Welcome to today’s session of the Business and Trade Committee. We are launching our new inquiry programme on export-led growth, on what I think we will all agree is quite a momentous day in the history of UK trade policy. Thank you very much indeed to Douglas Alexander and Nick Thomas-Symonds for making time to join us—I know that you have a hectic schedule at the moment—and welcome, too, to Amanda and Niall. Thank you so much for joining us and for all the work done ahead of this session. Broadly speaking, because this is the beginning of our inquiry on export-led growth, there will be a mixture of questions that take us through some of the strategic principles that guide your work, before we move into a discussion about our key markets: Europe, the United States and China. Gregor Poynton will open the questioning.

Trade contributes to growth. If you look at the latest figures, which we received only this week, there is no doubt that we face significant challenges in delivering improved levels of growth. However, this Government came into office recognising the scale of that challenge, and the latest figures of 0.1% that were published just a few days ago evidence the scale of the challenge. In terms of the work that we have under way in relation to the trade strategy, we are pretty clear that if you trade more, not only do you raise productivity, which is a key contributor to growth, but also it can significantly enhance your GDP. I would not want at this stage to set a limit on the contribution that trade can make to the ambition that has been set by the Government. However, I can assure you that that work is under way, as surely as this Committee is beginning its inquiry. We have not yet published the strategy; we will be publishing it later in the spring.

I would be hesitant of committing to a specific target for the contribution for the reasons that I just outlined, but I can assure you that we will be data heavy and delusion light in the trade strategy that we deliver. If you look at what we inherited, one of the anomalies of post-Brexit Britain is that in the last eight years we have not had a trade strategy published. If you look at the two principal free trade agreements that are most often talked about, the FTAs with New Zealand and with Australia, they make a very marginal contribution to an uplift in GDP going forward. If you look at the work that was under way in relation to the US FTA, that would have contributed less than 1% to GDP growth according to the previous Government’s numbers. It is difficult to differentiate individual instruments in relation to an overall target, but that gives you a sense of the scale that we are looking at and what we have inherited. Essentially, when we think about that trade strategy, we are seeking both to reset our relationship with Europe, which is work that is being led by Nick and by the Cabinet Office—about 46% of our trade is undertaken with the European Union—and at the same time to seize commercial opportunities in other parts of the world.

There are various measures that you could use for trade. If you look at trade intensity numbers, while we are at the higher end of the G7, the truth is that we have been coming down in relative terms, in terms of trade intensity. If you look at the volume of trade that we have undertaken with the European Union, my recollection is we are down about 5% on 2018, probably the most accurate year to make that judgment pre-pandemic. There is no doubt that we face significant challenges. But I think it was Sun Tzu, the Chinese military strategist, who said “tactics without strategy is simply the noise before defeat”. If you do not have a strategy, it is pretty difficult to be clear about where you are trying to deliver in terms of the economic approach of the Government. What is very obvious as we look back over the last eight years is that there was no defined strategy. We have really struggled to be clear as to the economic rationale of some of the decisions that were taken.

Presumably, the strategic objectives are to grow trade and the contribution of trade to GDP growth. The Prime Minister has gone out with some pretty bold targets to become the fastest growing economy in the G7. Have you been asked by the Chancellor to set out a strategy that enhances the contribution of trade to achieving that target? You said you did not set a ceiling on growth. We would like to know if you are going to set a floor.

Without betraying confidences, when I was appointed as Minister responsible for trade policy, the Prime Minister in that initial conversation emphasised the centrality of trade to the growth mission. That is recognised at the highest level of Government. We are working very closely with the Treasury on the growth mission board, which is one of the five missions. Given the centrality of the growth mission to the work of the Government, you can rest assured that Department for Business and Trade, and trade in particular, is well up that agenda.

It is a pleasure to appear before your Committee and I thank Liam for the invitation to come along and accompany Douglas today. I think the reset is central to what we are trying to do. If I could talk a little bit about the approach that we are taking to the reset, first, the very fact that I am speaking to you as a Minister in the Cabinet Office is significant because there was a machinery of Government change last July in which the Prime Minister moved this function to the Cabinet Office, at the very centre of Government. I am very pleased that, in the last couple of weeks, we have appointed Michael Ellam, a really talented individual who will bring significant weight, experience and expertise to the role of second permanent secretary at the Cabinet Office, focusing on the EU-UK reset. Michael will lead that secretariat, I will have ministerial responsibility for it, and it will report directly to the Prime Minister. This is an indication of its centrality, not only to assisting with the work that Douglas is doing on trade, but to achieving the Government’s first mission on growth, where it is absolutely critical.

This is probably a good moment for you to give us a sense of the big picture when it comes to the reset. In the past, you have set out safety, security and prosperity as the three pillars of that reset. Do all three of those pillars overlap with the mission that Mr Alexander has to help deliver?

I describe them as pillars, but there is, of course, an interrelationship between all of them. I would describe the first as the security pillar, and at one level that is about geostrategy and foreign policy co-operation. We have already seen some progress on this; the Foreign Secretary has met the High Representative—in fact, both High Representatives, because Kaja Kallas has just come in as the new High Representative. That is about structured co-operation. When we were an EU member state we would have had regular co-operation and meetings between politicians and at the official level. The UK and the EU have, of course, been working together since we left the European Union, but the idea here is to make it more structured and have that regular dialogue at the politician and official level, dealing with the very real challenges we face in the 2020s. The second pillar is about the safety of citizens and law enforcement co-operation. One example is our relationship with Europol, where we want to be sharing data in real time. It is the case, I’m afraid, that whether it is drugs crime, money laundering, counter-terrorism or the violent crime of people smuggling, time matters in the very early stages of the investigations, so that relationship is critical going forward. In particular, we are looking to work closely not just with the European Union, which is really important, but with France and the Calais group on people smuggling. There has also been the creation of the Border Security Command, which will work very closely with our continental neighbours. The third pillar of the reset is about trade, but it is very important not to see this pillar in isolation. A stable political environment and a stable relationship between the UK and the EU is obviously conducive to investment. We should not just see it as a pillar that is in isolation. We want to look at the examples that are set out in our manifesto, which we have a democratic mandate to seek to deliver. That includes the sanitary and phytosanitary agreement, the negotiation and securing of which is a huge priority for the Government. It also includes the mutual recognition of professional qualifications for our services—we have huge, very significant service exports, so that is really important for developing our trade in services—and our cultural sector, making it easier for our touring artists to tour around EU member states. Those pillars are where I see the reset going forward. I should add that a really important moment in this will be the first post-Brexit UK-EU summit, which will take place in the first part of next year. It does not have a precise date yet, but it will be in—

2026?

—the first part of this year.

Before the summer?

In the first half of this year; before the end of June.

Very good. I want to bring in Matt Western before I come back to you.

On the point made by Mr Alexander on trade intensity, in which he talked about metric, the data from pre-pandemic to 2023 show that the UK had a decline of 1.7% in trade intensity, whereas the G7 had growth of 1.7%. First, do you have any explanation as to why that is, and secondly, what happened in 2024? Did that trend continue as a disparity with the G7?

I will make a couple of points. The first relates to the point I was making on UK exports to the EU. They are now 8% lower than they were in 2018, which, as I said, is the most recent stable, pre-Brexit, pre-covid year for comparison. UK imports from the EU are 2% lower. To answer your question on trade intensity, one thing we seem to be discovering is that Brexit has not only inhibited cross-channel trade to the European Union, but risked making the UK a more closed economy. Research from Aston University, for example, shows that a significant number of medium and small-sized businesses literally gave up on the challenge of exporting because they felt they were buried under a weight of bureaucracy. Historically, the stepping-off point for exports has been exporting in the first instance to Europe, so how do we account for the loss of trade intensity? Broadly, post Brexit, services trade has overperformed against expectations and goods trade has significantly underperformed. My own explanation of that is that some services trade was not as affected by the new barriers at the border—and indeed beyond the border—in relation to the European Union. Also, my sense is that there was a post-covid manufacturing boom globally where the UK effectively missed out. We were judged to be more challenging to do business with in terms of integrated supply chains, which helped to contribute to the loss of goods exporting that we have seen. Services trade has helped to keep the UK numbers higher than they would otherwise have been. That augurs well for the UK in the sense that we are on the cusp of a significant services boom globally, but it also challenges us to look at the trade instruments we are using to make sure that, for example, we have a big focus on digital trade, digitally enhanced trade and all the work involved in that. In basic terms, as I am sure a number of the MPs represented in the room will recognise from their own constituencies, we seem to have lost a cohort of medium-sized and small businesses from the business of exporting. One of the challenges of the trade strategy will be being clear about how we can support them in their endeavour to export more in the future.

One of the features of the post-covid and post-Brexit UK economy has been a heavy reliance on FDI. I am not averse to—indeed, I actively welcome, within the appropriate boundaries of economic security—significant levels of inward investment into the United Kingdom. On the other hand, it is no great reveal or surprise that as the Trade Policy Minister, I want to see us increasing our level of exports. If you look at the kinds of border checks that we now face—customs checks, SPS checks, of which Nick was speaking—and the fact that we do not have mutual recognition of professional qualifications, it is an indisputable fact that there are new barriers to trade that appeared as a consequence of the decision that was taken back in 2016.

I just want to nail this. No doubt you read Robert Lighthizer’s recent book on trade. That basically sets out an argument that ultimately, an unlevel playing field is what accounts for the great size of the American deficit in trade. Most economists would say that some macroeconomic imbalances are more responsible. What accounts for the trade deficit in the UK? Is it macroeconomic conditions, an unlevel playing field or a bit of both? Is there an analysis that leads you to similar conclusions?

The relationship between those two is extremely complicated. Robert Lighthizer has a very particular point of view, which I expect will be highly influential with the incoming Trump Administration. I would not want to take a reductionist view that suggests it is simply barriers to trade that have caused the loss of exports and trade deficits we have seen. Take Robert Lighthizer as an example. He is actively advocating for new tariffs being imposed in the service of addressing trade deficits that are being encountered. In that sense, we are talking actively to the Treasury in terms of the macroeconomic factors. We are clearly in a different position than the economy that Robert Lighthizer focuses on because we do not have the reserve currency. There are many consequences from being a smaller economy, or a medium-sized economy, even one within the G7, as Lighthizer suggests.

We are not necessarily jumping to a Lighthizer philosophy of trade in this new Government.

No. With all due respect to our friends and colleagues in the US, we see the UK national interest as being the lodestar by which we are navigating our trade policy.

Let me just finish flushing through this question of numbers then. You are not going to set a ceiling on the ambitions when it comes to the trade contribution to becoming the fastest growing economy in the G7. It does not sound as though you are setting a floor either, and it does not sound like you are in a position to set out the kind of metrics that you will use to judge—

Conceptually, with respect, I disagree with the suggestion that we can disaggregate the trade strategy, for example, from the industrial strategy. We believe in open markets and an enabling state, from a skills policy to planning reform—what Robert Lighthizer would call “permitting”. We believe that you need a whole number of supply side instruments that you are ready to activate in the service of the economic growth mission of the Government. I can assure you that we are taking a coherent and co-ordinated way, as evidenced by the growth mission board, of seeking to deploy those tools effectively. Do I want to go down a rabbit hole of saying 1%, 2%, 0.5%, or 0.1% has to be attributed to trade policy, as distinct from skills policy or from the other instruments we are talking about? I can assure you that, when the Prime Minister talks about pulling the growth lever, all of us are more significant than any of us. In that sense, we are working in a co-ordinated way, both within DBT and within the Treasury, and within the Department for Education and all of the other relevant Government Ministries.

So we want to grow the contribution of trade to GDP growth, but we are not quite sure of the best way to measure that impact?

It is not that we are not quite sure. There is a question as to whether, analytically and politically, it is primarily what the Government should be focused on, as distinct from hitting the target. That, as Nick said, was part of the contract that we set with the British people. In that sense, there is a contribution to be made from trade policy, skills policy, and industrial policy. But do I want to spend my officials’ time—months of their lives—in the coming five years analysing the relative contribution of every aspect of industrial policy compared with every aspect of trade policy?

The question is more about how you would judge your success and how, indeed, Parliament should judge your success.

Ultimately, I think Parliament should judge our success not as a separate policy from the overall growth mission of the Government, but as making a meaningful contribution thereto. The Prime Minister could not have been clearer that he sees the trade strategy as being in the service of the growth mission of the Government.

The Secretary of State said that he would not be renewing the target of the last Government, which was the “Race to a Trillion” in exports. When we asked him about metrics, I think the only metric that he stipulated was possibly something about the fraction of small businesses that were exporting. Do you foresee any other metrics by which the trade strategy will be judged to either succeed or fail?

Respectfully, one of the challenges is that you are scrutinising a strategy that has not yet been published.

Which is why I ask whether you envisage the metrics—

We will be in a position to answer your question when we publish the trade strategy. Perhaps you are asking whether we are looking carefully at the relative success of past instruments. For example, how effective was the past trade strategy? What can we learn? There is a basic truth, for example, which is that our view is that geography continues to matter. Three of our five largest trading partners are still members of the European Union, along with the United States and China, making up the top five trading partners. There are certain statistical truths that underpin the analytical work that we are now undertaking for the trade strategy. Am I in a position, months before the publication of the trade strategy, to share with you the individual metrics of a yet unwritten trade strategy? Respectfully, no.

The Committee will supply you with advice, in that case.

I would be delighted; in fact, the consultation is open, so we are all ears.

Good afternoon. The Secretary of State was kind enough to provide the Committee a sneak preview of what he wants from a trade strategy in November. Would you be willing to do the same?

Pray tell, when you say a sneak preview, what did he share with you? I would be happy to try and match my boss.

I think it was just the concepts and the ideas and what he what he thinks the Committee should be focused on.

I would be very happy to do so. In terms of the work—and it is ongoing work that we have under way at the moment—the starting point is data, and not post-imperial delusions. If you try to make sense of the previous Government’s actions in relation to trade, I am not sure they provide the right foundation. So, how are we approaching this strategy? First, we want to have a clear-eyed analysis of the character of the UK economy in 2025, looking ahead for the next decade. For example, it is an 81% services-based economy. Naturally and appropriately, there will be significant focus in trade strategy on services. We are effectively still a services superpower in the United Kingdom; we export more services than any country other than the United States. One of the challenges of drafting a trade strategy is that you draft a trade strategy for the United Kingdom economy—not for, let us say, a better French or better German economy. Initially, we start by saying, “What is the character of the economy that we inherit, and how can trade meaningfully contribute to growth within that economy?” Secondly, we need a clear-eyed assessment of the world into which we are seeking to project United Kingdom exports and secure imports. Frankly, many of the assumptions that underpinned the previous Government’s approach to trade, and more broadly to Brexit, candidly no longer apply. The Chair very accurately defined today as a momentous day in terms of trade policy. If you think of three of the key underpinning assumptions of the Brexiteers, number one was that we were on the cusp of the next phase of a hyper-globalisation. The second was that we would have a functioning dispute resolution mechanism and a strong multilateral trading system. The third, and perhaps most critical, was that the major trading blocs—the United States, Europe and China—were actively in the business of taking barriers down rather than putting barriers up. As well as a clear-eyed assessment of the character of the UK economy, we are taking a very clear-eyed view of the geopolitical and geoeconomic context in which the United Kingdom is showing up and seeking to give expression to its trade strategy. I think it is now more than 20 years ago that Edward Luttwak talked about geoeconomics—the sense that, if you like, trade policy is but one instrument in the service of geopolitical objectives. There is absolutely no doubt that we are witnessing a very challenging and changing trading environment in which we are seeking to frame a policy for the next five to 10 years. Beyond that, we want to consider the effectiveness of some of the instruments that have been commonly used in trade strategy in the past. There has been a big emphasis, under our predecessors, on the use of free trade agreements. The past Government actually had a target of 80% coverage in terms of, if you like, saying that we have not lost anything as a consequence of leaving the European Union because we have this widespread coverage. The vast majority of the deals that were done were effectively rollover deals from the European Union. We are considering very carefully what the significant benefits that can be gained from additional free trade agreements are. If you look at the average levels of tariffs in the industrial world at the moment, it is about 2% to 3%. Back in the 1970s, that was somewhere between 10% and 15%. In that sense, what is the utility of FTAs compared with, for example, the digital trade agreement that was done with Singapore? The previous Government did one also, to their credit, with Ukraine. We are looking at what the tools are in the toolkit beyond conventional FTAs, because we want a quality rather than a quantity approach. You mentioned one target the previous Government hailed, which Johnny, as the Secretary of State, has disavowed. Similarly, we do not have an equivalent ambition of 80% coverage. Instead, we are seeing where FTAs can make a meaningful contribution to GDP growth and what other instruments we can use. As well as the trade policy element of the strategy, we will be looking at the trade promotion elements of the strategy. I am spending a lot of time talking to businesses at the moment—I am sure it is the same for Nick. I go into the room expecting to talk about trade policy, and I come out having talked about the border. In that sense, what are the barriers to trade at the border? Are there practical steps that can be taken, notwithstanding the constraints under which we are operating, to de-frictionalise trade? Can we be more effective, for example, in terms of export promotion, trade facilitation, and that cluster of issues? At the same time, we have other commitments I am happy to talk about in terms of our approach to trade scrutiny, labour rights and environmental issues. It will be a comprehensive document, but I hope that gives, as the Secretary of State did back in November, you some flavour of how we are thinking about, “What is a document that has not yet been written?”

That is very helpful, but one of the things it underlines is the strategic shift now in trade philosophy from a Government that is prosecuting free trade agreements to, as far as I can see, a much heavier emphasis on trade diplomacy and a wider variety of instruments.

You have written very eloquently, Mr Chairman, about the importance of economic statecraft. First, we need the clarity to recognise that the context in which we are developing a trade strategy, frankly, is changing. The alignment of economic security and prosperity converging is a very different approach to the market fundamentalism that underpinned a lot of the thinking about the kind of world that we would be looking at 10 years after Brexit. In that sense, the external environment has changed. At the same time, we continue to be committed to open markets, but I think we have a more realistic view of the relative contribution of FTAs compared with other kinds of challenges. When you talk to business, very often it is barriers behind the border—rather than at the border—that are the biggest inhibitors to trade these days.

You spoke about some of the most important geographical markets—China, the US and the EU—that you are looking at. Within that, what do you think are the most important product markets?

If you were to take a broad sectoral view, I would first think of the UK economy in terms of services—it is an 81% services economy. If you dig into those numbers, we have done extraordinarily well in what the ONS called “other business services”. When we have thought of services historically, we have tended to think about financial services, but if you think about management consultancy or architecture, for example, there is quite a wide basket in which the UK continues to be exceptionally good. In that sense, of course we want to build on that success. At the same time, as will be evident in the identified sectors of the industrial strategy, which is shaping and informing the work that I am leading on the trade strategy, we have significant capabilities in advanced manufacturing that we will want to continue to promote and advance in the trade strategy. If you were looking for a guide to how the Government are thinking more broadly on sectors, I can assure you that we are very closely aligned between the trade strategy and the industrial strategy. Back at the time of the international investment summit, we published a Green Paper that set out those eight key priorities of the industrial strategy.

I want to pick up on the discussion that you were having about free trade agreements and the slight shift away from them. We have just completed one of the many roundtable discussions and tours, and when we were having the discussion about trade, what was coming up a lot was the lack of clarity about why particular free trade agreements were negotiated—they could not see an underpinning logic to it. I would also welcome your thoughts on helping not only businesses to understand the logic behind the new trajectory but, more widely than that, our communities and people to understand how trade can benefit them and why it is important, so that we can bring it down to a level that is a little less ethereal and that people can engage with.

That is a very reasonable question. I have said publicly elsewhere that I really have no interest in Instagram diplomacy as the measure of our effectiveness as a trade Department—you can read into that what you like about our predecessors under the previous Government. The fact is that I well understand why businesses are like, “Well, what’s this got to do with us?” That being said, we will advance and seek free trade agreements. We are doing so at the moment with the GCC, and we are about to take forward the work that the Prime Minister announced with India, where we can deliver practical benefits to UK business. My view would be: first, you need to be more precise and clear about where you concentrate your efforts with FTAs. Secondly, where you deliver FTAs, you need to be as serious about utilisation as you are about securing the agreement. Again, my sense is that there is more that we could—and should—be doing as a Government to make it easy to utilise agreements that are put in place. In that sense, that is about getting alongside business, talking to business and understanding its concerns. As part of our broader work on the trade strategy, I met the five main business representative organisations just a couple of weeks ago in the Department of Business and Trade. We had a really rich, generative conversation about how you encourage those businesses, which have basically decided not to bother exporting, to get back into that business. Broadly, one of the other truths I sense after Brexit is that the very large British businesses had the capacity and regulatory capability to manage it. They were often exporting internationally anyway. What we have lost are the smaller business, and often the medium-sized businesses, that thought, “I just can’t manage this.” They have just been worried about paperwork and bureaucracy. Who are the most credible voices to persuade them? We in the Department for Business and Trade have a responsibility in terms of online roadshows and work that we are doing. The British Chambers of Commerce were making a compelling case that the single biggest help you can give to that business is to find another business to buddy with it, and to say, “Don’t worry, we managed it, and it is not that hard—let us help you.” With the trade strategy, one of the things I am very interested in is whether we can, in the manner that Germany does, harness the chambers of commerce network more effectively than has been the case in recent years in the UK.

You mentioned Germany, but Korea does a similar thing, as I understand it. Is that something you are looking to replicate and perhaps present in the trade strategy?

In the trade strategy, we are actively looking—as evidenced by that conversation with the BCC and other business organisations, it is a very live conversation, and we are receiving many thoughts and very good advice from business—at what we can do to better support British businesses in that trade facilitation effort.

If you would not mind, it would be very helpful to the Committee for you to publish your current view of the utilisation of free trade agreements. Is that something that you could explore for us?

I am sure we will have numbers, but let me check what the position is.

We will not have many numbers yet, particularly for Australia and New Zealand. The agreement entered into force only a year or so ago, so there is limited data yet on the utilisation of agreements, other than the continuity agreements that the Minister referred to earlier.

We will exchange—

The previous Government refused to publish impact assessments in relation to FTAs.[1] Let me see what I can do.

That is why we would like them.

To move on, many will talk about the beauty and benefits of pure free trade agreements, but they impact more on, say, workers and the environment. The new Government have not updated their negotiating mandates in terms of labour standards for any free trade agreement currently under way. Why not?

In terms of our approach, nothing that we are proposing in terms of our FTAs undermines the sovereign right of the UK to set employment standards and labour rights. In that sense, that is the settled position of the UK Government. The conversations that are under way at the moment clearly vary depending on which negotiations are under way at the present time. We have taken a very careful view of the mandates that were written under previous Governments. We have accepted some of them and decided to get back into the room; we are continuing to look at others. In that sense, it is on a case-by-case basis, rather than a blanket overview.

I am sure that you will have looked at the USMCA and its rapid response mechanism. We have taken some very concerning evidence from certain companies about how they source some of their products and the materials that go into those products. Are the UK Government looking to adopt the rapid response mechanism?

I have been in regular dialogue with Katherine Tai, the outgoing USTR, whose whole focus has been on worker-centric trade policy. The provision that you describe was a particular feature of the renegotiated NAFTA, which is now the USMCA. Notwithstanding that provision, my sense is that, if you look at the orders that appeared overnight in the White House, that particular trade agreement is going to be reviewed and looked at again. But we constantly look at all agreements that are being published around the world, to consider whether there are appropriate learnings that we can adopt and utilise to the benefit of the United Kingdom, UK employees and UK businesses.

It is striking that we were promised that we could take back control over our borders and so on, but that currently the US has a much stronger mechanism for stopping the import of products that could be the result of modern slavery. Isn’t that something we should be pressing on?

First, I do not find it that anomalous that “Take back control”, which was the slogan of Dominic Cummings and that generation of campaigners, stands in pretty stark contrast to a Democrat Administration that consciously and purposively sought to recognise the importance of organised labour. Voting has consequence, and if you vote for progressive politicians who are committed to upholding reasonable standards at work, then you end up with the kind of approaches we have seen in some parts of the world. If, on the other hand, you have a promise to take back control that is then not delivered in the subsequent years, you end up with some of the political choices we are facing today. In that sense, I never saw “Take back control” as an inherently progressive offer. I did see the commitment to a worker-centred trade policy of Katherine Tai, the USTR, and Joe Biden as being ideologically consistent with their approach to governing.

We could dump stuff at the border, couldn’t we? We could stop stuff coming in under such a mechanism.

In terms of dumping stuff at the border—

If you take the Uyghur forced labour Act or the provisions of the USMCA, you have much tougher safeguards at the US border for preventing goods that have been made with forced labour entering the United States. We have heard evidence from companies that has given us some cause for concern about goods entering the country and the nature of the goods and the way they are produced. What is the UK Government strategy for ensuring that we are not importing stuff that is made with forced labour?

First, that is a very diplomatic characterisation of the recent evidence session I observed, along with many others.

We are nothing if not diplomatic on this Committee, Mr Alexander.

Absolutely. The approach we have taken historically as the UK has been actor-agnostic. That is in sharp contrast to the Uyghur legislation that was passed by the US Congress. This is an area that we are looking at and continue to keep under review. But in that sense, legislation that commanded widespread support was the Modern Slavery Act at the time of its passage. I answered a UQ in the Chamber a couple of months back, just before Christmas, and was struck by the fact that there were questions being asked not only by people on my own side of the Chamber but by Conservatives, who I had anticipated would be advocates and supporters of the Modern Slavery Act, saying that actually further action was required. It is a matter that we are looking at, but it is fair to recognise that, first, we have historically taken an actor-agnostic approach and, secondly, we have taken seriously our responsibilities in relation to the WTO in a way that has not always been the legislative approach of some other countries.

When do you expect to see a strategic summit between the Prime Minister and President von der Leyen? What are the outputs you would like to see from such a summit?

To go back to my earlier answer to the Chair, the commitment is that the summit will be in the first half of this year, and I am confident that that will be the case. It is also really important to emphasise the interaction that has already taken place. There was a phone call between the Prime Minister and the EU Commission President on 5 July, just after the general election. They met again on 25 September at UNGA in New York. I accompanied the Prime Minister to meet the President of the Commission in Brussels on 2 October. Once again, I was with the Prime Minister on 7 November at the European Political Community. There has already been a number of meetings. On 3 February there will be the opportunity for the Prime Minister to address the informal European Council that is being held. While the UK-EU summit is clearly going to be a very significant moment, we should not underestimate the dialogue that has already taken place. To the second part of your question, my interlocutor at the European Union is Maroš Šefčovič, who I knew when I was shadowing this role in Opposition. I obviously would have worked with any commissioner who was allocated that portfolio, but Maroš continuing in that portfolio is very positive, given the relationship I built with him in Opposition. Both the President of the Commission and the Prime Minister have been clear to both of us that they want to see what they say are “deliverables” at the summit. That is what we will look to provide. I will be delighted once a date is set to make it public.

Great. You have talked a bit about the scoping conversations you have had; can you describe any of the potential barriers that you have identified in those conversations?

They have been conversations about positives; they were constructive conversations, rather than conversations about barriers. It is well known that our democratic mandate in the manifesto is based on not returning to the single market, not going back to freedom of movement and not going back to the customs union, so it is within that framework that the discussions will take place. What I have found in my conversations—as you can imagine, I have been to Brussels a number of times since the election—is a real sense that this is now the world of the mid-2020s. There is a real mutual benefit in the UK and the EU working together in the three areas that I have broadly spoken about—security, safety and indeed prosperity—and there is a real sense that now is not the time to go back to the debates and battles of the past but to look forward at the shared challenges and how we deal with them together.

Lastly, I want to ask whether or not there is going to be a road map and, if there is going to be one, whether you can give further information about what that might look like when working with the EU on trying to advance some of these conversations?

I am not proposing to publish a road map. Our position is set out in our manifesto; we have a very firm democratic mandate. There are examples in that manifesto of things that we want to secure or to deliver. In the trade space, as I indicated, a sanitary and phytosanitary agreement is a really important objective for us. It will be about looking at our manifesto, for which we have got a firm democratic mandate, to try to deliver.

We want to push on whether that is going to be enough, because obviously overnight we have had statements from President Trump, who has now threatened tariffs both on America’s neighbours and on Europe—significant tariffs on Europe. He said: “They don’t take our cars, they don’t take our farm product, they don’t take almost anything. And yet, we take their cars…So we’ll figure that out with either tariffs or they have to buy our oil.” Mr Alexander, how badly would American tariffs hurt the British economy?

As a matter of principle, we are not supportive of additional trade barriers going up and inhibiting trade, but frankly it is a little too early to judge effectively what this incoming Administration’s approach is going to be. We see significant possibilities and opportunities in the relationship with the United States. We are old allies, but we are open to new ways of working together. At the moment, we have a strong and balanced trading relationship. There is not a significant trade deficit, which is significant given that much of the commentary in terms of the incoming President’s thinking on tariffs has been related to the existence of trade deficits. But as to exactly how we deepen that partnership, or what defensive measures could be taken in other circumstances, frankly I think that, less than a day after the President’s inauguration, there are just too many unknowns. Let me try and explain why there are those—

I just want to tease out one piece of the puzzle. I have seen at least four or five economic studies that show a range of impacts on the UK economy of American tariffs. What is your sense of how bad a 25% US tariff on UK goods could be?

There are no circumstances, reasonably, Mr Chairman, in which you could expect us to be publishing UK Government numbers that would compromise a negotiation strategy.

No, but give us a sense of how bad it would be.

As I say, you are asking me to be several steps down a road that I am simply not prepared to journey with you less than 24 hours after the President has come into office.

There would be a negative impact of American tariffs on the British economy.

It is a matter of record that we do not support tariffs, and they could potentially have damaging consequences on a number of economies, but we are certainly not going to publish British numbers ahead of what could be important and necessary negotiations—we hope on the upside, rather than in relation to the downside.

How will you dissuade President Trump from imposing tariffs on the UK?

First of all, I think the challenge is to be honest and clear-eyed in terms of what we know and what we do not know at this juncture. Scott Bessent, in his Senate confirmation hearing, identified three aims for tariff policy: to tackle unfair trade policy; to raise revenues for the US Government; and to strike deals with other countries. The truth is that—as David Petraeus, my former colleague at the Kennedy School, said last week—the one exception to the unknowns that we are dealing with, less than 24 hours into this presidency, is the President’s approach to unpredictability in policymaking. We have to recognise that part of the uncertainty reflects a range of motivations that we have heard. Is the objective of tariff policy really to secure leverage for non-economic objectives? Is it to reindustrialise the American heartland? Is it to raise revenues? You will have seen overnight the reference to the external revenue service; is it a security play in relation to concerns about technology leakage and other issues? Frankly, we do not know the answers to those questions. Dependent on what emerges between what candidate Trump has said and what President Trump does, we stand ready to engage in the conversations in terms of where there are opportunities to deepen an existing economic relationship and to clearly and confidently articulate the UK national interest in any conversations that take place.

So at this stage, you do not know quite how best to dissuade President Trump from imposing tariffs, because we are not quite sure what the policy objective of the new Administration is.

If you look at the “America First” trade policy published by the White House this morning—in UK time—it seems that even within the White House the motivation is to do some more work to build the rationale, to reduce the risks of legal challenge in relation to the tariff policy and, it would seem, to secure the confirmation of a number of key officials in relation to trade policy. We are not looking at day one tariffs, but the direction of travel has been pretty clearly set by the “America First” trade policy. We are listening hard and reading all the documents that become available. Exactly in the manner that Nick described in relation to Europe, the Prime Minister, to his great credit, has already actively engaged: he had dinner in September in New York, and he had a phone call after the President’s election. In that sense, we have senior officials who are seeking to engage with the Administration. There is of course constitutional propriety that you have one Administration at a time. We are, within DBT and other parts of Government, constrained in what conversations can happen. But I can assure you that that engagement is under way.

What is your confidence level today that you can dissuade President Trump from imposing tariffs on the UK?

I am not in a position to give you a considered judgment on that. What I can tell you is that we see these significant opportunities to deepen and broaden what is already a strong economic relationship, building on the strong foundation of our security relationship with the United States. Our lodestar, if you like, is the statement of the Prime Minister on 2 December that we do not believe you need to choose between our allies and friends in Europe and our allies and friends on the other side of the Atlantic, and we stand ready to engage in those conversations.

It sounds like, as we sit here today, there is an unclear impact that will possibly hit the UK economy. We are unclear about how best to dissuade the American Administration, and we are not clear how confident we are that we can stop that impact arriving.

I disagree with every part of your question, Chair. That is partly and simply because, as I was trying delicately to suggest—

You can be indelicate.

The fact that I am not sharing our negotiating strategy with this Committee less than 24 hours after the inauguration of the President does not mean that there is not a strategy, nor does it mean that no analytical work has been undertaken. I could not be more clear that I do not think that it would be in the UK’s national interest to share with you our assessment of the impact of trade instrument actions that could be taken by the United States or by other actors ahead of those negotiations being conducted. First, there is analytical work that, as a matter of course, we undertake as a Government, but not all of that, necessarily and appropriately, should be shared on what you yourself described as a momentous day in trade policy. Secondly, it would not seem wise or sensible to share our negotiation strategy. If you are going into a negotiation, I am not sure that it is entirely wise to put numbers about your level of confidence either. Respectfully, I disagree with each part of your question.

That’s okay. My summary is that there is a secret plan that you cannot tell us and on which you cannot give us a confidence level for whether you will succeed. One of the conclusions that many people on the Committee might therefore draw is that, amid that anxiety-inducing uncertainty, it might make more sense to draw far closer to our neighbours across the channel in Europe. Mr Maynard will explore a couple of those points.

Let me try to assuage your anxiety. I can assure you that, far from the work not being done, the work is being done. As I said, it seems that we respectfully disagree on whether that should be shared with a Select Committee prior to it being shared with an incoming Administration, but I am very clear that our responsibility is to act in the national interest and to be clear-eyed in terms of what conversations we should have and in what sequence. I would not want you to feel any undue anxiety that that work is not being undertaken.

I am more interested in your level of confidence that you will succeed, but I understand that you cannot necessarily share that with us today.

When you are in an election campaign, would you say to your opponents, “I think there is a 40% chance that I will be re-elected,” or “There is a 90% chance”? Would that be helpful information to share with your opponents, and might that affect how they conduct themselves? It is a rather prosaic example but—

Normally we tell the media that we are fully confident that we are going to win, but I have not heard you, today, express similar confidence that you will succeed.

There is a due sense of humility, caution and care in the words that I am choosing to use.

One conclusion however, is that that might suggest a better, or safer, strategy is to draw closer to Europe.

Mr Alexander and Ms Brooks, I have a very nuts-and-bolts question. Your teams are working hard on all these free trade agreements; we are grateful for that, and it is great for the country. Do you agree that it is in our national interest to publish data to show the results of those free trade agreements? If we have a free trade agreement come in, what impact does it then have on growth and data? I do not believe that is published on a regular basis at the moment but are you willing to commit to doing so, and would you agree that it would be good news?

I will ask Amanda to speak about the historical position of the Government, and then I will talk a little about the trade strategy.

The position of the previous Government was that monitoring and evaluation reports would be published two years after agreements had come into force. As I said in my answer when the Chair probed on this subject earlier, we have not reached that point for the Australia and New Zealand trade agreements or for CPTPP, because those agreements have not yet been in place for two years, and the data collection, obviously, is delayed. I totally hear the case you are making—

I get that, but just take every free trade agreement from the last 10 years and publish once a year. It is not specific to ANZ or anywhere else: it is just the principle. Do we agree that we want to see how we are doing with our free trade agreements, and that we will publish data on an ongoing basis, every 12 months, for all of them? We could look back 10 years and, if there was a free trade agreement from nine years ago, say, “Actually, we are doing great with that free trade agreement. Well done.” I am looking for the principle here.

I was setting out the principle of the previous Government.

We were not signing FTAs nine years ago, so in that sense the point about the imminence of the FTAs that were published under the last Government is reasonable. I assure the Committee that we are giving thought to the scrutiny that should be undertaken, but we are back in a position where your Chair has invited me to offer a view on negotiations that have not begun, and you are asking me to be scrutinised on a trade strategy that has not been written.

I am not taking part in that conversation; I am taking part in this one. Do you agree that it is a good principle for us to publish data year in, year out? If we sign up to free trade agreements, we ought to track how we do against them. It is not a trap—it is just nuts and bolts. Is that a good thing to do? You can just say, “We’ll be thinking about it.” That is fine, but to me it seems like common sense.

The ONS publish a battery of statistics about the operation of the British economy. In discussing what the contribution of trade should be to that, we are in relatively new waters. You are saying there should be bespoke figures for individual FTAs, rather than for us as part of the trading bloc that was the European Union. I am saying that we, as an incoming Government, are giving thought to what our strategy should be. Part of that is deciding the appropriate mechanism by which, reasonably and rightly, the conduct of the Government in relation to trade could be scrutinised.

I look forward to hearing how those thoughts develop and hearing more of them. That is that. We hear a lot about the EU reset. As per our briefing pack, the UK wants a veterinary agreement, wants professional qualifications to be mutually recognised, and wants to make it easier for our touring artists—it was in the Labour manifesto. The EU wants access to fishing, to make sure that Windsor gets implemented well, to therefore have a closer trading relationship, and to see what happens with the data adequacy drop-off in June. Those are three different groups—we are talking past each other. I was rather impressed by something when we met the Swiss ambassador last week. He said, “We published a common understanding about what we wanted from our negotiations. We stuck it in the public domain—that is what we are after from an agreement with the Europeans.” The Europeans publish however many pages about what they want from their agreements with us. We are like, “We don’t need to do that. We’re more sophisticated. We know better. We’re excellent diplomats. We’re not going to set timetables or goals. We’re just going to play it loose.” Is that really the right way to do it? We do not have a great track record of success in terms of our trade over the last 10 years, so what do you think?

Just one correction in the question, first of all. You said the UK wants a veterinary agreement, but it is actually an SPS agreement, which is a sanitary and phytosanitary agreement, so it is broader than what you suggest. I would suggest that what we have is a manifesto that contains the elements that I described in the earlier answer to the Chair, and has a democratic mandate from the British people, which is a very strong position to take into the negotiations. I would also emphasise again the importance of the constructive discussions that I have had with Maroš Šefčovič, that the Prime Minister has had with the President of the Commission, and the Prime Minister and I meeting with the European Parliament President as well. Those are constructive negotiations, which are proceeding, and I say, will obviously now go into a different phase as we approach the run-up to the summit. The other point I would make, though—

Can I just check—have negotiations started on this, or will the bulk of the negotiations happen after the summit?

Of course we have had discussions, as you would expect, Chair. However, it was never going to be the case that we would get into a more formal steep negotiation into the summit until the European Commission was formally in place, which, as you know, was at the start of December.

Thank you; I interrupted you; sorry.

That is fine. I will just pick up on a really important point that you have made about the Windsor framework, because the Windsor framework taskforce is also within the Cabinet Office, as part of the European Union relations secretariat. I work extremely closely, across Government, with the DEFRA Secretary, and the Northern Ireland Secretary in particular on the Windsor framework. For this Government, the stability of the Executive in Northern Ireland is hugely important, as well as managing the Windsor framework in the context of Northern Ireland and in the context of businesses that supply Northern Ireland, but also because the Windsor framework was negotiated by the previous Government, but in opposition we voted in the Lobby for it. It is really important, as a Government, that when the United Kingdom is signing on the dotted line, that actually means something, because it did damage our international reputation when we had a predecessor Government who were, first, ambiguous to say the least about our membership of the European convention on human rights, and secondly were signing agreements and then trying to denounce them not too shortly afterwards. We have the Windsor framework, which has been signed on behalf of the United Kingdom, and implementing that is a very important principle.

May I just add, in relation to Mr Maynard’s question—

I am so sorry, madam. We have a vote shortly, so I am desperate to squeeze as much juice out of the Minister as possible, and we just need to get into an important question on dynamic alignment—

I have two questions, and will fire them both. You mentioned delusions twice, Mr Alexander, and we are talking about the fastest growth in the G7 and the race to a trillion, but goods exports are 11% below 2019, so they are going in the opposite direction. Trade intensity is down 1.7%. The rest of the G7’s trade intensity is up. We have trade from Northern Ireland into GB up 12.4%, as per December, and we have Northern Ireland trade into the Republic of Ireland up 17.6%—they are inside the customs union. Why do we not just do the obvious things and put the rest of our country inside the customs union, like we did with Northern Ireland?

On the customs union we have, again, a mandate for a reset with the European Union. In our manifesto, the contract we were elected on was that we will not rejoin the single market or the customs union, or go back to freedom of movement. That is the democratic mandate we have, and that is the framework that the negotiations now take place in. I will add one point, which is in terms of rejoining the customs union. We also have agreements that have been signed by the previous Government. We have the FTAs with Australia and New Zealand, the free trade agreements that Douglas and colleagues at the DBT are negotiating, the GCC and the deal with India. Also, we have acceded to the CPTPP. They are things that the previous Government have done, and that you appreciate we have inherited.

Okay. The product regulation Bill. In my first PMQs, I asked about the idea that if it is in our national interest to align, we align, but if it is not in our national interest, we diverge. I got a very unclear answer back. I have looked at your published materials and it is always on a case-by-case basis, but there is no structure—how does anyone know whether they make the case or do not make the case, or is that up to someone in the DBT to decide?

It is the Secretary of State—

Okay, but how will that work in reality? A load of manufacturers out there are going up the wall, kicking people out of work and having a terrible time. They need to know where they stand.

On the Product Regulation and Metrology Bill—which is a live Bill, I would just caution, in the House of Lords at the moment—the guiding principle is the UK’s national interest. It is a matter for the Secretary of State for Business and Trade, in each and every case, to take a decision in the national interest—

Nappies. Are nappies in the national interest?

That is a matter for the Secretary of State for Business and Trade. The other thing I would caution as well is—

But do you not get my point? How does this work?

Having an up-to-date system of product regulation is unequivocally in the national interest of the United Kingdom; yes. The Bill does not commit us to future policy. A lot of the policy conversation around the Bill has been: does it anticipate a particular approach? It is a framework that allows Governments in the future to update those regulations in a way that they so choose. Respectfully, we are now in a position where we have been questioned on a trade strategy that has not been written, negotiations that have not been started, and a piece of legislation that has not been passed—it is in the House of Lords and has not yet come to the Commons. If there are questions about the Product Regulation and Metrology Bill, there will be opportunities in the remaining stages in the Lords and in the Commons to debate all those questions.

But there is no visibility on what “case-by-case basis” means, apart from “in the national interest”. Can you please explain what you take to be the national interest when it is something innocuous and un-security-related? Does that mean that you will, or you will not, apply? I just do not understand.

A very basic example: we need to update product regulation to keep e-bikes safe. E-bikes are growing in popularity in the United Kingdom, but we do not have the appropriate statutory framework to be able to update product safety regulations in relation to e-bikes. That seems to me a pretty clear example of what you have asked for.

What might be underlying the question is that it is quite difficult to forecast where there will be dynamic alignment or checks on inadvertent dealignment. I think that both the Secretary of State for Business and the Chancellor have talked about the virtues of dynamic alignment and rule-taking in “established industries”, so is that official policy? What is an established industry? How can business be a bit clearer about where regulatory alignment will persist and where it may differ?

I would like to make a distinction. First, there is the Product Regulation and Metrology Bill and its very specific provision about the Secretary of State’s power, to which Douglas referred. Then there is an entirely separate question, which in fact, Chair, I think you have written about, on a sanitary and phytosanitary agreement. I think we need a bespoke sanitary and phytosanitary agreement for the UK. We often talk about the New Zealand or Swiss model—which I think you have written about—but how do we come to a sanitary and phytosanitary agreement that reduces the certifications, the checks and the prohibitions? Those are the things we want to enhance our growth, in particular in agriculture and agrifoods: goods trade with the European Union is important. Obviously, where we get to with that will be subject to the negotiations. I think there is that, so I would pull apart the question slightly, in the sense that we are referring to different contexts.

At this stage, can you describe a strategy or a set of principles on the degree to which we will stay aligned with European regulations, so it is not just a walk in the dark for the business community?

We certainly would not want a walk in the dark. We believe in high standards, whether that is in employment, in agricultural products or in our brilliant farming sector. We believe in high standards. We do not believe in a race to the bottom. We believe in what I think Katherine Tai referred to as “a race to the top”. That is the principle with which we start. Obviously, in a negotiation—the hard edge of which, as I say, we are going to enter into—we will get further down the track and see where precisely we will find the compromises and trade-offs. That is the case with any negotiations; I was involved in many negotiations over the years, before entering politics, when I was a barrister and a mediator. We will obviously get to the stage where we get to the hard edge of the trade-offs and the compromises, as you would in any trade negotiation, but we start from a position of wanting to promote the highest of standards.

Mr Maynard—maybe?

No, that’s it. Just, I do not know what a manufacturer would do with that information.

Congratulations on your first Prime Minister’s question.

Well, I wish I had got a better answer.

You talked about the EU, and relations seem to be broadly very good there, but of course, at the end of the day the EU is not a club; it is a protectionist bloc, really, if we get right down to it. Could there be a quid pro quo here? We have heard that the EU is quite keen on a youth experience scheme as well. But there are alarming suggestions that the EU is casting envious eyes at our fishing sector. Is the fishing sector likely to be a bargaining chip as we attempt this reset with the EU? That may be one for you, Nick.

Look, we have set out in the manifesto examples of things that are objectives and what we want to secure. You can read it. You can see what they are—they are all pretty open. Obviously, what is not within my gift is what the EU ultimately chooses to bring to the table. I see lots of rumours in different newspapers about what it is likely to bring to the table, but I think we have to actually see precisely what its position is. Specifically, our position is obviously to stand up for our fishers, most definitely. It is a hugely important industry, particularly in particular parts of the United Kingdom. I would just observe, though, in relation to fish, that the existing review period will end in 2026. As the trade and co-operation agreement stands at the moment, it would move into some sort of annual negotiations. I do think that having something that is more stable would be in our interests, going forward. But, as I say, I do not want to get back into trying to predict what the EU’s priorities are or put words in its mouth. I am actually pushing forward on our UK priorities. I cannot control what it chooses to bring to the table.

So they have not raised fishing with you, then? That has not been part of these negotiations?

We haven’t got to what I would call the steep bit of the negotiation. That goes into the summit. I think we will be—I hope—setting a date for the summit, and we will then see, as it were, the hard edge of the negotiation as to where we get to.

Okay. You talked about the sanitary and phytosanitary agreement, which could require dynamic alignment. Now, dynamic alignment sounds marvellous, but it is kind of civil-service-speak for us being rule takers rather than rule makers, I think. Is there a danger there that we are drifting very close? Rather than resetting relations with the EU, we seem to be sailing very close to undoing the Brexit. You referred to it earlier on as the “Brexit decision”. Of course, it was a decision of the British people—the British people voted for Brexit—so it wasn’t a Government decision; it was a democratically taken decision. So, that “dynamic alignment” does sound kind of alarming to me. Have you got a view on that, Mr Alexander?

I would defer to Nick, who is leading our negotiations, but he has already said to you in this Committee session that we are looking at a bespoke agreement. In that sense, there is of course a lot of commentary—including some very informed commentary written by the Chair of this Committee and others—as to the exact character of what the SPS agreement would be, but you have the principal actor here, on the UK side, who has been very clear that we are looking at a bespoke agreement.

Yes, and to go back to the question I answered earlier on the customs union, we were elected on a manifesto that includes “no return to the single market, the customs union, or freedom of movement”, and that is the framework in which the negotiation takes place.

We have already seen the EU push back a little bit on this, haven’t we? The Swiss and New Zealand models are slightly different, and the New Zealand model actually talks about equivalence, which is—

One is equivalence, the other is alignment. They are different models.

Yes. Correct me if I’m wrong, but my understanding is that the EU were not keen on the New Zealand model, which gave us equivalence; they were keener on the Swiss model, which goes back to more dynamic alignment. Am I right in saying that?

No. In terms of the two agreements that you are talking about, they are both for very particular circumstances. There is obviously a particular geographic distance between New Zealand and the EU. Switzerland is also not an EU member state, but none the less has a very different type of relationship with the EU from the one that we now have. Look, it’s a matter for the sovereign countries of Switzerland and New Zealand what particular arrangements they want to negotiate with the European Union. For us—

I appreciate that, but you must be looking at those arrangements. I think that for the Swiss deal, if there is a disagreement over something, ultimately the “backstop” is consultation with the Court of Justice of the European Union for interpretation. It would be quite a big step for a country like ours, which is outwith the EU, to go back into the orbit of that, surely.

I don’t know what you mean by “back into”, because obviously we have the Windsor framework arrangements at the moment; those exist in relation to Northern Ireland and do already have a role for the European Court of Justice in interpretation of EU law. So I don’t think that is a new concept in our arrangements at the moment. Again, I think we are getting into what a bespoke set of arrangements that is suitable for us looks like, and my point in response is that it needs to be a bespoke SPS agreement that is suitable for the United Kingdom and in our interests. I am sure that as people around this table—I think one of you mentioned you had spoken to the Swiss ambassador recently. I speak to the Swiss ambassador myself, obviously, and indeed friends from New Zealand. They have particular arrangements that suit them. Yes, of course, they are examples of SPS agreements that exist. You are absolutely right about that.

A Windsor framework-like mechanism that involves some kind of reference back to, for advice, the ECJ is not necessarily off the table when designing an SPS?

I would be hesitant to get into specific design points at this stage. I am just observing that obviously, with the Windsor framework, the previous Government negotiated particular arrangements, which we supported from opposition. Again, what the Windsor framework represented was a very specific set of arrangements for very specific circumstances. And again, we would be looking for something bespoke that suits the United Kingdom.

It sounds like, pragmatically, you are keeping your options well open.

I certainly hope I am always a pragmatist in these situations.

It seems that the Europeans are very keen on a youth mobility scheme; it seems to come up in lots of conversations. There is Erasmus+. They seem to view a scheme as almost a precondition to some sort of deal. What is the risk to us of having, say, a short-term visa scheme?

I have not had any preconditions put to me. On the talks, we have not got, as I have said to the Chair and John, up into that steep part of the negotiation yet, so I have not had preconditions and things like that put to me.

They are very keen on it. It would be one of their priorities.

It is in their position document, for example.

Well, we will see where we get to in terms of what they actually mean by it. I will obviously pursue the UK national interest. I will pursue the objectives and the examples that we have a democratic mandate for—that are in the manifesto. What I cannot ultimately say at this stage is, first, what precisely the nature of the proposal the EU comes forward with will be; and, secondly, what importance they attach to different elements. You would not expect either side to know that at this stage. Of course I will listen, as any respectful negotiator would, to priorities that the other side brings to the table, but we cannot see yet, first, precisely what it is, and secondly, what importance they put on it.

Mr Alexander, earlier you spoke about architects in relation to valuable services, but how do you propose to overcome the EU’s veto last year over a draft deal for architects? To follow on from that, what are your priority sectors for achieving mutual recognition of professional qualifications?

We are keen to pursue MRPQ. One of the great frustrations of the TCA has been the fact that not a single British professional has been able to secure recognition of their professional qualifications using that agreement. That being said, arrangements between regulatory bodies within the European Union and within the United Kingdom continue to be in place—for example, to ensure the ability of European doctors to be requalified into practice here within the health service. But you are right to recognise that that is one of the areas that we are keen to pursue, in terms of the discussions that Nick is leading.

Do you have key priority sectors within that?

Clearly, the regulated professions are at the top of the list because, for the reasons that I described previously, “other business services”—that ONS categorisation that recognises non-regulated professions—is growing very strongly. We have not seen equivalent progress in relation to recognition of professional qualifications. In that sense, we are talking to the regulatory bodies at the moment, but it is a process both of understanding which bodies need the most help, given that some of them have bilateral relationships in place, and engaging in time with the European Union.

We have seen on social media that British performers are frustrated when touring in Europe. What solutions do you have in mind?

There are a number of creative ways that we can do that, but it is a real priority for us in the negotiation, as I have made clear. It is really disappointing when you look at the number of tours. We have a brilliant, vibrant cultural sector and it is a real source of soft power for us, but what is necessary for a tour—not just the singer but everything that goes with it—is extraordinarily difficult to do under the arrangements that we currently have. Whether it is a specific carve-out or a slight change to the rules, I am open to being creative as to how we solve this issue, but it really is in our interests to have our artists able to tour Europe, and indeed, vice versa—for a great European artist to be able to come here. That is to our mutual benefit.

There are also some very powerful advocates for the creative industries in the UK. Harriet Harman’s daughter is a cellist, and Ms Harman did not miss the opportunity to tell the incoming Trade Policy Minister that her daughter would benefit from exactly the kind of progress that Nick is anticipating. In that sense, in all seriousness, the creative industries are hugely important to us. It is an issue that we frequently hear about as individual constituency MPs, and it is one of the areas that we are focused on.

We know that SMEs do fantastic work in the UK. What initiatives or grants can you provide for our SMEs in the UK to trade in the EU?

That is an issue we are looking at in relation to the export strategy, which is a critical part of the work of the Department, and I am working very closely with my colleague Gareth Thomas, who is the Exports Minister. One issue we are wrestling with at the moment is—this is analogous to the point that I made about chambers of commerce—what actually makes the biggest difference to the businesses and, with respect, not to the Department. Are online products actually an appropriate, geographically broad way to reach a large number of businesses? Is it better to do traditional trade promotion activities—to take trade missions abroad—and what is the relative benefit of that classic trade mission initiative? Or is it better to use intermediate organisations and have people come and talk to those organisations about the potential for exports? That is an issue that we are looking at in its totality at the moment, and we come to it with a very open, pragmatic view as to what businesses think would make the biggest difference to them, rather than us seeking to impose our answer on them.

We do fantastic work in relation to Scottish whisky, and we want to capitalise on that. Are there any other UK sectors in which we could be replicating that success and transporting it to the EU?

As the Lothian East MP, I should declare an interest: I have Glenkinchie distillery in my constituency, so I am unyielding in my support for the Scottish whisky industry. That being said, it is a fascinating example of where, 20 or 30 years ago, the expectation was that the industry was in decline. A large number of international companies bought into the Scottish whisky industry at the time, and in part what has driven extraordinary progress in the whisky industry over the last two or three decades has been both the scale, which has allowed exporting, and excellence in marketing. There are lessons that can be drawn, but actually there are very few small independent distilleries relative to the numbers that one might imagine. They are often being driven by very large entities such as Diageo and other companies. As well as looking at the example of the Scottish whisky industry, we are also looking at some of the examples you cited earlier, such as industries that do not have a regulatory or business administration department or a marketing budget behind them, which many of the whisky distilleries actually do.

The EU has already passed significant new product regulations since Brexit, for example, on artificial intelligence. Is the Bill essentially a keeping-pace mechanism?

On product regulation, yes—I can assure you that that is exactly what it is.

In the time that we still have, we would like to get into some of the trade-offs that may be confronted when we have deepening trade in Asia-Pacific generally, and China in particular. Do you think that we will need new safeguards around trade with China to protect and preserve the trade that we currently enjoy with the United States?

I would rather speak in general terms than identify the need to take action against a particular country. So let me speak in general terms and then we can answer other specific questions that you have. First, as I sought to reflect earlier, we are in a world in which there is a convergence between prosperity and security. I would argue that there is not actually an irreconcilable tension between them. We have an absolute obligation to the defence of the realm, as well as a Government mission to raise levels of growth, which extends to our work in support of British businesses. I know that the Committee has written extensively on those issues, and it feels to me that you have accurately discerned a new dialogue around economic statecraft and, more broadly, economic security. It is not coincidental that, as far as I am aware, I am the first Trade Policy and Economic Security Minister, and Commissioner Šefčovič, who is Nick’s partner in the negotiations with Europe, is the Trade and Economic Security Commissioner. That is reflective of a significant shift that is under way, moving away from seeing trade policy as simply an instrument of classic market fundamentalism, to a world in which geopolitics and geoeconomics are converging. In broad terms, we will be looking at all of our trade defence instruments, and at what is in the UK toolkit, whether that is in relation to investment security or export controls. Rightly and reasonably, we need to keep all of those matters under review.

That is very helpful. You have talked about labour standards and your ambition to look harder at them. Carbon is where this debate is going to come into focus quite quickly. I will turn to Antonia Bance.

As a Black Country MP, I am a proud advocate for the metal finishing and steel industries. Industry, not least Newby Foundries and Alucast in my constituency, has been warning about the trade impact of the EU’s carbon border adjustment mechanism. I asked the Chancellor this morning, and I will ask you now: what are the Government doing to mitigate that?

It is deeply worrying that you asked the Chancellor this morning, because you will be able to test whether we are aligned in our policy thinking across Government. For that reason alone, I am going to defer to Nick on CBAM.

That is something that is already in the trade and co-operation agreement with the European Union. For reference, it is article 392, which states that “The Parties shall co-operate on carbon pricing. They shall give serious consideration to linking their respective carbon pricing systems in a way that preserves the integrity of these systems and provides for the possibility to increase their effectiveness.” I am sure, Antonia, that you have had the point put to you by businesses that they are extremely concerned about the impact of the carbon border adjustment mechanism on a flood of cheap imports into the country. I know that the steel sector is already concerned about that. The answer is that there is already a commitment in the existing trade and co-operation agreement to look at linking our carbon border adjustment mechanism. So that is one of the things that I will be taking forward.

That solution would be very much supported by the businesses in my constituency, which are worried about both the gap between the EU and UK implementation of CBAM and about the additional paperwork and difficulty that comes from the two systems not being aligned. I think you are absolutely right to speak about the potential impact of dumping. In 2014, we saw a fivefold increase in Chinese steel, so I would encourage as much movement towards alignment as possible.

That is the ambition?

Absolutely. It is to do with linking our respective systems—that is what the ambition is.

To what extent should we converge our economic security arrangements with the US? We did not block the Three/Vodafone merger, despite the evidence of close ties between Three’s owners and the Chinese state. Are we being too lax?

Clearly, the United States has its own system, but if you look, for example, at the approach we have taken to investment security, the Committee on Foreign Investment in the United States—CFIUS, as it is commonly known—upheld the United Kingdom’s status as an accepted foreign country. As recently as 2023, CFIUS determined that the UK met the requirement for implementing a robust screening process and co-operating with the United States on investment security. That is but one example of where that dialogue is rich, deep and continuing, and a clear instance of where they felt confidence in what is a distinctive approach that they supported.

I am not sure I heard the answer to the question there, but—

You are free to ask it again.

Let’s just move on. If we fail to strengthen our economic security regime, is there any realistic chance of closer trade ties with the US?

That is premised on something that I would not accept a reasonable, responsible Government would do, which is not to strengthen our economic security regime. On threats to the United Kingdom, adversaries are constantly probing and seeking weaknesses in the UK. We have outstanding intelligence services. We have a cross-Government process under which we continue to review those threats. Again, I would not want to go into detail, but I can assure you that we take very seriously our responsibilities in relation to economic security and we keep the instruments that we have under review.

The FCA suggests it is not its job to police standards of firms such as Shein seeking to float on the London stock exchange and sell shares to British savers. Do we need tougher standards for foreign firms seeking British investment?

All companies operating in the UK are required to act within UK regulations and policies such as the Modern Slavery Act. We expect companies to follow international standards and principles, including the OECD guidelines on responsible business conduct and UN guiding principles on business and human rights—

So if it is not the FCA, who is it?

If I can finish the sentence, the position is that, of course, the Modern Slavery Act is the legislation, but it is also an issue that we keep under review. I was very mindful of what clearly was a rigorous and challenging evidence session, which left many questions unanswered at the end of the Shein witness statement.

Were you troubled by some of that absence of evidence?

Honestly, I would not seek to comment on a session that I was not party to, but I observed and read the session afterwards. I should probably leave it there, rather than pass comment on another witness when I am presently a witness before your Committee.

Do you agree that it is the FCA’s job to police standards of firms or not?

It is a decision for the FCA as to whether a business should be listed. In that sense, they have a listing responsibility, separate but related thereto. We have an expectation as the UK Government that adherence to the Modern Slavery Act will be upheld by all businesses operating in the UK.

Who does the FCA report to?

The FCA ultimately reports to the Treasury, but it is an independent regulator.

So it is the Treasury that has the responsibility, not the DBT.

It is an independent regulator, so in that sense the clue is in the title.

You know those cases in your constituency where you think there is one agency responsible for sorting out a problem and they insist that it is the other agency. You will have had lots of cases like that.

I am not unfamiliar with the scenario you describe.

I am afraid that the Committee is finding a little bit of the same problem here. We are looking for evidence that good labour standards are being adhered to, and we are asking both the FCA and the London stock exchange to opine on whether they think they have the requisite evidence, and they are all basically saying, “We do not have a moral framework against which to take certain decisions.” It could be that there is just a need for a little bit more direction from HM Government. Would you agree?

I saw the evidence session with the Shein representative. I have not had dialogue with LSEG or the FCA. They are answerable to other Government Ministers, but I hear the point that you make.

In this world in which economic security standards have to go up, the Atlantic declaration pointed to the need to strengthen export security arrangements. I cannot actually remember whether it pointed to the need to strengthen investment security arrangements, but we can probably expect the need for investment security arrangements to become stronger in future. Can you foresee a moment, in the calendar for this year, when you will bring back to the House proposals and recommendations for strengthening the UK’s export security regime and for strengthening the investment security regime?

I cannot give you a commitment on particular points of export security. I can say that we will cover export security in the economic security part of the trade strategy; we are planning to publish that in the spring of this year.

When will the China audit be completed?

I do not know whether a final date has been set by the FCDO for when the audit will be completed. Hold on, let me see if I have a briefing on this—I do. No, a date has not been set publicly for when it will be published.

I have a very brief point of clarification for Antonia on the carbon border adjustment mechanism, although I do not think it changes the substance of my answer. Having just re-read the wording of article 392 of the TCA, it is actually about linking our emissions trading system, but CBAM would very much be part of that.

Apologies to Ms Kumar, but just to close off this point, is the ambition basically to ensure that there is not a tariff barrier caused by differential carbon prices?

It is more that you have this perverse incentive for, essentially, dumping. For example, the EU will go ahead; it already has its date for the introduction of its carbon border adjustment mechanism. If we were not to consider linkage, we would open up our industries to the possibility of cheap dumping from overseas. You and Antonia have been speaking to me about steel, which is a very good example. Unless you look at linkage, you are exposing our native industries to risk.

The US, Canada and the EU have all increased tariffs on electric vehicles from China. Why have you not asked the Trade Remedies Authority to investigate whether the UK needs to defend its economic interest in this industry?

We have not received a request from the UK automotive manufacturing sector for such an investigation by the Trade Remedies Authority. The character of the UK industry is somewhat different: first, there is a preponderance of luxury vehicles, and secondly it is a heavily-export led industry. No request has been forthcoming. My recollection is that towards the end of last year—forgive me, I cannot recollect whether it was at the G7 or the G20—the Chancellor Rachel Reeves said that this was a matter that we kept under review. In the light of the conversation that I have just had with the Chair, it is a matter we keep under review, but no such request has been made from the industry.

Although as the Minister you can trigger such an inquiry under your own powers, I think.

Yes, there are statutory powers that are available to the Secretary of State.

Given what President Trump has said about tariffs on Chinese EVs—we know that the EU has also voted through tariffs on EVs, and the UK is currently not proposing any such trade remedies—do you worry that the UK market is about to be flooded in a way that may destroy the EV market in the UK?

That is something that, as I say, we keep under review. If you look at the action that has been taken in the United States, we have had the connected vehicles review, which was undertaken by the Biden Administration. I have not yet had the chance to read it, but I understand that that document dropped within a few hours of the outgoing President’s departure. We have a cross-Whitehall process that allows us to consider the security aspects of that. That would be led by DFT, the Cabinet Office and others, but we will be interested to see what that yields in terms of the connected vehicles review. Separately, there is the decision that has been taken independently in the United States—the 100% tariff that President Biden imposed on Chinese EVs. That was rapidly followed both by Canada and by Mexico. My sense is that that broadly reflects the extent of integration of supply chains in terms of car manufacturing in North America. The European Union has taken steps, in relation to Chinese EVs—

You have described the risk to the UK market, but I suppose the question is—

Just let me finish the point. One of the reasons that the Europeans acted in the way that they did was to seek to keep their actions in conformity with the WTO. In contrast, that has not been the approach taken by our friends and partners in North America. I hope I have demonstrated that we are alive to the issue, but we are not going to be driven by other countries’ actions as much as by our national interest. That national interest clearly has to be—I hesitate to use the word “dynamic”, given the conversation that we have just had—reflective of changing circumstances. In circumstances in which there was trade diversion as a consequence of actions taken by others, that is something to which we would have regard.

Would you require some kind of message from the automotive industry before you sought to ask the Trade Remedies Authority for advice, or are you basically monitoring what is happening with Chinese EVs and prepared to act under your own powers?

The latter, in the sense that there are statutory powers available to the Government to act in relation to tariff policy generally. Related thereto is the Trade Remedies Authority, which was created by the last Government. We can have recourse to asking for an investigation to be undertaken, but there are reserved powers available to the Government as well.

And you are not ruling out using those powers in future.

I have not ruled anything out.

The UK industry has different views about the situation, for understandable reasons, but the simple truth is that there are very, very cheap vehicles coming from China. If you talk to the bicycle industry in the UK, it will say that we acted too late and not strongly enough on Chinese dumping into the UK. Are we not in danger of repeating the same thing?

As I say, we keep this matter under review. I hope that the answers I have given demonstrate that no one taking a view of where the UK’s national economic interest lies would suggest that we are anything other than aware of movements that can happen. It would seem that one of the challenges in the coming years, given the environment in which we are operating, will be understanding the importance of trade diversion as a consequence of new barriers going up. This is but one example of where we will have a very clear-eyed view as to where the UK national interest lies. Equally, it is right and reasonable to be in part led by the industry. It is simply a matter of observable fact that the UK is in a different position from other areas where the industry was making pleas for immediate action from the Government. For example, if you read The Globe and Mail, there was a commentary about two weeks before Chrystia Freeland imposed the tariffs in Canada demanding that Canada should not delay and should get on with it, given the jeopardy facing the Canadian suppliers in the US supply chains. We are observably in a different position in the UK.

A vote is imminent, so perhaps we can wrap up with a question to Nick Thomas-Symonds. Thank you for setting out what sounds like a very pragmatic pathway towards a summit no later than June. You will be aware that the Centre for European Reform has published research that shows that the uplift to economic growth that might flow from the proposals you have tabled and the ambitions of the EU delivers an uplift to our economic growth of somewhere between 0.3% and 0.7%. That is quite a small number, given the 4% to 5% of GDP that we have lost because of Brexit. If the trade situation continues to deteriorate, for example with tariffs in the United States, will you look again at options to deepen trade co-operation with Europe because the circumstances of global trade will have changed?

Of course circumstances change—I will not get into how they might or might not—but irrespective of where different issues move, we are very ambitious within the framework of the manifesto. You mentioned the Centre for European Reform. There are many organisations that have been asked what the value of an SPS agreement is, for example, and universities have done work on that. There are a lot of different figures out there.

But would you agree that it is a small fraction of the trade that we have lost?

All I would say is within the mandate that we have from the British people—we are not going to rejoin the single market or the customs union or go back to freedom of movement—I reassure your Committee that we are ambitious. In particular, if we were to secure an SPS agreement, it would be of significant economic value.

You have not ruled out, in our conversation this afternoon, the possibility of dynamic alignment or checks against inadvertent de-alignment where, pragmatically, that might make sense in some sectors of the economy.

What I have said is, first, that we are very committed to high standards and, secondly, that—as I am sure you understand, Chair—the bespoke nature of the arrangements that we need on SPS will be beneficial for the United Kingdom. What New Zealand has on equivalence is suitable for it; what there is on alignment for the Swiss is suitable for them. We will be looking for something that works for us.

I have two nuts-and-bolts questions. The excitingly named multi-party interim appeal arbitration arrangement exists because the WTO appellate body is effectively defunct, as the US no longer funds it and will now not be funding it for a few years. That is a workaround to which Canada, Australia, New Zealand, Japan, the EU, China and various countries in south-east Asia and South America have all signed up. We have not. Could you give an answer as to whether we will or we will not?

I can assure you we are looking at exactly that. It is a plurilateral forum that is less effective than if we were able to see the dispute resolution mechanism re-established. Early in my tenure as trade policy Minister, I travelled to the WTO to have conversations in relation to the challenges that the organisation continues to face in terms of the dispute resolution mechanism. On a couple of occasions, I have met with Ngozi, the WTO director general. That being said, it is an issue that we are looking at. The United States stays out of that body, but I know that a number of our friends, allies and common countries are already in it, and it is an issue that we are looking at.

Similarly, we were in PEM, the pan-Euro-Mediterranean convention. I think that there are 25 signatories and it has been going since 2012. We now have our own perfectly formed equivalent. Perhaps that is rather a lot of work: we are essentially running our own set of harmonisation and standards separate from our European neighbours, who are our biggest trading partners. Would you consider rejoining PEM and trying to align standards more closely in terms of payments?

On PEM, it is not quite as linear as you suggest. There are some stakeholders who would argue that there would be disadvantages to sectors of UK business if we were to rejoin. However, it is an issue that we are open to looking at, because we want to take a pragmatic view as to where the national interest lies.

The last thing on our list, Mr Thomas-Symonds, is about mutual recognition of conformity standards. This is an enormous bit of red tape for UK industry. Could it feature as part of your negotiations, not least as a way of saving UK businesses an enormous and unnecessary cost?

I am open and pragmatic on these matters. I understand from reading the media that in a previous set of negotiations it was raised and rejected, but I am open and pragmatic on reducing trade barriers—a very nice note on which to end our session.

Thank you very much indeed for your time. There is a vote coming, so we will conclude our session with great thanks both to officials and to Ministers for giving the launch of our inquiry a flying start.     [1] The Department has clarified that while the previous government conducted initial impact assessments of trade agreements under the Free Trade Agreement (FTA) programme, no monitoring reports were published on any of these 39 agreements. The previous government made a public commitment to publish FTA monitoring reports for new UK trade agreements with Japan, Australia, New Zealand and for the UK’s accession into CPTPP, on a biennial basis. The first biennial monitoring report on the UK-Japan Comprehensive and Economic Partnership Agreement was due in 2023. However, this was not produced by the previous government.