Northern Ireland Affairs Committee
Oral evidence: The work of the Department for International Trade in Northern Ireland, HC 676
Wednesday 19 October 2022
Ordered by the House of Commons to be published on 19 October 2022.
Members present: Simon Hoare (Chair); Mr Gregory Campbell; Stephen Farry; Sir Robert Goodwill; Claire Hanna; Ian Paisley; Bob Stewart.
Questions 1 - 40
Witnesses
I: The Rt Hon Greg Hands MP, Minister of State, Department for International Trade; Amanda Brooks CBE, Director-General, Trade Negotiations, Department for International Trade.
Examination of Witnesses
Witnesses: The Rt Hon Greg Hands MP and Amanda Brooks.
Q1 Chair: Good morning, colleagues, and good morning, Minister. Thank you for joining us this morning. It is nice to see you back in Government. I am tempted to quote Max Bygraves: the Prime Minister has learned the lesson that You Need Hands.
Ian Paisley: Oh dear. That is the end of the Committee.
Chair: I might have sung a bit of it, so you got off relatively scot-free, Greg. Do you just want to introduce the official with you? I think you wanted just to say a few opening remarks. We will then turn to questions. We have an hour this morning, so we will be pithy in our questions and, if you could be focused in your answers, we can cover the ground that we wish to.
Greg Hands: Thank you, Chair. It is a pleasure to be with you this morning. I thank the Committee for affording me the opportunity to attend this session on behalf of the Department for International Trade. I am delighted to be joined by Amanda Brooks, who is my director-general for trade agreements. She will be offering any of the detail in support of my responses.
It is great to be back at the Department for International Trade. You will remember, Chair, that I was here at the beginning of the Department for International Trade back in 2016. I have been out the last year but am impressed by the amount of progress the Department has made in the last year.
Let me just turn specifically to Northern Ireland. In March this year, the Department opened a DIT hub in Northern Ireland to boost exports. Northern Ireland businesses should have equivalent access to and knowledge of DIT’s export services as the rest of the United Kingdom. Through capability-building programmes, peer-to-peer support and access to UK export finance, the aim is for Northern Ireland’s businesses to keep growing through international exports.
The DIT Northern Ireland hub was also created to increase Northern Ireland’s voice in trade policy discussions, free trade agreements and so on. Part of this is working to ensure that Northern Ireland businesses and consumers can benefit from the measures in FTAs, from increased market access for Northern Ireland’s goods and services, new opportunities for contracts with foreign Governments under procurement arrangements, and much more.
The UK, as we know, has trade deals with 71 countries plus the EU—partners that accounted for £808 billion of UK bilateral trade in 2021. We continue to work with the Administrations of Northern Ireland, Scotland and Wales, and their nations’ businesses, across every FTA in our programme to ensure that they deliver for the whole of the UK. Equally, foreign direct investment is a critical component of this, and we are also working very closely with Invest Northern Ireland.
Most importantly, we are leveraging DIT’s global overseas network, which is one of the strongest in the world, in over 100 countries, to showcase Northern Ireland’s strengths and investment possibilities in order to ensure maximum coverage for foreign investors.
Q2 Chair: Minister, thank you for that. I am sure that the first thing that this Committee would want to record with you on the record is how important we think this is, how beneficial we think it could be, and how welcome it is as an initiative of your Department. It is good to see what has been traditionally a Westminster-centric organisation looking out to all parts of the United Kingdom, so thank you for that. It is welcome.
You referenced there working closely with Invest NI, and I am sure we will all agree that it is always good not to duplicate or triplicate work, and to get everybody on the same page and looking in the same direction. Could you tell us about how all of that works with Invest NI and, indeed, with the Executive? Are there formal tripartite meetings? Are there memorandums of understanding? How is it going to work in order to ensure that everybody is pulling in the same direction and at the same time?
Greg Hands: I will bring in Amanda in a moment in terms of the documentation process that might be there. If I were to go through the overview, what used to be the ministerial forum for trade has changed its name in the last year, since I have been away, to the inter-ministerial committee on trade. It is between ourselves and the three devolved Administrations, working closely with Gordon Lyons and the Northern Ireland Executive. That is the starting point.
In terms of the working together between DIT and Invest Northern Ireland, we have nine people already in Erskine House. We are going to be growing that to 75 people, with a really significant presence. Chair, I might take issue with your comment that we have always been Westminster-focused, but we are becoming more focused on the nations and regions. We are looking at a total of 750 roles outside of London by 2030, in Belfast, Edinburgh, Cardiff and Darlington, so there is a real move to get out into the nations and regions.
We are looking to not crowd out Invest NI in the areas that it knows best—Northern Irish inward investment possibilities and even, potentially, companies that are looking to do outward investment—but to marry that with DIT’s global network. This is something that, realistically, Invest NI is not going to be able to match. Accessing those markets with our superb network of commercial diplomats is something that the UK has always done really well through the days of DIT and UKTI. We have superb people, and not always in capital city-type places, but superb representation in places like Munich, Los Angeles, Chicago and Osaka, really bringing in where the export and inward opportunities for Northern Ireland are going to be.
Q3 Chair: It will not be a strict division of responsibility, but, from what you said there, do you see Invest NI being more focused on bringing companies in, and your role as helping those companies, once they are there, sell their products and services overseas?
Greg Hands: We are not looking to change anything that Invest NI does at the moment. We are looking to leverage where the UK will add real value in terms of our global network. We will also be talking, of course, as we always have done, directly with Northern Ireland companies, but the idea is to be complementary rather than a replacement. The two offices are only a 10-minute walk away, and there is a great potential to be working really strongly together, as, to be frank, we do with Scottish Development International and the Welsh equivalent. There have always been close working relations.
Could I just bring in Amanda? Do we have some MOU-style relations?
Amanda Brooks: The ministerial group has agreed terms of reference. It meets at least quarterly. We also have a supplementary senior officials group that meets every six weeks. We often meet on top of that. To give you an indication of the breadth of the conversations that are going on, in the context of the Australia and New Zealand negotiations, we had over 100 hours of discussions with policy officials from across the devolved Administrations to ensure that we were receiving the information that we needed in order to do the best possible job that we could do in the negotiations for the UK as a whole.
Q4 Chair: Minister, you mentioned embassies, which are critically important. The soft and, indeed, the hard power of our diplomatic outreach is well recognised. If you are thousands of miles away, people often see the UK as just it. We see it as the four nations of the United Kingdom. How will you be ensuring that FCDO and others are making people understand the unique opportunities and benefits of investing in Northern Ireland, as well as in Wales and Scotland? How are they going to deal with that bit of the mix?
Greg Hands: This is something that we have very good experience of. In my experience, having now been in this role three times, our commercial diplomacy network is very well aware of the potential and actual deliverables from the nations and regions of this country. It is always worth remembering that our diplomats come from a pretty good diversity. Our ambassador to Germany is from Northern Ireland, for example. There is a really good existing diversity of people from across the UK doing these roles.
It is about knowing particular sectors and what the potential and the capabilities are. People are well aware of potential and actual deliverables. There are a whole series of sectors in Northern Ireland—food and drink, machinery and Irish whiskey—that are obvious, but some that are less so. Belfast is a fantastic digital capital within the UK. Digital trade agreements, for example, will also have fed into them. We recently did a fintech conference in Singapore, where two of the seven companies that went were from Northern Ireland. It is about knowing what Northern Ireland does and where the inward investment possibilities are, but also being dynamic about it and looking at new possibilities and openings that are opening up.
Q5 Bob Stewart: You have covered quite a lot already, Minister. I am just going to ask a question about the DIT Belfast hub, but you have already said that it opened in March. You said that it has nine people now.
Greg Hands: At the moment, there are nine dedicated people.
Bob Stewart: And it is expanding to 75.
Greg Hands: Yes.
Bob Stewart: That is set up, so it really is a working entity right now.
Greg Hands: Correct.
Bob Stewart: And it is in a place called Erskine House, which is in the centre of Belfast.
Greg Hands: I have yet to go to it, but I believe it is.
Bob Stewart: Have you been?
Amanda Brooks: I have not yet, no. I have not had the opportunity.
Greg Hands: Ministers Fysh and Burns, my immediate predecessor, have been so far this year. I am only, as I mentioned, eight days into the role. I have not visited any of our offices yet, apart from the one here up the road, but I will be visiting.
Q6 Bob Stewart: When it is functioning, presumably we might visit it ourselves, Chair, at some stage. You have covered most of the questions. There is only other question that I wanted to ask. Are there any DIT staff in Belfast who are not now part of this hub? Do you have other people there by any chance?
Greg Hands: I do not believe so.
Bob Stewart: So it is nine staff there now from DIT, expanding to 75, which is pretty good.
Greg Hands: It is a very significant presence, if I might say. That is on top of the existing Invest NI capability that is there. As I say, the intention is very strongly to be complementary, not overlapping and trying to do the same thing.
Bob Stewart: Just for information, Minister, I am now the chair of the business in Northern Ireland APPG, so I am working with people like Frank Shivers, who the Chair knows.
Chair: Yes, indeed.
Q7 Bob Stewart: Chair, I hope you will be part of that group too, if you do not mind. We will be visiting various companies in Northern Ireland. We were going to go this month, but it is too much.
Greg Hands: I am well aware of Colonel Stewart’s longstanding interest in Northern Ireland. He will also know that, when I was chair of the alternative arrangements commission, I met with a lot of Northern Irish businesses. I met with Stephen Farry as well. It is a community that is always fantastic to engage. It is a great community. It is quite a close-knit community, but one that is always outward looking and keen on export investment and very keenly aligned with our overall global UK agenda.
Bob Stewart: Chair, this is the final point I will make, because I am overstepping my time.
Chair: You are.
Bob Stewart: There is considerable interest in Northern Ireland in linking to the UK Parliament, as I understand it. Chair, I shut up.
Q8 Ian Paisley: Minister, I have had some dealings with your staff in Northern Ireland, and I must say that they are very sharp people and really good. The most important thing is that they are accessible. For a local politician, having accessible staff who come back to you and respond, and who have the clarity to say, “That is not one for us; that is for Invest”, or, “Yes, that is one for us; this is the person in our organisation who you should be talking to”, is really helpful. So far, it has been brilliant, and I do hope that that footprint, when it increases, continues to have that flexibility and accessibility.
There is one thing, though. You are missing something in terms of the synergy with Invest. Having you all in the one building and that proximity to each other would up the game again considerably. There is space in the Invest Northern Ireland building and a good opportunity there, so it might be something that you consider in terms of making that hub a real buzz point right in the centre of Belfast. It is right opposite the Ulster Hall and behind the City Hall, and a very good place to consider.
Greg Hands: That is a very constructive suggestion. That probably will not be wholly within my remit; I will have to have a word with the Northern Ireland Office and the Secretary of State for Northern Ireland. I hear what you say. I certainly would like to have a look when I am there as to how they are working well together.
If I might, Mr Paisley raises a very strong point, Chair, about the importance of MPs in all of this. DIT absolutely recognises the importance of interacting with Members of Parliament. Very few people, if any, are better placed to know their local businesses. MPs are a port of call if businesses feel that they are not getting the service that they need from central Government or if they have suggestions on how to improve things. I know, in work that we have done with the Irish Whiskey Association, Bushmills and others, how important that work can be with individual Members of Parliament who have businesses or sectors that are looking to export or to seek more investment. That is a very important part of our work.
Q9 Ian Paisley: I will not embarrass the Minister by naming the two key members of staff I have dealt with, but there are two exceptional and very helpful people there.
Northern Ireland is hitting nearly full employment, which is an issue for whenever you do attract more investment. Are you doing anything in terms of attracting BNOs—Hongkongers—into Northern Ireland? Are you doing anything to make that link to get us a bigger and more diverse workforce? Is that something that you can synergise with other Departments and make happen? I am sure that all of us in our constituencies have manufacturers that cannot get people.
Greg Hands: It is a good question, and thank you, Mr Paisley, for your praise for our staff. I do not want to say that any particular Department is better than any other, but I have always been incredibly impressed by the dedication and professionalism of DIT staff.
On your specific point about attracting Hong Kong migrants to the UK, that is not within DIT’s purview, but I might pass on your comments to the Home Office and see if I can get a Home Office Minister to respond to you or write to you, perhaps via the Committee Chair.
Q10 Claire Hanna: Minister, welcome to the Committee in your role. How is the Department engaging with businesses in Northern Ireland to let them know about the hub and the services that you can offer?
Greg Hands: Again, it is a very good question. There is continuous engagement, but, within that, there are very specific programmes. We will be launching our export champions for the first time in Northern Ireland later this year, for example, which will be successful local exporters, across a range of sectors and regions within Northern Ireland, that currently export to international markets, looking at best practice and how others can learn from exporters.
As you will know, one of the biggest obstacles can be being a first-time exporter—where do you start, how do you start, and what are the obstacles? It is about setting up a system whereby we recognise export champions as providing a model for people, if you like. More than 140 businesses in Northern Ireland have signed up this year’s UK Export Academy. That is a key part of activity going forward.
In my engagement in different roles with businesses in Northern Ireland, a lot of them are already very highly export-oriented, particularly the agriculture sector. I cannot remember the number of times I have met with the Ulster Farmers Union. They are always engaged in selling their excellent produce. I will never forget how pretty much the first thing our ambassador in Washington, Karen Pierce, did when she arrived there was to dine out, literally, in the British Embassy’s garden in Washington, on Northern Irish beef.
We are keenly aware of a lot of the high-quality produce coming out of Northern Ireland, but also some sectors that, if I might say, are perhaps less obvious, such as the machinery sector, which is a big seller into Australia and New Zealand, and will be helped by those trade agreements. There is a lot of activity there, but it is not just about the obvious sectors. I mentioned digital earlier, so it is about bringing in some of these newer sectors. We have set up various programmes, such as the export champions, the export academy and so on.
Claire Hanna: You will be aware that, under the protocol, even with all the barnacles sanded off, to quote the former Prime Minister, Northern Ireland will have unique dual market access to both the UK single market and the EU single market. You will be aware that a lot of manufacturers, particularly in agrifood, are really embracing that and making it part of their offering. It is a unique selling point that many people believe can really start to reverse a lot of the low productivity and sluggishness that has dogged Northern Ireland and fed into the politics as well. The best peace process is a job, so creating those opportunities, as manufacturers want to do, is really important.
What in particular is DIT doing to connect people with those opportunities, including other businesses elsewhere in the UK, which, I am aware, over the last few years since Brexit, have been advised to have an EU base in order to minimise friction when they are selling into the European Union, our biggest market? What are you doing to encourage investment in Northern Ireland on that basis.
Greg Hands: There is a lot of content in that question, but let me start off.
Claire Hanna: I am sure you are up to it.
Greg Hands: I know that you had the Secretary of State for Northern Ireland in yesterday, so I will not particularly add anything. You mentioned the protocol. We should be absolutely clear that we do not think that the protocol is working for Northern Ireland. We want to see significant changes to the protocol, which I am sure you asked the Secretary of State for Northern Ireland about yesterday.
Q11 Claire Hanna: Notwithstanding that, the current and former Prime Ministers have committed to retaining Northern Ireland’s access to the single market, which is something that the vast majority of electors and businesses wish to protect. As such, even when you address issues around checks and lanes, we will retain that access, unless something very dramatic happens. It is about how we are going to exploit and invest in that.
Greg Hands: Notwithstanding that, Northern Ireland is in a very good position to be a really strong exporter. We might come on to discuss how UK trade agreements work on the ground. For the services aspect, without going too far into trade history, one of the critiques that the UK would often make of EU trade agreements was that they were insufficiently services-oriented. UK trade agreements will be much more services-oriented, and the ability to access those agreements will be really strong. The ability to export unfettered to Great Britain is going to be a key advantage of Northern Ireland compared to, say, parts of the European Union. That is another key advantage going forward. Northern Ireland has a number of key advantages. Notwithstanding that, there are problems with the protocol and how it is working on the ground, particularly in areas of trade.
In terms of connecting people, a lot of the work is around exactly that—connecting export opportunities, sourced by the UK diplomatic network overseas, and advertising those within the system. We have tried, over the years, various ways to refine and improve this with digital tools, information services and all this kind of thing. That continues to work well. We are looking at where the opportunities are—for example, the city of Essen needs new buses, so we are connecting it with Wrightbus or other companies—and any obstacles that our exporters are facing. That could be anything. For example, you do not have to have a lot code on Irish whiskey being sold to Taiwan, which brings a risk of counterfeit. How do we engage our overseas trade partners to make sure that these kinds of nitty-gritty trade barriers are removed?
Q12 Claire Hanna: We do have really big advantages. Ian Paisley referenced the issue of talent, which is a very big problem, in terms of both the skills deficit—and we need an Executive to advance a lot of that—and the immigration framework. Northern Ireland has more or less net immigration. Our immigration problem is young people leaving.
Specifically on harnessing that dual market access, will the Department commit to putting a strategy in place after this negotiation has been concluded, on the basis of dual market access? That is not expected to change. This is an opportunity for a real Brexit benefit and to really catalyse growth, employment and all sorts of opportunities in Northern Ireland. If there is no strategy in place from the Department, there really should be.
Greg Hands: There very much is a strategy in place—our export strategy. We are looking at the world as a whole, of course, so export opportunities to and beyond the EU, and how we can maximise the benefits to Northern Ireland and the whole of the UK in our approach to this. You are right that there will be some key plus points for Northern Ireland.
You mentioned migration of young people, but Northern Ireland still has the youngest demographic of any part of the UK, which is very attractive for inward investors coming into Northern Ireland. A young, well-educated, digitally enabled workforce is something that they are increasingly looking for. That is one of the big pluses on the investment side. The talent that is available in Northern Ireland is a massive plus point, for exporters and, more particularly, for foreign direct investment.
Q13 Mr Campbell: Minister, you are very welcome. On the issue of the hub and how it might develop, Northern Ireland is quite a small part of the UK. You said that, when it is fully ramped up, there will be about 75 employees. How does that compare pro rata to Scotland and Wales?
Greg Hands: I am not sure. There are 750 roles in all by 2030 outside of London, 75 of which will be in Belfast. It depends on how you define English regions, but that seems to me a pretty good number for Northern Ireland overall.
Mr Campbell: It is about 10% then.
Greg Hands: The aim is roughly 10% of the total by 2030—750 roles outside of London, of which 75 in Belfast.
Q14 Mr Campbell: On the composition of the Northern Ireland job market and what we do well, quite a bit of Northern Ireland’s business sector is SME-oriented, as you will be well aware. Are the hub and your other activities going to try to develop the SME sector even beyond what it has done quite successfully in recent years in terms of reaching beyond the normal confines of these islands?
Greg Hands: Yes, absolutely. One of the great things about having more people is that you can greatly increase your coverage and dig down more deeply into SMEs. The UK is very much an SME-based economy. Along with the US, we are the two economies in the world where SMEs are a huge part of our economies.
That is one of the reasons why, in all our trade agreements, we try to negotiate an SME chapter—specifically, how can an SME navigate these huge trade agreements? With a 1,000-page trade agreement, if you are running an SME with eight or 20 people on your payroll, you are not going to want to, or have anybody able to, read that, so we put into these trade agreements an SME chapter. What are the key things that an SME needs to know that will improve their exports to, for example, Australia or, soon to be, we hope, the CPTPP and New Zealand. There is very much a focus there.
Amanda Brooks: Inside the hub, there are already a number of sector specialists in place. There are three sector specialists covering advanced manufacturing, agriculture, and food and drink. That specialism also helps us to support individual businesses more in line with their business needs in terms of their opportunities and those in other markets. That sector specialism is a really important part of our ability to reach into different business communities and support them more effectively.
Q15 Mr Campbell: That is very helpful, because that leads me into my final question. The issue that I have quite often found with Invest has been to ensure that it gets beyond the confines of the Greater Belfast area. It is a phenomenon that exists everywhere. I hear it from colleagues in GB in terms of getting beyond the south-east of England or, in Scotland, the central belt. In Northern Ireland, we have the Greater Belfast core.
I am thinking about, for example, the chambers of business and commerce that exist around Northern Ireland. Is there going to be a concentration of trying to speak to them to see where their specialities might lie, and then individual sectors that are developing and could develop beyond that 10 or 12-mile radius of the centre of Belfast?
Greg Hands: I feel sure that that is very high up on the agenda and may already be taking place. I will check and write to the Committee about the engagement. As I say, there are nine people today. We first started moving in in March. I would be confident that engagement with chambers of commerce is already underway, but I will write to Mr Campbell through you, Chair, with some of the detail of the engagement that has already taken place.
A very strong point is that, even in a smaller market like Northern Ireland, you can get overly focused on a central point, and making sure that we get into the regions and different towns and cities in Northern Ireland is going to be absolutely vital for our work going forward. I will write to the Committee with some of the detail.
Q16 Sir Robert Goodwill: I would like to ask a little bit about how the complexities of the protocol impact upon businesses trying to take advantage of the FTA, and particularly the one with Australia and New Zealand. What steps are the Government taking to enable Northern Ireland to benefit, as GB consumers will, from zero tariff imports under free trade agreements such as that with Australia?
Greg Hands: Sir Robert is the chair of the Defra Select Committee as well, so is an expert in these areas and I know has scrutinised the Australia trade deal closely. It is worth making a few points in general. I might bring in Amanda on some of the specifics.
FTAs coexist with the Northern Ireland protocol. Our negotiation partners are very much aware of and very interested in the Northern Ireland protocol. It can sometimes be challenging to explain the Northern Ireland protocol. Nobody really wants to see it as anything that is going to prevent an agreement being done, but, clearly, our trade partners need to understand the protocol.
I can honestly say, unless I have missed something in the year that I have been out of DIT, we have not found it to be in any way an obstacle to getting a deal done. That is the first thing that is important to say.
Q17 Sir Robert Goodwill: It would be right to say that the protocol trumps whatever might be in the trade deal. The protocol would take precedence if there was a conflict, which there often is.
Greg Hands: I will bring in Amanda in just a second, but essentially they co-exist.
Q18 Chair: Minister, you are right to say that they co-exist, but they do not have to be co-equal. One of them has to be the senior document, the superior document. Which one is it?
Greg Hands: Let me ask Amanda on the specifics here, because she is my lead official on trade agreements. Of course, the trade agreement is negotiated with the full knowledge that the protocol is there. That is the important thing to take away. It is not like this trade agreement happens to almost coincidentally exist alongside the protocol.
Q19 Chair: I understand, but if there is anything that is broadly agreed in an FTA, which is applicable to GB but cannot be applied to Northern Ireland because of the protocol, it is the protocol’s restrictions that trump the opportunities of the free trade agreement, not the other way around. Is that correct?
Greg Hands: Let me bring in Amanda.
Amanda Brooks: You are right to say, in the context of the negotiations we have done today, that we have agreed provisions, in different formats depending on the negotiation, that as long as the protocol is in force nothing in the FTA precludes the UK from taking the measures it needs to take under the protocol. The protocol is preserved inside the FTA’s provisions for as long as it exists.
Chair: I think we are saying the same things.
Amanda Brooks: We are.
Q20 Sir Robert Goodwill: The key to this is the definition of what is at risk. It seems to me that “at risk” is a pretty catch-all term, given that if something is subject to commercial processing then it is not at risk. If I have bought a lamb carcass and I cut it up, presumably that is commercial processing. Therefore it becomes at risk, even if it is sold in a supermarket in Belfast and never goes across the border.
Amanda Brooks: For all businesses in Northern Ireland, there is access to advice that enables them to work out what is the appropriate tariff and appropriate approach for them to take in the case of goods that might be deemed at risk. The UK trader scheme helps them to understand the tariffs that might apply, whether to goods do risk being classified at risk and therefore what are the right tariffs. About 48,000 businesses are already using that to enable them to have support. HMRC, which runs it, is getting very good feedback in terms of how that is working for businesses that are importing.
It is not the only thing that is in place to support businesses to navigate some of that complexity. There is also a tariff waiver available. If a business is importing small volumes of goods into Northern Ireland, we are able to waive the tariffs as long as it is a small volume. Finally, I think you know there has been a commitment to establish a reimbursement scheme as well, if subsequently it can be proved that goods stayed in Northern Ireland where there had been some concern of them going into the EU single market.
Sir Robert Goodwill: I am trying to get my head around this. For finished products being imported and put on the shelf in Northern Ireland, it seems fairly straightforward. For the majority of businesses that want to import raw materials or partly finished products and then process them, they immediately become at risk, even in the case of the famous langoustine processing plant in Kilkeel.
Chair: No, not the scampi.
Sir Robert Goodwill: We have mentioned it before, even though every single bit of that langoustine is actually going to go back to Whitby to have its breadcrumbs put on, sometimes via Vietnam.
Chair: Minister, in the year that you have been out of the Department, while you might have not been in attendance, you will not have missed the Sir Robert Goodwill one-man show about the life of a prawn.
Greg Hands: I have missed it.
Chair: It is fascinating. There is an illustrative talk with slides.
Ian Paisley: It is one of our biggest selling food products. It is a very important product.
Chair: It is.
Q21 Sir Robert Goodwill: Equally, it applies for a product like Baileys Irish Cream, where there are products coming into Northern Ireland that are definitely going to get processed, which are automatically at risk, even though they know exactly where every single bottle of Baileys Irish Cream is going to go, because it is a regulated product as an alcoholic drink. What proportion of goods coming into Northern Ireland, as a ballpark figure, would be deemed not to be at risk? I get the impression, apart from a few consignments to supermarkets, it is pretty much everything.
Greg Hands: I will bring in Amanda in a second. There are a couple of things to say on this. First of all, the point that you are making is illustrating well a lot of the difficulty that there already is with the protocol. While we certainly do not deny that, we are not the lead Department on the protocol, but we very much agree there are difficulties in how the protocol operates.
Amanda will correct me if I am wrong, but I think that this dataset, which is HMRC-collected data, is still not very evolved in terms of a percentage or amount that is involved here and what is at risk. It is a dataset that is being collected.
Amanda Brooks: That is absolutely correct. The data is being collected, but obviously it is still relatively early days to have sufficient data in order to examine that in detail. I know colleagues in HMRC and FCDO, as the leads on the Northern Ireland protocol, are examining that data really carefully as it emerges.
Q22 Sir Robert Goodwill: I look forward to seeing that. Finally, the Government are very keen to negotiate more trade agreements around the world. To what extent is the protocol in the mind of those negotiators as they make those new agreements, to see if they can minimise the impact on Northern Ireland? Is it a case, in the same way as the Australia deal, of really taking into account particularly the complexity of the protocol?
Greg Hands: Sir Robert, all of our negotiating partners are interested in it. It is more from the perspective that they want to make sure they get it right. They are entering into an agreement with the UK, a long-standing agreement. They want to make sure that they both understand it and can communicate it to their businesses, their stakeholders and necessarily their consumer groups. I have not recently been in a negotiation room on this, but the strong impression I have is that they want to understand. They would not necessarily have a view on whether this is a good thing or a bad thing. They just want to understand it and see what impact that would make.
Amanda has probably been in more negotiation rooms than I have in the last year.
Amanda Brooks: That is absolutely correct. Our negotiating partners want to understand the implications for their exporters in terms of the market that Northern Ireland offers, which is an important part of the UK market from their perspective. They want to make sure they understand the implications, the opportunities as well as the risks, so they are able to communicate that effectively to their businesses.
Q23 Sir Robert Goodwill: One of the complexities with tariff rate quotas is that, if a good is deemed at risk, it counts against the EU tariff rate quota rather than against the UK one. In terms of New Zealand and Ireland, there is a lot of headroom on both sides of the border, but there may be cases where that does become an issue. Will that be central to future negotiations—understanding the way that we are giving up our quota in terms of getting in cheap goods that consumers want to get hold of by having that complexity through the protocol?
Amanda Brooks: Yes, we do look at that very carefully. It slightly depends on the EU’s trading arrangements with our negotiating partners. In some instances like Australia, they do not have a negotiated agreement and therefore the access is through a different route. You are right. If it is deemed at risk of entry to the EU, it is scored against EU tariff rate quotas.
Q24 Chair: Following on from Sir Robert’s questions, many of us have always thought that it was rather strange that negotiations on the protocol, which are effectively about trade and its monitoring, reside with the Foreign Office and not with your Department. We asked the Secretary of State yesterday afternoon about what engagement the NIO has with the FCDO on this. Is there regular engagement from the FCDO to DIT on this?
Greg Hands: I will bring in Amanda, because I will be out of date on this. Before I left the Department in September 2021, there certainly was. I would imagine that has been continuing this year.
Amanda Brooks: That is absolutely right. The Foreign Office hosts a regular senior officials meeting for all interested Departments, which I or other colleagues across the Department attend, to ensure that we understand the latest developments and any implications that has for our negotiations.
Q25 Chair: Are those monthly, quarterly, weekly?
Amanda Brooks: It is a little bit variable depending on the pace at which things are moving. They are at least monthly, though.
Q26 Chair: Sir Robert referenced the FTA protocol. We have established that the protocol is the senior document in all of this. Clearly, your officials working in Northern Ireland and Invest NI are going to have to have some marked-up copy of any FTA to say, “These bits will not apply in Northern Ireland”, in order to save people a lot of time promoting opportunities that cannot be exploited because they are precluded by the protocol, although permissible in the FTA to the rest of GB. How would you propose to produce such a “marked copy”? Would you be happy to provide, as and when they are generated, a copy of such a document to this Committee?
Greg Hands: Let me bring in Amanda in a second, in terms of the logistics and the mechanics there. First of all, we should not forget that a huge amount of what would be in an FTA would not be impacted by the protocol.
Q27 Chair: That is a given. On the presumption that there will be some bits, clearly people marketing NI, wearing whichever hat is immaterial, will need to know that certain things that would be available in the rest of GB are not in NI. Otherwise, they will be wasting their time and frustrating people who might be interested when they find they cannot do it because the revised protocol trumps all. They are going to have to have some briefing document. That is the point I am making. I am not talking about whether it is 80% of a free trade agreement. It might be only 1% of a free trade agreement, but it is more than likely to be more than zero.
Amanda Brooks: We can be quite specific.
Q28 Chair: Tell us if you think we are wrong.
Amanda Brooks: No, you are right. We would not want to give anybody a marked up copy of a trade agreement though, as the way to navigate the system. There are two fundamental elements.
Chair: Or whatever briefing note might be provided.
Amanda Brooks: The Minister has just said it is thousands of pages. I hope we would find something a little simpler than that. There are two elements. Of course, this is all in relation to goods trade. There are the tariff schedules, which are a substantial part of the agreement. Then the second section is anything that is related to goods regulation, whether that is technical barriers to trade, intellectual property—that would fall into that category in certain cases—and sanitary and phytosanitary standards, as three obvious examples to pick out.
Q29 Chair: It is encouraging that such a briefing document would be generated. This is a question that probably only the Minister can answer. Would the Department be happy to provide this Committee a copy of whatever it is that is provided to your officials in Invest NI?
Greg Hands: I am sure, if it is something that we have and we are making available to business representative organisations, Invest NI and businesses in Northern Ireland, we would make that available to the Committee.
Q30 Stephen Farry: Welcome, Minister and Amanda. I just have a series of hopefully very short questions in relation to the protocol. First of all, I thought I would just pick up on one of your last answers there where you mentioned that the EU has yet to negotiate trade agreements with Australia and New Zealand. Whenever that comes about, is there any potential for DIT to go in to bat for Northern Ireland as part of that, to try to ensure that whatever the EU does is as co‑ordinated as possible with what the UK does in order to eliminate any of those potential tensions that the Chair was speculating on?
Greg Hands: That is a very good question. Let us look at the three deals that we have done so far, which are substantially different from EU deals. There is obviously the Japan deal where we went further. I do not believe there is anything in the EU-Japan deal that is not in the UK-Japan deal. We do go further. Obviously we have a deal with Australia, which the EU does not have and it does not look like there is any prospect soon of that happening. In terms of the New Zealand deal, there are differences. Your question is whether we would speak to the EU about its trade deal, which would be a job for UKREP. It is a very good question. I will ask Amanda whether this has arisen yet. Do we know how we might go about this? I might have to write to you, Mr Farry.
Amanda Brooks: You have covered it, Minister. Absolutely, that would be something that colleagues working in the UK mission in Brussels could and would raise with DG Trade as part of considerations. As I always say in any conversation I have about free trade agreement negotiation, the greater the specificity of information that we receive and that the UK mission in Brussels receives, the better job we can do to try to explain the impact and the opportunity that we are trying to address.
Q31 Stephen Farry: That is very helpful. This is in the same spirit, insofar as the current negotiations with the EU can reduce the current at-risk assessment. It tends just to eliminate or reduce the level of potential contradictions or clashes between the two. You also mentioned there the tariff reimbursement scheme. I suppose it is probably an issue for HMRC more than you, but this has been talked about for a couple of years. Is there any sense of progress as to when people are likely to see an outcome on that one?
Amanda Brooks: I am not able to comment on that, I am afraid.
Q32 Stephen Farry: On the impact assessments that were done in relation to both the Australia and New Zealand deals, my understanding is that the assessment in terms of the impact on GDP was not actually done in relation to the protocol. The protocol was not a factor in those assessments. Are there any plans to update those to take into account any of the impacts that may arise from the protocol?
Greg Hands: Let me take that one on. It is a good question. We need to understand, as I am sure you do, that a huge amount of attention is given to these impact assessments, but they are not intended to be an accurate forecast. They are essentially using a model that is not particularly precise. They look at the different regions and nations of the UK. For example, I recall that, when we did one for the US negotiation, Northern Ireland figured very well out of that on a relative basis to regions in England. The Australian one was a little bit of the opposite. I would caution putting too much emphasis on that, because for the economy as a whole they are relatively ballpark numbers, let alone for a part of the UK economy overall.
We are looking at this. We continue to look at how we can improve these impact assessments. We have not yet cracked this one. In terms of what we are actually looking at, that impact assessment, if I understand correctly, will look at data and think that, for example, machinery will be a good sector with Australia. It might improve by a certain percentage. How much of the machinery exports are based in Northern Ireland? Let us say that is 8%. Therefore we do 0.08 times the improvement. It is not a very precise science, because it is not supposed to be a forecast and it is a very ballpark sort of thing on which regions. Even for the UK as a whole, in the impact assessment I would not put too much store by some of those numbers, let alone the nation and region numbers.
Q33 Stephen Farry: Finally, just on the protocol Bill, you will appreciate I am not a fan of it. Notwithstanding that, I have two questions. First of all, what is your assessment or understanding if that Bill was enacted in terms of the current tensions between the EU trading arrangements and the UK trade deals? How will that evolve? Secondly, in the event that none of us wish to see happening, should the EU take any retaliatory measures against the UK, if that Bill were to become law, has any assessment been done of what the impact could be on Northern Ireland in particular?
Greg Hands: As you know, we are very much wanting and seeking a negotiated outcome with the EU. The Prime Minister has been absolutely clear about that. That is what our goal is. We have not done an analysis of what measures the EU might take. That is quite a hypothetical situation. On the face of it, though, it would seem perverse if the EU were to target things that would have a disproportionate impact on Northern Ireland. It would be unexpected if it was to take that approach, but we have not done any work on that.
The thing about trade retaliation measures is that they are very often driven by political factors rather than economic factors as to what is exactly chosen to be in scope. That makes it necessarily quite hard to predict what any such measures would be. The best thing for us to do is to avoid any such measures happening in the first place by coming to a negotiated settlement with the European Union, which I am confident we can achieve.
Q34 Chair: On this point of the protocol Bill, Minister, you will know that many people have a concern, which I share, of the UK’s reputation as an upholder of the rule of law and being as good as its word, of entering into agreements freely negotiated and freely signed, not in a coercive way. Then, during its operation, on finding things have not panned out as they hoped, understood or believed, there is a surprise that the other side applied things, which they have a right to apply, which one might have hoped they had not or had done so in a different way.
What I am getting at is this. Do you have any worry or concern that, were the Government to find themselves in a position of having to drive the Bill forward and put it on the statute book, the integrity of the United Kingdom and the honesty of our word would be questioned, making it more difficult or finding the remedy texts of disagreement gone over far more closely with other countries with which the UK was seeking a free trade agreement? We run the risk, do we not, of being seen as a country that signs something but, if we do not like it, we unilaterally alter it and bypass mechanisms in the agreement for dealing with remedy?
Greg Hands: Just to reiterate, of course our primary objective in all of this is to negotiate—
Q35 Chair: I appreciate what the primary objective is, but if the primary objective is not met surely you, the Secretary of State and officials must be giving some thought to the point I raise.
Greg Hands: We have not found this. To be frank, Amanda has been more been in more negotiations than I have over the last year. We have not found the reliability of the UK as a treaty partner as an issue.
What we have found as an issue is uncertainty about where it is all heading. What could be the final protocol, assuming a negotiated settlement or even a non-negotiated settlement? It is not so much our trade partners saying, “It looks to us like the UK is unreliable”. They are not saying that. They are saying, “Hold on; this is where the protocol is today. What is going on? What is the UK seeking to do that might change it, which might have an impact on our country’s exports, imports, investment flows, regulatory systems and whatever else?” It is more that, rather than any questions about the UK as a reliable partner.
Obviously, we have trade agreements with 71 countries. This is something the UK has really well established now, six years after the foundation of the Department. We are doing more negotiations for trade deals and FTAs than any other country in the world. People are seeing the UK as an attractive country to do a deal with and a reliable partner. It is more questions about what could happen with the protocol within that.
Q36 Chair: Let me invite you just to comment on this. Let us deal with the downside of what could happen. The Prime Minister’s aspiration, which you share and I am sure we would all share and hope Government are successful in, is reaching a negotiated settlement. Let us hope we arrive at that position. We are all off to the races in those circumstances.
However, let us be pessimistic for a moment. It is not a position any of us like being in, but let us presume that is not the case. Therefore, the Government’s fallback position is to put the Northern Ireland Protocol Bill on the statute book as the Northern Ireland Protocol Act. In those circumstances, what predictive assessment have your officials and your Department made of the potential impact of the point that I raised a moment or so ago?
Greg Hands: We are not aware, or I am certainly not aware, of anybody saying this will have or could have a direct impact. The premise of your question would be well beyond trade deals and potentially across international treaties as a whole. The UK is a party as a negotiator to a huge number of areas across multiple Government Departments. I am not aware of that being an issue. As I said, there is an issue in terms of, “This is what the protocol is today. What might it look like in the future? What impact could that have?” Again, that is not really an obstacle to negotiation. It is something our partners are seeking to understand rather than really comment on.
Q37 Ian Paisley: Minister, would you agree that you cannot reach a negotiated settlement with the EU if there are actually no negotiations taking place? Would you use the opportunity to call on the EU to open the mandate so those negotiations could actually begin? As far as I understand, there has not been a minute of actual negotiations. There have been talks about talks and explorations. That is not negotiations, because it shows there is not a will on one side to open the mandate. Would you use this platform today to call on the EU to actually open the mandate and commence real negotiations?
Greg Hands: If I might, Government policy on this is absolutely clear. It is a cross-Government policy, so in wanting that negotiated settlement and wanting things to move forward DIT is in lockstep with the FCDO and the rest of the Government.
Q38 Ian Paisley: There has not been a moment of negotiations as yet. That will only happen when the EU opens the mandate. Is that not correct?
Greg Hands: As I say, I am not going to add anything to Government policy in that regard. We very much want to find a negotiated settlement, but it is not for me to comment on the day-to-day mood.
Chair: The question that Mr Paisley raises is entirely legitimate, but the only person who can answer that is the Foreign Secretary.
Ian Paisley: Even the Foreign Secretary cannot open the mandate. Only the EU can open the mandate.
Greg Hands: In terms of what the UK Government are doing in their interactions, that is a matter for me.
Q39 Ian Paisley: You are telling us you want negotiations, but the fact of the matter is that Europe has not negotiated a day yet.
Greg Hands: Chair, that is a question better put to the Foreign Secretary or FCDO Minister.
Chair: For what is it worth, I agree.
Q40 Sir Robert Goodwill: I would just like to ask about products where trade defence measures are in place, such as anti-dumping or safeguarding tariffs, steel being the case in point. I understand, if the EU tariff is higher than the UK one, it is automatically deemed to be at risk. Even if you can go to Belfast and point at the building made of the steel and see it is still bolted to the ground in Belfast, it still has to pay the additional tariff. There are lots of different grades of steel as well; it is not straightforwardly just steel. In this situation, how does that affect the movement of goods from GB to NI? How is it different from steel that has been imported to GB and steel that has maybe been produced at Scunthorpe or Port Talbot?
Greg Hands: I will bring in Amanda in a second. There are three things I would say. Of course, I believe there is no steel produced on the island of Ireland, so this is a very real example of a problem with the working of the protocol, particularly in reference to steel safeguards. It cannot have been the intention of steel safeguards to penalise the movement of steel from Great Britain to Northern Ireland. There cannot in any sense have been any intention, but that has been the consequence.
It is also worth making the point that currently there are no EU tariffs that are lower than UK tariffs. You rightly point out that this is a specific case. In terms of the actual working, let me ask Amanda to come in.
Amanda Brooks: This did occur in 2021 in the case of steel, where we took action to prevent 25% tariffs being charged on the movements of steel between GB and Northern Ireland. The EU has since made some changes to its tariff rate quotas, which means that they are being filled up more quickly. Therefore, there is further action now underway by colleagues, not from inside my team, to try to address the issue, because we are very well aware of the UK business concerns of this.
Chair: Minister, on the chime, we have done it. As I said at the top of the meeting, it is great to see you back in Government. You have demonstrated this morning, only a week back in harness, as it were, that you are already more than on top of the brief. We are all very encouraged, as I said again at the start of the meeting, by very welcome focus on what your Department can do to help the economy and the people of Northern Ireland. We look forward to hearing more progress as it develops and seeing the fruits of your labours and those of the officials you have working there.
Thank you very much indeed for your time this morning. It is always nice when a Department that is not directly accountable to this Committee will field a Minister to take questions. We are doubly grateful on that point, thank you.
Greg Hands: Thank you, Chair. I joined the Government 11 years ago and this is my first invitation, if I am not mistaken, to appear before your Committee. I was very happy to take it up.
Chair: This strikes me as an invitation to receive more, for which we are grateful.