Sunday with Niall Paterson Interview with Liam Fox, International Trade Secretary

ANY QUOTES USED MUST BE ATTRIBUTED TO SUNDAY WITH NIALL PATERSON, SKY NEWS

NIALL PATERSON: First, leaving the EU will allow the UK to do trade deals with countries around the world, expanding markets unburdened by EU regulation and of course leading to untold riches for British businesses and opening up those markets, doing those deals, is the job of the International Trade Secretary Dr Liam Fox who is currently in New Zealand and joins me now. Dr Fox, given the time difference I won’t say good morning but I will say Kia Ora.

LIAM FOX: Thank you, it’s almost tomorrow morning but yes, good morning to you.

NP: Indeed. Your trip to New Zealand, I wonder are we about to hear from the government that we would like to see the UK becoming part of that Trans-Pacific Partnership after we leave the European Union?

LIAM FOX: Well that partnership isn’t fully formed yet, those negotiations are ongoing and we have no idea when that will come to a conclusion. We have been talking to the government of New Zealand, we’re talking to the government of Australia as well about how we can best get a new relationship with them. Of course we haven’t ruled anything out in terms of future relationships but I think talking about future memberships of TPP is a little bit too far in advance yet and as I say, we have no preconceptions about where we will end up.

NP: But in terms of your role within this whole Brexit process, you’re travelling the world, I think 33 countries at last count, racking up the air miles, looking for those all-important free trade agreements at the same time as saying that you’re, I think it’s fair to say, relatively sanguine that if there is no deal with the European Union ahead of our leaving we would revert to WTO rules.

LIAM FOX: Well of course it’s not just me, if you look at what the Director General of the World Trade Organisation is saying, it wouldn’t be the end of the world in his words for the UK. Of course we’d rather get a deal with the European Union but we’re not afraid not to get a deal. The thing is it’s in the interests of both the UK and the EU to reach such an agreement, not just in our domestic sense but from a global perspective and when you come to the other side of the world as we are now, they are looking to Europe as a whole to say whether Europe will become more protectionist, whether there will be impediments to trade and investment in Europe that don’t exist today and that wouldn’t be attractive for global investors so it is in all our interests to come to a deal that is an open and liberal agreement on trade between Britain and the European Union. If we didn’t get it of course we could trade on WTO terms, we do that on a large proportion of our trade already, for example with the United States so it’s possible but it’s not the outcome that we would rather have.

NP: But in terms of free trade agreements, clearly what you are saying, a consequence of what you are saying is the conclusion that WTO would be fine but actually a deal would be better and that is a similar situation isn’t it when it comes to us leaving the European Union. I mean if it were fine for us to revert to WTO why would you be in New Zealand?

LIAM FOX: Well we have a number of discussions here. You mentioned the free trade agreements, that’s one of the elements that we’re discussing. We’re also discussing the level of our bilateral trade, with New Zealand for example our trade is up 27% in the last year and New Zealand is a very open economy, there’s a lot that we can discuss and learn from their experiences. We also have the Commonwealth Heads of Government meeting coming up in April next year, we’ve got the International Meeting on Trade coming up in December in Buenos Aires, we have got a lot of things in common in that so there’s a lot for us to discuss and of course one of the things that we do have in common is we believe that we have to have an open free trading global environment. We have taken a billion people out of poverty because of that in the last generation, we have got to make sure those opportunities are available to those in the future.

NP: You have often made the point that a trade deal with the European Union would be the easiest deal in history because of that regulatory equivalence, we are basically trading on those terms at the moment but the problem with that is, isn’t the whole point of us coming out of the European Union that we want to be able to set our own standards?

LIAM FOX: No, we want to be able to – the reasons we voted to leave the European Union of course were to be able to have control of our own laws and our own borders and our own money. If we are able to have our own independent trade policy that’s designed to suit the United Kingdom, so much the better. One of the things that I think is being overlooked however is the fact that we still have to up our trade. If you look at the UK as a whole we export only about 28% of our GDP, Germany by contrasts exports about 47 so whether we’d stayed in the EU or not, we would still have had to make a lot of improvements in our trading performance which is why the Prime Minister set up the Department for International Trade in the first place.

NP: Surely any deal with the European Union in terms of trade they would agree to would involve at a minimum sticking to the standards that they have been setting over the past however many decades.

LIAM FOX: Well we wouldn’t want to see our standards reduced because in particular, if you are selling UK goods abroad people look to us to have very high standards of safety, of clarity about origin and so on and we would want to keep that because the UK is never going to be able to compete at the cheap end of the market, we are always going to have to compete at the quality end of the market and that’s a plus for the UK and that’s something that we should be very proud of, that people want to buy UK goods and services because they regard having a Union Jack on it as a sign of quality. That’s not something that we would want to diminish, nor do I think our consumers would allow us to do so and I think in any future trade agreements consumers will have a lot more to say about the parameters within which these are set than they have done in the past.

NP: But there are other countries aren’t there who see Brexit as an opportunity for us and for them precisely because we can fiddle with standards, the United States key amongst them of course. I am going to mention two words that you have not liked in the past – chlorinated chicken. I mean clearly the United States would wish us to relax standards in certain areas that the European Union would not.

LIAM FOX: Well we wouldn’t be willing to reduce standards if we didn’t think that was good for the UK either as a seller of goods or for UK consumers. People talk about trade agreements as though it is something that’s enforced upon us, we would only come to an agreement if we thought it was in the interests of both parties and that’s what negotiations are all about. This idea that it’s something that will be forced on Britain against Britain’s will simply is too wide of the mark.

NP: Perhaps the biggest sticking point it appears at the moment in moving on to Phase Two is the issue of the Northern Irish border, perhaps you can help here because to be honest with you I simply can’t see a solution that allows free movement, that doesn’t restrict trade on the Isle and still has us coming out of the customs union. Do you have a solution to the problem.

LIAM FOX: Well we have put forward some ideas to the European Union as part of our negotiations, naturally you wouldn’t expect me to say what they are but we made very clear what the outline is of our interests, that we don’t want there to be a hard border but that the United Kingdom is going to be leaving the Customs Union and the single market. We have always actually had exceptions for Ireland whether it’s in our voting rights, our rights of residence in the UK, we’ve always accepted a certain asymmetry and that will have to be part of whatever agreement we come to with the European Union but we can’t get a final answer to the Irish question until we get an idea of the end state and until we get into discussions with the European Union on the end state that will be very difficult. So the quicker that we can do that the better and we are still in the position where the European Union doesn’t want to do that and we are getting quite close now to 2018 when we will be talking about next year when we leave the European Union so for all the reasons, international as well as European, I think we have to get there faster than we’re doing at the present time.

NP: You are acting in essence on behalf of British industry and you have just repeated a point that has been made by David Davis and Theresa May that we can’t work out the transitional arrangement until we have concluded the deal. David Davis has also said that we could be going right down to the wire, all the way to March 2019, before we actually have a deal. I mean aren’t we failing business by sticking to this principle that we can’t work out the conditions under which we will be operating after, for the first two years after we leave the European Union?

LIAM FOX: It’s not our failure, we’ve wanted to get into these discussions with the European Union for some time, the sticking point is very much the European Union …

NP: But the simple fact is given the position that you’ve stated and given the position that the Prime Minister has stated, we’re not going to know what the transitional arrangements are going to be until some point in the future and certainly far beyond the end of Q1 next year which is when business says they need to know.

LIAM FOX: Well we still want to make progress in December and we hope we can get a clear idea of the shape of the final deal as soon as possible but we can’t get there as long as the European Union are insisting that we talk to them about a specified amount of money before we do so. I just think that that’s not in the interests of either the people on the European continent or the people in the United Kingdom and the question is whether we are going to put politics above the prosperity of our people and I think that would be wrong for us to do so and I think the European Union countries need to consider the welfare and the economic prosperity of their people as opposed to the obsession of the Commission about the concept of ever closer union. I think this needs to be an economic Brexit and not a political one.

NP: Even you will concede the revision by the OBR of the growth figures in the budget was pretty grim and actually it’s only going to get worse because, as you just conceded, businesses will not know the conditions under which they will be operating after we leave the European Union because we can’t agree on that until the point at which we’ve got the trade deal done and dusted.

LIAM FOX: Well I don’t accept that analysis for a moment because if you look at the actual facts of what is happening in our economy, not only do we have the highest employment in our history but last year saw the highest amount of investment coming into the United Kingdom that we’ve ever had and that was in the first full year after the referendum. There is a world beyond Europe and there are a lot of international investors who are looking at the United Kingdom as a very good place to put their money because they think they have got a very solid economy because fundamentals are very strong. They trust our rule of law, we have got a very flexible workforce, we have cutting edge tech, low regulations, low taxation, we speak English, we’ve got some of the best universities: none of those things are actually related to our membership of the European Union, which is why investment continues to come to the UK and we must be very careful not to talk down our prospects.

NP: There are those who suggest, with a degree of justification it would seem, that you are no friend of business. Last year you branded them too lazy and too fat to compete in the international marketplace, you’ve accused company directors of preferring to play golf on a Friday afternoon instead of contributing to our national prosperity and in an interview with the house magazine you said on Friday that ‘our trading performance needs to improve, I can agree as many trade agreements as I like but if British business doesn’t want to export then that doesn’t do us any good.’ You’re a friend of business?

LIAM FOX: Well that’s just stating the obvious because we can have as much market access as we want but if we are not able to get into those markets then that doesn’t do us a great deal of good so we’ve seen a big improvement in British exports in the past year, up 13% at a time when global trade was [inaudible], it’s a very, very good start and we are going to help with that this week, we’re going to fulfil one of our manifesto commitments to put in place and to advertise for nine of Her Majesty’s Trade Commissioners to head up our overseas efforts, to help British companies get in to overseas markets. The government has got to play its part in helping business to do that. Our performance isn’t good enough but we are getting there, we’re making steady progress and it is going to be a long slog for us to get from the 28% GDP that we export, as I say, up to levels like Germany with 47. That hasn’t happened overnight for them, it won’t happen overnight for us but the government will play its full part.

NP: Dr Fox, you are of course someone who has had a long standing interest in matters defence, and I wonder what you made this week of reports that we have a Minister at the main building at the MoD preparing to resign because of cuts to our armed forces?

LIAM FOX: Well you have to look at our record. We are one of the very few NATO countries that actually spends 2% of our GDP on defence and there is a review going on at the present time and I think back to my own time as Secretary of State for Defence when we had a similar review ongoing and there is always a lot of tension, not just between the MoD and the Treasury but also inside the MoD between the different parts of the armed forces and naturally there are concerns about the future shape of that but this is an ongoing discussion. I’m afraid it is not unknown for some of these tensions to spill over into the public domain, I think we should wait and see exactly what sort of compromise we reach because that’s what it will be and remember that the United Kingdom has the fourth biggest military budget in the world and, as I say, is one of the very few NATO countries actually fulfilling its promises to spend and help protect our partners. I would like to see more of them shoulder that burden and not just the very few countries who are already making the cuts to the proportion of GDP that we do spend.

NP: Dr Fox, I am so sorry, we are about to lose the line to New Zealand so I just want to say thanks very much for being with us before we do.

LIAM FOX: Thank you, Niall.