, which is essential. Free trade is not the same as trade without rules: we think it is essential to have trade remedies in place – or at least the ability to have trade remedies in place – to defend key UK industries from dumping and unfair trade practices.
“They’ve also voted against the UK having the potential to access the Government Procurement Agreement, which is a huge opportunity currently well used by UK firms around the world to compete abroad in government procurement.”
“In the Cross-Border Taxation Bill, they’ve voted against the UK having the ability to have its own scheme of trade preferences for the developing world, some of the least developed countries in the world, allowing most or all of their goods to have access to our market tariff-free. All of these are not only essentials in the UK operating a post-Brexit trade policy, they’re also really essential considerations here in the UK for UK industry and those who believe we should be offering favourable, preferential access to developing world countries to our markets.”
Having served his political apprenticeship in the combative world of Hammersmith and Fulham local government, Hands clearly enjoys taking the fight to his opponents and has previously relished the role of occasional attack dog in the media. And he does not mince his words as he cannot resist taking another swipe at those sitting opposite him in the House of Commons Commons:
“The Opposition are the Opposition, I suppose, but at times… some people in the Opposition sound like they want the UK to fail, that they want Brexit to fail.”
He doesn’t name names, although I suggest that his old friend George Osborne, now ensconced in the editor’s chair at the Evening Standard, could also now be slotted into that category, but he refused to get into that, merely commenting that “George has got a new job and it’s up to him how he pursues that job”.
Once free from the shackles of the EU’s Customs Union, the UK will of course be able to negotiate its own trade deals. And in their efforts to scope out new opportunities (as well as promoting British exports the world over), the ministerial team at the DIT have obviously been clocking up the air miles this last year as they meet with political and business leaders around the globe.
I ask where he feels the reaction has been most enthusiastic to the opportunities that the UK’s new-found status as an independent trading nation will bring and, as you might expect, traditional Commonwealth allies like Australia, New Zealand and Canada are at the top of the list. Then, as well as Singapore, which has long been a leader in free trade, he notes that Vietnam is becoming more pro-free trade, as are “more progressive Latin-American economies like Peru, Colombia and Chile”, while also mentioning India, Taiwan and Israel.
He is also quick to make the point that as well as thinking about future free trade agreements – and dealing with trade promotion, export promotion and UK export finance – the department plays a vital role in breaking down some trade barriers simply by talking with foreign counterparts: “We actually sit down and go through the barriers to trade between our two markets. You don’t need to have a free trade agreement to do that”. But overall, he is extremely positive about the reaction he and his colleagues are getting on their ministerial visits:
“Everywhere the reaction has been one of great interest, often great enthusiasm, for current and future trading relations with the UK… I think a lot of them are really excited to have the UK in that space, particularly at a time when free trade is sometimes under pressure in the world – the number of trade barriers has actually increased in the last seven years, not decreased, and some of them, the biggest barriers are coming from G7, G20 countries.”
Many free traders certainly have concerns about some of the protectionist rhetoric coming out of the US right now, but Hands – a UK-US dual national – is positive about the continuing trading relationship between the UK and the country of his birth:
“We’ve got a very good, strong relationship with the United States. We’ve had two meetings of our US trade working group, the first led by Liam Fox in Washington in July and the second in mid-November. They’re already doing some really important work. Obviously we cannot sign a trade agreement with the United States while we are still in the European Union, but we are scoping out what that future relationship might look like… I think we can still have a very good trade relationship with the United States as we leave the European Union as we have done at the moment. Actually, the current trading relationship with the US – and investment relationship – is huge. We are the largest investors in each others’ markets. Every day one million Brits go to work for American companies and one million Americans go to work for British companies. That trade and investment relationship is incredibly strong and we need to maintain that and augment that after we leave the EU.”
President Trump did of course pull the US out of the talks negotiating the Trans-Pacific Partnership (TPP), now renamed as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, it was reported in the FT (£) a couple of weeks ago that the UK had held informal talks about joining, which would make it the first member of the group that does not border the Pacific Ocean or South China Sea.
Hands does not deny the story, saying that “nothing is excluded – we are looking at all possibilities that are out there for where the UK’s future independent trade policy might go.” He goes on to note that the countries already set to participate in the CPTPP – which he thinks potentially could be signed this year – include “very substantial and important markets for the UK, namely Japan, Canada, Australia, New Zealand, Chile, Peru, Vietnam, Malaysia and Singapore.”
With the Brexit negotiations far from concluded and debate ongoing about the potential terms of an implementation period, no-one yet knows exactly when the UK will be able to begin trade negotiations in its own right. As a WTO member, the UK currently operates through EU schedules and Hands expects those schedules to be “rectified” this year. As to what the UK can and cannot do during the implementation period, that will be a matter for the Brexit negotiations. But he sets out the ambitious goal of the DIT, namely that they would like to be able to sign, seal and even put into effect new trade deals during the implementation period:
“We in the Department for International Trade very much want the ability in the implementation period to scope out, negotiate and sign agreements and we’d even like them to take effect as well. That will ultimately be a matter for negotiations about how the implementation period works. Obviously we won’t do anything in the implementation period that is contrary to the rules of the implementation period – but those rules haven’t yet been set and that will be a matter for those negotiations.”
As to how the negotiations will conclude, he is extremely optimistic, drawing on what he picks up during regular trips to Germany, both on ministerial business and with family (his wife is German).
“Germany has a very substantial trade surplus with the UK; most individual parts of Germany – which is a very regional-based country – have very substantial trade surpluses with the UK. So I’m expecting there to be a full and comprehensive free trade agreement between the UK and the European Union.”
“I think there is concern [in Germany] at the potential for disruption to our trading relations but that is why ultimately we will come to a good trading relationship because it’s strongly in both sides’ interests to get to that position. Obviously the EU as a part of our exports is declining, but nonetheless is still 44% of our exports. So having a frictionless trading relationship with the European Union is very important for both sides.”
With such a positive and optimistic outlook, Brexiteers ought to feel confident that UK trade policy is in good Hands.
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