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Dr. Liam Fox, U.K. Secretary of State for International Trade

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Dr. Liam Fox is the new Secretary of State for International Trade in Prime Minister Theresa May’s new government, and widely considered among the top two or three of the British cabinet’s senior members.  He joined me Monday morning to look back at why Brexit succeeded and forward to the new path ahead for Great Britain:

Audio:

07-25hhs-fox

Transcript:

HH: I am pleased, however, at this point to welcome back to the program Dr. Liam Fox, Secretary of State for International Trade in the new Theresa May-led cabinet that is leading the United Kingdom out of the European Union. Dr. Fox was one of the leading proponents of the so called Brexit. We covered the Brexit a lot on here, Dr. Fox. Welcome back to the Hugh Hewitt Show, great to have you back.

LF: Good morning, Hugh, nice to speak to you again.

HH: Congratulations on what is I think an overwhelming job. I was looking at what you are charged with doing with this basically negotiating trade deals with the rest of the world in two years or less. Are you a little overwhelmed by this?

LF: Well, you know, it’s nice to have a challenge, isn’t it? We clearly have to be looking at the UK’s global position, but there’s a lot of goodwill out there. A lot of countries have been talking to us about the importance of the UK economy. It’s the 5th biggest economy in the world. We have well beyond that reach into other areas and security cooperation, for example, as the 5th biggest military budget in the world, the 2nd biggest in NATO after the United States. We have so many close interests in so many parts of the world, and we want to leave the European Union, but with as few ripples in the pond as possible. We want our European partners to do well, because that’s an important export market for us. But ultimately, the decision by the British people was a brave and historic one, showing that we were not willing to submerge our sovereign rights in a pan-European project.

HH: Now Dr. Fox, I want to look backwards before we look forwards. There were so many people predicting chaos and destruction and doom if the United Kingdom went back to full sovereignty. What turned the tide against Project Fear? What put Brexit over the top?

LF: One of the golden rules of politics is if you’re going to engage in a Project Fear, it better be credible. And when you are predicting that it will increase the likelihood of conflict, it will increase the chance of genocide, and you’ll have economic Armageddon to boot. It really didn’t chime with the British people who saw it as a question of their ability to make their own laws, control their own immigration and borders, and to take control over their own economy. And you will recognize this, because we’ve discussed about this before, that the political and economic and media establishment in the UK was locked in a sort of echo chamber of self-justification of an old project telling us how bad it was going to be. And of course, what we’ve actually seen since the referendum is that recruitment has been broadly stable in the economy. Consumer behavior has been broadly stable. We’ve seen a little bit of a fall in our currency, because a lot of the smart money had been on the Remain campaign, and it’s unwound a little bit, not necessarily to our disadvantage. But you had a phenomenon that I think is very much in the Western world at the moment in that you have in the political bubble, you have a conventional wisdom that is increasingly not shared by the electorate.

HH: Now Dr. Fox, I’m talking with Dr. Liam Fox, Secretary of State for International Trade, and for my Steelers fans out there, one of the three or four senior members of the May government that has taken over in Great Britain now, and so it’s really quite wonderful to be talking to him this morning. I began the day by talking about a Syrian refugee suicide bombing in Germany. Over the weekend, a Syrian refugee, there was a machete attack. How much of Brexit was driven by a well-placed fear that EU rules concerning internal migration would bring this sort of threat to Great Britain without the ability to control it?

LF: Well, migration was a big issue during the referendum, and I would separate it into two elements. One was an economic element, and the other was a security element. And on the economic element, because the Euro zone has been doing rather poorly and has a pretty much flat economy with very high levels of youth unemployment, more than 50% in places like Spain, you’ve seen a movement of people from the south of Europe and the east of Europe in particular towards the UK, which has had much higher rates of economic growth and job creation. And that has caused a problem with public services, things like places for schools, accessibility to doctors and so on, and housing being a particular example of that, and so that you’ve got this economic effect. The second thing, there was a security element, and we’ve seen such mass migration into the European Union over the past couple of years that people were beginning to say well, when these refugees, but they may not all be refugees, some are economic migrants. Some may be even sympathizing to some extremists groups. When they’re given a passport in any European Union country, they will have the right to come and settle and live in the UK. And there was an element of worrying about that security in the longer term. And certainly, I would say that migration was probably on an equal par with the general view about who should govern us in terms of the outcome of the referendum.

HH: What was the impact of President Obama’s thinly-veiled threat delivered when he was visiting the United Kingdom a month ago about you know, get at the back of the line, UK, if you exit the EU?

LF: Well, I’m sure that the President felt he was giving the Prime Minister a help in the campaign. And the problem, as you would find with American voters, is that the same phenomenon exists in the UK that people don’t really like being told by anybody outside their own borders how they should organized their democratic affairs. And you know, I certainly wouldn’t be commenting on your presidential election in a partisan way, but what was very interesting when we looked at the focus groups was that although the discussion was about trade, that wasn’t what the British voters heard. What they heard was back of the queue. And for a lot of them, they said you know what? In Iraq, in Afghanistan, we were not at the back of the queue then. And I think it had a possibly unintended negative connotation. And it’s a very good example of how what we see as politicians isn’t necessarily what voters hear.

HH: Do you, in your first couple of weeks on the job as Secretary of State for International Trade, have you had indications that Great Britain is at the back of the queue when it comes to negotiating a new trade deal with the United States?

LF: Well, first of all, we can’t negotiate any new trade deals as long as we’re part of the European Union, which of course we will be for probably the next two years with an exit in early 2019. But of course, we want to have discussions and to scope out any possible deals that we might want to do immediately after that. But exactly the opposite, in fact, we’ve had a very warm welcome in terms of the UK’s trading position vis-à-vis the US, and that’s really not surprising. I mean, 20% of all UK exports come to the United States. And 25% of all the foreign investment in the United Kingdom comes from the US. We’ve got 700,000 British citizens living and working in the US, and British firms employ over a million Americans inside the US itself. So there’s a very strong and close relationship there. And it would seem to me natural for us all to want to be as closely aligned as possible for our mutual economic benefit.

HH: I’m talking with Dr. Liam Fox, Secretary of State for International Trade in the new Theresa May government, very senior over there. Before I turn to other policy issues, I have to ask you about the first question time. We played almost all of it. In America, we like our bobo dolls. Those are dolls that children punch, and they bounce back up. And it just seemed that Jeremy Corbyn was playing the role of bobo doll in that. That was just very, very amusing. But I’m surprised that he’ll be back next week. I’m not sure I want to go a few rounds with Theresa May. Were you on the front bench for that, Dr. Fox

LF: I was, yes. And you make one description of it. I mean, I suppose another one from your point of view would be a cruel and unusual punishment that was being meted out in the House of Commons.

HH: (laughing)

LF: And you know, I think that she’s a phenomenal lady, and a very strong prime minister, very strongly-willed, a very good friend of mine. And I’m afraid that the Labour Party in Britain will need to find somebody tougher.

HH: Is there any anticipation of an early election, Dr. Fox?

LF: None. We won an overall majority in the House of Commons last year. We have a mandate to run. We have the five year Parliament act. And so I fully expect us to be not having an election until May, 2020.

HH: Now one of the things that I wanted to ask you about today, because you are a Scot, and I am of Scottish descent, I was happy that Scotland remained in the United Kingdom. But there has been much talk over here that Scotland is now guaranteed to leave and try and join the European Union, and they get another referendum. First of all, are they guaranteed another referendum? And secondly, if they are, what does that, what do you think will happen?

LF: Well, again, there’s been a great sort of echo chamber of that, particularly coming from the Scottish Nationalists, who have only one reason in their political life, and that is to destroy the United Kingdom and to have Scotland being separate. It’s a philosophy I completely reject as someone who believes in the union of the UK. Constitutionally, a referendum can only be held if the UK Parliament agrees to that under the Scotland Act that we have. And there is no evidence that the people of Scotland actually want another referendum on the subject. They clearly rejected it in 2014. They wanted to remain part of the UK. And I’m not sure what it is that the Scottish Nationalists don’t understand about the fact that they lost the referendum.

HH: (laughing) Now I want to ask you about cooperation with the United States. You used to be the Secretary of State for Defense. I am reading Gordon Carrera’s new book, Cyber Spies: The Secret History of Surveillance, Hacking and Digital Espionage. And it is clear to me that that close relationship that developed over in World War II on intelligence now has to broaden into cybersecurity. And that’s part of International Trade if our firms are vulnerable. How much of that is on your portfolio? How much of that is with the Home Secretary and with the Foreign Secretary, because international trade will not work unless there is security from hacking of the sort that we’ve seen at Sony, at the Office of Personnel Management in the United States, at the Democratic National Committee. How much of that is your portfolio, Dr. Fox?

LF: Well, first of all, it’s interesting you mention that term, special relationship, because in fact, the first time it was used was by Churchill in his speech in Fulton, Missouri, which is better remembered for his use of the term Iron Curtain.

HH: Yes.

LF: But Churchill of course was a war prime minister, a security prime minister who understood the importance of sharing intelligence and of cooperation on the military and security front. So there clearly is a massive overlap here. In terms of my remit, the ennui part of exporting of that would fall within my department. We also take in defense and security exports as part of my department, so it’s quite a large department with a large remit. But of course, you’re quite right, and what worries me is the, still the lack of understanding that we face in our economic organizations and a lot of our big companies about the risks of cybersecurity. And if you look at some of the bit attacks that we have had, a lot of it is preventable by relatively simple behavior. You know, if people are not using their mobile phones and not using their iPads and so on in their workplace to access social media, people who remember to switch their computers off and not just their screens when they leave their offices, because a very large proportion of cyberattacks come from inside any organization. And the lack of security clearance for staff right down to cleaners who have access to property when everyone else is away, and if people leave their computers on, and they’re open to having malware inserted on their systems, a lot of very simple precautions would stop a lot of the cyber intrusion that we have. But then again, the at the international level, we have to recognize that we are constantly in what I would characterize as the war of the invisible enemy, when we need to insure that we are willing to spend money on the risks that we cannot see. And in many ways, here lies the challenge for politicians, because with finite budgets, we may have to disinvest in some of the very visible elements of defense in order to be able to afford some of the invisible elements of defense, and that’s quite a political challenge. And unless the public understand the size of the risk out there, they may not be willing to accept the political case for that investment.

HH: We’ll come back after the break and talk more about that invisible enemy with Dr. Liam Fox, Secretary of State for International Trade.

— – – – —

HH: Dr. Fox, there is a headline over at the Times of London, China Deal Is a Brexit Opportunity, Chancellor of the Exchequer Hammond says today, and of course, that’s true. But what is your general position about trading with adversaries – Russia, Iran and of course, China, but Russia and Iran being far more hostile, at least obviously, than China is? How do you approach those three in particular in your new job?

LF: I think you keep a balance. You try to have as open a trade environment as possible, because that brings an element of interdependency which can be very valuable in a broader security sense. But at the time, you carry a big stick, and you make sure that you are keeping in place all the elements of national security, which send a very clear signal. We in the UK have recently recommitted to our 2% GDP spend on defense, which is part of our NATO commitment, one, I’m afraid, only of four countries this year who will be making that commitment, including the United States. And we are investing, for example, in our new upgraded nuclear deterrent submarines, which we gave the go ahead to last week. And you have to send out the signal you’re willing to be strong in defense. And I think what’s been very underplayed in recent times is this concept of deterrence. You actually have to show that you’re willing to be strong in order to keep peace. And if you have that broader environment, you’ve got then the luxury of using trade to explore the opening up of relationships over time. And the spread of the things that the US and the UK have in common are views on the concept of rights, of self-government, of the rule of law, of democratic principles, and our belief in free markets, ultimately. So the more that we can export those ideas within an umbrella that shows that we are unwilling to tolerate any risk to our national security is, I think, the right balance.

HH: There’s quite a lot of controversy over the proposed sale of Boeing and Airbus commercial airliners to Iran, to the Islamic Republic of Iran. What do you make of that, and of the Obama administration pressure to proceed with those deals, both on Boeing and in France, apparently of President Hollande pressure on Airbus to do the same?

LF: Well, I was, as you well know, I’m quite critical of the nuclear deal over Iran, and I set out the reasons at the time that I took that particular view. But on the other hand, we do want to encourage an opening up of the Iranian system. And in a country where you have an overwhelmingly young population, if we are able to not just export aircraft parts, but export along with that our own cultural values, our own concepts of rights of religious tolerance, of treating women as equal citizens, all of these are means by which you will create a much better security picture in the future. So I think it’s, you have to be cautious, but you also have to have an element of believing that our own ideological basis is right, and I think we’ve had too much use of the term different in recent times, and not enough use of the term better. I think we have to believe that our concept of open markets, of free markets, of concepts of rights across race, religion, and gender, and democracy and independent rule of law, will ultimately win the day. And I think that there’s a reason why our respective countries are the way that we are, and it’s because of the decisions that have been taken by our forbearers. And we have to have faith in those. And you know, I don’t think that we advance our case for our values by closing down our trade.

HH: All right, last question, Dr. Fox, you’re standing up a new department. I think it’s fairly massive, from everything I can read. How big is it? And how are you going about simultaneously preparing these negotiations and standing up a new department?

LF: It’s a big task, but we have the full support of the new prime minister. We are effectively taking all of the elements that were UK trade and investment out of what was the business department. We’re taking defense and security exports from what was the ministry of defense where I used to be secretary of state. We’re taking UK export finance out of the treasury, and we’re creating a totally new trade negotiation department all within itself. Not too much of a challenge there.

HH: My gosh. And thousands of people, it’s got to be, are they all moving around, physically moving to a new place? Is there a new ministry of international trade somewhere?

LF: We are taking over what, a wing of what was, what is at the moment the Foreign Office. We’ll be based between Downing Street and the Foreign Office, and that’s going to send an important signal about how important Britain thinks international trade is in our relationship with the wider world. And I suppose that politics is ultimately binary. You either shape the world around you, or you’re shaped by the world around you. And we’ve chosen to shape the world, which is in line with our history, and in line with your history, too.

HH: Congratulations, Dr. Liam Fox, on the new challenge ahead. I hope you can come back early and often and keep us up to speed, because I do think it’s a great thing for the world that Brexit has succeeded. Dr. Fox, thank you.

End of interview.

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