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

Oral evidence, 6 March 2019.

Witnesses

Dr Liam Fox MP, Catherine Vaughan and John Alty.

Chair

Good morning. It is a great pleasure to see you here this morning, Secretary of State. Can I ask you first to introduce your team and then we will get going?

Dr Liam Fox

This is John Alty from trade policy, who is becoming a regular performer at the Committee, and Catherine Vaughan, our chief operating officer, from the MoD, who does all our money so brilliantly.

Chair

Very good—I am pleased to hear it.

Dr Liam Fox

No pressure, Catherine.

Chair

Secretary of State, the Prime Minister has said that if the House of Commons rejects the Withdrawal Agreement next week, it will get a vote on whether to extend Article 50. What, in your view, is the most likely outcome of the votes next week, and do you still consider the chances of a no-deal Brexit to be 60:40, as you said in August?

Dr Liam Fox

I might have a better chance of predicting the lottery numbers, Chair, than guessing what the House of Commons will do next week.

Chair

You did seem quite confident in August. There has been previous confidence, of course, the second after the midnight, we will—

Dr Liam Fox

It is dependent of course upon a lot of factors. I hope that the House of Commons will accept the Prime Minister’s deal. We wait to see what the Attorney General does in terms of that and of course there are a number of colleagues who are concerned about the issue of the backstop. That is something that the Attorney is talking about in Brussels at the present time, but clearly, for the sake of continuity, particularly in trade, the best outcome is a deal with the European Union and a Withdrawal Agreement. If that does not happen, of course the House will be asked to vote on whether it wants to leave the European Union without an agreement.

Chair

What is your view on leaving the European Union without an agreement?

Dr Liam Fox

It is not as good as leaving the European Union with an agreement, which is why I will vote for it.

Chair

You said previously it was damaging to the economy. Do you still stand by that?

Dr Liam Fox

Leaving without a deal will clearly add more friction to the economy. I think that is almost self-evident.

Chair

If the deal goes nowhere and the choice is between no deal, revoking Article 50 or extending it, what is your preference of those three?

Dr Liam Fox

I will abide by collective responsibility, Chairman, and I am not going to pre-empt the discussions that we may have in the Government on that.

Chair

Personally, have you given any thought as to which option you will take, because you are a leading member of the Government?

Dr Liam Fox

Indeed, but unlike some of my other colleagues, I prefer to have my conversations in Cabinet rather than in the media.

Chair

So you are keeping no deal on the table?

Dr Liam Fox

As I say, I will make my views known if the deal does not go through. I still will campaign over the next few days to ensure that that deal does go through.

Mr Chris Leslie

Just to be clear, you agree with the Prime Minister about putting a vote on no deal as an option this time next week. She was right to do that.

Dr Liam Fox

If I did not agree with the Prime Minister, I would not be in the Cabinet.

Mr Chris Leslie

If that is the case, what you are saying is that there will be a collective decision of Government on whether to vote for no deal. That is the consequence of your previous answer.

Dr Liam Fox

I imagine it will be a collective decision.

Mr Chris Leslie

Does that mean that you could potentially be voting for no deal this time next week?

Dr Liam Fox

Potentially all things are possible.

Mr Chris Leslie

So yes is the answer to that question.

Dr Liam Fox

No—potentially all things are possible is the answer to that question.

Mr Chris Leslie

We have before us the Secretary of State for International Trade who potentially, in seven days’ time, could be voting for a no-deal Brexit?

Dr Liam Fox

No, you have a Secretary of State who wants the House to vote for a deal, including all the members of this Committee, because he believes that that is the best way to avoid unnecessary friction in our economy.

Mr Chris Leslie

Did you see the comments from the head of the Northern Ireland civil service, David Sterling, in the Financial Times this morning, who warns, “The consequences of material business failure as a result of a ‘no-deal’ exit, combined with changes to everyday life and potential border frictions could well have a profound and long-lasting impact on society”? He went on to say that there are “very limited actions that could be taken to mitigate” that. Doesn’t that give you pause to not, this time next week, vote for no deal?

Dr Liam Fox

That is precisely why I will vote for a deal. All those who want to avoid the consequences of no deal, and yet will vote against the deal, will be bringing those consequences about.

Mr Chris Leslie

Yes, I understand that you want the deal on Tuesday. We are all clear about that, you are going to vote for the deal next Tuesday, but it is possible that next Wednesday, in only seven days’ time, you and the rest of the Government will be voting for a no-deal Brexit. I just want to be absolutely crystal clear. The cold facts of the matter are that that is where you could be.

Dr Liam Fox

We will want to avoid that. I am not going to be drawn on what might or might not happen when the Government’s policy is not fulfilled. The Government will work for that policy. We believe that the agreement that is set out is the best way for us to leave the European Union to fulfil the wish of the electorate at the referendum, but to do so in the most orderly way possible.

Mr Chris Leslie

But you think it could be a responsible thing to do the subsequent day, on the Wednesday, to vote for no deal. It is a choice you are leaving open; it is not irresponsible to do that.

Dr Liam Fox

I think the responsible thing is to vote for a deal. Congratulations to Mr Leslie for being the first independent to get a seat on this Committee.

Mr Chris Leslie

Thank you. It may be my last day.

Dr Liam Fox

I am sure it will not be.

Chair

This Committee is a broad church.

Matt Western

Secretary of State, just to follow up on that, you describe no deal as “survivable”—I think that was the word you used. Industry and major corporate leaders are saying that no deal would be catastrophic and would be existential—that is, it would be seriously damaging to them. I am talking about major names that you will be very familiar with. Are they wrong?

Dr Liam Fox

To me “existential” means that it threatens your existence.

Matt Western

Exactly. That is exactly the meaning of the word used.

Dr Liam Fox

If the argument is that not getting a deal with the European Union would threaten the existence of the UK economy, I think that is hyperbole.

Matt Western

They are talking about their businesses.

Dr Liam Fox

There are issues. If we look at what, for example, the Governor of the Bank of England was saying about how no-deal preparations had been accelerated and were much better than they were before, I think that takes you well out of existential. Would it be a problem and would it be a specific problem for some industries? Yes, it could be. That is why I go back to my point, which I know is boring, but that is why I think that we should vote for a deal. That is why I think all MPs should vote for a deal and why I think MPs who say, with all due respect, “These are the terrible consequences of no deal,” but consistently vote against a deal, need to understand what they may be ushering in.

Matt Western

But the point, just to be very clear, is that companies like Ford are talking about their businesses. They are not talking about the UK economy, because of course that will survive in some form—there will be some residual economy for sure—but they are talking about their existence as a business and they are saying it will be catastrophic for them. That is the point.

Dr Liam Fox

I completely take exception to the view that leaving the European Union without an agreement would leave us with a “residual economy” of some form. This is an economy with record employment, with half the rate of unemployment of the eurozone. This is a country that had a 20% increase in foreign direct investment last year, when continental Europe went down 73%. This is a country where we are seeing our strongest export performance of all time. The idea that leaving with no deal—which I accept is hugely suboptimal compared to getting a deal—would leave a “residual economy” of some kind does not help to encourage rational debate about this issue.

Matt Western

So you are not concerned about the damage to the UK car manufacturing sector.

Dr Liam Fox

I have made it very clear that I think it would be damaging to the UK economy. I think it is better to get a deal. I do not know how often I have to say this: I think a deal is better than a no deal. It is a relatively simple concept.

Chair

The deal of course keeps the UK in the European Union for 21 months. We hear the phrase, “Everybody wants to go to heaven, but nobody wants to die.” Aren’t you the type of Brexiteer who wants Brexit, but you certainly don’t want it this month?

Dr Liam Fox

No, I want us to honour the result of the referendum, which I believe was—

Chair

By staying in the European Union for another 21 months.

Dr Liam Fox

No, to stay in the European Union would not be honouring the referendum. Chairman, if I may finish, we have to leave the European Union because we have been instructed to by the voters of the United Kingdom—the voters that we, as Parliament, gave the right to make that decision. If we are doing that, in my view we have to do that in the best way possible. We can have arguments about what the best way is. Some would argue it is best to have a deal, some would argue that it is best to have no deal, but I doubt if anyone argues that it is democratically defensible to ignore an elected plebiscite. If you can ignore one, Mr Chairman, you can ignore another, which I think might have implications for your party.

Chair

Can you remind us how much the Treasury said a no-deal Brexit would damage the economy by if that happens on 29 March, because this might be helpful to your argument?

Dr Liam Fox

I have argued that we should have a deal.

Chair

Do you know the number?

Dr Liam Fox

I believe we should have a deal because I want us to have the implementation period and the time to adjust our economy to what we—

Chair

Do you know the number that the Treasury said a no-deal Brexit would hurt the economy by?

Dr Liam Fox

There are a whole range.

Chair

Eight per cent. Does that ring a bell?

Dr Liam Fox

They are not predictions. They are scenario planning, which I have explained to this Committee before is not the same thing.

Chair

Does 8% ring a bell?

Dr Liam Fox

They are not predictions, Chairman.

Chair

Your deal then commits the UK to be leaving the customs union and the single market 21 months later, which will damage the economy by 6%. Are you clear on that with people too?

Dr Liam Fox

Again, these are not predictions; these are about scenario planning if nothing else changes in that period, if there is no agreement and if there is no mitigation.

Chair

On 6 January, you said, “I think no deal would damage our economy, I’ve been frank about that”. You are not as frank about it this morning. Why not?

Dr Liam Fox

I have said that I think a no deal—

Chair

Well, what about the numbers?

Dr Liam Fox

I can look at the transcript of what I have just said. I think a no deal would inflict damage on our economy unnecessarily. That is why I think we ought to have a deal.

Chair

Have you any numbers for the damage, or is the damage just off the top of your head? What is the underpinning of your phrase “damage”?

Dr Liam Fox

I think it would create problems in our economy, not least for our exporters.

Chair

Do you have no numbers?

Dr Liam Fox

It would depend on what mitigations were in place. It would also depend what the future economic agreement was with the European Union itself. There are a whole range of issues. As the Treasury made—

Chair

We are looking for a number, not bluster.

Dr Liam Fox

No, as the Treasury made—

Chair

I am sorry, Secretary of State, we are looking for numbers, not bluster.

Dr Liam Fox

I am sorry, but the point is—

Chair

Secretary of State—

Dr Liam Fox

The number cannot be—

Chair

Just give us the numbers.

Dr Liam Fox

You cannot pick a number without looking at a whole range of mitigations.

Mr Ranil Jayawardena

We are very clear that you want a deal—indeed, many of us may want a deal also—but it is also a matter of fact that not a single member of this Committee voted for the deal that was put forward and the signs are that the deal is not being changed. Last week, the Government said that in February Departments reported being on track for just under 85% of no-deal projects. It is clearly very important that the Government completes that work. What percentage of no-deal projects in your Department are on track?

Dr Liam Fox

In terms of the range of issues that we look at—business readiness, trade agreements, trade remedies, GPA—it is a large proportion. I am not sure I could put a figure on that, given that a number of them are very complex, but I think that DIT is well advanced in that. Of course what we hope is that a lot of that preparation was unnecessary for the no-deal scenario itself. Again, on a lot of those issues it is far better for us—for example, on trade continuity—that we get that agreement with the European Union.

Mr Ranil Jayawardena

You have been very clear about that, but let’s probe into what happens in the event of a no deal. On Sunday you said in your interview on the BBC that 52% of our trade is outside the EU and 11% of the 52% comes from the EU’s FTAs, of which 5.5% is dependent on the agreement itself. You were also very coy about the progress that had been made in respect of the most important—if I can put it that bluntly—agreements that this Government is seeking to roll over. Can you assure us though that those top seven will be ready to be rolled over?

Dr Liam Fox

Switzerland, of course, which is by far the largest, has already been rolled over.

Mr Ranil Jayawardena

The top seven.

Dr Liam Fox

Of those, the next agreements would be Canada, the EEA, South Korea and the south African grouping, plus Mozambique. They are all making good progress.

Mr Ranil Jayawardena

So they will be ready?

Dr Liam Fox

The question of course is dependent on those who are on the other side. We are ready. A number of countries are still looking to say, “Should we set out our potential negotiating hand for future FTAs on the chance that there will be an agreement and we do not need to plan for no deal?” As I said at the Committee last time, a number of those agreements, although they are very advanced in terms of negotiation, may come in very late in the day.

Mr Ranil Jayawardena

To be clear though, you are pretty confident, I think it would be fair to say, that the British Government are ready and so we are simply relying on the third country to agree it. In the event that they do not, the figures you state say that it is a very small proportion of our trade that is covered by these agreements that need to be rolled over anyway.

Dr Liam Fox

If I can just make a correction to the number that I used for Andrew Marr, which was 5.4%, it is closer to 3.5%.

Mr Ranil Jayawardena

So it is even smaller?

Dr Liam Fox

A proportion of trade would be done under zero tariffs, so that trade would occur anyway, whether or not those agreements were made. Of the agreements that we have so far, of the 11%, Switzerland is 22%. The other agreements we already have will take us to 25% and, as I explained last time, the top agreements are themselves worth about 75%, so we could get 30 agreements and cover 25% of our trade, or we could get five or six and cover 75%. That clearly is the priority for the Department.

Mr Ranil Jayawardena

Exactly.

Dr Liam Fox

Those bigger ones are at a good stage of advancement. As I say, do not take my word for it—ask John.

John Alty

They are all in very intensive discussions. As the Secretary of State says, it depends on taking two to tango and the attitude of those countries in bringing them in as and when they see that as essential.

Mr Ranil Jayawardena

This is my final question, Chairman. On the 48% of our trade that is with the EU, what work have you been doing and what consideration have you been giving to using Article 24 of GATT as an alternative transitional arrangement on our way to negotiating a free trade agreement? Of course, they have said in respect to the backstop that the ambition is to negotiate a free trade agreement anyway. If the intention is there to take that in good faith, then it will also be true that Article 24 could be applied.

Dr Liam Fox

Of course both sides would have to agree, which I presume would require unanimity of the EU27.

Mr Ranil Jayawardena

No, it only requires the Commission, because it is the prerogative of the Commission to negotiate.

Dr Liam Fox

Indeed, but I would have thought, given the circumstances of a no deal, it would be prudent of the Commission to take cognisance of the democratic wishes of the elected Governments of Europe, but I accept that is another argument entirely. My understanding is that if we were to use Article 24, it would require the agreement of the other side and also at least a framework FTA to be in place, neither of which could be guaranteed.

Mr Ranil Jayawardena

But what work have you done? What consideration have you given? That was the question.

Dr Liam Fox

Of course Europe is not my Department’s responsibility. That is DExEU.

Mr Ranil Jayawardena

What consideration have you given it though?

Dr Liam Fox

We have looked at it, but the conclusion we have come to is that it could not be depended upon as a route because of the two considerations I mentioned.

Chair

You just alluded to Europe not being a very centralised place and it referring to its member states, which runs counter to a lot of the Brexiteer narrative. I thought the Commission would be telling us all what was happening.

Dr Liam Fox

Mr Chairman, one of the reasons I voted to leave was the lack of consultation between the Commission and its member states—the exact debate that I was alluding to.

Chair

But you just alluded to it there.

Matt Western

Secretary of State, I think you would agree that you are off the pace in terms of where you wanted to be or expected to be at this stage with the negotiation of the existing free trade agreements with the EU. How is the ongoing continued uncertainty that we face impacting on your ability to properly engage with the priority new FTA partners you are seeking—that is, the US, Australia and New Zealand?

Dr Liam Fox

It doesn’t, because we cannot begin the negotiations until after we have left the EU.

Matt Western

But you are having conversations.

Dr Liam Fox

We can have limited conversations about potential scoping, but that is as far as we can go. Under our duty of sincere co-operation, that is as far as we can go.

Matt Western

The conversations you have been having, say with the US, have been very limited.

Dr Liam Fox

They have been very broad, because we are not allowed to enter into what could be regarded as negotiations. It is very clear.

Matt Western

I understand that they are not negotiations, but you can sort of set parameters or outline considerations of what you might want to consider. The US has made it absolutely clear where they want to be.

Dr Liam Fox

We will, when we are able, be in a position where we can legally set out what we want in terms of future frameworks.

Matt Western

Just to move on, the Financial Times reported last week that if there is a no-deal Brexit the Government will set tariffs for most industrial products at zero. In that case, why would any country want to grant us concessions in a free trade agreement?

Dr Liam Fox

I certainly would not comment on any potential leak, well informed or otherwise. The Government will set out what they believe to be the correct tariffs, if in fact we get to a no-deal scenario.

Julia Lopez

I just wanted to ask a quick supplementary to Ranil’s question. You suggested it would be DExEU that would need to deal with any Article 24 process. You referred to the idea that we would need to put forward a framework for a future free trade agreement. Is that not something that would come within your Department’s remit, and if so, have you drawn up a future framework for a future FTA that you could simply put on the table on the day after a no-deal exit?

Dr Liam Fox

The relationship with Europe of course is not a simple FTA because it involves a whole other range of areas, including security, which is why it is dealt with as a separate issue and why DExEU has always taken the lead from the time of the setting up of DExEU and DIT.

Julia Lopez

What conversations has your Department had with those other Departments on the trade elements of a future framework?

John Alty

As the Secretary of State said, we are responsible for the trade agreements with the rest of the world, DExEU are responsible for the trade agreement and other agreements with the EU. Obviously we talk to them because what you do in one area has implications for other areas, but the Government has not begun either the negotiations with the rest of the world or the future partnership negotiations with the EU, so those are simply discussions internally at this stage.

Dr Liam Fox

If I may, it is a very pertinent question for what I think the follow-up question would be, which is that the Government will need to create an architecture for the next phase so that there is very close co-ordination with what is discussed in terms of the trading arrangement with Europe, because that will inform and affect the potential trading relationships outside the European Union.

Julia Lopez

So those conversations have not begun?

Dr Liam Fox

Those conversations are taking place about how that architecture would be constructed.

Julia Lopez

When did they begin?

Dr Liam Fox

There have been discussions for some time, but serious discussions about the architecture are under way at present.

Julia Lopez

How confident are you about how rapidly that kind of conversation could be drawn together so the day after we leave the EU without a deal we have a strategy that is coherent, in place and ready to go, to be tabled, if necessary?

Dr Liam Fox

I would say we are making good progress on that, but John might want to comment, as he is involved in some of the detail.

John Alty

Sorry, the only thing I was going to add was that obviously when the Chequers White Paper was published, that reflected a lot of cross-departmental work precisely to set out the position vis-à-vis the EU, taking account of our wider trade policy interests.

Chair

Back to Matt Western. We then need co-operation from Members, because a number of you want to come in with questions. Keep them short and sharp as a courtesy to others.

Matt Western

I just want to come back to the point that I was making about the US and its outlining the sort of requirements that it expects from a future trade agreement with the UK. That included comprehensive market access for US agricultural goods and removing unwanted barriers, such as those related to sanitary and phytosanitary standards, that block the export of US food and agricultural products. It had a lot of coverage in the media over the last few days, which you will be well aware of. How do you respond to that?

Dr Liam Fox

I respond to the fact that these are the same negotiating objectives that they set out for their future trading relationship with the European Union and Japan, with the exception that for the UK it does not deal with IP and it does not deal with trade surplus, which the US feels is not an issue with the UK. It is exactly what we have expected.

Matt Western

But as far as you are concerned, and clearly for the US, agriculture is a major bargaining chip for them. What they want is access to markets in the UK. That will be their priority, and you are okay with that.

Dr Liam Fox

It is what we expect in a negotiation. They are exactly the same negotiating objectives, bar the two that I mentioned, as the US set out in its negotiations with Japan and the EU. It is exactly what we expected to see.

Matt Western

Even if it will damage our agri-food sector, which Secretary of State Gove is very concerned about?

Dr Liam Fox

It is exactly what we expected to see, because it is exactly what the US has done in other trade negotiations.

Chair

You are quite relaxed about agriculture. Are you as relaxed about the NHS?

Dr Liam Fox

I did not make any assessment of what our position would be. I said that is exactly what we would have expected the United States to do.

Chair

Do you expect the NHS to be—

Dr Liam Fox

No, we expect the same issues to come up as have come up in these other negotiations. We will maintain the same position as we took when we were involved, for example, in the EU negotiations with the US, which is that Governments must have a reserved right to determine the regulation of their own public services. That has been a consistent position of the UK.

Mr Nigel Evans

Secretary of State, the American ambassador, on the Today programme this morning, made it absolutely clear that he would expect in any trade deal to float all the boats, and that clearly includes agriculture. He said that this morning, so what is your response to him? You can understand where he is coming from, surely.

Dr Liam Fox

I would find it very odd if an American ambassador to the United Kingdom was not reflecting the entire line of the American Government in terms of the negotiating objectives. It is a negotiation.

Mr Nigel Evans

Do you, rather perversely, think though that if we left without a deal with the European Union, it would be more advantageous for you in any negotiation with the United States of America to do a trade deal with them?

Dr Liam Fox

We have not yet set out our approach to what we want to do. There are a lot of phases in that and we will set out what the UK’s objectives are in due course. I am not sure that it makes much difference.

Faisal Rashid

Just following on from that, Secretary of State, many of my constituents have been in touch to express concerns about the position of the NHS in future trade deals, particularly with the United States. They are worried, for example, that large US private healthcare companies could take over parts of the NHS and be given new powers to sue the Government to demand more NHS contracts. One of the key objectives of American trade negotiators in any future trade deal post Brexit is to secure access for American companies to do business in the NHS. Can you guarantee that the NHS will be excluded from these future trade deals?

Dr Liam Fox

I have said almost literally until I am blue in the face that we will follow the pattern that we have set before, which is that we will insist on reservations such as we had in the Canadian treaty, CETA, that public services regulation will be exempt from the provisions of the treaty.

Faisal Rashid

Would you prevent the NHS from being a bargaining chip?

Dr Liam Fox

I have just said. Frankly, I don’t know how to make it any clearer.

Chair

You are saying yes.

Dr Liam Fox

We would want—we will ensure—that the regulation of public services—

Chair

Can you just say yes?

Dr Liam Fox

—becomes the duty of a sovereign Government.

Chair

That is a yes.

Dr Liam Fox

Thank you, Chairman.

Mr Marcus Fysh

I have a brief set of quick questions. Does it matter what our tariff schedule is? Does it matter what our tariffs are set at?

Dr Liam Fox

Is this in a no-deal scenario?

Mr Marcus Fysh

Yes, in any scenario.

Dr Liam Fox

Yes, it does matter.

Mr Marcus Fysh

When will we be publishing the schedule of tariffs that we would apply should we leave without a Withdrawal Agreement?

Dr Liam Fox

That will be a decision primarily taken—it is of course a Treasury responsibility—when the SIs are laid.

Mr Marcus Fysh

Is it possible that Parliament will be asked to vote next week on not having a Withdrawal Agreement, without knowing the intention of the Government on the conditions of the tariff schedule?

Dr Liam Fox

I think it would be beneficial for us to have that information in front of us, but I am unable to make a decision on behalf of the Government, as that does not fall within my departmental responsibility.

Mr Marcus Fysh

Do you think that the car industry is interested in what its tariff conditions would be in a no-deal scenario?

Dr Liam Fox

I think that any manufacturing industry that was dependent on intermediate goods would want to know what the potential input costs would be and they would also want to know what the potential no-deal implications would be for their potential external-facing tariffs, which might affect their exports.

Mr Marcus Fysh

Do you think that they know more or less about what their tariff position would be than about whether their just-in-time supply chains will function and what the costs of customs administration would be in a no-deal scenario?

Dr Liam Fox

I am not responsible for some of those elements, but clearly in terms of input costs, it would matter to a number of businesses, including the car industry, what they would be. There would be a number of other factors, which potentially could act as mitigants, but—

Mr Marcus Fysh

Have the Government—

Chair

Chris Leslie, you have the floor. Order, order.

Mr Marcus Fysh

Have the Government been communicating the possibility of using the transit system to make sure that clearance doesn’t have to occur at the borders themselves to the car industry, because they are concerned about those borders being shut?

Dr Liam Fox

That is an HMRC issue, but clearly there are a range of those issues that businesses will take into account and would have to have in account if it came to a no-deal scenario.

Mr Chris Leslie

I am just getting the sense we are being stonewalled here, Secretary of State, and almost every answer we have had is, “Oh, wait and see, not sure yet, vote for the deal on Tuesday, cannot tell you anything that is happening after.” There are 560-something hours left to go. I do not know whether you realise it, but holding a gun to the head of MPs like this is not exactly a way to persuade us to trust in your particular strategy. On this question, for instance, of unilateral tariff reduction or setting what those tariffs are going to be, you really need to start telling business now what will happen in that scenario. For example, the Freight Transport Association have expressed their concerns today about what the tariffs will be on goods that are en route at that moment—11 pm on 29 March. We are in a position where those logistics are almost now within sight. You are going to have goods and services moving across. Can you at least give an assurance to those driver—those businesses—that will be in transit what the tariffs are going to be at that particular moment in time?

Dr Liam Fox

Again, while the general decisions are being taken on that, the decision on timing of publication has not yet been reached. Again, that will be a collective decision. If I may go further than the question, my personal preference would be that we would know that information before we took a decision on a no-deal outcome. But Mr Leslie will understand that I am not in a position to be able to guarantee that that will happen, other than having my voice heard in the debate.

Mr Chris Leslie

I just think we are being given the run-around here. It makes me want to halt this whole process and go to a position where we can do this in a way that is safe for those who are potentially now going to be booking and ordering goods. What if goods are driving from Asia through Europe, coming through the Dover Strait? You can’t just give us even any basic data about what those tariff rates are going to be at that particular time?

Dr Liam Fox

The decision to publish will be one of timing.

Sir Mark Hendrick

If I could move on to the Department’s expenditure, your Department’s 2018-19 supplementary estimate shows an increase in its capital budget of over 450% compared to the original estimate and nearly all of this is “digital, data and technology”. Secretary of State, can you tell us what IT systems and software you are investing this money in?

Dr Liam Fox

Of course a great amount of what we have been doing is to upgrade our current systems to be able to deal with the changes potentially of leaving the European Union, so a lot of that has been EU-orientated activity. On what we have been doing through great.gov.uk, for example, and the related programmes that come from that, perhaps Catherine would be the one to give you the level of detail that you need.

Catherine Vaughan

All of the Department’s EU exit funding was allocated through the supplementary estimates process, so everything attributed to the investment we needed to make came at that stage in the Government’s financial allocations. Some of that investment is going on the simple IT kit that our growing staff numbers need, whether it is laptops or phones. We need to make sure that the new Trade Remedies Authority has the right IT infrastructure to operate. That includes things like wi-fi in buildings. Then there are a range of EU exit-related services that we need to make sure could operate on day one, so that will include things like—

Sir Mark Hendrick

Are these the ports?

Catherine Vaughan

The tariff application platform is one of those pieces of digital infrastructure that needs to work alongside HMRC systems to make sure that any tariffs could be properly levied, so yes, part of our expenditure does relate to that.

Sir Mark Hendrick

From a recent report we had, we found that the huge increase in volume on the day after Brexit cannot be handled by the current IT systems. Is that part of what this expenditure is for?

Catherine Vaughan

The responsibilities for handling how goods and tariffs are raised at the border is HMRC’s responsibility. We have a responsibility to make sure that we provide the relevant tariff information into their systems. The NAO recently published a report on border readiness and on this particular system, the current assessment of readiness is an amber/green for the tariff application platform, which DIT has IT responsibility for, and an amber on the processes. There is absolutely more work to be done, but DIT has done a great deal to make sure it is prepared for that scenario.

Sir Mark Hendrick

Are you confident all this will be in place the day after Brexit?

Catherine Vaughan

There are significant interdependencies between what DIT needs to do and HMRC systems, but those systems are currently being tested and there are obviously still conversations being had about when those tariffs might be published and that will affect the ability to test those in advance, but preparations are in good shape from a DIT perspective.

Sir Mark Hendrick

The NAO report also talked about shortages in terms of manpower, not just the technology. Are you looking at those issues as well?

Catherine Vaughan

Those responsibilities do not fall to DIT.

Sir Mark Hendrick

But you are providing tariffs. Presumably you have to have people that can ensure that this information is in there with the HMRC systems.

Catherine Vaughan

In terms of our ability to populate the data on tariffs, yes, we have sufficient capacity to make sure that those tariffs are uploaded correctly.

Dr Liam Fox

On the initial part of Sir Mark’s question about the size of the increase of the budget in relation to our total budget, there are two things I would say. The first is that this is still a growing Department and there is considerable IT cost per employee that is unavoidable when that happens. The second of course is that we are, as a Department, in somewhat of a unique position in that we were created in the middle of a Treasury spending round and so the budget that we began with was, if you like, an estimate of a budget that a new Department would require. I think the fact that there are big revisions to that is not surprising.

Sir Mark Hendrick

On that point, the day-to-day budget of the Department has grown by about 10% per year since it was created and is due to increase by 13% next year. Are you saying that you expect this spending growth to continue?

Dr Liam Fox

We will of course, as we go into the spending round, like other Departments, want to look at what we project our future functions to be and what we think the necessary manpower will be. One of the areas that we will want to look at is not this particular area, but our overseas network and how we think that can be best-placed and what the appropriate size is and what the interactions with FCO and DfID would be for us to be able to maximise the generation of income abroad for the UK.

Sir Mark Hendrick

Last week the press reported that your Department had spent more than £100,000 on a podcast that had only been downloaded 8,000 times, costing the taxpayer around £12.70 per listen. What lessons can you learn from this and do you feel that it was worth it?

Dr Liam Fox

What I can say is that we have identified about 400,000 businesses in the UK that say they could be exporting but are not exporting, so we need to try to get the appropriate messages to them to get them into exporting, because that generates income for the UK. We use a range of media on that: print media, social media, through to podcasts. It is impossible to know at the beginning of any of those what effect they will have, but at the end of each of them, they are subjected to a review to ensure that we get value for money and lessons are constantly learned.

Sir Mark Hendrick

Your intentions are good, but do you feel that that was an effective use of money?

Dr Liam Fox

It depends how many of the businesses who listened to it became exporters. If all the 9,000 who listened became exporters I would say that was a successful project. If none of them did, I would question its value for money, but that will depend on the review we have and the ability we have to get data.

Faisal Rashid

Secretary of State, you have told us that if the Trade Remedies Authority is not legally established at the point of a no-deal Brexit, its powers can be brought in-house as a shadow function within DIT. What impact would this have on trade remedies capability and capacity?

Dr Liam Fox

None.

Faisal Rashid

Nothing at all?

Dr Liam Fox

The same system would be operated. It would just operate inside the Department until such time as the Trade Bill received Royal Assent. We laid down the SIs for that yesterday.

Faisal Rashid

And what secondary legislation would it need?

Dr Liam Fox

The secondary legislation comes under the Customs Act. It simply enables it to operate inside the Department until it is given its status as a non-departmental public body under the Trade Bill. It is a contingency measure only.

Faisal Rashid

There is no secondary legislation that needs to be—

Dr Liam Fox

Other than the ones that we laid yesterday. That will do it. Of course we want to have the Trade Bill given Royal Assent as soon as possible, but in terms of the actual functions of the TRA, they would be the same—the same people operating, the same rules, from the same place, with the same information basis.

Faisal Rashid

No impact on any functionality, capacity or capabilities, okay.

Mr Marcus Fysh

Just to follow on with the trade remedies, I welcome the work that your Department has been doing on that. The contingency planning around whether or not we have the Trade Bill and being able to offer trade remedies in any event is very welcome. It is quite a contrast with the way that it seems the normal tariff schedules are not being outlined in the same way, which I will grant is not your responsibility, but HMRC’s. Why do you think that the Secretary of State for Business said on the radio this morning that the tariff schedule would only be announced once we knew that we were leaving without a deal on 29 March?

Dr Liam Fox

As I say, the timing will be a collective on. I have not been party to any discussions on timing that would lead me to that definite conclusion, but it is always possible that someone else knows more than I do.

Mr Marcus Fysh

Is it not surprising though for someone like him, who is supposed to be looking after the interests of business, to be willing to leave them in the dark over this issue right up to the wire?

Dr Liam Fox

It is a question of timing. As I say, it is a collective decision.

Mr Marcus Fysh

Just coming back to the question about whether any application of such a schedule would interfere with future trade negotiations, could you say a little bit about whether a temporary application of rates, for example, for a year or for two years could in fact encourage potential free trade partners to want to confirm those lower rates in a free trade agreement within such a temporary period?

Dr Liam Fox

It is a very clever attempt to ensnare me in the details of what we might or might not enact, but it is fair to say that future FTA partners would want to know whether any arrangement that was announced was a temporary or a permanent one.

Mr Marcus Fysh

I wonder if you could also say a little bit about whether within such a future framework, when we have our quotas for imports of certain goods without tariffs, opening quota that we would potentially have given to the EU if we had a deal with it to the rest of the world on an erga omnes basis might be an interesting and advantageous thing for us to pursue trade policy-wise.

Dr Liam Fox

It is an interesting subject, which as I mentioned in answer to your earlier question would have to be part of a wider architecture question about what was the balance between the access to the European market and what we were willing to accept in terms of the FEP and what we would want in terms of freedom for trade agreements elsewhere. As I have often said, there is a balance to be struck here and 44% of our exports still go to the European Union. We need to have good access to that very important market for the United Kingdom, but in a way that does not tie our hands to having access to other markets that might be growing more quickly.

Mr Marcus Fysh

Just finally, would you expect the EU to want to preserve its markets for exporting into the UK without tariffs, rather than see those markets go to some other countries without tariffs?

Dr Liam Fox

If in court, I would have said that was leading the witness, but it is undoubtedly true that the UK, as the world’s fifth biggest economy, is a very big market. It is worth just saying, however, that the European Commission does not sell to the British Government. Producers sell to customers and they will look to the most advantageous market conditions.

Chair

Just following on from tariffs, before I move to Nigel Evans, will there be a full consultation on any tariff changes?

Dr Liam Fox

In terms of long-term tariff policy, of course there needs to be.

Chair

If tariffs are changed, other than following the European Union’s tariff schedule, on what basis will tariffs be arrived at? Business would love to know this.

Dr Liam Fox

In the event that we have an agreement with the European Union, there will be plenty of time for us to have a full consultation about what our long-term tariff policy should be. If we leave the European Union on 29 March, for example, with no deal—at the other end of the spectrum—it will be necessary to introduce emergency tariffs.

Chair

You have had two and a half years to get to this point. You are telling me there is no thought of consultation and no work has been done on possible tariffs.

Dr Liam Fox

That is not at all what I said.

Chair

What has happened then? If we are leaving on 29 March with no deal, what is happening with the tariffs? If the work has happened, you can tell us.

Dr Liam Fox

The Government will set out what they believe to be the appropriate tariff policy, taking into account a number of factors. What would be the potential cost-input shock if we had to go to full MFN rates, for example, with the European Union? We would also have to take into account what would happen to business in terms of their exposure to unexpected competition were we to go to total liberalisation. The third element we have to take into account is loss of preferential treatment and preference erosion. Those are things that would have to be balanced.

Chair

This is a glaze over; what is happening with the work underneath? When you are taking things into account, who are you taking things into account with?

Dr Liam Fox

With the discussions we have across Government, with a range of businesses.

Chair

Only across Government, but not across business or industry about tariffs?

Dr Liam Fox

No, I said across Government with business.

Chair

There have been discussions with business about tariffs?

Dr Liam Fox

We understand where our businesses are and there needs to be a range of things that have to be counterbalanced by Government. Business will not have a view on preference erosion, for example, but it will have a view on what cost input would happen in terms of intermediate goods. Therefore the Government overall will have to balance a range of things. A lot of these discussions in any detail, Chairman, as you well understand, are hugely commercially sensitive and market sensitive in terms of decisions the Government may take. To pre-empt them in any detail would be quite dangerous territory.

Chair

I ask because it is important that there is transparency and that the UK goes forward not with the bureaucrats or the clique in Government, but on something as wide as this with full consultation. I ask about this because yesterday’s Financial Times had the regular business meetings being cancelled, which would indicate that the channels with business are not operating as they should.

Dr Liam Fox

No, not at all. In my Department, for example, our ITAs have hundreds of conversations a day with business and will continue to do so. We continue to give the best bespoke advice we can to businesses. What you are referring to was a particular meeting where there were a number of different businesses involved where we had leakage of the advice that was given. We can best operate in an environment where the advice we give is kept confidential—I think everyone accepts that. We will have to find the mechanisms to ensure we can give the most information that will help business, but in a way where the information is kept as confidential as we wish it to be.

Chair

What sort of information was leaked that annoyed you? According to the Financial Times businesses were infuriated by the lack of progress they had seen going on.

Dr Liam Fox

To your point, Chairman, I would say it is immaterial. The fact is that when information that is given on a confidential basis leaks, the nature of the information is less important than the leak. We will want to be assured, especially as we move forward and have to discuss quite sensitive details on future trade policy with business, that we are doing it on a confidential basis. I come from a professional background where we operated on the basis of confidentiality; I would like to think that extends further.

Emma Little Pengelly

In a no-deal situation where some of the tariffs were relatively high in some sectors, is it the case that the Government could look at supporting those businesses by way of payment or additional support that would not directly compensate for the tariffs but would recognise that this was an additional cost to business? This additional support could help those businesses in the short to medium term until the issue was resolved.

Dr Liam Fox

That more than pre-empts what the Government may attempt to do. In theory, the Government have a range of mechanisms to ensure that if there is any disruption to the market—by change in tariffs, change in currency value or by change in the competitive environment—they could diminish that. Those are levers that are open to any Government.

Emma Little Pengelly

Very quickly, obviously I am not asking you to give any detail about this, but are there discussions about looking at this on a sector-by-sector basis to assess which sectors may be more adversely impacted by tariffs and may require some additional or specialist support in the short term?

Dr Liam Fox

I think there are well-known debates in the country about which sectors may be more vulnerable to sudden competition from outside. Some industries take longer to turn around. I know agriculture is very clearly in the mind of those representing seats in Northern Ireland, as in other parts of the country like my own. There are a number of ways in which the Government will be able to mitigate any changes. Further than that, it would be imprudent for me to say.

Chair

I am going to indulge Marcus Fysh because he has promised that it is one question.

Mr Marcus Fysh

I apologise—I need to go to another meeting. Can I encourage you as a member of the Government to think hard about whether it is fair or even appropriate to prioritise the commercial sensitivities of business and secrecy, and I guess the procedural niceties and ambitions of the Government in terms of getting their deal through, over giving Parliament information about what the conditions of no deal would be, when we are potentially being asked to vote on it next week?

Dr Liam Fox

I am always looking to encourage it.

Mr Nigel Evans

It was reported on the radio this morning that Cabinet have now signed off the tariff regime post no deal. Is that correct?

Dr Liam Fox

There has been an agreement. It is always possible that there could be further changes but there has been a basic agreement, yes.

Mr Nigel Evans

There have been no leaks about that—who would have thought?

Dr Liam Fox

I am not sure we would be having this conversation about what was reported on the radio or in the FT had there been no discussions about what was actually said.

Mr Nigel Evans

Normally one reads on Twitter or indeed in newspapers exactly what goes on in Cabinet, so it is incredible.

Dr Liam Fox

There are days when I find it quicker to read the next day’s newspapers than wait for the Cabinet minutes, which is indeed true.

Mr Nigel Evans

Looking at the trade defence measures, there are about 109 that you have looked at and you have decided that 43 would be maintained as part of an independent UK trade policy. Why have you decided you should carry on with those?

Dr Liam Fox

Some of the 109 were not directly applicable to the UK and some did not meet the criteria we set out for the objective passing of the test. We thought the methodology that we set out was a fair and reasonable one and I am very pleased with the reaction we have had, particularly from some of the important sectors of our economy such as steel and ceramics which very much welcomed the way the Government carried out the process, as well as the outcome of the process itself.

Mr Nigel Evans

Can you add a little bit more to that? You have mentioned ceramics and steel. Is it because of the relationship between European Union defence manufacturers that you decided to go down this route?

John Alty

I am just picking up the point about defence manufacturers. These are a range of industries and we look at the impact that was previously found by—

Dr Liam Fox

Defensive measures, not defence industry.

Mr Nigel Evans

I mentioned defence because I have BAE Systems in my patch as well, but there is the generality.

John Alty

Yes, which is what I was picking up. We looked at the measures and where the UK industry was significant and affected, and the measures the EU originally took were important for the UK industry, we had consultations with them and they made their case. Then we assessed it and that was what led to the result the Secretary of State just announced. Therefore it was a range of different sectors; it was not related to defence equipment particularly.

Mr Nigel Evans

You have mentioned ceramics as one of them. Do you therefore think some of the measures you are taking will make it more difficult to do trade deals perhaps with other countries, because of the defensive measures you are taking?

Dr Liam Fox

No, these were trade remedies put in place because we believed there was already a case of unfair trade practice by one or other countries. These are designed to take us back, if you like, to an equilibrium to ensure there is fair trade taking place. We were doing no more and no less than we had previously been doing under the European Union.

Mr Nigel Evans

Of those ones that you decided not to adopt, have you had representation from any businesses within the United Kingdom with deep concerns about the fact you have not given any protection there?

John Alty

Obviously we had a number of representations but I think I am correct in saying we went round this a number of times to make sure that if any business was concerned about the continuity of measures, they had ample opportunity to make those points. As the Secretary of State said, I think generally reaction to the decisions we took has been pretty positive from the businesses.

Mr Nigel Evans

That does not really answer my question. Have you had any representations since to say there is deep concern?

Dr Liam Fox

Yes, we have. One particular case would be Brompton, the electric bikes. Our officials actually visited them yesterday to have discussions on how we could help them. Where companies fail to meet the market threshold of 1%, if they are not more than 1% of the UK market, we think it is unreasonable to apply the trade remedies in those cases. We have to have a threshold somewhere and we think that is a reasonable level.

Chair

Just to clarify, what does that mean for Brompton Cycles?

Dr Liam Fox

That the trade remedy was not applied.

Chair

For them, so they would be left exposed.

Dr Liam Fox

We were discussing with them how we might best be able to help them, for example by increasing export help for them to be able to compete fairly.

Chair

How did they take this information?

Dr Liam Fox

Naturally, anyone who is not covered is disappointed. However, we had set out a very clear methodology.

Chair

I would imagine.

Matt Western

Just on that, Secretary of State, the interview with Will Butler-Adams was very interesting. We have Pashley Cycles in Warwickshire as well, which is a very successful local business, and other businesses coming back into production. When we have growing manufacturing sectors like that it is surprising that we seem to be willing to leave them very exposed to the market. I understand what you have just said but there are real profound concerns in the manufacturing sector that they will be very vulnerable to your negotiations.

Dr Liam Fox

We also have to ensure that we are being WTO compliant and are not providing protections to our businesses that we cannot defend on an international basis.

Matt Western

When we met a month ago there was persistent questioning about where we were up to in terms of the rollover of trade agreements. I think you had a sheet of paper in front of you, I highlighted the colours on it and you said, “Sadly I am colour blind so I will be unaware of the document in front of me and what it actually means in terms of the success of where we are at for the status of those agreements.” It subsequently became clear that we were in very poor shape, or you were in very poor shape, in terms of the progress you were making, which was leaked to The Sun newspaper. It is great they actually covered it and gave it the sort of air that it needed. Was the fact it was then briefed to businesses in the afternoon that same day not discourteous to this Committee and maybe to me?

Dr Liam Fox

I do not think what was leaked was an accurate representation. What I set out was that, and I will repeat it, the trade we do under our free trade agreements as a member of the European Union is about 11% of our trade. Of that proportion about 3.5% was zero tariffed and would occur anyway. Of the remaining 7.5% to 8% we already have above 25% of that signed. We have a number of other agreements ready and we have a number of mitigation measures and contingency measures in place should some of those other countries not be ready to do so. No, I think in terms of continuity of trade we are well placed. The one thing that, of course, is holding that back is the lack of certainty among trading partners about whether we will have a deal with the European Union, in which case they do not need to have those continuity agreements.

Matt Western

To be fair, Secretary of State, my question was about whether you were being discourteous about sharing that information in the afternoon with businesses when you were not prepared to share it in this forum.

Dr Liam Fox

As I said, some of the information that was leaked was not particularly accurate.

Matt Western

To move on, at that briefing I understand that your officials explained it was not going to be possible for the agreements with Turkey and Japan, among others, to be completed before March 2019. Can you explain how many agreements fall under that category and how much UK trade will be affected if there is a no-deal Brexit?

Dr Liam Fox

I set out in the WMS which countries would be affected, and in the statement I made to the House of Commons when I answered those questions in the House of Commons. In the case of Turkey, of course Turkey is in a partial customs union with the European Union that sets out the dangers of being in a customs union where you have trade policy applied to you without having a voice on the issue. Apart from the elements with Turkey where it is not part of the partial customs union, on services and agriculture for example, there would be a limit to what we could do in terms of agreement. John might want to comment on where we are with those elements of it. Other than that we have to wait to see where we are with the European Union. In terms of Japan, I do not think it has much impact on our trade because all of our trade with Japan for the last 30-odd years or more has been under WTO terms. The Japan EPA only came into existence on 1 February so all our historic trade with Japan has been on the basis of WTO trade. In fact, some of the liberalisation that would come in under the Japan EPA would not come into effect until January 2020 and some of the tariff liberalisation is six or seven years later than that. The question for the UK is whether it would be beneficial and whether, in the event of a no deal—I repeat, yet again, that we do not want to see that, because in the event of a deal we get rollover of the EPA—our businesses would notice that they were doing business on exactly the same basis that they had been doing it for the last 30 years. Probably not. Would there be advantages in doing a bilateral agreement with Japan that went beyond the EPA? Probably.

John Alty

To clarify the 3.5% that you referred to earlier, the 3.5% is the preferences of that 11%, so it is 3.5% of our goods trade that is covered by preferences.

Matt Western

Thank you for that. Finally, if there is a delay to Article 50 through the votes next week, how will that affect your ability to roll over the agreements and how long would such a delay need to be in order to ensure proper rollover of all of them?

Dr Liam Fox

If there was, as has been indicated, a potentially short and one-off delay to Article 50, it would certainly make it very clear to those who are negotiating with us what the cliff edge might be in that case and provide some incentive to get their agreements done. If we end up, which I think would be the most detrimental outcome to the UK, with an Article 50 extension that in one way or another results in our not leaving the European Union, then that is a different case all together.

Matt Western

Given your experience over the last two years, you must have an idea of how long it would take?

Dr Liam Fox

Of course it is a question of the incentive that our trading partners have to come to that agreement. Some of our trading partners will say, “Why should we invest and to some extent show our hand of what would be our negotiating position for a future FTA in this agreement when we do not have to?” Therefore, they are waiting again—and not unreasonably, I have to say—to see whether Parliament is going to vote for a deal or not.

Matt Western

Lord Price was wrong?

Dr Liam Fox

I would not criticise Lord Price.

Chair

Picking up the point there, you said the leak that was in The Sun at the beginning of February was inaccurate?

Dr Liam Fox

Some of the countries mentioned are much further and much better progressed than that seemed to suggest.

Chair

What was leaked was a Department for International Trade slide on the state of play. Are Department for International Trade slides and the information there inaccurate?

Dr Liam Fox

They are snapshots; it depends on what day. The point I was just making to Mr Western is that these things move on, and on any one day you will get a slightly different picture from the day before or the day after.

Chair

The shelf-life of a Department for International Trade communication is about a day?

Dr Liam Fox

You have to understand that this is a real-time exercise that we are engaged in. Things will change from day to day and we make progress from day to day with these agreements, which is not at all unreasonable.

Chair

In a real-time happening, you mentioned that Switzerland was a country where there was rollover and that had been secured. However, it is not full transition, is it? There are gaps.

Dr Liam Fox

Of course there is not a single trade agreement that Switzerland has with the European Union. These are a number of agreements that have come into existence over the years. The point was to put as many of these together into a single document as possible to provide as much certainty as possible. John was involved with that, so he might want comment on any specifics.

Chair

Can you tell us what the gaps are, especially in the event of a no deal?

John Alty

I do not have all the details in my head just now but we set it out in the report. We put alongside the text of the agreement the explanations of where there are any differences with the EU arrangements.

Chair

It is not quite what the headline said though, is it?

John Alty

It is a substantial replication of the agreement.

Chair

It is substantial; it is not full.

Dr Liam Fox

Of course it is what we said the process would be: we would publish the text, we would publish the explanatory memorandum and we would set out where there were differences. We have published those and they are for the House to scrutinise.

Chair

We were told a month ago it was full. It was not full; it was substantial.

Dr Liam Fox

We set them out in detail. All Members of Parliament had an opportunity to look at them.

Chair

Do you think the use of the word “full” was wrong a month ago? Would “substantial” have been a better word, as Mr Alty has used this morning?

Dr Liam Fox

We have always said it was a technical replication of agreements in as far as we could do them, as far as it was possible to be able to do that.

Chair

We know there are gaps now.

Julia Lopez

You referenced Turkey a little earlier in response to Mr Western. You said it is a partial customs union and it does not have a voice on trade policy. As you know, one of my concerns about the backstop is the customs arrangements we would be in and the political declaration referencing that customs arrangement as the blueprint for the future relationship. In that scenario would we have a voice, for instance, on trade policy when it comes to agricultural tariffs? Would we be able to have conversations with other trade partners? As you know, Turkey has not been permitted to talk to the UK during this whole withdrawal process. How would you envisage that we would be able to have a voice on our trade policy if we were in a future customs relationship or partial customs union with the EU?

Dr Liam Fox

In a customs union we would be subjected to common external tariffs. We would be allowed to negotiate and sign, but not implement, any free trade agreements that applied to the point at which we left the European Union—that, of course, being the point which is the estimate of what the risk is of the backstop ever coming into existence.

Julia Lopez

Given that there is a risk of that, as has been discussed ad nauseam, does that make you concerned about the potential for our having a future independent trade policy?