Examination of Witnesses

Trade Bill – in a Public Bill Committee at 9:30 am on 23rd January 2018.

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James Ashton-Bell, Chris Southworth, Tony Burke and Martin McTague gave evidence.

Q We will now hear oral evidence from James Ashton-Bell, head of trade and investment at the CBI; Chris Southworth, secretary-general of the International Chamber of Commerce UK; and Martin McTague, national policy chairman of the Federation of Small Businesses. We were also due to hear from Tony Burke, assistant general secretary of Unite the Union, but I understand that he has been caught up in an evacuation and will get here as soon as he can.

For this sitting, we have until 11.25 am. Would each of the witnesses please introduce themselves for the record?

James Ashton-Bell:

I am James Ashton-Bell, head of international trade and investment at the Confederation of British Industry.

Chris Southworth:

Chris Southworth, secretary-general of the International Chamber of Commerce here in the UK.

Martin McTague:

I am Martin McTague, national policy director for the Federation of Small Businesses.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

This is a question for Mr Southworth. Does the Bill as it currently stands have the support of businessesQ ?

Chris Southworth:

There are four key elements within the Bill that are broadly in the right direction of travel around setting up a trade remedies Bill, sharing data and so on, but there are missing elements—I think we agree with a much wider community of non-governmental organisations and unions—where we need a more inclusive approach to dealing with trade, more democratic oversight and more policy connectivity. We are speaking in a context of G20, where there is a very public commitment to developing a free trade model that works for everyone. That is missing in the current Trade Bill.

James Ashton-Bell:

I think we start from the place that the Bill does a lot of really important things for business, in terms of providing continuity. Continuity is absolutely key in all business leaders’ minds when it comes to our trade relationship with the EU, but also with third countries and the World Trade Organisation. The Bill goes a long way toward providing assurances with regard to the WTO on things like procurement, ensuring—as you have heard—that trade remedies are available and provisions for replication of free trade agreements that we currently enjoy through the EU.

I think business is looking for more in the longer term, and there is a broader question about whether or not this is the right vehicle to use to create the kinds of structure that they need around consultation. Any major trade country in the world has extensive and formalised ways of engaging with civil society to ensure that they get the maximum amount of input into trade policy that they need. The question of whether or not this is the right legislative vehicle to create such a structure and such a process is one that I will leave to Members, but business is looking for those kinds of structure, and if not now, when?

Photo of Matt Western Matt Western Labour, Warwick and Leamington

Q So you both agree that you would be looking for more consultation and more transparency. Is that fair?

James Ashton-Bell:

Yes.

Martin McTague:

Our clear priority is the transition process. It is vitally important that there is no cliff edge at this very early stage. Our members, and the small business community as a whole, see this as an enabling Bill, something that will help a smooth transition, so in principle we welcome it.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

Q May I link to that and ask about your experience with other countries, where you may have visibility? How do they do this better and what should we be considering to include in the Bill?

Chris Southworth:

There is a general recognition across the international community since the EU referendum—of course, that was followed by Trump and further issues across the G7—that the existing models for handling trade need to change. That is because there is a disconnect within society and over wider communities and regions, particularly in the lower-skilled areas, where they have not benefited from the growth of trade.

Everybody is looking for exemplars. Some countries have more structured set-ups, such as the US and New Zealand, where it is much less around the ad hoc consultation and engagement that we have in the UK. That is one key point to make. There are definitely lessons to learn from elsewhere, including the EU, I have to say. The propositions in the Trade Bill are a lesser option than what already exists within the EU. Although the EU itself can improve, there are elements of their structures that would work well for the UK, going forward. That is a key point to make.

May I interrupt to welcome Tony Burke, who is the assistant general secretary of Unite the Union? We are very grateful to you.

Tony Burke:

Apologies for being delayed. St Pancras and King’s Cross tubes were closed. I have done some fleet footwork to get here.

We appreciate that and are grateful that you managed to get here.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

Q Mr Ashton-Bell, would you like to comment?

James Ashton-Bell:

I support everything that Chris has just said. For us, we look at the spectrum of different formal ways of engaging civil society. At one extreme you have the United States, which has an incredibly elaborate set of technical committees, numbering several hundred different members of civil society, to provide technical assistance to officials. At the other extreme there are less formalised systems for economies that tend to be a little bit less complex and tend to be significantly smaller than ourselves.

Business would come down somewhere along the lines of being closer to the US model than something less formalised for a less complicated economy that is also quite a bit smaller. Does that mean we need everything that the US model has? No, absolutely. We need a UK-specific bespoke model but it would probably be quite elaborate, to ensure that it takes in every business and wider civil society from across every region of the UK, across every size and shape of organisation and across all the different types of technical expertise, which crosses many different policy issues—everything from intellectual property to issues of data.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

Q You see this as crucial to getting a good deal?

James Ashton-Bell:

I struggle to understand how any Government, engaging in trade policy, be it at multilateral or bilateral level, would be able to get the best possible outcome for that negotiation unless they were using the full strength of their economy, pooling from the best minds that exist within and outside Government.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

Q Mr McTague, do you have a view?

Martin McTague:

It is difficult to draw parallels with any other country withdrawing from a 40-year relationship. The view that we have taken in the past is that consultation has worked well, inasmuch as the small business community, which we think is a vital part of the economy, has been listened to, and we would hope that that would happen in future. However, there is a temptation, because the bigger corporates sometimes have more access to Government, that small business does not really get listened to. This component, we think, is absolutely vital in the development of the policy.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

Q Can I ask the witnesses about the Trade Remedies Authority? In your opinion, how effective do you think it could be, given that the Bill provides a framework? I appreciate there are lots of details to fill in later. How independent do you think that authority can be, given the way in which the Bill is currently drafted? I will start with FSB and work my way along.

Martin McTague:

At the moment our view is that the early stages of development of TRA look encouraging, but we know they are a consultation. We know that they are looking at a variety of different options, and we are willing to wait for the consultation process before we get into a committed decision.

Chris Southworth:

The principles are there in terms of setting up a trade role and it is as much to do with the speed around that. I would echo the same thoughts: there needs to be a lot more consultation around them and there needs to be clearer evidence of learning best practice from others. We are not the only country proposing a Trade Remedies Authority. I would start with the idea that having a trade remedies authority and the core concepts that exist in this Bill feel broadly right.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

Q Do you feel that there is sufficient distance between the Secretary of State and the TRA?

Chris Southworth:

Yes, I would have thought so. I do not think there should be any opposition to the idea that one may need to evolve in time. The UK has to re-learn how it does trade as an independent country, so we will not get it 100% right in the beginning. It should be able to evolve over time, and if there is a better way of doing it, then do it.

James Ashton-Bell:

I take a slightly different view. As to what is in the Bill at present, our internal analysis of the Trade Remedies Authority is that there is a fundamental question, and we are looking for an answer to it: that question is about who makes the ultimate decisions about when to take action and when not to take action.

Having an independent organisation to advise on the data that exists—or does not exist, in many cases—is useful. The EU has found time and again that it does not have access to the kind of data information it needs to draw the kinds of concrete conclusions that it would like to draw. Given that scenario, it is useful to have an independent organisation to make those choices and to be clear about what information is and is not there.

When you have things like the economic interest test that is currently being floated as part of this authority, which in essence allows for the identification of particularly problematic trade behaviour from a third country and for it not to be actioned by the Government or authority, it means that there will be a decision at some point not to take action. If there is not enough information, then that in itself becomes a subjective decision about which parts of the economy are worth protecting using these particular tools, and it is argued that, if a subjective decision is going to be made, then it needs to most certainly be made by a Minister who is accountable for making those choices.

Tony Burke:

Right from the get-go, the Manufacturing Trade Remedies Alliance, which consists of three trade unions and a number of trade associations including UK Steel, chemicals industries and ceramics among others, pressed strongly to get a trade remedies clause or a structure in there. We were able to put forward our proposals in advance of the discussions taking place at this level. One of the things that we would say from the trade union point of view is that it is absolutely essential that the TRA has a trade union voice—a worker’s voice—on it, particularly at non-executive level. We should also obviously be subject to International Labour Organisation conventions that protect workers in that remedies arrangement. We are supported by the employers on this. From our point of view, the situation in Unite is that we have many members in manufacturing who have suffered at the hands of dumping: steel, tyres, ceramic, chemicals and pharma. It is a big concern for us. We would see that we need a remedies authority that is transparent, and that has trade union and employer representation. At the end of the day, Parliament has to have consent over any decisions made.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

Q You are happy that the authority is sufficiently independent at this point?

Tony Burke:

As it stands, but we do not see the transparency that we would like to see, and we also have a view about what appears to be an ability for the Minister to appoint people. We believe that working people and companies should have an opportunity to have a say, and also for trade unions to bring a case. This is important. We have learned from America. We have worked closely with the steelworkers’ union in the United States. They as a trade union in America do bring cases to protect their members in steel, rubber, paper making and industries like that.

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

Q Mr Ashton-Bell, can I pick up on something you said because I noticed that you were nodding when Mr Burke was saying that. You said you struggled to understand how we could get the best deal without engaging every part of society in the debate. You also posed the question of who makes the fundamental decision. Do you therefore agree with Mr Burke that it would be helpful to have, in the nine places available on the TRA, statutory representatives perhaps of small business, the trade unions and producers? At the moment, the Bill has it as a blank sheet for those nine spaces, and nobody is really quite clear who might be appointed. Perhaps you could all comment on that, starting with Mr Ashton-Bell.

James Ashton-Bell:

My organisation does not have a defined position on that blank sheet of paper you have just described, but to follow your rationale, and consistent with what I have said so far, bigger organisations do not have a monopoly on understanding how trade impacts the economy. In anything where you are making choices about trade and how it will impact the wider economy, you should have a wide and balanced group of people advising Government, or an independent authority, about how to make those choices. That means, indeed, that small business are very much equal to big business, and workers also, because workers are just as impacted as the businesses themselves.

Chris Southworth:

I just want to clarify my point. It is exactly the same: the representation is a critical point. An independent body, yes, but there must be representation within that independent body to represent all the important voices, which includes all those here, but I would also include NGOs and civil society, who have equal interest in the implications of trade. They must be at the table and that has to be in everyone’s interest, including business—big, small and medium.

Martin McTague:

Barry, it will not come as a massive surprise to you that, yes, I do agree that small business should be a serious voice on this. It is nice to know that James supports me. That is a welcome change. [Interruption.] It is something that we have clearly got unanimity on.

Photo of Kemi Badenoch Kemi Badenoch Vice-Chair, Conservative Party

Q Speaking about the representation on the Trade Remedies Authority, there have been suggestions that Parliament should have a greater role on this board. What impact would that and other stakeholders have on the impartiality, accountability and timeliness of decisions? Could the panel tell us what they feel about having various nominations to non-executive membership? What impact would that also have on the independence and impartiality of the Trade Remedies Authority?

Chris Southworth:

Ultimately, it is about having a rounded decision made by an independent body. That political oversight is critical—James is completely right. Ultimately, it is going to come down to a political decision whether a decision is made one way or the other. If you operate in an organisation like the World Trade Organisation, then all these voices come into play. It is incredibly important that the decisions prior to any engagement in a global environment are made in a good way that is inclusive. The role of Parliament is critical in that too.

Photo of Kemi Badenoch Kemi Badenoch Vice-Chair, Conservative Party

Q You don’t think that that would slow things down?

Chris Southworth:

Trade is slow, it is technical, and it is difficult. It involves implications for people’s lives and for businesses of all shapes and sizes in every region. There isn’t a component of public or professional life that is not impacted by trade. It is important that everyone has their say, so that when the negotiations begin, the negotiators and all the stakeholders are confident on what those positions are. It is equally important that, during the negotiation when important points come up that are difficult and tricky, which they always are at that stage, there is also an opportunity to come back and say, “What do you think? Do you agree with this, because we are going to have to make a compromise?” That could mean an implication for Welsh farmers, businesses in the midlands, or local communities in Sheffield. It could mean all of those things.

Photo of Kemi Badenoch Kemi Badenoch Vice-Chair, Conservative Party

Q I am asking because I have had messages, particularly from farmers in my constituency, about remedies being very slow to be enacted. That is a real issue, so I would be looking for a very efficient remedies authority. I hear what you are saying, but I can also see a situation where the conversation goes on and on and no remedy comes forth. Justice delayed is justice denied.

Chris Southworth:

Again, you need to come down with a political decision at some stage on whether or not it is right in terms of timing. The key point is: has there been proper consultation beforehand and has every stakeholder had the chance to voice their views in a proper structured format, not throughout the consultations, but in a proper structured way? That is the important point. Ultimately, there is always a sensibility around trade remedies, particularly if you are talking about things such as steel dumping. That has huge implications for a lot of people, particularly in geographies that tend to be vulnerable, so there is a difficult decision to be made. It is important that everyone has a chance to have their say about what that decision should be.

Photo of Kemi Badenoch Kemi Badenoch Vice-Chair, Conservative Party

Q Does anyone else want to come in on the make-up of the board, impartiality, timeliness, and so on?

Tony Burke:

I think we would agree with everything that was said about the make-up of the board. It has to be wide-ranging and it has to have expertise. On the point you raised: when we put our evidence in from the Manufacturing Trade Remedies Alliance—industry and the unions—we wanted a system that worked. Don’t forget, we have not done this for a long, long time. We needed to make sure that we got it right. There were some folks’ voices saying, “Let’s have a fast-track. Look at America, it takes a long, long time”. We said, “No, if you do fast-track, you could get it wrong”. You need to have a system that works, step by step, but is widely consulted on, as has been said.

We may have problems in a particular industry, where we have to bring expertise in and we need to have people in that discussion at the remedies authority who know exactly what they are talking about and are able to demonstrate it. They can be very complex. When we look at the US system, it takes a very long time and moves very slowly. We do not want to rush it, but we need something that works and is as wide as possible. As I said earlier, I do not think impartiality comes into it, providing there was oversight from Parliament.

Photo of Faisal Rashid Faisal Rashid Labour, Warrington South

Q I understand there were 60,000 responses to the consultation. The trade White Paper was published the day after the consultation closed. I apologise if I am wrong, but I think you said earlier that you were quite comfortable with the process. Do you think it is practical and do you think the consultation feedback from the stakeholders has been taken into account?

Martin McTague:

We believe it has been taken into account at this early stage, but a lot more consultation needs to take place. We have a position and we are developing that position on exactly how this will affect smaller businesses. At this stage, it is not a developed position.

Photo of Faisal Rashid Faisal Rashid Labour, Warrington South

Q So what exactly has been taken into account?

Martin McTague:

It is only in conversations with officials that we believe that a lot of those consultations have been accepted, or at least understood. We are not at a position now where we are taking a firm line on this issue.

Photo of Faisal Rashid Faisal Rashid Labour, Warrington South

Q I am trying to understand in real terms what in the Bill has been replicated from the consultation?

Martin McTague:

I can come back to you with concrete examples, but I do not have them at my fingertips.

Chris Southworth:

No, I do not think it has been satisfactory at all, certainly for the international community, which is what I represent. When I asked the question of officials, “Who have you actually consulted?” I was told, “The USA and Japan.” That is completely inadequate in terms of the countries that the UK is trading with. Their voice—they also have SMEs, also in supply chains, also funding livelihood—is equally important. This is going to affect other people’s countries and communities. So it was completely inadequate and haphazard. If you happen to name a name, that person will get consulted. If that person happens to be missed, we do not know, and they are completely missed off the consultation. That is not a way to consult on trade. It is slapdash.

Photo of Faisal Rashid Faisal Rashid Labour, Warrington South

Q Do you think it is practical that the consultation finishes tonight and the Trade Bill is published tomorrow? Is that practical in terms of taking all views into account?

Chris Southworth:

As I understand it from the explanatory notes and the Secretary of State’s speech on Second Reading, there is no intention of consulting within the Bill—that all comes later, whenever that is. It was not clear in any of the communications whether that would be a further Bill or a paper. It all sounds distinctly like it will be something informal, which I would argue is completely the wrong approach. Bear in mind that the Bill is the first opportunity for Government to tell the world, not just the UK, how they will create a free trade model that works for everyone. This is the moment to set out the stall on what that structure for engagement will be. It is all missing in the Bill. There is nothing in it.

Photo of Faisal Rashid Faisal Rashid Labour, Warrington South

If there is no new Trade Bill, those Henry VIII powers stay.

Chris Southworth:

I go back to my point that, if I were living in Scotland, Northern Ireland, Wales, the Yorkshire Dales—where I am from—Sheffield or the north, I would be concerned about where my voice is coming into this process. We are talking about rolling over the terms of 88 countries. That is a lot of countries, and they are not all EU. It is extremely unlikely to happen. I would want to have a say in that process, not to wait.

Tony Burke:

When the Manufacturing Trade Remedies Alliance put forward its document, which it had worked considerably hard to produce over a long time, we were surprised at the speed at which the whole thing moved. There were areas that we had gone through in great detail to prepare.

As I have said, there was unanimity on things such as International Labour Organisation conventions, trade union representation and industry representation, and on some of the real technical detail as well, which we could not go into today. We would be happy to revisit that document. I understand that the other folk from the MTRA are giving evidence to a different Committee today, and I think they will say very much the same thing. We have no problem in going through it again and picking out some of the key issues from the point of view not just of trade unions but of industry.

Some trade associations on that body are very concerned about what could happen to their industries. They will be putting forward those points of view today. The speed at which it was done was far too fast. The view seemed to be that that was it, even though people had spent a lot of time putting the arguments together.

Photo of Tom Pursglove Tom Pursglove Conservative, Corby

Q In my constituency—I represent the steel town of Corby—trade remedies are not theoretical, but reality. Mr Burke, what do you think the impact would be of not having a Trade Remedies Authority in place on day one when we leave the European Union?

Tony Burke:

The big danger is that, if we do not have one that works on day one, we could be subject to what we have already seen in the past few years. Steel has been subject to the most horrendous situation for the past two or three years—lots of jobs have been lost. The industry came together to try to make sure that it holds together, but without a trade remedies structure in place, the big fear is that we would be subject to the dumping of steel again, particularly from countries such as China, although I am not singling it out. That is one of the issues.

There are other constituencies where we talk to colleagues—MPs and others—and our members. The tyres industry, for instance, is very concerned about the dumping of cheap tyres on the market, which would undermine our premium brands and well-paid skilled jobs. We need something in place. Of course, as I have said, we have not had anything for 40 years and it will take some time to work through, but it is important to have a wider group of people who can push the arguments for various industries.

My fear, and the fear of our members in steel in Corby and other steel areas, is that, if we do not have trade remedies in place, we could be faced with horrendous dumping on the basis that, in respect of what is happening and what has been said, there is massive over-capacity. Steel in particular is being sold at cheaper rates than it costs to produce.

Photo of Tom Pursglove Tom Pursglove Conservative, Corby

Q I am grateful for that answer. One of the reasons that we could get to a much better place on steel was because politicians from across the political divide worked together and industry came together with the unions and the Government. That led to quite a lot of success, so were you and your members surprised that not all Members of this House voted to give the Bill a Second Reading? I ask that because further down the line, hon. Members who had genuine concerns could have tabled amendments to the Bill that potentially would have addressed the concerns, and let the House decide whether they were appropriate. Do you see any alternative to establishing the Trade Remedies Authority?

Tony Burke:

You have to have something in place. Certainly, many of our members in the steel industry have followed this and are extremely concerned about what could happen and about market economy status being granted to China. Those are the key issues, and they will expect us to keep pushing the issues wherever we can to get this right. It was said earlier on. We do not want to just harp on steel—there are lots of other industries—but it is one area where we have had a really bad time. Many of our members in the steel industry understand the arguments and would expect us to come back to the issues again whenever we could.

Photo of Tom Pursglove Tom Pursglove Conservative, Corby

Q So they were pretty surprised that the Bill did not receive a unanimous Second Reading, with a view to amendments being tabled if hon. Members had individual concerns about things.

Tony Burke:

We have not got to that situation directly in talking to our shop stewards and reps. We have been talking with our parliamentary colleagues who have steel in their constituencies, and our union reps are talking to them, so there would be concern.

Photo of Judith Cummins Judith Cummins Shadow Minister (International Trade)

Q We have heard a lot today about representation being vital to get the best deal and about gaining support from across society in terms of the Trade Bill and the trade deals. Tony Burke, in your view, is enough engagement in the formulation of trade policy with trade unions established by the Bill?

Tony Burke:

No. We have been working with the Manufacturing Trade Remedies Alliance, which includes a number of trade associations—as I have said, steel, chemicals, fertilisers and so on—and I think there has been a coming together. We would have preferred a longer period, obviously, to go through this in detail—a longer period to argue for the things that we put forward in our document, which were generally accepted by everybody. To answer your question, the only way we are going to be able to make sure that the voice of working people is heard is to have representation on that body directly from the trade unions.

Chris Southworth:

I would make an additional point. I completely support that point, but if there is one thing we have learned over the last year and a half, it is that we have to accept that there is generally a low understanding of trade, and trade itself has moved on significantly in the last 40 years; the world we live in today is not the same as it was 40 years ago, either. I think that extra diligence in relation to consultation and informing the public, and business for that matter—businesses are in the same position, surprising as that may sound—is a good idea.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Q I want to come back to what I think was a comment from James Ashton-Bell about what goes on elsewhere in the world, because actually a number of you have mentioned the United States and the way it handles both consultation on and scrutiny of trade agreements, but also the trade remedies approach. We will start with you, James, and perhaps others will chip in. Where, in addition to the United States, should we be looking for examples of good practice in setting up our Trade Remedies Authority?

James Ashton-Bell:

Specifically when it comes to trade remedies, I think the most important place to start is: where have mistakes been made and where have processes not delivered outcomes, either in a timely way or in terms of the right kind of outcomes for the wider economy? I know there is a lot that officials have been looking at to learn what not to do from the EU, because everyone agrees that that system is not perfect. Much of that thinking has coloured some of what has gone into this Bill. There are aspects of the US system that do not work. No one has a system that we have found you can hold up as an absolutely perfect system. There are always going to be different balances that have to be made, but the fact that officials working on this have looked at the US, Canadian, EU, Japanese and Swiss systems means that they have certainly made a good effort to try to learn from others’ mistakes, and that is an excellent place to start.

James Ashton-Bell:

Getting to some very technical areas that, as the Bill stands, would be covered by secondary legislation—so the devil will be in the detail—for me the central question is who ultimately makes decisions about whether to take action, where to take action and what is a proportionate action to take. The reason I say that is because taking action in a case of using trade remedies and defence is a highly political move and a highly economic move. It is never without controversy and, as I mentioned before, never with absolutely perfect information and data to make an objective decision.

Having very clear reporting structures and decision-making structures about who is the ultimate arbiter is key. Having lots of time for everyone to feed in as much information across the wider economy is key. So have as much information as you can at the beginning, but have a very clear process for using that information and have clear decision making to ensure that the outcome is someone’s responsibility and that they will be held accountable for it. It feeds into our wider industrial strategy; it is not just a trade issue.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Q Again, before I move on, is there an example of a mistake that you think we could learn from—something specific that you are prepared to be drawn on?

James Ashton-Bell:

The mistakes are usually procedural. I am not going to pronounce on individual decisions because, as I said, they are never made without controversy, and for me to pronounce on another country’s individual trade remedy decisions would put me in a very difficult place. In terms of process, some have commented that in the American system, they can be very rushed and not all information or all stakeholders are taken into account. In other instances, such as with the EU, the process can be so long that they do not actually take action early enough to ensure that you can fix the problem when it is a problem. Procedure is absolutely core to most of the problems that occur when designing a system like this.

Chris Southworth:

I have a difficult situation, which is a real one: the market status of China. That was very live last year or the year before. You have a classic situation there where we clearly want to be supportive to China as it comes on board as a global leader. China itself knows perfectly well that it wants to wind down steel production and that it is over-producing, but you cannot just wind down the Chinese economy overnight—that will take 10 years to do, as Europe did with its mountains in the past.

Where is the balance? In the meantime, the impact is on steel communities in the UK, across Europe and other parts of the world—we are not on our own—but who decides what that balance is? There is an implication either way on either the political relationship with China and supporting the Chinese economy, or local communities here in the UK. Someone has to come down and say, “Okay, this is where we are going to be.” That may potentially evolve: you may want to take several positions over a period of time so that you get to the end goal that you collectively want, but that must involve the people who will be impacted by those decisions.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Q Bearing in mind that the Taxation (Cross-border Trade) Bill deals with the powers, what do you see in this Bill as a way of addressing the concerns that you have just raised?

Chris Southworth:

I have already made the point, and broadly speaking I support the comments made here that you have to have something on day one. Do not be afraid to evolve that over time, but you have to have something in place that feels broadly right. Having listened to the conversations here, I would say that the stakeholder representation needs to be looked at, but the basic structure is there to work with—get on with it.

Tony Burke:

I agree with some of my comrades here. Everybody has got to look around the world at different systems. In Unite, we are focusing on the US system primarily because of our relationship with the United Steelworkers union in the States, which, as I have mentioned before in other areas, almost does this for a living. It has officials on the hill working on this all the time, and at times it is very time consuming and costly. So if there are many mistakes, they can either be rushed in the States, as has been said, or be very slow and very costly. We are looking for a system that works and that can be easily understood. I do not know whether you want to extend the debate into the market economy status for China. I will resist the temptation, but I have to say that that is a major issue for us in our industries.

Martin McTague:

The only thing I would add is that in the States there is a temptation—there seems to be plenty of evidence that it happens—for the bigger, more concentrated industries to get dealt with more quickly. What you have got is that the more fragmented industries that are supplied by lots of smaller companies do not get dealt with effectively.

Photo of Gillian Keegan Gillian Keegan Conservative, Chichester

Q As I think you said, there is no perfect system today. You have acknowledged that there has been some attempt to go out and find out what best practice is, but what we should be doing is comparing with the system that we have got today. Today’s system probably has some challenges. It is EU commissioners and civil servants who decide. They send out questionnaires to get some of the interested parties’ involvement and input into their decision when we are faced with dumping or unfair trade practices. Surely the TRA represents an opportunity for us to do things better, and to design a system that will improve where we are today and, as you say, evolve over time. What we have today is not what you are describing as the minimum starting standard for our TRA as we move forward.

Tony Burke:

The EU system was slow. At times, when we had the situation that I mentioned—going back to steel, when we had a crisis—we were quite concerned about the glacial pace of getting the whole thing moving and recognising what was happening. We are looking for the TRA in the UK to be, as I said, one that we can move forward on, and for decisions to be made that will assist companies and industries fairly quickly, without being too rushed—you need to take opportunities to listen to what people have got to say and take the best advice and evidence.

Photo of Gillian Keegan Gillian Keegan Conservative, Chichester

Q Is there any comment from you, James and Chris?

James Ashton-Bell:

My only comment would be, based on what is in the Bill, that it feels like there is a good framework to start with, and to work from that to create a better version of what the EU currently has, but much of whether or not that will be successful will be defined in secondary legislation, I believe. Based on what I have seen, we have a good starter for 10; we now need to build on it and ensure that more consultation responses on some of the more controversial issues are taken into account, and then translate that into secondary legislation.

Chris Southworth:

I would support those comments. I would not be too quick to dismiss the EU; they are very difficult decisions to make across 27 countries. The decisions themselves are incredibly diverse, as well as the 27 countries being diverse. There are very difficult decisions when you are talking about these kinds of issues around trade remedies.

Photo of Gillian Keegan Gillian Keegan Conservative, Chichester

Q I accept that. You talked about the farmers in Wales and the industries in Yorkshire and all the different parts of our country, and that is why it is complex, but add another 27 countries to that and, by definition, it gets more complex.

James Ashton-Bell:

Correct.

Chris Southworth:

I agree.

Martin McTague:

The principle is that we want to get this thing up and running as quickly as possible—efficiently and possibly more efficiently—while taking into account some of the interests of smaller businesses. I think that that is clearly understood, and we support the points that James made earlier, but do we need it? Is it something that essentially has to be there on day one? I do not think there is any doubt.

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

Q I am heartened by what has been said about taking this as an opportunity to improve things. I think that that is absolutely right of both the TRA and the scrutiny. The EU is evolving its system to include social and environmental dumping in trade defence. Does the panel think that we should include those things in our TRA? If the EU is doing that and we are not, do we risk becoming the favoured dumping ground against Europe, which is adopting such measures?

Chris Southworth:

Again, I think it all goes back to consultation and scrutiny. If people have an opportunity to look at the measures or issues properly, you are more likely to head those issues off. I agree that we do not want to become the second best option, or the optimal option for the wrong reasons, if you know what I mean. At the end of the day, these are people’s livelihoods, so it is very important, but it comes back to the same premise throughout this conversation: consultation, proper scrutiny across the stakeholders with Government and then coming to a conclusion as to what is right.

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

Q Specifically on the way in which the EU is introducing those environmental and social considerations into its assessment, I think the proposals elsewhere in the Taxation (Cross-border Trade) Bill are talking about the powers of the Bill and clearly that will be more closely defined there, but in principle, are those considerations ones that you would like to see in any impact assessment that the Government are conducting on their trade remedies?

Chris Southworth:

If we are going to create a free trade model that works for everyone, the answer is absolutely yes. There must be those considerations and there must be that input from the range of stakeholders. It has to be the right way forward. It is the only way forward, because what we definitely know is that what we have at the moment does not work. The backlash to that model is sufficient to make everybody sit up in their seats and say, “That doesn’t work, let’s try and be better.” The answer to your question is yes.

James Ashton-Bell:

I agree with that. We do not have a defined position as an organisation on this, but I would say that we do have a defined position that trade, industrial strategy and your wider domestic agenda are inherently linked and should never be seen as running in parallel or separate. Given those concerns, we would say that you would never take a decision on anything to do with trade defences without taking into account every impact on your wider economy before making that choice.

Tony Burke:

I agree. The question of taking the environment into account is important, but so is this question of social impact. When you look at what could happen with the dumping of goods and how that affects particular companies or industries that centre around certain areas, I think it is absolutely essential. As colleagues have said here, you have to take into account an industrial strategy that ensures that all regions and industries—particularly foundation industries—are protected as best as we can possibly do it. We definitely would need to include the environment, but social impact on localities and industries is very important.

Martin McTague:

The only thing I can add to that is that I do not see anything in the Bill that prevents you from doing that. This is something that we would support in secondary legislation.

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

Q Just to follow up, when the consultation period on the Bill ended and the MTRA had submitted its evidence to the Government, how long was it before the Government published the Bill, and do you consider that the Government took time to properly consider the representations to the consultation that they received? Did that maintain trust in the process from industry bodies?

Tony Burke:

Are you referring directly to the MTRA’s evidence, Mr Gardiner?

Tony Burke:

Yes. Well, as I said earlier on, one of the issues was that we have done a tremendous amount of work on this and lots of wide consultation. We came up with our proposals and we were quite surprised that almost overnight that was what we were going to do. What was the feeling? The industries represented on there were somewhat taken aback that it was done so quickly, and concerned—as would be expected—about whether their voices would be listened to. From the union’s point of view, that was very much the same. We thought that we had done one hell of a lot and put the arguments there very clearly, and obviously some of the key issues for us, such as ILO standards and employment protections, were not there. Hopefully we can try to revisit them and get them in at some point.

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

Q Just for clarity, the consultation finished on 6 November and the Bill was published on the 7 November. Is that right?

Tony Burke:

I believe that was the case, but then I will stand corrected. I remember it all happening.

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

Q Mr Ashton-Bell, what are your comments on the way in which that would be perceived in terms of consultation being effective and the trust that Government were engendering?

James Ashton-Bell:

The thing I can say is that the optics were not ideal.

James Ashton-Bell:

We start from a position that much of what is in this Bill is a framework. The framework itself can be argued to a greater or lesser extent as non-controversial. The controversy starts arising when you start putting in the detail that is not currently in the Bill as it stands and, from our perspective, more importantly, what is not in the Bill at all and probably should be. Those are bigger questions.

On that basis, we know a number of conversations happened in the run-up to publishing this Bill, particularly around the issue of dumping. The elements that went into the Bill seemed to be the ones that were the least controversial and could be built around with more detail. Presentationally, was it the right thing to do? Maybe not, but I have more confidence that there is opportunity for the House to alter this legislation to fill in on the more controversial element.

Chris Southworth:

My overall impression is twofold: too fast, and not enough consultation of the international business community, bearing in mind we are talking trade here. This is not public health in Yorkshire or somewhere. This is trade. We must be talking to our trading partners, who are just as perplexed and confused about what is going on over here as anybody else. I don’t think they were consulted enough, partly because of the speed and partly because there was not enough communication as to what the UK is trying to do. That would be my answer.

Martin McTague:

The best way to answer this is that small business as a whole is completely split down the middle. If I speak to the average leave voter, they would say “Why don’t you get on with it?” This isn’t fast enough for them. The average remainer will consider it a recklessly rushed process. We are not reaching a conclusion—it depends on which perspective is looking at this. That is largely the view we are getting from small businesses.

Martin McTague:

How quickly you take the process is either perceived as being far too fast or reckless.

I have at least three people still seeking to catch my eye and we have a maximum of eight minutes. If we can have short questions and short answers, and if a panellist does not feel they have anything to add to someone else’s answer, perhaps we can skip on, just to try and get as many people’s questions in as possible.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

Q Chris, earlier on you made comments that said that if you were part of the devolved Governments, you would have concerns about their voices being heard and taken account of. Both the Scottish and Welsh Governments have expressed concerns that, at the moment, they are seeing the withholding of the legislative consent motion. When they are asked as to their representation on the Trade Remedies Authority, do you agree that would be a good starting point?

Chris Southworth:

Overall—not just the Trade Remedies Authority—I would be concerned if I were in the devolved Administrations. There is specifically no opportunity for the devolved Administrations—or the regions, I have to say—to feed into decisions on trade. I would be very concerned about that, particularly in the devolved Administrations, where there are vulnerabilities on a whole range of different industries.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

Q You then made recommendations of changes that could be made to the Bill as it stands, which would start to ease these concerns.

Chris Southworth:

My point is back to James. What is missing in the Bill is clear direction on what the Government are going to do to create a new, more inclusive structure to include all the stakeholders. That is the central point to all of the content of the Bill and every other Bill relating to trade, going forward. We must do things differently and it is all missing. There is not even a reference to it. There are references to things that will be very agitating, such as Henry VIII powers—the ability to overrule. That, to the outside world, will look like an aggravating factor, I would have thought, when we need to do the opposite and be more inclusive.

On the world stage, I have to say, the UK Government are exemplary on this. We are pushing out the message very publicly, as the Secretary of State was doing in Argentina just before Christmas time at the World Trade Organisation ministerial conference, around inclusive trade—the need to do trade for everyone and to make it work for everyone. It was exemplary. We were the most vocal Government around it, actually, but back home, when you look at the Bill, you think “That doesn’t make sense.” That was my reaction to it.

James Ashton-Bell:

I agree with that.

Photo of Faisal Rashid Faisal Rashid Labour, Warrington South

Q Obviously, we talked quite a lot about consultation and stakeholders, and I really appreciate that. Listening directly to you guys from very powerful organisations in our country is important for all of us parliamentarians. I need to understand exactly how important it is to consult with stakeholders in forming the Trade Bill or trade deals. What could be the impact for UK businesses in future if that is not done in the right way? I would like one quick line from each of you. Another quick question for Tony: does this Bill have the support of trade unions, yes or no?

Tony Burke:

As it stands, no.

Chris Southworth:

Look at what you have got today. That is what you get when you do not get proper consultation and involvement in trade. That is what we are dealing with right now: huge social division, division and disparity across the regions, industries vulnerable. You get all of that. That is what we are dealing with. That is what you have if you do not make change. That is why the Bill needs to demonstrate change.

James Ashton-Bell:

The reason we have been calling for a very formalised form of consultation is twofold. One, there are many examples in history—many countries have designed very elaborate free trade agreements that businesses do not use because they were not designed with business in mind. That is a waste of everyone’s time and our negotiating effort.

The second reason is that we find in many instances, as we saw when trying to ratify CETA, through Belgium, or with TTIP, if you do not have an inclusive process that is incredibly formalised and elaborate, you actually lose public support. Having the right advocates to push the deal across the line is something that is good for the economy. It needs to be grounded in fact to ensure that it is good, and also something that has consensus and that we can actually stand behind.

Tony Burke:

Again, I am in danger of agreeing with a lot of folks in what they are saying at the moment. Regarding what has just been said, if you look at CETA and TTIP, there was massive opposition from across the spectrum. It is important that we get this right, and inclusivity is the key. We had no involvement in discussions with regard to the UK in those trade agreements and I think the same thing could happen again if we are not careful. We cannot just go casting around trying to pick one off the shelf. This is going to be a very complex issue, so everybody needs to be on board.

Martin McTague:

We have regarded this as an enabling piece of legislation. It is a framework. I can say that the area where TTIP really came alive for small businesses was when they introduced the small business chapter, which meant the real concerns of small businesses had a basis on which they could discuss those issues and get them properly grounded.

Matt Western, very quickly. We have got literally two minutes left.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

Q Thank you, Chair. I have a quick question to Mr Ashton-Bell. Yesterday, Carolyn Fairbairn made a very good speech, I believe. She was talking about the CBI quite rightly seeking a good Brexit. I hate to put you on the spot but I am sure you have had time to reflect on it. In your view, or the CBI’s view, does the Bill as it stands deliver a good Brexit? Or, what is it missing, other than what you have said so far this morning?

James Ashton-Bell:

I do not believe the Bill as a vehicle can deliver a good Brexit in any scenario. There are too many Bills and pieces of legislation that are necessary to deliver a good Brexit. This is one piece of the puzzle. There is a lot of detail that is not in here. Our position is not necessarily that that has to be in here. There are other pieces, like the consultation issue, that we believe need to be formalised in legislation. That could happen at a later date.

Our concern is that to deliver a good Brexit we are going to have so many pieces of legislation in a very truncated period of time. A lot of pressure will be put on Parliament to rush through legislation without properly scrutinising it, or legislation will not make it through. Either way, we get a bad outcome. Our question comes back to the one I started with. If there are essential elements for your trade policy, if they are not in this Bill, why not, because you have it in front of the House anyway?

Order. That brings us to the end of our time allotted to the Committee to ask questions. I thank our witnesses on behalf of the Committee for their evidence, in particular Mr Burke, for the tortuous journey he had getting here.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.