Oral evidence: The work of the Department for International Trade, HC 436

Oral evidence, 5 December 2018.

Witnesses

Rt Hon Dr Liam Fox MP, John Alty and Catherine Vaughan.

Chair

Good morning, Secretary of State. It is good to see you here in front of the International Trade Committee again. I should maybe ask first for your advisers to introduce themselves. The last time you appeared alone; yesterday you had one adviser; now you have two advisers. You had better make the advisers known to the Committee.

John Alty

I am John Alty. I am the director-general for trade policy in the Department for International Trade.

Catherine Vaughan

I am Catherine Vaughan. I am the director-general and chief operating officer for the Department for International Trade.

Chair

Thank you very much. I apologise; due to the short notice, we did not have time to make a name tag for you. Secretary of State, is Brexit going as well as you imagined?

Dr Fox

Ask me next Tuesday, Chair.

Chair

What will that be dependent on, next Tuesday?

Dr Fox

It will depend on what we vote in the House of Commons.

Chair

Which vote do you want?

Dr Fox

I want the Government’s deal to go through.

Chair

I find that very interesting. You said on 1 February 2017—

Dr Fox

To clarify that answer, there is, as I have recently written, a real danger that the House of Commons, which has a natural remain majority, may attempt to steal Brexit from the British people, which would be a democratic affront.

Chair

You said on 1 February 2017 to this Committee, “We expect to get a good deal”. Is the deal a good deal?

Dr Fox

If it was not a good deal, I would not be voting for it.

Chair

So it is a good deal. What is no deal like? How would you characterise no deal? If it is deal or no deal, you are a supporter of the deal, as you have said. What does no deal mean? How would you describe no deal?

Dr Fox

I would describe no deal as suboptimal, but I do wonder whether, following the passage of the amendment last night in the House of Commons, the House of Commons has any intention of allowing no deal to happen.

Chair

No deal is suboptimal to the deal or to the current situation?

Dr Fox

It is suboptimal to the current deal. Leaving the European Union is better than staying in the European Union.

Chair

Your order of preference is the deal, no deal and the status quo.

Dr Fox

My preference is the deal.

Chair

After that, is it no deal or the status quo?

Dr Fox

I am not going into the menu.

Chair

That is very interesting. You might have to go into the menu. If you do go into the menu, you should maybe share with the Committee which you prefer: no deal or no Brexit, as Donald Tusk said.

Dr Fox

I prefer Brexit. I voted for Brexit; I campaigned for Brexit. But I hope we do it in an orderly and transitional way, as I always have.

Chair

Leaving the European Union without a deal would not be orderly.

Dr Fox

It would not be orderly, no.

Chair

If we have a hard Brexit and no deal in March 2019, that would be a bad thing.

Dr Fox

You are trying to get me into a menu again, Chair.

Chair

I am trying to know your thought process, because you are a member of the Government.

Dr Fox

I want to leave the European Union, as I always have, because I believe that, for constitutional reasons, we should be masters of our own political destiny. I do not believe we should pay vast sums of money for someone else to govern us and we should have control of our own borders.

Chair

In short, my final point is this: do you still stick with the Prime Minister’s words—I do not know whether she sticks to them herself—when she said, “No deal is better than a bad deal”? Would you prefer no deal to no Brexit?

Dr Fox

I think we have to leave the European Union because we have been instructed to do so by the British people. Parliament did not give the British public a consultation. We actually contracted out our sovereignty on that particular issue to the British public and we said, “You take the decision on whether we should stay in the European Union or not, and we will abide by that decision”. They made their decision; we have to honour our side of the bargain.

Chair

Regardless of any economic consequences, that is your preferred choice.

Dr Fox

We have to leave the European Union. We have to find a way to do it that causes the least disruption to our economy and maximises the opportunities available to us. I have never seen it as a net negative for the UK.

Mr Evans

You know I am with you 100% on this, but at the moment we can leave the European Union unilaterally. Once we have signed the withdrawal agreement, we cannot. You understand that I have more chance of winning “The Great British Bake Off” than the Prime Minister has of winning this vote on Tuesday, given the colleagues I have spoken to. You have eaten a lot of pizza over the last few weeks, Secretary of State.

Dr Fox

I have not eaten any pizza. I assume that is not a commentary on my weight, Mr Evans.

Mr Evans

You have watched a lot of your colleagues eat pizza, and it has to be for some reason. What would you recommend the Prime Minister to do on Tuesday if she allows it to go to a vote and it goes as everybody is predicting? What would your advice to her be?

Dr Fox

My advice to colleagues is to vote for the agreement.

Mr Evans

Yes, but you have to advise the Prime Minister. She is in a hole.

Dr Fox

What advice I have for the Prime Minister would be done in private.

Mr Evans

But you will be talking to her in private, though.

Dr Fox

Frankly, my view is that, when you are in prison and someone offers you a key, you take it.

Mr Evans

The sad thing is that we are being offered a prison cell, Secretary of State. That is the problem. Those in the EU have the key. That is the real problem that people have in voting for this deal. Do you understand that?

Dr Fox

I understand the questions and reservations around the backstop. I do not know whether you want me to go into that element now. I am very happy to. Yes, as the Attorney General said, there is a calculated risk to be taken. If the risk is not taken, following last night’s vote in the House of Commons, the chances are that we will end up not having Brexit, or there is a possibility of not having Brexit. With the backstop, there are a number of things worth pointing out. First, I do not think it is in either party’s interest to get into the backstop. A number of people will say to me, “It would limit your ability to do trade agreements because you would not know what your future relationship with the European Union would be”. The same is true, of course, of the European Union. It would not know what its relationship with the UK, the world’s fifth biggest economy, would be. Secondly, many in Europe take the view—I accept that to many it requires a suspension of disbelief—that this backstop means, if the UK does not get what it wants in any future negotiation, it can camp on the backstop, effectively make no contribution and have no free movement, but still have access to the single market. They ask, “How do we explain that to Norway and Switzerland, or to French or German taxpayers?”, who would effectively be paying, in that explanation, in that understanding of it, for the UK’s access.

Chair

To recap, I started off by asking whether Brexit was going as well as you expected, and you said it depended on the vote next Tuesday. If the deal, as Mr Evans says, is going nowhere, I will conclude that you feel it is not going well.

Mr Jayawardena

Britain has an amazing opportunity right now to seize a new role in the world and become a beacon of free trade. Surely we should be locking down a trade deal with the EU that is free from red tape and boosting trade with the world before we throw away our ace card by handing over £39 billion.

Dr Fox

We have to do two things. First, we have to maintain good access to the European market. It is still 44%—it has gone up to 45%—of our exports of goods and services. At the same time, we have to maximise our opportunity to take advantage of those growing global markets.

Mr Jayawardena

Why do we want to pay over the £39 billion or agree to pay it over before we have secured a trade deal?

Dr Fox

As the Prime Minister said, nothing is agreed until everything is agreed.

Mr Jayawardena

The withdrawal agreement would be a legally enforceable document, whereas the political declaration is not.

Dr Fox

And we will want assurances on that future economic partnership before we bring the legislation forward.

Mr Jayawardena

As the former Brexit Secretary Dominic Raab said, he resigned because the draft withdrawal agreement would mean the UK forfeiting all hope of an independent global trade policy and being “leashed to the EU’s protectionist trading agenda”. How is that global Britain going to be possible?

Dr Fox

It is self‑evidently possible, because we have control over a number of those areas. In one of the discussions I had with the United States, the question was this: “If you have partial alignment on goods, do you lose control over your tariffs?” Of course, that is not true. To give a simple example, if the US wanted an agreement that saw zero tariffs on US cars coming to the UK, we could still do that under the current agreement. There is nothing to prohibit us.

Mr Jayawardena

So you do not believe that any part of the withdrawal agreement or any part of the political declaration holds Britain back in any way from doing deals with any other country.

Dr Fox

The backstop is a calculated risk. I have never made any great pretence about my love for the backstop. But, without the backstop, we would not have been able to get the Irish Government to take part in the negotiations. It is worth considering, because it is very seldom mentioned, that the backstop is not just for the Irish Republic. It is also necessary for the reassurance of the moderate nationalist community in Northern Ireland. Their understanding that there is no possibility of a return to a hard border is part of the way in which we underpin the stability of the Union.

Mr Jayawardena

So long as we are in the backstop, we are rule‑takers, right? While we are in the backstop, we are rule‑takers.

Dr Fox

While we are in the backstop, yes.

Mr Jayawardena

You said, as rule‑takers, without any say in how the rules are made, we would be in a worse position than we are today. Those are your words, so why do you continue to back this deal when it would be a sell‑out?

Dr Fox

It is very clear—it is in the text repeatedly—that it would be a temporary arrangement, if it had to happen. There are a number of mechanisms to stop it happening. There is the option of the extension of the IP, six months out, at the end of June 2020 to avoid getting there. I think we underestimate the sense of urgency there is to get a future economic partnership agreement between the EU and the UK, for all the reasons I have just mentioned. I did not mention the Irish business community, which thinks the backstop is a one‑way ticket for business to move out of the south to the north. All those things considered, there is a sense of urgency to get it moving. Much as I have had my own reservations about the backstop, one of the things it has allowed us to do is give the Irish Government a permissive environment, politically, to talk about the actual alternatives to the current backstop, facilitation and technological agreements, for example, which we have seen emerging in the last couple of weeks.

Chair

With respect to colleagues, this is the final question.

Mr Jayawardena

While we may not agree on the items we have discussed so far, one thing we will perhaps agree on is the EEA. Is that not the worst of all worlds?

Dr Fox

The EEA would be far more restrictive than the current proposed agreement, in that it has much stiffer alignment and much less room for manoeuvre. It would require us to join, which would require the agreement of the EFTA states. There is no reason to presume they would actually want to do that from some of the indications we have had. It would require us to maintain a level of alignment with the single market far greater than the partial goods alignment that is in the current agreement. In fact, in many ways it is closer to EU membership than the agreement being put forward today. I find it unbelievable that those who say they cannot agree with the current proposal put forward by the Government would want EEA or EFTA status.

Matt Western

Having heard that, and having heard from Mr Raab and his resignation on principle, why did you not resign?

Dr Fox

I did not agree with the assessment. I still take the view that Britain should try to leave the European Union in a stable and ordered way. The other alternatives of not leaving or leaving with no deal at all are either politically unsustainable or economically more damaging.

Matt Western

In talking about the future UK‑EU relationship, Mr Raab had an objection to the commitment to build on a single customs territory. What do you see as the implications of that for the Department for International Trade in relation to concluding our own trade agreements?

Dr Fox

There were two changes between the outline political declaration and the political declaration we finally agreed. The first was that we would build and improve on this, rather than simply build on it, and the second was the inclusion of the phrase “in line with the parties’ objectives and principles above”, which was a cross-reference to both the protection of the UK single market and the protection of the UK future independent policy. There was a change between those two versions that was not widely commented on but which the UK insisted upon, because it did actually make a difference to the interpretation.

Mr Fysh

One of the big industries in this country in which we want to do more trade overseas is our defence manufacturing industry. Its competitiveness is very important to that. Could you tell me whether Government involvement and Government support for our domestic defence industry would be subject to the state‑aid provisions of the EU in the backstop?

John Alty

In the backstop, there are some level playing field provisions. In most cases, those are non‑regression provisions, so they say you will not go backwards. On state aid, because the Government want a strong state‑aid regime, in the backstop, we are bound by the state‑aid regime.

Mr Fysh

Is that a yes? They would be bound by the state‑aid provisions.

John Alty

In the backstop, yes.

Mr Fysh

Is it or is it not the case that currently in EU law there is a blanket exemption for defence industries from the treaties so that EU firms are exempt from state‑aid provisions?

John Alty

I am not an expert on the treaties as they apply to the defence sector. You are right that there are special provisions for defence in relation to those sorts of things, but I am not sure whether it would be true to say it is completely irrelevant.

Dr Fox

Chair, it is such a fine legal point. I think I will write to Mr Fysh on that.

Mr Fysh

It seems to me that what is being proposed by the Government is essentially to allow the EU to regulate state aid of our defence industry while it gets a competitive advantage for its own by being able to do whatever it likes. I find it hard to see how any responsible Government could possible recommend that to Parliament.

Dr Fox

That would not be my interpretation, but we will clarify that. We will get a legal clarification on that.

Emma Little Pengelly

On 8 November, Secretary of State, you said that the UK must have the ability to end the backstop or else we would be subcontracting that power to the European Union, and it needs to be an issue for the sovereign British Government. What changed?

Dr Fox

If we do not get the agreement, as I wrote at the weekend, there is a chance that we will not see Brexit completed. Having talked to colleagues across Europe, their dislike for the concept of the backstop is stronger even than I had anticipated, and therefore there is a double incentive on both sides to never get there.

Emma Little Pengelly

You are saying that it is a political risk, as you have mentioned already this morning, that is worth taking, to change your view about the backstop.

Dr Fox

It is a calculated risk, because my assessment is that the worst possible outcome would be not to leave the European Union, in terms of both the future of the United Kingdom and faith in our political system.

Emma Little Pengelly

Do you agree with the Chancellor of the Exchequer, the Prime Minister, the Attorney General, that the backstop is bad, not good and needs to be avoided?

Dr Fox

All parties will want to avoid it. It is potentially extremely unacceptable to all sides.

Emma Little Pengelly

Could you explain why it would be unacceptable? Why is it bad for the UK? Why is it bad for Northern Ireland?

Dr Fox

It clearly restricts the UK in a way that it otherwise would not be restricted. As I have already explained, there are those on the other side of this debate who think it gives the UK the advantage of being able to continue to access the single market without making a financial contribution or accepting free movement.

Emma Little Pengelly

Could you just explain in a bit more detail how it would be restrictive? If Northern Ireland was in the backstop, how would it be restrictive?

Dr Fox

To be frank, while we would technically have the ability to make and implement trade agreements, it would be difficult without knowing what the end date would be. That would provide us with a potential difficulty. I do not think it is worth pretending otherwise, because it is quite clear that there are downsides to it. The downsides on both sides provide an incentive not to get there. The backstop is there primarily to give the Government of Ireland an assurance that the UK is genuine about not wishing to see the introduction of a hard border between the Republic and Northern Ireland.

Emma Little Pengelly

In the context of the backstop, particularly in relation to Northern Ireland, Michel Barnier has said that, if the backstop applied to Northern Ireland in the way set out in the withdrawal agreement, Northern Ireland would not be able to participate fully in any UK trade deal. What assurances did you get? What do you have in the withdrawal agreement to guarantee that Northern Ireland would be able to partake in UK‑wide trade deals?

Dr Fox

We will negotiate and implement trade agreements for the whole of the United Kingdom.

Emma Little Pengelly

What assurance did you get in the withdrawal agreement to guarantee that Northern Ireland could partake in United Kingdom trade deals in light of what Michael Barnier had said about the backstop?

Dr Fox

We would not implement trade agreements that were not UK‑wide.

Emma Little Pengelly

Is it not the case that there is nothing in the withdrawal agreement that gives that assurance?

Dr Fox

The decision about what the UK Government would implement is only for the UK Government.

Chair

That is interesting. I was going to ask you about this. If you were in a negotiation, would you be in a GB negotiation or a UK negotiation? You now say that if it was not for the entire UK you would not implement those trade agreements. Therefore, external forces have you over a barrel. If Northern Ireland is in a backstop, you ain’t going to be negotiating or agreeing any trade agreements. You have just said that.

Dr Fox

No. The trade agreements we negotiate would be for the whole of the United Kingdom.

Chair

If Northern Ireland is in the backstop, it is not the whole of the United Kingdom. You cannot include them in this.

Dr Fox

That is not the same question, Chair.

Mr Fysh

Can I just clarify? In the backstop, there are provisions where GB has to comply with the common commercial policy and the common external tariff. In reality, how could the UK possibly make trade agreements with other people when that is explicitly given in the black and white legally binding agreement to the EU to progress? It has nothing to do with you.

Dr Fox

It is a UK‑wide backstop.

Chair

Northern Ireland could be the services part, in the single market.

John Alty

In the backstop, we would not be covered by the common commercial policy. We are covered by a customs union with the EU.

Mr Fysh

No, that is not true. Sorry, that is not true. Would you like me to find the provision?

John Alty

We can confirm that.

Chair

We can come back to that detail, and we will pick it up again.

John Alty

To clarify, we are only covered by that to the extent that the customs union—

Chair

Sorry, we will come back to that when both sides are happy with the data.

Faisal Rashid

Thank you, Secretary of State, for coming. Very quickly, if on Tuesday this Bill is voted down, is there a plan B? If yes, what is it? If no, why not?

Dr Fox

The Government’s plan is to get their vote through the House of Commons, and we are not going to get into hypotheticals ahead of the vote.

Faisal Rashid

Clearly, Secretary of State, the Government have to have some kind of contingency plan. It is very normal in any organisation for such a big issue. There is no plan B. I am really worried about that.

Dr Fox

There is an easy way round that, which is to vote for the Government’s motion.

Faisal Rashid

You mentioned that there is a danger of having no Brexit. What do you mean by that?

Dr Fox

I think it was clear during the passage of the Trade Bill that there is a lobby in the House of Commons to keep the United Kingdom in a customs union, or in the customs union, as it was put then. That lobby is alive and well, as was shown in last night’s vote.

Faisal Rashid

In paragraph 25, the political declaration refers, in relation to the future UK‑EU relationship, to the UK “aligning with Union rules in relevant areas”. How would that affect our ability to strike trade agreements with other countries?

Dr Fox

If I may say so, it is a very good and key question. Any voluntary alignment would have a countermeasure in terms of what we can offer elsewhere in the trade agreement. Basically, the more the alignment, the greater the limitation on being able to offer freedom for future trade agreements in that space but, equally, the less friction there is in terms of our trade relationship with the EU. Conversely, the lower the level of alignment, the greater the degree of freedom in free trade agreements in those areas will be, but the greater the friction. Therefore, it has to be a trade‑off between what the cost of the friction will be in trading with the EU, and what the realistic limitations will be on the freedom we have with free trade agreements. There is a sliding scale. From the discussions we had, it is very clear that this will be something, in the future economic partnership, for us to determine. To do that, you have to have a realistic view of our likely share of trade with the EU and the cost of friction in that trade versus the freedom we would have in determining a free trade agreement elsewhere.

Faisal Rashid

You agree that there will be limitations.

Dr Fox

It is a real‑world trade‑off.

Faisal Rashid

Right, so we will be able to have trade agreements with the rest of the world with no problem.

Dr Fox

Of course we will, but if you have alignment in a particular area it means you cannot offer freedom from that alignment in a trade agreement you are entering into. For example, if we want alignment in elements of manufactured goods to avoid border friction, we do not have freedom to offer that in a future free trade agreement. The question on manufactured goods would be whether anyone would seriously want that. Most of those manufacturers selling into the UK are also selling into the EU, and have a single manufacturing process. They have said to us, “It would be inefficient for us to have a second production line just to sell into the UK”. In likelihood, we would adopt those standards anyway.

Chair

You have indicated that the Government are out of plans if plan A goes out.

Dr Fox

That is not what I said at all.

Chair

Is there a plan B?

Dr Fox

I said I was not discussing it.

Chair

But is there a plan B? I am pretty sure that in 2014, when Scotland was going for independence, yours was one of the voices looking for a plan B, and there were plans A to E. But we are here asking you what plan B is. When you demanded in the past a plan B, or your colleagues demanded a plan B, plan B was there and plans A to E were there. One of two things is happening here. You either have no plan or you have a plan and you are not disclosing it. What is going on? Do you have a plan? Is there a plan B?

Dr Fox

As I said—

Chair

Why can you not be candid with the people?

Dr Fox

I will repeat this: the Government’s plan is to get its deal through the House of Commons because we believe it is the best way.

Chair

Do you have a plan B, overt or covert?

Dr Fox

The Government’s plan is to get its vote through the House of Commons.

Chair

That is shocking.

Mr Leslie

I feel as though I am seeing a different Secretary of State—here we are in 2018—than the one with all those ideals and expectations back in 2016. Reality has been a bit harsh.

Dr Fox

Has it?

Mr Leslie

Let me clarify—

Dr Fox

If I thought it was right to leave the European Union when I voted to do it in 2016, I think it is twice as right now.

Mr Leslie

Brexit, your Brexit, means this blindfold concept. We give the withdrawal agreement and then we do not really know what the European relationship is going to be, because that is still to be negotiated. I just want to get a sense of this. I do not think it was necessarily your expectation that the Secretary of State for International Trade would continue to have to sit and twiddle his thumbs for that next period while the European trade agreement was still to be determined. I would have preferred the trade agreement, as you intimated at the time of the referendum, to have been done by the time we exited, but it turns out that under your Brexit we are going to be exiting without having that commitment to the future trade arrangement. Are you going to be negotiating the European trade arrangement or is that for a different Department?

Dr Fox

It still remains DExEU that would deal with the European Union.

Mr Leslie

You are going to have to wait until they finish it.

Dr Fox

No, we are not waiting at the moment. Plus, I just have to say this. There is this view, quite wrongly, that all the Department for International Trade does is trade policy. Trade policy is only part of what we do. It is 470 out of nearly 4,000 staff we have. This Department’s main work on a day‑to‑day basis is exports and investment. That is mostly what the Department does.

Mr Leslie

But your real ambition, Secretary of State, was to be out there, across the world—it was the easiest thing in the world—making all these comprehensive free trade agreements. It now turns out that you will have to wait until we, as a UK, secure our trade agreement with the EU first, before we can then, in sequence, conclude trade agreements with the rest of the world. Is that not right?

Dr Fox

The assumption is that the political declaration effectively has the effect—John might want to comment on this—of what would be a trade negotiating mandate. That is how our international partners view the political declaration. This is the direction of travel of what our trade agreement with the European Union will be, and they will be planning accordingly.

Mr Leslie

But you are not expecting to conclude any comprehensive free trade agreements with non‑EU countries before the EU arrangement is concluded.

Dr Fox

They are likely to progress very much in parallel.

Mr Leslie

But you could not conclude any, could you? Those other countries will want to know what Britain’s relationship with the EU is first before they conclude.

Dr Fox

Yes, of course they will, but in any case we would not be implementing any new trade agreements until after the end of an IP in any case.

Mr Leslie

Expectations have been part of your problem, Secretary of State. You are saying, “One second after midnight, we will roll everything over. Everything is the easiest thing in the world”. Can I, from experience, suggest that you dampen expectations down a bit for the country? They should not necessarily expect all these free trade agreements with the rest of the world to be concluded until many years after 29 March, potentially. It is going to take many years to conclude the EU arrangement. Only then will we be able to come to concluding agreements with the rest of the world, maybe. That is because, is it not, those other countries will want to know whether the UK will be free to reduce or change tariffs, whether we will be free as a country to vary our SPS or TBT arrangements, and all those things?

Dr Fox

No, it is very clear that we will.

Mr Leslie

We will not know that until we have concluded with the EU.

Dr Fox

We do know, for example, that we will have complete control over our tariffs, because we have talked in the political declaration about alignment on manufacturing goods.

Mr Leslie

Will we know if the UK is able to lower its tariffs?

Dr Fox

That is not about tariffs, because we will want to maintain complete control of our tariffs. We have said so.

Mr Leslie

But you have not agreed that with the EU. There is no agreement with the EU that the UK will be able to lower its tariffs, for instance. We will not know that until we have concluded our deal with the EU many years hence.

Dr Fox

We would expect to conclude our deal with the European Union by the end of the IP, i.e. the end of 2020.

Mr Leslie

You really think we are going to conclude a trade agreement with the EU by the end of 2020. Be careful about expectations, again, as I was saying. Just to be clear, you think we are going to settle our deal with the EU by the end of 2020.

Dr Fox

That is the express wish of both sides.

Mr Leslie

But you will not guarantee that, will you?

Dr Fox

We cannot guarantee anything.

Mr Leslie

Just as you could not guarantee rolling over all the trade deals one second after midnight, could you?

Dr Fox

We are still intent on doing that.

Mr Leslie

You are still intent on rolling over all those existing trade deals one second after midnight. Your junior Minister did not raise that expectation.

Dr Fox

If the Government win their vote next week, that is exactly what will happen.

Mr Leslie

The realistic Liam Fox is probably the one I would suggest should be freed here, not the one who makes promises that cannot be fulfilled. That is partly the problem you have caused here.

Dr Fox

In terms of promises that can be fulfilled, if the House of Commons votes for the Government’s agreement next week, all our trade agreements that the European Union currently has will automatically in law be rolled over.

Mr Leslie

Okay.

Mr Fysh

If we get to the end of 2020, as you have been mentioning, and we have not concluded an agreement, what happens at the border, trade‑wise? What do companies have to do to trade between Great Britain and the EU? What are the documents that need to be shown?

John Alty

Are you talking about no deal?

Mr Fysh

No, in the backstop.

John Alty

In the backstop, there will continue to be common customs arrangements. As the Secretary of State was saying earlier, there will not be tariffs. There will be questions for the UK about its regulatory arrangements. There are customs checks relating to tariffs, rules of origin and so forth, which would not be operational in the backstop. The UK will then have a choice about its regulatory arrangements. Again, as the Secretary of State was saying, there is a sliding scale there. For things like rules of origin and tariffs, there will not be checks under the backstop.

Mr Fysh

What is the meaning of the A.UK movement certificate that is mandated by the legal text of the Northern Ireland protocol or backstop as regards GB‑EU trade? What needs to be declared in it, and what is it?

John Alty

That is another detailed question. If you need the answer—

Mr Fysh

I can help you with that. It says that it has to be a physical paper certificate, given to the company making the consignment. It has to be wet‑stamped. It must be wet‑stamped by a customs official when it crosses the border. Then the company needs to keep those certificates for three years and can be inspected by the European Commission to see that it has complied. What has to be declared is where the product is from or that it has had its duty paid. How is that not a massive and very antiquated friction that is in fact different from the electronic declarations that are currently available within EU law for third‑country trade? How is that not a much worse deal than not having a withdrawal agreement? How is that not, in fact, the cliff edge that this Government is proposing to set up?

Dr Fox

I will need to check on the exact status of the form that Mr Fysh mentions but, were we not to have a withdrawal agreement, were we to leave the European Union without an agreement in other words, we would face widespread potential disruption to business. Again, where there are ways of minimising that, the Government would consider that, but ultimately, to go back to Mr Leslie’s question, although he is rather bothered about my brush with reality, the backstop is not something we want to see. It is not something either side wants to see. In fact, I see it as an incentive for us to get an agreement before we would ever get there.

Mr Fysh

Can you understand, Secretary of State, how the people who read the text of the withdrawal agreement, the legally binding agreement, might see this? I have mentioned two of the hostages to fortune. One is the friction that I just mentioned and the other is the defence industry; there are a host of other ones. Every single one of the 27 countries in the EU will come with its own thing that it wants as its price of letting us out of the backstop fallback and into something else. Is it not just monumentally stupid and utter wishful thinking on the part of this Government to think that is somehow something they are going to do? Are they going to say, “Sure, UK, if you want out of it, fine, we will give you whatever you want”? That is never going to happen, is it?

Dr Fox

As I said and as the Attorney General said in the House of Commons, there is a calculated risk here. I also repeat—

Mr Fysh

Is a calculated risk a bit like putting five bullets in the chamber of a revolver and playing Russian roulette with it? It is utterly stupid.

Dr Fox

No. I will repeat what I said earlier. There are those on the other side of this negotiation who think that what has been negotiated gives Britain an unacceptable advantage. I know some of us in this country find that difficult to grasp conceptually.

Mr Fysh

Yes, the Government do. That is correct.

Dr Fox

But there is the view that this is advantageous for the UK, because there are those—I have spoken to them—who say this means that, if Britain does not get what it wants, Britain will be able to camp on the backstop, not make any contribution, not have free movement and still have access to the single market. I know that is not how it is viewed from a certain British perspective, but—

Mr Fysh

It will give up its sovereign ability in defence.

Dr Fox

It is a real view. It is a real view that is expressed from the other side.

Chair

I am going to leave that disagreement there. You just said that a hard Brexit in March and no deal would lead to widespread disruption to business. You are talking in concrete terms there. In March, if that happens, that is equivalent to a WTO Brexit, a hard Brexit. Earlier you said you preferred that to remaining in the European Union. Effectively, though, when you move out of the abstractions and into the concrete, in March/April you would much prefer to be in the European Union than out of the European Union. Is that not right? That is why you will take any deal now to achieve that.

Dr Fox

No, I want to leave the European Union.

Chair

But not next March or April: you want to be in the single market and the customs union, trading as we do now, in April.

Dr Fox

I want us to leave the European Union on time, as we promised the British people. I want to do it in the least—

Chair

But do you see an incongruity between your abstractions and your concretes here?

Dr Fox

No, I think there is a deal on the table that is acceptable. It will get us out of the European Union on 29 March. It fulfils what we were instructed to do by the British people. It is not a perfect deal from my point of view or from the European Union’s, but the bigger danger here is the political one of not leaving the European Union.

Emma Little Pengelly

In the spirit of the context of realism, I want to pick up on the point that John mentioned in response to Marcus’ question. Post-Brexit, in a backstop situation, you referred to it being UK‑wide. But that is not the case, because there are aspects of it that are particular to Northern Ireland. In particular, you said that in a backstop there would not be an issue with customs checks, because the UK would indeed be in a UK‑wide customs arrangement, but that the UK would have a choice in regulatory terms. The Secretary of State has said that, in terms of that choice, the more aligned that we are, the more restricted we are in making free trade deals, and the less aligned we are, the more flexibility we have. But it is factually the case that, within the withdrawal agreement, there are 68 pages within the annexe where there will be full alignment on many issues that pertain to Northern Ireland, which would restrict the ability to do trade deals in relation to those matters. Is that not the case?

John Alty

There is regulation, as you say. It will be for the Government to decide, for the whole of the UK, what the rest of the UK does in relation to regulation at that time. All I meant was that the customs arrangements are UK‑wide customs arrangements.

Dr Fox

I entirely understand the point. During the backstop, the application of regulatory alignment would not make it possible to introduce the elements of any free trade agreement that related to those areas where there were restrictions. For example, services or investment may be applicable in a future free trade agreement but not in terms of goods.

Emma Little Pengelly

To be absolutely clear, within the protocol and the associated annexe, that is mandatory in the backstop for Northern Ireland but it would not be mandatory in relation to the detail set out in the annexe, those 68 pages, for the rest of Great Britain. That would be a political decision for the Government in relation to GB.

Dr Fox

Were there any trade agreements already negotiated at that point, it would therefore be for the Government to decide whether to apply them but not fully to Northern Ireland or wait for full application until after the backstop, in which case it would be a purely UK application. My personal preference is for the latter.

Faisal Rashid

Very quickly, Secretary of State, if the EU withdrawal agreement and political declaration does not get through Parliament next Tuesday, would you support extending article 50 in order to renegotiate and go back to the European Union?

Dr Fox

It is a very neat try at the same question another way round. My view is that we work to get the Government’s agreement, and I am not discussing hypotheticals beyond that.

Mr Evans

Originally, you supported a time‑limited backstop. Would that not have been the best solution to this particular problem?

Dr Fox

There are a number of potential solutions to the reservations that many of us have. The question is whether they are negotiable.

Mr Evans

It appears that not much attempt has been made to negotiate. It is worse than David Cameron going and trying to negotiate his deal. He asked for little and got less. There is this perception—

Dr Fox

Nothing is less, yes.

Mr Evans

There is a perception that we did not try to put a time limit on the backstop. Would that not have been the solution to a lot of people’s concerns? There could be a backstop at the end of, say, a six‑month period, if they have not come to a solution. To be honest, they have until 2020 to come up with this solution, plus a backstop. It is basically an extension on the extension.

Dr Fox

There is an inexorable logic to that point, as there would be with a unilateral mechanism to escape the backstop. The drawback is that the Irish Government would say, “A backstop with a time limit is not a backstop”.

Mr Evans

It being open‑ended is a real problem for people, you will find. If the backstop does come in, which most of us believe will happen because it gives the EU 27 leverage on things like fishing and various others, what impact does that have for the United Kingdom on our schedules with the WTO during that period?

Dr Fox

In the laying of our schedules, it makes no difference.

Mr Evans

They stay as they are. They are aligned to the European Union.

Dr Fox

Our independent schedules have already been laid for both goods and services. Our GPA schedule has also been laid. They will be the basis on which we would make an offer for future trade agreements. That is what our trading partners would know. They are not actually dependent on this process. It is worth pointing out that the EU itself has never had schedules certified that reflected either the full EU membership or the current trading position.

Faisal Rashid

WTO schedules are the baseline against which free trade agreements are negotiated, so how will any protracted uncertainty over the UK’s schedules affect your plan, first, to roll over existing EU trade agreements at the point of Brexit and, secondly, to negotiate new agreements soon after Brexit?

Dr Fox

They will not. As I have just pointed out, the EU has not operating on certified schedules for over a decade. It has never had certified schedules for its full membership at any point since 1995. The EU has been able to conclude and ratify a number of trading agreements in that time, and the same would apply to the UK.

Faisal Rashid

It will not affect us.

Dr Fox

It will not affect us.

Julia Lopez

As I understand from what you have said, you believe that colleagues should support this deal because, while it is not ideal, at least it is a Brexit of some kind. The risk of not voting this deal through is that we might have no Brexit at all. You are a much more experienced parliamentarian than I am, so can you please take me through, step by step, how we would get to no Brexit at all? It is my understanding that that would require Government legislation. As far as I understand it, the law suggests that we will have a no‑deal Brexit unless the Government put down some other piece of legislation that tries to move it in a different direction. Can you take us through, step by step, how you perceive that we could get to no Brexit at all?

Dr Fox

It would entirely be possible, we believe, for amendments to a number of possible pieces of legislation to achieve that effect. It is quite right: we cannot be bound by a motion in the Commons, but we would be bound by legislation. Governments can only be restricted by statute, legally. There are a number of pieces of legislation that we need to pass to make our exit from the European Union effective, the Trade Bill being one. That gives us our ability to technically roll over our trade agreements from the EU. I will come back to the other possibilities there. Likewise, there is the setting‑up of the Trade Remedies Authority and membership of the Government Procurement Agreement. We are exploring the legal options for Ministers. We have taken the first part of the TRA, for example, on ministerial direction in terms of spend, but of those three it certainly would not be possible to have UK membership of the GPA without the legislation of the Trade Bill going through. It is undoubtedly true that that Trade Bill is amendable to have a customs union amendment attached to it.

Julia Lopez

Would you consider pulling the Trade Bill, if necessary, if you thought that some cheeky amendment might get tabled that could kill Brexit altogether?

Dr Fox

As I said, I have been taking advice on other potential routes to achieving what we need to achieve through the Trade Bill, but my understanding, as far as it is today, is that the GPA part of the Trade Bill would not be possible to achieve by any other legal means currently available to the Government.

Julia Lopez

My understanding is that the Government want us to move to a situation whereby we align ourselves in goods and agri and not in services when it comes to our future trading relationship with the EU. That would limit us to being able to make trade deals, broadly, based on services. Are you aware of any other major economy that has done a services‑only deal?

Dr Fox

No, it would not be services only. First of all, FTAs have to cover all elements. Of course, we would have complete freedom on tariffs and TRQs even when it comes to the manufactured goods we are talking about. I gave the example earlier. One of the ones most oft quoted in recent times is that we would not be able to do an FTA with the United States because we would not be able to offer tariff‑free access to American cars. That is not actually true.

Julia Lopez

One of the concerns I have had going through this process is the degree to which your Department is talking to the chief Brexit negotiators, and whether those Brexit negotiators understand that what they are agreeing with the EU is going to have an impact on our ability to have an independent trade policy. In the Department for International Trade, we have a highly experienced and world renowned trade negotiator in Crawford Falconer. I would like to know how many times Crawford Falconer has met with our chief Brexit negotiator Olly Robbins.

Dr Fox

I cannot answer that question, but we can certainly find out. It is a key question, and it is currently being looked at by the Cabinet Secretary —how do we align the two sets of negotiations going forward, those that will relate to FTAs outside Europe and that European process? For example, we have had a lot of countries expressing interest in discussions with the UK, with the American Government having already sought congressional authority for discussions with the UK. These are going to begin. One of the challenges we have to face in an organisational and structural way in Whitehall is how to co‑ordinate those two. How do you coordinate that FEP negotiation going forward alongside other negotiations we will have at the time? Mr Leslie raised that point just a moment ago. We see that as operating in parallel, not in sequence, but that requires quite a lot of co‑ordination across the process in Whitehall.

Julia Lopez

Have they met several times?

Dr Fox

As I have said, I cannot answer that question. I do not know.

Julia Lopez

So you do not know whether your chief negotiator is meeting regularly with chief Brexit negotiator.

Dr Fox

I do not know how many times they have met; I have said I do not know. I can find out, but I do not know how many times they have met.

Chair

Will you write to the Committee?

Dr Fox

I will indeed.

Emma Little Pengelly

I just want to ask a very specific question about quotas and how this will impact Northern Ireland if Northern Ireland is still within a backstop scenario. If Northern Ireland is in a backstop scenario, as you have indicated, there is free movement into the European market. In that situation, as you have described, post-Brexit, even within this arrangement, you would have the ability to change quotas. For example, if we decided to increase our quota for New Zealand lamb, more New Zealand lamb would be coming into the UK. How does that impact, with that lamb coming to Northern Ireland? Clearly, there is an open backdoor into the EU single market, which would potentially impact on their quotas for the same product. Have you made any assessment in the Department of how that quota differential may impact, in terms of goods travelling from GB into Northern Ireland?

Dr Fox

Changes in quotas that are different from the current arrangements would only be implementable after we left the backstop. While we were there, that problem would not arise because the quotas would be as they are today.

Emma Little Pengelly

It is your position that, as long as Northern Ireland would be in a backstop situation, the UK Government could not do anything in terms of quotas.

Dr Fox

As I said, the Government would have the choice. If we had a new trade agreement that had a different level of quotas, the choice would be whether to implement the elements we could for the rest of the UK during that period. My preference is that we would only implement a trade agreement when we were able to do so for the whole of the United Kingdom.

Emma Little Pengelly

That is your preference. You are saying that there is the ability to do that but, if Northern Ireland was in the backstop, that could only be implemented in Great Britain.

Dr Fox

Yes.

John Alty

As the Secretary of State said, in the backstop, because we have a common customs arrangement with the EU, the quotas we would have would be saved. If we negotiated an agreement with a country like New Zealand, we would not be able to bring that into force until after we had left the backstop in relation to things like quotas.

Chair

Secretary of State, you mentioned the United States of America there. A famous son or grandson of my Hebridean constituency, President Donald John Trump, said last week, “If you look at the deal, they may not be able to trade with us. That would be a very big negative for the deal.” Was the President indulging in truth or was he indulging in bluster?

Dr Fox

Clearly, the comment was not meant to be taken literally, because we can trade with the United States and we will continue to trade with the United States. It is our single biggest trading partner as a nation.

Chair

The President of the United States was indeed factually wrong, of course, not for the first time.

Dr Fox

The President was implying that you would need to look at the implications of any EU deal in terms of what the UK had to offer any US FTA.

Chair

Was what he was alluding to truth or bluster?

Dr Fox

The fact the US would not be able to trade with the UK—

Chair

We know that is nonsense; we have established that.

Dr Fox

It was factually incorrect.

Chair

Donald Trump often indulges in nonsense; we take that as read.

Dr Fox

I would not take that as read for the President of the United States.

Chair

Are you sure?

Dr Fox

I would think in this case it was factually incorrect.

Chair

I would guide you to YouTube. There is some fantastic stuff from Donald Trump on YouTube.

Dr Fox

I am far too busy.

Chair

But the point is this. Is the possibility of an FTA impacted negatively by the Brexit deal?

Dr Fox

The United States will have to take into account what the UK’s relationship with the EU will be when we come to that trade agreement with the US.

Chair

I take it there was some truth in what Donald Trump said, then.

Matt Western

In terms of the continuity of EU trade agreements, the EU has 40 agreements with something like 68 or 70 countries. When we heard from you back in October 2017—Mr Leslie was referring to this earlier—you were very confident that we would be able to roll over all of those a second after midnight or whatever it was. Where do we stand in terms of having confidence that all 40 of them will absolutely be delivered at that time?

Dr Fox

We do not have any reticence among any of those countries about having that rollover in a no‑deal scenario. Where there is reticence is that some of those countries do not believe there would or could be a no‑deal scenario. They make the assumption that there will be a deal and therefore they need not implement the legal work required to do that. Our advice to them throughout has been, “It makes sense to prepare for no deal, however unlikely you think that may be”. They will be watching our proceedings over the next week and making their assessment in light of that. We are well advanced, particularly on a number of the bigger trade agreements. I am not going to say which ones, because they are all sensitive negotiations for us. But, in terms of the major elements, I am confident that we will have the ability to roll those over in the event of no deal.

Matt Western

I have two supplementaries. Korea and Japan would be among the larger deals.

Dr Fox

They include Japan, Korea and Switzerland.

Matt Western

You are confident we will deliver those.

Dr Fox

As I say, we have had indications from all of those that they want to see continuity. Again, they are making decisions about when they should begin the process, sometimes domestically, of being able to achieve that. That is dependent on a number of national elements. Our advice throughout has been, “Do not leave it too late. Do not leave a lot of work to be done in the last few months. Get it done now”. But we have not had an indication from any of those countries that they do not want there to be continued trade access through those negotiations. As I say, if there is any difficulty on that, it is on timing and the understanding of those Governments about the likelihood or otherwise of no deal.

Matt Western

Mr Hollingbery was in front of us last week, and he seemed to be slightly more cautious about achieving all 40 by 29 March. You are more optimistic.

Dr Fox

It is a question of the balance of expectations. As I said, none of those countries have said they do not want to roll over into a new agreement.

Matt Western

I understand. It is about the actual delivery.

Dr Fox

That is very clear. It is a question of whether countries believe we will have a deal with the European Union or not. I have to say, from their point of view, they get different signals from the UK at different times. My advice is consistent: even if this turns out to be work that was unnecessary, our businesses will not blame us for being over‑prepared for the eventuality. That is far better than being underprepared.

Mr Leslie

Coming back to reality and expectation management, I suppose, you will remember one of your previous junior Trade Ministers, many junior Trade Ministers ago—I think it was Lord Price—told the Committee, or in fact he tweeted it out, “They have all been rolled over. They have all been done. All these deals have been done”. Of course, it turned out they had not been done. Then we were talking about rollover one second after midnight when they would be done. In your answer just now, you did not talk about them as a sort of copy and paste rollover. You talked about them as negotiations, in fact quite sensitive negotiations: Switzerland, Norway, Turkey. That does not sound like a copy and paste rolling-over process. That sounds as though you are having to go back to these countries, that they are asking for different terms, that there is something slightly more than just a “photocopy and insert here” exercise in that rollover.

Dr Fox

I have never ever, ever used the phrase “copy and paste”, because that has never been what we are engaged in. There are some differences, elements on TRQs for example. Again, I make the point that every single one of those countries has expressed its desire to have continuity with the UK. It is a question of how we achieve that continuity and the speed with which we achieve it. My worry is not our ability to deliver on all those trade agreements. It is that time is running out.

Mr Leslie

When you were here in November, when the Chair asked, in a follow-up question, if you wanted to renegotiate parts of them, your answer was no. Now you are saying that that was not quite right. There is some renegotiation taking place.

Dr Fox

There are some minor differences, but they are essentially replications of what we have already. They are all slightly different agreements. We have to take account of those. I do not use the phrase “cut and paste” because it is actually inaccurate to say that.

Mr Leslie

We should think of them as renegotiations.

Dr Fox

We should think of them as replications.

Mr Leslie

There is a difference between replication, which would imply the continuity of the same terms, and renegotiation. I just think it is quite important. We are talking about big countries. What is our EU proportion, 40% to 44% of our trade? We are talking about 12% to 14%, something like that, of our trade. In your economic modelling, by the way, you assumed they would all be there, rolled over, but now we are talking about renegotiation of that 12% of our export trade. It is a slightly different proposition. I just want to be realistic about what we should expect, that we should not all be told, “It is all fine. They are all going to be rolled over one second after midnight”. Let us be realistic that, if there is a renegotiation, it is a process that could take quite a long time.

Dr Fox

No. Countries are very clear about the consequences of not being able to maintain access. Of course, only three of these agreements are more than 2% of total UK trade.

Mr Leslie

Sure, they are cumulative.

Dr Fox

For all of them, access to the UK market is generally greater, by size, than the reciprocal view. Therefore, it is in the interests of all those trading partners to maintain access to what is the world’s fifth biggest economy.

Mr Leslie

If I am a company in—I do not know—financial services, 5% of our financial services export is to Switzerland. It is quite a big chunk of British export activity. They should not expect a replication of the current arrangement because there is a renegotiation happening with Switzerland, right?

Dr Fox

I am not going to comment on where we are with any one of them because they are quite sensitive.

Mr Leslie

I do not want to reopen it, obviously. I totally respect that this is bilateral, but just so we are clear it is not a copy and paste. It is not a rollover. It is a renegotiation between the UK and Switzerland.

Dr Fox

It is a replication of as close as we can get to the current agreement.

Mr Leslie

And it could take some time.

Dr Fox

I would not expect it to take a long time.

Faisal Rashid

You are saying they are rolling over after 29 March. After the transition period, will these negotiations have to change, depending on what deal we get with the European Union, the final deal, the free trade agreement? There will have to be some changes to these 40 agreements.

Dr Fox

If we have an agreement with the European Union, there will be an automatic continuation of these agreements through the implementation period. If we have the withdrawal agreement, these agreements will continue as they are today, without change, to the end of the implementation period.

Chair

Secretary of State, I have three questions for you and then we will go to another area. First, Government economic modelling scenarios published last week provide figures for an impact on GDP of the various Brexit scenarios. I am sure you know they are all negative. The modelling assumed that, in all the scenarios, all EU trade agreements will be transitioned unchanged from exit day. Given your difficulties in rolling over these agreements, is the picture actually worse than that modelling suggests?

Dr Fox

There is a difference between forecasts and scenarios. I am sure I do not need to tell the Committee that. The forecasts look at all the factors and, in light of all the factors in play, determine what the most likely outcome is. Scenario planning isolates a single factor and says that, if everything else stays the same, this is what would happen. Of course, in all these scenarios it does not take into account any mitigation put in place by Government, any fiscal changes or any monetary policy changes that are put in place.

Chair

I am asking specifically about the deals not being rolled over.

Dr Fox

As I said, we expect those agreements to be rolled over. That is still our assumption.

Chair

Let us just scenario plan, or scenario think, for them not being rolled over. How will that impact GDP, positively or negatively?

Dr Fox

It depends on other mitigations. I am afraid we cannot just pluck figures out of the air on scenario planning.

Chair

If they are not going to impact GDP negatively, they do not matter, do they? Because they matter, they must be impacting GDP negatively.

Dr Fox

As I say, we expect them because it would be more disadvantageous for other countries not to have the access to the UK market. That is why other countries want to have them.

Chair

Indeed. Sabine Weyand, the deputy EU Brexit negotiator, reportedly said that South Korea—and the Committee has been to South Korea, and we have spoken at length with your embassy in South Korea—had objections to the rolling over of its EU trade agreement during the post-Brexit transition. How worried are you that South Korea will push for more restrictive rules of origin in the rolled over trade agreement, meaning cars assembled in the UK could be subject to tariffs?

Dr Fox

I am not going to comment on individual countries, for obvious reasons. I have also been in South Korea recently and, again, there is a very strong desire to see replication of the agreement. Again, there is some reticence about whether it is worth making the planning for no deal, because many would assume there that there will be a deal. It is a case that we have to consistently make.

Chair

You have just told us you expect all the deals to be rolled over, yes?

Dr Fox

It is impossible for us to guarantee it, but it is in everybody’s interest to do so. Nobody has said they do not want to do so, but, as I say, there is a political impediment here. That is the approach of some countries to whether they should actually activate the process as domestically required if, in fact, we are going to have a deal with the European Union, and whether they would be wasting time and resources. It is an understandable reticence.

Chair

That is quite a notable difference from what George Hollingbery, your colleague in the Department for International Trade, told our Committee last week. He asked a rhetorical question to himself: “Will we get them all in time? We will not”. He said, “Will we get the majority? I believe we will”. That is a big difference from what you are telling us at the moment. There seems to be a lack of unity and focus from the Department for International Trade when one of you is saying that and you are saying something else.

Dr Fox

I am telling you what the aim of our Department is, and it is in the mutual interest of all those involved, not least some of the smaller trade agreements, which are with developing countries, to maintain access to the UK in that scenario.

Chair

As I said, the Committee was in South Korea. We were in Seoul. We spoke at length to UK diplomats in Seoul, who pointed out a number of the difficulties, not least the Parliament in South Korea, the time it might take to get things through there, the negotiators themselves. Leaving all that to one side, has the Department undertaken any analysis of the ratification process in each signatory country and have you found any red flag issues internally?

Dr Fox

We have.

John Alty

Yes, we have looked at how each country would expect to ratify, and we have taken that into account in the way that we have approached the programme. In some countries, there are different ways of doing it.

Chair

Were any red flag issues found, any big worries?

John Alty

I was just about to say that some countries have emergency ways of operating. There are their normal procedures; then there are things they can do more quickly. At the moment, as the Secretary of State has said, we are at an advanced stage with many of these countries and they are aware of their own procedures and their enthusiasm to maintain continuity.

Chair

Are there red flag issues?

John Alty

As I say, we constantly monitor the processes, and we are in touch with those countries. They often have choices about how they do things so we want to know from them how they are planning to implement things. It is often a question of choice for the country as to the different routes they take.

Chair

Is any country creating a major concern for you?

John Alty

As the Secretary of State said—

Dr Fox

Yes. The answer is yes where countries still believe they do not need to carry out the planning because there will be a deal. My advice still is that it is prudent, whether or not they believe that a deal is likely, to prepare for no deal, because that will ensure that, should it come to pass, there is trade continuity. There are potential other ways of doing that, short of full ratification, but we think the sensible thing to do is, even where countries believe we will have a deal with the European Union, to take the precaution of ensuring they have belt and braces.

Chair

We know there will be trade continuity. The trade will continue. The question is whether the trade will continue on the same preferential, advantageous basis. Are there any countries that have given you red flag issues?

Dr Fox

Where we have concerns with particular countries, we continue to raise them with them, particularly on this point that all countries should prepare. Even if they believe it is an unlikely eventuality, they should prepare for it.

Chair

You have concerns with particular countries and you raised the issues with them.

Faisal Rashid

Business Insider has reported that the DIT plans to use Henry VIII powers to scrap European food standards. What assurances can you give that these powers will not be used to lower our UK food standards?

Dr Fox

My first recommendation to the Committee would be not to take too much notice of Business Insider when it comes to reporting of anything from the DIT. We have made it repeatedly clear that the Government intend to maintain our standards, not only because there is enormous pressure from UK consumers to ensure those standards are met, and we have our domestic legislation to ensure the standards of the food we eat and the substances we drink. I would also make this point: the Barclays survey of global customers suggested that, for example, in China up to 60% of people would choose to pay more for a product because it was made in the United Kingdom. They do that because they regard “made in the UK” as conferring, in itself, levels of standards in the quality of the produce, including food and drink. If the UK were to decide to, for some reason, reduce the levels of quality assurance we give to our own consumers, it would have a knock-on effect in terms of the quality of our exports. It is not simply a domestic concern; it is also a concern in terms of international reputation.

Faisal Rashid

Why was there a need for Henry VIII powers in the Bill?

Dr Fox

The Government have taken a range of powers to ensure that we have continuity. I say this again. I say this in Parliament; I say it outside. There are some who have decided that they want the Government’s policy to be that we would reduce standards because it suits their political agenda to do so. It is not the Government’s policy. In continuing to peddle this line, they are peddling a complete untruth.