EU-Japan Economic Partnership Agreement

Food Advertising (Protection of Children from Targeting) – in the House of Commons at 2:26 pm on 26th June 2018.

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[Relevant documents: The Twenty-ninth Report of the European Scrutiny Committee, EU Trade Agreements: EU-Japan Economic Partnership Agreement, HC 301-xxviii, the First Report of the International Trade Committee, Continuing application of EU trade agreements after Brexit, HC 520, and the Government response, HC 1042.]

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley 2:40 pm, 26th June 2018

I beg to move,

That this House
takes note of European Union Document No. 7959/18 and Addenda 1 to 11, Proposal for a Council Decision on the signing, on behalf of the European Union, of the Economic Partnership Agreement between the European Union and Japan;
and European Union Document No. 7960/18 and Addenda 1 to 11, Proposal for a Council Decision on the conclusion of the Economic Partnership Agreement between the European Union and Japan;
and welcomes the proposed signature and conclusion of the agreement.

I am delighted to be here today to debate the EU-Japan economic partnership agreement, although I confess it feels slightly peculiar to be standing here and speaking to the House after three years of silence. The agreement is broad and ambitious, offering excellent opportunities to the UK. The Government have long supported the EPA, and I welcome the opportunity today to set this out in my new role. However, let me first take a moment to thank my predecessor, my right hon. Friend Greg Hands, for all his works as the Minister for Trade Policy and indeed for his kinds words in the previous debate. He did an excellent job in promoting UK businesses around the world and shaping our future independent trade policy—I very much recognise that I have large shoes to fill.

Photo of John Spellar John Spellar Labour, Warley

Will the Minister just give us a list of his achievements?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

I am not entirely sure whether the right hon. Gentleman is talking about my achievements or those of my right hon. Friend. [Interruption.] The establishment, in conjunction with the Secretary of State, of a brand new Department for International Trade and preparing ourselves for Brexit is evidence in itself—I could list a great many things.

The Government have an overarching commitment to free trade—

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

With all due respect to his predecessor, does the Minister accept that there has been no firming up of deals with third countries that we are assured will continue? Furthermore, South Korea, Chile and Australia have already said that they want to renegotiate their deals, so we have been left in a state of uncertainty and without any deals.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

The fact is that the previous Minister was engaged, as was I, in a great many lines of negotiation with countries that have agreement with the EU. Progress is being made and will continue to be made under this Administration.

The Government have an overarching commitment to free trade, which is a fantastic and progressive means of stimulating economic growth, creating jobs and providing greater consumer choice. The UK has been, and will continue to be, a leading voice in support of free trade globally. We will continue to support the EU’s ambitious trade agenda while we remain an EU member state. As I have just illustrated, this includes some 40 trade agreements, including the EPA with Japan, which we are talking about today. Ongoing UK support for these agreements, including in respect of signature and conclusion of the Japan agreement in July, will send a positive message about our commitment to global free trade, now and as we prepare to leave the EU.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

Japan has thrived on globalisation and remains one of the most dominant economies in the world. Notwithstanding an ageing population, it has done so without reliance on large-scale immigration. There is a lesson there, is there not?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

I think it would be unwise of me to stray into the areas governed by the Home Office, but I will say that in some of the items agreed in this deal, among which is the transferability of labour across borders, Britain’s right to regulate its immigration processes is clearly protected. I should leave that there.

We will continue to support the EU’s ambitious trade agenda while we remain an EU member state. This includes some 40 trade agreements, including the EPA with Japan. Ongoing UK support for these agreements—I recognise that I am repeating myself and I apologise to the House—will send a positive message about our commitment to global free trade, now and as we prepare to leave the EU.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

I will, but I might even start that bit again.

Photo of Catherine McKinnell Catherine McKinnell Labour, Newcastle upon Tyne North

The north-east is home to 50 Japanese firms, including Nissan and Hitachi, and has a long history of doing business with Japan, with many thousands of good jobs in my region relying on Japanese investment. Does the Minister share serious concerns about the future of that relationship, given warnings by the Japanese ambassador that firms could seek to move that investment and thousands of jobs elsewhere as a result of the UK leaving the single market and the customs union?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

I thank the hon. Lady for her intervention, but I should point out that there have been a number of large-scale investments by Japanese companies in the UK. Toyota, Nissan and Honda have all recently made large-scale investments. Furthermore, the trade deal that has been negotiated includes increasing access for supply chain elements to the automotive market into Japan in a way in which it has not hitherto been accessible. We should always remember that there are small businesses that will have access to the market that did not realistically have that access before.

Hon. Members will have seen from the Government’s detailed and comprehensive impact assessment that the EPA is estimated to be worth up to £3 billion to UK GDP annually in the long run. UK imports are due to grow by up to £8.4 billion per year in the long run, which reflects reduced input costs for British businesses, which in turn are expected to lower prices for consumers. UK exports will increase by up to £5.4 billion, with the largest gains in the chemicals and automotive sectors.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

Does the Minister accept that when we technically exit in March there will be no legal obligation for Japan to keep us in this trade agreement and after the transition period we certainly will not be in it? There is every risk we will be out in the cold. That just shows we are better negotiating as part of team EU.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

Clearly, all sorts of scenarios are possible, but the hon. Gentleman will also know that a piece of legislation is coming to this House shortly that lays the framework to ensure that we can continue those arrangements. As I have already said, efforts are ongoing across the piece to go around those 40 organisations and 70 countries with which we already have agreements such that we can continue them after exit.

Photo of Wera Hobhouse Wera Hobhouse Liberal Democrat Spokesperson (Housing, Communities and Local Government)

Has the Minister tried to find out whether those countries we want to continue to have trade agreements with will want to continue them in the way we want them to do? It seems that there is a good opportunity for these countries to come back wanting much better terms for themselves.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

The hon. Lady will know that I have had a relatively short time in this post and I have not visited any of those countries she mentions, but a great many efforts have been made. The Secretary of State will attest to the fact that we have visited all of them and they have all demonstrated a willingness to continue the arrangements that we currently have.

Photo of Oliver Heald Oliver Heald Conservative, North East Hertfordshire

I welcome my hon. Friend to his new duties. Does he agree that given the scale of Japanese investment in this country, and the fact that Japan likes doing trade with us and we like doing trade with it, it is unthinkable that it would not want to reach a trade agreement with us?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

Evidently, that is the case, because we are here today discussing exactly that, and there can be no reason to think that that position would not continue beyond Brexit.

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee

As Chairman of the European Scrutiny Committee, which recommended that this issue be debated on the Floor of the House, I thank the Government very much on the Committee’s behalf for agreeing to that. It demonstrates that this House of Commons does debate and, if necessary, vote on matters, not behind closed doors and with full transcripts. We operate not in the way that the European Union functions but in the proper, traditional Westminster manner, with full transparency. For that reason, I congratulate the Government on holding this debate.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

My hon. Friend is plainly right: we have debated this matter and are giving it further scrutiny today.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

I have already taken up nine minutes of the House’s time, so if the hon. Gentleman will allow me, I shall make a little progress.

The treatment of UK services suppliers will be fairer as a result of the EPA and comparable to that of Japanese suppliers. That is good news for UK priority sectors such as finance, postal, telecommunications and maritime.

The National Health Service, which was discussed considerably as part of the heated debate—as were, indeed, public services generally—is a national treasure. I know all too well the importance that fellow Members and, indeed, the population of the United Kingdom place on the need to safeguard the NHS for generations to come. I share that view and wish to be clear with the House that the delivery of public health services is safeguarded in the trade-in-services aspects of all EU free trade agreements, including the EU-Japan EPA. For the avoidance of doubt, for the UK that incontrovertibly includes the NHS in this agreement.

Although investment protection is not featured in the agreement, investment liberalisation provisions will help to improve market access for British companies. Right hon. and hon. Members should note that the EU and Japan will continue to engage to negotiate a stand-alone investment protection agreement.

For the first time in an EU trade agreement, there is a dedicated chapter on corporate governance, which sees the EU and Japan reaffirm their commitment to the OECD principles on corporate governance. The UK played a key role in agreeing those principles at the 2015 G20 summit. The House should be clear that the inclusion of corporate governance provisions in the EPA does not unduly limit the UK’s ability to act further in this area at national or international level.

The agreement explicitly refers to our commitment to labour rights and environmental standards, and neither party will seek to reduce such thresholds to boost trade.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Environment and Rural Affairs), Chair, International Trade Committee

I welcome the Minister to his new position and wish Greg Hands well for the future.

This is the second time today that we have heard the UK Brexiteer Government welcome the European Union’s trade agreements; it seems that when ideology is put to one side and practicality comes in, the EU does not seem to be at all as bad. Currently, what really concerns the Japanese is the relationship that the UK will have with the European Union, because 40% of Japan’s investments in the EU are currently in the United Kingdom. That has led to considerable nervousness in Japan. As well as this agreement, will the Minister be cognizant of that fact?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

I take the hon. Gentleman’s point, but I must say that I do not think it is widely relevant to the matter before us. Suffice it to say that the UK Government clearly share concerns that we should have a good and friction-free relationship with the European Union after we have left.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

Not for now.

The EU’s principled long-term ban on the import of whale products will not be lifted by the agreement, and the UK and the EU remain strongly committed to the international convention on trade in endangered species and the work of the International Whaling Commission.

The UK has a wealth of experience in producing the finest foods and drinks across all corners of the country. The agreement secures the protection of Scotch whisky, Scottish farmed salmon, Irish whiskey, Irish cream, west country farmhouse cheddar and both white and blue Stilton. I am proud that those products are safeguarded by the EPA.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

I congratulate the Minister on his new role. He is making a strong case for this excellent EU-Japan deal, and we should embrace it. Does he agree that the UK-EU partnership that we will be looking for should be even deeper and better, especially in areas such as digital, services and common standards to facilitate our trade?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

My hon. Friend is absolutely right: we should seek to do the widest, deepest and most ambitious trade deal that we possibly can.

In the light of the European Court of Justice opinion on competence in the EU-Singapore FTA of May 2017, which helped to clarify the scope of the common commercial policy, the Japan EPA is to be concluded as an EU-only agreement. That means that it will fully enter into force once Japan has ratified it, should the European Council and the European Parliament support its conclusion. I am aware of the implications of this approach on the role of Parliament in the scrutiny and conclusion of the EPA, and of EU-only trade agreements going forward, because it means that ratification by Parliament is not required for an agreement to enter fully into force. I am also acutely aware of Parliament’s interest in the Government’s approach to the scrutiny of future UK trade deals and trade policy. That is one reason that I welcome the opportunity to debate the EU-Japan EPA today, as it rightly ensures that Parliament has the fullest opportunity to scrutinise the agreement, under the current EU scrutiny structure. I am pleased to be able to go beyond what is simply required ahead of signature, in line with the Government’s commitment to transparency.

Photo of Owen Smith Owen Smith Labour, Pontypridd

I, too, warmly congratulate the Minister on his new appointment. He is making an excellent speech in which he is making a powerful case for the EU-Japan trade deal. I completely concur with the remarks of my hon. Friend Catherine McKinnell about Japanese trade’s importance to our economy. Will the Minister concede that he can offer no guarantee that post Brexit we will have as good a trade deal with Japan, once we are a stand-alone trading nation?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

All I can say is that the Government are extremely ambitious in what we want to achieve. We are seeking to achieve that trade deal post Brexit and hope very much that we will. Furthermore, we are pursuing that same opportunity with all the other current signatories to deals across the European Union.

Photo of Darren Jones Darren Jones Labour, Bristol North West

I declare my interest on the register and wish the Minister well in his new role. I note that the agreement between Japan and the European Union on the free flow of data has been separated from the free trade agreement. Will the Minister give the House a commitment that we will have the opportunity both to debate the data trade agreement that the EU and Japan wish to negotiate and to explore the opportunities and risks for the UK as part of the Brexit process?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

It was not possible in putting together this agreement to reach the agreement that we wished to reach on data. The discussion between the two countries on that is still ongoing, and I have no doubt that the matter will come back to the House in due course.

My Department will continue to work with the European Scrutiny Committees to identify appropriate ways to ensure the thorough scrutiny of similar EU-only free trade agreements while the UK remains a member state. The Government are currently considering the legislative framework for future trade agreements, but they are committed to ensuring that Parliament will have a crucial role to play in the scrutiny and ratification of the UK’s future trade deals when we bring forward proposals in due course.

The EU and UK agreed at the European Council in March that international agreements to which the UK is party by virtue of its EU membership—including, at the time of exit, the EU-Japan EPA—should continue to apply to the UK during the implementation period. Text to that effect was agreed in the draft withdrawal agreement. We continue to advance our dialogue with the Japanese Government on the shape of our future bilateral trade and investment relationship, which will come into effect after the implementation period, and I look forward to making progress as we continue to foster our post-Brexit relationship with the Japanese.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

I congratulate the Minister on his speech and his appointment. On his point about the trade arrangements rolling over to the post-Brexit period, will he remind the House that we were told by the Opposition that that would never be possible—that we would never be able to agree that with the European Union and it absolutely would not happen? But of course the Prime Minister has delivered that.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

Indeed, my hon. Friend is plainly right.

As Members will know, in August 2017, the Prime Minister and the Japanese Prime Minister, Shinzo Abe, agreed to

“work quickly to establish a new economic partnership between Japan and the UK based on the final terms of the EPA” as the UK leaves the EU. The UK-Japan trade and investment working group, established last year by the Japan-UK joint declaration on prosperity co-operation, is tasked to deliver on that commitment, and it met for the first time in May.

Photo of Laura Smith Laura Smith Shadow Minister (Cabinet Office)

Does the Minister accept that the investor-state dispute settlement has been excluded from the deal because of the widespread public outcry against it? Will he assure the House that his Government will not seek to include ISDS in any future deal with Japan?

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

As the hon. Lady will know, this is not part of the current agreement because, at this stage, there was not agreement between the two parties on how it should work—it is not because it could and would not work because neither party would agree to it. Therefore, I cannot give her the assurance that she is seeking.

To conclude, the EU-Japan EPA is an excellent agreement for the UK that will benefit UK exporters, importers and consumers. During the implementation period, the United Kingdom will seek to retain access to EU free trade agreements while gaining the right to negotiate, sign and ratify new trade agreements. Japan’s commitment to establish a new bilateral economic partnership with the UK based on the final terms of the EPA is clear.

Colleagues can rest assured that the UK will continue to be a strong advocate of free trade globally, and a defender of the multilateral rules-based system. The Government are committed to a truly global Britain as we leave the EU, where we seize the opportunity to engage with partners around the world in the shared pursuit of prosperity and security. As to future scrutiny arrangements, the Government are clear that Parliament will have a crucial role to play in the scrutiny and ratification of the UK’s future trade deals, and proposals on this will come forward in due course.

The EU-Japan EPA has a positive role to play for the UK, the wider EU and global free trade in general. I look forward to the UK demonstrating our support for the agreement when Council adopts decisions on conclusion and signature, and I urge my fellow hon. Members to support the Government’s motion to that effect today.

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade 3:01 pm, 26th June 2018

I welcome the Minister for Trade Policy to his new post. I am delighted to have him opposite us at the Dispatch Box. I also pay tribute to Greg Hands for the work that he did in this Department. We had many voluble exchanges in Committee and on the Floor of the House and he always dealt with them with exceptional good humour. I am sure that he will return to the Front Bench at a later stage and I look forward to that.

I am grateful for the opportunity to speak in this debate to set out our position on the EU-Japan economic partnership agreement. The relationship with Japan is, as many have said, of enormous importance, and we on the Labour Benches want to ensure that our future co-operation boosts trade and jobs in both our economies.

Exports make up 30% of our national economic output, and we celebrate the jobs and the myriad other benefits that come from international trade. No country exemplifies the importance of foreign investment to our economy more than Japan. It is Japanese companies that have chosen to invest billions in the manufacturing capital of this country over many decades, and with that investment has come jobs—good jobs, skilled jobs. Some 3,800 are directly employed by Toyota, 7,000 directly employed by Nissan, and 3,400 directly employed by Honda. We could double those figures when we factor in the indirect employment in the UK that comes from these companies—the manufacturers of parts that go into their supply chain and the logistics companies that ensure their just-in-time delivery systems.

I was at Honda a week ago last Friday speaking both with the unions and the management in Swindon. A new car rolls off its production line every 69 seconds, and its just-in-time supply chain is critical to its performance. That is why workers at that plant were telling me of their strong support for Labour’s position on a new customs union that would stop disruption to that supply chain and why they cannot understand the Government’s red line that there should be no such customs union after we leave the EU.

The Government have put our trading relationship with Japan under enormous strain because of their disorganised approach to Brexit. Companies such as Honda will speak for themselves, but many working there cannot understand why the Government are taking such a risk with their livelihoods. Japan is one of our key export partners. It accounted for £12.5 billion of our exports in 2016.

Photo of John Spellar John Spellar Labour, Warley

Before my hon. Friend moves on from his comments about Japanese companies in the UK, will he join me in commending the very long-term view that those Japanese companies take? They invest significantly not only in capital equipment, but in their staff and their continuous training programmes, all of which have been an example that, I am pleased to say, has now been followed by many British companies.

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

Indeed. I absolutely agree with my right hon. Friend. The Japanese investment into our country over many, many years has been hugely beneficial not simply in creating those jobs, but in sustaining them into the future. We absolutely cannot afford the Government’s red line, which puts that in jeopardy.

As I was saying, Japan accounted for £12.5 billion of our exports in 2016—it was our fifth largest export market. A Labour Government would certainly want to do a trade deal that builds on the commercial and diplomatic ties that bind our two countries together. The Government have been forced into calling this debate by the European Scrutiny Committee, chaired by Sir William Cash. The Committee rightly said that the agreement raised

“complex legal and policy issues for the UK” which remain unanswered.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

On a point of clarification, I think that it is the official position of the hon. Gentleman’s party—I am not sure whether he is fully signed up to it—that they would remain part of the customs union after leaving the European Union, which would inhibit his chances of striking a free trade deal anywhere, as the EU would be required to negotiate that deal on his behalf. Bearing in mind his reservations about the EU-Canada Comprehensive Economic and Trade Agreement discussed in the previous debate, and his potential reservations in this debate, is he confident that the EU will negotiate those trade deals to his satisfaction?

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

Clearly, while we remain a member of the EU, we have a seat at the negotiating table of any deals. If we are outside the EU, we will not have that, but, equally, we will not have the benefit of being part of a 500 million-strong consumer market that would enable us to negotiate better deals. I am sure that the hon. Gentleman appreciates that being in a new customs union with the EU, as the leader of my party set out in a speech he gave in Coventry a little while ago, would mean that we would be co-decision makers with the EU in that relationship—a customs union not such as the one we currently have with the EU, but one much more like Mercosur, where each of the countries has equal sway.

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

I will make a little progress and then, of course, I will very happily give way to the hon. Gentleman, because his Committee has raised a number of questions on the EU-Japan deal that we need to explore further. The Committee insisted, in fact, that the Government bring the deal to a debate on the Floor of the House before the EU Council. Interestingly, in the light of the absurdly tight timeframe that the Government imposed on themselves, the Committee also instructed them to publish their impact assessment into the EU- Japan EPA no later than 4 June.

The first question that the Minister must answer then is why the Government failed to meet that deadline. The impact assessment was published a week late, on 11 June, on the same day that this debate was announced. It is an extraordinary document. Its own authors openly acknowledge that the assessment cannot be taken as an accurate guide to the future impacts of the agreement. It failed to calculate the specific effects on individual EU member states. The assessment admits that it cannot know what proportion of any aggregate gains from the EU-Japan EPA might come to the UK or to any other EU member state. There has been no proper independent assessment of the impacts on the UK, and the authors—these are the authors of the assessment—say that they have just had to assume proportionate outcomes in line with the UK’s projected share of EU trade with Japan.

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee

I thought I might try to lift this enormous pile of documents to show the House what we are actually considering today; it is really quite formidable. I want to make one point regarding the single market. Does the hon. Gentleman deny that, in relation to our trade with the other 27 member states, we run a deficit of £82 billion a year—these are figures from the Office for National Statistics—whereas our external growth, our external surplus, is growing exponentially and, of course, 90% of all future trading will be outside the EU?

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

I am grateful to the hon. Gentleman on two counts—first for showing us precisely what we are talking about. I know that he will have read the full EPA assessment, as I have done. I am equally grateful to him for raising the issue of the balance of trade surplus and deficit that we currently run. I am just about to come to that point, so I hope that he can hold off with his remarks.

It is perhaps most damning to quote from the impact assessment document itself, which states:

“Figures presented here reflect the long run impacts per annum and should be treated as a magnitude of change and not a forecast…It is important to note the results below are not based on the final EU-Japan EPA text and are therefore subject to a degree of uncertainty…Estimates are produced against a baseline of 2008 and reflect a world in which the Doha trade round and EU-Korea FTA are un-concluded.”

So there we have it. The baseline is 10 years out of date and fails to take account not only of the EU-South Korea FTA, which has been applied ever since July 2011 —seven years ago—but of the terms of the final agreement text that it is supposed to be assessing.

The European Scrutiny Committee was absolutely right to demand in its report

“a clear breakdown of how different UK sectors and stakeholders are expected to win or lose from the agreement.”

All the independent projections made of the EU-Japan deal calculated that the gains accruing to Japanese firms would be far higher than those seen by European businesses. All the forecasts spoke of major increases in Japanese exports, and the potential loss of jobs and businesses in Europe as a result. The Government assessment has at least picked up on these forecasts, recognising that the UK’s balance of trade with Japan will take a serious hit when this agreement comes into force. Voting to approve this motion will allow the Government to rush ahead and sign a deal that the Government’s own figures show will result in a decline in our trade balance with Japan of between £2.2 billion and £2.9 billion, so Sir William Cash, who chairs the European Scrutiny Committee and asked for the impact assessment to be published, will now see that the effect of this deal is, in fact, to increase our problems in terms of our balance of payments with Japan.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

I will try again. Am I now to assume that the official position of the Labour party is not to ratify the Japan EPA?

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

Note how keen the Secretary of State is to deflect the House from the fact that his own impact assessment says that, in signing the deal, this country will be between £2.2 billion and £2.8 billion worse off.

Photo of Liam Fox Liam Fox The Secretary of State for International Trade and President of the Board of Trade

Surely the House has a right to know the position of the official Opposition. Do they or do they not agree with this House ratifying the agreement that we are discussing and scrutinising today?

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

Goodness me! The Secretary of State is getting really exercised from a sedentary position; he is starting to be abusive. Let us be clear what has aggravated him so much. It is that I have read his impact assessment, and his own assessment of this deal says that this country will be £2.2 billion to £2.8 billion worse off.

Several hon. Members:

rose—

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

I will make a little progress, Madam Deputy Speaker, because I know that you want to encourage other Members to speak.

The automotive industry offers the clearest indication of the issues posed by the EU’s deal with Japan. The EU-Japan EPA will, for example, remove the 10% tariff that currently applies to all car imports into the UK from Japan, which will—again, according to the Government’s figures—result in a £2.8 billion surge in Japanese car imports into the UK. That will have significant implications for the future viability of our domestic automotive sector and the thousands of jobs attached to it. But this is precisely where the Government’s assessment is so hopelessly unsatisfactory. It fails to ask the real questions as to what the long-term impacts on the UK car industry might be when we remove the existing 10% tariffs on Japanese car imports. This question is clearly of the utmost importance when it comes to safeguarding jobs in the UK auto industry, as there will no longer be a trade incentive to maintain Japanese investment in precisely the way in which my hon. Friends the Members for Newcastle upon Tyne North (Catherine McKinnell) and for Crewe and Nantwich (Laura Smith) mentioned earlier.

Photo of Chris Leslie Chris Leslie Labour/Co-operative, Nottingham East

I wonder whether my hon. Friend could help me out, because the Opposition are very keen to get to the denouement of this particular question. It feels to me as though he is raising some issues of concern. But, by and large, this is quite a positive deal for the UK, EU and Japan. Is he saying that we should oppose the motion before the House?

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

I am astonished. I should have thought that each week my hon. Friend reads—just as I do—the Whip that comes out from our Whips Office, so he will know perfectly well which way we will be voting. [Interruption.] No, and Government Members will get to find out in due course.

Photo of Chris Leslie Chris Leslie Labour/Co-operative, Nottingham East

My point is that I do not have a copy of the paper Whip in front of me at the moment. Madam Deputy Speaker. Would you encourage my hon. Friend Barry Gardiner to share with Labour Members what our position is on this important issue?

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (Second Deputy Chairman of Ways and Means)

That is a point of debate. I want the debate to move on because a lot of Members wish to speak.

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

The Government have not published any serious analysis as to the potential outcomes of the EU-Japan EPA on the car industry beyond the basic econometric analysis in their impact assessment. It cannot be right to allow the Government to proceed with fast-tracking approval of this trade deal when we have not had answers to the critical questions posed by the hon. Member for Stone and his Committee, based on a proper analysis of what the likely impacts might be.

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

I will not, because Madam Deputy Speaker wants me to press on to allow hon. Members to make their own contributions.

The car industry is far from the only sector involved in what is a comprehensive trade deal. Food and drink producers are also implicated, not least as regards the protection provided in the agreement for products with specific geographical indications. Once again, the Government have failed to defend the interests of British producers on overseas markets. France, Spain and Italy have each listed dozens of their national products for special protection in annex 14-B of the deal and Japan has listed 48 of its products for protection, yet the UK Government could only be bothered to list four products under the geographical indications provisions of the deal—Scottish farmed salmon, west country farmhouse Cheddar, Stilton and Scotch whisky.

Photo of Barry Gardiner Barry Gardiner Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

Indeed. As my hon. Friend says, what about Welsh lamb? What about Scotch beef, Dorset blue, Yorkshire Wensleydale, Cumberland sausage and Melton Mowbray pork pies? Can the Minister explain why we failed to register geographical indications to protect more of our UK food produce?

The European Scrutiny Committee raised many further crucial issues relating to the deal that remain unanswered. Under the negative list approach, all service sectors that are not explicitly exempted from liberalisation are included. It is considered to be a particular threat to public services, as it may prove impossible to shield them from liberalisation effectively once they have been committed to an international trade treaty. It means that any emergent sector in the future will be automatically subject to trade liberalisation even where there may be a clear need for Government regulation or intervention. We cannot possibly predict what those will be prior to their emergence, but what is the point of using such “negative lists” to reduce the capacity of the Government to regulate in the future?

Annex 1 allows countries to list existing non-conforming measures that enjoy some protection. Annex 2 is a stronger protection, in that it permits countries to protect service sectors into the future by allowing for the introduction of reforms that would otherwise contravene the EPA rules. As the Minister said, the UK has entered annex 2 reservations for cross-border auditing services, manpower planning for doctors in the NHS, privately funded ambulance services, and residential health facilities services other than hospital services. I repeat: other than hospital services. In other words, they are, and will forever remain in future, subject to liberalisation and competition under this agreement, in contradistinction to the implication that we heard earlier. I therefore repeat the Committee’s question: will the Minister confirm whether he is content with the proposed provisions enabling Governments to regulate in the public sector?

Do the Government intend to negotiate the UK’s future trade partnership and its future investment relationship with Japan at the same time, as one agreement—another question posed by the hon. Member for Stone and by my hon. Friend the Member for Crewe and Nantwich—or will the separate EU-only trade agreement constrain the UK’s ability to negotiate and conclude an integrated trade and investment agreement? The House will be rightly concerned that the Government have simultaneously inserted into the Trade Bill sweeping Henry VIII powers to implement such a future trade agreement without any proper scrutiny or oversight. Will the Minister confirm that no such investment chapters will be included in any future trade agreement with Japan?

Let me be clear: Labour would like to see a trade agreement with Japan. We have an incredibly strong trade and investment relationship between our two countries, and we believe that we can continue to build on that. We want a positive, dynamic relationship that elevates standards, boosts opportunities to benefit from advances in technology and research and development, and continues to support growth and investment in our high-tech manufacturing sectors and world-class services sector. But we cannot be expected to rely on this Government’s quiet promises alone, and it is imperative that Parliament has the proper opportunity to scrutinise and debate these trade agreements well in advance of their being signed.

It is worth noting that this deal has yet even to go through the full scrutiny process in the EU, with INTA—the Committee on International Trade—not scheduled to hold a public inquiry until 9 and 10 July and the European Parliament scheduled to vote on whether to give consent to the agreement in December. If the motion before us is voted through, it will allow Ministers to endorse the agreement without proper scrutiny by the House, and even before the full scrutiny process of the European Union has been properly applied. That sets a dangerous precedent for future trade agreements and makes a mockery of the idea that any future trade agreements to which the Trade Bill applies will have received proper scrutiny by this House.

Several hon. Members:

rose—

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (Second Deputy Chairman of Ways and Means)

A large number of colleagues want to speak. I will have to put an immediate six-minute limit on Back-Bench speeches.

Photo of Greg Hands Greg Hands Conservative, Chelsea and Fulham 3:23 pm, 26th June 2018

For the second time today, I have the rather dubious honour of following the shadow Secretary of State after he made what was, yet again, a most extraordinary speech. Earlier, he spoke for 40 minutes without actually telling us what the Labour Front-Bench view was on CETA. Then we discovered not long afterwards that he was abstaining in the Division, even though last year he had been against CETA. More Labour MPs have voted in favour of the provisional adoption of CETA than have voted against it. The confusion continues. In that 21-minute effort by the hon. Gentleman, I do not think we got any closer to finding whether Labour agrees with the EU-Japan EPA or not.

The hon. Gentleman came out with some extraordinary statements. I think he said that the EU or the UK would be some billions of pounds worse off as a result of the agreement. That is not what the impact assessment says, as I know because I signed off on it. The impact assessment actually says that Japanese exports to the EU will rise more quickly than Japanese imports from the EU. That is not the same as saying that anybody is going to be worse off. Trade is not a zero sum game. He has bizarrely moved from the position of being anti-trade agreements to having some kind of Trumpist, mercantilist view of the world. From what I could interpret from his 60 minutes of oration today, he is the living embodiment of the Trump view on trade here in the House of Commons.

The EU-Japan EPA is a very good agreement. I will speak about three aspects. First, it is a good agreement in its own right. Secondly, it is very important for current trade policy and also for our future UK trade policy. Thirdly, there is what it means for free trade generally at a time when free trade is being challenge in different parts of the world. On its entry into force, the agreement will see 91% of Japanese tariffs eliminated overnight and 97% eliminated over the long term. There will be benefits for all of the UK in this agreement, whether in chemicals, motor vehicles, agricultural products, food and drink, processed foods, beer, wine, whisky and more. All will enjoy lower tariffs.

The agreement is also very good for UK services. With trade agreements, we must always remember the importance of services to our economy. Services provide 80% of the employment in our economy and 79% of GDP. One of the best and most exciting aspects of the future UK independent trade policy is being able to do more for UK services. We are the world’s second-largest services exporter. It is estimated that the agreement could be worth up to £3 billion to the UK economy each year. We are in a good position with Japan on trade. Last year, UK exports to Japan were up by 13.3% to a total of £14.3 billion.

This agreement is important, as was the CETA agreement, for the EU’s own trade agenda and for our future UK trade agenda. After five or six years of no EU trade agreement seeing fruition, we now have CETA. the EU-Japan agreement coming on track, important agreements with Singapore and Vietnam, modernised versions with Mexico and Chile, and the possibility of agreements with Indonesia and Mercosur. These are all really important agreements and steps for the EU.

I have been to the last four of five EU trade council meetings. Some people might say, “Why is the UK so enthusiastic about these EU trade agreements?” The answer is briefly this: trade agreements generally are good for trade, and the UK is a passionate supporter of free trade. This also gives us the potential to take the substance of the agreements that are being negotiated at the moment to put into a future UK agreement. In my time in the role, I have found myself being the most enthusiastic for the EU’s trade agenda of all the EU 28 member states sat around that table—ironically, at a time when we are leaving. It is important to recognise that, as my hon. Friend the Minister pointed out, the two Prime Ministers recognised that the substance of this agreement will establish a new economic partnership between Japan and the UK based on the final terms of the EPA.

This agreement and other agreements like it are very important for free trade generally. We need to be breaking down barriers. Most of the new barriers to trade that have arisen in the past 10 years have come in G20 countries. This is a big agreement between the EU and the world’s third largest economy. It is breaking down quite a few non-tariff barriers, particularly in services. This is a step in the right direction.

We look increasingly to our friends—countries such as Canada and Japan—when it comes to the debate about the importance of free trade and of the rules-based trading system. There are worrying developments in trade at the moment, such as the section 232 steel tariffs and what is going on with automobiles. Earlier today in my constituency, I bumped into John Warr of Warr’s Harley-Davidson in Fulham, and he is concerned about the potential for that trade dispute to escalate. We must never forget that trade is about real jobs, real businesses and the real livelihoods of our constituents.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Trade) 3:29 pm, 26th June 2018

I welcome the new Minister to his place. I want to start by making an observation about trade deficits and surpluses, which seemed to get Barry Gardiner into a bit of a pickle. They will not be solved by trade agreements alone, and they will not be exacerbated by trade agreements alone. They will not be resolved by general protectionism. They will be resolved, if they are deemed a problem, by Scottish companies, UK companies and EU companies making better products, marketing them better, designing them better and manufacturing them cheaper. All trade agreements do is facilitate trade, and that is why this Japan agreement, which is mercifully free of an unacceptable investor-state dispute resolution mechanism, is very much to be welcomed.

I say that because Japan is a massively important market for Scotland. Indeed, the value of Scottish food and drink exports has surged to almost £100 million a year. Japan is Scotland’s 13th largest food and drink export market. Scotch whisky sales alone are up to some £76 million, making Japan the 14th largest global market for Scotch whisky. There are 85 businesses in Scotland with parent companies registered in Japan, with 210 local sites employing more than 6,000 people and a turnover of £1.5 billion. That represents an increase of some 520 local employees on the 2015 figures and an additional £187 million of Scottish turnover. The more we can encourage investment from Japan into Scotland, and the more we can sell directly from Scotland, the UK and the EU to Japan, the better.

Photo of Bob Stewart Bob Stewart Conservative, Beckenham

I assume that the hon. Gentleman is saying that his party is fully supportive of and enthusiastic about this deal.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Trade)

I am saying that we see absolutely nothing in the Japan deal that would cause us to vote against it, which, on balance, is a good thing.

We very much welcome this. There was a bit of a bun fight in the previous debate on CETA, but this is a much calmer affair, and it allows me to speak for far less time, which makes me very happy indeed. I agreed with much of what the previous Minister, Greg Hands, said about global free trade. I was also very taken by the example he gave of Harley-Davidson, which is important in terms of the Japan deal and other trade deals. We have seen the US tariffs on imported steel and aluminium increase Harley-Davidson’s costs in the States by around $30 million. We have seen the reaction to President Trump’s tariffs lead to an increase in the cost of an exported Harley-Davidson to Europe of around $2,500. These tariffs in and out are bad, and they are counterproductive. I hope that people get calm quickly and that these things are wound back, because tariffs do not protect jobs. Tariffs destroy trade and ultimately weaken jobs. [Interruption.] I am glad that the Conservatives are saying that this is an excellent speech.

I am going to say that again in a different way, in the context of the Japan agreement, by quoting the Front Benchers’ favourite European, Jean-Claude Juncker. [Interruption.] I thank the Minister for that marvellous introduction. Jean-Claude Juncker said:

“The step we are taking today paves the way for our companies and citizens to start benefitting from the full potential of the Economic Partnership Agreement with Japan already in the coming year.”

He went on to say—this is the philosophical bit where there is pretty much broad agreement, apart from the proto-Trumpian economists on the Labour Front Bench—that the agreement

“sends a clear and unambiguous message that we stand together against protectionism and in defence of multilateralism. This is more important than ever.”

Several hon. Members:

rose—

Photo of Marcus Fysh Marcus Fysh Conservative, Yeovil 3:34 pm, 26th June 2018

It is a pleasure to follow Stewart Hosie, and a pleasure to have heard a free trade speech from the Opposition Benches. I welcome my hon. Friend the Minister. Let me also praise my right hon. Friend Greg Hands for his sterling work on these issues in the Department, and for his engagement with the various Committees of which I am a member.

This agreement is very important to the UK, and I support it. The total trade between Japan and the UK is worth £127 billion, and Leonardo, in my constituency, has a relationship with Kawasaki, producing helicopters, which it would like to expand. As my hon. Friend the Minister said, the Government’s impact assessment forecasts gains amounting to no less than £3 billion from the new agreement, partly as a result of increases in both imports and exports. Cheaper imports help our economy, which is one of the main reasons why we voted to leave the EU and its customs union.

After we leave the EU there will be great opportunities to improve on the Japan agreement, especially in respect of services, in which our economy has a strong interest. The Japan EPA states that world standards should be followed, and demonstrates how we can use methods of regulatory co-operation in the agreement that we make with the EU to guide, smooth and facilitate the handling of goods at our borders with it.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Environment and Rural Affairs), Chair, International Trade Committee

Given the high praise that the hon. Gentleman is heaping on the European Union, might it not be important to have some bits of paper from both the European Union and Japan saying that this relationship could continue—as he has suggested that he would like it to—following the UK’s departure from the European Union? We would not want to find ourselves in a less advantageous position.

Photo of Marcus Fysh Marcus Fysh Conservative, Yeovil

The hon. Gentleman has made a good point. I shall come on to those matters—by which, as he knows, I am exercised—a little later. I will say, however, that we want a good relationship with the European Union. The fact that we are leaving it does not mean that we should not have that relationship and nurture it.

The Minister rightly pointed out that the Japan deal is an “EU competence only” agreement because of the exclusion of investor-related matters. I noted his statement that the UK would seek a stand-alone investor agreement, and I should like to know a bit more about that. One of the things that concern me slightly is the legal basis that will apply as we leave the EU and, potentially, enter a transition period. In particular, I should like to know what access third parties would have to our markets under EU free trade agreements, potentially without reciprocation.

I understand that the Department has been undertaking bilateral discussions with the third parties on these matters. It is positive to hear about the bilateral agreement that we are negotiating with Japan for after we leave the EU, but I think that during the transition we shall need more clarity. Article 124 of the withdrawal agreement relies on a notification to be given by the EU that the third parties would somehow abide by the arrangement, but it is unclear to me whether that means that we will seek formal third-party confirmation, and, if that is the case, I should like to know what legal basis will apply to enforce it.

We need to caution against the uncertainty that could be extended during this process. We have article 50 running now, we have a potential transition period, and there is talk of potential backstop extensions. During all this, it is proposed that we should be effectively in the customs union and large parts of the single market, but it is unclear what the underlying legal basis would be. Clarity would be much appreciated by business. It is clear to me that no countries will want to conclude deals with us, or even start to negotiate seriously, while they think there is any chance that we will stay in a customs union with the EU, and the Government need to stand firm against any such suggestion. In my view, Labour has cynically undermined business certainty in this regard. Both importers and exporters need clarity on how this process will work.

In a customs union, not only would it no longer be possible for us to improve JEEPA, but we would have no say on our trade policy and no say on our trade defences, and the EU would be able to sell third parties access to our markets.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West 3:39 pm, 26th June 2018

It is a pleasure to follow Mr Fysh, who made a number of interesting points about the uncertainties we face. In particular, we have Brexit day in March and then a transition period, and our status within this very welcome EU-Japan deal is very uncertain.

The first key point I want to make is that we should relish the fact, as Greg Hands essentially did, that we have been part of the EU and have had the strength of the EU to enable us to negotiate a good deal. The real fear is that, after Brexit, we will be a stand-alone country facing big opportunities but also big challenges—whether with Japan, China or Trump’s United States. That is something I very much regret.

It is good to see that we do not have an investment court system in the Japan deal. That underlines the point that such a system is simply unnecessary for trading between two mature economies in democracies with established judiciaries, because there is already protection for investors. That is the case for Canada, and also for trade with the United States, in which investors are protected. The problem with investment court systems is that they put the investor first, above the environment or the public interest. There is an endless list of examples, but—[Interruption.] The Under-Secretary of State is chuntering from the Front Bench. By way of example, let us take George Osborne’s sugar tax. When such a tax was introduced in Mexico, such a system was used to sue Mexico for the profits lost by protecting people from diabetes, so these things do happen.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

The hon. Gentleman is citing the Cargill case, in which Mexico was actually fined by the World Trade Organisation for inappropriately applying tariffs that were contrary to a free trade agreement. In that case, it was ruled against not just under the investor-state dispute settlement process, but in the WTO itself.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

The WTO did get involved, but the essential point—[Interruption.] No, let us get this clear. The essential point of these arbitration courts is that investors invest, and if Governments change the rules and doing so changes their future profits, investors can sue for compensation, as was the case with the sugar tax. That would be the case if there was a plastics tax, for example, or if there was a diesel tax, and so on. That is why people are very worried, and the Government must not trade off the environment, the public interest and wider considerations of public law. Thankfully, there has been concern about this in Europe, which is why such an unnecessary system has not been applied in the Japan deal.

On Japan, 40% of its inward investment into Europe is to Britain. Why? Is it because the Japanese love British people? We do speak English, which is their second language, but it is basically because we are a platform, through the customs union and the single market, into the biggest market in the world. These are the facts. If we are not in the single market and the customs union, which we will not be after the transition period—if we go ahead with the barmy negotiation that is being suggested—that foreign direct investment will go to mainland Europe, and we may just be left on our own.

This is the situation we face. In particular, as has been said, President Trump basically has an America first policy. He does not recognise anything except a zero-sum game. We have had a conversation about imports and exports.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

I will take the hon. Gentleman’s intervention in a moment.

Sir William Cash, who is sadly no longer with us—I mean he is not in the Chamber—has always argued that we have to get out of the EU because we have more imports than exports, yet that is the case in Japan, as has been pointed out. There is a bigger picture here, because cheaper imports are often inputs that make our products less expensive relative to elsewhere, and there is a balance in relation to foreign direct investment as well. These are complicated issues, and I do welcome the deal. I will take the hon. Gentleman’s intervention.

Photo of Jeremy Quin Jeremy Quin Conservative, Horsham

I will allow the hon. Gentleman to continue.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Environment and Rural Affairs), Chair, International Trade Committee

The hon. Gentleman is making an absolutely fantastic speech on inputs and imports. [Interruption.] He actually is, if Members would listen to what he is saying.

The important point, which the hon. Gentleman will be aware of, is what I heard when I was in Detroit with the Select Committee in February. It is that the Americans are more concerned about the relationship that the UK has with the EU—and, I suspect, that we have with Japan as well—because if the companies in which they have invested find there are obstacles and their supply lines are disrupted by tariffs, border checks or whatever, that will have serious economic effects.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

It is in the interest of the Americans for us to be separated, isolated and small so that we can be picked off. They obviously intend to impose their standards. They are selling more asbestos, they have lower chemical standards and lower standards of food safety—I am thinking of chlorinated chicken and so on. They will impose those standards because we will be desperate to have a deal and we face problems. We are better as part of team EU.

There are worries if we find ourselves excluded from the Japan-EU deal as we Brexit. That will include services—80% of our exports are services—and financial services. The axis of yen plus euro would be a danger to the City of London.

Captain Fox is boldly going to try to establish trade relations that no one has had before but might find that we currently have a trade relationship that is even better. In the round, when people realise that and lose their enthusiasm for Brexit, they will realise that such trade agreements underpin the need for a public vote on the deal. When we have that, Britain will decide that it wants to stay at home in Europe.

Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet 3:45 pm, 26th June 2018

I support any measures that reduce tariffs, accept others’ standards and reduce non-tariff barriers. Sadly, the EU, in its usual way, has agreed to accept only international standards and has refused to accept good-quality domestic standards in Japan and elsewhere.

The economic partnership agreement is an EU-only agreement. We are discussing it today with the help of my hon. Friend Sir William Cash, but it does not really matter to us. I tried to assist Barry Gardiner in making that point. He may have problems with the deal, but in the world in which he might like to live in future, we would not be discussing the deal at all because we would be held up on the tails of a future customs union or the customs union.

It is sad that it has taken seven years to get to where we are—the agreement will not come into force for another year. That timeline shows the sclerotic nature of EU negotiations. I very much look forward to the time when our Government can negotiate such deals with Japan and others as an independent sovereign nation.

Whatever grumbles I have about how we got here, the benefits of the agreement are clear. Japan is the third-largest global economy. Given the size of our economies—Britain is the fifth or sixth-largest, depending on what measure we prefer—trade between us is very much under-weighted. We export more to Sweden, which is an economy of just 10 million people. We export more to Qatar, which is an economy of just 2.5 million people. We import more from Norway, which has just 5 million people, than we import from Japan, which has 127 million people.

The economic partnership agreement will increase that trade, which is currently virtually in balance at about £14 billion either way. Estimates show that the agreement will increase bilateral trade—UK trade to Japan—by up to £5 billion. I believe that to be an underestimation of what can be achieved.

I welcome the deal as a step forward in liberalising global trade, but the deals I want our Secretary of State to do over the coming years are with developing nations. I want our consumer pound to be spent helping developing countries to trade towards prosperity, and I want our consumers to benefit from low global prices, free of protectionist EU tariffs.

I support the agreement and look forward to more as we take control of our tariff schedules and become a global force for free trade. The world is sadly in danger of descending back into protectionism, whether directly through tariffs or through non-tariff barriers. I tried to intervene on the hon. Member for Brent North. I need to impress upon him and others that this deal and others like it, any rollover deals or future beneficial deals around the world will not be achievable if we stay in a customs union or the customs union. We need to be free of that and to behave like a normal independent country again. I look forward to the Secretary of State making future excellent deals for the benefit of our nation.

Photo of James Cleverly James Cleverly Deputy Chair, Conservative Party 3:49 pm, 26th June 2018

I intend to speak only briefly. I welcome the Minister for Trade Policy, my hon. Friend George Hollingbery to his place. I think we all agree that his first performance was outstanding. I am sorry he is not in his place, but Stewart Hosie gave a very concise and well-defined explanation of how international competition works. That was surprising and welcome from the Scottish National party Benches, because we so very rarely hear such sensible discourse from that side of the House.

I had the privilege of visiting Japan, with my right hon. Friend Mark Field and my hon. Friend Michelle Donelan, in September 2016. It was shortly after the Brexit vote and it is fair to say that our decision to leave the European Union generated quite a bit of disquiet and concern among Japanese society and Japanese businesses. Indeed, Prime Minister Abe wrote a fair and balanced letter to our own Prime Minister outlining their concerns.

A huge degree of work on a bilateral basis by our Department for International Trade and Foreign and Commonwealth Office, right up to bilateral meetings from Prime Minister to Prime Minister, has gone a long way to calming those concerns and we have seen significant increases in investment by Japan in the UK. Japan already invests heavily in this country, with over 1,000 businesses employing over 100,000 people. Despite Brexit, SoftBank committed to a very significant investment in Arm, a fantastic innovative British company.

I am very glad to say that in the conversations I have had with Japanese businesses and politicians, the enthusiasm for Great Britain and British products seems to be completely unabated. We talk about how welcome Japanese manufacturing is here in the UK, but when I went to Japan it was very clear that they have a huge appetite for British-branded goods. I understand fully why colleagues from the Scottish National party are so keen on a UK-Japanese business arrangement, because the Japanese, without a shadow of a doubt, have a real taste for Scotch whisky. Indeed, they produce very good whiskies of their own, which are well worth a taste.

After 29 March 2019, we will no longer be just a star on someone else’s flag. We will be an independent free-trading nation and we will be reaching out to partners across the world. One of the strongest and best partnerships ahead of us is with the good people of Japan. I welcome that and I welcome this motion.

Photo of Emma Little Pengelly Emma Little Pengelly Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Equality), Shadow DUP Spokesperson (International Trade) 3:53 pm, 26th June 2018

I welcome the motion before the House today. As with the previous debate, I believe this is a logical and sensible approach as we move through Brexit into the transition and into renegotiating these matters. The Democratic Unionist party will therefore be supporting the motion.

In Northern Ireland, we have a number of Japanese-owned businesses. This has happened more through an organic approach, whereby companies have been taken over by Japanese companies. However, I had the opportunity to go to Japan with a trade mission a few years ago and I could certainly see huge opportunities, which will only help and which I think will be good. I believe this is a good deal.

I think some will be surprised by the comments and criticisms that have been made today, particularly on process, but there is a very easy answer to them. It is only through the United Kingdom leaving the customs union and leaving a customs union that we can put in place our own meaningful processes on international trade. European Union processes, in relation both to this motion and to the previous motion on CETA, have flushed out a number of key issues relating to investors, arbitration and services. I welcome the Secretary of State’s statement about looking at services and their potential as we move forward and renegotiate the deals that are in place. The experience of the European Union in such deals provides valuable learning opportunities that can inform our way forward as the United Kingdom takes responsibility for this policy area.

We have heard many different contributions from across the House about free trade, which we proudly support. The Secretary of State has also said, however, that free trade does not mean trade without rules. Brexit provides the opportunity for a meaningful discussion and debate, for the first time in a long time, on what the rules should be for the United Kingdom.

Fundamentally, international trade deals must be good for all parties. They must be positive for business, consumers and our economy, and for building international relationships. To listen to many, including in this place, there seems to be much confusion about that. I have no doubt that our UK negotiators and the UK Government must—and will—go and fight for the best deal, and a good deal, for the United Kingdom with the European Union and in trade deals globally. However, that must take into consideration our UK regional interests. It must also take account of Northern Ireland interests.

The freedom to make our own trade deals undoubtedly brings opportunities, but sadly they have been drowned out by so much negativity. I believe that not having a proper and meaningful debate thus far about the potential for trade deals, free of the European Union, is sad for business and bad for business. We need to move on and embrace the opportunities that Brexit will bring. The Secretary of State will be aware of the very strong desire to do so of many in business and the strong advice on economic impacts relating to the importance of EU-third party trade deals to the UK economy. I support the Government’s policy on rolling forward the EU third-party trade deals with some 40 countries. Some will be surprised that there has been opposition from the Labour Front Bench team today to the Canadian and the Japanese deals, and, since it is the Government’s policy to roll forward the existing deals with all 40 countries, there needs to be an indication now of which of those deals Labour Front Benchers no longer support and feel should be renegotiated.

Photo of Angus MacNeil Angus MacNeil Shadow SNP Spokesperson (Environment and Rural Affairs), Chair, International Trade Committee

Would it not be useful if the UK Government could give bits of paper to those 40 countries to show that the warm words actually mean something?

Photo of Emma Little Pengelly Emma Little Pengelly Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Equality), Shadow DUP Spokesperson (International Trade)

Absolutely. As I indicated, I fully support the desire of the Secretary of State and the UK Government to secure those agreements and roll them forward. It is absolutely clear that the best approach—the logical, sensible approach—is to secure the current situation. We should agree this motion, as we agreed the previous motion, and use that as the foundation to build on and renegotiate in due course. It is absolutely clear that business wants as much certainty as possible about this. I welcome the fact that there have been discussions with many of the third parties who have the EU-third party trade deals, but I, along with many others across this Chamber and with business right across the United Kingdom, want certainty as quickly as possible. I support the Government in getting on with that job, getting the clarity that we need and getting the best deal for the United Kingdom as we Brexit.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South 3:58 pm, 26th June 2018

I add my warm congratulations to my hon. Friend, the Minister for Trade Policy, on his new position. Next week, as chairman of the all-party group on smart cities, I will make a keynote speech at a smart technology event, hosted jointly by the Department for International Trade, the embassy of Japan, the Japan Bank for International Co-operation and the Japan External Trade Organisation. This conference will explore the new investment and trade opportunities in the field of smart cities and smart technology—a field in which the United Kingdom is one of the world leaders.

I mention that because, in addition to the existing strong trade and investment links between the UK and Japan that many Members have referenced, this new technology, which will generate much of the wealth that we will need in the future, offers an enormous new level of co-operation between our two countries. The EPA that we are debating will provide a very strong platform from which to develop these new trading and investment links. As I said in the CETA debate, I wonder what is the opportunity cost to this country of not ratifying the agreement—what investment will be lost, what jobs will not be created, what deals will not be done? We must ratify the agreement to make it clear that the UK is an outward-facing, liberal, free trade-supporting country. I support the motion.

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South 4:00 pm, 26th June 2018

I am pleased to speak in this debate.

I hope that we can continue to build on the strong relations between the United Kingdom and Japan. Both countries are advanced developed economies, and our liberal democracies share many cherished values, and none more important than trade. I welcome this debate, therefore, because as we leave the EU we must maximise our opportunities for trade and continue to grow our share of prosperity. OECD figures put our countries on a similar growth trajectory, yet we lag behind on export projections, with 3.3% growth, compared with 4.5% for Japan. We need to see this improve. It is essential that because, and not despite of, Brexit we develop an independent trade policy to facilitate and maximise our exports and support growing industries.

That is why I am determined that everything possible be done to ensure that our Government adopt a transitional trade agreement with Japan. We must adopt and build on this trade agreement to ensure continuing and blossoming relations with Japan. I warmly welcome the Prime Minister’s work on her recent trade delegation visit to Japan, where she met the Japanese Prime Minister, Shinzo Abe, and at which a commitment was given to working quickly to establish a new economic partnership between the UK and Japan to match as closely as possible the final terms reached in the EU agreement.

Why is this so important for the UK and places such as my constituency? Improving our trading relations with Japan means reducing the cost for British businesses wanting to trade with Japan and opening our businesses up to new and exciting opportunities. For places such as Stoke-on-Trent, this is not something new. We have a long and proud history of economic links with Japan. Many British ceramicists have imitated and developed the styles of the fine Japanese porcelain dating from the early 19th century. By the 1850s, with the opening up of trade between Japan and Britain, the flow of goods and influences on design and creativity only grew. Today, this exchange of ideas and creativity between our two countries goes from strength to strength.

Reiko Kaneko, a ceramicist with a studio in my constituency, grew up in Japan and has chosen to develop her business in Longton in Stoke-on-Trent South, designing and making fine modern ceramic products. Her hard work to build on and encourage greater collaboration between ceramic makers in the UK and Japan is to be celebrated, and I would encourage all hon. Members to buy some of her wonderful ceramics. I also had the honour of meeting the Japanese ambassador in Parliament towards the end of last year, and I was delighted to learn that he had recently visited World of Wedgwood in my constituency.

The Japanese continue to take an increasing interest in the UK and what we have to offer. Local manufacturers have told me that they see a real opportunity to boost sales of local products to the Japanese market. The continually growing demand for British products in Japan is a mark of the high quality of British products, especially ceramics.

Photo of Richard Graham Richard Graham Conservative, Gloucester 4:03 pm, 26th June 2018

Today we celebrate an important agreement with a long-standing and close ally and, more widely, a further landmark for free trade and a commitment to closer relations with Asia. I congratulate the new Minister, my hon. Friend George Hollingbery, on both his elevation and the case he made in favour of the agreement, while also thanking my right hon. Friend Greg Hands for all he did for the new Department for International Trade.

The contrast with the other side of the House is striking: acres of unoccupied Benches, considerable misgivings about free trade, Divisions on what should be uncontested issues and appeals to colleagues by sensible free traders such as Mr Leslie, who is not in his place now, for his party not to be the party of narrow protectionism. It is a disappointing sight, with the shadow Secretary of State the closest thing we have in this country at the moment to a Trump-style mercantilist, unable, sadly, to see the benefits to consumers from lower tariffs and lower costs of imported goods bringing down our cost of living and inflation, as well as opening markets for our goods and services, especially to Japan, where the power of the “made in Britain” brand is strong and above all based on the quality of product and service.

There are issues ahead, of course, and I would welcome comments from the Minister on some of them in the time remaining. We will need confirmation that this agreement will be rolled over during the transition and thereafter extended until it can be widened and deepened. When does the Minister expect progress on this? There may be opportunities to bring down the cost of Japanese electrical vehicles which would speed up the reduction of both diesel vehicles and emissions in the UK. What assessment has the Department for Business, Energy and Industrial Strategy made of the potential for this? And what opportunities has the trade and working group identified for us to take forward? What would be the impact on the terms of this and any other relevant bilateral agreements were the UK to be part of a future trans-Pacific partnership that includes Japan?

Our value to Japanese foreign direct investment depends not least on the ease with which manufactured goods here can access EU markets. Are Ministers clear about the implications of that? In terms of future transparency and parliamentary oversight, does the Minister agree that pre-consultation is the key? What is unsatisfactory about the EU withdrawal agreement arrangements is the idea that after a negotiation Parliament can send the Government back to the negotiating table; that is not a very practical approach. Now that we have EU-negotiated agreements with Korea, Vietnam, Singapore and Japan—not all implemented yet—this encouraging progress in the continent where growth is most likely to be the greatest gives us further opportunities to expand, for example through a services agreement with Hong Kong, Australasia, China and the nations of south-east Asia as well as India.

In all of this, the opportunities for our international trade to go further and deeper are considerable. Nothing, of course, will be easy, but I hope the Minister will make a statement that will be strongly supportive of much closer UK trading relationships with Asia, where we need to open many doors in lands where trust is so important.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton 4:06 pm, 26th June 2018

I welcome my hon. Friend the Minister for Trade Policy to his place and thank his predecessor for all the fine work he did in this area and his great knowledge.

I am very much in favour of this agreement, which is a clearer position than that of the shadow Secretary of State, who has refused all opportunities to say whether he would or would not execute the agreement. He also apparently wants to leave future negotiations in such deals with the EU and seems to think that we will be co-decision makers on that basis. Has he had conversations with the EU about that? Would it agree to such a thing? It seems very unlikely.

The Secretary of State clearly pointed out the benefits of free trade agreements, as Ricardo did 200 years ago. He talked about the increase in overall consumption and the bilateral agreements between the two trading nations. He was right. One hundred years ago, 90% of the population of this planet was in extreme poverty. Today it is only 10%. One hundred years ago, only 20% of people got a basic education. Today it is 80%. That demonstrates clearly that free trade is not a zero-sum game. So we should welcome this agreement, which will enable us to set aside these tariffs. That will have a significant impact on trade—an increase in trade of £10 billion to £15 billion per annum.

One thing Ricardo probably could not have foreseen is the way nations have regulated their own economies and the differences between those regulations. Part of the difficulty with these agreements is the harmonisation of regulations—the non-tariff barriers. This is not just about free trade: it has to be fair trade so we operate on a fair and level playing field. That is particularly necessary for our small and medium-sized businesses.

In this place, we rightly bring forward new legislation—whether workplace regulation, environmental regulations, product standards or animal welfare legislation— because we want to see high standards in products and in terms of how we operate business in this country. Clearly, multinationals have different opportunities from small businesses. They can game the system in many ways—not all of them do—and put their manufacturing facilities in areas with the lowest common denominator. That is certainly a feature of President Trump’s renegotiation of NAFTA. He is trying to ensure that Mexico has a minimum wage, in order to disincentivise car manufacturers from placing their manufacturing facilities in the areas of lowest cost.

In conclusion: free trade, yes, but it absolutely has to be fair trade. In all these agreements, we have to consider small businesses—

One and a half hours having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Standing Order No. 16(1)).

The House divided:

Ayes 317, Noes 1.

Division number 194

See full list of votes (From The Public Whip)

Aye

No

Question accordingly agreed to.

Resolved,

That this House takes note of European Union Document No. 7959/18 and Addenda 1 to 11, Proposal for a Council Decision on the signing, on behalf of the European Union, of the Economic Partnership Agreement between the European Union and Japan; and European Union Document No. 7960/18 and Addenda 1 to 11, Proposal for a Council Decision on the conclusion of the Economic Partnership Agreement between the European Union and Japan; and welcomes the proposed signature and conclusion of the agreement.