Trade (Australia and New Zealand) Bill - Committee – in the House of Lords at 4:30 pm on 23rd January 2023.
Moved by Lord Lennie
3: Clause 1, page 1, line 15, at end insert—“(3A) Regulations under subsection (1) may not be made before completion of a review by the Trade and Agriculture Commission of the potential impact of the procurement Chapters on industry in the United Kingdom.” Member's explanatory statementThis amendment requires a review by the TAC before regulations implementing the procurement Chapters can be made.
This is a bit like a jack in the box; I apologise. There are a number of amendments in this group in my name, which I will briefly run through. There is also an amendment from the noble Baroness, Lady McIntosh, and four, I think, from the noble Lord, Lord Purvis. They will explain theirs as we get into it.
Amendment 3 requires a review by the TAC before regulations implemented in the procurement chapters can be made. Amendment 4 requires an impact assessment on employment and human rights and climate change to be published before regulations implemented in the procurement chapters can be made. Amendment 5 requires a regional impact assessment to be published before regulations implemented in the procurement chapters can be made. Amendment 8 requires an impact assessment within 12 months, and every three years thereafter, of regulations made under Clause 1. Amendment 9 requires a regional assessment of the impact on farmers of the procurement chapters. Amendment 11 requires an NHS impact assessment of the procurement chapters. Amendment 12 requires a review of the negotiation of the procurement chapters. Amendment 13 requires a climate change impact assessment of the procurement chapters. The final Labour amendment, Amendment 14, requires a labour rights impact assessment of the procurement chapters.
All these amendments require impact assessments addressing different areas of the procurement chapters of the Bill. While predictions can be made, they are generally vague and broad, and specific impact assessments would not only give better insight into the deals but help learn lessons for future deals. We have tabled amendments requiring assessments across specific areas that are particularly pertinent to the deals. On employment and labour rights, while agreements do make reference to workers’ rights and labour standards, a prospective Labour Government would seek to establish a gold standard of workers’ rights in trade deals. Also, it is unacceptable that the Government have failed properly to engage with workers’ representatives through the negotiation process, as union members are best placed to outline many of the tangible impacts of trade policy.
The TAC has noted that the agreement
“does not contain commitments to ILO core conventions and an obligation for both parties to ratify and respect those agreements. Rather it contains a much weaker commitment to just the ILO declaration”.
Labour is concerned about the precedent this may set, especially for ongoing and future trade deals with countries that have significantly worse protections than the UK. UK agri-food producers are concerned that
“the Agreement increases UK market access for food produced in ways that would be illegal in the UK, making for unfair competition.”
The National Farmers’ Union has been critical of the impact the trade deal may have on farming, saying:
“We see almost nothing in the deal that will prevent an increase in imports of food produced well below the production standards required of UK farmers”.
“There is little in this deal to benefit British farmers.”
It is little wonder that Australia’s former negotiator at the WTO said:
“I don't think we have ever done” a deal as good “as this.”
The Government’s own impact assessment shows a £94 million hit to our farming, forestry and fishing sectors, as well as a £225 million hit to our semi-processed food industry. The Government claim that they are trying to mitigate this with tariff-free access being phased in over several years but what is being done is totally inadequate. For beef and sheepmeat, the phasing-in period is 15 years, but the quotas being set by the Government for imports from Australia are far higher than the current level of imports. On beef imports, for example, Japan negotiated a deal with Australia where it limited the tariff-free access in the first year to 10% on the previous year; South Korea achieved something similar, limiting the increase to 7%. However, this Government have negotiated a first-year tariff-free allowance of a 6,000% increase on the amount of beef that the UK imports from Australia. On sheepmeat, in the first year of the deal, the Government have conceded a 67% increase in the tariff-free quota.
The cross-party International Trade Select Committee set out that it is
“disappointed that the Government has not acted on the suggestion that liberalising agri-food trade under UK trade agreements should be conditional on imports meeting … UK food production standards.”
It went on to call on the Government to say
“what it will do to monitor unfair competition for UK producers resulting from agri-food liberalisation—and how it will act to mitigate adverse consequences for UK producers’ interests, and UK consumers’ wishes and choices, from such competition. We are concerned about the potential undermining of voluntary food production standards in the UK as result of agri-food liberalisation under the Agreement. The Government must say what it will do to monitor, and potentially act on, this.”
I turn to climate change. It is deeply concerning to see that vital commitments made to this House on climate change in relation to the Australian trade deal are not being upheld. Alok Sharma, the COP 26 president, said in the Commons that the Australia deal
“reaffirms both parties’ commitments to upholding our obligations under the Paris agreement, including limiting global warming to 1.5°.”—[
However, the final deal as negotiated does not uphold this important direct commitment. There is a damaging climb-down by the Government that represents a significant missed opportunity. The UK must be a world leader in tackling climate change, not only to deliver on our own environmental obligations but in recognition that this is a key, growing market for international trade. As a result, all our trade deals would be greatly enhanced through properly addressing the issue and setting out an ambitious joint plan for action. Britain should seek to be a world leader on climate technology; this must be a core part of our trade policy.
On the NHS, the general stance is that we think it should be off the table. Any assessment to be made is about making sure that this is the case, and not just going through the back door. Can we have some reassurance on this?
I turn to negotiation. On
“since I now enjoy the freedom of the Back Benches, I no longer have to put such a positive gloss on what was agreed … unless we recognise the failures the Department for International Trade made during the Australia negotiations, we will not be able to learn the lessons for future negotiations … The first step is to recognise that the Australia trade deal is not actually a very good deal for the UK … it has to be said that, overall, the truth of the matter is that the UK gave away far too much for far too little in return … In my view the best clause in our treaty with Australia is that final clause, because it gives any UK Government present or future an unbridled right to terminate and renegotiate the FTA at any time with just six months’ notice … What lessons should we learn? First, and most important, we should not set arbitrary timescales for concluding negotiations.”—[
Those are damning criticisms from the Minister of the outcomes achieved by his then Government of this trade deal and of the wider strategy being pursued by the Government on international trade.
The chaos in the Conservative Party has caused severe delays to the promise of free trade agreements. It has cost the UK economy billions in potential export opportunities. The 2019 manifesto pledged that, by the end of 2022, 80% of UK trade would be covered by free trade agreements, including an agreement with the USA. The reality now is that these deals are far from complete, damaging exporters and the wider UK economy. Lessons must be learned around how the Government have conducted these negotiations and the lack of voice given to vital stakeholders in the UK, including the trade unions, during negotiations.
All of this is vital. We have learned from the UK Government that they are starting negotiations with other countries and trading blocs, including the CPTPP and its 11 countries, which the UK applied to join in 2021. The negotiations were to be concluded by the end of 2022; I do not know how far on we are, but an update would be helpful. Negotiations with the US started in May 2020, but a federal agreement is not expected soon. The Government have signed up to a memorandum of understanding. There is no current trade agreement between the UK and India, and negotiations started on
The noble Lord, Lord Purvis, will speak to the other amendments in the group, but I would welcome the Minister’s observations on these critical points.
My Lords, I am delighted to follow the noble Lord, who moved so eloquently his amendment. I lend my strong support to his Amendment 3, which encapsulates a discussion that was held at Second Reading by a number of noble Lords around the Chamber and previous legislation that we debated a year or two ago. I warmly welcome my noble friend the Minister to his place and am glad he has the opportunity to present this Bill in Committee.
It was very clear that the Trade and Agriculture Commission should have a role, and that the timing and sequence of that role in relation to trade agreements, or in this case procurement agreements, is absolutely vital. I look forward to my noble friend’s response to Amendment 3 and the other amendments tabled by the noble Lord, Lord Lennie. I particularly associate myself with Amendment 3.
Amendment 7 in my name is a probing amendment. I draw the Committee’s attention to the Department for International Trade’s impact assessment for this free trade agreement, particularly page 32, to which the noble Lord, Lord Lennie, also referred. Having been in touch with the Wine and Spirit Trade Association, I accept that it will be a beneficiary of this agreement going forward, provided that a chapter is included after the association agreement. It harks back to when we joined the European Economic Community in 1973 and were told that we would get cheap booze. Here we go again; it seems to be a relic of that time.
What is stark about table 3 on page 32 is the figures on food. Agriculture, forestry and fishing will take a change of minus 0.35%, a tumble of £48 million over 2019 figures; and, furthermore, semi-processed foods will take a tumble of 1.16%, which is a £97 million fall in equivalent growth value added. What is the issue that this Government have with farmers’ role in producing food, particularly in increasing the level of self-sufficiency? We are hovering around the 60% mark. Given the fact that we have a war on our borders, it is absolutely vital that we look to improve our food self-sufficiency. This has been recognised by my right honourable friend the Prime Minister, who remarked at the time of the leadership contest hustings last summer, which seems an awfully long time ago:
“We know that farmers are concerned by some of the trade deals we have struck, including with Australia. A Rishi Sunak-led Government will make farmers a priority in all future trade deals … We will maintain the highest standards of animal welfare, environmental protection and food safety.”
The problem that I have with the procurement aspect of the Bill—and with the Procurement Bill itself and the trade agreement with Australia and New Zealand—is that it is completely asymmetrical on farming, forestry, agriculture and processed foods. As the noble Lord, Lord Lennie, suggested, this goes to the safeguards. Normally, we have infinite safeguards: they are not time-barred. The noble Lord referred to these being between 11 and 15 years in length. For what reason are these safeguards time-barred? This breaks with tradition in other trade agreements, procurement agreements, or whatever the Minister wants to call it. It has been incredibly difficult to table amendments, so I really feel quite pleased that I have an amendment that passed go on this.
The reason that I referred particularly to lamb and beef in proposed new subsection (1) in Amendment 7 is that they are the two sectors where our farmers stand to lose out. Also, for 18 years I represented an area next door to where these are the prime products, and I grew up in the even more upland area of Teesdale. I am concerned about these two products in particular, as well as the other £48 million that we are going to lose in this sector.
We were told at the time of the general election that our food standards in this country would be respected, and not lowered for imported food. For what reason are we seeking to reverse that commitment given in 2019? In the next group of amendments, we will talk about the concerns of the Food Standards Agency, which were flagged up in its annual report for 2021—but why should we accept products, particularly lamb and beef, that do not meet the production and food safety standards in this country, and why are we not having permanent safeguards instead of those that are time-barred? I have a further question before I get too carried away: why are the tariffs harmful to British farmers and favouring New Zealand and Australian farmers?
My Lords, I apologise for not being present during Second Reading. At that time, I was suffering from Covid and was confined to my home. Noble Lords will be pleased to hear that I am now recovered and testing negative.
Amendments 7, 9, 15 and 17 in this group deal with the impact on British farmers and the environment. I will speak to Amendments 15 and 17 in the name of my noble friend Lord Purvis of Tweed, to which I have added my name and which relate to the chapters on farming and the environment.
The farming community in the UK is undergoing a period of considerable change and stress. Some of that is due to the effects of the war in Ukraine and the supply of grain, and it is also due in part to the shortages of chemicals and fertilisers. Mostly, however, it is due to the changes in farm payments on the withdrawal of the CAP, coupled with the slow rollout of the environmental land management scheme. We on these Benches fully support the aims of ELMS. A change in the system of payments for farming is long overdue. However, the way in which it is being handled by the Government, with the CAP being phased out before many aspects of ELMS are fully published and costed, has led to confusion and uncertainty among the farming community. Many farmers are keen to enter aspects of ELMS, but find insufficient information available for them to make a decision.
The UK has some of the highest animal welfare standards in the world. These standards are not mirrored in other countries. In Australia and New Zealand, some animal- welfare practices exist that would not be acceptable here. Excellent animal welfare comes at a cost, and our farmers are extremely diligent in maintaining standards. There is extreme concern that imports of inferior animal products and goods from Australia and New Zealand will be cheaper and will therefore undercut our excellent British farming produce. The noble Baroness, Lady McIntosh of Pickering, has already referred to the effects of this on farmers. Are the Government so desperate to have trade deals with countries outside of Europe that they are prepared to see our British farmers go to the wall in order to fulfil their ideology?
Amendment 15 would provide a safeguard in the form of impact assessments for livestock, arable and upland farmers, including those who are tenant farmers and those who run family farms. I am sure that the very large and conglomerate farms will be able to adjust to the import of cheaper, lower-quality produce. They have the quantity and capacity to do this, but it will be much more difficult, if not impossible, for those farmers who currently operate on the edge of viability, especially upland farmers. The production and publication of impact assessments will be vital to provide assurance for the farming community.
As a current member of the Secondary Legislation Scrutiny Committee, I am aware of the Government’s reluctance to provide impact assessments if they can possibly avoid it. However, in this case, it is absolutely essential—a necessity—that impact assessments be very fully drawn up and published. If the Government are committed to ensuring a thriving agricultural industry of our own, the Minister will agree to this amendment. I have also added my name to Amendment 17, which calls for impact assessments on environmental standards, food standards, animal welfare standards, and biodiversity.
Environmental standards, supported by the environmental targets, are currently the hot topic in this House. There are no fewer than three regret amendments tabled against three of the six environmental targets. Water will be debated later this evening, biodiversity later this week and particulates next week. The remaining three will be debated tomorrow afternoon. It is clear that all four of the categories in Amendment 17 are high on the agenda of both national and local politicians. The public are also extremely concerned. Both animal welfare and food safety feature high up the public agenda. Young people across the board feel that they have been let down by previous generations in loss of biodiversity and environmental standards. It is important to reassure the public and give them confidence in this vital aspect of the Bill by committing to impact assessments, with a publication date within six months of the passing of this Act.
I do not see this group of amendments as doing anything other than enhancing and improving the Bill. They will not wreck the Bill, but they could make a considerable difference to how the public and farming communities view the implementation of the Bill, and I hope the Minister will agree.
My Lords, it may be that I am not paying sufficiently close attention, but it struck me as rather odd that the starting point was a discussion of the advice that was given to the Secretary of State on
The second thing that is missing from the debate so far is that Ministers have been very clear, not least in the letter that I think was sent to the International Trade Committee in the other place and to our International Agreements Committee, that they are committed to a monitoring report on both these agreements every two years and to a comprehensive evaluation five years after the coming into force. Some of these amendments look for earlier and more frequent reporting. I have to say, earlier reporting seems to be misplaced. It is going to take time to understand the impacts of these agreements, not least because, for example, the tariff rate quotas that are available for some of these products have not yet been absorbed, so the starting point for thinking about what is the base case for the impact of the agreements must at least allow for the possibility that, in the absence of the agreements, there might have been some increased importing from Australia and New Zealand using existing TRQs.
The third thing I want to say is about George Eustice, who I like. We have worked together, and I enjoyed working with him, but I have to say two things. Number one, if you subscribe to my view of collective responsibility—I see former Ministers in their places—it does not stop when you leave the Government subsequently. You subscribe to collective responsibility when you enter into government and you enter into collective decision-making. In my view, I stick to that—even, in my case, extending it to my coalition friends. If George Eustice did not agree with the decision that was made in relation to either of these agreements, the time to leave the Government and to leave collective responsibility was then, not at a subsequent point when he is on the Back Benches.
The second point to make about him—clearly, he said things that people will say are interesting for the future, not least on the setting of deadlines, while the Government have moved away from that idea—is that the principal argument he made about the risks associated with the agreement and food standards was the risk of the importation of hormone-fed beef. His argument that this was a risk was only because we might subsequently enter into the CPTPP and, under it, we might be subject to an investor state dispute resolution that would force us to dispense with our ban on the import of hormone-fed beef. These are extremely unlikely propositions. As the TAC made absolutely clear, despite the fact that a proportion of beef cattle in Australia are fed hormone growth promoters, none of them—nor their products—may be imported to this country, because we have a ban. So the risk presently does not arise.
That is the heart of the problem—as we will go on to consider in the next set of amendments. Since we left the European Union, there have been no checks at our frontiers to show to what extent the meat coming into this country observes the criteria to which my noble friend referred.
My noble friend simply makes the point that the Government should implement the legislation that exists. We have no need to change the legislation to ban the import of hormone-fed beef or the use of hormone growth promoters on beef imported into this country, since the legislation already exists. The point is its implementation—and messing about with this Bill does not change that at all.
I have one final point. As I turn to the CPTPP and sheep farmers, I should say that my sister-in-law is a sheep farmer in north Wales. She may take a view about the New Zealand agreement, principally because of lamb imports, but she has never mentioned it to me. She probably thinks that it is a pretty remote risk compared with the many risks that she has to put up with on a daily basis.
I am UK chair of the UK-Japan 21st Century Group; my noble friend Lord Howell, who is sitting on the Front Bench, was one of my predecessors. My Japanese friends tell me that we are making good progress on our potential accession to the CPTPP. There are clearly issues. In this context, if one were critical of the Government, it would be on the risks associated with the precedent of tariff liberalisation—to the extent that it was offered in these agreements—being used by other counterparties as a basis for their negotiations, not least through the CPTPP. They may seek that in the schedules that they are looking for from us before we are allowed to accede to the CPTPP. Notwithstanding that reservation, in the view of my Japanese friends, other aspects of the negotiations stand a fair chance of being completed in the first half of this year.
On the basis of what the Government have already said about impact assessment and reporting in the future, I think the amendments in this group in particular are not required.
My Lords, I rather agree with the noble Lord, Lord Lansley. There are two points to bear in mind, particularly about the agricultural concern. First, Australia is a very long way away; and, secondly, the big market for Australia and New Zealand is due north of them in East Asia, not over here.
I do not see even the hill farmers in Britain suffering seriously. I do not think that this will be a major target market for Australia and New Zealand. Let us remember the scale. This is a very marginal agreement. It is not a bad deal, but it is certainly not a big deal. It will not change much in our economy; even on the Government’s own estimates of the increase in GDP that might result as a consequence of these two agreements, it is really marginal.
So I am very doubtful about calling for a raft of impact assessments; it seems to me that that is not really necessary. The one amendment that might be necessary is Amendment 18, in the name of the noble Lord, Lord Purvis of Tweed, which takes us back to procurement standards. I can see a case for that, but not for looking sectorally across the agreements and calling for impact assessments in every case.
It would be reassuring if the Government could say something about the non-precedential nature, in their view, of the agricultural agreements with Australia and New Zealand. We read that the Canadians and the Mexicans are pricking up their ears and asking for the same terms that we have given to Australia and New Zealand. Those countries are much closer, and a major target market for both is Europe. If one were to look beyond them to, say, Brazil, Uruguay or Argentina, then I would say that the hill farmers in Britain would have a real reason to be concerned, if the Government were to follow the precedent of their deal with Australia and New Zealand, which is going to come in slowly, over time, and will be pretty marginal in its economic effects. If that were to be applied to trade with Canada, Mexico, Brazil, Uruguay and Argentina, there would be very serious effects on UK agriculture.
What we most need from the Government is not an impact assessment of the effect of the deals that they have done but an undertaking that, since very different considerations would apply, they would do very different deals with other future partners.
My Lords, I am going to focus on Amendment 5 as well, regarding the impact issue. I agree very much with the conclusion of the noble Lord, Lord Kerr, who has just spoken, but—I hope this does not sound too contrary—for the opposite reasons to those that he gave as to why we should not put too much faith in impact assessments. My opposite reason is that, far from this being a tiny issue that will not lead to very much, I think this opens a gateway into the gigantic trade expansion that is now going on throughout Asia, in which we simply have to be more deeply involved. I know we are trying to get into the CPTPP and other trade arrangements. We have to do so, and this is part of the gateway. I think this is a very big issue, not a very small issue.
At the same time, one’s faith in impact assessments in this House is pretty limited. Your Lordships will all have seen the report from a Select Committee, about a year ago, saying that impact assessments left a lot to be desired. They are particularly difficult when dealing with speculation and suppositions about how trade may develop in a very fast-changing world, and that has been recognised for some time. If we are now moving on, as Amendment 5 suggests, to impact assessments not only for the devolved nations but for the entire packet of English regions, the chances of getting anything in these assessments even faintly right in relation to the different regions in this country, with all their variety, is very slim indeed. The need for this huge exercise, which would take a great deal of work and a great deal of speculation, is not the point at all; we just want to get on with the purposes of the Bill.
I must apologise to noble Lords: I should have said when I spoke earlier that I have a sort of interest in all this, in that I am a member—just about coming to the end of my membership—of the excellent Constitution Committee, which produced a very interesting report on the proceedings in which we are involved now. It really is worth reading, and worth reiterating that that committee said that your Lordships should call on the Government and the Minister
“to explain during the progress of the Bill, rather than at third reading, what efforts it has made to secure consent and the reasons why, in its view, this has so far proven impossible.”
It does not say so but I think that is referring to Scotland. I do not know what kind of informal or other kind of consent has been achieved in the differental discussions with the regions, and with people outside England, that the Minister has already mentioned, or what prospects there are of getting those turned into good support and consent.
The Constitution Committee report also concluded that we ought to
“encourage the Interministerial Group for Trade to endeavour to ensure that, where devolved matters are affected, the making of any statutory instruments designed to implement these agreements, and any future free trade agreements”— that is very relevant to what my noble friend Lord Lansley has just referred to—
“adhere to the principles of intergovernmental relations set out by the review.”
These are important matters and they ought to enter into our discussions at an early date, because if we do not get these things right this time then we certainly will not get them right on future occasions either.
My Lords, I apologise for not having spoken at Second Reading on this Bill. I am afraid that, like many others including my noble friend, I failed to dodge a couple of viruses and their aftermath recently.
I am grateful for the opportunity to speak briefly on this group, and in particular to support Amendment 15 in the names of my noble friends Lord Purvis of Tweed and Lady Bakewell of Hardington Mandeville. This amendment reflects the concerns of UK farmers and has a particular relevance to Welsh farmers. It seeks to ensure that the Secretary of State reports on the impact of the procurement chapters on different types of farmers and farms. Here, for the first time in my nine years in this House, I find myself slightly at odds with the noble Lord, Lord Kerr.
With the trade deal set to provide a mere 0.08% boost to the UK economy, it appears that both New Zealand and Australia, with economies many times smaller than ours, are set to benefit. New Zealand, for example, will have access to a UK market of some 67 million people if it chooses to, whereas our farmers will find New Zealand, with its market of some 5 million people, a much less attractive prospect. Both New Zealand and Australia will have almost unfettered access to UK markets. This places UK and Welsh farmers at significant risk, with apparently almost nothing gained in return.
For those of us who live in Wales, there is an additional impact that will not appear in the list contained in this amendment but is nevertheless important to us—the impact on the Welsh language. Some 42% of our farmers speak Welsh, as opposed to 19% of the general population. They are the guardians of our language, traditions and culture. Anything that impacts on the viability of our farming communities will eventually impact on our language.
Our farmers are concerned about their futures and, as a recent edition of Farmers Weekly reported, this concern has resulted in a large reduction in the level of support for the Conservatives among UK farmers. Where 72% of farmers in 2020 said that they would vote Tory, now only 42% would do so. One supposes this result reflects the reality of “getting Brexit done” on our farming communities and fears for the future of farming. However, this is an opinion poll; what we need is hard evidence.
The Minister can perhaps suppose that this trade deal will be a great success; I can suppose that it poses a significant threat to our farming communities. Only a comprehensive impact assessment, such as the one called for in Amendment 15, can provide us, as legislators, with the evidence we need to justify our positions and decisions. Like my noble friend, I hope the Minister will agree to this amendment.
While I have the Minister’s attention, could I ask him to further comment on his assertion that eating New Zealand lamb is better for the environment than eating lamb from around the UK? Imported lamb from New Zealand can be produced to lower standards than our own foods, using methods that are unacceptable here. This is why my preference has always been for the taste and quality of Welsh lamb over New Zealand lamb. I fail to see how importing lamb from half way around the world makes that lamb better for the environment than locally produced and sourced lamb. Welsh lamb is among the most sustainable in the world, produced using non-intensive farming methods and high standards of husbandry. When the Minister responds to this group, would he care to take the opportunity to offer Welsh and UK farmers a few words of support in recognition of the work they do to produce such high-quality produce?
My Lords, it is a pleasure to follow my noble friend. I agree with 99% of what she said—the 1% is that lamb from the Scottish Borders could even just edge Welsh lamb. But I will allow the Minister a life-raft after what he said at Second Reading: he does not necessarily need to choose between Scottish and Welsh lamb, he just needs to say that he will back British producers over Australian and New Zealand producers. He is the British Trade Minister, so he needs to bang the drum for our sectors.
We have heard from the noble Lord, Lord Lennie, on whether George Eustice’s comments were in breach of the compact made in accepting everything bad that is done by your Government once you leave office. The noble Lord, Lord Lansley, is scrupulous in doing that and protecting the previous record.
I turn to the point made by the noble Lord, Lord Kerr, on impact assessments. When it comes to the impact on some of our sectors, the Government themselves have touted the protective measures. They have indicated that this could go wrong and therefore that protective measures could be triggered. The NFU is quite clear that they are insufficient; nevertheless, Boris Johnson and others have said that there are protective measures and that we need not worry. So we need to know the baseline information about that—it needs to be transparent and open—otherwise we will not know whether we are getting close to understanding whether a triggering mechanism will be required or not.
As my noble friend Lady Bakewell indicated, we are starting from the basis that cattle and sheep production in the UK are having difficult times. I noticed, just this morning, from statistics on GOV.UK that this is the first time since 2012 that total UK meat production has
“decreased by 0.8% to 4.1 million tonnes.”
That is a reduction in cattle of 4.6% and in sheep of 9.5%. The sectors are having a difficult time, for a whole set of reasons that have been indicated, and therefore the last thing that they needed was an agreement that did not sufficiently offer a degree of protection that there would be like-for-like competition.
As we all know, this was an agreement of liberalisation, but it was a liberalisation from our end and not theirs, because they were already liberalised. So the only opportunities that could arise would be if Australia or New Zealand either seek or want to capitalise on that. The Minister made the point at Second Reading—he made it very clearly—that it was unlikely that they would want to take all the quotas and capacity they have now secured; he said that it would be unlikely that that would be the case. However, that does not recognise, as the NFU and others have said in very clear briefings, that it is not just the overall volume of imports; it is also what kind of cuts and meats they are and what kind of competition exists.
One thing that, I confess, I had not noticed—it was subsequently drawn to my attention—is that, unlike normal practice, this is an agreement on shipped product weight; it is not an agreement on carcass weight equivalent. That is absolutely desirable for the Australians and New Zealanders; they want to ensure that the good cuts for our markets will be shipped in a way that is super-efficient and is not an overall carcass-equivalent weight. That means that every percentage point that they increase on shipped product weight that comes directly to our markets will have a disproportionate impact on our own ability to compete with that, because our farmers are ordinarily trading on a carcass weight equivalent basis. Unless I am incorrect, I understand that we trade with the EU on carcass weight equivalent, but we are giving Australia and New Zealand the advantage of trading on shipped product weight. I would be grateful if the Minister could say whether that is the case.
My second point is about the Government’s own estimates, which say that we are likely to see a 5% contraction in the sheep sector and a 3% contraction in the beef sector. As the noble Baroness, Lady McIntosh, indicated when putting that in GVA terms, the NFU has calculated that that would result in £464 million lost to GVA. That is not an insubstantial sum when it comes to a sector that operates in some of our most remote and rural areas and, as indicated before, in areas that have received considerable challenge over recent years.
That is notwithstanding the point that there will of course be some exporters who seek to take advantage of the Australian aspect. I think it was the noble Lord, Lord Lansley, who spoke earlier in the group on an area on which I did agree: geographical indications. The point was raised at Second Reading, with faint hilarity, that we are going to be able to protect our geographically indicated goods only once Australia has signed its agreement with the EU. I wonder whether the Minister is encouraging the talks between Australia and the EU to hurry up that agreement in order to accelerate the protections that we are looking forward to securing. I would be grateful if the Minister could state whether that is so.
I mentioned earlier the really rather impressive report from the Australian Parliament with regard to environmental aspects, and why we need an impact assessment in this area. Just to preface this, I noted the remarks of the noble Lord, Lord Lansley, when it comes to trade and agricultural advice. I read that advice, as he would expect; it was carefully worded with the questions that the Secretary of State asked for advice on—including, for example, whether the FTA mandated a change in our law. Well, it does not, so when the TAC says that this FTA does not mandate a change in our environmental laws beyond what we have committed, of course it does not. But that is not necessarily the question that the noble Baroness, Lady McIntosh, and others have been asking. What they were asking was: what is the space between the bar we have set, which is high, and the level that Australia has, which some argue is lower, that we will trade within?
For example, the TAC indicated that it was unlikely that we would have hormone-growth beef imported, but it did not exclude it. Similarly, it did not exclude the possibility that pesticides and fungicides that we have banned but are used in Australia could be imported. It is about this space where they are able to export to us by using practices which we have banned, but we have not changed our legislation. It is just that the space which exists is that difficult area, and the TAC was more cautious in its conclusions concerning that area.
Let me quote from the Australian Parliament’s report. Paragraphs 7.44 and 7.45, headed “Negotiating Objectives”, are quite interesting. They state:
“Australia’s negotiating objectives with regard to the environment were succinct: to ‘ensure high levels of environmental protection, consistent with international agreed principles, standards and rules’.
Paragraph 7.45 states:
“The United Kingdom’s … strategy for the AUKFTA was more comprehensive—stating it would use free trade agreements … to pursue strong environmental commitments and support the UK’s aims in the low carbon economy. The strategy reflected a view Australia’s environmental standards are not as high as the UK’s. Many of the UK’s identified negotiating objectives have been incorporated into the text of Chapter 22, though most were provisions often found in environment chapters, or incorporated using language such as ‘shall endeavour’ or ‘shall strive’, or committing the Parties to recognise the importance of such matters”.
I am not sure how much hard bargaining was required—although I will defer to the noble Lord, Lord Kerr, who has done this a lot more than I have—to have agreement on both sides to recognise the importance of such matters, but it is there.
This led the Australian Fair Trade and Investment Network to tell the Parliament that
“the commitment to address climate change did not contain any specific targets on emissions reductions and is a soft, aspirational commitment … new articles on the circular economy, air quality, marine litter, and sustainable forestry were aspirational and not enforceable …the process for proving a breach of commitments on not weakening environment protections to encourage trade and investment had a high barrier”.
So, where there is a concern, there is a high barrier to doing anything about it, while in other areas there are simply aspirational commitments. It is very important, across the whole breadth of these areas for our really important sectors—for beef and sheep in particular, as well as for the environment—that it is clear what the impact assessment is now and that we have clear reporting mechanisms.
This leads on to my Amendment 18, which I will jump to at the moment, which seeks a means by which one of the areas in the agreement that I welcome—the ability, quite particular to the Australia FTA, to include within our procurement social, labour and environmental standards—a mechanism to understand what those standards are and how they can be policed and clarity in guidance for our procuring authorities. The agreement also includes an environment working group; its processes must be public and it must regularly report on these issues, so we are seeking to help the Government facilitate that.
In Amendments 15 and 16, I refer to the impact on procurement. This is related because, currently, about 30% of Australia’s procurement goes to SMEs, and under the new Albanese Government the policy is that it should be 20%—they overshoot that by a considerable degree and they are very happy with that. This is relevant to the threshold question because, if a sub-regional authority has maintained a high threshold, below which it does not need to advertise—say, an education authority in New South Wales with a contract for food or any kind of crop—how will our businesses know about it? That 30% carve-out for SMEs reduces the space where we will be able to compete. The Minister referenced that in his letter to me, and I am still scratching my head as to why the Government think that British SMEs will equate to Australian SMEs. I do not think that is the Australian policy; I think it is to encourage Australian SMEs, not British SMEs. I would be grateful if the Minister could clarify that point.
Finally, I agree very much with the comments from the noble Baroness, Lady McIntosh of Pickering. Rishi Sunak simply cannot get away with making a commitment and, when faced with the mechanisms to deliver on that commitment, ignore it. So clarity from the Government on how this Bill, with this procurement, will support British farmers is fundamental. I hope the Minister can be crystal clear on that when he winds up this group.
My Lords, I begin with an apology that I did not at the beginning declare or direct noble Lords’ attention to my register of interests. There was a comment at Second Reading, and I hope I have ensured always that I am entirely transparent about my personal holdings, which I do not believe come into conflict with this debate. It is certainly worth ensuring that there is always full transparency, and I welcome any comments or question around that.
This has been a wide-ranging debate, and I thank noble Lords for their valuable contributions, particularly my noble friends Lord Lansley and Lord Howell, for their helpful support, and the noble Lord, Lord Lennie. This has been a broad debate about the free trade agreement between Australia and the UK and New Zealand and the UK. I am happy to cover some of those important points, but I start by taking the noble Lords back to what I said at Second Reading: that this is a Bill about procurement specifically. It seeks to change the UK’s current procurement regulations in a number of ways to implement commitments arising from chapter 16 of the UK-Australia and UK-New Zealand FTAs.
If noble Lords do not mind, I will go through them, because I think it is very relevant and important for this debate: after all, that is what we are debating in these amendments. These changes provide guaranteed legal access to Australian and New Zealand suppliers to the procurement opportunities covered by the FTAs, as we discussed earlier. They streamline the options for local government issuing notices for future procurement opportunities, which I think is current practice in large part and is right, in any event, for our own procurement update. They clarify that contracts of undefined value are in scope of the trade agreements. Again, I think most of us in this House will agree with that; contracting authorities trying to get around making sure they are covered by the procurement chapters by having unspecified contract amounts seems unreasonable, in my view. Having been, in my past, part of a small business tendering for these sorts of contracts, I think it is very important that that is clarified: it is extremely helpful, regardless of any trade agreement we enter into.
The Bill ensures that contracting authorities cannot avoid international commitments by terminating the contract process. This effectively means that if you think you are going to award a contract to a party that you do not like, for whatever reason, that is not according to the law, you can be challenged for that. Again, we would want those privileges afforded to us, and we, as good-government enthusiasts, would not want not to extend those privileges and rights to all contracting parties, frankly.
I think it is important for us to absorb those specific measures: it helps put the rest of these discussions in context. All these measures are logical improvements to our procurement system. They align with the Procurement Bill; they do not create additional work for tendering authorities, in the main; and they ensure that Australian and New Zealand suppliers are protected by our laws of fair play and good governance. They prevent unfair discrimination in contracting, and I believe the whole House approves of their ambition.
I turn to what noble Lords have raised in their amendments. On impact assessments, the Government have already published impact assessments. We have been discussing them. I have them here in my hand: they are weighty documents. These assessments, which were independently scrutinised by the Regulatory Policy Committee and rated as fit for purpose, include: assessments of the potential economic impact on UK GDP; the impacts on the nations and English regions; analysis on sectors of the economy and business, including small and medium-sized enterprises; and additional assessments on consumers, labour markets, environmental impacts and more. I am glad we have done these impact assessments: it has allowed us to have the debate, and we are well aware of the issues these impact assessments raise, which is why we have these debates. It has helped us, in turn, to ensure we negotiate the best possible deal for this country. So we have the impact assessments; they are alongside me now.
Additionally, as I reaffirmed at Second Reading, the Government have committed to undertake monitoring reports, and to an evaluation report within five years of entry into force of the agreements. These evaluation reports will cover a broad range of impacts across the whole agreement and will not be limited to the procurement chapters; it is very important that this is an impact assessment of the entire free trade agreement. To perform an assessment before two years, which I think has been suggested and was covered by the noble Lord, Lord Kerr, would clearly be of little value and would also be costly to the taxpayer. If we are to have impact assessments, they have to have enough time to run so that we can see what the impact is. Clearly, the Government and all of us as individuals are keen to learn what those impacts will be, and I believe that they will be extremely positive for this country. To perform another impact assessment now would simply replicate work we have already done to no effect. It would cost the taxpayer and would delay implementation of our agreements. I think that position is made relatively logically.
The scrutiny arrangements we currently have in place also cover procurement. By way of example, I repeat the eloquent words of the International Agreements Committee of your Lordships’ House, which remarked in its report on our trade deal with New Zealand,
“We welcome the inclusion of a procurement chapter that extends commitments above those provided for under the WTO Government Procurement Agreement.”
I note that some of these amendments—specifically, Amendments 3, 4 and 5 in the name of the noble Lord, Lord Lennie, Amendment 7 in the name of my noble friend Lady McIntosh of Pickering and Amendments 15, 16, 17 and 18 in the name of the noble Lord, Lord Purvis of Tweed, and the noble Baroness, Lady Bakewell of Hardington Mandeville—are seeking further review prior to the regulations being made from the Bill. I will address this point later on in my remarks after setting out what we are doing in the thematic areas raised in this group. I think that is important: it is right to have a debate.
On agriculture and farming, I thank my noble friend Lady McIntosh for tabling Amendment 7. She has illustrated her passion for UK farming over the years and draws on her extensive experience of chairing the Environment, Food and Rural Affairs Committee in the other place. I also thank the noble Lords, Lord Lennie and Lord Purvis, and the noble Baroness, Lady Bakewell, for tabling Amendments 3, 9 and 15, which similarly focus on farmers. I hope that I can provide reassurance to them all as to why these amendments are unnecessary. I also thank the noble Baroness, Lady Humphreys, for her comments on this. Importantly, I encourage all noble Lords to enjoy locally sourced, grass-fed, delicious lamb, as I did last weekend in preparation for this debate.
It was locally sourced—that is my focus, but lamb from anywhere in the UK is delicious, as is all our produce.
I reiterate my personal passion for and commitment to this important sector of our economy and the people in our farming and rural communities who work in it. This is one of the most special and unique features of our nation. As someone who grew up on a farm—many of my family are farmers and I spend what time I have, when not here working with noble Lords to promote our free trade agenda, on a farm—I can say that there is no one more sensitive to and aware of the effects of these changes on farmers and their communities. I continue to bang the drum for our agricultural products whenever I travel around the world.
It is important to emphasise that this Government consider agriculture a key part of UK trade policy. We have made this a key focus in designing these deals. British farmers are among the best in the world, and we want to ensure that farmers and producers benefit from the opportunities provided by UK FTAs, while ensuring that appropriate protections are in place for the most sensitive products. This is why we have invested so much in concepts such as farming advocates around the world and why I spend a great deal of my time trying to get investment into agricultural technology developments that will ensure that our farmers are equipped for the future and can profit fully from this work. We are a world leader in agricultural technology and new methods of planting, harvesting and husbandry. We need to repoint this important discussion—I hope to do so in future—to focus on the possibilities for the future as much as to protect the treasure that we already have.
I acknowledge the concerns that noble Lords have raised, most recently at Second Reading, pertaining to the liberalisation of agriculture, in particular that of beef and lamb. The Government have sought to balance the benefits of free trade for UK businesses and consumers with robust protections for our agricultural industry. Within the Australia and New Zealand agreements, the Government have secured a range of measures to safeguard UK farmers, which my noble friend Lady McIntosh and the noble Baroness, Lady Humphreys, wanted me to focus on in particular. I apologise if this is too detailed, but they include tariff rate quotas for a number of sensitive agricultural products, such as cheese and butter as well as beef and sheepmeat, product-specific safeguards for beef and sheepmeat from Australia, and general bilateral safeguard mechanisms that provide a safety net for industry.
The noble Lord, Lord Kerr, raised the very important point of whether this is a template for other free trade agreements. I stress that we look at every free trade agreement on its own merits; it is absolutely right that we should negotiate each one separately. What is in this agreement will not necessarily be replicated in other agreements, but I think that we have been very successful in the way we have structured these deals to provide safeguards and, as I have said in this Chamber before, the flexibility built into these FTAs to enable us to evolve the specifics over time. I hope that the broad concept and structure of how we enter these FTAs will be replicated and continue to be appointed as successfully as possible.
On agreements around agriculture and sensitive industries, we are clearly aware that every trade deal must be negotiated specifically to ensure that we get the best deal for this country. It is very important that we take the right amount of time to execute them. I hope noble Lords will join me in wishing our Secretary of State all speed in coming to sensible conclusions, while always ensuring that the quality of the deal is not sacrificed to try to conform to some arbitrary timeline. We want the best deals for the future, and it is important that they are specific to each country with which we sign treaties.
Within the Australia deal, the first measure—known as the tariff rate quota—lasts for up to 10 years. There was some discussion around this, so I would like to clarify it. Depending on the product, higher tariffs are automatically applied to imports above a certain volume threshold, known as the quota. The second measure—this is for the Australia deal—from years 11 to 15, is known as a product-specific safeguard, which has a broadly similar effect. It allows the UK to apply significant tariffs—for example, 20% for beef and sheepmeat—above a volume threshold. Additionally, on sheepmeat, if volume thresholds under tariff rate quotas in years 1 to 10, or product-specific safeguards in years 11 to 15, for sheepmeat are consistently filled, there will be an automatic reduction of the quota safeguards by 25%. That is very important. If we see a continued excess of imports in those products, we can then reduce the quota allowances to ensure that more pay higher tariffs. That is quite an innovative measure that has been put into these mechanisms.
My Lords, I think this goes to the crux of my amendment. The NFU has specifically requested an answer to why it is time-barred. It is 15 years, as my noble friend said, for beef and lamb, but for sugar it is only eight years and for dairy it is lifted after six years. Have there been time limits in previous agreements? I think probably not, given the EU.
I thank my noble friend for those comments. I do not know our previous treaty structures—those that were pre-EU were long before I was alive, but I am happy to see whether these have been replicated in other trade agreements. The point is that they are innovative, and they are designed to ensure that we can protect ourselves over a prolonged period of time, which I think is very important. We are not looking at immediate liberalisation in these sensitive areas; we are looking at having complex and well-thought-through mechanisms that protect our agricultural industry while allowing for the gradual liberalisation of our trade.
If I may carry on, it may clarify the answer to my noble friend’s question. The third measure, a general bilateral safeguard mechanism, will provide a temporary safety net for industry if it faces serious injury from increased imports as a result of tariff liberalisation under the FTA. This applies to all products. This protection is available for a product’s tariff liberalisation period plus five years, in order to allow domestic industries time for adjustment.
I hope the Committee is reassured to know that the New Zealand deal includes a range of tools to protect sensitive agricultural sectors in the UK. Tariff liberalisation for sensitive goods—for products such as cheese and butter, as well as beef and sheepmeat—will be staged over time to allow time for adjustment. There are tariff rate quotas on a range of the most sensitive agricultural products. These limit the volume of duty-free imports permitted and, in the case of sheepmeat, will be in place for a total of 15 years. A general bilateral safeguard mechanism, which provides a temporary safety net for industry if it faces serious injury, or threat of serious injury, from increased imports as a result of tariff elimination under the FTA applies to all products.
I raised at Second Reading why we do not expect products from Australia or New Zealand to flood the UK market from the current low levels at which they are imported. I believe the noble Lord, Lord Kerr, also raised this. The fact is that, in kilogram terms, 80% of Australian beef and 70% of Australian sheepmeat exports in 2021 went to markets in Asia and the Pacific. We would expect any increase in imports into the UK to displace other imports, probably those from the European Union, rather than compete with UK farmers. I think this is very important in the sense of where we see these exports going. We can be reassured that the main market for Australia and New Zealand absolutely is, at the moment, Asia. Further, diversifying the potential source of imports will help UK food security.
I point out that New Zealand already has a significant volume of tariff-free access into the UK for sheepmeat, but last year used less than half of that quota. That means that New Zealand could already export more sheepmeat to us, tariff-free, but chooses not to. I think that is something that we should bear in mind. In many instances, the quotas—particularly for sheepmeat in Australia—are not being utilised by a significant margin. That should give us some reassurance.
During this debate, noble Lords—my noble friend Lady McIntosh in particular—have also raised concerns over standards of production in Australia and New Zealand, particularly in relation to animal welfare and the environment. This is a very important point on which I want to reassure noble Lords. We are proud of our standards in the UK, which, importantly, we have retained the right to apply and to regulate in future. The deals do not provide for any new regulatory permissions for imports. All animal products imported into the UK must continue to comply with our existing import requirements—including hormone-treated beef, which was and remains banned in this country.
I am very aware of my noble friend Lady McIntosh’s comments about the Food Standards Agency. I will look into that, but I believe she is implying that there are no checks at our borders for imported meat products, and I would be completely surprised if that was the case. I will certainly look into it, but I am reassured by my officials that we run a coherent inspections regime, and that will not change. It is very important that we feel reassured that we have this regime. In fact, the reports I have read from the Trade and Agriculture Commission have referred specifically to that.
On animal rights and welfare—which is a particularly important issue to me personally—I spoke to Minister Watt, the Australian Minister for Agriculture, last week. In particular, I went to see him to discuss his commitment to this area, which he reiterated to me significantly. He also updated me on the progress of appointing a new inspector-general for animal welfare; I think the noble Baroness, Lady Bakewell, will be pleased to hear that.
The independent Trade and Agriculture Commission —a body my noble friend Lady McIntosh was instrumental in establishing—concluded on this point that the UK-New Zealand and UK-Australia FTAs do not affect the UK’s statutory protections for animal and plant life and health, animal welfare and the environment, and in some areas actually strengthen the UK’s right to regulate. It concluded in relation to the UK-Australia deal specifically that
“the FTA does not require the UK to change its existing levels of statutory protection in relation to animal or plant life or health, animal welfare, and environmental protection.”
I raised these points at Second Reading, and I believe I used that quote then. I hope I have made it very clear that our standards and protections do not change on account of our FTAs with Australia and New Zealand—I ask all noble Lords, please, to hear this. The TAC continued:
“even to the extent that the FTA imposes greater trade liberalisation obligations on the UK, as it does, for example, by reducing customs duties, the UK not only has the same rights as it would under WTO law to maintain and adopt protections in the areas covered by this advice, but in relation to animal welfare and certain environmental issues it has even greater rights than under WTO law.”
I take this opportunity to say that this is not the end of the agreements but the beginning. These deals also establish a forum for the UK to raise concerns, co-operate and share information under the FTA committee structure. This structure spans the whole of the FTAs. For example, the UK-Australia FTA provides for sub-committees covering technical barriers to trade, working groups on animal welfare, dialogues on legal services, and numerous other sub-groups and committees that will allow us, if we feel at any point that these FTAs have issues, to raise this with our trading partners formally or through other mechanisms to ensure that we come to a resolution.
I appreciate that I have gone into some detail—
I am grateful to the Minister for giving way. Since the noble Lord, Lord Lansley, mentioned the TAC letter to the Secretary of State when it reviewed the agreement, let me quote just one part, because I am having difficulty squaring what the TAC said and what the Minister has just said on environmental aspects of the agreements. The TAC report says that
“we determined that it was likely that products affected by the practice at issue would be imported in increased quantities under the FTA. This was true, for instance, of plant products produced using pesticides and fungicides that are not permitted, or being phased out, in the UK.”
If the Minister is so clear, I do not know how it is possible that we will import under the FTA increased amounts of products which use things we have banned here.
I always appreciate the noble Lord’s interventions. Hopefully, I will cover this issue as I go through my notes. I will continue to go through these points because they are important, and it is important that noble Lords hear from me the relevance we place on these discussions. This really is the meat, as they say, of the free trade debate, although I do not see that it relates specifically to this Bill. I appreciate that I have gone into a lot of detail, but these are important issues. I am grateful to the noble Lord, Lord Purvis, for his comments and to the noble Baroness, Lady Bakewell, and my noble friend Lady McIntosh for tabling their amendments in the interests of our frankly brilliant farming communities. I hope I have to some extent been able to reassure them that their amendments are not required.
Turning to Amendments 4, 13, 14, 17 and 18 from the noble Lords, Lord Lennie and Lord Purvis, and the noble Baroness, Lady Bakewell, on environmental, social and labour considerations, I want to reassure the House that both the Australia and New Zealand FTAs include comprehensive chapters that cover labour and animal rights and commitments not to derogate from environmental and labour laws, to reaffirm our climate commitments under the Paris Agreement and to strengthen co-operation in a number of areas. The Government are committed to upholding the UK’s high environmental standards, and we will continue to ensure a high level of environmental protection in our trade agreements.
These chapters also include commitments not to derogate from laws, regulations and policies in a manner that weakens or reduces the level of animal welfare protection as an encouragement for trade or investment between the parties. For example, the UK-New Zealand agreement contains the largest list of environmental goods with liberalised tariffs in any trade deal, supporting both countries’ climate and environmental goals through trade policy. I think the noble Lord, Lord Lennie, touched on that—the importance of trying to ensure that we benefit in the area of net-zero in particular. We have that specifically in our treaties. Provisions included under these FTAs went further than both Australia and New Zealand had previously gone before.
I turn to the review of negotiation and Amendment 12 in the name of the noble Lord, Lord Lennie. This would create a duty of the Secretary of State to undertake and publish a review of the lessons learned from negotiating the procurement chapter. I agree that learning the lessons from negotiations is crucial to the UK getting the best outcome from them. Indeed, we already do this, so it is not necessary to create a statutory requirement to undertake such a review. All negotiations are different, as I have said, but my department is committed to learning from each negotiation and applying those lessons directly to its work, both in chapters and across negotiations. DIT has a continuous improvement team dedicated to learning lessons from trade negotiations. I am confident that this approach towards negotiating procurement chapters allows for high-quality chapters that work well for British businesses and consumers. I hope this provides reassurance to the Committee.
On SMEs, which are very relevant and relate to Amendment 16 in the name of the noble Lord, Lord Purvis, I reassure the Committee that the procurement chapters of both agreements include articles on facilitating the participation of SMEs in procurement. Both chapters also include provisions on continuing to co-operate with Australia and New Zealand to facilitate participation of SMEs over the lifetime of the agreements.
We worked very hard to ensure that SMEs were engaged before and during the negotiations. Indeed, Lucy Monks of the FSB gave evidence to the Commons on the engagement the Department for International Trade has carried out with SMEs. Hopefully, what she said is heard:
“The Department for International Trade has been talking to us and other bodies about encouraging opportunities. It is an ongoing process.”
I know the department is extremely keen to see these agreements brought into effect. We are very serious about our ambitions to support SMEs in trade, and we seek a dedicated SME chapter and SME-friendly provisions throughout all our trade agreements, as we have done in these ones. I am grateful to the noble Lord for raising this issue during the passage of the Bill; however, I do not believe his amendment is necessary, given what the Government are doing to support SMEs and appropriately assess the impact of our trade deals on this vital part of our economy.
In concluding, I wish to return to the point on impact assessments being required prior to any regulations being made. In addition to the reasons I gave earlier in relation to what the Government have already done on impact assessments in each area raised, requiring further assessments to be done before regulations can be made would delay the entry into force of these agreements, as I am sure noble Lords will agree. This would delay the point at which UK businesses and consumers could benefit from the advantages of these agreements with Australia and New Zealand—an outcome to which I simply do not believe your Lordships’ House aspires.
We have covered a lot of ground in this debate, but I hope I have been able to demonstrate in each important area the wide range of work and analysis that the Government and other groups independent of government have done and will do to ensure that these specific issues are addressed. I ask noble Lords to withdraw or not press their amendments.
My Lords, that was a long one. We have been here for half an hour listening to the response on what is essentially a fairly simple set of amendments about impact assessments and reviews.
I start with the noble Lord, Lord Lansley, who brought up the behaviour of his right honourable friend George Eustice. I am quite grateful to George Eustice, because he wrote my speech for me when he was critical of this agreement to the degree that he was, but I would say that you are going to get that kind of discipline back into the Tory party only when it becomes a single party. There are at least three Tory parties continuously at war with each other. It seems to me that, as long as that continues, it is good for us but not so good for the Tories. We have been there before ourselves; we are not in that position now, thank goodness. We will see what happens with that one.
The Minister listed the areas where impact assessments have already been undertaken or are no longer necessary, but Labour’s stand is that climate change, the NHS and the regions were missing from that list. It seems to me that the purpose of an impact assessment in a trade agreement is to give a more precise prediction of what is expected in these areas from the agreement, then the reviews measure whether the impact assessment proved to be about right, wide of the mark or different. The Minister said that this does not set a precedent for other agreements, but it does, whether he likes it or not. Everyone will be looking at this agreement, as it is the first one, and will be looking to make predictions about their own position in relation to the UK as we come to trying to make agreements with those countries. The noble Lord, Lord Kerr, is right: the nearer we are to import products, the higher the risk for the UK. It is an obvious statement, but Australia is as far away as we can get. It does, however, have an impact. This agreement has a bigger impact than just the pounds and pence that it will produce for the UK and Australian economies.
With those remarks, I beg leave to withdraw the amendment; we will probably return to this issue at a later stage.
Amendment 3 withdrawn.
Amendments 4 to 6 not moved.
Clause 1 agreed.
Debate on whether Clause 2 should stand part of the Bill.
My Lords, in this little group, I will speak to why I query whether Clause 2 and Schedule 2 should stand part of the Bill. I will also speak briefly to Amendment 20, which I realise is in the name of the noble Lord, Lord Lennie. He beat me to it; I had asked the clerk whether I could table exactly that amendment. Rather than just deleting Schedule 2, the purpose of that amendment is to request that draft regulations
“be approved before a statutory instrument can be made in England, rather than allowing them to be annulled by a resolution of either House”.
It really goes to the heart of the fact that, as we have seen, there are only skeleton outlines in this Bill of what the Government are seeking to achieve.
Clause 2 and Schedule 2 provide for different types of provision that could be made by regulations under Clause 1 where needed—for example, by consequential provision—and it gives effect to, in my case, not just Schedule 1 but Schedule 2. They retrospectively set out restrictions on the use of power by devolved authorities and provide for how regulations under Clause 1 can be made.
I refer particularly to Part 3 of Schedule 2, which states:
“The power to make regulations under section 1 in relation to … the government procurement Chapters of the UK-Australia and UK-New Zealand FTAs, or … any modification of either Chapter which requires ratification, is capable of being exercised before the agreement or (as the case may be) modification concerned is ratified.”
Referring back to earlier debate as to why these regulations are particularly pertinent and important, especially now, paragraph 10 of the Food Standards Agency’s Our Food 2021: An Annual Review of Food Standards Across the UK, its most recent review, says:
“New free trade agreements (FTAs) with Australia and New Zealand are in the process of being ratified at the time of writing. The UK Government has a statutory obligation to report to the UK Parliament on whether each FTA maintains statutory protections for human, animal or plant health, animal welfare or the environment. The FSA and FSS are providing advice on statutory protections for human health during this process.”
In relation to food coming in from the EU, the report states:
“Analysis of compliance levels in import controls checks carried out between 2020 and 2021 shows that there has not been any meaningful change in the standard of imported goods as a result of either the pandemic or the UK’s EU departure”— so far, so good. It then states:
“The UK Government recently announced that full import controls for goods coming from the EU to Great Britain would be further delayed and replaced by a modernised approach to border controls by the end of 2023.”
If my understanding is correct, until the free trade agreements take effect and the Procurement Bill and this Bill are enacted, most of the food will be coming directly and indirectly from third countries, Australia and New Zealand, through the EU.
The report goes on to state that, until the end of this year,
“the UK food safety authorities continue to manage risks through pre-notifications, which were introduced in January 2022 for certain high-risk food and feed imports, and through enhanced capability and capacity put in place as part of EU exit planning to detect and respond effectively to food and feed incidents”.
The debate on this small group of amendments is simply to ensure that in what the report calls
“a particularly momentous period for UK food”, we are in a position to ensure that our food is safe. Every 10 years, there happens to be a food scare or health hazard. We had BSE in the 1990s, in the 2000s we had foot and mouth disease, and in 2012 we had the fraud of horsemeat being passed off as beef. This debate gives my noble friend the opportunity to assure the Committee that either the law is sufficiently clear as it is or that regulations will be made under Clause 2 and Schedule 2, to which I have referred, ensuring that sufficient checks are in place.
Without checks at the frontier, we will be in a position of relying on our cash-strapped local authorities to do the checks on food outlets. These vary and include kebab parlours, supermarkets, restaurants and bars—everywhere serving foods. I would hazard a guess that the checks taking place at the moment are very patchy. As things march on, much greater pressure will be put on these checks.
Given that the Food Standards Agency has identified that we need presumably not just to recognise this new statutory obligation on the Government to report to the UK Parliament on whether each free trade area maintains statutory protections for human, animal or plant health, animal welfare and the environment but to be assured that it is done either at the point of entry or by local authorities, I would like to know what the mechanism will be and what resources will be made available, if indeed our local authorities are asked to do this. It will obviously pertain to food that is served and procured through our prisons, schools, hospitals and all such institutions.
With those few remarks, I beg to move my opposition to the clause.
My Lords, I will speak to Amendment 10 and Amendments 20 to 35 in this group, which are consequential to it.
As the UK Government have prerogative powers to negotiate international agreements, Parliament has limited scope to make substantial changes to such an agreement, not least as it has already been formally signed, and opportunities to block ratification are therefore limited. As a result, it is of concern to see the Government waiting so late in the day before tabling the agreement to meet the statutory 21-day scrutiny period. It was not tabled until
Furthermore, it is shameful that Ministers have taken such a long time to conclude negotiations and long ago signed the trade deals but have not appeared before Parliament to give a full account. Ministers have been granted significant powers in the trade negotiations. The Labour Party will continue to push for more and wider scrutiny, so that parliamentarians and wider groups can properly impact on the process.
To help achieve this, our Amendment 10 and those that are consequential to it would bring in the super-affirmative procedure where an instrument is, or, as the case may be, regulations are, subject to the super-affirmative procedure. Under the super-affirmative procedure, a Minister presents a proposal for a statutory instrument and an explanatory statement. Committees in the House of Commons and House of Lords consider the proposal and can make recommendations. The Minister can then formally present or lay a draft of the statutory instrument under the affirmative procedure. We consider this necessary due to the limited other opportunities for scrutiny that come from legislation stemming out of negotiations, not least with the Procurement Bill changes that will limit this further and the Government’s steps to avoid scrutiny.
Our other amendments would implement some of these steps individually, such as requiring draft regulations to be laid in advance, but without the requirement for committee consideration that the super-affirmative procedure would bring. Amendments 34 and 35 would sunset the ability to make regulations, either two years after the Bill passes or on the UK’s accession to the CPTPP—which the Government said would happen last year.
My Lords, I have considerable sympathy with those who argue that the regulatory procedure is insufficient for looking at these regulations for all the familiar arguments, which I need not go into.
Our role in the House of Lords in relation to the negative procedure is nugatory. I do not think that that is quite right. The matters we are discussing are quite important, so I support Amendment 20. Part of my concern is that I am worried about Clause 2 itself. I have mentioned this before. I would be very grateful if the Minister would construe what Clause 2(1)(a) means. It says that:
“Regulations under section 1 may … make provision for different purposes or areas”.
What does “different” mean? Looking at it, I see that regulations under Section 1 must be provisions to implement the procurement chapters of these two agreements. So what are the “different purposes” mentioned in Clause 2(1)(a)? This is rather permissive drafting. I want to know what “different” means. Could “different” mean going beyond the scope of the procurement chapters in the free trade agreements with Australia and New Zealand? If it does mean that, we are giving the Government a pretty wide power in Clause 2. If it does not mean that, why is it necessary to have the language at all?
My Lords, I thank all noble Lords for their comments. I am delighted to respond to the thoughtful contributions we have heard—from the noble Lords, Lord Lennie and Lord Kerr, and my noble friend Lady McIntosh—on the issue of scrutiny and how regulations made under the Bill will be made.
Before I focus on the amendments themselves, I would like to draw attention to the beautifully short report published by the Delegated Powers and Regulatory Reform Committee on this Bill, on
I reiterate that the Bill is required to implement two free trade agreements that Parliament has already scrutinised. The scrutiny process under the Constitutional Reform and Governance Act was completed for the Australia FTA in July 2022 and for New Zealand in December 2022. We engaged extensively with Parliament throughout the negotiation process. For these deals, this included eight public progress reports during talks, including extensive information published at agreement in principle, and 12 sessions with the International Agreements Committee and the Commons International Trade Committee, both in public and in private with Ministers and/or officials, before and after signature. There were nine ministerial Statements—three oral and six written—and eight MP briefings, plus one on the Trade (Australia and New Zealand) Bill.
A programme of statutory instruments has been put in place to implement the agreements to ensure that the UK is not in breach on its entry into force in the following areas: rules of origin and tariffs, intellectual property, government procurement, immigration rules changes, and, for the New Zealand FTA only, technical barriers to trade.
The Government have long acknowledged that, due to their length, complexity and importance, FTAs warrant a bespoke framework of scrutiny, and our full range of commitments is contained within the exchange of letters conducted last year between my predecessor, my noble friend Lord Grimstone, and the International Agreements Committee.
I turn to the specific issues raised by these amendments. It is the Government’s view that the amendments would require disproportionate scrutiny of the regulations to implement what Parliament has already had the opportunity to scrutinise, including through noble Lords’ scrutiny of this Bill. As it may be of interest to noble Lords, I can commit to sharing the draft procurement SIs ahead of Report. They will be in a draft version subject to change, due to consultations, as noble Lords can imagine, legal checks and recognising that the Bill is still undergoing scrutiny by your Lordships’ House. I hope that the noble Lord, Lord Purvis, is satisfied by that.
In all the meetings and information provided in various forms throughout the process—and I accept that there was a lot—was any opportunity given for anyone to say no to any of it?
This is a consultative process designed to get as much as much input as possible into what is ultimately a negotiated outcome. As a House, we have the opportunity to vote on this Bill alone. I hope that we certainly will decide to support it, so I do not really understand the noble Lord’s point, in the sense of people being able to say yes or no. We are voting on a piece of legislation that is extremely relevant to the execution of our free trade agreements, which is why, if I may be so bold, we have had a wide-ranging debate in this House on the issues behind the free trade agreements specifically relating to this Bill, which, I think we all agree, is particularly specific and without contention. My answer to the noble Lord is that we have had a huge debate and a very high degree of consultation and have followed more than the process laid out for scrutinising free trade agreements in Parliament and nationwide.
The noble Lord, Lord Lennie, will want me to be specific in my response to the amendments, but he will be glad to know that there are significantly fewer pages in my response to this group than in the previous response. There is precedent for the approach the Government have taken. Clause 1 of the Trade Act 2021 was used to implement the UK’s accession to the WTO agreement on government procurement, the GPA, and the regulations made there were subject to the negative procedure, so that is important to note. Parliament had the opportunity to scrutinise the UK’s accession to the GPA through the CRaG process before the subsequent regulations were made. This is the same situation we have here for the Australia and New Zealand free trade agreements. I am very comfortable in confirming that as the ultimate point.
Amendments 10, 21, 22, 24, 26, 28, 29, 31 and 33 relate to the super-affirmative procedure, which I believe the noble Lord, Lord Kerr, raised, and are tabled in the name of the noble Lord, Lord Lennie. This is the process used for statutory instruments when an exceptionally high degree of scrutiny is thought appropriate. An example is remedial orders, which the Government can use to amend Acts of Parliament should the courts find them in breach of the European Convention on Human Rights. That example seems significant, but I respectfully suggest that it is disproportionate to use this process to approve the minor technical changes needed to implement the procurement commitments in the Australia and New Zealand FTAs. It would also represent a significant use of parliamentary time when Parliament has already debated the fundamental issues.
Another important consideration is how the use of the super-affirmative procedure will lead to delays in these agreements entering into force, which I think we have all agreed is not desirable. Parliament has had sight of the Australia and New Zealand agreements for 13 and 11 months respectively. It is right that we take appropriate time to scrutinise these deals properly, but we must now get on with entering these agreements into force to ensure that UK businesses and consumers can benefit from the significant economic advantages as soon as possible. This is also the shared desire, as I stated earlier, of the Labour Governments in Australia and New Zealand.
In terms of modifications, there may be small changes to be made to the procurement chapters—for example, machinery of government changes. It is important to stress that the Government have no intention of making significant changes to these agreements. I have stated this before and do so again. The Government are proud of the Australia and New Zealand FTAs and have no intention of significantly modifying them in structural terms.
The amendments tabled by the noble Lord, Lord Lennie, also deal with the scrutiny of regulations made by devolved Ministers and regulations made by a Minister of the Crown jointly with a devolved authority. The increased level of scrutiny set out in the proposed amendments would be as disproportionate in the devolved legislatures as in the UK Parliament. The reasons I have already given are as applicable to secondary legislation made in Scotland, Wales and Northern Ireland as they are to secondary legislation made in Westminster concerning the specifics of secondary legislation relating to this Bill, such as technical changes relating to machinery of government changes.
The time required for completing this level of scrutiny in each of the devolved legislatures would delay entry into force even further. This is not in the interests of businesses and consumers in Wales, Scotland or Northern Ireland. His Majesty’s Government will continue to work closely and consult with the devolved Administrations. We have already covered comments about the approval we have received from the devolved nations for our high level of consultation.
Before concluding, I will cover some of the other points raised in the amendments. Amendments 34 and 35, in the name of the noble Lord, Lord Lennie, would ensure that the powers in this Bill will expire, even if provision under it is still required. The Bill is about implementing our commitments in the procurement chapters of the agreements, but it is also about maintaining our commitments. Therefore, any amendments that remove this power while it is still needed, frankly, cannot be accepted.
While these amendments would permit the procurement chapters to be implemented, they would remove the power when it may be needed for modifications. We envisage that further modifications in the procurement chapters will relate mostly to simple machinery of government changes and the subsequent updating of lists of government entities. I stress the importance of those very specific points. It is also very unlikely that these changes would be made until the agreements have aged several years.
I must disagree with the premise of Amendment 35, under the terms of which the Bill would lapse when the UK joins the CPTPP. Bilateral free trade agreements such as those signed with Australia and New Zealand sit alongside multilateral agreements such as the CPTPP and the WTO Agreement on Government Procurement. The procurement chapters of the Australia and New Zealand agreements will not be superseded by the UK’s accession to the CPTPP, whenever that may be. Accordingly, the powers in this Bill will still be needed when the UK has acceded to the CPTPP in order to implement future modifications to the Australia and New Zealand agreements.
I want now to address the question of whether Clause 2 and Schedule 2 should stand part of the Bill, as raised by my noble Friend Lady McIntosh, as these parts of the Bill ensure the proper functioning of Clause 1. Clause 2 ensures that the powers in the Bill can be exercised effectively—for example, by enabling any consequential provision to be made as necessary. This can be used to ensure consistency across secondary legislation. In addition, this clause is needed to set out how devolved Administrations can use these powers, as it enables Schedules 1 and 2 to have effect. On Schedule 2, the power in Clause 1 ensures that the UK can amend procurement regulations to meet its obligations under those chapters. Schedule 2 is necessary to specify how those changes can be made, by both a Minister of the Crown and a devolved authority.
My noble friend covered a number of other very important points in relation to standards and the importance of ensuring that we maintain the integrity of our borders. I assure her that I will personally look into the matters she has raised. I hope I will be able to reassure her that we maintain our borders to the highest possible degree of integrity.
I realise that my noble friend and I did not have the meeting last week that he very kindly invited me to, as I was involved in other legislation. Could he perhaps write to me on the two specific questions I have asked? First, how do the Government expect to fulfil their statutory duty to report on the new obligations under this Bill to maintain protections for human, animal or plant health, animal welfare and the environment? Secondly, how and where will the food be checked: when it is coming into the country, at the borders; or when it is being offered to be eaten?
I thank my noble friend for those comments, and I will be happy to respond to both questions in writing. She raises the very important point that, to have security and trust in these free trade agreements, we need to know that they are properly policed and monitored. I am completely with her on this, and I hope the reassurances I have already given will be seen as significant and can be passed on to my noble friend in the detail that she requires.
If I may come to a conclusion, I thank noble Lords again for their contributions, but I hope I have demonstrated that these amendments are not necessary, and I hope that I have provided further reassurance to noble Lords today. I therefore ask that the amendments not be pressed.
I still have not heard what “different” means in Clause 2(1)(a). I do not need to know now, but if I do not hear by Report, I shall be tempted to join the noble Baroness, Lady McIntosh, in arguing that Clause 2 should not stand part of the Bill.
I appreciate the comment made by the noble Lord. I am told that it refers to Clause 1(1)(b), which says,
“otherwise for the purposes of dealing with matters arising out of, or related to, those Chapters.”
I am happy to have a more detailed conversation with the noble Lord about the specifics of the Bill at a later stage. As the noble Baroness mentioned, I have offered to all Members of this House to have one-to-one or group discussions about the agreement, and I have kept my diary open, but the meeting that I was so looking forward to last week was cancelled due to no one attending. I hope the next meeting that I arrange will have a few more people coming, since I look forward to the debate and am happy to be specific about the details.
I am going to come to a conclusion and then I will hand back to the noble Lord.
I ask that these amendments not be pressed, and maintain that Clause 2 and Schedule 2 should stand part of the Bill.
Just before the Minister finally sits down, I wonder whether he might be kind enough to write to the noble Lord, Lord Kerr, and ensure that copies are sent. These powers are a perplexing issue. The Explanatory Notes say they are necessary for consequential elements, but that would be covered by Clause 1(1)(b). The Minister says we need these powers in the long term, but they are repealed by the Procurement Bill as soon as that Bill becomes an Act, because this Bill is superseded. There is no part of this Bill that is protected by the Procurement Bill; this Bill will be repealed entirely. I do not expect him to reply now, but, if he could explain that point in writing in advance of Report, that would be very helpful.
I appreciate that intervention, and I will certainly do so. I am happy to have further meetings on this issue. I thank the noble Lord for that comment.
I am grateful to all who have spoken and particularly to the Minister for responding.
Perhaps it is the advocate in me, but I have always worked better from a written brief. It would have been helpful for me to have had the meeting with my noble friend to explain my thinking behind the problems that I have with Clause 2 and Schedule 3. It would be helpful if he could reply to me with a copy to the noble Lord, Lord Kerr, and perhaps place a copy in the Library—at which point I will decide whether further action is required on Report. We have had a good debate on these super-affirmative regulations. I know this is something that the Law Society of Scotland has put forward at other stages of other Bills, so it has a lot of support on the right issues in the House.
What my noble friend said about the Delegated Powers Committee is right: there are a number of practitioners in the country who are concerned that the broad and unspecified powers to alter public procurement rules in the Bill should adequately reflect the values of transparency and openness that I know my noble friend is wedded to. With those few remarks, I withdraw my opposition to Clause 2 standing part of the Bill.
Clause 2 agreed.
Amendments 7 to 19 not moved.
Schedule 1 agreed.
Schedule 2: Regulations under section 1
Amendments 20 to 33 not moved.
Schedule 2 agreed.
Clause 3 agreed.
Clause 4: Extent, commencement and short title
Amendments 34 and 35 not moved.
Clause 4 agreed.
Bill reported without amendment.