Welcome to today’s session of the Business and Trade Committee as we pursue our inquiries into the state of the EU and United States trade relationships. Sir Chris, thank you very much indeed for joining us and thank you for bringing Kate Joseph and Amanda Brooks with you. Perhaps I can open by reflecting on last Tuesday’s spring statement, because that showed quite a significant deterioration in the trade outlook for this country. We have a widening of the trade deficit now forecast for the next few years. Of course, since then, the European Union has proposed the final text of its Industrial Accelerator Act, which the SMMT says is a “real threat” to us. Alongside that, President Trump has torched the special relationship, with a series of attacks on the Prime Minister. Why is the outlook for the UK trade picture deteriorating over the next few years, and is it likely to get worse, given the events of the last week, including the conflict in Iran?

I do not think that it is going to get worse in the sense of the cataclysmic version that you laid out there, but I will go through the individual issues. Let me start with the Accelerator Act. This is a draft; it’s a first draft. You know the processes through the European Union. We had been engaging with the European Union for some time on the issue of Made in Europe, not only for the British argument, but because I have spoken to many of my counterparts in other capital cities in Europe and they have made the point that many of their aeroplanes and automotives are made partly in the UK, so if you exclude the UK from Made in Europe, you are going to provide significant long-term problems for the whole economy of Europe. This is why I was glad that in the main, for most elements of the Act, it was much better than we had originally anticipated. I think that that is a result of significant lobbying, partly by the Secretary of State, a little bit by me, and by the whole team, working in all the member states as well as working with the European Commission.

But Mike Hawes says of the Accelerator Act: “As drafted, it would discriminate against UK-made vehicles and components, damaging a trading relationship worth…£70 billion annually.” Willie Bain from the British Chambers of Commerce says that “the rules could have…considerably more impact upon cross-border trade and investment in automotives and climate change technologies.” So hasn’t the lobbying failed?

No. I was going to come on to the point about automotives because I met Willie Bain and others and the SMMT on Thursday afternoon, I think—the day after the Accelerator Act had come out—or maybe on the Wednesday. I can’t remember; it was one or the other. They made those points, and we have registered the points as well. We need to make sure that we win the whole of this campaign, all the way through until the eventual legislation, but in particular, one of the issues for automotives is that if they do not have access—if UK manufacture is not part of European manufacture qualifying for, for instance, fleets—that is a significant problem for the automotive sector. We are very focused on that. I have always said that this will be a campaign all the way through to the end, and anything that the Committee can do to help us win that argument in Europe is good. There is a move towards protectionism everywhere in the world. We face it sometimes in the UK as well, and I am determined to make sure that the move towards protectionism in Europe does not rule us out.

The Chancellor, in a speech for which the text is not published, reputedly said to the Bruegel think-tank: “Further integration will require further alignment, but I’m up for that. We are keen to go through at sectoral level what sectors we could have alignment in.” It looks like this new proposal from the European Union has just scuppered that strategy.

No, I do not accept that. That is certainly not the view when I have spoken to my German counterpart, my—I could go through a list, and I am quite happy to provide the list if that is something that is useful to you, of other countries that we have spoken to.

Thank you.

But in relation to an aeroplane, for instance, what is a European aeroplane? When any of the European countries go round the world trying to persuade countries to buy Airbus, 30% of the aeroplane is likely to be made in the UK, because the wings will have been here or the engines may have been made by Rolls-Royce here and so on. You can repeat that on so many different parts of manufacture across the whole of Europe, so I think this is an argument that Europe needs to have a bit with itself. I am very confident that if we put the campaign together correctly, we can win that. I am still going back to the original question, so to deal with the other—

Yes, let’s go back to the question of the United States, because in February this year, Varun Chandra said that he was “hopeful” the UK-US economic prosperity deal would move to a conclusion in the first half of 2026. Judging from President Trump’s Truth Social account and his interview with The Sun, it looks like that ambition is dead.

I do not accept that. I have not had any indication, and nor has anybody in the Department, from anybody from the United States of America that the process that we are engaged in at the moment, of trying to secure the best economic prosperity deal for the UK, is not on track.

But the President said to The Sun on 3 March: “It’s very sad to see that the relationship is obviously not what it was.” He also said: “This was the most solid relationship of all. And now we have…strong relationships with other countries”. On Truth Social, he said: “The United Kingdom, our once Great Ally…we will remember.” That was the threat he issued.

Yes. I do not think he was talking about our trading relationship. I am not a commentator on this; I am a player in this field, and my aim is to deliver the best possible deal that we can with the United States. We have already got the best deal of any country in the world in significant areas, such as 0% on pharmaceuticals. We have the best deal of any country on steel—25%. I think we have negotiated this process extraordinarily successfully up to now. We still have to get to the final text, and I am confident that we will be doing that in the coming months.

The letter that we are publishing from you today says that you are confident that the 10% tariff rate will remain in force. My understanding is that the legal basis for that tariff today is section 122 of the Trade Act 1974, and therefore these tariffs expire after 150 days. What confidence do you have that the 10% tariff is good for the long term, rather than simply the next 150 days?

We have already agreed on some of the specific lines, and we do not think they are affected at all—for instance, the 0% on pharmaceuticals that I referred to, steel, automotives and the quota that has been agreed. There is the agreement on beef. We think all of those are settled parts of the agreement and we do not think they will be touched. Of course, following the Supreme Court ruling, we are still trying to work out— as are the United States of America—precisely where it lands everybody. That is part of our ongoing negotiations. It is one of the things I will be discussing with my counterpart later this evening.

So what is your working assumption about the legal basis for the 10% tariffs in place today? Is it the 1974 Act or some other made-up bit of legal basis?

We do think it is section 122 of the 1974 Act. I do not think that we have complete clarity on exactly how that will work from a legal perspective and whether the US will change the tariff rate for some countries and not for others, because they have indicated that they may look to increase the rate for some countries. It is not entirely clear to us exactly how they will go about that.

Including us?

I think the suggestion is that it may go up to 15% for some countries. It is unclear whether that would include the UK. Obviously we want to maintain the 10% for the UK, and they may well do that for partners with whom they have a trade agreement.

It is worth saying that we have not had any indication that going to 15% is what will happen, and that is why I wrote to you as I did.

Obviously there are UK companies that are now paying the 10% tariff today on a legal basis that sounds unclear. Why can’t they sue to get their money back?

I think the way it would work is that importing companies would potentially be due refunds under the Supreme Court ruling, but, again, it is not entirely clear how that process will work. I think it is in the public domain that there is a suggestion that it may be possible for companies to secure refunds, but that would be for companies that have paid the tariff and that are importing goods in the US.

It is not for the UK exporter.

So if I am importing Range Rovers, I can potentially go to court to get the tariff money back.

Well, no, because we think that automotives are already sorted.

Okay. One bit that is not especially sorted is steel.

Can I just go back, because you asked me another question?

Go on. Is this my question at the top, about the broader picture?

Yes. I have Jimmy Maxton running through my mind from 1935. He said that if you can’t ride two horses at the same time, you better get out of the circus. The truth of the matter is that since the UK left the European Union, we have a new responsibility, which is trade, and we have to be able to ride an awful lot of horses, all at the same time, to be able to secure outcomes for the UK. That is what we are trying to do, and I think we have done quite well. We have already had conversations in a previous session in relation to India. We have also got a better deal done with Korea. We are working on Switzerland, Turkey, Greenland, the GCC, and the EU and the US at the same time.

But the challenge we have, notwithstanding the heroism of all that work, is that the OBR is forecasting the trade deficit to widen to 3% of GDP from 2027 onwards. Strategically, it seems that all your work is not moving the numbers.

Obviously there are two different ways in which economists look at balance of trade. Some, in the United States of America, for instance, would argue that having a negative balance of trade is a major long-term problem for the country. Some would also point to the fact that if we are able to access goods from elsewhere and bring them into the UK to keep the cost of living down and tackle inflation, that is a good thing. I am very focused on two things. One is the fact that we have a big surplus in relation to trade and services around the world. That is why it is all the more important that, when we are trying to agree FTAs around the world, we focus on that work and unleashing that possibility.

Let’s look at the export numbers then. In 2026, exports decline 0.3%, 0% in 2027, then positive 0.2% in 2028 and 0.1% in 2029. At the same time as the global economy is growing at about 3.3%, our export growth is really quite limited. Does that tell you anything important that you need to change about the export strategy that we are pursuing, if the OBR is concluding that trade numbers are not materially improving?

I said earlier that I had two things that I was focused on. The first was about services. I am not sure whether the figures you gave there are for goods or services.

Exports of goods and services. It is in table A.2 in the OBR spring forecast.

Thank you. The second point I was going to make was around exports. You have heard me say before that I find it worrying that only one in 10 UK businesses exports. One of the strengths of what we did last year was that we focused on the eight key industrial sectors where we think there are real economic opportunities for this country. For instance, one of them is the creative industries, which last year saw 5% growth—more than five times bigger than the whole of the rest of the economy’s growth. That is one of the areas where we have a significant increase in exports. We need to work on what we are good at and maximalise that, but I am also conscious that, in relation to the European Union—because that was the other question that you asked me, which I have not fully responded to—we need to be able to achieve as frictionless trade in as many different sectors as possible. I am not naive about the timeline for that because it is phenomenally tough and difficult to negotiate with a bloc made up of so many countries at the same time, but that is the piece of work that I think we need to unleash.

The final question before I hand the floor to Mr Madders is about the energy price shock that is unfolding thanks to events in Iran. Presumably, that is going to knock the cost base for the UK into a pretty serious position. What measures are you beginning to contemplate at the Department for how we can keep industrial energy costs down if oil stays at this elevated price range?

Obviously that is one of the things that we have been considering. Some of that relationship, in relation to specific energy prices, lies with DESNZ rather than ourselves, but we need to consider what the knock-on effects might be for other sectors. That is one of the things we are already focused on—I cannot remember whether it is Kate or Amanda who will speak to that in a moment, but one of them will. There are other issues. Incidentally, I was talking to some of my Gulf counterparts yesterday and today, and one of the issues for them is access to food. There is a whole series of issues that are impacted by the effective closure of the strait of Hormuz. We need to work as fast as we can. It would be good to get to a resolution of the situation in Iran so that everything can open up again, but in the meantime, we need to—Kate and Amanda, I can’t remember which of you was going to—

It’s Kate.

Kate, what are the options on the table to help UK firms with energy costs now?

We are obviously in the early stages of this. At the moment, we are monitoring and keeping an eye on what is going on. It is clear that, over the last few days, the impact on oil prices in particular has been very significant. There is work going on across Government to look at the current options and programmes that we have—especially, from our perspective, to support businesses, because that is where we would come in on the DBT side. At the moment, those plans are being discussed across Government, so I do not have additional information that I can share with the Committee about the specific direction of travel, but it is being taken very seriously.

Okay, but the Government are reviewing options for helping businesses with elevated energy costs.

At the moment, we are doing some work with other Government Departments on how this might be affecting businesses, particularly energy-intensive industries. That is a key concern from our perspective, but we are still evaluating what the possibilities are. Of course, one of the big issues is how long this will go on. It feels at the moment like things are not coming to a conclusion, but duration is a critical factor in the overall impact, and therefore in what support might be needed.

Sir Chris, when have you asked for options to be on your desk by?

I am not going to set a timeline for options being on my table because it is not only my or our Department’s responsibility; it goes across Government. I want to say one other thing, on another aspect that is my responsibility: the person who is probably rubbing their hands with glee the most at the moment is Vladimir Putin. We need to think about the impacts on the sanctions issues that we were talking about a week ago as well.

One of those energy-intensive sectors is steel, where tariff protections are still not where they need to be.

Indeed. On 10 February, we had Russell Codling, the commercial director of Tata Steel, give evidence. I am sure that you are aware of what he said to this Committee, which was that we have two months to save the industry. That was a month ago. He was very clear that a tariff regime needed to be introduced. He said: “I am not quite sure why we are not acting quite as fast as we need to, but time is running out.” That was a month ago, and things have obviously not gone any better in the meantime. When will we see tariffs?

The existing safeguard that we inherited from our membership of the European Union, as you know, Mr Madders, runs out at the end of June. We have said several times in public, and I say again today, that we will have a set of steel trade measures after that. We have not quite dotted the i’s and crossed the t’s yet, but I hope to do so in the near future. That will sit alongside our steel strategy, which the Minister, Chris McDonald, has been developing as well.

Okay, but Tata is saying that we need something in place by April. That is a couple of months where there is no action, and we are being told that the industry is going to collapse if nothing is done. How can you be confident that doing something in June will be enough?

I think they meant that they wanted an announcement by April, because between April and the end of June there will be the existing safeguard. They want an announcement about what will happen from July in relation to trade steel measures. As you know, under WTO rules whatever we do will be constructed in a different way, but I do not have any intention of disappointing Tata Steel.

So we can expect an announcement within the next month.

They wanted something by 1 April, and I would be very upset if we had not announced something by then. I am not the person who gets to decide when announcements are made, but we are very close to dotting the i’s and crossing the t’s. I should say, because this may be an area that you want to ask me about, that one of the issues of concern is that the EU announced its trade measures and is cutting the quota by 47%. If that were applied on an equal footing to the UK, that would be of significant harm to us. Part of what I have been engaged in, as has the Secretary of State and others, in conversations with Commissioner Šefčovič, is trying to make sure that we have some kind of deal between us. Frankly, the problem with steel is not the UK or the EU, or Canada or the United States of America for that matter; it is overcapacity in other parts of the world where there is unfair subsidy. That is why the worst of all possible worlds would be a situation where the measures we put in harm Europe and the measures that Europe puts in harm us, and that is a bit of a zero-sum game.

Okay, so are you confident that those circles can be squared?

I am doing my very best. One of the things I am conscious of in relation to negotiating with the EU is that I would obviously always prefer to move much faster. I would prefer to move much faster on everything, basically.

It is true.

I irritate officials a lot. One of the difficulties with the EU on the SPS deal, for instance, is that, while we announced that we wanted to negotiate that last May, the Commission did not get its mandate from the EU until November, so we could not properly start negotiating until November. The United States of America decided last year to start negotiating with all the countries in the world at the same time. USTR is not an enormous department, and that provides some challenges for them to be able to get through a lot of negotiations at the same time.

Okay, but the key thing that we are concerned about is that there will not be an air gap between the expiry of the current steel safeguards on 30 June and the implementation of new safeguards. Is that the assurance you can give us?

100%.

Thank you very much.

That is not me announcing a tariff; it is just saying that I can be absolutely certain that there will not be a gap.

Okay, that is fine.

We have heard different things from politicians, civil servants and business about the technology prosperity deal. Is the tech prosperity deal operational, as you see it? Could you give us an update on where we are with it?

There are lots of bits of it. It is a series of chunks; bits of it are still progressing, and other bits are—I think the Americans themselves have used this term—“paused”. For instance, in our work on quantum research we are still moving forward.

Really? We were told that quantum benchmarking work had stalled since the suspension. The national quantum programme starts on 1 April, but the details are still unpublished.

Well, my understanding is that the research that is being done with TAE Technologies and the UK Atomic Energy Authority’s joint venture partnership to commercialise fusion technology in the UK is still proceeding. Kate Joseph indicated assent.

Okay. We have had evidence to the contrary, but Mr Aldridge, do proceed.

It would be really useful to hear which areas, from your perspective, are not going so well. Which are the areas that we should be doing more work on?

This is primarily a DSIT lead, rather than DBT, but because some of it was announced around the same time as our work on the economic prosperity deal, it has sometimes got conflated with it. I am happy to make sure that you get any information from DSIT that you want. Kate, is there anything that you want to add?

Only that a large part of the deal is about facilitating company-to-company or business-to-business co-operation. It is our understanding that quite a lot of that is continuing. There are official dialogues and processes, and some of that is not proceeding as fast as we would like, but a lot of the benefits through collaboration between companies are still being realised. We want to get things going across the board as much as possible, but I do not think that it is right to say that nothing is happening under the tech prosperity deal.

Is the tech prosperity deal an effective package, or is it simply repackaged and rebranded business-to-business negotiations? Is it things that were already going to happen anyway between businesses, or is there something substantive in addition?

It is a chunk of things that have been enabled by co-operation between the two Governments and would not have happened without that co-operation, although they are in the commercial interests of both ends of the equation.

Is it suspended or not suspended?

I would say that work is ongoing on chunks of it. I note that the US has said that it is paused, but there are substantial chunks of it that are still proceeding.

It was reported that the United States was frustrated at the UK’s unwillingness to address non-tariff barriers on food and industrial goods, but you are saying that that frustration has not translated into a complete dead stop across the piece.

It is certainly true that we have discussions. I myself have not seen those two things connected, and I do not think that we have, but Kate will answer in a moment. It is certainly true that one of the things that the US has regularly said, in Senate hearings and so on, is that it wants us to dismantle some of what it calls our non-tariff barriers, which we would call our non-retardant materials regulations, our regulation on food standards or whatever. We think that we are global leaders in many of those areas, and they are simply not part of what we would negotiate away.

I see. There was supposed to be a ministerial-level working group set up within six months. I assume that that has not been achieved yet.

I certainly have not been to one. Kate?

That would be a DSIT lead, but it has not happened yet. It is at that level that we would like to see progress kick-started again. But that does not mean that nothing else is happening.

Okay, but today there is no timetable for establishing that ministerial working group.

Not that I am aware of, but we can check and come back to you.

If we have anything different from DSIT, we will let the Committee know.

It is just that the lack of clarity on some of this is causing confusion with some of the business partners, so it would be useful for everything to join up.

Okay.

Great. Let’s get into some of those barriers.

The PM’s special envoy Varun Chandra has said that we are “working through longstanding red lines on economic security, food standards, agricultural approaches and third-country interactions.” There is quite a lot in that. What are the difficulties in resolving these issues?

Some of them are inevitable areas in which there might be red lines on either side of the conversation. The classic instance, which has been referred to many, many times in the public domain, is what tends to be characterised as hormonal beef and chlorinated chicken and so on. We have made it absolutely clear from the very beginning, and I am happy to reiterate it today, that we will not surrender our food standards in any of these negotiations. As I say, we are not intending to do the same in relation to our standards on other products either. Sometimes that ends up being a kind of “red line meets red line”, and that inevitably ends up with difficulties.

So how are you going to break that?

I have two things that run through my mind. I am not doing most of the negotiation in relation to the United States of America—most of those conversations have been had by the Secretary of State or by our chief negotiator working under Kate’s team or with Varun Chandra—but I think it is exactly the same as any other discussion. There is a poem by Browning, “A Toccata of Galuppi’s”, in which he says, “Hark, the dominant’s persistence till it must be answered to!” Sometimes you just have to hold your line. You just have to keep on going, keep on going, keep on going and keep on going until the people on the other side of the table realise that it is genuinely a red line. In some other areas, you have to go a bit more like Jimmy Durante: you’ve got to give a little, take a little and let your poor heart break a little.

I cannot work out what our American interlocutors are going to value most: your poetry or your musical repertoire. At some point, you will have to tell us.

It is a novel approach to trying to resolve the red lines.

Sometimes negotiation ends up happening between people—well, it’s always between people, but personality is what ends up determining whether you get something over the line or not.

Some of these red lines have been very clear, and they are not going to change, so how will these things get to a resolution?

I am in a difficult position because I do not want to comment on the specifics of live negotiations, for obvious reasons. I do not want to negotiate via the Committee and into the public domain. I think these things are best done in a negotiating room, and that is what we are trying to do. I am, however, confident that we have done pretty well so far. We managed to get a deal on pharmaceuticals—I was very sceptical about whether that would be possible at the beginning of the negotiations, because there seemed to be very hard red lines, but that was achieved—and there are other areas where we might have successes still to come.

Okay. I will not press any further on that.

I may be more gravy browning than Robert Browning, but I am delighted to hear Schnozzle Durante getting his nose into the Business and Trade Committee.

Poor old Elizabeth Barrett!

Channelling your inner Adam Smith, you talked earlier about the things that we are good at, and agriculture is one of the things we are good at. What are our ambitions for agriculture in this trade deal with the US? What do you think the big gains might be?

We have obviously had one gain already in relation to beef—I was licked a lot by some beef cattle the other day on a farm outside Dorking. The US produces a great deal more beef than we do, but I think our product is materially different. It is for a very specific market, and I hope it is going to do very well. The DEFRA Secretary of State was in the US to celebrate that moment and to promote it. We have our first agri-trade person working in Washington trying to promote that part of the deal. Agriculture, of course, is not just agricultural products standing on their own; it is also food products. Quite often, these are part of the equation. I am not sure about other things in the American deal in relation to agriculture, unless Kate has anything to add.

In terms of what we have already agreed, that is exactly right: it is primarily the beef quota. But we are in ongoing negotiations with the US to try to secure more access for UK products at lower tariffs than we currently have. They are largely at a 10% tariff rate. That does not put us at a huge disadvantage at the moment, in comparison with the rest of the world, but we would like to make some gains on that. It is obviously not easy to do that. The US Administration have not given us many signs that they are willing to go below the 10% threshold across the board, but we are continuing to push for the best possible deal that we can get for British farmers.

We touched on the concerns about things coming over here. There has been a lot of concern about chlorine-washed chicken—although I had chlorine-washed salad for lunch—hormone-treated beef, and pork and turkey treated with chemicals that make them more lean but are banned in many countries. Are you sure that our protections against that are sufficiently robust?

We have extremely rigorous food standards in the UK, and we are not going to surrender them. Incidentally, that does not just apply in relation to the United States of America. When we were having the conversation in relation to India, there was some question about cheese, and it is exactly the same set of issues. We have strong food standards and standards for treatment of animals, and we will abide by them.

We took evidence from the British Standards Institution, which warned that the American approach to regulation was a real threat to us. In particular, it raised the prospect of a hard border in Northern Ireland if we began to surrender our territory on this. Will you hold as firm on the regulatory approach question as you do on food standards?

Yes.

Both the UK and the US are working on the digital trade agreement. What are the Government’s objectives for that with the US?

Go on, Kate—I am still thinking about the last answer I gave.

We are looking at areas in which we can improve the current digital trade environment, in terms of duties that are paid and so on, but also at creating less friction in digital trade across the two countries. It is an element that we are looking into as part of the wider negotiations. It has been reasonably positive so far. We think that there is more we could be doing to create less process around digital trade with US partners. I hope that that will be an element of what is finally agreed. At the moment, there are not insurmountable barriers, but we can still improve on the current situation. Digital trade is about making sure that digital processes that support the trade in goods and services are able to proceed in a more frictionless environment. That has been a key priority.

I should say first of all that we have a data adequacy agreement that is not in relation to the US; it is a bridge, as I think it is called, which is an important part of being able to allow localisation of data protection and so on. Secondly, one of the areas in which we co-operate with the US in relation to the WTO, which is coming up in three weeks’ time, is trying to get a permanent moratorium on electronic commerce through the WTO. We did not manage that at the last ministerial; I would like to get it at this one. Both the US and the UK, around the world generally, want to have more digital trade elements to their free trade agreements, or agreements with other countries, because it is an area where we can both prosper.

There are two controversial areas. There is the UK digital services tax: President Trump used the term “overseas extortion”, which feels like hyperbole to me. The other area is the Online Safety Act, and the push around freedom of speech from the US. How much work is going into each of those areas to hold the British line on that?

I am at a bit of a disadvantage, because the first of those is a Treasury issue and the second is a DSIT issue. But having been in DSIT as a Minister for a year and a bit, my view is that the legislation introduced under the previous Government will probably not be sufficient to last three, four or five years but was none the less important. I do not see that as a free speech issue. Digital tax is a matter for the Treasury, but the Chancellor of the Exchequer has made it clear that people should pay their fair share of tax.

I want to make it clear that although there has been a lot of speculation in the media about both of those issues and the negotiations that we have been having, they have not actually been a major feature of our discussions. Online safety in particular has not really been a part of the discussions that we have been having with trade counterparts. That is not to say that they will not come down the track at some point in future or through other channels, but it has not been an issue that our trade counterparts have been pushing with us so far—especially online safety.

I think that that is a really important thing for people to understand. It is not dissimilar to the conversation we were having earlier about businesses seeing the political rhetoric and feeling that it translates into practical work around trade agreements. That is really important.

There is a lot of noise, and we tend to pretty much ignore it. We just plough on with trying to get the best possible deal we can—and that is what we get from the other side as well, to be fair.

In April 2025, Lisa Nandy said that the Online Safety Act would not be weakened as part of the US negotiations. That is your position.

Yes.

Okay. On the digital services tax—

Sorry to interrupt, but it is for the British Parliament to determine what the legislation should be in relation to that. It has not happened in this particular case, but sometimes people say, “Well, you’ve got to change this or that piece of legislation to get a deal over the line.” I often have to point out, “I’m sorry, but we have a legislative process; we have a democratic process in the UK, and this is the democratically arrived-at position.” That Act was agreed by both the previous Administration, who brought it in, and us, who implemented it.

It sounds as if you are not being asked to walk that back, nor are you prepared to countenance walking it back.

No. It is British legislation. We brought it in, and I think it is necessary. Indeed, we may need to go further, but it is a matter for DSIT to decide exactly how far we go.

President Trump has labelled the digital services tax as “overseas extortion”. TechUK told us: “We know it has been on the table for these negotiations.” It is forecast to raise about £1 billion in 2026-27. You are not considering weakening that revenue base at this stage as part of these negotiations.

As Kate has just said, and so far as I am aware—I have not been in any of the rooms personally, so I am a bit hesitant about precisely what I can say—it has not been raised.

Okay. Kate, you have been in the room.

It has not been a big feature of our negotiations on the trade agreement: that is the way I would frame it. You are absolutely right that this is an issue of concern to President Trump and many of the people around him, and they have spoken to various bits of the UK Government about their concerns about the digital services tax. It is a Treasury lead and, as far as we are concerned, it is for the Treasury to pick that up with the US Treasury and have a discussion with them about it.

Is it your understanding of the UK Treasury position that this is a red line for them?

I do not know the ins and outs of the Treasury position. I do not believe that they have got into a negotiation with the US Government on this at the moment, but I think it is for the US Treasury to take that up with our Treasury.

I think the Chancellor has been asked directly about it in the Chamber, so I would be inclined to go with whatever she said.

We have had evidence from quite a few investors who were generally very positive about the broader conditions. There is obviously market demand, particularly for data centres, but they said that the political stability, the rule of law, and the Government focus on investment were all factors that encouraged them to make the investments that they were making. They were really saying that these deals were not deal-breakers for them; they were already making these investments anyway. When we get statements that the Government are going to create 7,600 more jobs from the technology prosperity deal, were those jobs that were actually going to be created anyway?

No, I do not think it would be fair to say that. I was not involved when that went through but I understand that, as I said earlier, because the British Government, working with the US Government, created an environment in which people felt confident to make those investments, they were able to proceed. Similarly, when we had the state visit we announced £150 billion of investments—I think the biggest set of state visit announcements ever. Some of those were investments that people might have brought forward earlier, but they were very happy to be brought together into a package and they are proceeding.

I think that was the flavour that we got—that these were things that might have been brought forward and that had been accelerated by that deal. But we are trying to understand whether there are any specific new investments as a result of that deal?

They are all new investments. I am sure that if the investments were cancelled, everybody would be blaming the Government so it seems only fair that if the investments are brought forward, that is a sort of vote of confidence in Britain as a place in which to make long-term investments. As a Department we are very keen to say not only that we are there to be as strong a voice for business as we possibly can but that we want to provide the long-term stability and predictability that enables people to make investments in the UK.

Absolutely, but some investments have been cancelled. We will come on to those in a minute. Is the Department keeping track of the jobs that are going to be created to see whether the promises made are actually delivered?

Yes, very much so. It is slightly early days because some of these investments were signed up to only a few months ago. The £90 billion investment pledge from Blackstone, the £3.9 billion investment from Prologis, the £1.5 billion from Palantir, and so on, are all being tracked by the Office for Investment but it is a little early to give you further specific information.

You can give us updates on that when more information is available.

Certainly. That is the whole purpose of the Office for Investment. There is no point in making an announcement and it not leading to anything.

When we asked Prologis for more detail of their investment, their representatives flagged that you had conflicting regulations and that decisions were being taken by what they called the “quangocracy” in this country. Who is in charge of deconflicting such problems? Is it you? Is it Lord Stockwood? Who is the quarterback for this?

It slightly depends who it comes to sometimes, but it would normally be Jason Stockwood—Lord Stockwood. All of us in the Department, whenever we come across such problems, want first to unlock whatever we can immediately—whether that involves speaking to other Departments, to local government or whatever—and secondly to learn from that problem about wider problems that there might be, such as the regulatory burden. As you know we have set ourselves a target of cutting the regulatory burden cost by 25%. That is not an easy task because everybody is very good at coming up with new regulations and not very good at finding ones that we should let go of.

Okay. We might share with you the Prologis correspondence, when it is published tomorrow, to ask for your reflections on how problems like that are resolved.

I have a question on pharma and life sciences. Experts across health, academia and civil society wrote an open letter to the Prime Minister saying that there should be an urgent pause on any plans to strike a deal with the pharmaceutical industry in the US that involves increasing the amount of money that the NHS spends on medicines. Notwithstanding that, AstraZeneca has said that the US-UK pharmaceutical deal is not sufficient for it to pick up its £200 million Cambridge investment. What can you tell us about whether the UK has gained more than it has given away in that area?

First of all, I do not think that people anticipated that we would get to 0%, because President Trump had said quite a lot of things about pharmaceuticals and the fact that Americans were paying more for drugs than we were in the UK. Secondly, I would point to the argument that Lord Patrick Vallance has been making for some time, independent of this discussion with the USA, around the fact that we have been slow over recent years to bring new drugs—some of them lifesaving drugs—to people through the NHS. That is partly because we have not been spending enough on drugs. We have also not been spending enough on drugs to enable the pharmaceutical sector to feel that it has a long-term future in the UK. So I think that this is a good deal. I say that partly as somebody who, back in 2019, had stage 3 melanoma. I was very fortunate because I was diagnosed with it one week after the UK had sanctioned the use of targeted therapy and immunotherapy in an adjuvant setting for melanoma. I think that my life relies on the fact that that drug was able to come on board. I want that to be possible for many more people in the UK through the NHS. So I think it is a good deal.

I am delighted that you are here to tell us about this, but—

Thank you—you don’t sound it!

Absolutely I am, from the bottom of my heart. But you will realise that it is very concerning to hear that R&D in this country is lagging so far behind in this area. That is a terrifying prospect, isn’t it? Is the answer to that to get the NHS to pay for more drugs? Is that really the answer?

No, I do not think R&D is lagging behind; I think we have done phenomenally well, but we have been living off a past legacy, and we have been living off the fact that the NHS is able to buy drugs at a significant discount because it is such a large single buyer. But, as Patrick Vallance has said, one of the great strengths of striking this deal is that we will be paying the right amount for our drugs, enabling more people to have earlier access to drugs and thereby enabling those companies to see this as a really good place to be able to make those investments. I met the people who set up BioNTech—a German couple. They are doing the vaccines for melanoma. They have made significant investments in the UK because they believe that this is the best place in the world, both academically and in terms of being able to take things to market, to be able to develop those new technologies. I am not worried about R&D. Of course, AstraZeneca has made its own decisions, but part of our discussions in China have enabled it to make new investments there as well.

Before we move on to a different kind of medicine, I just want to underline this point. The chief executive of AstraZeneca has said that the deal is “a very positive step”, but “will not be sufficient” to resume the paused £200 million investment in Cambridge. The new money for more expensive drugs is welcome in and of itself, but it does not appear to be reversing the decisions of big US-based and other life sciences companies, so do we actually need to go further on this?

Some of that discussion is for DSIT, but I remember that, 18 months ago, a lot of life sciences companies were threatening to leave the United Kingdom, not talking about coming here. I think that this deal has reassured a great many of them.

Okay, I guess time will tell. The full legal text of the pharma deal has not been published, has it? Do you plan to publish it?

Go on, Kate—I am not telling you to publish it; I am just saying you should answer.

We are working with the US on securing the full legal text so that we can make that available.

Okay, so the plan is to publish it?

I do not know that the plan is currently to publish it, but I think that would be our aspiration.

It is £1 billion-worth of extra cost to the UK taxpayer, so I think Parliament might want to have a look.

As you know, my preference would be towards transparency, but this is one of those areas where it takes two to tango, so being able to publish it will require not only analysing some of the commercial sensitivities that there might be but persuading the US to agree with us. I am quite happy to write on that.

Maybe we could ask you to maximise what you can publish, in that case.

This is a subject close to my heart, and also to my liver: Scotch whisky. Scotch is at 10% tariffs in the United States, and there is a potential for that to increase later this year to as much as 25%—in a complicated tit-for-tat that involves aircraft, slightly improbably. That is obviously very worrying, because the Scotch Whisky Association says that that 10% tariff has dropped volumes to America by something like 15%, or £4 million per week. This is quite remarkable—if that was to more than double—so where are we with Scotch?

I wish I could give you an answer, but the truth is that both of those elements are still in negotiation.

Okay.

Sorry. I am very aware and we talk regularly to the Scotch Whisky Association—it says something here and I can’t read it. We are trying our best to get as good a deal as we possibly can.

So negotiations are ongoing, and this is not something that is paused or where chunks of it are going on?

Completely, yes.

I do not know whether Kate wanted to add anything, but this is obviously a huge number: £600 million of exports between 2019 and 2021 when the 25% tariff was in place. I do not know what the current tariff is costing us, but presumably it will not be cost-free. What are the prospects of getting a deal? From what I understand, we have thrown every body in our national armoury at this problem, but it sounds like we have not got something over the line yet.

It is a high priority for us to secure a reduction in the current 10% tariff. It is also a priority to try and resolve the large civil aircraft dispute in a way that we would not be facing increased tariffs on whisky. I was going to point out that, thanks to the Prime Minister’s visit to China, we also secured a reduction in the tariff that we are paying on whisky exports to China, from 10% to 5%. That was a significant win for the whisky industry, and other significant wins were made through the India deal. We are doing everything that we can on whisky, but we are still on the case with the US.

India’s tariff, as you know, is going down from 150% to 75%, and then in later years down to 40%. We have also secured geographical identification in Argentina for Scotch whisky. We work on this all the time—it feels like it is one of our best clients.

It is such a big focus. It sometimes confuses us why food and drink production is not one of the IS-8, but that will be a matter for a later session. Let us now switch focus to Europe, though I appreciate that your colleague Nick Thomas-Symonds is not with you. There is an issue for parliamentary scrutiny of trade with Europe because the understanding given to the Liaison Committee was that scrutiny of Government negotiations with Europe would sit with relevant Committees. We scrutinise the trade relationship with Europe, so we are disappointed that Nick Thomas-Symonds was not able to present himself today as requested to answer our questions. I am afraid you will have to do your best, even if it is not completely your policy responsibility.

Can you give us an overview of where we are now with regards to negotiations on SAFE, SPS and the internal energy market?

If I do SPS first, as I said earlier, the EU Commission got its mandate in November for negotiation on SPS, so we are undergoing that process at the moment. We have said that we want to complete that by the time of the next EU summit, which will be later this year. We still hope to be able to have all the legislation in place in the next 18 months to two years—something like that. But that is partly dependant on the timing with the EU, and I am conscious that there are significant issues that have to be addressed and there is an awful lot of legislation that might need to follow from it. In relation to SAFE, round one is complete and we are not part of it—I think you are aware of that. But that does not mean that British businesses cannot take part: they can, but only in the same way as those in third-party countries would be able to. The SAFE negotiation said one thing to me, which is that you do not just accept any old deal that is on the table. If the price is too high, then it is not good for you, and you do not sign up—that is where we got to with SAFE. You asked a third—

Sticking with SAFE for a moment, Canada is rumoured to have got into SAFE for a grand total of €10 million. We had an offer price of €6 billion. What is going on there, and what is our way through on that?

There is a technical reason why. Basically, what Canada was being offered in proportion to what it was seeking to achieve was very similar to the UK. If you want all the detail on that, we are happy to write to you, but Amanda is about to give some of it. As I say, British businesses are still able to participate, but in a different way.

I am going to add something on SPS while I have the chance. You have essentially said it, Minister, but Canada and the UK have very different defence industrial bases, so we are operating and negotiating on a very different basis, and the outcome of the negotiations reflected that. My understanding is that the number for Canada was not as low as you suggested, Mr Maynard—

Do you have a number?

I cannot remember off the top of my head, but it was not as low as in the tens of millions; I thought it was more than that. The resulting offers were different. As the Minister has said, we had gone into negotiations in good faith, but it did not work from the UK’s national interest in terms of overall value for money, and a decision was made on that basis. Those particular negotiations are led by our colleagues in the MOD. On SPS, while I have the chance, I should say my colleagues in DEFRA published today a list of EU regulations which they expect to align with as part of the outcome of the SPS agreement. They have done that to help businesses prepare. It is not definitive that all the regulations on that list will be covered, and there may also be some not on the list that are covered, but it enables businesses to understand the shape of the agreement and what they may need to prepare for. That was published today by DEFRA colleagues, who lead that particular negotiation.

The third one was IEM—the internal energy market—or electricity market.

The electricity trading market, yes.

Go on.

Similarly, the EU only reached its mandate for that negotiation in November. These negotiations are being led by colleagues in DESNZ. Obviously, we can see there is a great opportunity for the UK to participate in that internal electricity market, particularly in helping to support investment in the renewables sector. Those negotiations are currently under way and ongoing.

Just taking those three and adding in the youth experience, youth mobility and ETS, if the teams—DBT and others—get those over the line in the next six, 12 or 18 months, which I guess is probably your goal—

Earlier than that.

Great—even better. What are your hopes after that? You have the rest of this Parliament. What are the Labour Government hoping to achieve in Europe if we get those put away? What are your goals after that?

As much frictionless trade as is possible. What are the frictions in different sectors? You might have friction about business travel and whether people are able to do their business elsewhere in Europe. Some of that might be about mutual recognition of professional standards—

Qualifications.

Sorry, thank you—mutual recognition of professional qualifications. We are working on a series of sectors at the moment. There are a series of other standards—not just in relation to foodstuffs but in relation to furniture and electronic equipment and so on—where I would like us to get to a position of as much alignment as possible, to have as much frictionless trade as possible.

If we got business travel, mutual recognition and sectors done, is that the apex—the best we can hope for? Or are there other things beyond that which make sense and will help trade between us and the EU?

If you were to do that in all sectors, that would be the job done in one sense. I am conscious that the time taken is always much longer than you think—as, for that matter, is accession to the European Union. In many cases, it takes decades; manging to get all the way through the acquis communautaire is a slow process. I am just trying to be entirely rational about what is achievable as fast as possible. To some degree, the events of the last few years—all the way from a greater recognition in the UK that Brexit was probably not the wisest thing we have done in our life for our trading arrangements to the problems that there have been in international trade, whether that is because of the situation in Ukraine or the situation in the middle east, or because of new tariff regimes or whatever—have made people realise that the UK and the EU are in it together in the end. Some 46% of our trade is still done with the European Union, despite our coming out of the European Union. I have said this privately and I will say it publicly: it is possible, I suppose, that in the next three or four years the answer in Ukraine might be UK boots alongside European boots, although it would not ever be called that. We might effectively be protecting Ukraine, as we were in EUFOR in the Balkans. We might effectively be part of a European army, and then it would be very odd if we were not able to trade fully and freely between one another. That, it would seem to me, would be our getting the world the wrong way around. I want us to be as ambitious as we possibly can in this sphere.

Is that view shared by the Prime Minister or the Chancellor?

I have said these things several times in the past. Of course, I fully recognise the red lines that we have, which is that we are not joining a single market or a customs union. Frankly, if we were to consider either of those things, I think it would be unlikely that we would be able to do them in the next 10 years because of the timetable that these things take, but it is my understanding that that is the view of the Government. Amanda?

I wondered whether you wanted also to refer to EU-CPTPP dialogue, in which you have been playing quite a big role.

Yes—thank you very much, Amanda. Part of my anxiety is that, in essence, I am a free trader: I believe in having free trade wherever you possibly can—preferably free and fair trade, which means that you have to consider responsible business conduct as well to make sure that you have a world trading system that works for everybody. My anxiety is that if the World Trade Organisation were to fall on its face in the next few months, or if it were to be diminished, that would be a long-term problem for trade and for prosperity not just for the UK but for some of the poorer countries in the world in particular. That would be a problem for all of us. The disruption that would fall if the WTO were to collapse would be equivalent to closing the Panama canal, and we can prevent that. The relationship between the EU and the CPTPP at the moment, which would represent something like 35% of world trade, is a really positive possible development.

The appellate body is essentially defunct—stop me if that is too harsh a term—so there are quite a lot of mutterings about the Cameroon meetings. Could you scope out what the UK is thinking in terms of how you would like the WTO to look if there were changes? What reforms do you think are necessary to make it a functional entity?

We appreciate the policy paper that was published today, I think, with quite a punchy interview in the Financial Times. I do not think there is an oral statement proposed for this yet, although that would obviously be a good idea. The policy paper is pretty high level, so what are the real ambitions that the UK is bringing to the table?

I think there are only about six countries that have produced a paper for the WTO so far. The US was early out of the doors and then the EU, and we have joined that group now. Part of our rationale is that we certainly want to see reform of the WTO so that it survives and meets the challenges of today. A classic instance is the fact that it has not managed to get the electronic commerce moratorium over the line at the last ministerial and it meets only every two years. We therefore need to have a process that enables it to reflect and make more decisions more frequently. Secondly, the WTO needs to be able to allow plurilaterals, where they are not doing any harm to anybody else, to be able to function under WTO rules. Thirdly, we need to look at how we make decisions, because consensus can be a dangerous stricture that can mean you never make a decision about anything if one person in the room can effectively stop everybody else. We do not have a fully functioning appeal process, and that needs to be back in the equation. We need to make sure the WTO is agile and accessible. I personally would change some of the language that is used in the existing system, such as “most favoured nation”. I am not meant to say this, I know, but the most favoured nation concept does not mean the most favoured nation at all; it means that everybody is equally most favoured. Some of this makes it incomprehensible to the vast majority of people in the world, so some of that needs to change as well.

That is quite a sweeping view of some reform at the WTO, and quite a sweeping view of where alignment might be needed with the European Union. Are there particular sectors of the economy where you think the kind of alignment you have set out is off limits with the European Union?

I can’t think of any.

Okay. You have sketched out most of the economy.

I have.

Okay, that is in line with what the Chancellor said. She said at the LSE that some of the alignment will have to be unilateral, and some will have to be negotiated. She is pretty ambitious for the amount of alignment that is being forecast. Presumably the new Bill will make that much easier.

Look, I meet businesses that say to me, “10 years ago, I could easily just send a sample of something that I want to sell in country X in the European Union through the post, and now I can’t.” At one company I visited last week, the director actually flew to Madrid to take a sample to the licensing company. That is just preposterous. Sometimes these are issues around how some of the EU rules are differently interpreted in different countries in Europe, and some of the work we need to do is about our bilateral relationship with each of those different countries. That is one of the reasons why I was very keen that we have trade envoys for France, Germany and Italy. We are doing work on some recognition of qualifications in Spain, for instance, with accountants, as well as specific work in Germany. We need to do a lot more of that, but in the end, we need to be far more ambitious about our relationship with our nearest neighbour.

The European Union will ask for some concessions from us, around both mobility and money, but let us turn to youth mobility first.

This is something that has excited and captured the attention of lots of young people in Weston-super-Mare and, I imagine, across the country. What conditions, in your view, must the UK impose on any youth experience scheme that it agrees with the EU?

Broadly speaking, we have existing schemes with Australia and New Zealand, so we want to have the same kind of pattern of agreement. That is the process we are negotiating at the moment. I know I have said this rather often today, but this is a Home Office lead responsibility, rather than DBT.

It is lucky you have such a broad range of ministerial office. What is currently on the table in terms of numbers, age limits and access to home fees at British universities?

You are asking me to negotiate publicly, and I am not going to do that. I haven’t got those details and I won’t be able to provide them to you.

Okay, let’s go to Mr Madders—no, on second thoughts, let’s do money first: Mr Cooper.

Is Mr Cooper money?

Well, as you know, money talks; all mine ever says is goodbye. Looking at the EU cohesion fund, which is basically a method by which we trolley money to Greece, Estonia, Slovakia, Poland and others with national incomes below 90% of the EU average, we are now expected to contribute to that. Do you have any sense of how much that contribution will be as part of the reset? How will we ensure value for money for that? This seems to go back to SAFE, and the idea that we will be asked to pay into these things to access them. How do you balance that out?

Every time that I go back to my constituency in the Rhondda I drive down a road that was built with cohesion funds, but Amanda will answer that.

The proposal that you are referring to came from the Commission and was set out in December last year. It is fair to say that that position does not represent a proposal by the Government. Therefore, I am afraid that there is no further comment I can make on it in terms of that.

To be clear, though, it is something that has been proposed by the EU—they have invited us to put in money if we would like to, or they would like us to.

They have set a proposal that the European Council should open negotiations with the UK on contributing to that fund. That is the proposal.

And we have not picked that up. Are we saying no or are we still considering it?

I am unaware. That would not be for DBT, I am afraid.

Where we are signing up to a scheme that has some administrative costs, of course, we accept the need that we would have to pay some share of that.

So you have not ruled this out in principle, then?

I do not think we have publicly said either yea or nay.

I think the common understanding says that the UK has committed to “appropriate financial contribution” as part and parcel of both the ETS and SPS participation. We have obviously heard from you today about proposals for much wider dynamic alignment across a much wider slice of the economy, and you have also talked about ambitions to reboot the MRQ negotiations as well. We have heard directly from the Commission that as deeper alignment and integration are sought, there will be an expectation for more latitude on the movement of people but also more money going into cohesion funds. Given that we have accepted in the common understanding the “appropriate financial contribution”, we are interested in what the range of figures might be.

Amanda?

I am afraid I have no further information on that.

Nor do I, for two reasons. First, there is an element of speculation about where we might end up at the end of negotiations. Secondly, as I said, I think the only firm principle that I have is that where we are signing up to a scheme that has administrative costs, it would only be fair for us to bear our fair share of that burden.

Can I ask a practical question? With the contribution and cohesion fund payments, is there a clear table that says, “Okay, if it’s going to be this, look down here and here it is”, or is it completely a black box: “The EU says you have to pay this”?

I have not seen either a or b, actually.

So is it sort of entirely unknown? Is there any public information available on how they calculate what?

I have not seen a request for money in any shape or form.

But you are not ruling out the principle of further UK financial contribution?

I am not saying that we are making contributions to the cohesion funds, just to be clear. I am saying that when we join, for instance, Erasmus+, if there are administrative costs, we would be sharing part of that cost.

You have already talked a bit about the Made in Europe position, and you were right to identify that on automotive, we have some more work to do. I think you suggested that fleet vehicles and one or two other areas were currently excluded. My understanding is that if you take all the areas that are not part of Made in Europe at the moment, that is over 50% of all exports from the automotive sector. That is a big chunk to try to recover. Given that the Department has been engaging very seriously on this, what analysis is there as to why we have ended up in the position where quite a large part of the automotive sector would not be included?

If you had asked me before Christmas about where I thought Made in Europe was going to end up, I was very worried that we would be in a much worse place than we are now. For instance, the element that refers to the general procurement agreement—

Government procurement.

Government procurement agreement, sorry. That element is helpful, and I was pleased to see the version that got published, but in relation to automotives, we are in a more difficult position. I am determined to win this. Since we have left the European Union, I think sometimes the UK has thought that a negotiation with the EU happens one person to one person, but it is the whole of the UK—all our sectors, all of industry and everybody else—with the whole of the European Union: the member states, the Parliament, the industrial sectors, and the Commission. That is what we need to engage in, and I am looking for recruits to help in that campaign over the next few months.

Can I just add one small point, Mr Madders? To make sure everybody is clear about this, autos are out for everybody—every other country that has been brought into the Made in Europe tent. It is not that the UK has been singled out in that context.

It is all third-party—

It is a general exception, not a UK-only exception.

Yet I think for the people engaged in the £70 billion-worth of trade, that remains a—

I totally take that point.

We are not minimising it. Obviously, at some point we would want to make sure there are amendments to the Act before it ends up finally going through its trilogy of processes.

Absolutely, but I did not really get a sense from you—other than this is just applying to everyone—as to why various parts of the sector have been excluded, and critically how we are going to win the argument that they should be back in.

I think the most important part of the argument is that this does damage to an awful lot of European businesses. That is the most important thing. I have said this repeatedly, and this is the argument that the Swedes made very convincingly just after the Secretary of State’s visit; there was an article in the FT by the Swedish Prime Minister—I think I am correct. Likewise, some other European countries have made a very strong argument that this is actually dangerous for them.

Of course it is.

And the CEO of BMW has made this point.

That is why I am very hopeful that we will win this argument.

Would you say there are quite a lot of member states that would be in that place?

Yes, from the conversations that I have had with my counterparts. I think I am going to have to persuade them for 10 minutes and then they start with it; they say it before I do, because it is as damaging for them as it is for us. How many cars are made just in one country—the final thing? Hardly any, if any.

Absolutely. Do you see any people who might be advancing a contrary view in the EU?

I am told there are others making a different argument, and I am visiting Paris on Tuesday.

Okay. I was going to ask whether you could update us after that particular visit.

I am very happy to. I am going to Brussels on Monday, I am going to Paris on Tuesday, and I think on Wednesday I am going to the Netherlands, as well, to meet members of the new Government there.

Thank you for your travel plans.

Which are the most problematic parts of the Industrial Accelerator Act that you have seen? We have obviously looked at some bits that have been well discussed, like the power to exclude countries, in whole or in part, via delegated acts on reciprocity and economic security grounds, but are there other particular elements that you think pose most jeopardy to the UK economy?

I might have to write to you, because although I read it all last week, it is not at the top of my mind. When I met with SMMT on Wednesday or Thursday—whichever day it was—the key point it was making to me was about access to fleet sales.

That is correct.

In terms of what you have seen so far, are there any unexpected wins? Obviously the fact that we are still on the pitch in terms of automotives is a good thing, but are there other areas where you would say we have done better on the first draft of this than you expected?

The draft that was published was, I think, not the version that was anticipated in December, and the draft that was anticipated in December would have excluded us from everything. That is why, notwithstanding the very significant concerns we have about the automotive sector, I was pleased last week to see the version that came out. I met with—I have forgotten his name—the chair of the committee in the European Parliament, a German MEP. He was adamant—

Bernd Lange.

Yes, that’s right. He was adamant that he was going to make sure that, before the Act was published, it was going to be more sensible. I am very hopeful that he and the German Government will be yet more helpful over the next version, when it comes to going through committee and so on.

Thank you. Can we come, Mr Cooper, to the challenge of—

Sorry, Chair. If I might, I think there is actually a role for the Select Committee in relation to this. If we want to win some arguments in the European Parliament, it may be that the Select Committee here might want to speak to them.

You will be very pleased to hear that we have begun those discussions with our counterparts in the European Parliament.

On hauliers, the new EU entry/exit system will limit the time that drivers can spend in Europe. In fact, their fortnight in the costas might actually count towards the time that they spend on the continent for the purposes of their work. I have hauliers in my constituency, Dumfries and Galloway, who are very troubled by that. There are other hauliers who say they are going to shift operations to the continent, though that is not an option for my hauliers. Are the Government considering this whole piece? What might you be doing about that?

There are a whole series of issues relating to hauliers where we have some concerns; I will ask Amanda to respond more fully in a moment. I have hauliers in my patch who have raised similar concerns. We are discussing the issue with Commissioner Šefčovič and his colleagues in the Commission. Another area that I know has been of concern to several Select Committees is hauliers’ support for touring of theatre, opera, ballet and musical acts. Hauliers are a really important part of British acts being able to perform across the whole of Europe; it is not just about visas for individuals who might be performing. That was referred to in the summit last year and is an issue we are discussing with them.

We are working with a number of EU member states to raise the issue, as well as the impact that it will have in their countries on supply chains and so forth. We are looking at how we can work with them to reduce queues at entry points and elsewhere. We continue to talk to the sector on a regular basis to make sure that we have fully comprehended their concerns, as we get more information and as they learn more. That includes colleagues from relevant bits of the Department attending some of their leaders’ forums. I know that Minister McDonald had a roundtable earlier this year to talk about a wider range of challenges and opportunities that the sector is facing, not just in the context of the EU.

Let us round out with the EU reset Bill. I am sorry that Minister Thomas-Symonds is not here to talk to it, but he has told the House that this is not going to go through pre-legislative scrutiny. We assume that it is going to be presented in the King’s Speech and that it will give Ministers pretty sweeping powers to dynamically align the UK economy with EU regulations, without primary legislation. You have talked quite extensively today about some of the sectors that are priorities for you, such as business mobility and MRQ, and you have set out quite broad areas of the economy where you want to see some alignment. Are the Government going to produce a White Paper for this Bill, or is there going to be a position statement about what the priority sectors are for dynamic alignment?

This is the only time that I am going to do this, but I am afraid that that is a matter for the Cabinet Office, not for me. So far as I am aware, a decision has not yet been made.

On whether there will be a White Paper, or on what the priorities might be?

On any of the above, or indeed on the patron of the legislation or whether it will be in the King’s Speech. Some of those matters will be for the Leader of the House rather than the Cabinet Office.

In that case, we will continue in our efforts to have Mr Thomas-Symonds come in front of us. Finally, the Committee has been engaged in a lot of work on economic security—thank you for your help with that. There are some areas where the EU is now slightly ahead of the UK in economic security matters. Arguably, one is around critical minerals, where the RESourceEU plan was published before Christmas. The second is the anti-coercion instrument that has been developed. The third is the aggressiveness with which the Commission has opened anti-dumping investigations when it comes to China, with about 140 investigations already open. Where do you see the big opportunities for working together with the European Union to strengthen our economic security for the future?

I am grateful, Chair, for your comment that 60% of what the Committee recommended in this area is being adopted by the Government. That is certainly the case. I know there are a couple of areas where we disagree. I wanted to make this offer to the Committee: if you can come up with a specific power that you think we need to take, rather than a generalised power, then I will be very happy to consider how we might take that forward. However, when I read the report I could not see a specific power that you wanted us to take, which is why we pushed back on that. We have a trade remedies process—I can see you smiling, Chair, so you are obviously not very impressed by it.

It is hopeless.

Okay. I think it has teeth. But anyway—

We are improving it.

And we are improving it. I think there are further areas where, on the back of our business conduct review, we may want to align ourselves more closely with the EU and, for that matter, other countries. I think that, as I said earlier, we need to do more in relation to anti-competitive practices around the world. But we have not had specific discussions with the EU around that. Sorry, did anyone else want to say anything?

As I think you know, Chair, we have a programme of work, which we have partially set out in the trade strategy, to strengthen our trade defence toolkit. Our Secretary of State has given a strategic steer to the Trade Remedies Authority to lean in more. We have some measures in the Finance Bill on setting duty rates and giving the Secretary of State clearer power to initiate investigations, which at the moment is somewhat circumscribed. We are also seeking views on whether or not we need to take new powers around economic coercion, potentially along similar lines to what the EU has—although we are one state and they are many, so it probably looks slightly different. But we are looking at options around that. I do not think that we would subscribe to the view that our toolkit is useless, but we are trying to strengthen it because we recognise that there is a lot of change around this.

Let me give you a specific example. If China once again constrains rare earth exports to the UK, say, what are we going to do about it?

We have not actually been targeted specifically by China on rare earth exports so much.

But what if we were tomorrow?

That is a fair question to ask, because that is precisely the sort of situation that we want to try and avoid, and we want to improve our toolkit to be able to respond to that. That is why we are looking at taking more powers around adverse economic pressure and being able, if needed, to raise tariffs around that kind of coercion.

Wouldn’t we stand a better chance of deterring that kind of behaviour if we were joined at the hip with the European Union on anti-coercion? They are a big bloc; we are a small country.

It is certainly one of the things that we are considering and it is part of the equation. But of course the opposite applies as well, which is this: would China bother taking such an action against us on our own? Probably not.

It did to the Norwegians.

It did indeed. But Norway is—well, anyway. One of the things that infuriates me is this: how on earth did we get to a place in the world where, despite the fact that critical minerals are deposited and extracted in large numbers of countries around the world, many of them are either 70%, 80%, 90% or 95% processed in only one country in the world? How did we allow ourselves to get to such a daft situation? That is why we produced our critical minerals strategy before Christmas. Again, it is not my direct area of responsibility, but it is one of the pieces of work that I am taking forward with Jeffrey Goettman, who is my US counterpart and who I am meeting in a few minutes, as part of the work that the US wants to do on this.

Equally, if, as we know to be true, China is subsidising its industry six times more than we are—we know that because the OECD has made it clear through its magic database that those are the numbers—that poses a real threat to, for example, European manufacturing, European automotive and European offshore wind. I mean, how do we deter that kind of behaviour?

Indeed. But also, the free flow of trade is vital to everybody.

We are not going to have any trade left if they wipe out our manufacturing industry with these subsidies.

True, which is one of the reasons why we quite often focus on our services capacity. That is part of our negotiation with China at the moment—to be able to unlock much more potential with UK trade and services to China.

Can we agree that there is a need to police Chinese over-subsidisation of its manufacturing base and that that poses a material risk to the European manufacturing base?

Of course. If you go back to steel, which is the classic instance, I think from memory that—I might have got these figures wrong—in 1970 we produced 27.8 million tonnes of steel in the UK. That was our peak. When we got to 2010, I think it was something like 9.4 million and now it is 4 million. The rapid fall in the last bunch of years is as dramatic as anything you can consider. We need a steel industry in the UK, especially if we are going to be effectively rearming as we have to in order to defend ourselves. We will have to be able to produce our own steel. To return to one of our earlier conversations, that is one of the reasons why I am absolutely certain that we will make sure that we protect our steel industry and why we want to get it back to the place that it was.

Well, we accept your challenge to engage in a debate about how we strengthen our anti-coercion, anti-competitiveness and anti-dumping measures. We look forward to scrutinising the plans on critical minerals with the new critical minerals inquiry that we have agreed this afternoon.

You did not have to coerce me.

I certainly did not. We could do with a bit more coercion of some of your colleagues, however. Thank you very much for coming in front of us. We really appreciate your evidence. That concludes the session.