ANY QUOTES USED MUST BE ATTRIBUTED TO SKY NEWS, SOPHY RIDGE ON SUNDAY

SOPHY RIDGE: The Prime Minister has promised to return to Brussels with some new ideas to try and solve the Irish backstop issue and writing in the Sunday Telegraph Theresa May once again assures leaders that the UK will leave the EU in time but with only eight weeks to go has quite a lot to do so yesterday I sat down with International Trade Secretary Liam Fox and I started by asking him what the government’s next steps are.

LIAM FOX: Well we continue to talk to our European partners to see if we can get an agreement as quickly as possible. Time is moving on and there is also increasing worries about the European economy, the state of the global economy – we’ve seen a big slow-down in China that’s had a knock-on effect. We have seen Italy go into recession, we have seen the German economy slow down, the French economy slow down – really we do need to avoid any disruption to that European trading system.

SR: You say you are going to try to talk more to the EU but at the same time Theresa May is saying that she wants to get some changes to that Withdrawal Agreement but if you look at what EU politicians and leaders are saying, it simply doesn’t chime with that at all. Donald Tusk says the Withdrawal Agreement is not open for renegotiations, the Irish government says the same, Macron says the deal is not renegotiable, Juncker says it’s the best and only possible deal – is the government deluded?

LIAM FOX: Well are they really saying that they would rather not negotiate and end up in a no-deal position? I think that’s not a responsible approach to take. It would have an impact on the European economy, on jobs and prosperity and for them to …

SR: And on the British economy.

LIAM FOX: And for the British economy, absolutely, so it is in all our interests to get to that agreement. For the EU to say we are not going to even discuss it seems to me quite irresponsible.

SR: So from the conversations that you’re having do you think some EU countries are more open than others to renegotiate?

LIAM FOX: I think there is, as there always has been, a difference between the member states and the European Commission. I think the European Commission has a priority for the political ideology of Europe, of ever-closer union and the four freedoms. Member states have governments that need to be re-elected, who have to worry about real jobs, real prosperity and real trade.

SR: Well let’s talk about the backstop because that was [inaudible] message wasn’t it, that they would accept the deal if the backstop was effectively got rid of, but that’s not going to happen is it? I mean I was speaking to the Irish Europe Minister last week and she is absolutely clear that this is not something that Ireland can possibly negotiate on.

LIAM FOX: Well if they won’t negotiate on it they might end up with no deal and the European Union said that’s the best route to get a hard border so for the Irish I think it is even more important than most that they are willing to talk to us about what the alternative ways are of achieving no hard border because that’s the stated position of both the Irish government and the British government and indeed the European Union.

SR: One of the things that may be a price for changes to the backstop is the customs union, it is something that apparently Jean Claude Juncker has floated and it is certainly something that Labour are pushing for, is a customs union something that you could stomach to get a deal over the line?

LIAM FOX: No.

SR: Would you resign?

LIAM FOX: Well I think it would not fulfil the promise we made to leave the European Union. We would not be taking back control of our trade policy, you cannot have an independent trades policy if you are in a customs union. Turkey finds itself in that position at the moment, it can’t even talk to the United Kingdom about what might happen afterwards because it is locked in a partial customs union with the EU.

SR: So would you resign if it were to become …?

LIAM FOX: Well I don't think it’s about us, that makes it about the politicians and not about the policy and I think we should concentrate on the policy and I think that would be a bad policy for the United Kingdom.

SR: Another thing I wanted to ask you about was an extension to Article 50 because this is something that is increasingly being talked about because frankly there is still so much stuff to get done if there is going to be any chance of leaving the EU on the day that the government wants to happen. Now when we spoke in June you said this about an extension to Article 50: “I wouldn’t find that politically acceptable and I couldn’t support it.” Is that your position still?

LIAM FOX: Well that was in the context of us not having reached an agreement and simply extending the time, I don't think that solves anything. If we actually have an agreement and it takes a little more time to get the legislation through to make that as smooth as possible, it makes that a very different argument.

SR: It sounds a bit like you’re dancing on the head of pin there though.

LIAM FOX: No, I think there is a big difference between if we have an agreement and we need some time to get the legalities done, that’s one thing. I think to extend simply because we haven’t reached an agreement would not provide any impetus for that agreement to be reached and in any case, there is no guarantee that the EU would want do that.

SR: We’re not ready for no-deal are we?

LIAM FOX: Well we would be able to deal with that scenario but it wouldn’t be in our interests to go there. It seems to me we have got to guard against two things: one is the rational pessimism that says everything will be a catastrophe and the ration optimism which says everything will be absolutely okay, the truth lies between the two. If we left the European Union with no deal there would be disruption to our trade, there would be disruption to European trade as well, it wouldn’t be in our best interests to do that. Of course it’s survivable but we don’t want to be putting our economy into a position of unnecessary turmoil.

SR: The question though is you say it is survivable but it could have been better than this, couldn’t it, if the government had started preparing for no-deal at an earlier date? This is where a lot of the issue is from isn’t it, why weren’t you preparing for no-deal from day one?

LIAM FOX: Well we are sitting here in the Department for International Trade and our very existence has been about preparing for post-Brexit and we’ve always had the view that we might get no-deal so let’s try and prepare for that. Of course the whole of the private sector are looking to see if they can make those appropriate mitigations.

SR: Well let’s talk about the preparation for the Department because if we do leave the EU then we are going to be losing access to 40 EU trade deals, that’s 12% of our trade. How many of those have been rolled over?

LIAM FOX: Well first of all we would not lose access to that trade because a great deal of that trade is done and will continue to be done on World Trade terms. Those agreements … so it’s 11.1% but let’s not quibble about 0.9%, a number of those are already signed, we have signed the Australia and New Zealand Mutual Recognition Agreements, we have signed the Chile Agreement, we are just about to sign the Swiss Agreement, we have signed Faroe Islands – which is important for fishing – this week and we will want to bring them through as we go on. We are talking to a number of those countries about how we finalise them and they will come, some very late in the day, as we get towards the 29th March.

SR: It is still quite a small number isn’t it?

LIAM FOX: It’s not really because if you look at those agreements, five of those agreements represent eight out of that eleven percent.

SR: We hear a lot about the WTO, you were just talking about the WTO, how worried are you about the fact that this is an organisation that is going through a rocky period to say the least? I mean look at the way that the US is blocking or trying to block judges to the WTO, I mean is this really the right time to be relying on this organisation?

LIAM FOX: Yes, and it is in fact time to help strengthen the WTO and update the WTO. There are a whole range of issues, you mentioned just a couple of them but there are others, the fact we have not liberalised services the way we have liberalised goods, the fact that the differentiation between what are goods and services is blurred and yet the mechanics for governance are not clear. I said to my Chinese counterpart some time ago, I said if I had asked you the question in 1995 if I sell you a digital coder over the internet to make something on your 3D printer, have I sold you a good or a service you wouldn’t have understood that question in 1995 and yet we are using the same rules to govern the global economy when that global economy itself is fundamentally different. So we do need to update the WTO and as we take up our independent seat after we leave the EU that will be one of our great priorities.

SR: Do you worry though the way that some supporters of Brexit talk about the WTO, that this is the fix-all solution to any issues we might have if we leave the EU without a deal?

LIAM FOX: Well most of our trade, most of world trade operates under WTO terms …

SR: But we have other trade deals …

LIAM FOX: Well that is my point indeed. If WTO was so good then people wouldn’t be looking to have trade agreements or customs unions which are ways in which you can further improve on those WTO rules and it has always seemed to be a bit strange that people say you don’t need to worry about having a future trade deal with Europe, we can operate on WTO terms while at the same time saying we should have a free trade agreement with the United States to get away from WTO rules so we have to be consistent.

SR: Do you think that Theresa May was right or wrong to decide not to call on the services on Crawford Falconer who is the top trade negotiator at your department, someone who many people are very respectful of when it comes to a post-Brexit and trade future for the UK?

LIAM FOX: Well let me tell you, he is not exactly under-employed at the moment. He is extremely busy in this department as the Chief Negotiator …

SR: It sounds like you had a prepared answer for that, but what do you really think?

LIAM FOX: He is busy enough but I don’t really think we should be delving into which bits of the civil service are used for which, it’s the government policy that matters.

SR: But do you think he would do a good job if Theresa May did decide to use him?

LIAM FOX: Oh I think he does a great job and what do I do if he is doing something else?

SR: What do you make of the way that Theresa May has handled the negotiations?

LIAM FOX: Well the Prime Minister has had a very difficult … and because she has not only been negotiating with the European Union, at times she’s been negotiating with her own party. This is a Leave country with a Remain parliament and it is a Remain parliament with …

SR: And a Remain Prime Minister.

LIAM FOX: … no majority. The Prime Minister has been very clear and I think has been very insistent on carrying out the will of the British people in the referendum and I wish more people in our parliament would do what they were elected to do which is to fulfil the promise they made to honour that referendum.

SR: Do you think that people who don’t may be punished in the ballot box in the next election?

LIAM FOX: Well 80% of MPs in this parliament were elected on a manifesto, either Labour or Conservative, promising to honour the result of the referendum. Those who got elected on that promise and then don’t follow it through once they get to parliament, I think they’ll have a difficult time with the voters the next time and if that happens then they deserve it.

SR: The International Trade Secretary Liam Fox there.