– in the House of Commons at 11:25 am on 21st February 2019.
I beg to move,
That this House
has considered potential future free trade agreements: Australia, New Zealand, US and a comprehensive and progressive agreement for Trans-Pacific Partnership.
It is a pleasure to open the debate on Britain’s potential future free trade agreements as an independent trading nation outside the European Union. The Government have consulted widely on the topic and heard a huge range of views, including from the Select Committee on International Trade, businesses, civil society groups, parliamentarians and the wider public. Today is the opportunity for the Government to hear further from Members of this House what their ambitions are for the first agreements we negotiate as an independent trading nation.
Although the Government’s firm intention is secure an ambitious partnership with the European Union, if we are to deliver on the referendum result instruction given to us by the British people, we must remember that there is a world beyond Europe and there will be a time beyond Brexit. Now, for the first time in over 40 years, the United Kingdom will have the opportunity to step out into the world and forge relationships across the globe by negotiating, signing and ratifying new free trade agreements.
Free trade agreements should not be seen in isolation from the wider economic, strategic and security partnerships that we will need to thrive as a truly global Britain; nor should we ignore the enormous potential of multilateral agreements, which can have even greater liberalising effect than bilateral FTAs. Our ability to influence such agreements will be a major benefit of taking up our independent seat at the World Trade Organisation on leaving the European Union.
Numerous constituents have contacted me, very concerned about the future of our national health service. If we are to have all these trade deals around the world, can the Secretary of State guarantee that we will never open up our healthcare market to private firms that would deeply damage our NHS?
I have read a number of representations from a number of organisations, particularly in relation to investor-state dispute settlements on matters such as healthcare, but let me say first that the ISDS system does not and cannot force the privatisation of any public services, and under current UK and EU agreements, claims can be made only in respect of established investments; they cannot be made in relation to an alleged failure to open up public services to a potential investor.
In the comprehensive and economic trade agreement, which has been ratified by this House, there is a clear reservation on healthcare services, which the Government have said we want to use as the template for the future. For the sake of clarity, I will read out the provision. Under the heading “Cross-Border Trade in Services”, it states:
“The United Kingdom reserves the right to adopt or maintain any measure requiring the establishment of suppliers and restricting the cross-border supply of health-related professional services by service suppliers not physically present in the territory of the UK, including medical and dental services as well as services by psychologists;
services by nurses, physiotherapists and paramedical personnel;
the retail sales of pharmaceuticals and of medical and orthopaedic goods, and other services supplied by pharmacists.”
We have made it very clear that there will be nothing in future agreements that will stop the Government being able to regulate our public services, including the national health service. That is set out in statute; it is there for all those who take an interest to read. There is no point having the same old arguments that were raised by the Transatlantic Trade and Investment Partnership, because we have already made that specific proposal; it sits there in CETA, which was ratified by this House, although its provisions, including NHS regulation and services, labour law and environmental services, were not supported by the Opposition. Perhaps the hon. Gentleman would like to explain why.
I thank the Secretary of State for that clarification. He has made it abundantly clear that the privatisation threat to our health services lies not with trade deals from which we can be fully protected but from his own Government’s privatisation agenda, which is still ongoing.
While I clearly reject the latter part of what the right hon. Gentleman has said, the rest of it is very important. Trade agreements make it very clear that it is up to the elected Government of the United Kingdom to determine what they do with public services. The matter is therefore decided by the British electorate and not by any forces outside the United Kingdom. I am grateful to the right hon. Gentleman for making that point.
I will make some progress. I will give way again shortly.
New opportunities are clearly available to the United Kingdom, and seeking them will demand some of the agility that is required to respond to the potentially seismic shifts that are taking place in the world economy. The United Kingdom will have to be ready to compete for emerging sources of growth. While our established partners—such as the European Union—will continue to be vital, the locus of economic power is none the less shifting rapidly. It is estimated that 90% of global economic growth in the next five years will occur outside the EU. A centre of gravity that rested in North America in 1990 will have shifted to China and the far east by 2050, and we are already seeing the effects of some of that in the global economy. Those changes in economic development, global trade patterns and population growth in emerging and developing economies will fundamentally alter the opportunities that developed economies will have in the years to come.
Overall, the global population is projected to rise from 7 billion in 2010 to 9.8 billion by 2050, with the increase stemming mainly from Asia and Africa. The world is becoming increasingly well educated, wealthier and more urbanised. It is expected that by 2030, 60% of the world’s population—5 billion people—will be middle-class. In 2009, the figure was only 1.8 billion. In the intervening time, middle-class spending will more than double to $6.38 trillion. The rise of the middle class in Asia means that there is an enormous potential demand for the high-quality products and services in which the UK specialises. By 2030, China alone will have 220 cities with a population of more than 1 million, while the whole of Europe will have only 35.
The Secretary of State is right to refer to the emerging middle class in growing economies—India is one example—but can he give me a cast-iron guarantee that when he is negotiating these trade agreements, human rights and issues such as freedom of religion and belief will be at the forefront of his mind? I am concerned about the possibility that, as we go around negotiating these wonderful free trade agreements, we will start to ignore human rights, particularly in the case of India.
The importance that the UK ascribes to human rights is extremely well documented in the range of Departments that are involved. The Government do not intend to seek any watering down of concepts of human rights, although it is very reasonable for us to have different provisions in countries such as Canada and the United States, whose legal remedies and legal systems are similar to ours, from those that we would have in some other countries. We will want to be flexible on that, and it is one of the issues that I want to see built into real-time parliamentary scrutiny of our trade agreements so that the House can determine whether the values represented by the United Kingdom are reflected in those agreements.
Does the Secretary of State expect the beneficial arrangements that the European Union has made with developing countries to be maintained in the deals that his Department will negotiate?
I am grateful to the right hon. Gentleman, who takes an interest in these issues, for his intervention. Not only would I like to see those maintained, but I would like to see us use our greater freedom to enhance them. For example, I would like to see a greater convergence of our trade and our development policies; I would like to see us use outward direct investment to help some of the poorest countries develop the ability to add value to their primary commodities; and I would like then for us to be able to use our freedoms in tariff policy to be able to reduce those tariffs on those value-added goods. It cannot be right that countries that produce coffee or fish are penalised for roasting their coffee beans or canning their fish when they try to sell them into our markets. By bringing those two elements together, we would be able to bring enormous benefit and enable people to trade their way to prosperity, rather than being as dependent on our aid policies as they are today. I am grateful to colleagues on both sides of the House who have come forward to us with proposals on that, because I think that we could find a strong bipartisan consensus in this country to be able to do some of that work.
We have already shown that we are very capable of getting contracts, for instance, as the Secretary of State knows and as I saw from direct involvement, with China in terms of the agri-food sector in Northern Ireland. We have a £200 million contract over four years, which is an example of what we can do. Does the Secretary of State feel that the personal, family and business contacts we have with Australia, New Zealand and the USA will inevitably lead to further trade deals that will benefit us all in the UK, and does he share the confidence that I and many others in this House have that the trade deals we will get will benefit all in the United Kingdom of Great Britain and Northern Ireland?
The hon. Gentleman makes several interesting points, and of course not all of the improved openings will come from former bilateral free trade agreements. The case he makes about opening up the dairy sector in China, which as he correctly suggests is worth about a quarter of a billion pounds to the Northern Ireland economy, came from our bilateral engagement with the Chinese Government and looking at their own regulations, so it was produced by a unilateral change by China, rather than a bilateral agreement. In many ways, it will be the opening up of sectors rather than bilateral agreements that will see the UK be able to increase access. The hon. Gentleman also makes a very good point about some of those other countries, because we have strong bilateral and personal links that I hope in the case of the United States, for example, will enable us to be involved at a state as well as a federal level in terms of improving British trading access into those markets.
On scrutiny and transparency, can my right hon. Friend confirm that the legal protections for our NHS that were built into the EU-Canada deal will be replicated in any future UK trade agreement and that, if there is ever a dispute with investors, it would be resolved in a transparent and open manner and not behind closed doors?
The UK as well as the EU have been at the forefront of improving the investor-state dispute settlement system and its transparency; in particular we supported the UNCITRAL—United Nations Commission on International Trade Law—rules on transparency that became effective in 2014. We have always seen this as being a necessary part of agreements, but we do absolutely agree that transparency is one of the ways that will give greater public confidence in the system itself.
It is predicted that the share of global GDP of the seven largest emerging economies—Brazil, China, India, Indonesia, Mexico, Russia and Turkey—could increase from around 35% to nearly 50% by 2050, which would mean that they would overtake the G7, although of course even with more mature economies the International Monetary Fund has predicted that the United States will grow over 50% faster than the euro area this year, at 2.5%. This historic shift in global economic and demographic power will reshape the opportunities of international trade in the years to come, perhaps faster than many expect.
We cannot wish away this change and nor should we. Providing the employment and economic growth the UK needs means navigating this shift successfully. Happily, the United Kingdom is well placed to take advantage of these new opportunities. British businesses are superbly positioned to capitalise on this new environment, as both established and growing economies drive demand in precisely those sectors in which the UK excels. Anyone who has travelled widely will have seen how impressed global businesses and consumers are by the high quality of British goods and the professionalism of British services.
But surely Team EU collectively, with Britain in it, would have much more negotiating leverage against those very large emerging markets. An extreme example would be China. We are dwarfed by China but, as the EU, we can negotiate the best deal. The EU is negotiating deals with Singapore, Japan and others. Surely the Secretary of State must agree that we would get a better deal as part of the EU than isolated as a dwarf outside it.
I really find it quite insulting that the United Kingdom, the fifth biggest economy in the world, should be described as a dwarf by the hon. Gentleman. We are one of the most successful global economies. It is also worth pointing out that the European Union does not have a trade agreement with China or with the United States because it was too difficult to get an agreement with the 28 nations in those negotiations. He is right to suggest that economies of scale have a role in trade agreements, but so also does the ability to conclude those agreements and to ratify them. That has shown itself to be easier when dealing with single nations, which is why Australia has a trade agreement with China but the European Union does not.
The Secretary of State has given us a good rundown of eastern growth metrics. This is why the EU is making the free trade deals with Japan and Korea that we are worried we are going to fall out of. The percentage that I would like him to give us is the gain to gross domestic product for the UK in any deals. We know that the UK will probably gain about 0.2% of GDP with a United States deal, as opposed to the 6% to 8% that it is going to lose from the European Union. That is only about one thirtieth or one fortieth of the gain. If the right hon. Gentleman is talking percentages, will he give us the percentages in context? He says that there will be a loss from Europe and gains with the United States of America and other places, but sadly those gains will be dwarfed by the losses.
But that is a false prospectus, because we want a full and comprehensive trading agreement with the European Union that maintains that trade for the United Kingdom plus the extended opportunities that will come with increased access to those markets that are growing faster. It is possible to do both. It is possible to maintain our trade with the European Union and to improve our trade with the rest of the world. In fact, Britain will have to do that if we want to generate the sort of income that we require for the provision of our public services. Work done by the Institute of Economic Affairs suggests that in 2017 the big increase in UK exports of about £60 billion fed back into the Exchequer at a level of something like £15 billion to £20 billion. That is an example of how, when we come to balance our budget, it is not simply a choice between raising taxes and cutting spending; it is also about earning more money as a country.
Is the right hon. Gentleman seriously saying that the Treasury’s suggestion that getting out of the European Union and the single market will hit the UK economy by 6% to 8% is not actually the truth? That is what is going to happen; he knows that we will take a GDP hit from that. He also knows that a deal with the USA, which accounts for a quarter of the world’s GDP, will give us only a 0.2% gain. He will need to make about 30 or 40 USA-style deals to make up for that loss. Given that the USA accounts for a quarter of the planet, he is going to have to trade with seven or eight planets to make up the loss resulting from his Government’s policy on Europe.
I know that the hon. Gentleman feels very strongly about this. He did not like the result of the referendum and he does not like the decision to leave the European Union, but we are leaving the European Union and we need to ensure that we have sufficient access to the European market, but in a way that does not tie our hands in relation to increased access to other global markets. He makes assumptions on growth in other markets that I do not accept. Nor is this purely about access to goods markets; it is also about the growing access to services markets. In the global trading environment, we have simply not seen the sort of liberalisation in services that we have seen in goods since the establishment of the World Trade Organisation. There is huge potential to unlock the economic benefits to the United Kingdom in seeking global liberalisation in services trading, which is not factored into any of the equations that the hon. Gentleman has mentioned.
My hon. Friend Angus Brendan MacNeil, the Chair of the International Trade Committee, has got to the nub of this. The National Institute of Economic and Social Research said 18 months or so ago that we would lose around 20% of total UK trade even with an FTA with the EU. However, FTAs with the main English-speaking economies and with all the BRICS countries would only see trade rise by 2% or 3% respectively, which goes nowhere close to filling the gap. The point that my hon. Friend is making in GDP terms and the one that I am making in trade terms is at the heart of this. Liberalisation or not, there is no way that we can fill the gap left by what we are about to lose.
As I said, the Government’s ambition is to have a full and comprehensive agreement with the EU, as set out in the Prime Minister’s model. Of course, if the Opposition parties want to avoid what they regard as the terrible scenario of no deal, they can vote for the Prime Minister’s deal. In arithmetic terms—if the hon. Gentleman looks at where Britain’s exports are going—just over a decade ago some 56% of our exports were going to the EU, whereas today that is down to about 44%. Why? It is not simply because the EU has grown more slowly, which it has, but because the economy of the rest of the world is growing faster. Clearly, that is where the markets are going to be for a United Kingdom that has an outward, global vision.
I will make some progress.
Standards have been widely debated in relation to future trade agreements, and I am sure that they will be raised throughout today’s debate. The Government have been clear that more trade does not and cannot come at the expense of the deterioration of our world-class regulations and standards, whether they relate to the recognised quality and safety of our products, our labour laws or our environmental protections. Our current approach both protects our own citizens from sub-standard goods and services and provides the quality assurance that foreign buyers want, which underpins our export success. I remind the House that Britain’s exports are currently at an all-time high.
The United Kingdom has proud and long-standing domestic commitments to protect the environment, to fight against climate change and to uphold high labour standards. We have clear commitments to sustainable development and the protection and advancement of human rights, as mentioned by David Linden, who is no longer in his place. We have a proud and long-standing tradition of promoting those values throughout the world, and the Government remain determined to meet our international commitments in that regard. That will not change as we leave the European Union.
To further that agenda, we will also be exploring how those values should be reflected in the design and provisions of future trade and investment agreements. We are absolutely clear in our policy that any future deals must ensure high food safety, animal welfare standards and environmental protections and maintain our excellent labour standards. The Government are committed to ensuring that this House and people across the country will have the opportunity to scrutinise such commitments in any future free trade agreements—a subject on which I will elaborate later.
Taking the Secretary of State back to Honda’s decision earlier this week, the company said that one of its reasons for disinvesting from the UK was the new EU-Japan free trade agreement. Britain was fully involved in the negotiating of that agreement, so did the Secretary of State’s officials get the EU to take account of the FTA’s impact on inward investment into this country, because it has turned out to be disastrous?
That was one of many reasons, with the main reason being changes in the international car market and, for example, the move towards electric vehicles and away from diesel engines. However, the hon. Lady’s argument seems strange coming from the Labour party, because Labour wants to remain in a customs union with the EU, which would keep the EU-Japan agreement in place and prevent us from making changes to it in the future. If it is such a bad agreement, why is it Labour policy to lock us into a customs union with that agreement in place?
We would like to stay in the customs union because we export a lot to Europe. That is the simple answer to the Secretary of State. However, the question that I am trying to put to him is about what he, his officials and his Ministers did to prevent an agreement that has been damaging to the British economy. Will he undertake to ensure that future free trade agreements will not involve the same model, because that would have a similar negative impact?
The liberalisation of global trade is to everyone’s advantage. The hon. Lady says it is a terrible agreement, but her party’s Front-Bench policy is to keep Britain in the customs union, which would mean the agreement is there in perpetuity. Not only that, but we would have no ability to alter it in future, nor would we have the ability to resist any changes made to it, whether or not we think they are to Britain’s advantage. The Labour party cannot have it both ways: it either wants the freedom to create trade agreements or it wants them to be dictated by the European Union. It must be one or the other.
Vicky Ford asked the Secretary of State for an assurance that the wording he read out from the agreement with Canada will be included in these future trade deals, too. Can he give the House that assurance?
I have done so in previous debates of this nature, in which I said that we regard the public provisions in CETA as being the template we would like to see for future trade agreements. We think it is a good agreement, which is why we find it difficult to fathom why the Labour party did not vote for it in the House of Commons.
The world is crying out for the goods and services in which Britain excels, and it will do so even more in future. We have long been a proud and open trading nation. Trade totals some 61% of our GDP, and it is the foundation of an economy that delivers high-quality, high-paid jobs, that delivers better and more affordable products and that creates the conditions for competitive, world-leading businesses to innovate, prosper and grow across all parts of the UK.
Our openness to free trade, founded on a rules-based multilateral trading system with the World Trade Organisation at its centre, is at the heart of our prosperity. The Government have a clear position that multilateral agreements remain the gold standard of international trade agreements and are the ideal means of pursuing prosperity for the UK and globally across all 164 WTO members. However, this does not mean that bilateral or regional agreements cannot be useful complements to the multilateral system as an adjunct to wider liberalisation. That is why we are also pursuing a range of free trade agreements at both a regional and a bilateral level. Through these free trade agreements, the United Kingdom can work with our partners to establish modern, enduring and impactful trading rules that work for British businesses and for people and communities across our country.
One of the most important trade agreements we are considering is, of course, with the United States, which is our largest single-nation trading partner, with £184 billion- worth in the last year accounting for around a fifth of our exports, and is the single biggest source of inward investment into the United Kingdom. The UK and the US have a deep, long-standing relationship with a strong and enduring bond. We have a shared heritage and shared values, and of course we have deep co-operation across a wide variety of security and defence matters.
We have already taken concrete steps towards this potential trade agreement, including the signing of a mutual recognition agreement last week that confirms both Governments’ commitment to maintaining all relevant aspects of the current EU-US MRA when it ceases to apply to the UK. This will help to facilitate goods trade between the two nations and will guarantee that UK and US exporters can continue to ensure goods are compliant with technical regulations before they depart their home country. Total UK trade in the sectors covered by the deal is worth up to £12.8 billion, with the UK exports covered worth an estimated £8.9 billion.
Similar agreements have been signed in recent weeks with Australia and New Zealand. These agreements ensure continuity and safeguard revenues for British businesses and consumers, and they mark a further crucial step in securing and furthering our vital trading relationships. An ambitious free trade agreement between the US and the UK would further cement our existing strong bilateral partnership and further the interests of our highly compatible economies. It will make it easier for UK and US businesses to trade with each other and identify where we can collaborate to promote open markets around the world.
I have been listening carefully to the Secretary of State, and his argument seems to be that, on our own, we will be nimbler and more able to negotiate good trade deals, but he must know that size matters. As a market of 500 million, there is 10 times the opportunity for profit in the European Union than in the United Kingdom. Why should we get a better trade deal with the United States, for example, given the smallness of our market and of the opportunity for profitability compared with the European Union? If we are not going to get a better deal, why are we doing it?
I hate to point it out, but the EU does not have a trade agreement with the US. Let me give the hon. Lady one example of why it has been unable to have one—data localisation. Although 24 out of the 28 members wanted to move forward with data movement with the US, four countries—France, Germany, Austria and Slovenia—blocked it. That meant that although most of the EU wanted that agreement, it was unable to get it. We would not be restricted in the same way. She is right to say that the bigger the market, the bigger the offer, but that has to be balanced against our ability to be flexible, and how liberal and open we would want to be in that trading environment. We are the fifth biggest economy in the world, and I find it ridiculous that we are being told that we are some sort of economic minnow, when, as the fifth biggest market in the world, most countries want to have access to us. Being smaller economies than the EU has not prevented countries such as Canada and Australia from having trade agreements with much bigger economies, because those trade agreements will be completed and signed only if they provide mutual benefits—otherwise, what would be the point in negotiating them? So I counsel this House against the despair of saying, “We cannot do it on our own.” As the fifth biggest economy on the planet, we are more than able to negotiate strong agreements with other political and economic groupings around the world.
I will make a little progress, because I know other Members wish to speak.
When we leave the European Union, an ambitious UK-US free trade agreement will be a key priority for the Department for International Trade, and we have already been laying the groundwork. The US-UK trade and investment working group has now met five times, with conversations focused on what both sides can do towards ensuring certainty and continuity for business on both sides of the Atlantic, and on identifying opportunities to facilitate bilateral trade and investment, consistent with the UK’s obligations as an EU member. Both the Prime Minister and President Trump have made clear their shared commitment to these bilateral discussions, and they restated that in their most recent meeting in July 2018. As US Ambassador Woody Johnson has said:
“Britain is the perfect trading partner for the United States.”
We very much welcome the letter of intent sent to Congress from the United States trade representative stating that the Administration intend to open a negotiation with the UK once we leave the EU. The President’s statement in the Rose Garden last week, pointing to a very substantial potential increase in UK-US trade, makes it clear that we already have a special trade relationship and that there is real ambition on both sides of the Atlantic to embrace this after we leave the EU.
Let me come back to a point about UK-US trade. The Secretary of State will be well aware that so many US corporations have favoured UK membership of the EU because it has given them a bridging point in access to the EU. The US Chamber of Commerce in Europe, for example, has long favoured our staying in Europe. Does he not agree with that?
A lot of US corporations that I speak to are very relaxed about what our relationship with the EU will be, not least when I explain to them the constitutional implications of Britain being in the EU. I say to my American colleagues, “How would you like to have a court that has authority over the Supreme Court but that sits in Ottawa or Mexico City and over which you have no control?” They then soon understand the constitutional reasons why many of us voted to leave the EU.
I will give way, but then I will make some progress.
My constituents are very concerned about animal welfare standards. Will the Secretary of State confirm that a future trade agreement with the US would not expose British farmers, who have our high animal welfare standards, to products from the US that may have been produced to a lower animal welfare standard?
I have already said that we give high priority to those standards, including animal welfare standards. That has been an essential part of what the Government have set out. I know that it would be advantageous for the Opposition if that were not the Government’s position, and they would like it not to be our position so that they could attack it, but we want to maintain our high standards of consumer products, our high environmental standards, our high standard of labour law protection and our high animal welfare standards as part of our approach to global trade. I am not sure that I could be clearer but, no matter how often the Government restate their position, there are those who do not want it to be our position and who want to interpret it in a completely different way.
The Asia Pacific region will be a key engine of global growth in the 21st century. That means that the comprehensive and progressive agreement for trans-Pacific partnership, or CPTPP, is a key interest for the United Kingdom as we leave the European Union. It is an extraordinarily global free trade agreement, spanning 11 countries on four continents: Japan, Vietnam, Singapore, Malaysia, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. Those 11 countries are collectively home to around 500 million people, constituting some 13% of global GDP and more than £95 billion-worth of current UK trade. If the UK were to accede to it, we would be the second-largest economic member within the agreement, which would then cover a sixth, or 17%, of global GDP—nearly equal to the EU minus the UK.
There has been a positive response across CPTPP members to the Prime Minister’s announcement of the UK’s interest in potential accession. In particular, it has been welcomed by both the Japanese and Australian Prime Ministers.
I thank the Secretary of State for mentioning the welcome developments with regard to the partnership. I hope, though, that accession would not be at the expense of trying to move towards a free trade agreement with our great friends and allies in Australia.
The right hon. Gentleman, as ever, anticipates my very next point. In addition to considering access to that comprehensive international trade agreement, we are at the same time moving forward with ambitious bilateral discussions for future free trade agreements with two of our closest friends and allies: Australia and New Zealand. Both countries are important strategic partners with which the United Kingdom has a deep shared heritage, built on the foundations of democratic values, security, language, our common legal system, culture and, of course, sport—although not all with equal success. It is because of our shared values and our firm belief in free and open trade that we want to strike cutting-edge free trade agreements with Australia and New Zealand, seeking to go further than CPTPP—indeed, further than any FTA ever before—in areas of shared ambition such as services and digital.
Many UK businesses already view Australia and New Zealand as an attractive base for their regional operations, and their proximity to Asia makes them excellent partners for UK firms in a region that stands to deliver nearly two thirds of global growth to 2030. Unlike the EU, Australia and New Zealand have trade agreements with the world’s second largest economy, China.
The Australian Trade Minister has said that other countries in the Asia Pacific region would be considered before us for membership of the trans-Pacific partnership, because we are not in that region. How does the Secretary of State feel about that? Does it dint his confidence at all about any agreements we could reach?
No. The countries in the CPTPP have been quite clear that they want to finish the ratification process for the 11 countries that are already in the partnership before they consider potential new entrant countries. They have yet to decide whether they want to consider individual countries or to group countries in a timetable for accession. We have simply made it clear that we have an ambition to join the partnership. We have a long way to go in determining what that would look like in respect of both timescale and content.
I am delighted to report that both Australia and New Zealand have shown strong political will to negotiate such agreements. Australia is the 13th largest global economy and has been a flourishing nation in recent times, with an excellent record on GDP growth, and trade already worth some £15 billion per year.
The UK is the second largest investor in Australia while Britain is the second largest destination for Australian overseas investment. Our countries established the UK-Australia trade working group in September 2016 and since that time it has met regularly to lay the foundations for future FTA negotiations in addition to discussing wider trade issues of shared interest. I believe that we can look forward to those discussions with confidence.
Similarly, New Zealand and the United Kingdom enjoy extremely close economic ties. The UK is New Zealand’s largest export market in the European Union. New Zealand exports more goods to the UK than to Germany, France and Italy combined. We are also the largest EU investor in New Zealand. The UK and New Zealand are both ranked in the top 10 countries for ease of doing business and we already boast a strong trade relationship, with UK-New Zealand trade worth around £2.8 billion.
The UK-New Zealand trade policy dialogue has been working since September 2016 to determine how we further strengthen our trade and investment relationship and to prepare the groundwork for the launch of bilateral FTA negotiations. An FTA with New Zealand would be an opportunity to set an ambitious precedent for future agreements and to build our relationship with a key ally in multilateral forums. It will give us the opportunity to pioneer modern and enduring trade rules, to update the global rulebook and to identify where we can collaborate to promote free, fair, rules-based trade in markets around the world.
Free trade agreements also give the United Kingdom the opportunity to design new modern trading rules that play to our unique strengths. To ensure that any future FTA works for the whole of the UK, the Government have sought views from a broad range of stakeholders from all parts of the UK. The Government’s proposal, published last year, set out our approach to pursuing new trade agreements collaboratively by engaging the widest range of stakeholder groups. We are committed to an inclusive and transparent trade policy that benefits the whole of the UK.
We are also creating a new strategic trade advisory group, which will advise Department of International Trade Ministers and trade negotiators on trade policy as we move forward. The group will be co-chaired by the Minister for Trade Policy and we are now finalising the selection process for membership. I will shortly write to the successful candidates, with an announcement to follow. This group is composed of core members, representing a diverse range of interests and expertise, drawn from different groups—from business and the trade unions to consumers and non-governmental organisations among others—but all with an interest in our future trade policy and its impact on the full spectrum of issues facing the UK, from the workplace to consumer choice and the environment. The membership of this group, with its balance of interests and representation from across the UK, is designed to allow the Government to harness advice, insight and evidence from a cross section of experienced voices already actively involved in trade-related issues.
I thank the Secretary of State for giving way. Let me go back to the issues around Australia—as an Australian this area is of particular interest to me. The Japan-Australia economic partnership agreement took seven years from start to finish to establish. How long does the Secretary of State estimate it will take to establish a similar agreement with Australia?
At the other end of the scale, the Australia-US trade agreement was an extremely short one to negotiate. So where there are compatible economies, it is possible to do that. I spoke to my Australian counterpart yesterday, and we hope that, given the openness of our economies and their compatibility in terms of shape, we will be able to conclude an agreement as soon as possible. There is no way, in advance of a negotiation, to say how long it will take. At the beginning of this process, our Australian colleagues are likely to be involved in a general election, which may mean that it will be slightly later when we can get into the process, but I hope to be able to conduct bipartisan negotiations with them to ensure that we can make progress as quickly as possible, which is in our mutual interest.
Alongside the consultations, we ran 12 events across the different regions and nations of the UK to seek their views on how prospective trade agreements could support prosperity and growth. The evidence provided in the responses to those consultations will inform the Government’s overall approach to our future trading relationship with these countries, including our approach to negotiating any trade agreements. Decisions made as a result of the consultations will be published before potential negotiations start.
This is the first time that the United Kingdom has consulted on potential future trade agreements independently. The volume of responses across all four consultations, run simultaneously, means that it is only right that we take time to consider the responses and the views of this House in detail. While there are many other markets that the UK will look to for new agreements, our shared values and our strength of trade with the US, Australia and New Zealand make them the right places on which to focus our initial attention, alongside our interest in potentially negotiating accession to the CPTPP.
Let me turn to future scrutiny of our free trade agreements—a topic that has received much discussion in both Houses, including through the inquiry co-ordinated by the International Trade Committee and the published response.
Let me provide a little extra scrutiny. The Secretary of State has talked a lot about trade policy and trade agreements, but these are very different from trade; trade is a different thing. I am thinking about my constituency, where there are guys who travel to the European continent on a weekly rotation basis with lorries containing live shellfish. Now, if we have trade agreements with New Zealand, it is not so easy to drive there on a weekly rotation with a lorry of live shellfish. These guys would also face snarl-ups and there would not be the openness that there currently is to access the French, Spanish, Italian and German markets. How will the interface between trade, trade policies and trade agreements actually work in practice for lorry drivers of shellfish? That is what these people need to know.
The mechanics of the market become immaterial if there is no market to sell into. We are looking to ensure that UK producers have increased market access so they can trade more, sell more of their products and make more profit, which enables us to employ more people. That is what the whole concept of free trade is about. The hon. Gentleman is quite right that the mechanics at borders need to be ensured—not only in the United Kingdom, but in many of the other countries that we are selling into. That is what the trade facilitation agreement that we signed last year was all about. There has to be an improvement in global trading mechanics, including through using new technologies.
The Government are committed to the established principle that Parliament must be able to scrutinise trade agreements at the beginning, throughout and at the end of negotiations. We must have a mechanism that balances real and meaningful scrutiny with the need to maintain the greatest possible security for sensitive negotiating positions and potentially market-sensitive data. I am grateful to Members on both sides of the House for their encouragement and the private conversations that we have been able to have on this issue. The Government are considering how best to balance these elements and I will bring forward further proposals very shortly, not least because we need this for the Trade Bill to make progress on Report in the other place. We will of course take account of views expressed on the subject in this debate.
As we leave the European Union, the United Kingdom will have the opportunity to negotiate, sign and ratify free trade agreements during the implementation period. Working with like-minded partners such as Australia and New Zealand in bilateral agreements and adding our weight to the CPTPP—a modern and ambitious agreement— alongside an agreement with the largest and one of the most innovative countries in the world, the United States, will allow the United Kingdom to take advantage of the opportunities that leaving the European Union affords. This will allow us both to break down barriers that exist with our established partners, and to adapt to the momentous changes taking place in global trading patterns and the growth of the global economy.
Across the world, new markets are emerging that will provide golden opportunities for British goods and services, and it is right that the Government seek out like-minded partners to build the relationships and trading environments that will best maximise those opportunities for the benefit of the United Kingdom and the wider world.
There is a saying that the longest journey begins with the first step. I have always thought that very foolish. Surely the longest journey begins with deciding upon one’s destination. Without a destination, one is simply wandering about aimlessly. Of course, the other part of key journey planning is knowing what we want to do when we get there. Well, it seems to me that today’s debate shows that, when it comes to trade, the Secretary of State has identified the countries that he wants to visit—New Zealand, Australia and the United States—but that he is not really sure what he wants to do when he gets there.
The Secretary of State must persuade the House today that he has a clear itinerary and agenda. What are his objectives in securing these new trade agreements? What are the attack sectors in the markets that he has particularly identified as ones where we need to secure liberalisation and access for our suppliers and exporters? Which are the defensive sectors in our own markets that these other countries may seek to attack in response? What are the measures that he is proposing to use to defend those sectors in the UK?
My right hon. Friend John Spellar intervened on the Secretary of State to elicit a clear statement of his firm intention to safeguard our NHS. Perhaps the Secretary of State would confirm that he was not actually quoting from the CETA, but from its non-legally binding interpretive side document. What sacrifices is he prepared to make in the negotiations to secure his objectives? How do his objectives sit alongside the objectives of his colleagues in the Department for Environment, Food and Rural Affairs? Do they compromise our food standards or producer capacity? In the Department for Business, Energy and Industrial Strategy, do they fit alongside the plans for a low-carbon transition of our economy to net zero? A successful strategy is one that has thought through all these questions beforehand.
My hon. Friend Helen Goodman exposed how only this week we have seen an announcement by Honda, whose future in the UK has been sacrificed as a result of Japan now being able to export Japanese-made cars tariff-free to Europe. The Secretary of State said, “Well, of course, they’re still going to be able to do that after we’ve left the EU, and we’d have no way of changing it inside.” We have no way of changing it outside, because Honda will still be able to export those cars to Europe tariff-free; The Secretary of State knows that. The point that my hon. Friend was making so powerfully was that the relevant impact assessment was not done and that this Government had therefore not insisted that the relevant protection was made for our industry in the EU-Japan agreement.
I have a philosophical question. There are two schools of thought regarding what is to blame for the Honda situation. It is either Brexit and the anticipation of trouble at the borders either now or in 21 months’ time as the Prime Minister kicks the can down the road and we leave the customs union and the single market; or, as the hon. Gentleman has just postulated, it is the EU-Japan free trade agreement. If it is the latter, is it not negligent for a country within the EU not to raise this issue as a defensive interest and ensure that this situation did not happen? It would seem to be extreme UK negligence for a country within the EU to have burned its car industry on the basis of getting a free trade agreement.
The hon. Gentleman makes two distinct points. Of course, he is right to talk about the impact of Brexit on the automotive sector in the UK. All Members in this House should be concerned about that. The point that my hon. Friend the Member for Bishop Auckland quite rightly made was that Honda said, as the Secretary of State mentioned, that there was no imputation that this decision was made as a result of Brexit, but there was a clear indication that it was as a result of Japan now being able to import tariff-free to Europe—including the UK, but the whole 28 member states. At the point when this Government should have been making representations during the negotiations on that agreement, they were not doing so.
The Labour party’s position is that it would be inside the customs union, where it would inherit the very agreements it says it does not like—it did not vote for CETA and it does not like the Japan economic partnership agreement. It would not only be bound by those agreements but would have no say in any future policy because it would be applied by the EU through the customs union.
It is always the way with the Secretary of State: when he sees that a valid point has been made and that he is vulnerable to it, he tries to go on the attack. It does not work. It is a pathetic response when he knows and should, with some humility, accept that the proper impact assessments were never made.
Is the hon. Gentleman aware that there is some concern among Japanese car manufacturers about whether the US will end up imposing tariffs on EU products and that that might make exports from the EU to the US very uncompetitive? Is that not potentially a much better reason why, in this case, sad though it is of course, they are consolidating low-volume production models back to Japan?
The hon. Gentleman makes a fair point, and I will address it because he has done so in an open spirit. It could well be the case that the risk of America doing as he has suggested could have had that impact. I think he will concede that it is more likely to have been the case in the high-value sectors of our automotive industry, such as Jaguar Land Rover, where we export prestige vehicles to the United States, than in the bulk sector—the Nissans, Hondas and Toyotas that form the bulk of our domestic production and of our exports to Europe. He is partially right. It could well have affected their decision making, but it is more likely to have been at the high end of the market than the low.
Does my hon. Friend think it is a cruel irony that Margaret Thatcher was instrumental in creating the single market and getting Japanese car companies to come here as a platform to access that market? The EU-Japan trade deal is one of the reasons they have gone there. The other imperative is that, had we not been Brexiting, those car manufacturers would in all probability stay in the EU, in Britain, where they are already. Given that car workers who voted to leave are now finding that they voted to leave their jobs, should they not have a final say on whether we leave at all? They certainly did not vote to lose their jobs. It is completely farcical.
My hon. Friend tempts me into a discussion about Brexit, but I am sure that if I were to be tempted, Madam Deputy Speaker, you would be on my case in a flash, urging me to deal with the matter of future free trade agreements instead.
This debate was originally promised at the last International Trade oral questions on
Their Lordships required the Government to set out their proposals for the process, the consultation, the mandate and scrutiny of making international trade agreements in the first place, including:
“Roles for Parliament and the devolved legislatures and Administrations in relation to both a negotiating mandate and a final agreement.”—[Official Report, House of Lords,
The House will note that no such proposals have yet been brought forward, so perhaps the Secretary of State will tell us what progress he has made in this respect and when he intends to introduce such a debate.
Today’s debate certainly cannot be considered to constitute that important discussion. It is a general debate on a Thursday, in a week that was intended to be recess, talking about potential agreements before Parliament has even debated the whole process of consultation, impact assessment, negotiating mandate, parliamentary debate, transparency of negotiation, ratification and subsequent review and periodic appraisal that should constitute a framework within which the Government intend to bring such agreements into being.
Furthermore, people watching today’s debate will be incredulous that, given that just last week the Secretary of State was forced to come to this House and admit that he had thus far failed to replicate the 40-odd trade agreements that he promised would be ready to sign one second after midnight after Brexit, last week only five had been agreed, nine were off-track, 19 were significantly off-track, four were said to be impossible to complete by
I thank the shadow Secretary of State for giving way and for the excellent speech that he is making. When I asked the Secretary of State earlier whether, given the different sizes of the UK market and the EU market, the UK could succeed in negotiating a better deal than the EU, his response was that the EU had yet to negotiate a deal, seeming to imply that no deal could not be worse than a bad deal that he might negotiate. Does my hon. Friend agree that this is contradictory to the Brexiteers’ position, and that a bad deal for us negotiated with the United States of America could have a really devastating impact on our agriculture and automotive trades specifically?
I certainly do agree with my hon. Friend. Some in the Secretary of State’s party have been claiming that no deal would be better than a bad deal. Others have been claiming that going on to no deal would be no problem at all, that we would be trading on WTO terms. I am sure that she also wonders, if working on WTO terms is as good as those Conservative Members believe it to be, what the green sunlit uplands are that the Secretary of State is speaking about in terms of getting rid of the WTO terms in all these new trade agreements. I think he was the one who referred to having it both ways earlier, but it rather seems to me as if he is doing just that.
The Secretary of State’s reference to the sunny uplands of post-Brexit trade rather prompts the question why the Government Benches are not a little fuller today. Would my hon. Friend like to comment?
There is no need for me to comment. The empty Benches are screaming my hon. Friend’s point louder than I could amplify it.
Will the hon. Gentleman give way?
I will make a little progress.
The Government’s primary focus must be securing a deal with the EU, which accounts for 44% of all our exports. The Department for International Trade’s primary focus must be to secure the so-called roll-over agreements—a promise repeatedly made by the Secretary of State, which he has now only 35 more days to deliver. Thousands of businesses depend on the ability to continue to operate their just-in-time supply chains, and thousands of jobs in this country depend upon the same.
Questions have repeatedly been asked of the Government’s capacity to handle even the volume of work required to get these deals over the line—more so given the UK’s relative lack of trade negotiation experience after some 40 years of not being able so to do under the EU’s common commercial policy—yet today’s debate is to consider a number of potential new free trade agreements with Australia, New Zealand and the United States, and the potential accession of the UK to the comprehensive and progressive agreement for trans-Pacific partnership.
The Opposition want to see progressive, positive trade agreements that benefit the UK, help to grow our export potential and further enhance the UK’s attractiveness as a destination for investment, but we have been clear from the outset that the priority must be securing a deal with the EU and ensuring continuity of trade for British business, including with respect to trade agreements that the EU has with third countries. There is a good reason for that, which is that any major trading partner will want to know what trading arrangements we have with the EU before concluding a trade agreement with us in future. That seems self-evident. If we are not able to conclude the free trade agreement with the EU, perhaps right into the transition period, that will substantially impair our ability to secure a new trade agreement with any of the three countries that we are considering today.
The Secretary of State is like a general who fails to secure his rear before charging off in search of a new enemy to fight, but that is not his only embarrassment. The letter written to the Prime Minister this week by the chief executive of the British Ceramic Confederation is excoriating about the total lack of understanding displayed by the Secretary of State of the impact of the proposals he favours for a move to zero tariffs in as many areas as possible. The chief executive sets it out in surgical detail:
“Removing import tariffs gives a leg up to foreign competitors, thus threatening British manufacturing jobs.”
“Our manufacturers would still be paying other countries’ import tariffs including, in the event of no deal, EU MFNs and other countries’ MFNs where we will have just lost our preferential access. The net effect across all sectors could be to increase imports at the same time as exports are being put under pressure with a resulting adverse effect on balance of payments.
No tariffs makes the UK’s emerging trade remedies system ineffective from the outset by lowering the cumulative duty paid on the distorted imports, for example, by 12% in the case of dumped Chinese tableware.
It would weaken the UK’s hand in making free trade deals with other countries. If we give away access to Britain for free, why would anyone need to do a trade deal with us?”
Will my right hon. Friend give way?
I will, but my hon. Friend has promoted me.
I am grateful; my hon. Friend is making an exceptionally important point. I have had the ceramics industry in touch with me because I have a brick factory, Wienerberger, in my constituency. Zero tariffs would also be catastrophic for farmers. Does he not agree that if the Secretary of State is planning to bring forward a statutory instrument in this form next week, he should have had the decency to announce it at the Dispatch Box today?
I do not know whether my hon. Friend was in the Chamber just prior to the debate starting, but I raised a point of order with Mr Speaker—obviously, you were not here, Madam Deputy Speaker— to say that the fourth written statement due to be laid before the House today had not been made available prior to this debate. I thought that was a great shame. Mr Speaker expressed his view that, of course, these things sometimes happen inadvertently. If it was advertent, he deprecated it. But of course, there is a pattern here, and my hon. Friend is right to point to that pattern. I share her hope that we will not find next week that there are further documents that either would have been vital for today’s debate or are being produced at exactly the wrong point for Parliament to have the maximum opportunity to scrutinise what the Government are doing.
The British Ceramic Confederation letter continues:
“Some members thought if we are importing, say, a raw material, that was not manufactured or quarried in the UK a liberalisation might be acceptable. Our members are clear this should be an exception rather than a general rule and comprehensive consultation would be needed.”
Of course, the chief executive rightly also points out that most other sectors have not had the same level of discussion with officials that ceramics has had, and so are largely unprepared for the potential impact of a unilateral snap move to zero most favoured nation tariff rates. There has been no comprehensive formal consultation, no comprehensive impact assessment and no prolonged transition proposed. Such a significant decision would have far-reaching consequences for the UK economy and would demand full parliamentary scrutiny.
Consultation, impact assessments and parliamentary scrutiny—those are all the things their lordships are still waiting for before returning the Trade Bill to this House, and all the things this debate ought to have been about, rather than putative future agreements whose working groups have been mired in secrecy and which the Secretary of State sees as his vanity project of restoring the Anglosphere.
The letter continues:
“In a no deal Brexit, already highly damaging and disruptive for our sector, the shock of zero tariffs would be devastating, affecting businesses, jobs and communities across the country as well as affecting UK manufacturing more generally.”
Of course, it is not just the ceramics industry that is horrified by the Secretary of State’s proposals. The Manufacturing Trade Remedies Alliance, which is made up of eight national trade associations, as well as three trade unions, only yesterday put out an equally strong press release damning the folly of a wholesale reduction to zero tariffs, saying that
“the move could ruin the home market for many sectors. Increased imports would flood the market, jeopardising tens of thousands of jobs and fundamentally changing the British economy.”
Ian Cranshaw, head of international trade at the Chemical Industries Association, said:
“The idea of a new tariff regime is something which should be subject to proper consultation. With less than 40 days to Brexit, British manufacturers already dealing with Brexit uncertainties are now having to assess how their business might be impacted by an increase in non-EU competition should the government remove MFN tariffs on key chemical products.”
Finally, Jude Brimble, GMB national secretary, said:
“Zero tariffs in the event of a no-deal Brexit is a short-sighted move. While it may lower prices in the short term, it will ultimately put thousands of British manufacturing jobs at risk.”
Will the hon. Gentleman give way?
In a moment. Jude Brimble continued:
“Manufacturers are often based in the heart of their communities and supporting many more indirect and supply chain jobs.
Zero tariffs could destroy the proud history of making and manufacturing” in this country.
Is this really what the Secretary of State intends? I will happily give way to him now if he will rise to confirm that he has abandoned that folly.
The need to produce a new tariff policy would be required only in a no-deal scenario. I voted for there to be a deal to avoid that—will the hon. Gentleman?
I have two points. First, of course I will vote for a deal, but I will not vote for the Secretary of State’s bad deal. That is why we have put forward our own proposals for a good deal that would protect manufacturing in this country. Secondly, he says that new tariffs will be necessary only if there is no deal. Why then have he and his departmental officials been talking to industry about his proposals for zero tariffs? I will very happily give way if he will come back to the Dispatch Box and explain that. [Interruption.]
Order. The hon. Gentleman cannot sit down. He has to keep going.
I was seeking an intervention, Madam Deputy Speaker.
According to the Office for National Statistics, Australia was our 16th biggest export market over the past 20 years, with machinery, Scotch whisky and particularly motor vehicles being among our primary exports. House of Commons Library data suggests that we exported £10.8 billion of our goods and services to Australia in 2017, representing 1.8% of our total exports. In turn, we are Australia’s primary EU market, with primary imports consisting of metals, including precious metals, as well as gems, wine and agricultural products.
The UK Government have recently announced that a UK-Australia mutual recognition agreement has been agreed alongside an agreement on trade in wine. [Interruption.] This is not a glass of Australian wine that I am drinking. That agreement is intended to replicate the terms of existing agreements between Australia and the EU. Australia maintains a number of trade co-operation agreements with the EU, and the current state of play on the UK Government’s progress in rolling over these agreements remains unclear. Although Australia does not currently have a free trade agreement in place with the EU, discussions towards an agreement began last June. Australia has repeatedly made it clear that the EU agreement remains its priority agreement, and that any trade agreement with the UK will not be possible until Brexit is settled.
The European Parliament approved the negotiating mandate for the trade agreement, but noted that there must be
“special treatment for some sensitive agricultural products, for example, through tariff-rate quotas or transition periods, and a request that consideration should be given to the exclusion of the most sensitive sectors;
and the preservation of governments’ right to regulate with a view to achieving legitimate policy objectives.”
Furthermore, the European Parliament called on the Commission
“to conduct negotiations as transparently as possible”,
and said that
“the role of the Parliament should be strengthened at every stage of the FTA negotiations.”
I ask the Secretary of State whether the UK Government will be adopting the same mandate in the negotiations. Where they are not adopting the same mandate as the EU-Australia agreement, will he will set out precisely where it will differ?
In the same year, our exports to New Zealand totalled £1.5 billion, representing 0.2% of our total exports. The ONS statistics for the period show that New Zealand was our 54th biggest export market over the past 20 years. Again, our biggest goods exports to New Zealand were primarily motor vehicles and machinery, with agricultural products and wine constituting some of our major imports. The US was our primary export destination in that period, and of course it continues to be our biggest trading partner, discounting the EU. We record a trade surplus with each of these countries, so it would be fair to imagine that it is in their interests to ensure that any future trade agreement grows their own export base.
The EU and New Zealand also commenced negotiations towards a free trade agreement last year, with the mandate again being presented for a vote in the plenary of the European Parliament. Concerns were raised about the impact of agri-food imports on farmers, and the European Parliament requested
“that due consideration should be given, for instance, either to the inclusion in the FTAs of transitional periods or appropriate quotas, or to the exclusion of commitments in the most sensitive sectors.”
It said that the negotiations should seek to ensure
“the inclusion of a specific chapter devoted to generating business opportunities for micro-enterprises and SMEs;
special treatment for some sensitive agricultural products, for example, through tariff-rate quotas or transition periods, and a request that consideration should be given to the exclusion of the most sensitive sectors;
and the preservation of governments’ right to regulate with a view to achieving legitimate policy objectives.”
The European Parliament called on the Commission
“to conduct negotiations as transparently as possible,” and MEPs stressed that
“the role of the Parliament should be strengthened at every stage of the FTA negotiations.”
Again, I ask the Secretary of State whether, in pursuing the trade agreement with New Zealand, he will be adopting a mandate that is similar to the one already adopted by the EU. If not, will he now set out precisely where it will differ?
With that in mind, we must be clear about what the opportunities and threats are in respect of further liberalisation of trade with these countries by way of a free trade agreement. It would therefore have been helpful had the Government set out their priorities for each of the trade agreements we are talking about. I had hoped that this would be an opportunity for the Secretary of State to come to the House and do precisely that—to set out the sectors of attack, the sectors of defence and exactly what trade-offs he might foresee.
Angus Brendan MacNeil and his colleague who speaks on trade for the SNP, Stewart Hosie, both challenged the Secretary of State by saying that neither the contribution to GDP nor the volume of trade secured in these future trade agreements would compensate for the loss of trade with the EU. When they intervened on him earlier to do so, they gave figures and statistics, but the Secretary of State did not do so.
What impact assessments have the Government done on the specific rises in GDP and volume of trade that the UK seeks to secure from the agreements his working groups have been working towards? With those assessments we might be able to hold him to account in the future. For example, given that motor vehicle exports make up our largest goods exports to Australia and New Zealand, it would be helpful to know what assessment the Government have made of recent market developments, or of our ongoing capacity to export motor vehicles to those countries.
I hesitate to intervene to make a discordant point, because the hon. Gentleman was being generous. However, on balance I think I should say that if we have a customs union only and are not in the single market, which is the Labour party’s policy, that itself would probably mean a hit to GDP of about 4%. If we need about 30 agreements at 6%, then we would need about 20 similar agreements—20-ish such American agreements—to make up for the damage his policy would bring in loss of trade to the European Union.
Yes, indeed. That is why I have consistently said that I believe that Brexit will do economic damage to this country. Unlike the hon. Gentleman, however, I believe in democracy. I believe that, after the referendum took place, this Parliament had an obligation to do what the British people said we should do.
There is also the question of geography to overcome, with the traditional trend towards trade being with one’s nearest geographical neighbours. That is called trade gravity. While we may share a common history, have cultural relationships and even share a legal system—in trade terms, that is critical and very helpful—there can be no avoiding the significant logistical challenges of shipping goods right around the world to the Pacific. It is worth our considering that these countries are all major agri-food producers and exporter nations, with Australia and New Zealand being members of the Cairns Group bloc at the WTO.
The Cairns Group is an interest group committed to the abolition of agricultural subsidies and the elimination of tariff and non-tariff barriers to trade for their agricultural exports. Other members include Canada, Chile, Malaysia, Peru and Vietnam, which, alongside Australia and New Zealand, make up of seven of the 11 CPTPP countries and seven of the 19 Cairns Group members. There may well be potential to grow our exports to those markets, and the ask on their side is clear. It goes precisely to part of the question posed earlier by my hon. Friend the Member for Bishop Auckland.
The ask on their side is clear: “Open up your markets to our food products.” The impact on our domestic agricultural sector could be substantial as our farmers find themselves struggling to compete with an influx of cheaper food products.
The Secretary of State has repeatedly welcomed the perceived benefit to UK consumers of cheaper New Zealand lamb, and today he again dismissed—I was glad to hear him be so robust—safety concerns over things such as GMO foods or chlorine-washed chicken from the United States. In response to one of his colleagues, he said that there will be no lowering of either sanitary or phytosanitary standards or of animal health and welfare regulations in this country. I welcome that, and we will hold him to it.
If a trade agreement between our countries requires the removal of all tariffs on such goods and the abolition of tariff rate quotas, that could well mean the end of our livestock and poultry sectors. We already know that there has been a big push by the agricultural lobby in those respective countries to seek greater market liberalisation, and some of those countries, including New Zealand and the United States, have slowed the progress of our accession to the Government procurement agreement. It is likely that some countries have also voiced objections to the lodging of our WTO schedules and that the Government have had to agree to a number of future concessions to smooth the road. Again, I would happily give way to the Secretary of State if he wanted to come to the Dispatch Box and deny that is the case, or to set out any concessions or commitments he may have given, but he appears unwilling to do so.
The farming sector in this country is extremely nervous about the impact on its ongoing viability should the UK open up market access for imported agri-food, particularly from the United States. Concerns over production standards, animal welfare, sanitary and phytosanitary standards have not been put to rest by the Environment Secretary’s repeated assurances that our domestic standards will not be lowered. At no point have the Government ruled out allowing access to our markets for goods produced to lower standards than our own. Indeed, the latest rumour is that the Government will seek to counter the impact of the importation of such goods with tariffs. The Secretary of State did not rule that out in his earlier remarks—again, I would give way to him if he sought to intervene, but he does not.
Where a trade agreement is in place, such tariffs are likely to be removed and therefore will do nothing to defend our farmers from cheaper imports from those countries. The argument that that will benefit consumers must be demonstrated credibly, with a proper impact assessment and economic modelling that fully considers the effect on our domestic producers and jobs in that sector. Lower prices will not benefit consumers who find themselves out of a job as a consequence of our producers going to the wall. Concerns have been similarly raised about the chapter on sanitary and phytosanitary measures in the CPTPP, which are referred to by some academics as “SPS minus” and are significantly lower than the EU’s current sanitary and phytosanitary rules that the UK will inherit as retained EU law. Acceding to that agreement and allowing products that have been produced to lower or differing standards than our own to enter our markets could further compound the threat to our domestic farmers and undermine any future relationship with the EU and the standards alignment that we need.
Sanitary and phytosanitary standards are one of the most sensitive aspects of trade policy and they have, for good reason, been a major point of contention in discussions about our relationship with the EU post Brexit. It is not only our farming sector that is concerned about the impact of those agreements. Last week, we saw reports that the US steel-producer lobby has been petitioning to block or restrict access for UK producers to Government procurement contracts in the United States under the terms of any potential trade agreement. Indeed, President Trump has been abundantly clear with his America first agenda that he will not countenance any trade agreement that he views as being counter to American interests—namely, domestic protectionism and ensuring a US trade surplus with trading partners.
President Trump has publicly stated that the US is
“losing billions of dollars on trade” and would find a trade war “easy to win”. Such rhetoric should be alarming to British businesses as Trump is clearly not out to do a good deal for us. President Trump stands on an America first platform and believes that by forcing trade partners into submission and competitor companies out of business, he can restore manufacturing in the United States. In truth, those tariffs are hurting US businesses who participate in global supply chains and face countervailing tariffs overseas. As part of his trade war, President Trump has also refused to endorse nominations to the WTO appellate body, thus blocking the progress of dispute resolutions and the enforcement of the rules-based system. We should be very wary of doing a trade deal if we cannot seek enforcement at the WTO for any actions taken in violation of those rules by another country, and the US is blocking that possibility.
A recent report by a number of right-wing think-tanks—many linked to the Secretary of State, who is understood to favour the report—suggested that a US-UK free trade agreement should “enshrine” the “negative list” approach to liberalisation across goods, services, investment and Government procurement, which is conducive to faster, broader and deeper economic integration. The Secretary of State will know that the negative list system, which has been adopted in some trade agreements that we have already entered into, means that future sectors—some of which we cannot currently even conceive—would automatically be liberalised, no matter what the public policy consequences would be. That is extremely dangerous, and it would be good if the Secretary of State assured the House that when he considers future trade agreements, he is mindful of that point and would not wish to have a negative list system that could expose us in that way.
The Secretary of State has established a number of trade working groups, including with Australia in 2016, New Zealand in 2017, and the US in July 2017. To date, we have precisely no information about what has been discussed in those working groups, what progress has been made towards a future trade agreement with those nations, what assurances have been sought and concessions agreed, or what representations have been made on those issues. The Secretary of State has made no secret of his desire to fast-track these agreements and have them ready to go after the UK withdraws from the EU, but it is not at all clear that his counterparts share quite the same ambitions.
Australia has repeatedly stated that its priority is securing a trade agreement with the EU, and the American President has suggested that a trade deal with the US is all but impossible with the Government’s preferred approach to Brexit, as set out in the Prime Minister’s proposed deal. Just this week, Simon Birmingham, Australia’s Minister for Trade, Tourism and Investment, poured cold water over any idea that the UK could quickly accede to the CPTPP noting
“obviously it’s a statement of fact that the UK is not within the Pacific.”
[Interruption.] That is not me; that was Simon Birmingham. He went on to say that
“some of the other TPP members would think that there are some nations within the Asia Pacific region who might be earlier starters in terms of coming in.”
Does the Secretary of State believe that he can confidently conclude these agreements with the same speed and ease with which he promised he would secure the roll-over agreements?
Has the Secretary of State had conversations with CPTTP member countries about the UK’s accession to that agreement, and what commitments has he received or given in respect of the same? He will no doubt be aware that New Zealand has sought, through a series of side letters with other members of that agreement, to disapply the investor-state dispute settlement provisions of that agreement. I would be delighted if the Secretary of State said that he is going to do the same. Will the UK be seeking ISDS provisions in trade agreements with Australia, New Zealand and the United States, despite the fact that, as he said, the Secretary of State believes they should not be necessary
“under systems such as the UK’s”?—[Official Report,
Many colleagues will be extremely concerned that a number of those issues will already have been discussed privately through the trade working groups and that assurances and commitments may already have been exchanged. We are here debating potential agreements that may well already be loosely drafted. This debate can hardly be considered to be a meaningful say from Parliament on the terms of those trade agreements. The Government’s approach to trade agreements has been little more than warm words and window dressing. Public consultations were opened by way of an online survey on the Department’s website on July 2018 and have since closed, but we have yet to have any report on the findings of those consultations.
This approach does not constitute a proper consultation and oversight framework that ensures the best agreement possible for the entire country as we withdraw from the European Union. Key stakeholders are concerned that they are being invited to give views merely as a tick-box exercise, with no real say on helping to shape trade talks and with no capacity to feedback on any complications that concessions during negotiations may present. That is why my party has repeatedly called for a proper consultation structure that would require the formal engagement with affected stakeholders, civil society, trade unions and the devolved nations.
Such a process must also ensure that Parliament has a role in the approval of mandates, impact assessments and reviews of trade agreements. The Government voted down every amendment to the Trade Bill to that effect. We have also been clear that consultation alone is not enough. A comprehensive, independent sustainability impact assessment needs to be conducted in advance of the launch of new trade and investment negotiations to establish the potential social, economic and environmental consequences for all sectors and regions of the UK.
To conclude, we in the Labour party would welcome trade agreements that grow our export base across all regions of the United Kingdom and that help maintain and elevate rights and standards. If the Secretary of State could show that these potential trade agreements could achieve those objectives, we would of course welcome them. However, we are extremely concerned at the lack of information presented to Parliament on the prospective benefits and on the potential threats to our domestic producers, which are clearly evident. The Government must ensure that proper assessments are carried out and must ensure that Parliament has a proper say in future trade agreements that are ultimately to be concluded between our nations.
As usual, I have a couple of declarations to make. First, I belong to the National Farmers Union, not as an active farmer but certainly as a member in this country. With my background that is to be expected. Secondly, as my accent has already made clear, I have dual nationality. I come from New Zealand and I have a New Zealand passport. I also have a UK passport and I have lived here longer than there. I am extremely supportive of what the Secretary of State for International Trade and President of the Board of Trade, my right hon. Friend Dr Fox says, particularly when he talks about negotiations to join the TPP, and working on negotiations for a deal with Australia and New Zealand. Australia and New Zealand can teach us a number of things as we head into a field that they headed into as we went into the EU.
There are at least two relevant factors involved in the negotiations on going into the TPP. First, most people see Britain as an asset as a TPP partner. After all, free trade agreements are two-way—or perhaps I should say that they cut both ways. Secondly, as I have made clear, we almost certainly have at least two friends, two Commonwealth friends, who have been supportive for generations, even kith and kin. They will be supportive as we move towards the TPP.
When we went into the Common Market, New Zealand’s trade with this country teetered overnight from 90% to 50%, and then dwindled to 5%. It must find it a bit strange and have a wry smile that we want to go back. Fortunately, it is most likely to be helpful and positive to our interest, but equally, we must remember, with its own interests definitely in mind. After the crash of the New Zealand economy when we entered the then Common Market, New Zealand and Australia forged an aggressive export drive. They also shocked their economies into action. In New Zealand’s case, I remember the Prime Minister, a few years after that trade blow, explaining to one of our well known characters on the “Today” programme that it had lifted its trade export market to over 100 more countries. We need to watch that as we go out. There was a slight but not too serious hiccup between Australia and New Zealand when a small group of Australians suggested that New Zealand should become another state of Australia. That generated much antagonistic steam. In fact, the New Zealand Prime Minister at the time stated that
“Any New Zealander moving to Australia would increase the IQ of both countries.”
I am sorry that Deidre Brock has left the Chamber. [Laughter.]
The main export for New Zealand then and now is agriculture. New Zealand farming was radically shaken up very quickly. Farming subsidies were removed at a stroke overnight, but so were the restrictions. The freedom that gave those farmers made such a difference to them entering a really effective market. Farming became an industry. It became open, competitive and free market. Australia did much the same. They will be our competitors and partners both through our trade agreements and if we go into the TPP.
I find the thought of a Pacific link curious, because the only UK geographic link to the Pacific is the overseas territory of Pitcairn Island. As has been said, I understand that Simon Birmingham, the Australian Trade Minister, did not sound particularly enthusiastic—we heard a couple of quotes. Contrary to that, however, he has also said that Australia is ready to fast-track some sort of deal with the United Kingdom. New Zealand, on the TPP, was a little more confrontational. Commenting on New Zealand’s membership of the TPP, Catherine Beard, the executive director of ManufacturingNZ and ExportNZ said:
“New Zealand would benefit from $222 million in tariff savings yearly.”
As an NFU member, I am also aware that she said:
“Agriculture is widely expected to be a big winner with kiwi fruit, beef, wine, dairy, forestry, and seafood products all expected to benefit from savings on tariffs and the chance to more easily make aggressive entries into foreign markets.”
That could be a warning for us. I think of that when I look round my Mole Valley farms. My constituency has a dairy farm that is supposed to be big. It has 350 cows. Mole Valley has sheep farms with perhaps 1,000 sheep, and some of those farms get 90% of their income from subsidies. These farms are tiny compared with New Zealand and Australian farms. Two dairy farms near where I lived as a youngster in New Zealand milk 1,500 and 2,500 cows, twice a day. The farm I came off in the middle of the South Island had 1,000 head of cattle, 1,000 head of deer and 23,000 lambing ewes. When they lambed we had 50,000 sheep. The land, the atmosphere and the weather resembles much of the hill country of Scotland. It is right up where “Lord of the Rings” was filmed.
We have nothing to compare with that here in the UK. The size and the power of the industry in New Zealand could shatter our farming. If we are going for free trade, we have to wake up. We have time. We can do something about it, but we have to give our farmers the chance to dramatically improve. There is protectionist talk of product care and standards matching ours. That is the correct approach, but it is the correct approach for food safety reasons, but not for protection because Australia and New Zealand meet those standards already.
Vineyards are another classic example. There are square miles of vineyards in New Zealand. You can stand on a high hill and see nothing but vineyards.
The hon. Gentleman talks about improvement. I just wonder what he means by that. Does he mean expansion and growth? When he talked about having 23,000 sheep, with 50,000 after lambing, my hon. Friend Drew Hendry asked me, “How many do you have?” I said 32—just 32. We are talking about a hugely different scale. Is he talking about farms in the UK getting bigger and amalgamating, and a whole change in the structure of UK farming?
There is a list of ways in which we can look at that. Perhaps I can answer with an old story. I was upbraided by my farmers some time back and they finished with an anti-politician joke. I explained to them that the son of one of my Surrey farmers had gone out to New Zealand and had bought a farm the same size out there. When shearing time came around, he called up the shearing contractor and said, “Will you come and shear my sheep?” The contractor said, “I’ve got two gangs near you. One’s up the Waimakariri and they have 17,000 sheep to go, and the other ones can be with you next week. How many sheep have you got?” He said, “17.” The contractor said, “17,000?” He said, “No, no—17 sheep.” The contractor said, “Oh, are you English?” He said, “Yes.” The contractor said, “Are you from Surrey?” He said, “Yes.” The contractor said, “Right —you’re English, you’re from Surrey, and you have 17 sheep. Can you tell me their names?”
What I am getting at is that we have an opportunity—I will touch on this in a minute—to counteract that. Australia is a huge agricultural producer. The gross value of Australian farm products in 2016-17 was $60 billion. The Australians export about 77% of what they grow and produce. Fortunately, through the TPP and other arrangements, those two nations are pouring their products into Europe, China, the middle east and even the US, and they are not fulfilling their quotas. There is a real opportunity for us to improve our efficiency in farming and everything else, because Australia and New Zealand may well be looking for us to help them to fulfil those quotas, including, particularly, the quota for lamb meat going into the EU.
I really appreciate the hon. Gentleman’s anecdotes about sheep farming. He talks about improvements in efficiency, but does he recognise that our landscape—I am thinking particularly about the landscape of Northumberland and County Durham and the beautiful landscape of the north of England—is driven by the scale of farming that we have now. Its beauty would be much affected and, in my view, much diminished by the kind of efficiency that we see in New Zealand farms.
All I can suggest to the hon. Lady is that she gets disc two of “The Lord of the Rings”, and if she does not find that beautiful, she needs to go to Specsavers.
I do not need to get disc two of “The Lord of the Rings”, because I already have it and have watched it on a number of occasions. There are different types of beauty; I am talking about the beauty of Northumberland. I appreciate the beauty of other countries, but I wish to retain the beauty of our gorgeous countryside.
So would I, but I think it is quite possible to have some dramatic improvements in farming. Part of the reason for that is that, having left the EU, we will be able to have a bonfire of the rules and regulations that the EU have applied to farming. That would make a huge difference. Also,—I say this to the Minister—if we are going to continue with farming subsidies, could they be paid on time and without, in the case of my farmers, my having to constantly badger the Department for the payments? We need a total rethink of the subsidies and regulations. We need to provide an opportunity for farmers to meet standards but not have to suffer from the regulations. If we do not do that, we will suffer from some of the gloom and doom that we heard from the Opposition Front Bench spokesman, except that we will have the help of our allies—Australia, New Zealand and most of the people in the TPP—because they will need us to help them to fulfil their portfolios. That will give us an opportunity to make sure that our farming is up to scratch and can meet standards. However, at the same time, as a few hon. Members have already said, free trade is double-edged.
I start by agreeing with what the Secretary of State said about looking to have trade deals with developing, emerging and growing markets. That is absolutely right, whether the UK or the EU does it. He made big play of Australia and New Zealand, which we just heard about from Sir Paul Beresford. Australia takes about 1% of the UK’s exported goods—half of what we sell to Turkey. New Zealand takes 0.1%—about the same as we sell to Algeria—so however important Australia and New Zealand are, they are not developing growth markets. They are mature, established markets.
The Secretary of State also spoke about being dictated to by the EU—I much prefer the language of “working together with our European partners”—and even that language tells us a great deal about where some of this is driven from. Of course, he made big play of a potential deal with the US. I visited the US last year with the Treasury Committee. We were told in no uncertain terms by anyone who spoke to us about trade that the UK would be required to put everything on the table and that the US would be required to put nothing on the table.
My hon. Friend is making a great point about the demands made by countries such as the US. A lot of constituents are rightly worried that we will have to sacrifice such things as a public NHS to get a deal done with countries such as the United States. Does he agree that that is a clear and present threat?
I am going to say more about the ISDS component—the arbitration competent—of these things later. I do not want the public sector to be impacted on in any way by trade globalisation with the US. If there is to be some deal cut, there is language that can be used—for example, that used to exempt military and intelligence operations. That should be included rather than the vague protections for the NHS that many of our constituents simply do not believe are robust enough.
One of my constituents’ biggest fears is that private companies will be able to buy off parts of the NHS in future deals with the USA. Does my hon. Friend agree that it would be catastrophic for our NHS to be sold off to the highest foreign bidder?
I do. It was interesting to listen to what the Secretary of State said earlier. He laid out very clearly, to be fair, the component parts of the NHS that were to be protected. I listened very carefully, but let me give an example of something that was not included: cleaning. People might say, “Big deal,” but in Scotland, when cleaning was contracted to the private sector, hospital-acquired infection rates went up. We then took a decision to bring back NHS cleaners, and hospital-acquired infection rates came down. Had that contract been won under the terms of one of these agreements, we could have been sued and challenged if we had tried to take a public health measure to return something as simple as cleaning from the private sector to the public sector. When it is considered on terms that people can understand—my hon. Friend is absolutely right to raise this point—it demonstrates how, and I will give a few more examples later, public health concerns can be overridden by some of the provisions in these international trade deals.
I look at trade and the proposed deals that we are discussing today through four prisms: how they will affect the success of Scotland’s export businesses; how they will support the Scottish Government’s trade and investment strategy; by asking if the processes suggested ensure that there is proper scrutiny of trade deals; and the attitude towards investor-state dispute settlement arrangements, which can give foreign companies special legal rights outwith our national legal systems. I think it is right that we look at trade through these four prisms.
Scotland’s exporting businesses—it is businesses, not Governments, that export—have done a remarkable job. Last year—I use these figures because they were immediately to hand—Scotland’s exports rose to £29 billion. That was 12% up on the previous year, the largest rise in any part of the UK. With imports at £24 billion, Scotland is a net exporter, which is a fantastic position for the economy to be in—a position that we should strive to retain but one which is put in jeopardy not just by a hard Tory no-deal Brexit, but by any form of Brexit, and that is the point. We hear about the Prime Minister’s deal, but that is only the transitional arrangement. It is not the deal we will have to cut to kick in in 20 months’ time, at the end of the transitional period; that is the bit the Government always seem to ignore.
I said it is businesses that export, not Government, and that is true, but Governments do and must support exporting companies. The Scottish Government’s trade and investment strategy is first class. It brings together trade, investment and the internationalisation of our economy. It defines our ambition and the importance of the “One Scotland” approach. It links to Scotland’s innovation and investment hubs. It tells us what our global opportunities are, and it supports global Scotland and our approach to boosting export performance. Anything the UK Government do should support that.
Although we can and do support trade, we do not negotiate our own deals or have a seat at the top table in the EU, which strikes the best trade deals currently. Until we do—this relates directly to any new deal—we demand a formal, statutory input to trade deals, including the ones being discussed today, at every stage of every trade deal, from setting the mandate for negotiations right through to implementation.
My hon. Friend is making an important point about how Parliaments across the United Kingdom should have a thorough input to trade negotiations, including the mandate. The Welsh Affairs Committee received evidence from representatives from Canada, who engage thoroughly with the devolved legislatures in that country, as well as with businesses, before even coming up with the mandate for negotiations.
That demonstrates that it can be done and there is nothing to be afraid of. It is vital so that Scotland’s national interests, as well as those of Wales and Northern Ireland—all the devolved nations—are given equal weight to the needs and ambitions of exporting companies in London and the south-east.
To pursue that point, the increasingly broad scope of modern trade agreements is such that often we will have to deal with a wide range of reserved and devolved policy areas. Does my hon. Friend agree that if the UK Government consider Scotland to be an equal partner in the Union, they must commit to allowing legislative consent in the Scottish Parliament for any deals that affect Scotland?
Yes I do. That ties in directly to the powers the UK Government have seized over public procurement. In Scotland, we have a fantastic record of small and medium-sized enterprises winning public sector contracts. The Westminster figures are rather less compelling. We could lose that advantage because of what has happened in Westminster; equally, we could lose it if foreign companies were able to challenge the way in which we currently do our public procurement.
Trade deals need to be fair, not only to every partner in the UK but to every citizen. That means we cannot accept deals that allow secret investor dispute courts where taxpayers can be put on the hook or public services subjected to forced privatisation and competition in a one-way ratchet, limiting the ability of any Government to deliver services the way they feel is best for the benefit of their public, not for the profit of international businesses.
Even excluding the EU, many of the UK’s biggest trading partners already have or will soon have a free trade agreement with the UK via the EU, so it is unlikely—perhaps even impossible—that net trade with those countries could be increased as a result of the UK leaving the EU. It is far more likely, because the UK will be in a weakened position, that the terms of trade will be less advantageous, but even if they were not, any new FTAs would simply be filling the gaps in trade left behind, and that gap is likely to be very wide indeed.
I intervened on the Secretary of State to ask about the NIESR report published in 2017, which showed a 22% to 30% fall in total UK trade, depending on the type of Brexit. It also suggested a total rise in UK trade of about 2.6% from an FTA with the main English-speaking economies, and a similar rise with an FTA with the BRIC countries— Brazil, Russia, India and China. That is nowhere near close to filling the trade gap that Brexit will cause. It is hard to believe that the deals being discussed today with the main English-speaking economies, plus the CPTPP deal, would do any better.
My key questions today are mainly about process. Current procedures are such that this could be the only opportunity MPs have to debate four major trade deals. That would be woefully inadequate. General debates unaccompanied by objectives, strategies or impact assessments, and lacking a vote or the possibility of tabling amendments, do not provide adequate scrutiny and could lead to trade deals being signed that are bad for the UK, contain controversial provisions, or do not have public support. Is this, in effect, the debate on the mandate for these trade deals, or will other debates follow? If they will, how will they be conducted? Will there be a public set of negotiating objectives and comprehensive impact assessments?
Modern trade deals can have major implications across the economy and society. They can touch on financial regulation, public services, environmental policy, intellectual property and Government procurement—all areas where sovereignty normally resides with the legislature. A vague proposal to initiate negotiations is, therefore, concerning. We know that the US is insisting on an agriculture chapter, which would seriously affect UK farming. The US also wants to change chemicals regulation and access to public service contracts—potentially locking in contracting out for public services such as the NHS.
The CPTPP is already written. It contains worrying provisions, including ISDS mechanisms that allow investors to sue Government in secret arbitration courts. Have the Government produced impact assessments of the CPTPP and other deals, and when will Parliament see those assessment? Will they include consideration of third country impacts? Will the Government accept ISDS provisions in any trade deal they sign? Will they promote such provisions? Will the Government exclude public services from future trade deals, and will they use the same strength of wording as is used for military and security exemptions?
It is encouraging that some 600,000 individuals have contributed to the consultation so far, but it was woefully inadequate because it failed to give any sense of negotiating objectives or red lines. What steps will the Minister take to address the serious public concerns raised in the consultation? Will there be a further consultation based on the negotiating objectives accompanied by impact assessments? Will this consultation be a model for future consultations on other trade deals?
My final substantive remarks are more about ISDS or equivalent arbitration. The SNP and many members of the public have real concerns about the impact those provisions could have on Governments. I will give two brief examples.
In the first case, between 1995 and 1997, the Canadian Government banned the export of toxic PCB— poly- chlorinated biphenyl—waste, in order to comply with their obligations under the Basel convention, to which the United States was not a party. Waste treatment company S. D. Myers then sued the Canadian Government for $20 million in damages under chapter 11 of the North American free trade agreement, which is a similar arbitration scheme. The claim was upheld by a NAFTA tribunal in 2000, even though Canada had taken action to remain in compliance with an international treaty.
In the second case, in April 1997, the Canadian Parliament banned the import and transport of petrol additive, MMT—methylcyclopentadienyl manganese tricarbonyl—over concerns that it posed a significant public health risk. Ethyl Corporation, the additive’s manufacturer, sued the Canadian Government, again under NAFTA chapter 11, for $251 million, to cover losses resulting from the “expropriation” of both its MMT production plant and its “good reputation”. That was upheld by the Canadian dispute settlement panel, and the Canadian Government repealed the ban and paid Ethyl Corporation $15 million in compensation.
Those cases involved toxic PCB waste and a petrol additive that was deemed to have a public health impact. It is quite wrong for large corporations to be able to sue Governments simply for taking steps to protect the wellbeing of their citizens, or for enacting public health measures which they believe to be right and for which they may well have an electoral mandate.
While we will welcome new trade deals, whether the United Kingdom cuts them or, better still, they are cut by the EU—for those would be better deals—they need to be fair, and the process of agreeing them needs to be transparent and inclusive, with, for instance, the formal involvement of the Scottish Government and other devolved Administrations at all stages. There needs to be an honest appraisal by the UK Government of the fact that no number of new FTAs can possibly compensate for the damage to trade that will be done by Brexit. There also needs to be a clear understanding that FTAs that include secret ISDS-type courts, which limit the ability of Governments to act in the best interests of their citizens, are simply unacceptable.
Future trade deals must be part of a coherent trade strategy, and it is imperative that, as part of that strategy, we rapidly set out what our tariff schedules will be in all eventualities, and our attitude to tariff-rate quotas. Many people in business throughout the land are looking for that guidance. It is a key part of their preparations as we leave the EU, and I think we owe it to them to make clear what the position will be, particularly as the lead times to import are quite long in the case of some products. If products will have to go into catalogues in the future, businesses really need to know what their margins will be, and it seems unfair that they have not, as yet, been given that guidance.
Today’s debate is a classic that has been heard in this place for the last 150 to 200 years: the age-old debate about protectionism versus free trade. It is an argument that has proved to have the potential to split parties, communities and families right down the middle. I think that, in the modern era, it would be wise to try to go about these matters in as well-informed a way as possible, because we owe it to the people on whose behalf we are making our decisions to understand fully what we are talking about.
People in the trade world talk about offensive and defensive interests in negotiations, but, in many circumstances, the attempt to reach mutual agreement means that it is not really a zero-sum game. Approaching negotiations with the right partners and in the right way can bypass such oppositional characterisations of trade and of our own interests. That is not to say that we should not be mindful of the impacts that different trade arrangements might have on our people—our businesses and our farmers, for instance. I am keen to champion the maximum supply of information and the maximum involvement of communities in the preparation of trade strategies and trade policies along the way.
Several Members have expressed concerns about the NHS today. We have probably all been contacted by constituents about the need to protect it, which is close to the hearts of many people throughout the United Kingdom. Does the hon. Gentleman agree that it is important not only to protect it and issue strong statements to that effect, but to provide transparency so that people are clear that what is agreed, what is to be negotiated and the negotiating mandate do not include things that are precious to them and that they do not want to be compromised?
The hon. Lady makes a good point. The earlier the involvement in these conversations, the more confident communities can be about a mandate that the Government can take to a negotiation, and the process of ratifying whatever comes back from the negotiation can then take place in a timely manner, which I think is essential. I shall talk about the NHS in a bit more detail later, but I see no reason why there should be those fears about it. Indeed, I can see reasons for it to benefit, and for its users to benefit, as a result of deals with, for example, the United States that might allow earlier and cheaper access to drugs than is possible now.
This debate is, of course, about future free trade agreements, but those agreements, and the trade strategy, are inevitably coloured by consideration of what our potential relationship with the EU might be, and what obligations we might enter into in order to acquire it. I now want to say a little about the impact of the restrictive nature of the proposed withdrawal agreement, including some of the prejudices to our future trade policy and strategy that it sets up.
The withdrawal agreement commits us to paying a lot of money without real limits, and with oversight by the European Court of Justice of the exact obligations that will be required. It allows the possibility of an extension by up to two years of the transition period that is being contemplated. We do not know at this point what sort of competition or anti-competition legislation the EU might produce in the next four years, but it might affect our economy, and might have an impact on what we could or could not do with future trade partners, either during that time or afterwards. The agreement gives the joint committee very wide powers of interpretation of what it says, and, in fact, powers to change what it says, as if it had the effect of law and Acts of Parliament. That means that the position in another two to four years’ time is very uncertain.
It should be noted that the agreement proposes the acknowledgement and implementation of the current EU system of geographical indications. I am not necessarily opposed to their being implemented in the same way in the future, but that really should be a matter for the future trade negotiation, which we have been told all along cannot take place during the article 50 negotiation period.
What is slightly more worrying for us in this discussion of future trade policy is that the agreement strengthens the current requirement for “sincere co-operation” within the common commercial policy to which we are subject as members of the EU, which effectively means that we are obliged not to undermine the EU’s interests in any international forums. I do not think we should be in the business of trying to undermine its interests, but that requirement may well restrict what we can discuss with future free trade partners during the transition period. That, I think, adds to the uncertainty that already exists about the transition period, and about what has or has not been agreed by the EU and the EU. Whether and how the EU’s existing free trade agreements with the rest of the world will apply to the UK during the transition period remains opaque, as does the extent to which the UK is able to sign free trade agreements during the transition period in the context of that sincere co-operation.
Within the backstop provision for after the transition period should nothing be agreed, there is a hard veto for the EU on any superseding agreements. Article 20 of the protocol is very clear that there needs to be a joint decision by the EU and the UK for future alternative arrangements to succeed the backstop. So whatever the best endeavours clause does or does not do, that is still a hard veto that needs to be dealt with.
The reality of the operation of the backstop as written for the UK is very dramatic from the point of view of trade and competitiveness. For example, the EU will be able to increase state aid during the period after 2019, but the UK must maintain it at current levels. If that happened for four years, it could really undermine the competitiveness of some of our domestic producers, which is exactly what we have said we need to think hard about in future trade agreements. Because of how the annexes operate, state aid provisions would effectively be applicable to our defence manufacturing industry for the first time in a way that they are not in the EU. That would enable the European Commission to take cases in our courts against defence manufacturers and/or the Government in instances that were considered to be state aid to the defence manufacturing industry.
Those are the sorts of hostages to fortune that are lurking in the backstop, and that is one reason why I am against it. We need to be very mindful of that sort of leverage over our future arrangements with the EU, whether on the status of Northern Ireland within our constitution, if our fishing is open to European actors, the status of Gibraltar, or our defence capability and sovereign ability. Those are all potential hostages to fortune in the current backstop arrangement, which is a big part of the reason why I am opposed to the current proposal and want those backstop arrangements to be replaced now, or at least to have full legally binding guarantees that they will be replaced over time.
As the backstop is currently written, it envisages a customs union. There has been much talk about whether that means frictionless trade.
I am grateful to the hon. Gentleman, who serves with me on the International Trade Committee, for giving way. He has clearly laid out his opposition to the backstop for various reasons, and I respect what he has said on that, but where does he go then: to no deal or to the revocation of article 50?
I do not think it is as clearcut as that. In the Malthouse compromise, which some might have read about, there is a proposal to replace the backstop with a permanent arrangement that is effectively a zero-tariff environment for the time being with a trade facilitation agreement, which allows very efficient trade to take place across the border. It would not be a unilateral exit from the backstop, and there would not be a time limit on it; I understand communities in Ireland wanting some certainty about that. I actually think it is a much better idea to replace the backstop within the withdrawal agreement if we want to pass the agreement now, and if that does not happen we should keep offering to do exactly that. I will come on shortly to some of the back-up plans should that not be acceptable either.
The customs union arrangement within the backstop would oblige us to continue to adopt the common external tariff and would potentially oblige us to have the common commercial policy. There is a great deal of uncertainty about the physical operations at our borders. What the annexes of the withdrawal agreement backstop say is required, in black and white, is that every transaction between Great Britain and Northern Ireland and vice versa, and between Great Britain and the EU across the channel, would require an a.uk physical, stamped certificate, effectively showing where the duty has been paid in the customs territory it is coming from. That is a massive administrative burden. Based on the HMRC numbers of transactions with the EU, the number the CHIEF—customs handling of import and export freight—computer has to handle will be going up from 55 million currently to 255 million in the future. That means there will be an extra 200 million of these things every year; that is over half a million physical certificates a day that HMRC officers will somehow have to process. That is wholly unrealistic, and when one talks to the Government in detail about it, or to the EU, they admit this is totally unworkable and will not be introduced. How then can they say they cannot introduce alternative arrangements now that would have another two years to be implemented on the ground?
In addition to those physical stamped certificates there would have to be export declarations into the export control system, which would enable the logging of whether a tariff needed to be collected or indeed whether rectification was needed in the inward processing relief systems. So the idea that this is a frictionless system is wrong, and it needs to be replaced. It is unworkable; it is full of friction and it also prevents an independent trade policy for the time that it persists.
If we were to continue to offer the Malthouse proposals even if we could not get a withdrawal agreement done, we would continue to offer a stopgap measure of a zero-tariff, simple free trade agreement, or an agreement between the UK and the EU to prefer each other’s trade for a period of time, which could be notified to the World Trade Organisation under article XXIV of GATT—the general agreement on tariffs and trade. That is a very simple thing to propose, in a sense: because it would be a goods-only agreement, it would not need ratification by all 27 member states, and it could be agreed and implemented very rapidly.
If the EU did not want to do that either, although that would be best because it would be absurd for us to be charging tariffs on each other, we would need to look at other things we might do. We heard discussion earlier of some elements of the unilateral free trade policy that we would potentially need to put in place to prevent price rises for different goods. That does not mean we would have to unilaterally reduce our applied tariffs for every product; we can make that choice product by product.
We have already heard on the grapevine that we are not planning to zero-tariff agricultural goods in our future tariff policy. That makes sense in many ways, because we need to take a nuanced approach. We need to look, product by product, at where domestic producers need some sort of tariff or programme so that they are not exposed to world prices immediately.
We also need to consider an interesting strategy that would encourage other countries to enter into free trade agreements with us. It would propose that we would take a unilateral free trade approach for a period but that we would reintroduce tariffs going up towards the bound tariff level—the common external tariff level—after, say, two or three years. That would encourage the countries that want the continuation of free trade to enter into free trade agreements with us to achieve it.
In the meantime—coming back to agricultural products and taking beef as an example—while we might have a tariff, we would still have a tariff rate quota that allowed some nations zero-rated access to the UK market up to a certain quota. We could open those quotas that would have been for the EU to the rest of the world. The EU would then have a choice. It could enter into a free trade agreement with us and have a quota or it could see the markets that it currently has in the UK being opened to the rest of the world. I personally think that it will want to have a free trade agreement, at least on a temporary basis.
I am trying to follow what the hon. Gentleman is saying as closely as I can. He talks about working on a tariff-by-tariff basis and making judgments or decisions depending on domestic demand or production, but this would open us up to a retaliatory or mirror action from the European Union. For example, if there were no citrus fruits such as oranges here and we decided to get rid of tariffs on oranges, impacting the Spanish and Portuguese orange producers, they could ask themselves what tariffs had existed only to protect the United Kingdom as part of the EU pot. They could then pluck out those tariffs, and we would find ourselves in an even more disadvantageous trade situation.
I thank the Chairman of our Committee for his intervention. I absolutely agree that it makes the most sense to have a free trade agreement. That is the simplest thing, and it would eliminate the absurdity of even having to discuss these matters. So it would be my first proposal, my second proposal and my third proposal to have just that kind of FTA. This is really the fall-back to the fall-back to the fall-back position—
The backstop to the backstop to the backstop, exactly. I really do not think that we should get into that position. Looking at the sensible contingency planning that the EU is doing in lots of other areas, I see no reason why it should not continue to be sensible and reasonable, just as we are, and I believe that we will get there.
I want to come back to the trade facilitation issues, because they are really important to the consideration of what trade costs and therefore to the potential value of future free-trade agreements as well as the value the EU’s current agreement. I would like to congratulate HMRC on its work to make trade efficient in the event of no deal at the end of March. Indeed, that work will also be applicable in the future if we are outside a customs union and the single market. These will all be very useful things.
The transitional simplified procedure that has been opened up to operators is really good news, but I think the Government should take it further straight away by making it available to intermediaries such as the logistics service providers that control a large amount of our trade. That would make the most sense, because it would enable them to be authorised consignees so that they could close out the transit documents that will be an essential part of future trade.
The Government should also look at a more comprehensive scope of waivers for transit guarantees, because the financial liability, especially of operators, cannot close out those guarantees. That will be essential to keeping our trade flowing. They should also look at underwriting some elements of the liability to duty in the EU, so that our export side can operate efficiently.
These things come down to the impact assessments that we have seen. When I have spoken to logistics service providers, customs brokers and others, it is obvious that these documents—the transit documents, the export declaration on this side and the import declaration on the other side—will need doing. It is more than we have to do now, so people need to get ready. I say to business: get ready. Businesses being able to do these things, and ensuring that their logistics service providers are able to do them, will be essential to enabling their trade to flow efficiently.
These measures cost about £50, not hundreds and hundreds of pounds. The value of the goods on a truck crossing the channel can be £10,000 if it is carrying bread or bread products and up to £300,000 for beef or beef products, so £50 is just a tiny fraction of that. We are talking about, at most, 0.5% of the value. According to the Government’s impact assessment, the cost of customs administration in the event of no deal would be 5% to 6% of the value, which is wrong by an order of magnitude. We must not underestimate the value of our future trade agreements based on a misapprehension of the real costs of trade.
Similarly, as the Opposition spokesman said, we should not get the gravity relationship wrong. In the UK, the factor of linkage between trade and distance is only about 0.23%. When we back that number out of the Treasury’s forecasts before the referendum, we get the figure of 0.9%. The figure of 0.9% is the intra-continental EU gravity factor, and it is my contention that the wrong one has been used in our models. That undercooks the benefit to us from free trade around the rest of the world and really overcooks the value of the EU’s trade. I am not saying that we do not want the EU’s trade—we absolutely do—but we want to trade with Europe and with the rest of the world. The referendum result was about us wanting both.
The Government really need to pull their socks up over what they have been saying about UK businesses’ access to Europe. The Secretary of State for Environment, Food and Rural Affairs has again said that there is a big risk of our agricultural products not being allowed into the EU, but that is simply not right. The EU has stated it will put contingency arrangements in place, that we will be listed on the right lists and that we will not be shut out in that way. It is simply wrong to say that we will. I personally think that it does our farmers a disservice to frighten them unnecessarily in that regard.
Similarly, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend Richard Harrington, who is also in charge of no-deal planning at the Department, said on “The Week in Westminster” on Saturday morning that UK car manufacturers could not be sure whether they could sell their products into Europe because of the regulations. That statement is in grave danger of misleading the British public and the auto industry, and it could be devastating to the confidence of smaller players in the automotive market that may not be aware of what the rules are or what the EU’s position really is.
The reality is that the EU Council and Commission decided on
Quickly, because I know that everyone wants to get to speak, although it seems that I am the only one left on the Government Benches—
Order. That does not mean to say that the hon. Gentleman has to take up all the time and stop others getting in. Come on, Marcus Fysh.
I want to point out that my hon. Friend is not the only one left on the Government Benches, although I really came to listen—
Order. May I just say that there are no more Government Members on my list, which includes people who were here at the beginning, but we will have interventions.
I really came to listen to my hon. Friend, because it is such a privilege to listen to a genuine expert on this subject. He has forgotten more about it than most people know. I am just wondering how he accounts for the fact that we have had palpably inaccurate statements from Ministers. Is it possibly because our esteemed Under-Secretary of State for International Trade, my hon. Friend Graham Stuart, was not involved in making those statements?
I thank my hon. Friend for his intervention. I am quite sure that the Minister present was not involved in the decision making around such Government mistakes. He is an eminently sensible fellow whom I know well. He used to be my Whip, and I would trust him explicitly. I cast no aspersions on the current occupant of the Government Front Bench.
The Government’s sabotage of the people’s desire for an independent trade policy has to stop. Having an independent trade policy is a mainstream Conservative manifesto promise and desire. People want to take advantage of the new opportunities for free trade agreements around the world. They do not think that there will be a gap in or loss of EU trade, just as long as we execute on the things we need to execute, and the measures that HMRC could implement right now would go a long way to ensuring that that is not the case.
We also need to deal with the fallacy that the UK is somehow a small player that will get completely taken to the cleaners in any negotiation. The reality is that many players around the world are excited about the return of the UK to the global trading environment and are keen to do business with us. They see some of our leading markets, such as pharmaceuticals or financial services, as regulatory environments in which it makes sense for them to do more business, and we can help to develop the rules-based trading system around the world in a way that helps them, too.
That is particularly true in the US context, and our service businesses have a lot to gain from potential deals with places such as the US and Japan, where being part of the EU has really restricted our ability to do the sorts of deals that would advantage those service industries because, by and large, the European industry is not services based. For example, America has a $700 billion market in insurance in which our insurers, which are only currently selling about £2 billion into the US, could raise their market share. By comparison, sales of insurance into the EU are about £1.5 billion, so the US represents a much bigger market opportunity than the EU—even under single market strictures
By way of conclusion, because I want to allow other people to get a look in—[Hon. Members: “Hear, hear!”] I appreciate the House’s time. It is nice to have a bit of time for once on a Thursday to speak in detail about something about which I know, rather than be limited to four or five minutes, which is more often the case in the big debates.
The Department for International Trade has some brilliant civil servants and officials who have been doing incredible work. Even though it is a small market, the roll-over of the Chilean free trade agreement is a benchmark, because the officials have provided for diagonal accumulation between the UK and the EU and Chile. That really should be a benchmark for how we treat our future trade arrangements, which will be the successor arrangements to those that we currently have with the EU. I want to see International Trade Department officials more involved in the thinking about what we are doing with the EU, because that would be of great benefit to the Government and the country.
In conclusion, we need to trust in business and in the ability of businesses to adapt, to innovate and to lift their eyes beyond the current horizons. We need to trade with both the EU and the rest of the world. We need to say no to protectionism, because free trade has driven global growth around the world over the past 150 years, and it is misguided to think that there are not tremendous consumer advantages as a result. We need to be there for our farmers. We need to make the most of the derogations from normal restrictions on subsidy for items such as marketing to ensure that our farmers and producers can get the best prices around the world for their high-quality produce. We must not hang them out to dry. We also need to focus on the tremendous opportunity that leaving the EU gives us to make our way in the world in a different way. We can be best of friends with the EU and best of friends with the rest of the world.
Order. If Members replicate the length of that speech, not everyone will get in, which seems a bit absurd. Try to think of the others as you go along. I call the Chair of the International Trade Committee, Angus Brendan MacNeil.
Thank you, Mr Deputy Speaker. I will take cognisance of the fact that I started at 2.7 pm and will look to not to be too long. I want to thank Barry Gardiner, who reminded me as he was speaking that I had not arranged for somebody to feed my sheep this morning. My 81-year-old neighbour Iain MacLean stepped into the breach quite admirably, but only because I was reminded by the hon. Gentleman.
I was talking earlier about how citrus fruit may not be an offensive trade interest, but I have just heard that the weather today in Aboyne, Lossiemouth and Altnaharra in the highlands of Scotland is about 17° C or 18° C. It is a summer’s day in Scotland, so anybody watching who is looking to have a decent half-term break should head to Scotland and forget about going anywhere else. It seems to be the place to go for the temperatures. I note that the Conservative Benches are empty, but perhaps they are in Val d’Isère taking advantage of free movement while it still exists. This may be the Brexiteers’ last holiday.
I also thank the hon. Member for Brent North for his frank honesty. I was talking earlier about damage to GDP and gains through the trade agreements. Of course, a no-deal Brexit and crashing out would, according to the UK Government, damage UK GDP by 8%. Now, the gain in GDP would be about 0.2% from a USA-style trade agreement, but that would mean we would need 40 USA-style trade agreements to make up the gap. There is only one problem. The USA accounts for over a quarter of the world’s GDP, so needing 40 USAs means that we will have to find 10 planets of people as wealthy as Americans in 2019—not 1919 or 1819, but as wealthy as they are today.
If there is an FTA, which is the route the Government want to take after kicking the can down the road for another 21 months of European Union membership—putting the pain off for another wee while—there would be a 6% hit to GDP. We would then need 30 USA-style agreements, or seven and a half planets.
If we follow Labour’s policy of a customs union only—I pay tribute to the honesty and candour with which the hon. Gentleman admitted this—there would be a 4% hit to GDP, requiring 20 USA-style agreements, or five planets, to make up for the lost GDP caused by ripping up our current deal with the European Union.
It is important to bear that in mind. It is nice to talk about flashy new trade agreements and trade policies but, in actual fact, trade is what drives all this. As I said to the Secretary of State, people who are selling shellfish or frozen fish, as people I know in the north-west of Scotland are, will not be able to do their rotations to Europe because of the barriers and all the paperwork listed by Mr Fysh, and they cannot exactly drive their lorry on a rotation to New Zealand, South America, Chile or wherever else in the CPTPP, or wherever else we might find ourselves having an accidental trade agreement.
As Chair of the International Trade Committee, I welcome this opportunity to debate these potential free trade agreements with the United States, Australia and New Zealand, and to debate possible UK accession to CPTPP. The Government initiated consultations on these potential trade agreements last summer and, despite having closed four months ago, we have yet to see the Government’s response, which would have helped to inform this debate. The Government received a vast number of responses to the consultations, but I understand that many of those 600,000 responses were duplicates. I hope we will see the responses soon.
The Committee recently went to the World Trade Organisation in Geneva, where there is much bemusement as to what the UK is doing. Trading on WTO terms is the most expensive form of trade, and the deputy director general of the WTO, Alan Wolff, said that if we trade on WTO terms, or something close to it, rather than the open single market we currently have, a “Brexit gap” in economic performance would damage our GDP. That is a good way of seeing it, because we are talking about a 4%, 6% or 8% Brexit gap in our economic performance.
It is good that we are having this debate, because the Committee published a report in December titled, “UK trade policy transparency and scrutiny,” which made a host of recommendations on Parliament’s role in future free trade agreements. One recommendation is that Parliament should have an opportunity to debate the Government’s negotiating mandate, or “outline approach” to use the terminology that the Department for International Trade favours, on a substantive motion before negotiations begin on the free trade agreements. I think negotiators would find it useful to have such a steer on the will of Parliament as to what they should progress in any negotiation.
An example of how not to do it is the Prime Minister’s approach to her international agreement with 27 other actors under one umbrella, the European Union. She came back to Parliament and found herself with a whole range of people, from Yeovil to the north of Scotland, ranged against her for various reasons. Had she tried to carry Parliament with her from the beginning, she might have found herself in a different position. We should be adopting such an approach to future trade agreements. Governments come and Governments go, and an awful lot of work might be done before being stopped and wasted. The resource of trade negotiators is few and far between, and they take a long time, so we do not want to negotiate something for three or four years and then find ourselves having to scrap it—assuming we Scots are still here, because independence may well be around the corner for us.
My Committee also recommended that devolved Governments should be consulted on this, as Canada and other countries tend to do. We have to make sure that we have as big a buy-in as possible. As we are seeing with Honda and Japan at the moment, there can be winners and losers in these agreements. As I said to the hon. Member for Brent North, the automotive sector in the midlands of England has perhaps lost out in the EU-Japan agreement.
If there are to be losers, how do we compensate them? If the UK enters a free trade agreement that, say, benefits the south-east of England and destroys, for instance, Welsh lamb, is there any idea of fiscal transfer or compensation for the sacrifice of the Welsh for the south-east of England? Do not think these are esoteric, way-out-there possibilities, because the air agreements that the UK entered into after 1945 specifically mentioned international flights only flying into London airports, which damaged the north of England, Wales, western England, central Scotland, northern Scotland and many other places. Iceland, for obvious reasons of its geography, was one of the first to break that. Having created the advantage of a transport hub in the south-east of England, there was a huge reluctance to cough up for the sacrifice imposed on others.
There are trade-offs in the decisions and directions that Governments take. Interestingly, of course, the Irish Government were quite different during that period. Rather than centralising around Dublin, they actively promoted the west, which is why Shannon airport is still the destination it is, and Knock airport in the north-west has also benefited.
The Committee feels that the Government should publish a trade policy strategy that articulates a vision for the UK as an independent trading nation—if all those things come into being—and outlines the UK’s immediate and future trade priorities at bilateral, plurilateral and multilateral levels. We propose that such a strategy should outline the UK’s key objectives, interests and priorities in respect of its trade policy. Sadly, we have yet to see such a strategy, so I urge the Government to publish one, as it would allow potential new FTAs, such as the ones we are debating today, to be seen in a wider context.
The UK has been spoken of as being a dwarf in comparison with the US, and the Secretary of State robustly jumped to the Dispatch Box to say that the UK is absolutely not a dwarf compared with the United States and that it is the fifth largest economy. When we actually look at it, the United States makes up about 28% of global GDP—about a quarter, as I said earlier—and the United Kingdom is about 2.3% of global GDP, so it is about a twelfth of America. If I came across somebody 12 times taller than me, I might feel rather dwarfish. We might find that the muscle that can be applied in trade negotiations by a grouping 12 times larger than us is somewhat more substantial than what we bring to the table ourselves.
The hon. Gentleman makes an important point about how many other nations will look at the market size of the UK and will perhaps consider that they do not want to concede in the same way in these negotiations as they perhaps would have if we were still a member of the European Union. Perhaps that goes some way towards explaining some of the difficulties that the UK Government are having in trying to sign off on some of these roll-over agreements.
The hon. Gentleman makes an interesting point. There are 40 such agreements with about 70 countries, and the UK’s hope is that we can stand on the shoulders of the European Union and roll over that work, which of course relies on 70 other countries not seeing a possible advantage in getting better trading terms, as a number of them certainly do. A negotiator who wants to be promoted within their trade negotiating structure will, when the UK appears over the horizon with probably not the most experienced negotiators—they certainly will not have the same track record on international negotiations—see too great an opportunity to resist.
Interestingly, I note that the countries that have concluded the much-trumpeted trade agreements are ones with a tremendous balance of exports in their favour. Chile’s is about £150 million to £200 million in its favour, but the outstanding winner here has to be the Faroe Islands; I like to blow the Faroes’s trumpet as chair of the all-party group on the Faroe Islands, but my goodness! It exports £229 million-worth into the UK while importing only £16 million-worth back. So not only have the Faroes got themselves up the scales of acknowledgement, but they have done themselves a fantastic piece of business by rolling over what was already a very advantageous trade agreement. So well done the Faroe Islands, and I hope the welcome in Tórshavn will be as good as it always is.
Let me now look at UK-US trade relations. When we went to the US the farm lobby asked, “Why folks? Why have you done this?” They were just bemused. Ford said that for it, “The UK-US is incremental, but the UK-EU is existential, particularly the interplay with the UK-EU and Turkey. The tariffs that could be accumulated in that direction could be problematic.”
The International Trade Committee’s key recommendation was that
“the Government should undertake detailed work modelling the potential effects of a UK-US agreement on the economy.”
Evidence to the inquiry regarding the impact on GDP varied, but it was about 0.2%. We also have to make decisions about whether we have some increase in regulatory barriers with the EU in exchange for the removal of barriers with the US, and what the overall benefit of that is. As someone who keeps a few sheep, as I mentioned to Sir Paul Beresford, I can see a huge problem if we find ourselves putting up barriers to the EU to please some Americans and the American Administration in order to wave a piece of paper and say, “Trade agreements in our time.” That huge danger presents itself to a UK Government who might rush into trade agreements for the sake of it.
My hon. Friend is making a point about trade agreements having an impact on sheep farming in the highlands, but if those kinds of conditions are written into these trade agreements, could they not have a massive effect on trade and exports across the whole of the highlands and islands in respect of a range of different goods and services?
Absolutely. My hon. Friend is correct about that. This whole area needs to be fully assessed, as the impacts are as yet unclear. If the Government are looking for trade agreements in our time, we might wake up some while after we have concluded these agreements with whole areas of the economy that we currently rely on being devastated and with the shock of having to realign, which would take a number of years to do. This would have huge impacts on people’s lives, as we saw in New Zealand. There may have been an idea that with New Zealand agriculture an easy and seamless change could be made, but that certainly was not the case.
Before entering into any free trade agreements, the Government must be clear about the relative weight they intend to give to different sectors in the UK economy and about the geographical spread. I could say a number of other things about the UK-US agreement, but I recommend to you our report on it as bedtime reading one of these fine evenings, Mr Deputy Speaker. Of all the reports that any Committee has produced, the International Trade Committee’s reports are the best, and the UK-US one is one of the better of the best, so I am sure you would enjoy reading it from cover to cover. I can see nodding and I am very pleased.
To keep the bedtime reading going, my Committee is currently working on an inquiry on trade with Australia and New Zealand. This is a keen inquiry and, since its launch, we have received 46 pieces of written evidence and heard from 10 witnesses, over two evidence sessions. We have focused on wine and agriculture to start with. Something interesting came up about wine exports from Australia and New Zealand to the EU. A number of these exports come to the UK in bulk, where they then get bottled in England and are exported on to the EU. Of course, the problem might be that if the UK is outside the customs union and single market, the wine that is coming from Australia and New Zealand, and currently providing jobs in England, might have to be re-routed elsewhere in the EU to enable it to be bottled without picking up tariffs as it crosses the border into the EU member states. The dairy industry in the UK felt that such an agreement might not be a huge priority for it, but Fronterra, a New Zealand-based dairy company said:
“We see a New Zealand-UK FTA as a great example for setting a benchmark for a high-quality, ambitious FTA for the UK.”
We are also fortunate that George Brandis, the Australian High Commissioner, has been paying attention to this, at least he was when he was here earlier. Australia is very keen to have a fairly simple FTA with the UK that has few carve-outs. Agriculture is said by the Australians not to be a major interest for them, as they have so much else of the world to service. Perhaps therefore we might, just like the Americans did with them, carve out a number of areas, and so agriculture might not be part of it. Australians say that it is not such a huge concern for them, but it is a concern for us. When they dealt with America, over 14 months, a number of carve-outs were made by the Americans, on pharmaceuticals, on the investor-state dispute settlement and on sugar access. So people will pursue their own interests and needs in trade agreements.
You will be upset to know, Mr Deputy Speaker, that the Committee has not looked very much at the CPTPP. We have not had time to do that, but we will be addressing it. It will certainly be discussed with the Secretary of State, who is due to appear before us again on
What a pleasure it is to speak in this debate with so many other antipodeans: the hon. Members for Mole Valley (Sir Paul Beresford), for Yeovil (Mr Fysh) and for Edinburgh North and Leith (Deidre Brock). The words “Australia” and “New Zealand” were in the longer title of the debate and therefore we seem to have been attracted out the woodwork. I cannot promise to compete with the knowledge of the hon. Member for Mole Valley about New Zealand sheep farms, but having grown up in Sydney I have a bit of a feel for some of the topics discussed, and it is a pleasure to be serving on the International Trade Committee and looking into the debate on this.
There are not many debates in the House where we go for three hours without a woman speaking. It took three hours for us to get there today, so I will try to set the tone by being brisk—
Quality not quantity.
We are in the bizarre position of not having a proper agreement with our main trading partner, the EU, with which we do almost half our trade, or a little bit more than half, depending on which academic work one reads. The question of Brexit remains unsettled and not at all a done deal, yet at the same time, because of the Government’s rather interesting negotiating style, there remain big questions about tariffs. My hon. Friend Barry Gardiner hit the nail on the head when he said that the written statement on tariffs that will be published later really should have come in advance of this debate, so that the debate could have been possibly shorter and more meaningful.
We know that right now goods are on their way to Korea and Japan and their exporters do not know what tariffs will be charged on arrival, because in under 40 days Brexit could happen and there could be no deal. That is leading to a great deal of concern, not only about exports but about imports. The hon. Member for Yeovil said that he felt the farming sector was perhaps being a bit frightened, or need not be so worried or scared, but every time one opens a newspaper, one finds that reliable titles such as the Financial Times are citing extreme concern about what tariffs will be put on to goods coming into the UK.
The National Farmers Union spokesperson has been eloquent in expressing the union’s concerns. As a Member representing a London seat I would not want to say that I could be any more knowledgeable than she, and she is presenting some very important concerns from the agricultural sector and about our lovely countryside. My hon. Friend Chi Onwurah made a good point about whether the sector could be more efficient without our losing the wonderful beauty of the countryside. A move toward an agribusiness model could have a big effect on the countryside.
I can describe the position we face today only as neither in nor out—halfway. With under 40 days to go, that is a dereliction of duty. I feel that to some degree industry is being let down, doubly so after Honda’s announcement this week. It is not just about industry but, of course, about the people who work in industry and all our partners.
Let me briefly set out some principles, because that is far as we can get today, given that we do not really know what is going to happen in the next 34 days. First, liberalisation may sound fine as a principle, but we know that there are problems. Members have mentioned issues relating to the ISDS provisions in various free trade agreements. A famous example is the tobacco companies in Australia taking the Australian Government to court for loss of profit because of changes in Government policy. People find the idea deeply anti-democratic and think we should be very careful in how we proceed. Furthermore, when the International Trade Committee visited Canada, we heard about the Dow v. Canada case, in which the US chemicals giant Dow sued Canada for attempting to ban the pesticide 2,4-D. The full details of the settlement were unclear, but it is likely that some concessions for the company were agreed, despite the environmental impacts of pesticide use. Those two examples show why, if we embrace a form of trade liberalisation, it is extremely important to remain vigilant about the long-term impacts.
The second principle is scrutiny. The Select Committee heard about some impressive best practice in Canada, where there had been regional consultations and the debates around equalities and human rights were an element of the consultation. That is a good way of engaging the regions in discussion about consultation and scrutiny. We need to look more closely at that. Given that the Government are trying to bring forward an industrial strategy—it is difficult to tell right now whether that has been successful—we should look at the best practice in that area.
The third principle is preparedness for our future, depending on what happens with Brexit. In the Select Committee’s evidence sessions on the Trade Remedies Authority, I have been concerned about the sense of unpreparedness. I felt that when questioned, the chief executive was not familiar with our current tariff levels with different countries. When questioned on her views about various trade matters, she seemed rather unprepared. That suggests that the Department desperately needs to do more work. Furthermore, on Member engagement, although I welcome today’s debate, there needs to be more in-depth consideration. It is a pity that Members had to look on the Swiss Government website to see details of the Swiss agreement, when we had asked as a Committee for more information and were not given it—and that is Committee members, who are interested in trade, let alone Members of Parliament as a whole. It is disappointing not to see more interest on the Government Benches in today’s debate and what our future is going to be.
The fourth principle is human rights. My fear is that we will lack clout with some of the big players, such as China. Put simply, China is more likely to countenance a dialogue about human rights with a partner with the clout of 500 million people than with the UK. We will struggle to maintain our integrity and what we believe to be important at the same time as managing our twin concerns about national security and trade. The three principles of trade, national security and human rights are hard to get right as a smaller country. It is easy to discount such a country, particularly when we may be giving off a whiff of desperation right now, with our debates and the sense that we need them more than they need us. We need to take that into account.
The fifth principle is standards. We currently have the EU’s gold standard for goods. Other Members have mentioned the challenges relating to animal welfare standards, particularly in respect of a US deal and sanitary and phytosanitary standards. That throws up a wealth of questions. I am convinced that the US would like agriculture to be a sectoral element of any future free trade agreement. Again, we need to get the balance right between protecting what we have, the beauty of our landscape and our traditions, and being open-minded about new ways of doing things.
The hon. Member for Yeovil mentioned the NHS and seemed relaxed about how the US health system might be able to “improve”—I hope I am not misquoting him—it. My right hon. Friend John Spellar intervened earlier to emphasise the fact that our national Government set the tone for the NHS and any intervention in it or other public services, but in respect of an interface with the NHS, we must be aware that the US healthcare system is among the most expensive and unequal healthcare systems in the world.
I wish to echo and strengthen the hon. Lady’s point. Bernie Sanders—I wish him the best of luck in his attempt at the presidency of America—made the exact same point. The idea that co-operating with America on health is going to make anything any cheaper is far from the truth.
I thank the hon. Gentleman for his intervention and for his leadership of the Select Committee. It is a very interesting Committee that he manages very well, given the breadth of views among its members.
I have a further point to make on TTIP, or what I call trip-up. Much of the TTIP proposals were quite anodyne, but they were politically mishandled. When the Select Committee visited the US Senate and the House of Representatives, the famous Democrat John Lewis said to us that had labour rights been raised much earlier in the discussions around NAFTA, there may not have been quite the problems that arose when Mr Trump first became President. Had labour rights been much more at the forefront and given much more scrutiny, and had everything been much more open and debated much more freely, perhaps messes might not have been got into. That applies to TTIP or any form of agreement. Any sense that the public are being kept out, that it is secret or that the trade unions or civil society groups are not involved can lead to a trip-up.
My hon. Friend is making some important points. I am sure that she will agree that one of the great lessons that we have learned through the Committee is that the EU approach—and the approach of countries such as Australia—of involving civil society and other groups ensures that, when it comes to setting the agenda for any negotiation, those points are very much on the table and are clear.
I agree, particularly in relation to some of the really sensitive things such as human rights. We are represented at an EU level, which means that we have our MEPs there in the room. Equally, though, very sensitive discussions can be held on our behalf, without our personally having to make a comment. Perhaps the Secretary of State for Defence might have appreciated a bit more “arm’s length” recently, especially when he was asked in a rather cheeky way yesterday by an interviewer on the radio whether he should button his lip. Again, we have to learn diplomacy if, indeed, Brexit happens and if, indeed, we end up having an independent trade policy. We cannot just go round opening our mouth and saying what we like.
I wish briefly to talk about an element of our future arrangements with Australia. I am not talking so much about the goods side. On agriculture, as those of us on the International Trade Committee know, Australia does not currently meet its quota for the Asia market—Asia in this case is the far east—and so that is less of an issue for our own agriculture here in the UK. However, there are areas around services—for example, equivalence on education, diplomas and degrees—where an already healthy relationship could be enhanced by improving mutual recognition of degrees, diplomas and professional standards. As the Secretary of State and the shadow Secretary of State have said, some of these things will be easy wins.
I will briefly touch on developing countries and fair trade. Many of us are very optimistic that more can be done in this area. I would be very grateful if the Minister, in his closing remarks, talked about how leadership can be shown in intra-Government and intra-country arrangements. For example, he will be aware that coffee in some African countries comes to Europe to be prepared and is then exported back at a higher price to Africa. Perhaps opportunities exist there to erase some of that cost by ensuring that those products can be much more effectively consumed locally and by ensuring that they do not have to come via Europe. African nations should be able to do that themselves and have their own trade agreements.
We are in a very difficult national position. Geopolitically, it is not a great time to be starting a big free trade discussion. The situation in the EU has its instabilities as well, with the upcoming elections this spring possibly producing more member states who have an aversion to free trade.
With regard to the US—one of the purported wins on free trade—there are many question marks on future business, particularly given some of the more protectionist statements by the President. In China, we are seeing a changing internal situation, which is having an effect on big infrastructure decisions. China is also possibly overstretched on the Belt and Road initiative. Some commentators suggest that some of these huge infra- structure projects may be overstretching China’s reach to some degree, which means that entering trade agreements in the current climate may be quite difficult. Similarly with Japan, there is a need not just for Ministers, but for Whitehall to have another look at preparedness for a very big challenge.
Once things calm down, it would be helpful if we could find some way of looking at how prepared the Foreign and Commonwealth Office, the Department for International Development, the Ministry of Defence and all the different silos are and consider how they could work more effectively together. Such a review exercise could gain a lot of traction and help us to achieve a more slimline approach—not so much to do with people; more to do with a greater sense of direction. I suspect that that lack of direction comes from the different Departments. Furthermore, the reduction in the number of language experts in the Foreign Office, and in expertise in some other Departments, needs to be reviewed. I am sure that the Minister will mention that in his closing remarks.
It is very disappointing to see how few Members are present in the Chamber today—that applies to the Benches on both sides of the House, but certainly to the Government Benches. I have a lot of respect for the Under-Secretary of State for International Trade, Graham Stuart, and I am sure that he, too, is disappointed that a topic of such importance should actually have attracted so few people to the Chamber today.
Today’s debate honours the Government’s commitment that was made back in the summer to hold a debate on these future trade agreements, but it does not provide for the much-needed debate on the Government’s outline approach on an amendable, substantive motion, as proposed by the International Trade Committee in our report on trade policy transparency and scrutiny, which is disappointing. It seems that the Government’s conduct of marginalising Parliament in the process of Brexit is evident once more—so much for taking back control. As the Committee stated, handling trade negotiations is the prerogative of the Executive, but there must be a meaningful role for Parliament in the trade policy process.
The Committee has been absolutely clear that trade policy needs to be open and inclusive, maximising the benefits across and throughout the UK; that Government must operate from a presumption of transparency; and that consultative processes must be formalised. Specifically, the Committee was interested in the role that Parliament, the devolved Administrations, local government, businesses and civil society should have in the process—all elements that are included in Labour’s policy on trade deals. However, it would seem that the Select Committee report is being ignored.
Since his appointment, the Secretary of State for International Trade has asserted a great many things: in July 2017, we were told that a deal with the EU would be the easiest in human history, and in December 2017 he stated that the 40 free trade agreements covering 55 countries could be rolled over a second after the UK left the EU. A couple of months earlier, Lord Price, the then Trade Minister, told us that there were 36 FTAs with 60 countries, and he said that they could simply be cut and pasted and that that had almost been done. It was not until the Select Committee was told by Professor Andreas Dür that there were in fact 41 free trade agreements covering around 70 countries—a figure confirmed by The Financial Times—that we absolutely knew where we were. As suspected, the notion that free trade agreements could be rolled over has not proved quite as easy as the Secretary of State originally claimed. Although not central to this debate, that does illustrate the huge challenges that we will face.
Just two weeks ago, the Secretary of State came before the Select Committee to face questions, and it was quite clear that rolling over these agreements was not really going that well. Despite his considerable obfuscation, the reality of the state of the deals was evident from the Secretary of State’s own briefing note. Anyone in the Committee Room could see that on the piece of paper in front of him there was a huge amount of red, a little bit of orange and very little green. Under that green, amber and red traffic light system, the status of these free trade agreements was quite clear. When the Secretary of State was challenged on that point, he claimed colour blindness, yet hours later in the afternoon he was more forthright with business leaders—sadly not with us. It was yet another example of keeping Parliament in the dark.
On that idea of keeping Parliament in the dark, if the UK and the EU were to enter into a trade negotiation, European parliamentarians would know more than Members of the House of Commons, and our best way of finding out what was happening would be to ask our friends from Ireland. Far from us taking back control, the European Parliament would actually have more control in that particular trade negotiation, which is a supreme irony of the whole Brexit carry-on.
I thank the hon. Gentleman for his chairmanship of the International Trade Committee, which he does so well, and for the important point that he has just made. One senses that we are being kept in the dark, that there is there is far greater transparency on the EU side, and that we will probably end up learning more from the EU and other countries about how our deals are progressing. The Select Committee has actually found that to be the case when we have visited Geneva, Brussels or elsewhere; we are discovering the reality from trade ambassadors in those other countries.
I am very much enjoying my hon. Friend’s speech. It is not just that we seem to be in the dark about our relationship with the EU; Ministers also seem to be in the dark from one another. For example, the Chancellor has said that they he does not want any tariffs on food because he wants to keep food prices down, but in today’s Environment, Food and Rural Affairs questions the Farming Minister gave a very long answer about how DEFRA is looking at tariffs, quotas and various other restrictions. It is not very good if Government Departments cannot even talk to one another, is it?
My hon. Friend makes an important point, which I was going to come to later in my speech. He is quite right that the Government are kind of fudging the situation along, and no one is absolutely clear how these things will be managed. Our rural and farming communities will be extremely concerned because, having been so dismissive of the common agricultural policy, it is absolutely not clear how we are going to manage our all-important farming and agricultural sector post Brexit.
I was talking about the free trade agreements and the discussions of the Select Committee last week. It has subsequently become clear that the situation is a real mess. The status of the deals has been leaked and we now know that just five have been agreed, nine are off track, 19 are significantly off track, four are not possible to complete by March 2019 and two are not even being negotiated. So much for colour blindness—perhaps it is more of a blind spot.
In the case of the five deals that have been rolled over, their lack of priority and importance is perhaps self-evident. The Faroe Islands, which were mentioned earlier, are the UK’s 114th largest trading partner—critical, then—and account for 0.1% of total UK trade. Clearly we buy a lot of fish from them. Then there is Chile, our 65th largest trading partner, which also accounts for 0.1% of total UK trade. The eastern and southern African region accounts for £1.5 billion and another 0.1%. Switzerland and Israel are the only countries that are bringing deals of the scale that we would have expected earlier in the process. Perhaps most concerning are the agreements with South Korea and Japan, which are way off track, and the lack of diplomacy is only hampering them.
It is clear that the Secretary of State and his Department favour securing deals with Anglosphere countries—the US, Australia, New Zealand and Canada being prime among them. The US is a major market, but so is the EU. Perhaps it is the appeal of another strong and stable leader that is driving the Prime Minister and her Secretary of State to prioritise a deal with the US. Elsewhere, of course it would be good to have better deals with Australia and New Zealand, but is it not more sensible to prioritise the customers on our doorstep? When I did a paper round, I always thought that it was better to do the paper round on my own street, rather than on the other side of the village; maybe I am wrong.
The public should not be fooled into thinking that this will be over by 2020 or 2021. As we have heard, these deals will take six to 10 years to negotiate. This will not be easy. The EU-CETA deal took six years. That is typical, and we have heard from trade negotiators, trade lawyers and those involved in other countries just how difficult this will be. The public need to know, as do those in our industrial and business sectors. The US is a great country, but it is an even better trade negotiator. In trade deals, as in any business deal, size matters, and since the election of President Trump we have seen a new approach that favours the bilateral agreements that he prefers. That puts the US at an immediate advantage. Hence, NAFTA was redone. The Select Committee happened to be over there back in the spring of 2018, and the anxiety was palpable among the Canadian negotiators about what that would mean—but not just among them. It was palpable among US exporters and the car industry, as we heard earlier.
Perhaps naively, or perhaps because it is the outcome that the Secretary of State favours, we will face the mother of negotiations when our people sit down in Washington, and we should be under no illusion as to what the US will want to trade on. It will be services and cars, traded for agriculture and healthcare. We should remember the issues from the negotiations on the now-abandoned Transatlantic Trade and Investment Partnership, otherwise known as TTIP. Foremost among the public’s concern was the threat posed to our precious health service from a possible corporate takeover in any form. That deal, lest we forget, was being negotiated between the EU and the US, virtually equal-sized economies.
I have nothing against the US. In fact, I love the US, but I love the NHS more, and I am suspicious of the strategy of the Government and the Secretary of State. I have nothing against him personally, but let us be honest, he was the founder of the Atlantic Bridge, and his motivations and intentions have always been clear.
Like so many of my constituents, I fear not just for our health service but for our excellent, world-leading car manufacturers, local farmers and all those involved in our agri-food industry. None of those working in that sector should be under any illusion that they will be safe in a trade deal that the Secretary of State will seek urgently and desperately to secure in order to preserve the Government’s position. Without doubt, financial services will be his priority.
Our farmers should also be concerned by what concessions are likely to be made in the trade deals elsewhere, especially in the trade of livestock. Likewise our fisheries. Just last week, there was disagreement between the Secretary of State for Environment, Food and Rural Affairs and the Secretary of State for Business, Energy and Industrial Strategy, and that was echoed this morning, as we have just heard, in the comments about who would subsidise our farmers in those circumstances should we leave the EU. While both Australia and New Zealand have much to offer, their markets are still a small fraction of that of the EU, and the Secretary of State should be clear about that. By my estimation, trade with the EU is 30 times the combined trade that we do with New Zealand and Australia.
By contrast, the comprehensive and progressive agreement for trans-Pacific partnership has considerable scale. Naturally, its members comprise the nations around the perimeter of the Pacific, which will benefit from free trade in that sphere. I struggle to see how it will benefit or be appropriate to the UK. Call me old-fashioned, but doing business locally was always easiest and remained the priority. That seems no longer to be the case. Of the countries involved, our trading negotiations with Japan and South Korea are the most critical—far more so than those with Australia or New Zealand. In conversations with Japanese and Korean investors, it is clear how concerned they are by Brexit.
At an event in October last year held by the Japanese Chamber of Trade here in Parliament, its chief executive made it clear to those present, including the Secretaries of State for Business, Energy and Industrial Strategy and for Transport, that Brexit would seriously affect its businesses and investments in the UK. Spring forward three months, and Nissan has cancelled its investment in Sunderland, Honda has announced the closure of its plant in Swindon with the direct loss of 3,500 jobs, and Hitachi has cancelled its investment plans for a nuclear station in Anglesey. A clear pattern is emerging.
Let me return to the question of priorities—let us call them business priorities. Surely our priority must be to secure our existing trade in inward investment. I do not understand why the Government seem so relaxed about walking away from their biggest customer and in the process damaging existing relations and undermining both domestic and foreign direct investment.
The hon. Gentleman has mentioned Japan. Does he think that the lack of concern that has been shown for Japanese interests in this whole Brexit farrago will not serve the UK very well when it comes to negotiating a trade deal with Japan? The list of companies he gave and the concerns that the Japanese have raised have not registered or led to any deviation in UK policy, and it is understandable that the Japanese feel quite slighted, given their interests and that 40% of their EU investments were on island UK.
I thank the hon. Gentleman, whose constituency name I always get wrong—the Outer Hebrides—for his important point. It is not until we actually talk to investors and their representatives, and to major corporations that have given so much prosperity to these islands over the last 30 or 40 years, and consider how they feel—he used the word “slighted”—that we realise that respect is such a critical part of the culture in Asia. It is absolutely clear that they feel disrespected in this process and that we have not approached them and engaged with them sufficiently well. The Government may well have done that to an extent, but the fact that we are now seeing this haemorrhaging of investment from the UK underlines how seriously that is felt. At that reception held by the Japanese embassy in October last year, attended by the Secretaries of State for Business, Energy and Industrial Strategy and for Transport, the words of the chamber’s chief executive were chilling. He said, in summary, about Brexit, “We will be watching you.” Never have so few words concerned me so much.
I cannot help but conclude that this country is being seduced by a prospect of some sort of brave new world—empire 2.0, perhaps—when, in reality, the existing world in which we trade is both stable and prosperous, no matter the present headwinds. Actually, I agree with the Secretary of State for International Trade that we could be performing better in Asia-Pacific markets, but I disagree with him on his solution. How can it be that, as I have said previously in this place, German exports to China are 10 times those of the UK? Germany is part of the EU, is it not?
Sometimes, we—the UK public—have bought the lie that being a member of the EU has held us back in international trade. It has absolutely not. To be fair to someone I did not necessarily agree with, Margaret Thatcher recognised that and recognised the importance of the EU. As was said by my hon. Friend Geraint Davies, who is no longer in his seat, it is perhaps the greatest irony that she would have sought to protect our membership of the EU single market, of which she was the architect, recognising its importance to businesses based here, and particularly the Japanese companies she persuaded to invest here, such as Honda and Nissan. She will be turning in her grave.
I remain convinced about and committed to protecting our market and our businesses, and our jobs that they provide. Likewise, I am concerned for our farmers and those in the south of my constituency around the villages of Barford, Bishop’s Tachbrook, Hampton Magna and Norton Lindsey, who I believe will be seriously damaged by the industrial-scale farming they will be forced to compete against in future.
I also remain convinced about and committed to the EU market. Surely it provides greater certainty than the prospect of being caught up in the crossfire of the US-China trade wars. The truth is that, whether it be the uncertainty of negotiating with the current President of the United States or the significantly smaller markets presented by Australia and New Zealand, the priorities claimed by the Secretary of State are far removed from the certainty of the EU market. We should be wary of where we are going.
I thank my hon. Friend for giving way again. Does he accept that one sector that is particularly vulnerable is the pig sector? American exports to China have all but come to an end and the Americans are desperate to find another market that they can populate with their pigs. The obvious one is the UK. Would not that be a real threat?
I thank my hon. Friend for his well-informed intervention—he clearly knows a huge amount more about the pig farming sector than I do. The subject did come up in conversations in the United States and subsequently of the opportunities not just for pig farmers but for soya bean agriculture, and how keen the US is to export those products. We have to be cognisant of what that will mean. As has been said many times this afternoon, this is about concession, trading terms and what we are most prepared to give way on, but I am particularly fearful of the impact on our rural communities and on the farming sector, whether it be the pig farmers or others.
In considering future deals, it is essential in any event that there should be scrutiny from Parliament. That has come through loud and clear in the evidence that our Select Committee has taken: we should involve not only Parliament, but the devolved Administrations, civil society groups, representative business bodies and the unions. We need economic impact assessments, undertaken and shared with the relevant bodies—in particular, Parliament and the Administrations. That approach would ensure transparency and is best exemplified by that followed in the EU’s process, but also by the US itself. We also need to ensure the protection and maintenance of workers’ rights and environmental protections—certainly in our farming and rural sector—and to oppose the use of investor-state dispute settlement mechanisms in future agreements.
Finally, in leaving one of the most sophisticated, most advanced markets that is the EU, we must not allow this or any Government to reduce standards or protections. First and foremost, we must be determined to ensure that our manufacturing industries and farmers receive the appropriate protections they deserve, not the 0% tariffs on imports that the Secretary of State is advocating.
It is a pleasure and an honour to follow my hon. Friend Matt Western in speaking in this debate.
This has been a tumultuous week in British politics and, indeed, a very saddening week for a Labour Member like me. However, today’s debate reminds us of the critical task that this Parliament faces as the Brexit deadline approaches. Trade is at the heart of the Brexit debate, and many Members have made very good and detailed points on the challenges for our trade policy as we leave the European Union. I wish to focus my points on three areas: landscape, cars and negotiating power.
Indeed, landscape, cars and negotiating power are related, as I had reason to realise when my car broke down on the road to Craster in Northumberland on Sunday. After I had sought to negotiate getting a bungee lead from a friendly fisherman, who refused to take any money for it, I had ample time to contemplate the exquisite beauties of the Northumberland coastal landscape while I waited for my exhaust to be repaired.
The labour movement is often associated with our cities and great urban centres. In truth, however, access to and enjoyment of our countryside has been a key part of our labour movement for decades and, indeed, centuries. One only has to think of the Kinder Scout trespass to see the way in which our movement has fought to ensure that our glorious countryside remains accessible and can be enjoyed by everyone.
While Newcastle is uniquely privileged in having a moor, the Town moor—or the “Toon” moor—at its centre, we also have the ability to enjoy the wonderful countryside of Northumberland and County Durham. It is perhaps contradictory to say so, but this stunningly beautiful countryside, with its dry stone walls, little fields and fantastic coastal views, is not entirely natural. It is actually a function of our farming and particularly of our small-scale farmers. They are the ones who have created and who protect our beautiful countryside.
This is of course very different from the situation in the United States, where we can find wheat farms the size of small counties here in the UK and pig farms the size of small towns. How does the Secretary of State expect our small-scale farmers to compete with the American agro-industrial machine? If someone drives through areas of the US that have a similar northern, temperate climate, they will see vast swathes of countryside that, having been cultivated in the 19th and 20th centuries, have been given back over to wilderness because of that inability to compete with the vast farms in Texas and other states.
Sir Paul Beresford suggested that New Zealand might be a model to follow, and as I said, I greatly admire its landscape and countryside, as shown so wonderfully in the films of “The Lord of the Rings”. However, the landscape of north-east England, with its drystone walls, hedgerows and its people, is not comparable with that. In the Northumbrian countryside, someone is never more than a few hundred metres from a wall, house, field, home or road. New Zealand has only 4 million people but 20 million sheep, and although I admire and recognise those different forms of landscape beauty, I do not want that imposed on the north-east.
New Zealand also produces other agricultural products such as wine and fruit—apples, pears and so on. Many of the units in New Zealand are small, but they work together as co-operatives that do not damage the countryside, and something similar could quite easily take place in many areas of this country. The countryside would be preserved; jobs would be created; and the economic value of those small units would be lifted.
I thank the hon. Gentleman for that intervention, but let us be clear. He gives the example of wine—we are not huge producers of that in Northumberland—and fruit, but I am talking about lamb, sheep and the other products of small-scale farming in the highly temperate climate that drives our beautiful, natural landscape. That is what I want to continue.
British farmers have been able successfully to compete on both quality and price in markets defined by EU food safety rules. For example, British farmers export far more wheat flour to the European Union—approximately 250,000 tonnes last year—than they do to non-EU countries, at approximately 6,000 tonnes, and the same goes for other agricultural products such as barley and oats. The EU is the largest importer and exporter of food in the world, and as part of an EU member state, our farmers have benefited from preferential access to that market through exemptions from the tariffs and quotas that are imposed on non-member countries, and without dropping our environmental and farming standards.
With 85% of seasonal agricultural workers in the EU coming from Bulgaria and Romania, agriculture is one UK sector dependent on freedom of movement. The immigration Bill will clearly do nothing to enable the continuation of what the Government are pleased to call “low-skilled” workers—those who earn below £30,000— but what about the Agriculture Bill? Will it protect our small farmers? It does nothing to address concerns about competition, and it places no duties on the Secretary of State for Environment, Food and Rural Affairs. It offers no funding and no environmental safeguards. The Government are showing yet again that they are not prepared to deliver a farming environment that protects our environment as well as the standard and quality of our food.
Our automotive sector is a global success story, although, as we saw in the sad announcements from Honda and Nissan, it now faces challenges due to technology, climate change and Brexit. It is clear that this is not all about Brexit. As I said, there is technology and there is climate change. However, the automotive sector is one of the most competitive and highly integrated industrial sectors. When there is one disabling factor that is a unique disadvantage for UK producers—Brexit is a unique disadvantage for UK producers—we are more likely to lose in the competition for future investment. The inability or the decision of this Government to not take a no-deal Brexit off the table means that our investment is falling.
My hon. Friend not only beautifully illustrates the north-east of England, but she is making very important points about the farming community and the automotive industry. On Honda’s announcement, this is the first car plant it will have ever closed in its entire 71-year history. That is not coincidental. Brexit is, as she says, just one element, but when working with such thin, narrow margins in such a competitive sector, it is what triggers the review and subsequent decision to disinvest.
I thank my hon. Friend for that excellent point. The competitiveness of the sector means that margins are narrow, so any such factor—Brexit and access to markets are significant factors—will place us at a continued disadvantage. The Society of Motor Manufacturers and Traders says that no deal could cost the car industry up to £4.5 billion in tariffs.
The hon. Lady makes the powerful case against no deal, which is why the Society of Motor Manufacturers and Traders, and practically the whole of business, is urging her and her colleagues to vote for the Government’s deal. Why will she not do so? Why does she put so many jobs at risk? Why is she peddling the myth that investment is falling, when overall the latest figures suggest that Britain continues to lead Europe on investment?
I thank the Minister for that intervention and for giving me the opportunity to reiterate that, as my hon. Friend Barry Gardiner, the shadow Secretary of State said, the false choice between the Government’s bad deal and no deal is in effect an act of economic blackmail. Industry sectors have said they would prefer the Government’s deal to no deal, but they also said that it is a bad deal. It is a bad deal for British industry. It pushes the key decisions out two years into the future. In two years’ time, we will be facing, with less leverage, exactly the same challenges under his deal.
Which business organisations have said that they think this is a bad deal?
The Minister knows very well that the business organisations who have said that to me—I speak to them extensively as a shadow Minister—do not wish their names to be given. [Interruption.] They have said it. They do not wish to be named in Parliament, because they fear the negative reaction of Ministers such as himself.
Very simply, the reality is that this is not just about no deal. Businesses, the manufacturing sector, the CBI, the FSB and all the others are saying that they would prefer for us to stay in a customs union and a single market. That has been the Labour party position since February last year. It is absolutely clear. That is where the manufacturing sector wants to stay. The CEOs of Jaguar Land Rover, Airbus and others all want us to stay in a customs union and a single market.
I thank my hon. Friend for that important point. Many organisations, such as the Manufacturing Trade Remedies Alliance, have explicitly come out against the Government’s deal and repeatedly said that they want a customs union. That is an implicit criticism of the Government’s deal.
I will give way, but I do not wish to emulate others in making long speeches.
The hon. Lady mentioned businesses that are not prepared to go on the record. I quote:
“This is not a Brexit-related issue for us”,
and this decision is “being made” on the basis of “global…changes”—those are the words of Ian Howells, Honda’s senior vice-president for Europe. It is clearly disingenuous to suggest that Honda’s decision was based on Brexit. Does she accept that, because Ian Howells says so?
I do not know whether the hon. Gentleman was in his place when I started speaking, but I acknowledge that Honda’s decision is not entirely based on Brexit. However, as we have been discussing, the uncertainty in the business environment caused by Brexit has an impact on investment. The Minister stated that investment was not down, but investment in the automotive industry has gone down by almost 50% in the last year. At the same time, components worth £35 million are delivered from the European Union every day. That partly reflects the way in which our supply chains are integrated.
Government Members, many of whom pride themselves on their business experience, seem to fail to understand that supply chains—as a chartered engineer, I have been involved in many supply chains—such as the automotive supply chain are highly integrated and highly just-in-time. We have automotive supply chains that cross the channel backwards and forwards multiple times—for example, a crankshaft can be made in France, go to the west midlands to be drilled and milled and then sent to Munich to be put in an engine, which then comes back to Oxford—and the channel would be a tariff border. Such integration requires not only frictionless borders, but agreed standards to define everything from the acceptable frequency of electromagnetic radiation to the atomic composition of a given chemical. In leaving the European Union, what the Government apparently want is not less regulation, but simply more duplication, setting up new regulatory bodies to recreate existing European agencies and regulations. Far from Brussels imposing regulation on the European Union, it was often acting as an outsourcer for regulation that we would need in any case.
The automotive industry delivers not gig economy or minimum wage jobs, but good, well-paid jobs, and we in the north-east, particularly as the only region in the country that still exports more than it imports—we are very proud to have the most productive Nissan plant in the world in our region—refuse to envisage the future that the Government seem to desire, whereby our manufacturing is undermined by taking us out of the biggest free trade area in the world, one which is absolutely essential to us.
It pains me to advise my hon. Friend of this, but in the last quarterly set of figures, that honourable exception of the north-east being the only region that exports more than it imports is no longer the case. I know that, as a doughty fighter for the north-east, that it is not what she wants to hear, but it is testament to what happens under this Government.
I thank my hon. Friend for that intervention. I had not seen the last set of quarterly figures. I hope that in the annual figures, we are still exporting more than we import, but that is testament to the fact that manufacturing is not safe in Tory hands. In particular, manufacturing would be devastated by a Tory Brexit. The Honda announcement was devastating for families and friends of the employees there and we do not want to see any more announcements like that.
The thing that really upsets me is when the Tories claim that to take a no-deal Brexit off the table would be like someone telling a car dealer that they were not willing to walk away. With Brexit, we are not trying to buy a car in a car dealership. We are trying to build cars across the European Union that will deliver good jobs. Choosing to leave a no-deal Brexit on the table is an act of unparalleled economic sabotage by this Government.
To highlight the point my hon. Friend is making so well, has she heard and was she as appalled as I was by the comments made by Matthew Lesh of the Adam Smith Institute a couple of weeks ago on the radio, that this is all about free markets, liberalising trade, 0% tariffs, competency and competitive advantage, and if we lost our manufacturing industry in the process of achieving that, so be it?
My hon. Friend raises a very unpleasant memory for me of when, as an engineering student at Imperial, back in the ’80s, I heard Margaret Thatcher say that the UK was going to be competitive on the global stage in finance and other services, and the rest of the world could be our manufacturer. The consequences of the lack of support for manufacturing from successive Conservative Governments are seen in the average wages of our constituents, day in, day out.
I want to talk briefly about negotiating power. The car buyer fallacy is not the only Tory fantasy; the idea that we will do so much better in trade negotiations on our own than with the collective power of the European Union is a total fantasy. The Secretary of State said that on our own, we would be nimble, negotiating deals the clunky 27 could not, such as with the United States. European Union gross domestic product is seven or eight times greater than that of the UK, so it offers greater opportunity for profit. Any trade agreement that delivers 1% improved profitability with the European Union would have to do seven times better with the United Kingdom to be as attractive. The Government are arguing that in the margins of the differences between ourselves and other EU members, without damaging environmental standards or working rights, we will be able to deliver seven times the benefits to any trading partner. That is a fantasy we will pay for.
African and other Commonwealth countries are not part of this debate, but the Secretary of State spoke quite extensively about them in his opening speech. One of the many disingenuous—indeed, deceptive—ways in which the leave campaign sought support during the referendum campaign was to promise better immigration and trade opportunities for Commonwealth and African countries in an attempt to draw in Commonwealth and African diaspora citizens to voting leave. Well, the £30,000 salary threshold for skilled immigrants shows clearly that there are to be no greater immigration opportunities for people from Commonwealth and African countries.
As chair of the all-party parliamentary group for Africa, I know how important trade is to African countries. The subject is raised regularly with me by incoming delegations. It is true that the economic partnership agreements between the European Union and African nations are flawed because they lack transparency and because they limit scope for African Governments to make their own development choices and industrialisation plans, but many—indeed, most—African nations see the UK as the entry point to European Union markets, and they are at a loss to understand why we are abandoning the world’s greatest free market area. What they seek is continuity and fair access to our markets, and clearly this Government can offer neither.
In the almost three years since the Brexit vote, we have learned much more about what Brexit involves and what the choices are. Now it is clear that all forms of Brexit involve an economic hit, but this Government’s Brexit trade policies and, in particular, leaving no deal on the table are a form of economic sabotage, and that is something to which I will not be a party.
Earlier this week, I did not expect to be here today. I was planning a day in my constituency, working. However, the volume of emails and other messages that I received from constituents asking me to attend this debate and set out their concerns made me change my mind. I am glad that the Secretary of State has returned to the Chamber at such an appropriate time: I can make my constituents’ points to him very clearly.
I fear that I have no erudite or detailed points to make. I want to tell the House about my constituents’ concerns, although I do not think that they will come as any surprise. Indeed, the Secretary of State referred to some of them in his opening speech, and they have been mentioned since. I am sure that I am not the only Member of Parliament whose constituents have been in touch this week, expressing strong feelings about some key principles.
I want to make a few points, quite briefly. The first relates to a matter that we have discussed before. My constituents have fears about the NHS, and about the opening up of our national health service to competition from overseas companies as a result of trade deals. I heard what the Secretary of State said earlier. People in the north-east not only enjoy beautiful countryside—as was mentioned by my hon. Friend Chi Onwurah—but have strong views about the NHS. They firmly believe that it should not be opened up further to competition. As we have heard today, there is already competition in the NHS, but we do not want it to increase. I ask the Secretary of State to reiterate, very clearly, that our NHS is not for sale as part of a trade deal.
The second issue raised by my constituents concerns environmental and food safety standards. We have all heard many times the classic example of fears about trade deals with the United States involving imported chlorinated chicken, but there are many other examples. My constituents fear the impact of these trade deals, feeling that they will weaken our environmental standards and also weaken labour terms and conditions.
What the Government must do is very simple. They must accept one of the amendments to the Agriculture Bill, which rules out any lowering of standards. Surely the Government can do that, and then we can all support where we go as a result of that agreement.
I thank my hon. Friend for his intervention, and look forward to the Secretary of State’s comments on it.
The hon. Lady has asked for my reassurance. As I mentioned earlier, article 23.4 of the comprehensive economic and trade agreement states:
“The Parties recognise that it is inappropriate to encourage trade or investment by weakening or reducing the levels of protection afforded in their labour law and standards.”
The protections for which the hon. Lady has specifically asked are included in a document that has already been ratified by the United Kingdom Parliament. My question is this: why did the Labour party not vote for it?
I thank the Secretary of State for his comments, and for pointing me to that document. I am sure that my constituents will be glad to hear what he has said, but they will also want me to ensure that the issue continues to be at the heart of our discussions and interventions.
That concern about people and labour standards brings me to my third point. Just before Christmas, I was pleased to be able to lead a debate on Traidcraft and the future of fair trade. One of the issues raised was also raised today by my right hon. Friend Stephen Timms: trading status with less developed and developing countries. We were seeking assurances that those countries would continue to have access; I noted the Secretary of State’s earlier comments on that matter but would welcome further assurances, perhaps by the Minister in summing up this debate. It is important for trading and the economic development of those countries, but there is also an important gender equality element in dealing with those countries to ensure they continue to have that focus.
Finally, people wanted me to raise the issue of scrutiny. There is real concern that trade deals will be signed off behind closed doors. Again, I note that the Secretary of State touched on that, but we need to be very clear that there is the best possible scrutiny of the trade deals being done; Parliament must be able to take a full part in that, and it must be transparent. My constituents must be able to see that that is happening. It is very important that that happens.
These are not the detailed points that many other Members have raised, but they are the issues that most concern my constituents, and they must be addressed in the discussions. Again, I ask the Minister to address clearly the concerns of my constituents.
Before I call the Front Benchers to sum up the debate, let me thank Liz Twist for her brevity this afternoon. I have been listening to the whole of this debate and the hon. Lady said as much in six minutes as others took over 20 minutes to say. Her constituency is well served this afternoon: because she did not take the extra 15 or 20 minutes she could have taken, none of her constituents have suffered at all as she has spoken well for them. I make this point because I can tell the House that the Front-Bench opening contributors had a very good debate; it went back and forward with interventions and that is how a debate should be. But the Front-Bench contributors at that point spoke between them for 97 minutes—let me repeat that; 97 minutes. But I do not have to repeat that again as many Members have repeated points this afternoon over and over again. It is customary at the end of a debate that when the Front Benches have taken 97 minutes—oh, I did not count Stewart Hosie who spoke for the Scottish National party; his was a very reasonable 17-minute contribution, which takes the Front-Bench contributions to 114 minutes if I am to be accurate—the wind-ups normally take 10 minutes. Clearly there is some elasticity this afternoon, but that does not mean the Front Benchers whom I am about to call can each speak for some 40 minutes just because the remaining time would allow that. What kind of example is it for Members of Parliament speaking in the Chamber of the House of Commons to take the attitude that because something can be done it should be done, and that indulgence and self-indulgence is to be accepted? It is not, but I am quite sure that I can rely on the spokesmen for the Front Benches now to sum up in the usual amount of time which is taken for these matters, which is between 10 and 15 minutes each.
Thank you very much, Madam Deputy Speaker. It certainly has been a very thorough debate, and I certainly do not intend to go into the Minister’s allocation of time and will be well within my half of what is remaining; I can certainly confirm that.
At the start of the debate, my hon. Friend Barry Gardiner raised a point of order. He said that a written ministerial statement on trade continuity under a no-deal scenario was due to be published today—it was listed as No. 4 on the Order Paper—but that it was not available by the start of our deliberations. It had still not been published on the internet by 2.30 pm, but happily the Vote Office very kindly delivered a copy to me at about 2.10 pm, which was some time after the Front-Bench speeches to which you have just referred, Madam Deputy Speaker. The document is entirely relevant to our deliberations. It refers to mutual recognition agreements with the United States, Australia and New Zealand, and much more besides that is relevant to the debate. I shall take the time to refer to it during my remarks. It is a shame that it was not here earlier, as it would have enabled other Members to have the relevant information.
Distance is important. The value of our trading relationship with Ireland is higher than the value of UK trade with Italy or Spain, even though Ireland’s economy is much smaller than that of either Italy or Spain. Members should not just take my word for it; that is the view of the Office for National Statistics. If the Government have their way, we will abandon the deal that we have on our doorstep for a deal—or a series of deals—on the other side of the planet. Trade by teleport is not a reality, however. I am glad that the Secretary of State has acknowledged the fact that we are on the other side of the world from the Pacific. It is also a fact that he is proposing that we become a nation that is reliant on carbon-pumping trade deals, which is somewhat at odds with the claim in his opening speech that he is going to uphold our climate change obligations.
Is the hon. Gentleman’s logic that if we had less trade overall, less carbon would be omitted and that would be a good thing?
What an absurd intervention—but we have come to expect nothing less from the Secretary of State. Of course we should have trade around the world, but we should not be prioritising trade on the far side of the world over trade on our own doorstep. He knows that only too well. That has been the theme of this debate.
The Secretary of State quoted the interpretive instrument in CETA. As Stewart Hosie mentioned, the Canadians have the highest use of investor-state dispute settlement arrangements anywhere in the world, so they have form when it comes to the use of such systems. The problem is that the instrument does not alter, let alone override, the text of CETA. Article 31 of the Vienna convention states that treaties
“shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”
However, if there is
“any conflict or confusion between CETA’s plain wording and the instrument, it is CETA’s text that prevails…The critical point is that while the parties retain the right to regulate, they must do so in conformity with their CETA obligations and commitments.”
Those are the words of the Canadian Centre for Policy Alternatives. The interpretive instrument that the Secretary of State referred to does not overrule the main CETA documents. Those of our constituents who have written to us with their concerns about the threat of the privatisation of the national health service as a result of the negotiation of deals—the subjects of which have been covered in this debate—are right to be concerned, given the contents of the CETA document and the legal opinions on it. They are right to raise those concerns, as was my hon. Friend Liz Twist earlier.
Turning to the opportunities to scrutinise the negotiation of these deals, I wonder whether the Minister could pick up on the thread of the debate about whether this is our one and only opportunity to do that or whether there will be further chances for Members of Parliament to debate and challenge the mandate for negotiation and then to scrutinise any proposals put forward during the negotiations. What is going to replace the current arrangements through the Council of Ministers, the international trade committee of the European Parliament, the European Parliament itself, and our own European Scrutiny Committee? I note that the written ministerial statement refers to
“full parliamentary scrutiny processes to ratify some UK-third country agreements”,
so what are those processes? Do they represent full scrutiny, or are they the Henry VII powers that the Secretary of State advocated in the Trade Bill, which mean an absence of any meaningful scrutiny of measures, especially given the inability to influence their contents? The same point applies to the new agreements referred to in this debate.
Businesses that want certainty had to change from WTO arrangements with Japan, to which the statement refers, to EU-Japan agreement arrangements at the start of this year. Presumably, they will now have to change back to us trading with Japan through the WTO, which again is in mentioned the statement, and then, once agreed, to UK-Japan bilateral agreement arrangements. That is far from a demonstration of certainty for business, but that is what the written statement appears to confirm, which prompts the question of why there was a delay in the appearance of the missing information.
Does my hon. Friend agree that we need primary legislation, not hour-and-a-half debates in Committee Rooms? Some of us are spending much of our time upstairs rushing through all sorts of incredibly complicated legislation and no one really understands the implications.
My hon. Friend makes much the same point that my hon. Friend the Member for Brent North and I made when the Trade Bill was in Committee last year about the importance of full scrutiny and a thorough process that goes way beyond the Henry VIII powers that the Secretary of State has been so keen to confer upon himself for the scrutiny of such agreements. My hon. Friend Dr Drew makes an interesting point about the SIs and the completely inadequate no-deal planning, but that is a discussion for another time, although I share his concern about the pressure being put on Members to vote for the Prime Minister’s bad deal, as my hon. Friend the Member for Brent North described it earlier.
My hon. Friend Catherine West spoke of the frequency of the legal action being taken by Canadian companies, which was also mentioned by the hon. Member for Dundee East. She also advocated greater regional and national engagement in scrutiny and said we should learn from international good practice, and I agree. My hon. Friend Matt Western also said that we should learn from other countries. When our own Government say that they cannot give us information because it is confidential and would affect delicate negotiations, it is odd that we can find out what is going on from the other countries involved. He also mentioned the importance of looking after our own street first and referred to prioritising a trade deal with the EU before looking for deals on the other side of the world.
My hon. Friend Chi Onwurah spoke about landscape, cars and the environment, describing the contrast between agriculture in the UK and the US and the difficulties facing our farmers in surviving and competing in the trade world that the Secretary of State envisages. She made a good point about sustainability and the importance of the rural environment, and she was right to cite the desire of much of industry, across sectors, for a customs union to support frictionless trade.
We have a trade deal, which represents 48% of our trade, on our doorstep. The deal ensures frictionless trade and access to the single market, as well as access to 11% of the rest of our trade through deals with 70 or so further countries, but as the written ministerial statement shows, only six new trade deals have been signed so far, and we leave the EU at the end of March.
I was startled to find out that neither the Defence Secretary nor the International Trade Secretary has learned the basics of diplomacy. Domestic sabre rattling on China, which we assume is part of the Defence Secretary’s leadership campaign, has jeopardised talks with China, while the International Trade Secretary has managed to insult the Japanese. [Interruption.] Excuse me. I think the International Trade Secretary had something to say to me there.
He was just obliging you.
Was he? That is very kind of him.
In 2017, a number of Australian academics warned of the danger that
“Australia’s interests get caught up in the possibly unrealistic worldview of the Brexiteers and thus Australia becomes collateral damage of…British politics.”
Why might they say that with this Secretary of State in charge?
In the real world, my constituents who put their goods on a ship at the port of Liverpool today do not know whether the ship will be able to dock in Tokyo on
This week, in Swindon, we have seen what is happening in the real world: real workers’ jobs going—3,500 of them—and real communities affected. We are party to a trade agreement with Japan through our membership of the European Union, and the deal has not prevented the disinvestment of Japanese companies such as Honda and Nissan.
“The idea that Brexit uncertainty is irrelevant to this is fanciful. How are Honda supposed to calculate the costs and benefits of staying in the UK in the overall global context against such lack of clarity on the future terms of trade?”
Those are not my words but the words of Sir David Warren, the former UK ambassador to Japan.
I would have thought that the management of Honda are closer to this issue, and they say it is a result of changes in the international car industry and specifically not a result of Brexit. Why does the hon. Gentleman want to make it so when the company itself says it is not true?
As my hon. Friend the Member for Brent North was just saying to me, Honda’s management are far too well-mannered to say these things in public, but a former ambassador will tell it as it is, and I would have thought the Secretary of State wanted to take the advice of somebody with Sir David Warren’s experience.
That just will not wash. Why, then, is Honda leaving Turkey? Is that the result of Brexit as well?
The leave campaign pushed the point rather hard about Turkey’s accession to the EU.
My hon. Friend Helen Goodman—this is the bigger point about the Secretary of State’s involvement—spoke about the failure to ensure, when the EU-Japan deal was negotiated, that there is support for the foreign direct investment and its critical place in our car industry, whether at Honda or Nissan. The Secretary of State’s answer is that he will not change his approach in the future trade deals he negotiates once we have left the EU. That is a pretty grim predictor of what is going to happen under this Secretary of State and his colleagues in their support—or rather lack of it—for our industry, our manufacturing industry and our car industry in particular.
I mentioned Margaret Thatcher earlier. If she were still around today, she would not settle for Honda leaving the UK. She would fight with every fibre in her body to defend our interests in retaining that important business in the UK. Does my hon. Friend agree?
We have come to an interesting point, with Labour Members citing Margaret Thatcher and the fact that she founded the single market of the European Union to demonstrate just how wrong the current Government, who claim her inheritance, are in their international trade policy.
I have taken a number of interventions and I am very cognisant of your strictures for me to keep things to a minimum, Madam Deputy Speaker. As I was saying, the alternative is to deliver certainty. That alternative can come with a new customs union and a deal with the single market on regulations, standards and common institutions that protects our trade with the EU and with our partners around the world. The difficulties in renegotiating the deals with our partners have been laid bare in recent weeks by the failure of the International Trade Secretary to make progress on more than a handful of such deals, quite apart from the uncertainty over our future trading relationship with the EU. He wants to align to lower standards from the US.
That is not what I said.
Well, the Secretary of State has been saying that for years. The Chair of the International Trade Committee spoke earlier, and the Committee’s report set out the consequences of a deal with the US: it will inevitably lead to a conflict, with the potential for lower standards, impacting our ability to do a trade deal with the EU. That point should be listened to and the Minister should respond to it in his summing up.
We have had an excellent debate and I sincerely hope that the Minister will respond to the challenges set to him about where we have reached. In particular, I hope he will address whether adequate protection is in place for our agriculture, car industry and other manufacturing sectors and whether there will be further opportunity to scrutinise international trade agreements and their preparation with the US, Australia, New Zealand and the Pacific rim. I thank my colleagues for their contributions to the debate. I look forward to scrutinising the Government in the coming months on these points, but the fact that only five roll-over deals have been completed so far does not bode well under this Secretary of State and his ministerial team. [Interruption.]
I hear urgings from Opposition Members, not least the Chairman of the Select Committee, Angus Brendan MacNeil. It is a pleasure to conclude this debate about future trade agreements, in which we have heard interesting contributions, ranging from the profound to, more recently, the bizarre. Nearly all have been interesting and I wish to thank everyone who has taken part. I particularly want to thank the Chairman of the Select Committee and its members for their thoughtful and well-informed contributions.
Today’s debate is just one way in which the Government are seeking to ensure that the House of Commons, the House of Lords, the devolved Administrations and wider society are engaged in, consulted on and fully briefed about future trade agreements. It is the Secretary of State’s profound belief that only a transparent and inclusive approach is appropriate as the UK sets out on its exciting journey towards a fully independent trade policy. Ninety per cent. of global growth over the next few years is expected to occur in areas of the world outside the EU—90%. That is why we should remember that there is a world beyond Europe, and I promise that there will be a time beyond Brexit. The purpose of this debate was to enable Parliament’s voice to be heard on the potential agreements, prior to the UK’s negotiating objectives being formed.
Although international trade policy is reserved, we have committed to holding formal and regular inter-governmental ministerial forums with Ministers from the devolved Administrations to consider future trade agreements. We ran public consultations on the four potential agreements that we are debating. They lasted 14 weeks, as has been said, and closed on
As I am talking about consultation and engagement, I shall give way to the hon. Lady.
One of the positive things about this debate has been the many voices from across the UK, the devolved regions and the other regions throughout England. As we go through the immediate period, there will be concerns from businesses, particularly in Northern Ireland where we do not have a devolved Assembly so cannot participate formally. Will the Minister have an open-door policy in his Department, and encourage his ministerial colleagues to do the same, so that businesses and organisations from across the regions and right across the UK can articulate concerns and genuinely be listened to? That way, we can make sure that this is a truly global UK agenda moving forward.
As ever, the hon. Lady speaks powerfully on behalf of her constituency and, indeed, Northern Ireland. That is a really important point for us to take note of. As I have said, we are led by the Secretary of State in our determination to make sure that we get this right and fully engage people. One of the well-informed Opposition Members said earlier that some of the concerns about TTIP were asinine but, the allegation was, badly politically mishandled. By engaging all parts of the United Kingdom, as I have set out, we are absolutely determined to try to make sure that asinine, false issues do not blind us to the real ones. There are genuine trade-offs to be had in trade agreements, and we should look at and understand them. We need to make sure that we are not spending our time dealing with issues that are not in fact real and are just peddled, often by groups, for political purposes.
I agree with the Minister that it is better to take one’s time to analyse the responses to the consultation, but does he or the Secretary of State intend to go back out for further public negotiation once the negotiating mandate for the deals is agreed?
First, I should say that parliamentarians will continue to be able to inform the negotiations. Parliament will be updated regularly as the negotiations progress, and it will be Parliament, through the process set out in the Constitutional Reform and Governance Act 2010, which was passed by the Labour party, that will ultimately play its role in the ratification of any new FTA.
I will not.
Both Houses will be fully involved as we balance meaningful scrutiny with the security necessary to protect sensitive negotiating positions and market-sensitive data. Having reflected on the contributions in this debate, including those of Stewart Hosie, we will return with more detailed proposals shortly, ahead of the next stage of the Trade Bill.
As I said, we have had interesting contributions from Government and Opposition Benches. I shall pick on some. John Spellar noted in an intervention that he fully accepts that there is no threat to the NHS from the potential trade deals. He has accepted that we are not going to let that happen. I hope that Opposition Members, who have, like me, heard the concerns of many constituents on that front, can not only bring those concerns to the House but help to allay them. If there is a genuine issue, it is worth looking at it, but if there is not, we do not want false fears. There are enough real challenges facing us without spectral ones being introduced as well.
The issue of developing countries and what more we can do was touched on by Members on both sides of the House. One Opposition Member—I cannot remember who it was—sounded rather sceptical, saying that we might go backwards in that regard. I think that there is a real opportunity to go forward. As the Secretary of State has said, bringing trade and development together is really important if we are to help people out of poverty. Ultimately, trade, not aid is the way out of poverty. Therefore, the issues that have been raised here, not least about coffee and other such products, are about making sure that poorer countries can add value in their country and then sell into the UK. That is the kind of forward-looking policy that we have in mind.
Market access was also touched on. While we are talking about these big flagship trade deals, more advantage could well be had by targeting smaller market access issues. We heard about the pork industry earlier, and we could mention the opening up of Taiwan and China to pork. It has made an enormous difference to the pork industry in this country. There is an opportunity to do much more in many other areas, not least in the new digital and data-related areas as well.
Geraint Davies did his usual gloom routine. I really do not understand how such a dynamic and forward-looking area as Swansea can be represented by someone who is so down on this country and its future prospects. I really hope that, at some point, he will cheer up and recognise that there is an upside, and that every cloud does have a silver lining.
Barry Gardiner mentioned differences between the EU mandate and our own. We will set out our plans and a scoping document in due course. As I have said, we really are committed to making sure that this House and, as broadly as possible, civil society and certainly the devolved Administrations can be included, and we will be having that inter-ministerial forum as well.
Excellent. That is delightful.
I have been speaking for eight minutes so far, and will seek to stay within the time. My hon. Friend Sir Paul Beresford was informative, fascinating and interesting when he talked about the scale of farms. Agriculture was raised in the debate. There is a balancing act to be done between looking after consumers and making sure that we look after the beautiful countryside, not least in the north-east of England, but in the rest of the country as well. If there are to be any changes—liberalisation, for example—they need to be done in a sensible way that maximises the potential upsides and minimises any downsides to any losers.
The Chairman of the Select Committee, Angus Brendan MacNeil, said that we needed to carry Parliament with us, and he is absolutely right. In talking about winners and losers, he mentioned compensation for areas that lose out. By having a central Treasury, this country makes sure that we provide a counterbalance between those areas that do less well and those areas that do better. I point to the behaviour of the Department for International Trade. As the Minister responsible for investment, my job is to lead the investment team. [Interruption.] Well, the shadow Minister, Bill Esterson, seems to invent facts rather than actually access them. If he looks at the latest numbers from the United Nations Conference on Trade and Development, probably the most respected ones globally, he will see that they suggest that, while global foreign direct investment fell markedly last year, that in the EU fell even more, and the UK—#despite that—went up by 20%. So there is little truth in the suggestion, which we hear so often from the Opposition, that somehow things are going downhill. We have more people in work than ever before, more disabled people in work than ever before, rising wages and lower inflation. The truth is that we have fewer unemployed young people than at any time in our history. This is good news. Trying to talk the country down about both its future and its present may be a standard Opposition tactic, but, in the current circumstances, it is, frankly, disingenuous.
Other than spending consequentials in this centralised UK state, there are no fiscal transfers from the south to the north of England—for example, when the north of England got damaged by the air transport policy that the UK ran for about 40 years. I just caution the Minister against being too complacent. The UK is not doing what it should to offset the bias of the sterling zone and the UK centralised Government towards the south-east of England.
We have seen investment spreading out from London and the south-east. If the Chair of the Select Committee looks at the EY report, he will find that there has been a big change in the amount of investment going into the regions and nations of the country—away from London—over the last number of years. I recommend that report to him. In addition, it points out that there has been an increase in the share going to manufacturing.
The Opposition are again peddling the falsehood that we are somehow seeing a loss of manufacturing. On the contrary, manufacturing is becoming more efficient and competitive. It is competitiveness that will ultimately lead to higher living standards and it is competitiveness that this Government understand. The Opposition too often want to be on the side of protection, rather than enhancing competition while managing it, and that is why almost every Labour Government in history have ended with higher unemployment at the end than at the beginning, and it is why the Conservative party and this Government have a proud record of creating more employment.
I hope that these limited responses have been helpful to hon. Members. As I have said, we are listening closely to the views expressed in this debate and will reflect seriously on them before laying our outline approaches to our first negotiations before the House—and we will do that.
The United Kingdom’s exit from the European Union provides us with a golden opportunity to negotiate, sign and ratify new free trade agreements as an independent free trading nation for the first time in more than 40 years, and it is an opportunity that this Government and this party are determined to seize.
Question put and agreed to.
That this House
has considered potential future free trade agreements: Australia, New Zealand, US and a comprehensive and progressive agreement for Trans-Pacific Partnership.