I beg to move,
That this House
has considered the UK-Japan Comprehensive Economic Partnership Agreement.
I am delighted to open this debate on the UK-Japan comprehensive economic partnership agreement, otherwise known as CEPA, in a landmark moment for our national trading history. This is the first debate we are having on a new trade deal since our departure from the European Union. This is the first time we have been able to have such a discussion in the House of Commons for nearly 50 years. It was not possible when Brussels represented us in trade negotiations, but things have changed. We now have a deal directly negotiated between London and Tokyo, and the whole House will be glad to know that this will be the first of many debates about our independently negotiated trade agreements. There will be more to come as we pursue gold-standard deals with Canada, the United States, Australia, New Zealand and South Korea.
The right hon. Lady is right in one respect, but we have had many debates recently on trade deals. Indeed, we had a veto on those trade deals between the EU and other partners, and views were expressed. I suspect that we were on the same side on the Canada and Singapore trade deals. We have had those debates. This should be about the principles of trade, rather than just the niceties of whether we are in or out of the EU.
I observe that the right hon. Gentleman did support many of those deals. I afraid that the same cannot be said for most of the members of his party, who did not support, for example, the Japan trade deal when it previously went through the House. We are in a completely different position. From
The UK-Japan agreement is a British-shaped deal going further and faster than the EU deal in areas such as data and digital, services, advanced manufacturing and food and drink. The deal has been welcomed across the board, from the CBI to techUK and the National Farmers Union. It was even welcomed by the Labour party—although rather tepidly and although Labour did not actually vote for the original Japan deal.
The deal is estimated to add over £15 billion in trade to our already growing trading relationship with the third largest economy in the world. We expect it to be even more. We have asked Professor Tony Venables from Oxford University to lead a review of our future modelling to ensure that it accounts for our world-leading digital and data trade. The United States recent study of its deal with Mexico and Canada found that the biggest economic benefit of that deal came from the provisions on digital trade, and we are confident that this is the case for the agreement with Japan, which is why we want to better quantify the benefits of future free trade agreements.
On the quantification of future benefits, of course the Secretary of State has given us the most advantageous figures that she has, which are about what trade would have been if we were out of the European deal. The reality is that for businesses on the ground very little will change between the end of this year and the beginning of January, and the reality is that the quantifiable benefit she talks about is actually a maintaining of the status quo, is it not?
The reality is that if we had not negotiated this deal, we would have reverted to trading on World Trade Organisation terms with Japan and businesses on both sides would have faced tariffs and barriers to trade. But we have gone further than just continuity with this deal, and I am about to tell the House exactly how that is the case. This deal is better and more valuable than the Japan-EU deal, which is otherwise known as the JEPA, because in simple terms the CEPA is deeper than the JEPA. It goes further and faster in areas of in vital importance to the United Kingdom economy.
On digital trade, we are protecting source code, enabling the free flow of data while agreeing a ban on data localisation, saving companies the cost of setting up servers in Japan. Our textile and confectionery manufacturers will benefit from more liberal rules of origin, making their goods more competitive by allowing up to £88 million of UK exports to benefit from reduced duties. Our creative industries will have their brands and innovations protected, as we go beyond the EU in tackling the online infringement of intellectual property rights. Our fantastic food and drink producers will benefit from increased protection for iconic goods, as around 70 geographical indications, 10 times as many as before, will be protected in Japan, subject to their domestic processes next year.
Our services industry will have more regulatory co-operation, safeguards on data storage and greater flexibility to move talent across the world.
This is clearly a more British-shaped deal, and it delivers more benefits to the UK than the previous deal. Some Opposition Members have asked for a precise economic assessment of this difference, but in our Command Paper we agreed to assess our deals, not the deals of other countries or trade blocs, and I am not going to waste the time of Department for International Trade economists by asking them to assess deals that are clearly inferior to the one that we have secured.
This is a deal that will benefit every part of the United Kingdom. It delivers for our farmers and businesses, and it delivers for Japanese investors such as Nissan, Toyota and Hitachi, supporting thousands of jobs across the United Kingdom.
Does my right hon. Friend agree that, in addition to all the opportunities she lists, this deal is a fantastic opportunity for the growing and sustainable industry that makes British sparkling wine across 770 vineyards in the United Kingdom? It employs 10,000 people today, and is on a journey to increase its exports and could potentially employ 20,000 or 30,000 people in the future. By securing important geographic indicators, my right hon. Friend has unlocked that opportunity for us all.
My hon. Friend is a doughty champion of English sparkling wine and knows that this will be one of the geographical indicators that goes through the domestic process early next year, to be registered in Japan and recognised in Japan, and who knows how long it would have taken under the EU, because under its deal, it has to negotiate every new indicator. We have got agreement on those 70 indicators through the process, and the only circumstance under which English sparkling wine would not qualify is if English sparkling wine were produced in Japan, and I do not believe that to be the case.
This deal aligns with our high environment, animal welfare, labour, data and food safety standards, and it helps to position the United Kingdom as the world’s hub for services in tech trade and establishes us as a major force in global trade. Following Japan’s economic push on womanomics, we have also signed an entire chapter on women’s economic empowerment to help female entrepreneurs in both our nations—another chapter that was not included in the EU deal.
I do not want to rain too much on the Secretary of State’s parade, but she will be aware that, according to the British Government’s own figures, the Welsh economy will grow by only 0.05% over 15 years, based on a WTO baseline, as a result of this deal. Also, the British Government’s policy of leaving the single market and the customs union means we will need over 70 deals to make up for that loss, and if we have no deal that figure will be considerably worse.
This deal is worth at least £15 billion in extra trade, not including the trade that was already increasing between our two nations, and there are significant benefits for Wales, including the recognition of Welsh lamb as a protected geographical indicator as well as more opportunities for manufacturing industries.
I cannot help but stand up when I hear the words “Welsh lamb”. It is a wonderful GI that I know the Secretary of State is working to protect. On Japanese business, Wales saw Japanese trade increase in 2018 by £250 million. That is a 25% increase, and this deal will solidify that. I normally work with Jonathan Edwards and welcome what he has to say, but I think that this deal really is terrific for the Welsh economy.
We had a major success in 2019 when we gained access for British lamb into the Japanese market, and, of course, one of the products that is flowing into Japan is our fantastic Welsh lamb.
This agreement is not just about economics, but about our close relationship with Japan and the Japanese. Together we are helping to set the standard for trade in the 21st century. That does not come as a surprise, because our relationship with Japan is deep and long standing. Way back in 1613, King James I concluded the UK’s first trade agreement with Japan. Under Queen Victoria, a treaty of peace, friendship and commerce was signed in 1858. We see that friendship endure under Japan’s current Emperor Naruhito, who has written fondly of his time studying at Oxford. We continue to benefit from Japanese commerce after Margaret Thatcher opened the door to new investment from companies such as Nissan, supporting local jobs and communities.
A fortnight ago, I was delighted to receive an email from the embassy of Japan, informing me that my constituency of Newcastle-under-Lyme will receive 30 of the cherry trees that it agreed to donate to the United Kingdom. That was agreed in 2017, as part of the prosperity agreement, but it is a real symbol of what we are now doing with Japan in this trade deal. I compliment the Japanese Government and my right hon. Friend’s Department for all they have done.
I thank my hon. Friend. Our relationship with Japan is going from strength to strength. Japan and the United Kingdom are two great island nations, but we are not insular in our embrace of freedom, democracy, human rights and free trade, and we will be working together when the UK has the presidency of the G7 next year to advance on all these fronts and to champion much-needed reform of the global rules for services and digital trade.
Next year, Japan will chair the comprehensive and progressive trans-Pacific partnership, a high-standards agreement that promotes the values that we believe in for rules-based free trade. The CEPA secures Japan’s support for our joining that club and will provide further market access under that agreement. This agreement will turbocharge our trade with dynamic members from Canada and Australia to Chile and Peru. The CPTPP is more than the sum of its parts, because we gain access to a free trade area with common standards and rules of origin, which means flexibility and opportunities, but, unlike with the EU, we retain control of our borders, our laws and our money.
This huge gateway to the Pacific region will help us unleash our potential as a global hub for services and technology trade. On joining CPTPP, global Britain would have unprecedented and deep access to markets covering 13% of the world’s GDP, which equates to more than £11 trillion in some of the world’s fastest growing markets. If we add in the US, this would amount to over 40% of the world’s GDP, which equates to more than £27 trillion.
The Secretary of State is very generous in giving way. As a member of the all-party group on Japan, I agree with some of the things that she is saying, but does she agree that, in principle, it would be much better if we had more scrutiny in advance of votes on trade deals, so that we can have this kind of debate rather than having it post facto?
I will come on to the issue of scrutiny later in my speech, but we committed in our Command Paper to produce a scoping assessment, which we did. We have produced our objectives and there are opportunities for them to be scrutinised through the International Trade Committee, and that has been happening during the process. There will be full opportunity for a debate afterwards. This puts us in a very strong position compared with comparative parliamentary democracies, and of course I welcome the opportunity to debate issues such as CPTPP during the accession process next year.
Today’s debate is truly historic, as trade policy is once again a matter for the United Kingdom and for this House. It is part of our new system of proper scrutiny, of which I am delighted to be a part. Parliament will rightly have the final say on the ratification of this deal. I am very grateful for this report from the International Trade Committee, which has made clear the desire for a debate. We will shortly be introducing an amendment to the Trade Bill, which will write the role of our vital Trade and Agriculture Commission into law, again giving independent advice to Parliament on trade and agriculture.
I, too, thank the Secretary of State for putting together the continuation of the Trade and Agriculture Commission and setting it up as an expert group for the next three years, because it will be very important, as we move forward to deal with Australia and others, that we really drill down on the way that agriculture is done and food is produced to keep our high animal welfare standards in this country.
I am delighted that my hon. Friend welcomes the putting of the Trade and Agriculture Commission into statute, which will be done through the Trade Bill. We need to make sure that farmers are engaged, businesses are engaged and our whole country is engaged in these trade agreements because we are doing them to benefit the United Kingdom—to make sure that every part of this country is helped to thrive. We are lowering barriers to trade and creating—
I have already given way to the hon. Gentleman and we have a limited amount of time for this debate.
On benefiting the whole country, we have yet to mention Scotland and Scottish produce. I am delighted that under this agreement we will see increased numbers of products that are geographically protected, with Scotch beef and Scotch whisky added to that list. The trade between Scotland and Japan is incredible. It dwarfs even Wales, with £500 million-worth of trade between Scotland and Japan last year, and this is only set to grow under the incredible deal that has been negotiated by my right hon. Friend.
My hon. Friend mentions some of the benefits from the Japan deal. Of course, there are also measures to protect the Scotch whisky industry from counterfeiting in Japan. I know that was very strongly welcomed by the industry when we announced the results of the Japan trade deal.
I can tell the hon. Lady that we have agreed with the Japanese that our 70 geographical indications will go through the process and, unless there is some objection by a producer in Japan producing exactly the same product, those procedures will be successful.
As I said, I am grateful for the report from the International Trade Committee, which made clear the desire for a debate. We will shortly be introducing the amendment that I mentioned earlier.
The House will now understand why on signing this deal in Japan, the land of the rising sun, I hailed the dawn of a new era for free trade. Days ago, we struck a vital continuity deal with Canada, which means that we have now secured 89% of the value of UK trade with continuity countries and with Japan, which goes further. These 53 countries cover £164 billion-worth of trade. No other country has conducted so many trade negotiations simultaneously and delivered. We have achieved this by being prepared to stand our ground and to fight hard for Britain’s interests.
I am very confused about Labour’s approach to these deals, which seems to veer between complete capitulation and a refusal to sign any deal. I read that Emily Thornberry will not vote for any deal we get with the EU, but apparently she does not agree with her leader on this matter. She has told us before that she would not sign any trade deal with the US, yet she seems prepared to do a deal at any price with everyone else. The Opposition have attacked us for not rolling over trade deals that they did not vote for in the first place. They criticise us for not engaging with countries that refuse to come to the negotiating table, and then they repeat the media lines of foreign Governments. Do they understand how negotiations work? I do not think they do.
Let us be honest: negotiating trade deals in a pandemic is not easy, but I am incredibly proud of our team, who have been negotiating in video conferences and phone calls round the clock, and they have got the job done. Just today, long before Parliament opened this morning, our negotiators were deep in talks with Australia, which are now on to their third round. After the House rises this evening, I will be speaking to my New Zealand counterpart about the next round we are about to undertake. This is just the start for global Britain. We are back out there, making the case for free trade and helping to reshape global trading rules. Our deal with Japan is vital for our economic recovery. It will drive jobs and prosperity across every nation and region of the UK, ensuring a brighter future for the British people. I commend this agreement to the House.
This is all very lively, as I can see, and a large number of hon. and right hon. Members wish to contribute to this debate, so I will start with an immediate five-minute limit for Back Benchers. That may well have to come down later, but we will try to keep that on for as long as possible.
Before I begin my response, I feel obliged to say two things. First, my hon. Friend Mrs Hodgson—Nissan is based in her constituency—wanted to be involved in this debate, as did my hon. Friend Fabian Hamilton and another of my hon. Friends, who has extensive experience in this area and an important constituency interest, but who understandably does not want his name to be mentioned. He says this is an affront to democracy. All of them wanted me to put on record that they were keen to take part in this important debate, but unfortunately were excluded from doing so by the Leader of the House and his current rules for virtual participation.
Secondly, I feel that I should inform the House of an important development overnight on the issue of international trade deals, which somehow the Secretary of State did not see fit to announce. I can tell colleagues that the news was slipped on to her Department’s website this morning that no continuity agreements are expected to be agreed with Algeria, Bosnia and Herzegovina and Serbia, which means that our current EU trade deals with them will expire on
Nevertheless, turning back to the subject of today’s debate, let me make clear at the outset, as I did 10 weeks ago, that I congratulate the Secretary of State on securing this enhanced continuity agreement with Japan. During a time of great economic turmoil, it provides an important measure of certainty for all those British and Japanese companies that would otherwise have lost their current terms of trade on
Let me pause for a moment on an important issue of parliamentary scrutiny and approval. As colleagues will know, under the current Constitutional Reform and Governance Act 2010 rules, a new trade agreement must be laid before Parliament for 21 sitting days before it can be ratified in law. The only way that Parliament can block that agreement is through an Opposition day motion, but only if an Opposition day is granted during the 21-day period. We are now on day 15 of ratification for the Japan agreement, and no Opposition day has been granted in that period, nor is one scheduled. If it had not been for the Government’s act of great generosity today, Parliament would have no right and no power to debate and approve this important agreement. It is not an isolated case: of the 20 continuity agreements signed by the Government since 2019, 15 of them have completed their 21 days of ratification with no Opposition day debates granted during those periods, including all 11 agreements signed by the current Secretary of State.
I will rattle through a bit of my speech, because I have the beady eyes of Madam Deputy Speaker on me. Once I know I am definitely halfway, I will take interventions.
The same situation with Opposition day debates is set to be true of the continuity agreements recently reached with Ukraine, the Ivory Coast, Kenya, Canada and, of course, the 11 other continuity agreements that the Government still need to secure in the next five weeks—or 14, if we are still counting Algeria, Bosnia and Serbia.
In other words, the process for parliamentary scrutiny and approval that the Government are relying on for our future deals as an independent trading nation is failing repeatedly at the very first hurdle, through the denial of Opposition day debates. I therefore greatly welcome the Secretary of State’s decision to grant this debate and vote in Government time, and hope that she will amend the Trade Bill, because she will now have realised that this simply will not do; the right to debate and approve future trade agreements should be a matter of law, not just a matter of discretion. That brings me to the main theme of my remarks: the importance of the Japan agreement as a precedent for other trade deals to come, in terms of both substance and the way in which they are presented to the world.
Let me start with some of the positives. I welcome the Secretary of State’s dedicated chapter on the role of women in our economy. That is definitely an important precedent. I hope that her friend Tony Abbott will study it closely to appreciate that female empowerment means more than just plugging in the iron. I welcome the new ground broken in this agreement on trade in digital services and data—a vital area of future growth for exports and investment—and hope that the Government’s stated principles, particularly on net neutrality, will be precedents for our future trade deals with Australia and the United States. But I am afraid that there are many other areas in which I hope that the Japan deal does not set a precedent.
Beyond digital, there is a disappointing absence of any new measures to support the vital role of Japanese companies as investors in our economy and creators of British jobs—something that is especially important in the current climate, as we look to safeguard the jobs provided by companies such as Nissan. There is also a lack of any new, enforceable commitments on climate change and the environment. That is another wasted opportunity and one that does not bode well for the ongoing negotiations with Australia. There is the absence of any progress on workers’ rights, coupled with the failure to consult trade unions on the deal, as well as the rolling back of commitments on civil society dialogue. I am afraid that this is all consistent with a Secretary of State whose official trade union advisory group contains just four members, one of which is the British Medical Association.
When it comes to deeply unfortunate precedents, there is also the sheer extent to which the Secretary of State has exaggerated, oversold and misrepresented the benefits of a UK-Japan deal compared with the EU-Japan deal that it replaces. Let us take a single example: agriculture and food. She tells us that 70 new British products will be protected by GI status thanks to her deal, but that will only be true if they are approved by Japan’s Ministry of Agriculture—a process that takes at least five months and which resulted in the rejection of 85% of applications last year. She tells us that our farmers and food producers will benefit from lower Japanese tariffs, but that will only be true if they are exporting to Japan ostrich feathers, dried eggs or 180 proof alcohol, which none of them currently does.
The Secretary of State tells us that we will benefit from continued access to the EU tariff rate quotas for exports to Japan of products such as soft cheese and cake mix, but that will only be true if the EU does not use up those quotas itself. She tells us that British farmers will have access to Japan’s quota for imports of malt, which, I am delighted to tell colleagues, is true. It is true! But she did not mention that it is actually a global quota to which every farmer in the world has access—so I do not know why she is looking so pleased with herself—and which can be withdrawn by Japan at any time. Finally, her Department’s Twitter feed tells us—during an episode of “The Great British Bake Off”, no less—that imports of Japanese soy sauce will be cheaper, which, as thousands of people pointed out, is not true in the slightest.
In one area after another, the spin from the Secretary of State and her Department does not match the substance, and her concern for how the deal will be presented appears to be more of a priority than the deal that she will actually deliver. That is a hugely damaging precedent, and one that I hope will not be followed—for example, in the Canada deal signed last weekend—particularly when it comes to our cheese exporters. After all, if it is the case that, like the Japan deal, we will only get access to the EU’s quota on exports of cheese to Canada if the EU has not used up the quota itself, that is deeply worrying for our dairy industry.
I assure the right hon. Lady that we have access to the EU reserve on equal terms with the EU.
So there is a cake of a certain size—the tariff quota—and the EU and Britain will have access to that cake. Who gets what bit first? What happens if the EU gets the cake first—what does Britain do then? Is it first come, first served? Or is the cake already cut up in pieces? I wonder whether the right hon. Lady could help us with that.
I am happy to furnish the right hon. Lady with a letter about the details of the licensing procedures, but it is important to understand that, in a situation different from that for the tariff rate quota with Japan, the UK reserve is applied for on an equal basis with the EU.
Given the time, I will with your leave, Madam Deputy Speaker, take some other interventions at this moment, as I am halfway through my speech.
My right hon. Friend mentioned workers’ rights; does she agree with the now sadly deceased Senator John Lewis that, had workers’ rights been more at the heart of a proper consultative process, the Transatlantic Trade and Investment Partnership negotiations may have ended better than they did?
I agree with my hon. Friend. I have to say that trade deals generally are better when we consult properly and extensively and put trust in Parliament, which unfortunately the Conservative party does not seem to have at this time.
Also missing from the Secretary of State’s comments were the Government’s own figures, which indicate that Japanese imports to the UK will benefit at a level four times greater than that for UK exports to Japan. Does that not indicate that it is actually a very good deal for Japan?
I am grateful to the hon. Gentleman; I am coming to that.
When it comes to the exaggeration of benefits and the misrepresentation of the Japanese trade deal, one crucial issue is left unresolved, and it is a vital precedent to get right. By my count, I have now asked the Secretary of State a very simple question three times on the Floor of the House, twice in letters and once in a written parliamentary question and—she knows what is coming— I ask it again now: in pounds and pence, what is the forecast increase in UK exports and growth resulting from the UK-Japan deal compared with the EU-Japan deal that it replaces?
I fail to see why the Secretary of State gets so indignant about this question; after all, she is the one who has repeatedly claimed over the past 75 days that the deal she has negotiated with Japan goes “beyond and above” the EU-Japan deal, goes “further and faster” than the EU-Japan deal and delivers “additional economic benefits” compared with the EU-Japan deal. Indeed, when I pressed her last week simply to confirm that the forecast for exports and growth was higher under her deal than under the EU-Japan deal, the Secretary of State told the House, “Yes, it is higher”, so why has she continually refused to quantify that difference? Why will she not provide the figures, in pounds and pence, to back her claims?
All is not lost, though: we might be able to make some progress on this point today. I went back to the Department’s original impact assessment, published in May 2018, of the effects of the EU-Japan deal. It is a detailed 51-page document, signed and authorised on the front cover by the Minister for Trade Policy, Greg Hands. I have to say that I do not think it is the right hon. Gentleman’s best piece of work—the assumptions and baselines are pretty sketchy, and my hon. Friend Barry Gardiner was pretty scathing about it during the debate in 2018—but, nevertheless, it is what we have to go on; we do not have anything else.
On page 2, after the Minister’s signature, it says in black and white:
“The analysis assumes that the UK continues to trade…after EU exit…with Japan on an equivalent preferential basis to the EPA.”
In other words, this is what we have been asking for and what the Secretary of State has repeatedly refused to provide—an analysis by her Department, authorised by her closest ministerial colleague, of what would happen if we had just stuck to the terms of the EU-Japan deal.
I remind colleagues—I wonder whether my hon. Friend Gareth Thomas wants to write this down, because it might be worth coming back to—that in the final assessment produced last month by the Department of the long-term impact of the UK-Japan deal, the forecast increase in UK exports to Japan was £2.6 billion, and the forecast increase in UK GDP was £1.5 billion. Let us compare those figures with the Department’s assessment of the long-term impact of the EU-Japan deal. Under that assessment, the forecast increase in UK exports to Japan was not £2.6 billion but £4.3 billion, and the forecast increase in UK GDP was not £1.5 billion but £2.6 billion. I do not know about you, Madam Deputy Speaker, but that does not sound like further and faster, above and beyond, additional or higher to me. It sounds like smaller, slower, lower and lamer.
I have no doubt that the Secretary of State will tell me that the 2018 forecasts were inaccurate, the methodology was flawed and the Minister for Trade Policy was having a bad hair day, although he did put his name on it. All those things may be true, but here is the problem: unless and until she can produce an assessment of how the UK-Japan deal compares with the EU-Japan deal in terms of the forecast for UK exports and growth, that is all we have to go on. The two assessments produced by her Department in 2018 and 2020 show that her historic, groundbreaking, British-shaped deal has left our country worse off than if we had simply rolled over the provisions in the EU-Japan agreement. My suggestion to the Secretary of State is that, until she can provide her own assessment of the difference between the two deals, she should stop making exaggerated claims about the “additional economic benefits” of her deal, because quite frankly, she does not have the figures to back them up.
That is why this issue really matters, and that is why it is important that we get this precedent right before the Secretary of State goes off to negotiate any more trade deals on our country’s behalf. It does not matter whether it is an issue as small as soy sauce imports from Japan or as big as car exports to Europe. We gain nothing in international credibility if we overstate what our trade deals have achieved. Indeed, we risk misleading the British people and undermining their confidence in the importance of trade if we claim benefits from the agreements we negotiate that are simply not borne out by the facts.
I welcome the trade agreement with Japan—all of us on the Opposition Benches do—but the Secretary of State has done herself no favours and done our country no service in the way in which she has presented this agreement and oversold its benefits. I hope she will learn the right lessons from this when it comes to negotiating our new trade deals with the US, Australia, New Zealand, the rest of CPTPP and the Mercosur countries in the coming years. More importantly, I hope that a renewed focus on substance over presentation and the chastening loss of our trade deals with Algeria, Bosnia and Serbia will encourage her to get her head down over the next five weeks and do the hard, unglamorous work of sorting out the other 11 continuity agreements worth £55 billion in trade with Mexico, Singapore, Ghana and others before the clock runs out and before any more of the free trade agreements we already have are carelessly and needlessly thrown away.
I want to begin by congratulating my right hon. Friend the Secretary of State and her incredible team of Ministers, our fabulous negotiating team, our Japan team at DIT and our team in Tokyo, led by ambassador Paul Madden, who have all contributed enormously to the success of this negotiation. I want briefly to explain why I think this deal is important in the global trade environment, what it says about Japan’s outlook and the UK’s outlook and why it matters for CPTPP.
All trade liberalisation matters, particularly at the present time. Even before the covid pandemic, global trade was shrinking—partly for cyclical reasons, 10 years post the financial crisis; partly because of trade tensions, not least between China and the United States; and partly because of rising protectionism, not least in the G20. The G20 represent 90% of global GDP and 80% of global trade. At the end of the financial crisis, only 0.7% of G20 imports were covered by restrictive measures. In the first quarter of 2020, that had mushroomed to 10.3%—a huge barrier for developing countries to have to overcome to be able to sell their goods into developed markets.
We have also had a failure of liberalisation at the WTO—25 years and all we have seen is the trade facilitation agreement, no further liberalisation—and we have seen far too few multilateral agreements. In fact, we have seen none apart from TFA; we are now moving to plurilateral, regional and then bilateral FTAs. That is why any liberalisation should be welcomed in this House.
Japan is a country with a GDP of $4.97 trillion. It has a global GDP share of 4.13%—not an inconsiderable market—with a GDP per capita of over $39,000. Japan is increasingly assertive and confident on the global stage. When TPP was looking as though it might collapse when President Trump pulled the United States out, Prime Minister Abe stepped up and led its recovery. I am sure that everyone in the House would like to wish him good health in his retirement.
We have seen increased co-operation in security between the UK and Japan, with the first joint exercise by UK troops in Japan only last year. We have a strong investment relationship with Japan. A self-confident, assertive Japan is good for our bilateral relations, good for regional security and good for global prosperity. My right hon. Friend said right at the outset what she thought that meant for the UK’s outlook. Clearly, having an independent trade policy is one of the positive consequences of Brexit. This agreement itself says a lot about the UK’s outlook. It brings improvements to mobility provisions for business travellers and it is has clear pluses in terms of data and digital, indicating the UK’s forward-leaning position on this most important element in the global economy and our understanding of the importance of e-commerce, not only as a key enabler of development but as an empowerment tool—not least for women in the global economy, particularly in the least developing economies.
The agreement also helps us to escape from the trap of the EU’s data localisation. The four countries—Germany, France, Slovenia and Austria—that held the rest of the EU to ransom are out of step with the rest of the global economy. They had a medieval view of data localisation, and not only have we escaped it by being out of the European Union, but we have managed to go forward in this agreement. Of course, the real gain that we would get with Japan would be global services liberalisation, because a multilateral agreement, or even an open plurilateral agreement, would give us far greater access to what we really need.
Finally, let me say something about CPTPP. This is a regional grouping of increasing importance. As my right hon. Friend said, it represents an increasing share of global GDP. With the UK, it would be bigger in GDP share than the EU; with the United States, its share would be over 40%. Here is a great opportunity: if we can persuade the new United States Administration to take America back into TPP alongside the UK, it will also have net benefits for our trading relationship with the United States.
Eleven fast-growing countries: a single set of rules of origin, allowing content from all CPTPP countries to be cumulated—but above all else, its advantage lies in the strategic environment. If we want to deal with the problems of China in global trade, in terms of intellectual property theft and transparency, we are going to do it not by hitting it with tariffs repeatedly, but by creating a parallel structure with a widened CPTPP that shows what can be achieved by genuine free trade and adherence to global rules. That is the real prize for us.
Last time we discussed this text, I said that I would reserve my enthusiasm until we saw more of the detail. I am rather glad I did, because while it would be churlish of me not to give the Secretary of State her moment—this is an achievement, and I welcome it—it is really small beer. Any rational person recognises that in any course of action there are upsides and downsides, costs and benefits, and any course of action will have consequences. I am struck, to mangle Thomas Hardy, that this is a treaty in which no Brexiter would see anything to dislike, but no objective person anything to admire when set against the disadvantages of this course of action.
In EU stuff, in trade and in life, if we do not look at things in the round—if we do not look at the full picture—we will make poor conclusions. As we heard earlier, the consequences of giving up the benefits of the EU-Japan trade deal, to be replaced by this deal, have not been properly analysed. By the UK Government’s figures, such as they are on this, the deal will add 0.07% percent to UK GDP. That is not a small amount of money and I welcome it, but we need to look in the round at what we are losing.
I am struck, as always, by the capacity of Government Members to be giddy with excitement over the Brexit process and the potential hypothetical upsides, which, in a spirit of intellectual honesty, I accept may exist. I am proudly pro-European. A cornerstone of the SNP’s economic plans for Scotland is membership of the single market. We believe we were adequately well represented by the EU on the world stage. PGIs were mentioned earlier and there is an interesting point to be asked, and perhaps answered, about what protections the UK Government sought within the EU’s negotiation and at what point the UK disengaged from that process to foster its own deal, but that is a different argument. I accept that we have left the European Union and we need to properly analyse the costs and benefits of where we are now.
There may be some advantages to this deal. There may be some things that fit better. I have my doubts and I am not convinced that it was worth the change, but the SNP is pro-trade. As I say, we believe that the risk to our existing trade patterns is not set off properly by the benefits of this deal. Japan accounts for 1.8% of the UK’s exports of goods; the EU accounts for 46% of them. So to get the hypothetical potential upsides of the Japan deal, the UK jeopardises the real-world existing benefits of the EU single market membership and access right now. To ignore that strikes me as flatly absurd.
We will tell the right hon. Gentleman that when we are bringing forward the independence prospectus. We regret that the UK has left the European Union. We regret the consequences to all our businesses, traders and exporters of the increased complexity and uncertainty that leaving the EU single market means. Our proposition on independence will be rejoining the EU market, and that has consequences for our trade flows, of course, but a proper analysis of how much Scottish trade goes through England, rather than to England, is an interesting statistic in itself. In the same way as Ireland, pre-EU membership, was very heavily dependent on the UK market, Scotland’s trade flows will change also.
There are consequences, which I do not dismiss and deny, but let us talk about this deal right now as opposed to our plans for the future. This deal right now is not worth the candle, is not worth the effort and is in no way better than what we are giving up to get it. A real-world example, where the Secretary of State and I have a degree of common ground, is cheese. She has mentioned cheese a number of times. I note that it was a particularly nice touch to give a jar of British Stilton to Japan’s Minister Motegi to celebrate this deal. I wonder: did the Secretary of State check whether he is lactose intolerant? There was an interesting statistic—I see that there are doctors in the House— from The Lancet in October 2017 that 73% of the Japanese population are lactose intolerant. Perhaps we should consider what the opportunities for our exports of cheese actually are in the real world, as opposed to Panglossian excitement about what they might be, hypothetically.
In conclusion, we welcome this treaty—just. We think it is better than the alternatives, but like any responsible Government, we are concerned about the real-world consequences and real-world costs to all our exporters right now of jeopardising our closest trading relationships with the EU, and, as we have heard, of the failure to roll over trade agreements with the wider world. It was best put by Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, who said:
“We hope the deal can be ratified swiftly but, for both sides to benefit fully, we still need to urgently complete an ambitious and tariff-free UK-EU deal—and time is rapidly running out.”
I counsel Government Members to save their hubris until the bigger questions are answered.
By rights, the Chair of the International Trade Committee, Angus Brendan MacNeil, should be making this speech, but he is stuck in the Western Isles and unfortunately cannot be here. I am joined by a number of Committee colleagues, however, and I am sure that we will make similar speeches.
I start by thanking the Government for how much effort they have put into helping the Committee’s scrutiny process. There is no doubt that, at every opportunity when we have asked the Secretary of State to help out, she has come along and been very helpful to us, and has been keen to help the process of scrutiny. I will say more about that in a minute.
I echo what my right hon. Friend Dr Fox said about the extraordinary amount of work that has been done by the Department and its Ministers. I also point out that I was part of the ministerial team when he set up the Department, and the reason it is so qualified to do this now is the incredibly hard work that he put in as Secretary of State. He had the foresight to take on the trade negotiators and Crawford Falconer to lead the trade policy team to make the Department fit to do all these trade deals and roll-overs.
To turn to our report, we categorically congratulate the Government on their achievements and on helping us out, but I will raise one or two points. There is a big argument about whether this is a roll-over deal or a new deal. Actually, it seems to be a bit of a hybrid deal. Although if this deal had not been done there would be no deal at all, it seems to have been based on JEEPA—the Japan-EU economic partnership agreement—so it is a bit of one and a bit of the other. When it comes to scrutiny, that means that we have tended to look at some economic forecasts that compare it with the WTO and some economic forecasts that compare it with JEEPA.
Looking at how it compares with JEEPA is incredibly important, because it signifies what it will be like when we modify all the roll-over deals that we have made so far. For example, CETA has been rolled over, but at some point we will want to improve on that deal. What we have done here, with the improvement on JEEPA, signifies what can be achieved elsewhere, which is obviously something that we will be taking a close look at.
When it comes to scrutiny, there is no doubt that it is an incredible challenge for a Select Committee, and indeed Parliament, to really get into the nuts and bolts of the whole deal. It has been pointed out that CRaG lasts for 21 days and we are now on day 15. The good news is that when we asked for a debate, the Department was keen to table one, so we got a debate. It is worth bearing in mind that, for Select Committee members trying to look into these documents—although we were given them a week earlier than anybody else, which was very helpful—when they sit down on a Friday afternoon and see an impact assessment, a parliamentary report, an explanatory memorandum and 57 documents, it is a huge amount to get through. It certainly messes up one’s weekend.
That means it is incredibly important that we get a huge amount of feedback from everybody else who is being affected by this. As I say, it is very good that the Department has been open with us, but the scrutiny is none the less quite a challenge. We have to think carefully, as we come to more complicated deals, about how we will be able to do it. As I say, however, the Secretary of State has been very flexible, and I am sure that we will have an opportunity to talk to her about it in future.
I do not particularly want to go into the content of the deal, but there is a point to be made about how trade deals are incredibly important in how they lean on one another. Alyn Smith mentioned the Society of Motor Manufacturers and Traders. Certainly, when Mike Hawes came in, I had the opportunity to ask him whether, if we did not get a trade deal with the European Union, that would affect Japanese manufacturers in the UK, to which his answer was that he did not think so. Certainly when I was a Minister looking after that sector, I was acutely aware of that.
The bottom line is that those manufacturers have been in the UK for 25 or 30 years—a long time—so they are not going to get up and leave. It is incredibly important, however, to remember that trade deals lean on one another and people need to have confidence in future relationships. It is also worth bearing in mind that, when we do a deal with Japan, that makes us more attractive to those who might come to the UK to export to Japan. If we join CPTPP, the same applies. We have to understand that all trade deals have more implications than perhaps the immediate economic impact that people look at.
Many other hon. Members wish to speak, so I will finish by thanking the Department again for its co-operation with the Select Committee. If it carries on like this, we will have an extraordinarily wholesome and good relationship.
We know that this deal is almost a carbon copy of the EU-Japan deal. We can discuss the ironies of this Government plagiarising the EU’s work on another occasion. However, I would like to focus on the small but significant differences and what they might mean for the UK.
We will undoubtedly hear a lot of concern about digital rights today, and it would be remiss of me not to voice my concerns and the concerns of my constituents—I am also a graduate of the School of Computing at the University of Leeds—about what the deal means for data privacy. The deal allows for the
“free flow of data between Japan and the UK”,
and from there on to other trade partners, undermining existing data protection frameworks.
Perhaps most concerningly, this means our data being transferred to a range of countries, including the USA, and obviously the other countries that have recently signed the CPTPP. US data protection laws are some of the weakest in the western world. There is no federal oversight, just a patchwork of state enforcement models. By allowing data to be sold off to the US, the Government are removing the right of UK citizens to know where their data is held and for what purpose. We will not be able to stop our data being used in discriminatory ways, and we will not be able to have it deleted. This could well undermine the provisions of the online harms Bill that the Government plan to lay before the House.
It is also worth noting that despite e-commerce and online retail being wrapped up in digital tech services, they are not mentioned in the deal. Instead, the deal only specifically refers to FinTech, which gives us a crucial clue about the Government’s plans. FinTech firms, usually backed by venture capitalists, are necessarily globalised. The deal fails to support small start-ups or individuals. It tells us what we already know: the Conservatives are not the party of business, they are the party of the financial elites. This deal does not create a level playing field.
The lack of concrete and enforceable environmental and sustainable provisions is another real concern of mine. This deal was a golden opportunity to outline and to aspire to establish world-leading practices as both countries work to reduce their carbon emissions to zero by 2050, and to lay the groundwork for COP26 in Glasgow. How many golden opportunities on the climate are the Government prepared to squander in the run-up to COP?
I think it is fair to say that the natural environment is at best an afterthought here. Little consideration was made of the deal’s effect on biodiversity, which is particularly pertinent as we export more agricultural goods and import large quantities of chemicals and plastics. There is an over-reliance on future technologies to excuse the potential increase in carbon emissions caused by international trade. This is worrying, and yet to be addressed.
Japan’s track record on animal welfare and sustainability is shaky, to say the least. Last year, it resumed catching whales for profit in defiance of international criticism, yet the majority of the environmental provisions in this deal are non-enforceable. Flimsy, unenforceable terms present a real barrier to upholding high environmental protection, animal welfare and food standards. The Conservatives promised us in their manifesto that they would not compromise on that, so why are they compromising on it in this first deal?
Does my hon. Friend perhaps notice a pattern emerging here? We have seen the Agriculture Bill, and the widespread concern about chlorinated chicken and other abhorrent practices. We have heard today of the deep concern about some of the things that are happening in Japan. While we obviously welcome the deal, does he agree that there is a pattern emerging of the Government putting serious environmental concerns at the back of the list of the matters they are addressing in these deals?
I do agree with my hon. Friend. I sat on the Environment Bill Committee many months ago, when the Bill first came in and before there was a huge pause, and this was also clear in relation to that Bill, so we are seeing a pattern across these Bills and these deals.
Moving on to the wider ambitions of the Government, I would like to ask—I see that the Secretary of State is leaving her place, but perhaps the Minister for Trade Policy will respond—whether this is the first step towards joining the regional comprehensive economic partnership, or just clearing the way to become a member of or a signatory to the CPTPP through the British overseas territory of the Pitcairn Islands.
From my understanding of the trans-Pacific partnership, it includes very strict provisions on state aid and an investor-state dispute resolution mechanism, both of which mean conceding a great deal of sovereignty. Does it not just go to show that the great Brexit slogans of “take back control” and “a global Britain” are inherently contradictory?
The provisions of the investor-state dispute settlement are exceedingly worrying. We have seen previous trade deals founder on them because they give private entities a whip hand over Government and the state. We are meant to be taking back control, not handing it to private courts.
Perhaps the Minister can enlighten me on the points I have raised about his ambitions towards the CPTPP and the RCEP through that great overseas territory, the Pitcairn islands—which qualifies as it is in the Pacific.
Ultimately, we have to ask what kind of deal we want. Do we want a deal that puts the data privacy and security of the everyday person at its heart, or one that furthers British financial services? Do we want a deal that protects the natural environment or one that encourages lower standards? I would ask the Government to do better in future.
After the rather negative contributions from the Opposition, I hope to make a more positive case. I congratulate the Secretary of State and the ministerial and negotiating teams on achieving the deal, and it is nice to know that, as a post-Brexit free sovereign nation, we can manage to conclude such a worthwhile deal.
As a member of the International Trade Committee, I have had the opportunity to scrutinise the agreement in detail and can assure the House that it is a significant improvement on what we previously had via the EU. I can also assure hon. Members that food standards, animal welfare and so on will not be compromised.
As we move forward, the Opposition might be accused of moving the goalposts in their assessment of the deal. Prior to the announcement of the historic agreement, critics of the UK negotiating team claimed that we were not able to secure a deal as good as the EU’s. Now that we have a deal, the same people complain that it is only on a par with the EU’s. I can assure the House that they were wrong to be pessimistic in the first instance, and they are wrong about the result in the second. It is certainly true that we have replicated key elements of the EU-Japan deal, and that provides much-needed continuity and certainty to UK businesses involved in trade. However, this is a deal tailored to the UK economy, which secures additional benefits beyond what the EU was able to secure.
The most notable differences can be seen in the provisions on digital, data and financial services. Those are areas in which the UK already has a very strong comparative advantage, so the deal represents a significant boost to British business. The City of London Corporation labelled those provisions “a major achievement”. In some areas, we have agreed to implement the same measures as the EU but on a faster time scale, such as the 21 industrial tariff lines that will be eliminated under the CEPA immediately, in January. Another example is the immediate withdrawal of UK duties on two tariff lines relating to electronic control panels for electric vehicles, which will not be eliminated until 2024 under the EU agreement.
The UK is a trading nation; 64% of our GDP comes from imports and exports. I understand that the Department for International Trade has identified around £88 million-worth of trade with Japan that could gain from lower tariffs, owing to more liberal rules of origin. Those new rules, which again go beyond what the EU has in place, will be a big bonus to the many British businesses that import products in order to add value to them in some way.
In respect of visas, the International Trade Committee concluded that the CEPA represents an improvement on the JEPA in a number of respects. Financial services represents one of the areas in which we have made significant strides beyond the Japan-EU agreement. UK suppliers will now be able to offer new financial services on the same basis as Japanese suppliers in all modes of supply, whereas the JEPA only allows for one mode. That is an improvement. A further example relates to the joint UK-Japan Financial Regulatory Forum. That is an improvement on the EU deal, which only gave the UK indirect representation. From next January the UK will be its own representative, on an equal footing with our partners. The House can be reassured that those improvements have been widely welcomed by industry.
On digital trade and data, the UK has negotiated more ambitious provisions. Industry can be assured that the agreement also goes well beyond the EU deal in respect of intellectual property, where provisions are in place to protect trademarks and copyright. We have also got a better deal for geographical indicators. Japan has 55 products that it wants to get on to the UK register, and we have 70 products—including, of course, traditional Grimsby smoked haddock, vital to my constituency and its neighbours.
The UK-Japan agreement creates a working group for co-operation in the field of agriculture. That contrasts with the EU by producing a system involving fewer administrative burdens and allowing greater flexibility while maintaining appropriate decision making. Reference was made earlier to Bosnia-Herzegovina and Serbia. As the Prime Minister’s trade envoy to the western Balkans, I can assure Members that negotiations are continuing and I am pretty confident of success. Free trade is the foundation of this country’s prosperity and I can assure the House that we want more free trade. This agreement provides the opportunities.
I am pleased to be making this speech in this debate tonight—I was hoping to make it last night. I declare an interest as a vice-chairman of the all-party group on Japan. May I also take slight issue with my hon. Friend Alex Sobel, who criticised some parts of the agreement for plagiarism? Personally, I think plagiarism is much underestimated. I am very much with Tom Lehrer:
“Plagiarize! Plagiarize. Let no one else’s work evade your eyes…Only be sure always to call it please ‘research’.”
I join my right hon. Friend Emily Thornberry in welcoming the agreement while recognising that there is considerable work still to be done. I will come back to that point in a minute.
My interest in Japan—I am pleased to see the chairman of the all-party group on Japan, Jeremy Hunt, in his place— primarily stems from working in the electricians’ union. We were involved with many of the Japanese electronic and car companies that came in, bringing not just product but a whole new mindset to engineering and manufacturing. Mention has been made of Margaret Thatcher bringing Nissan to Sunderland, which has been a huge boost to that region, along with Toyota and Honda—although Honda, unfortunately, will be departing in the near future. There is a book about Toyota, “The Machine that Changed the World”. Toyota certainly changed the British motor industry. It had an enormous effect on the success of the industry, which has driven much of our engineering. We all benefited from that engagement and involvement. The trade union movement was also involved in a way that, very often in those days, did not happen with British companies.
I want the Government to look not just at the agreement, but at the follow through. I wish they would show concern about that. Hitachi came to Newton Aycliffe and built a major train manufacturing unit, employing large numbers of people, but who did we give the next agreement for trains to? To Siemens, which did not have any manufacturing capability in the UK. We need much more joined-up government. That is what other countries, particularly Japan but many others, expect of us.
There was mention of Canada and New Zealand. The detail is very important, and I fully accept many of the key points that have been made, but so is the context. Trade is important for economies, but it also binds together countries and societies. That is why the role of the Japanese embassy here, and the work of Paul Madden and the British embassy in Japan, is enormously important in establishing cultural and economic links, building unity among liberal and economically liberal industrial societies. That is very important in relation to Japan. We have looked at the work being done in industry and in Japanese finance houses here, but also many specialist companies.
We have many things in common with Japan. We are both island peoples with limited national resources. Both of our countries have had to live on the ingenuity and technology of our people and our nations. Incidentally, there seems to be a liking for rugby and the Japanese have had great success in rugby. We both like beer, to the extent that they even bought Fuller’s brewery, and we drink tea. However, with the autocracies around the world flexing their muscles and engaging together, the unity of liberal democracies around the world is enormously important. Trade deals are a significant part of that, and we therefore need to be working together with not only Japan and the other major countries, but those countries that wish to join that democratic caucus. Otherwise, the rules of not only world trade, but international engagement and society will be set by the autocracies. That will not be good for our country and it will not be good for the world.
As a member of the Select Committee on International Trade, I will try to keep my comments brief. [Hon. Members: “Hear, hear!”] Thank you for that. My hon. Friend Mark Garnier summed up the thanks the Committee wishes to give the Front-Bench team for the access given. It is interesting to see the CRaG—Constitutional Reform and Governance Act 2010—process in action, given that this debate had been asked for. The fears we heard from Opposition Members about the inadequacy of the CRaG process are clearly not being met in this trade debate. The report was interesting; we looked at those documents and discussed this process with other members of the Committee. We have fed back to the Front-Bench team about areas of possible improvement, but I wish to reinforce our thanks for the openness we saw.
It is a pleasure to follow John Spellar and his talk about trade links and trade lines. I echo the tribute paid to both embassies for the work they put in behind the scenes and in front of the scenes on this trade deal. I was also reminiscing, as a Welsh Member, about how terrific the Japanese were in hosting the rugby world cup, and their match against England was one to remember.
As chair of the all-party group on international trade and investment, I completely agree with the comments made by my right hon. Friend Dr Fox on liberalisation. This is an important milestone as we emerge from the tentacles of the European Union and set out on to the open stage with our own trade deals. It sets again an independent trading story of this island nation, and I certainly want to see that greater liberalisation. He espoused it far better than I can, so I will move on.
Alex Sobel is not in his place, but he accused us of plagiarising the EU treaty and of lowering standards. I say gently that we can either have copied the EU treaty or be doing something differently, but I am not sure that both lines of attack work in the same paragraph.
As a rural Member of Parliament, I wish to reflect on the agricultural nature of these trade deals. I know that my local farmers will particularly take heart from the tone of this continuity extra trade deal. They will be looking at what they can achieve through this sector. Jonathan Edwards touched on the potential for Wales, and trade between Wales and Japan has been growing at a terrific rate. Two companies in my constituency, Nidec and Invertek, are thriving under new Japanese ownership, and I can only see these bonds strengthening.
Before the hon. Gentleman gets too excited, I am sure he will agree that most Welsh farmers this evening will be looking at the cut of nearly a third in agriculture support that they now face as a result of today’s comprehensive spending review. That is a far bigger issue than the Japan-UK trade deal.
I would not want to be told off by you, Madam Deputy Speaker, as often happens to me in these debates. I will not make accusations about anything that will get me in trouble with you, but if Members look at the detail of the funding supplied by the UK Government and topped up from the EU to the Welsh Government direct, they will see that the Welsh Government and the Farmers Union of Wales need to be very careful with their accusations. We will take that aside after this debate. I wish to focus on the growth of that trade, which has been terrific. It was £250 million in 2018 and we are talking about a 25% increase year on year. Our relationship and that of our companies with Japan is growing. It is hugely welcome, and it is reinforced by this trade deal.
I will finish by commenting on the GIs. It is brilliant to see not just the greatest lamb product in the world, Welsh lamb, recognised in these trade deals, but also the Anglesey sea salt, the Conwy mussels, the west Wales salmon and, of course, the plums from the Vale of Clwyd. They will be going through the normal process, of course, but it is great to see this on the face of these agreements. It is incredibly encouraging. On deals such as these, Opposition Members were incredibly sceptical that we could ever get anything on a par with the EU deal. Their attacks have moved on, and we now have something that is superior. I have no doubt that these deals will continue.
It is a pleasure to speak in this debate as a Member who serves on the International Trade Committee. I would like to start by congratulating the Secretary of State and the Department for International Trade on what they have achieved. However, I have concerns that I would like the Department to address, and I will come to those in a moment. As we know, CEPA is the UK’s first bilateral trade agreement of its kind, and it therefore lays crucial precedents for the future trade agreements that the UK will eventually enter into. There are several aspects of CEPA that improve on its predecessor, JEPA. This is true, for example, of how CEPA treats the rules of origin of manufactured goods. Previously, there were stricter limitations on what could be considered UK- manufactured goods.
CEPA also provides for the so-called extended cumulation of manufactured parts made in the EU and placed in UK and Japanese goods. This change makes it easier for inputs from non-EU third countries to count as being of UK origin, and this will enable UK producers of those goods to diversify their supply chain. However—and it is a big however—the EU may challenge this shift, to the long-term detriment of the automotive industry, and as third-party cumulation will be crucial in producing electric vehicles, I believe that the Secretary of State should consider how a challenge to third-party cumulation could impact the automotive industry’s expansion into electric car manufacturing.
There are sections of CEPA that require further clarification, and prominent among them, as we have heard, are the rules governing data protection. That is an area in which CEPA departs from JEPA. There are concerns that provisions relating to cross-border data flow could have negative implications for our NHS, for example, and I ask the Minister to clarify how those restrictions could potentially harm NHS data storage and sharing.
I would also like to raise my concern over the provision relating to the UK’s future accession to the CPTPP. In the short term, the Government have promised to assent to a partnership that would give the UK access to some of the CPTPP tariff quotas and, by extension, access to more competitive export markets. However, the Secretary of State has indicated that that tariff scheme is a temporary arrangement that will expire in 2024, at which time it will be assumed that the UK will join the CPTPP. However, if the UK’s accession to the CPTPP takes longer than the Government predict, or if it ceases to be a high-priority objective, will the UK lose access to those advantageous tariff quotas?
I am also concerned about how the Government modelled CEPA’s impact on our annual GDP. The Government estimate a resulting 0.09% GDP increase in the event of a no-deal Brexit. Will the Minister clarify whether that increase would be due to higher projected barriers to trade between the UK and the EU, resulting in more potential trade with Japan, or whether it would be due to the negative impact on UK GDP growth of the UK and EU not concluding a trade agreement?
On a more general note, CEPA currently lacks any guidelines requiring imports to meet UK standards of animal welfare. As it stands, the agreement may create problems for our farmers and agricultural standards when it comes to agreements with other priority trading partners, particularly Australia and the United States. So when the Minister rises to his feet, I hope he will tell us whether the Government will re-evaluate that section on animal welfare, bearing this concern in mind. Finally, it is important to note that the time given to the Committee to scrutinise CEPA was very limited. I understand that there is pressure to pass CEPA with all urgency, but we should not sacrifice the thoroughness of a process this important for the sake of expediency. It is vital that Parliament should be given an appropriate amount of time, and indeed more time than the task requires, for future agreements.
It is a great pleasure to follow Taiwo Owatemi, who does formidable work on the Health and Social Care Committee. I normally see her through a screen, so it is nice to hear her in person.
I particularly want to congratulate the Secretary of State for International Trade, although I know that she is not in the Chamber right now. Getting this deal is a personal triumph for her, and it gives great confidence to the country that this Government will be able to negotiate the formidable number of deals we need in the post-Brexit era. She is being fantastically supported by the Minister for Trade Policy, my right hon. Friend Greg Hands, and it has to be said that they are building on the excellent foundations laid by the previous Secretary of State, my right hon. Friend Dr Fox. He is one of the most formidable advocates of free trade that this House has ever known, certainly since the days of Margaret Thatcher. It was excellent to hear his comments earlier.
I am speaking today as chair of the all-party parliamentary group on Japan, which, with 93 members, is the second-largest country all-party group in the House of Commons. That is testament to the great interest in Japan among hon. Members. I am proud to have that role, because I lived in Japan for two years in my 20s. I worked there, learned the language and fell in love with the country to such an extent that I once memorably accused my Chinese wife of being Japanese, something she has never allowed me to forget.
The genius of Japan is the people’s humility and willingness to learn, their decency and civility, and their work ethic. Of course, it is a country that has tremendous respect for the past but is able to combine that with an active embrace of modernity. For our purposes in this House, it also has what my right hon. Friend the Member for North Somerset talked about: the tremendous support for western liberal values for which Japan is a beacon in east Asia, a part of the world where those values are not universally shared. That is why this trade deal has a lot more significance than simply the increase in trade that we are looking forward to.
None the less, that increase in trade is important. I have personal experience of that, because anyone who remembers last summer’s leadership contest, which now feels rather a long time ago, may have picked up that I used to be an entrepreneur. I have not had an opportunity to say that on the Floor of the House before. Hon. Members may not know that my very first venture was an attempt to export marmalade to Japan. It was not terribly successful; in fact, it was a complete flop. I managed to export half a container load of Frank Cooper’s “Oxford” marmalade to Japan before the market rather dried up. I realise now what I did not realise at the time, which is that what was missing was a fantastic trade deal to give me all the encouragement I needed to ship that marmalade to Japan.
My marmalade exporting days are sadly behind me, but I know that an army of younger entrepreneurs are willing to take up the baton. As they embrace those opportunities alongside many other entrepreneurs, we will be proud to know that we are strengthening our relationship with a country that is our best possible strategic ally. That is why this deal is such a triumph for the International Trade Secretary, her Minister and their team.
I, too, sit on the International Trade Committee and our report outlined the positives in this deal. There were also many things we just could not quantify, because the Government have not given us the figures, or they do not want to do that analysis, so we just do not know how things will pan out in the future. This is the first run at this.
My first point is about the role of parliamentary scrutiny. This is very much the first run and we need to deepen and strengthen parliamentary scrutiny. We have the weakest parliamentary scrutiny of the major bodies that we now want to negotiate with. Japan and the Japanese Parliament will have longer debates, binding votes and a guaranteed vote to accept sections, the European Union will of course be able to have discussions through the negotiations and will vote section by section, and the US will be able to vote section by section on the deal and will be involved in setting up the framework of the negotiations.
The Minister shakes his head; I am happy to send him a constitutional 101 of all those countries, because the fact is that we have one of the least developed parliamentary scrutiny systems. Of course we do, because we have not done it for 40 years and other countries have developed since then, but we do need to develop, and it is no good the Minister shaking his head on these points.
The other thing I would say is that, although I welcome the Department giving the International Trade Committee a two-week head start on these documents, I have here in my hand just one volume of the documents, and three of the annexes never arrived in time and were only given to my office a few days before they were publicly released. It is all well and good, and I understand these are working documents, but that cannot be a continued pattern for how these things work; we need to be involved earlier, and we need to be involved throughout.
On the content of the deal, let’s be honest: many of the clauses we have heard celebrated today are non-binding or worse, or are being exaggerated. The workers’ rights sections are of course all totally non-binding; the climate change sections are non-binding and weak; the women and trade section—a new section—is all totally non-binding in the agreement. There is no section on consumer standards, and Which? says to me that it has not been involved much at all in these discussions. It believes there need to be whole sections on consumer standards, and the agreement fails to do that.
Also, in many areas there are standstill clauses that embed the current system we have in Britain and do not allow change. For example, there is a standstill clause on the Post Office; that means if a future Government wanted to change their mind on the disastrous privatisation by this Government of the Post Office that put money into their crony friends who bought the shares which then zoomed up—[Interruption.] It is true, and we would not be able to reverse that without renegotiating this deal. That is an inhibition of sovereignty, and that is a problem.
This deal is also reliant on the EU deal. If we do not get an EU deal, there are some clauses in this deal that will not be enacted fully; there is also a danger that the deal might be a green light for offshoring many jobs out of Britain, as there will be an EU-Japan deal and a UK-Japan deal. But if there is no UK-EU deal, businesses will place themselves in Japan because they will access both markets from there. If we do not get that EU deal, this deal could be an offshoring charter.
The TRQs are a scraps-on-the-table deal, under which the EU of course gets first dibs and if there are crumbs left—we hope there will be crumbs left, for a few more years anyway, until we sign the CPTPP—then we can get those crumbs. We cannot get the crumbs beforehand of course; and in terms of developing innovation, businesses cannot rely on them because they do not know what amount of crumbs will be left over. We have heard that Government analysis of the EU-Japan deal conducted when it was signed shows that the deal will have a worse economic outcome rather than a better one: there will be £1.7 billion less in exports with this deal than under the EU deal, and £1.6 billion less in GDP with this deal compared with how much the EU-Japan deal was benefiting us. Those are the Government’s figures, not my figures.
There are also some very dangerous elements on data protection, including voluntary agreements rather than binding agreements, not least in areas such as data protection and the NHS. That should greatly worry many people.
It is a great pleasure to speak in this debate. I look forward to my right hon. Friend Jeremy Hunt being able to export marmalade under this new deal. May I assure him that my daughter-in-law is most definitely Japanese? I just want to make that absolutely clear. I agree with the points that have been made about the liberal democracy in Japan now and the need for us to co-operate and build on that across the world, especially in Asia.
I thank Angus Brendan MacNeil, the Chair of the International Trade Committee, for his great co-operation, for allowing me to guest on the Committee and for the work he has put into scrutinising this trade deal with Japan. I also thank the members of the Committee for allowing me to guest on that Committee and for putting up with me as we debated this. It has been a very interesting experience to monitor the deal through the Committee and to see how another Select Committee works. It may—dare I say it?—give me some ideas for my own Select Committee.
I thank the Secretary of State for her engagement on scrutiny and her commitment to amend the Agriculture Bill, to put the Trade and Agriculture Commission in legislation. I look forward to the Government publishing that amendment, which they have yet to do. The independent Trade and Agriculture Commission will be important in helping MPs to scrutinise new trade deals, whether with Australia, New Zealand, Canada, the US or Brazil. We need to ensure that Parliament has a proper opportunity to debate and scrutinise trade deals, and I hope that the Trade Bill will strengthen that process when it comes back from the other place. I welcome the deal that we have agreed with Japan.
Does the hon. Member share my concern that animal welfare standards are generally lower in Japan and that this agreement does not replicate the FTAs that have better, stronger animal welfare provisions? Does he agree that we could and ought to do more to protect ourselves against lower standards of imports from Japan?
When the hon. Lady served on the Environment, Food and Rural Affairs Committee, she always worked hard on animal welfare. I think that we can get improvements, which is why it is essential to have the Trade and Agriculture Commission up and running to scrutinise these deals as they are put in place. The issue is that once a trade deal gets to the Floor of the House, we can scrutinise it, but it is very difficult to change it, so work has to be put in through the negotiations to get that trade deal right. There can be improvements on animal welfare.
It is essential that thae continuity agreement preserves the tariff reductions we enjoy as part of the EU trade deal. We must ensure that we can increase our access to quotas from Japan, because we can export more of some agricultural products to Japan than we have in the present agreement. This is welcome news for agrifood businesses that export to Japan, but it could have been a bit more ambitious on exporting our excellent British food into Japan. Japan is the largest net importer of agrifood products worldwide, as it lacks enough agricultural land to feed its population, importing about 60% of its food, so there is a huge advantage in trading with Japan.
In future, we will have to boost exports of even more of our great food. It is in our interests to use the Agriculture and Horticulture Development Board and the levy payers who pay every time they process lamb, beef and milk and get those people out to do those trade deals. We need to build on the great links that our Government have with the industry, and I particularly welcome the engagement with businesses about what they need through the Trade and Agriculture Commission.
To conclude, I welcome the agreement. I thank the International Trade Committee again for its scrutiny of the deal. I hope to see a lot more of the Secretary of State and her team on the Floor of the House and in Committee telling the House what brilliant deals we have signed and allowing us enough time to scrutinise them. The Government have set an excellent precedent by coming to the House and having a proper debate on this deal, and I look forward to having a debate on all future trade deals.
I rise in support of the trade agreement that has been reached with Japan, and I congratulate the Minister and the Secretary of State on their efforts to secure this very important deal. In terms of scrutiny of the process, I have been grateful that the Minister’s door has always been open to my questions, particularly about digital and data policy relating to trade agreements, whether this agreement or the other agreements currently being negotiated. I note that he offered last week to write to me with a detailed note setting out the differences in data and digital policy between this trade agreement with Japan versus the EU-Japan trade agreement.
The Government have been clear that this is an enhanced deal. I welcome anything that increases the scope for digital trade in this country, because it is incredibly important to our future growth. These are industries of the future, and the UK is a world-leading nation, but I raise an issue that is important for this agreement and for other agreements as well, which is the scrutiny of data and digital policy as it is concluded in trade agreements. It would be worth while to have an opportunity to scrutinise the reports from the Information Commissioner on digital agreements, because the commissioner is responsible for the enforcement of our data protection rights.
I note as well that the Government say that there are high levels of data protection in this agreement, but this agreement means that UK data can be processed by data processors in Japan, rather than that having to be done here. We know that Japan has a data agreement with the US, which allows the free flow of data between Japan and the US, so people will naturally ask, “Does that mean that UK citizens’ data could end up, via Japan, being processed in the US, outside UK data protection laws?” I know that is not what the Government or the Minister want, and I am sure there are safeguards to ensure that cannot happen, but nevertheless those are natural concerns that people raise. If a company was processing UK data in America, having routed that through Japan in breach of the agreement and our laws, it could be very difficult for the Information Commissioner’s Office to take enforcement action. It is perfectly right that people ask those questions, and I certainly think the ICO could have a role in allaying such fears and concerns.
This is important in the context of other trade agreements because we know that the big technology companies, particularly through their trade bodies, are actively lobbying for trade agreements to be used to lock in more liberalisation of data policy and of how data is handled and processed around the world. In America, they have lobbied successfully for the US-Japan trade agreement and the US-Canada-Mexico trade agreements to abide by the section 230 provisions in US law, which give immunity for tech companies in how they process and handle content. That is contrary to the rules and regulations we have here.
I have discussed this with the Minister many times, and it is not something I would want to see in a UK-US trade agreement. If the House said, “We would rather have data protection laws that are more like America’s than the EU’s,” that is a matter for the House to decide and for legislation to be passed to do that. It is not the route I would want to go down, but it should not be the role of trade agreements to try to lock in the changes.
The Minister will know that there has been considerable criticism in the US Congress of the Trump Administration using trade agreements in that way to try to set domestic policy in this area. That should rightly be the role of Parliaments, not trade agreements. I have expressed to the Minister my concern that if the current US proposals for a US-UK trade agreement were accepted, we would also have to take this measure on board, which would massively restrict our ability to legislate on things such as online harms. It would potentially undermine such things as the age-appropriate design code to protect children online. I know that is not what the Minister wants. The Government have resisted those efforts, and I hope that President-elect Biden’s Administration will review the terms offered by the American Government in that trade agreement and change them.
I raise this today because the Government’s intention is clear to ensure that we keep high levels of data protection. Any changes to our data protection laws should be something that Parliament votes and legislates on, but there are forces at work who want to use trade agreements to try to change the global norms, and we do not really have a global system for monitoring and policing the movement and use of citizens’ data. Data is the new oil of the economy, so it is important that people know what their rights are and how they can be enforced around the world and that trade agreements do not affect that.
It would be remiss of me not to start my remarks by touching on some of the connections of my city with Japan, because they are long and special. Where else to start other than with Thomas Blake Glover? We have heard numerous examples of fantastic Japanese companies that have borne huge success. Mitsubishi has not been mentioned, but Mitsubishi is indeed one of those, and one of its founding pioneers was Thomas Blake Glover. Thomas Blake Glover House is situated just north of the idyllic Brig o’ Balgownie in Aberdeen in the constituency of my hon. Friend Richard Thomson, and it is my understanding that Thomas Blake Glover went to school in Old Aberdeen, which is in the constituency of my hon. Friend Kirsty Blackman. It is important that we reflect on the cultural significance.
I thank the hon. Member for his contribution. He is absolutely correct. Thomas Blake Glover did indeed originate from Fraserburgh, but his house is in the Bridge of Don. Hopefully, David Duguid will have discussions with his colleagues in the Conservative-led council in Aberdeen, and we can perhaps get the house fitted back up from its dilapidated state as it stands at present.
The cultural links between Aberdeen and Japan do not stop there. They also extend to the Scottish Samurai awards, which I am sure my colleagues are also aware of. They were founded by Mr Ronnie Watt, who I believe is a 9th dan in karate. Ronnie managed not only to bring forward the Scottish Samurai awards, which have been a tremendous success story for Scotland, but to bring the World Karate Championships to Aberdeen.
Ultimately, this entire debate is about trade. In that regard, it is important to reflect on what was said by my hon. Friend Alyn Smith. Is it worth it? Again, I will look at matters from a particular Aberdeen perspective, because, of course, Japan has a trade deal with the EU and much of what has been brought forward by the Government—in fact, almost all of what has been brought forward by the Government —is a replication of that trade deal. We are leaving the European Union—indeed, we have left it—and the impact of that on my city will be enormous. Aberdeen is projected to be the hardest hit city in the entire UK as a result of Brexit. Gross value added is expected to reduce in Aberdeen by around 3% on the basis of a hard Brexit. Since 2016, Warwick University has outlined that around £9,000 per head of population has been lost in Aberdeen from investment.
Let me provide some further context. My city is bearing the brunt of an oil and gas sector price crash. It is also bearing the brunt of a 75% drop-off in job vacancies. Universal credit claimants doubled between March and September, and we are obviously still facing the challenges of covid.
When we look at that wider context and we look at the damage that Brexit will do to Aberdeen, we have to weigh that up against another figure—0.07%. That is what this trade deal is estimated to bring to the UK economy. It is an absolute drop in the ocean compared with the damage that this Government will do to my city and to my country. I am utterly appalled by it. Quite frankly, they should be apologising to the people of Aberdeen for disregarding their democratic views and, alongside that, disregarding the views of the people of Scotland.
Of course this trade deal is not just about the trade deal in itself; it is obviously a precursor to the Government’s intended plan to join the CPTPP, which is all good and well, but I caution the Government in that regard because, as I am sure they are aware, Canadian exports to Japan dropped between 2018 and 2019, while, of course, being members of CPTPP. This is not all about the land of milk and honey—far from it. You know what, Madam Deputy Speaker, I do wish the Government well. I wish them well in trying to secure better trade deals. We support trade deals. They are a complete necessity, but, ultimately, at some point very soon, Scotland will choose a different path where we can define our own trading future.
Accounting for 2% of UK total exports in 2018, Japan is the UK’s fourth largest export market. By size alone, it is an important one for this country to have secured an FTA with, and our Ministers are to be congratulated on that achievement. However, it is important that consideration is given to what constitutes success or levels of success when looking at this deal, against which later deals will be judged. Do we measure success by jobs secured or jobs to be gained, by tariffs saved or regulations avoided—or is it political, defence or strategic gains, all of which can directly or indirectly come out of a trade deal? In this regard, I have seen reports that complain that the Government have, for the most part, only got the same as the existing EU deal with Japan; the Opposition also said that earlier. That is somewhat harsh, as the Government’s stated objective was to roll over existing EU FTAs. If they have done so, in my book they have met their objective.
Having said that, we still need to understand and set out the parameters for future FTA measurements of success. The speed of negotiations with Japan has been frenetic. We should look again at the timetable and learn whether we can make improvements on the timing of future FTA talks, including for scrutiny purposes. I would be interested to hear whether the Minister thinks that more could have been achieved at this stage with more time.
I declare any interest that I may have as a non-practising solicitor, but it is clear that recognition of professional qualifications with Japan has simply failed to happen in the way in which services’ representative organisations had asked for. Will this now be addressed, or will services continue to be treated as the poor relation of manufacturing as we progress with other FTAs? Given that services account for 51% of our trade with Japan, this is an important issue.
The Government have stated their intention that this Japan FTA should act as a stepping stone to the UK acceding to the comprehensive and progressive agreement for trans-Pacific partnership. With 13.5% of global GDP and 495 million consumers, this clearly is a big deal. Of course, the CPTPP’s predecessor was the trans-Pacific partnership, which was partly a US-inspired effort to marginalise China in the Pacific region. The US then withdrew from the TPP, and seemingly now may be replaced by China. This clearly raises many political, as well as trade, questions. I think that the Government will need to set out their case here at the earliest opportunity. How is this likely to affect our US FTA negotiations? How will we deal with regulatory issues such as the US-based agriculture regulations, which the CPTPP follows? Could this be a rare opportunity to create a new set of rules with China, such as on treatment of state-owned enterprises, and how does this impact on other CPTPP members that have varying levels of issues with China in trade, as well as security concerns?
Let me finish by heading back to the important issue of scrutiny, process and approval. The Minister will know full well my amendment to the Trade Bill requesting parliamentary approval for FTAs between agreement and signature. We can go through any processes we like, but the bottom line is that this Japan deal had to be approved by a vote in the Japanese Parliament, and that is not the case in the UK. A version of my amendment is currently in the other place, and I wish it well.
A further set of Trade Bill amendments is aimed at modernising the antiquated CRaG system, which currently enables, but does not demand, votes on treaty ratification. CRaG does not allow Parliament to stop a treaty as Ministers have previously suggested, but only to delay ratification for 21 days at a time. I note that the Government maintain that the speed of the Japan negotiations did not allow regular updates to Parliament via written ministerial statement. I also note that the EU Committee in the other place has suggested a process for the sharing of FTA documents before laying them formally. Is the Minister going to accept this common-sense proposal? Likewise, there have been some very late stage letters—sent, I think, in October—from the Secretary of State to Lord Goldsmith and the International Trade Committee setting out a proposed scrutiny system process. Clearly, more needs to be done in this area and it would be good to hear the Minister’s comments on that this evening, but I would not wish to detract from the importance of this deal to the UK and the further opportunities that it will open for us looking forward.
It is a pleasure to follow Mr Djanogly. I will pick up where he left off—on the question of the scrutiny of this agreement and others that are yet to come. He is absolutely right; we are very much in the early stages of feeling our way back into this business. I hope that, for future trade agreements, we will see something rather more substantial and detailed than on this occasion.
To pick up the point made by Neil Parish, surely it should be possible for this House to play a more front-loaded role in relation to scrutiny, because waiting until a signed deal is, in essence, presented on a take-it-or-leave-it basis is somewhat unsatisfactory. There must be an opportunity for the various Select Committees of this House to engage, follow and scrutinise future deals as they come forward. But that is all for the future; we are where we are and it is welcome that we even have this debate.
It is significant that we have a deal with Japan, which is a significant trading partner: it is the world’s 11th biggest trading nation and our fourth biggest export market. It will be a matter of significant relief to the salmon farmers in my constituency in Orkney and Shetland, for whom Japan is an important export market, that we have a deal of this sort that means they will be able to trade without tariffs.
It is also welcome that we have a continuation of the very important protected geographic indicators. The continued protection for Scotch whisky is supremely important for Scotland and for the UK as a whole, and I am delighted to see that. Of course, it is a continuation of what we already have; it is also important that we continue to have protection for Orkney beef, Orkney lamb, Shetland lamb, Shetland organic wool and one other that escapes my mind at the moment—I know there are five of them in total. I apologise for the offence that I have caused to that particular sector in my constituency. It is Orkney cheddar, of course—and it is important because I am meeting its representatives tomorrow.
The protections given to those important local products are important, but it has to be said that Japan is not their biggest export market, so their producers will be looking for the successful conclusion of a deal with the EU sometime between now and the end of the year, because that market will matter to us. For example, for decades now Orkney cheddar producers have, at the encouragement of Governments of all colours, moved towards participation in that export market and produced a higher-quality product as a consequence. If they are now forced to compete on a different basis, and one for which tariffs will be payable, that will be a matter of great significance for them.
When we consider trade deals of this sort, it is sometimes important to think about exactly what impact they will have on the individual citizen, their daily lives and their rights, liberties and freedoms. In that regard, I hope that those on the Front Bench paid close attention to the comments of Damian Collins when he was talking about the data protection provisions. Data protection is squirrelled away; it is not in a substantive clause but in a footnote and that causes serious concern for him, me and many others from all parties in this House. The prospect of data being processed and somehow laundered for onward transmission—particularly to the United States of America, because Japan already has that agreement with the USA—should be a significant cause of concern for us all.
I also venture to suggest that if that provision is to be left unamended, it will make it very difficult for us to do a future deal with the European Union. I cannot see the European Union agreeing data transfer with us if the prospect remains of our transferring it to Japan for it then to be onward laundered. The Minister is frowning; I hope he has an answer when he comes to reply.
It is a pleasure to speak in this debate. I commend Mr Carmichael for his speech. He speaks about fish, and he and I are universally aligned on the need to make sure that export markets are always open and available to our fishermen and that fine British fish is on the dinner table around the rest of the world.
I thank the House, or at least those on the Government side, for putting me on the International Trade Committee, on which it is a pleasure to serve. In the Committee’s most recent two or three sittings, I have had the opportunity to look at some level at the new deal that has been signed with Japan and what we can look forward to in future.
I do take the points that were raised about scrutiny, which are important. My hon. Friend Neil Parish made the exceptionally important point about the role the Trade and Agriculture Commission is going to have in future trade deals. I represent a constituency with a fine farming background, as well as a vibrant fishing community. We want to be able to make sure that our ag and trade commission is playing the role that it needs to to allow both the Committee and this House to have the full breadth of understanding of what each trade deal is doing before we debate it in the House. I know that Ministers have been competent in assuring us that that will happen.
Lloyd Russell-Moyle seemed quite happy to say that nothing was quantifiable and then to outline a whole load of figures that he felt were quantifiable just for his argument. Actually, the purpose of the International Trade Committee has been, so far, to look at those deals and scrutinise them in depth. If he is a slow reader, I apologise for that, but we are able to get through those documents. In this case, I do believe that the information that we were given was in good time and good order, and we have had the ability not only to scrutinise the information within this trade deal but to speak to the Secretary of State and to other Ministers and experts on the deal.
The value of this trade deal may easily be able to be seen now and in future in how we develop our relationship with the Japanese, but it should also be seen as a mark of confidence in the faith that they have in this country and its future. It should also be seen as the way in which we can have stronger political co-operation. The ambition to join the CPTPP is a fantastic one. As Japan is due to hold the presidency of that organisation in due course, I think we can look forward to a successful entry into that organisation and the UK playing a role in an enormously important part of the world.
Much of what I wanted to say has already been said. This deal rolls over some of the agreements that Japan had with the EU and that we now have with Japan. As the right hon. Member for Orkney and Shetland said, it protects geographical indicators. It also allows us to look at new export markets across the world. As a vote of confidence in what the UK can achieve both now and outside the European Union, we should look at the Bill for the success that it is, and we should build on the lessons that we have learned from this negotiation to make sure that future trade agreements, say with Canada and elsewhere, are as successful and beneficial to all corners of the United Kingdom.
As we stand on the precipice of 2020 and search for visions of 2021, many in this country are hopeful of a brighter future. Not only do we hope that 2021 will see a vaccine reignite the country’s economy, but we hope that our departure from the European Union will spark opportunities for businesses and return sovereignty to this great Chamber. One such opportunity is the ability to form new trade deals like the one we are discussing today. Economic opportunity has the potential not to just benefit a single business owner but to change the future of communities and generations.
In my constituency of Ynys Môn, economic opportunity has been lacking for decades. Underinvestment has seen our island’s GVA drop to one of the lowest in the UK, and only with significant effort can we turn this around. So far, the support from this Government has made it possible to save many jobs across Ynys Môn, and I know that the innovative Welsh people will continue to make best use of the opportunities made available to them.
The UK-Japan trade deal is set to build upon the 7.6% growth of UK exports to Japan that we saw last year. Welsh businesses contributed exported goods worth about £300 million to Japan. Particularly important for Anglesey is the reduction of tariffs on agricultural products. The green fields of Ynys Môn are home to some of the finest cattle and sheep in our United Kingdom, and our farmers are some of the most ambitious. Getting to know farmers from NFU Cymru and the Farmers Union of Wales has been a privilege. Seeing the hard work they carry out and the determination they have makes this trade deal even more significant. Peter Williams, a local sheep farmer and chairman of the Anglesey show, said today:
“Japan offers new opportunities for farmers across the island.”
Last year, Welsh agricultural exports to Japan were worth £2 million, and now, with the reduction of tariffs, I am certain that we will see that accelerate. Families across Tokyo will be able to savour the same delicious Welsh lamb at the dinner table that is sold in Raymond’s the butchers next to my office in Holyhead. We also expect flagship products such as Welsh lamb and Halen Môn’s Anglesey sea salt to benefit from geographical indication protection in Japan as early as 2021. That will highlight the extraordinary dedication to quality that sets Welsh farmers apart from the rest of the world. The House should not just take my word for it; a business owner from Anglesey told me today:
“We were delighted to see that the UK has negotiated its first trade deal with Japan. Japan is a brilliant country to work with and the trust between our two countries ensures that the export process is straightforward. We look forward to continuing the development of our relationship with our Japanese importer. Growth in Japanese trade will definitely help safeguard Anglesey jobs.”
This Government and I made a promise to the people of Ynys Môn at the last election. We promised that we would deliver the jobs and investment that they needed to see real change in their community. This trade deal is just one of the many approaches we are taking to fulfil that commitment, and I look forward to seeing how producers across Anglesey make the most of this new opportunity.
It is a delight to follow my hon. Friend Virginia Crosbie.
May I first congratulate the Secretary of State—she is not in her place—on achieving a truly sterling landmark trade deal with Japan, the first of many outside the European Union? This deal sends a clarion call to the international community that the United Kingdom is once again a proud, sovereign, independent trading nation. This deal demonstrates how effective, pragmatic and nimble the mechanisms of government can be in dealing with constructive, like-minded nations in remarkably short timeframes. The House may compare and contrast.
In an increasingly multipolar and uncertain world, it is crucial that diplomatic links with our allies across the globe are underpinned by strong commercial foundations that produce benefits for all. Pessimists claimed that this deal would not be better than the one we could have achieved as part of the European Union. However, as now proven, that could not be further from the truth.
In the realm of data provision, the excellent team from DIT has secured a more comprehensive footing for UK firms operating in Japan, allowing them to innovate and expand their businesses. In financial services, crucial gains have been made between Japanese and UK regulators, which will make conducting business easier for firms of both our nations. In the exchange of goods, tariffs have been removed to support jobs in the car and rail industries in the UK. Liberalisation of rules of origin regulations makes things far simpler and cheaper for British export producers. I, for one, am looking forward to seeing Scottish beef give Miyazaki’s own a run for its money.
I commend the British negotiating team for being constantly at the disposal of MPs throughout the negotiating period to ensure that input was received and progress monitored. Monthly cross-party sessions were held with Ministers in the Department for International Trade, the UK’s chief trade negotiation adviser, Crawford Falconer, and Graham Zebedee, who headed up the team, to respond comprehensively to questions that I and many parliamentary colleagues raised.
This is the first of many steps in repositioning the UK as a vital international trading power and signals an opportunity for the UK to enter into the comprehensive and progressive agreement for trans-Pacific partnership. Japan is a key ally, with which we have enjoyed a long history of friendship—an ally that has been a beacon of tolerance, pluralism and democracy in the post-war world. I am confident that we have a close friend and ally in the Liberal Democratic party Administration of Yoshihide Suga and am keen for our relationship with Japan to develop further, so that we may tackle key issues, notably climate change, national security and the global economic recovery, following the covid-19 pandemic.
Is it a pleasure to follow my hon. Friend Imran Ahmad Khan, who is always most eloquent. I am delighted to have the opportunity to speak in this debate at a historic moment for the UK as an independent trading nation, and I congratulate the Minister and the International Trade Secretary on doing this brilliant deal. It demonstrates that we are ready to start trading independently from the European Union with our allies across the world.
I have a particular interest in our relationship with Japan. Some years ago, I ran a small business importing handmade paper from around the world, and Japan provided products and the source of inspiration. I visited a number of times, once as part of a trade mission.
The deal is historic, not least because it is the first we have struck since constituencies such as mine voted overwhelmingly to leave the European Union. It will create new and exciting opportunities for businesses in Stoke-on-Trent Central. For many UK businesses, Japan has traditionally been a challenging market to penetrate with multiple barriers to entry, but thanks to the agreement, many of those barriers have been eliminated. The cutting of red tape and removal of barriers between the two countries means that the agreement is a huge win for the more than 8,000 small and medium-sized enterprises in the UK that already export goods to Japan, more than 700 of which are based in the west midlands.
With the free trade agreement in place, many more businesses stand to prosper. I want to encourage more local businesses to explore the opportunities that trading with Japan can offer. For example, an advanced ceramics research and testing company in my constituency, Lucideon, has told me that the UK-Japan comprehensive economic partnership agreement will support more than £1 million of commercial growth for it in the next 12 months. The agreement makes it easier for such companies to export and sell the knowledge and skills of their world-leading experts to the highly competitive and highly lucrative Japanese market. It also makes it easier for business people and skilled workers to travel between our two countries and gives British and Japanese workers more flexibility to move between them.
I thank my hon. Friend for her outstanding representation of Stoke-on-Trent. In Stoke-on-Trent North, Kidsgrove and Talke, I have the amazing Burleigh Pottery based in Middleport, which saw exports to Japan grow by 60% last year, worth £250,000. Does she agree that this is a fine deal not just for advanced ceramics, but for our traditional tableware ceramics as well?
I absolutely agree with my hon. Friend that this is a great deal for Stoke-on-Trent and all the Potteries.
I am delighted that the first deal that the UK has struck as an independent trading nation is with our long-standing ally and friend Japan. From having previously done business in Japan, and from my personal connections, I know that the Japanese, just like the British, have a huge love and respect for quality brands, the highest standards and excellence in manufacturing. After all, it is the country that has introduced the concept of kaizen to the world, improving productivity across the globe. For household names in the UK, such as Emma Bridgewater, Portmeirion and Wade, all of which manufacture in Stoke-on-Trent Central, the deal presents a fantastic opportunity to sell more goods and achieve even more brand recognition.
The deal shows us that, now we have left the European Union, there is not a race to the bottom in standards, as some naysayers would claim—quite the opposite. The Government have placed, and will continue to place, our shared common values and commitment to high standards at the heart of the UK’s trading policy.
In conclusion, the deal is a great step forward for an independent and global Britain. It moves us ever closer to joining CPTPP, which will give businesses in my constituency and across the UK tariff-free access to some of the world’s fastest-growing economies. I am extremely enthusiastic about the deal, which is only the tip of the iceberg of what the Government can achieve for our country as we leave the constraints of the European Union and become a truly independent trading nation.
We are almost at the end of the debate, but if he will take only three minutes before I call the Opposition spokesman, I will call Mr Brereton.
Like the UK, Japan is an island nation—a maritime trading nation. We have shared values: it is a strong voice for free trade and the rules-based international order, as many hon. Members have already said. It was hugely welcome that Japan was one of the first nations to announce that it would seek a mutually improved trading future with a post-Brexit UK. As our partnership deepens, I want more of that investment to come to Stoke-on-Trent, and for Japanese tourists and buyers to come to enjoy the authentic world capital of ceramics.
Like the Japanese, we are keen on tea and fine ceramics—or should I say porcelain?—so at the top, or high-value, end of the market for exceptional ceramics, it is no surprise to find a fusion of Japanese and Stoke-on-Trent expertise and artistry. The British-Japanese ceramicist Reiko Kaneko, whom I was delighted to visit in my constituency, has her studio locally. There is also Hitomi Hosono—sorry for my pronunciation—who trained in Japan, Copenhagen and London, but it was at Wedgwood in my constituency that she really made her mark. She is now its artist in residence, and one of the few who has actually exhibited while still alive at the British Museum and the Victoria & Albert Museum. This is what Stoke-on-Trent can offer to global Britain: local expertise and local passion at the very top of the world class.
However, it is not just about those artists; we are also keen to ensure that earthenware, ceramics, tiles and tableware are increasing their exports to Japan. The UK lags behind EU competitors such as France and Portugal, and we can do a lot better than that. We want to make sure that we are increasing our exports into the Japanese market, and this trade agreement will allow us to do that. It is also about ensuring that we secure not just market access, but greater market presence, and a specialist DIT adviser for ceramics based in Stoke-on-Trent could be just the way of achieving that. Ceramics manufacturers have certainly welcomed the partnership with Japan, which is their fourth largest export market. I hope we can agree that Stoke-on-Trent ceramics are an iconic good that we must continue to push locally.
I would like to thank the Secretary of State and the Ministers for all they have been doing to push ceramics. They never fail to mention ceramics in the many trade agreements we are seeking to secure. It fits very much as well with the recent work of VisitBritain, which shows that this is a place that the Japanese see as the world’s best destination for revisiting places of nostalgic importance. That is very much about the ceramics industry and the ceramics that we want to see very much pushed with further trade agreements.
While I welcome this deal and the recent announcement of the Canada deal being rolled over, I am not sure it merits the “truly historic” or “groundbreaking” description that the Secretary of State would have us use to describe it.
The problem is that, out of the hearing of the Secretary of State and her cheerleaders today, there are very few experts who think this deal is quite as good as she does. The more generous suggest privately that it is a deal just a little bit worse than the EU agreement, while even the more considered suggest that we look at the impact assessment. On the upside, from that impact assessment it is clear that trade is set to rise significantly between our two nations, and as a key strategic ally, that is welcome. However, this is a deal that, according to the Government’s own calculations in the impact assessment, will see 83% of the almost £16 billion increase in trade over the next 15 years between the UK and Japan going to Japanese exporters, while the share coming to UK exporters is just 15%. Clearly, the last thing we should do is adopt a mercantilist attitude, but a deal five times better for the other side’s exporters than for our own does, I think, merit a little pause for thought. Even Donald Trump might not have rushed to describe this as a “truly historic” triumph.
In May, the Secretary of State published alongside the Department for International Trade’s scoping objectives for a UK-Japan deal, an impact assessment showing the limited benefits of the deal she was hoping to achieve. As the impact assessment on the final deal reveals, she was not even able to reach the sunlit uplands of those limited heights. Not only will our negotiating partners apparently benefit by five times as much as our firms and employees, but the deal will apparently increase our GDP by just 0.07%, and that is in comparison with there not being a deal.
Strikingly, Ministers claim that the deal they have negotiated is better than the EU-Japan deal, but they provide zero evidence to back up that claim. Despite repeated requests, as again today, from the shadow Secretary of State in written parliamentary questions, letters and parliamentary debates, Ministers have refused to estimate what impact the deal has achieved above and beyond the EU-Japan deal. It has been 75 days since the shadow Secretary of State asked the Secretary of State why she could claim that her deal goes far beyond the existing EU deal. She again, in her opening remarks today, did not give us any figures to back up that assertion. One can only assume that the difference between the two deals is marginal at best.
My hon. Friend Taiwo Owatemi rightly drew attention to one of the other comments in the impact assessment. The Government’s estimates show that as a result of increased imports from Japan arising from the deal, there will be economic costs for the UK—indeed, a long-run fall in employment in chemical, machine and automotive production as a result of cheaper Japanese imports. There was again no word from the Secretary of State on how she plans to help the industries and communities in our country affected by those job losses.
Japan is a valuable export market for our agricultural goods. The tariff reductions agreed in the UK-Japan trade deal are almost identical to those set out in the EU-Japan deal. Important analysis by the independent UK Trade Policy Observatory found that there are just 11 out of 9,444 products where the tariffs on UK exports are set to be lower under the UK-Japan deal. As my right hon. Friend Emily Thornberry, the shadow Secretary of State, pointed out, the extra concessions to the UK are striking by the lack of logic behind why Ministers sought them, as, for example, we have had no exports to Japan of any of these products, which include dried eggs and ostrich leather.
The Secretary of State has also claimed that another 70 of our food and drink products will be recognised by Japan under the geographical indication scheme, increasing their value and protecting their brand. I say this gently, but it does appear that the Secretary of State is exaggerating just a little. There are only seven, not 70, GIs recognised in the UK-Japan deal—exactly the same as in the EU-Japan deal. All that has been agreed is that the UK can apply to Japan to have more of our products recognised, with at least two Government Ministries in Japan having to be involved and deciding whether or not to grant them. There is absolutely no guarantee of success.
One of the key questions about the deal was whether the UK would be able to roll over all the anticipated agriculture benefits of the EU-Japan deal into our UK-Japan deal. In some areas, this appears to have been relatively straightforward. Tariff reductions for exports for lamb and beef, for example, are exactly the same in the UK-Japan deal as apply under the EU deal, but there does appear to be one key difference, which was alluded to in the exchange between the Secretary of State and the shadow Secretary of State. The European Union has 25 separate tariff-free quotas with Japan for agricultural goods. The UK has managed to secure partial access to just 10. Of those 10, it would appear that the UK gets only what is left after the rest of the European Union have had their fill. I will read with interest the legal letter that the Secretary of State is going to release after this debate, but one has to ask why such a letter was required and why this was not clarified in the text itself.
A series of Members have highlighted the need for better scrutiny arrangements for trade deals going forward, from my right hon. Friend the shadow Secretary of State to my hon. Friends the Members for Leeds North West (Alex Sobel) and for Brighton, Kemptown (Lloyd Russell-Moyle), Alyn Smith—the SNP spokesperson—Mr Carmichael, and, most welcome of all, the hon. Members for Wyre Forest (Mark Garnier), for Tiverton and Honiton (Neil Parish) and for Folkestone and Hythe (Damian Collins).
Of course, I should emphasise again the shadow Secretary of State’s great thanks to the Secretary of State for being so kind in allowing the House the opportunity to have this debate at all. Under the so-called CRaG process for considering trade deals, there is absolutely no legal requirement for this type of debate to take place. It is entirely in the Government’s gift. If the Trade Bill was amended in the other place to demand the same level of scrutiny as we are applying to the Japan deal today, how could any Member of Parliament reject such a reasonable proposition, given that at the moment we rely entirely on the generosity of the Government as to whether or not to grant a debate?
Despite the rather complacent air of the Secretary of State’s speech, I hope that the Government will not be resting on their laurels. Even after the loss of Algeria, Bosnia and Serbia, there are still 11 continuity agreements waiting to be agreed, covering some £55 billion of our trade last year. There are serious questions, too, about the UK’s future membership of the CPTPP. It is not a done deal; it will warrant serious debate in this House.
There are serious questions that the Minister of State could answer now. When will there be an impact assessment setting out what Ministers expect to be the benefits? Will we simply have to accept the provisions already in the CPTPP? Will we be a rule taker, or will we be able to be a rule maker? What will be the benefits of CPTPP for UK exports, jobs and economic growth, and what might be the downsides? What we know is that the Secretary of State has negotiated a deal with Japan that appears to put British farmers and agricultural exporters at the back of the European queue for tariff-free quota access and that, by her own Department’s analysis, benefits Japanese exporters five times as much as it does British exporters.
This has been an excellent debate, with speeches from 13 Government Back Benchers and six Opposition Members. It is an historic moment, as the Secretary of State outlined. The UK-Japan comprehensive economic partnership agreement is an historic milestone in embracing the opportunities of the UK’s future as an independent trading nation. It shows that economic powerhouses such as Japan—the world’s third largest economy—want ambitious deals with the UK and that it is possible to strike deals that go further and faster than the EU. It not only secures the benefits of the existing EU agreements, which many—and particularly the Opposition—said was impossible, but goes further in a number of key areas such as digital and data, financial services, the protection of geographical indicators and rules of origin. It was negotiated in record time, almost entirely virtually.
I am very grateful to my right hon. Friend. Does he agree that this important free trade agreement is the first of several key UK-Asia goals over the next year, including accession to the trans-Pacific partnership, dialogue partner status with the Association of Southeast Asian Nations, several bilateral market access initiatives and partnership of the climate change summit in Glasgow? Altogether, this will bring alive the determined strategy of global Britain.
My hon. Friend is quite right. He is our trade envoy to the ASEAN region and to a couple of countries there. I was addressing our DIT internal teams in the Asia-Pacific region just this week on the incredible opportunities that this country has there.
The deal was negotiated almost entirely virtually. It deepens the economic partnership between two like-minded island democracies. It reflects our shared values and our shared belief in the fundamental principles of free and fair trade and the importance of playing by the rules. That point was made on both sides of the House, including by John Spellar and my right hon. Friend Jeremy Hunt. This British-shaped deal strengthens ties between the world’s third largest and fifth largest economies and will help to drive economic growth in the long run. The Government are committed to levelling up the UK, delivering opportunity and unleashing the potential of every part of our United Kingdom.
We heard in this debate from two former Trade Ministers: my right hon. Friend Dr Fox, with his excellent and deep understanding of world trade, and my hon. Friend Mark Garnier on the importance of the International Trade Committee in scrutinising this agreement. We heard from my hon. Friend Martin Vickers, who again showed that we have proved the naysayers wrong, and from my hon. Friend Craig Williams about thriving Wales-Japan trade, particularly in the area of lamb.
My right hon. Friend the Member for South West Surrey, a former Foreign Secretary, described this as a personal triumph for the Trade Secretary; I entirely agree. I can attest at first hand to how much personal effort she has put into getting the team to move forward, including in the early hours of the day. That has been incredibly helpful. My hon. Friend Neil Parish, who chairs the Environment, Food and Rural Affairs Committee, welcomed the fact that the Trade and Agriculture Commission was to be put on a statutory basis. He also pointed out that Japan is the world’s largest importer of agrifood.
I am afraid I have too many hon. Members to respond to.
My hon. Friend Damian Collins has a keen interest, of course, in all matters relating to data. I can tell him that I shall be meeting the Information Commissioner’s Office in the next few weeks. I say to Mr Carmichael that he was correct when he made the point that the UK-Japan deal would not change the current position in relation to onward transfer of UK personal data from Japan.
My hon. Friend Mr Djanogly made some very important points. He made an important point on services—that it is very important that there is mutual recognition of professional qualifications in deals as we go forward. In recent weeks I have met the architects, the Law Society, the Bar Council and so on.
My hon. Friend Anthony Mangnall said that Japan’s role as chair of the CPTPP this year was really important for our agenda in 2021. My hon. Friend Virginia Crosbie said that the deal opened up new opportunities for farmers in her constituency. My hon. Friend Imran Ahmad Khan praised the DIT’s outreach to MPs. That has been a priority of the Secretary of State, me and the entire team.
Then we had the entire Conservative team from Stoke, lined up geographically in order, South, Central and North—the sort of line-up that Alan Hudson would have been proud of in the 1970s, in his Stoke City pomp—making the point again and again how important trade is going to be for the future of that great city. We heard from my hon. Friend Jo Gideon of her business and personal connections with Japan, and her commitment to quality. It has been a great effort. I know how supportive the whole Stoke team has been of the DIT’s efforts.
Alyn Smith said that the SNP is “pro-trade.” He may not know, but the SNP of course abstained on the original EU-Canada deal. But he is almost unique. There are only two Members in this House who have actually voted against the original EU-Canada deal, and he is one of them, from his time as an MEP. So with all of his praise for that original deal, he is one of only two Members in this Parliament who has actually voted against it. He has fallen into the trap that the SNP fell into last week of praising EU agreements that they actually voted against in the first place.
Alex Sobel spoke about the importance of COP 26 and climate, and slightly ridiculed the idea of our joining the CPTPP. He claimed that Britain owned the Pitcairn Islands. Well, it is not the Pitcairn Islands but the 11 members of the CPTPP that have welcomed the UK’s interest in applying to join—countries such as Japan, Australia, Canada, New Zealand and so on.
The right hon. Member for Warley raised an important point about the unity of liberal democracy, which I have mentioned.
I assure Taiwo Owatemi that no harm will be done to the NHS or NHS data by this agreement, but it does help tech firms and data firms setting up operations in Japan that they do not have to follow local data localisation rules. That is incredibly important for our tech sector.
Lloyd Russell-Moyle spoke about parliamentary scrutiny. He said that Which? had not been involved. I was the guest speaker at Which?’s national trade conversation just last week. He does serve on the Select Committee, but he is not always fully up-to-date with his information.
I have already answered the point that the right hon. Member for Orkney and Shetland raised about data transfer.
Gareth Thomas summed up for the official Opposition. He is like the SNP: he never actually supported any of these trade deals in the first place. He did not support EU-Japan. He voted against EU-Canada. He voted against EU- Singapore. So for him to come along today and say that the new UK rolled-over version is somehow inferior to the trade deal that he might have supported in the past—well, a quick check of Hansard revealed that he never supported any of those deals; in fact he actively opposed most of them.
It has often been said that an independent UK would not be able to strike major trade deals, or that at the very least such deals would be bad and take years to conclude. But even in the midst of this terrible pandemic we have proven the naysayers wrong, as my hon. Friend the Member for Cleethorpes also nobly said. We have secured provisions as good as the EU’s on all our objectives and gone beyond them in some key areas, securing vital priorities for the UK.
This deal benefits all parts of our country while protecting our red lines on areas such as the NHS and food standards. It is a sign and a signal that we are back as an independent trading nation, as a major force of global trade, and as a country that stands up for free enterprise and liberal values across the world. Using our newfound independence as an optimistic, outward-looking trading nation, once again we are embracing the golden opportunities ahead for global trade, visibly shown in this UK-Japan comprehensive economic partnership agreement.
Question put and agreed to.
That this House
has considered the UK-Japan Comprehensive Economic Partnership Agreement.