Trade (Australia and New Zealand) Bill
Tuesday 6th September 2022
(1 year, 7 months ago)
Commons ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
18:00 - The House divided: - Ayes: 309 / Noes: 56 - Question accordingly agreed to.
Madam Deputy Speaker (Dame Eleanor Laing)
The reasoned amendment has not been selected.
The Secretary of State for International Trade (Anne-Marie Trevelyan)
I beg to move, That the Bill be now read a Second time.
Just over two and a half years ago, the UK set out as an independent trading nation and began a new future outside the European Union. That future would be shaped by rekindling old partnerships, striking up new ones and harnessing the power of free trade to create prosperity for every corner of the UK. The free trade agreements that we have signed with Australia and New Zealand represent the first significant successes on this journey, and they are the first from-scratch trade deals that the UK has signed in 50 years.
Caroline Lucas (Brighton, Pavilion) (Green)
I am grateful to the Secretary of State for giving way so promptly. I appreciate that it is a bit unusual to intervene so soon, but I wonder if she accepts that the process by which we are having this debate utterly undermines this House. It is deeply undemocratic that there has not been any way for us to have a full vote on the objectives of each future trade deal or access the negotiating texts, for example; there are no guarantees for the House on any of those things. Will she take away the anger that is felt certainly on the Opposition side of the House about that, and look to change the process in future?
Anne-Marie Trevelyan
I thank the hon. Lady for her comments. I hope that as we progress the discussions today, we will be able to look at them.
Mr Steve Baker (Wycombe) (Con)
Is it not the case that negotiations directly between Parliaments—that is the effect of what the hon. Member for Brighton, Pavilion (Caroline Lucas) says—on any international agreement would be an absolute nonsense and would never get us anywhere? The right way is to use plenipotentiary powers in the name of the Crown to negotiate the deal and then have a serious engagement with Parliament, as this is.
Anne-Marie Trevelyan
I thank my hon. Friend. Both hon. Members highlight what is important about what we are doing today, which is bringing to the House, as part of our new free trade agreement powers, the opportunity for the UK to negotiate and complete really great deals with our important trading partners that will help us to grow our economy. That is the power and the freedom that our departure from the European Union brought us in trade, and I have been proud to drive that forward in the last year. The Australia and New Zealand trade deals are two of many that are now in train that will help our businesses to export more widely to the rest of the world.
These free trade agreements will eliminate tariffs on 100% of all UK exports to Australia and New Zealand. As I say, that will open up new trade opportunities for businesses of all shapes and sizes, and that is an important aspect of the opportunities that our free trade powers bring us for our businesses to take advantage of.
Mike Freer (Finchley and Golders Green) (Con)
While Opposition Members focus on process, does my right hon. Friend agree that professional services’ ability to trade without requalification is a massive export opportunity for the sector in the whole of the UK?
Anne-Marie Trevelyan
I thank my hon. Friend for his intervention and, indeed, for his incredible work in the Department over the last year to help us to grow our export opportunities for businesses. He is absolutely right: one of the key opportunities for our service sectors is negotiating that mutual recognition of qualifications, which removes a market access barrier to enable businesses to share their expertise more widely. Not only in the Australia and New Zealand trade deals, but as we work in places such as Canada and the USA, those are key areas where we can genuinely rocket-boost what our businesses will be able to do in taking their expertise across the world.
John Spellar (Warley) (Lab)
The right hon. Lady is talking about businesses, but is this not also about individuals in these jurisdictions who have the qualifications and skills? There will be a greater mutual benefit, not just a benefit to the UK. This will grow the economies of the free world and enable our citizens, and those of Australia and New Zealand, to develop their careers and opportunities.
Anne-Marie Trevelyan
The right hon. Gentleman is absolutely right. A key element of the Australia and New Zealand trade deals is the improved mobility arrangements, which will not only give those under 35 much more flexibility, but will mean that those with professional skills can move much more easily between our countries, for exactly that reason: to help their skills as individuals, as he says, and as part of businesses to grow those economies mutually. Our trade deals are all about mutual benefit and picking countries with which we have strong ties and want to grow our economies together.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
In evidence to the Senedd’s Economy, Trade, and Rural Affairs Committee, the Welsh Government, the farming unions and the Welsh Local Government Association expressed concern that there was no published data about the impact on specific Welsh economic sectors and subsectors. Will the British Government publish that data—they must have it to have come up with the cumulative data that they have published—or are they guilty of hiding the impact of these trade deals on sectors such as Welsh hill farming?
Anne-Marie Trevelyan
We have done a great deal of economic assessment across any number of layers. I am very happy to share with the hon. Gentleman some of the detail in due course, and the team will pick that up with him.
It is important to remember that one key area, as we look beyond sectors and to the other side beyond business, is that the consumer will be able to enjoy many more Australian and New Zealand brands coming to the UK, in the same way as the UK will be able to share our brands with other countries. I was in Australia and New Zealand last week, and it was very charming to see which British products people were excited to have more of. I was also able to say that I would help personally to ensure that Australian wine is drunk more often at my own table as a result of this trade deal.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Further to the point made by my Welsh nationalist friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards), I understand from the Department that it has not granularly broken this down, but has made assumptions in the modelling across the regions of England and the nations that make up this current Union. I would be surprised if the Secretary of State has the data, which I think would give figures that were quite alarming to people in Wales, Northern Ireland and certain areas of Scotland, particularly those involved in livestock production.
Jim Shannon
The Secretary of State will be aware that the Northern Ireland beef and lamb sector is worth some £1.3 billion, employs 5,000 staff in processing and has some 29,000 farmers, and 70% of that produce goes to the UK. Her own Department has reported:
“If large local economic effects occurred, this could…result in a net GVA loss for Northern Ireland.”
May I ask the Secretary of State—it is the same question as others have asked, but about Northern Ireland—what steps can be taken to ensure that, if this is the case, Northern Ireland is not left behind in trading with Australia and New Zealand? I know it is an interest for the Secretary of State, and it is a big interest for me in my constituency.
Anne-Marie Trevelyan
The concerns that the farming community has raised are ones we have addressed many times, but I am happy to address them again. As part of the trade deals, and acutely aware of the sensitivities of our changing farming communities as we have left the European Union, we have built in—after quite a lot of negotiating effort with our Australian and New Zealand partners—a three-layered set of safeguards to ensure that there cannot be any unexpected surge of agricultural products coming in that would disrupt our markets, tapered over a 15-year period. That will give all the markets the chance to adjust to the opportunity to share goods, moving in both directions. The Under-Secretary of State for International Trade, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith) will set out in more detail, if necessary, what those safeguards are, but they are there to show that we have been absolutely cognisant of this and determined to ensure that our farmers will not have the risk of a surge of produce.
Fay Jones (Brecon and Radnorshire) (Con)
The Secretary of State will know that I represent a large beef and sheep farming constituency, and there is nervousness in the farming community about what will happen over the next 15 years, but also a broad welcome for the deal, and I congratulate her on her efforts so far. Can she say a little more about what she and her Department can do across Government, working with the Department for Environment, Food and Rural Affairs, to make sure that there is real confidence in this sector over the next 15 years?
Anne-Marie Trevelyan
I thank my hon. Friend for her comments. To give her reassurance, all our trade negotiating teams have Department for Environment, Food and Rural Affairs teams within them. They are the experts from the UK Government, and they are absolutely at the heart of our negotiating teams not only for these deals, but for those we are working on now.
Part of the challenge—I understand the anxiety that has appeared, about which I hope the safeguards for these two deals have provided reassurance—is that these are of course the first two of a large number of trade deals. We are looking to accede to the comprehensive and progressive agreement for trans-Pacific partnership, under which we will have enormous opportunities for our agriculture producers to export to something like a £9 trillion marketplace. The Australian and New Zealand trade deals are the first two of many that will afford great opportunities for some of the finest products in the world. I think we are all concerned in standing up for our constituents and ensuring the opportunity to find new export markets for those goods.
Victoria Atkins (Louth and Horncastle) (Con)
My concern is not for the enormous farming conglomerates that we see across swathes of the countryside, but for the small tenant farmers in my constituency. They are a critical part not just of my constituency—which, incidentally, helps feed the country—but of our farming heritage. I think it is those smaller farmers that colleagues across the House are so concerned to understand, support and, if necessary, protect.
Anne-Marie Trevelyan
My hon. Friend is absolutely right, and that is why we have built into these first two of our trade deals these very clear and robust safeguards, so that there cannot in the early years be the sort of surges that could risk the success of our important tenant farmers. That is also why the work that the National Farmers Union and the National Farmers Union of Scotland do is so important in helping our farming communities.
I too have many small tenanted farms in my constituency, and this is the opportunity for them to work together and to work in the new markets that will be appearing thanks to the continuing new trade deals we will strike. This is about how we can get the maximum benefit not only as they produce for our own domestic markets, but, if they choose to do so, as they export some of the finest meat in the world to new and growing markets across the world.
These two trade deals are very much the first two anchor points, as it were, of a broad and wide set of trade deals that will afford such opportunities to all our farmers, from the large farmers that are very good at fighting their own corner through to—exactly as my hon. Friend points out—our small but incredibly important farmers across our rural communities. Their importance is not only in the food they produce, but in land management and, indeed, in the wider community, so that is at the heart of the plan.
As I say, the negotiating teams that the Department for International Trade take to these negotiations have at their heart teams of experts from the Department for Environment, Food and Rural Affairs, as well as from other Departments as required for each of the chapters in the trade deals.
Caroline Lucas
The Secretary of State is very generous in giving way. On that point, does she not recognise that the bottom line is that if we are rightly asking farmers to lead the way on more sustainable farming methods, yet at the same time allowing imports to come in that will undercut them—because they are not having to meet the same standards and are therefore cheaper—we are essentially handing farmers a knife to cut their own throats? It is simply not sustainable. Notwithstanding all her nice words about safeguards, do we not need to make sure that there are much stronger environmental regulations in these trade agreements so that we do not actually cut off the livelihoods of our own small farmers?
Anne-Marie Trevelyan
We have not only built in safeguards for that, but of course all the safety regulations in our own domestic requirements remain clear barriers to entry, so we are very clear that there will no dilution of or risk to any safety requirements on food.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
Is my right hon. Friend not surprised by the point made by the hon. Member for Brighton, Pavilion (Caroline Lucas), since New Zealand is led by a Labour-Green coalition that puts enormous weight on environmental sustainability? Therefore, the suggestion that this trade agreement would undermine those standards seems very odd.
Anne-Marie Trevelyan
My right hon. Friend raises an important point, which is that we have done trade deals with two partner countries that are very much of the same view as us on food safety standards, and we will continue to work with them. One of the beauties of these new trade deals is that they are very broad-ranging and much more ambitious, but are also cross-cutting in many areas. They are not static but have built into them the opportunity for dialogues in any number of areas. Where any business sector here or in those countries either has anxieties or wants to work together to grow those markets, we have factored such dialogues into the trade deals so that they will be able to do that.
To get on, if I may, over the long run our UK-Australia agreement is expected to increase annual trade by over £10 billion. This means a £2.3 billion boost to our economy and a £900 million increase in household wages. Beyond this, the agreement supports the economy of the future thanks to the first ever innovation chapter of any trade deal in the world. In addition, professional workers and those under 35 will enjoy new opportunities to live and work in Australia.
Turning now to our agreement with New Zealand, it will increase overall bilateral trade by 60%, providing an £800 million uplift to the UK economy on top of the £2.5 billion a year in bilateral trade we already do with our Kiwi friends. UK services and tech firms will gain deeper access to New Zealand’s markets, sustaining jobs in this country while also growing the high-value businesses of the future. Our analysis shows that this deal will provide real economic rewards to the 6,000 UK small and medium-sized businesses that already export goods to New Zealand, while opening new opportunities for those that have not yet begun that journey. Northern Ireland, Wales and Scotland will enjoy an annual economic boost worth over £50 million.
This Bill relates to a key element of our Australia and New Zealand deals: their measures to widen access to procurement opportunities for firms in both our countries. To give the House a sense of the possibilities on offer for UK businesses, the Australia deal will mean our companies can bid for Australian Government contracts worth around £10 billion a year, including major infrastructure projects such as road upgrades and railway constructions. The Railway Industry Association trade body recently praised the deal’s procurement aspects, saying that they will make it easier for our rail businesses to invest and operate in Australia. This Bill will ensure that our businesses can seize these opportunities as well as the free trade agreements’ broader benefits by putting us on the path to ratification.
Turning to the detail, this Bill is narrowly focused on enabling the Government to implement their obligations under the agreements’ procurement chapters. It will give the Government the specific powers they need to extend duties and remedies in domestic law to Australian and New Zealand suppliers for procurement covered by the free trade agreements and to amend our domestic procurement regulations so that they are in line with commitments in the Australia free trade agreement. The Bill will also give effect to potential changes over the free trade agreements’ lifetimes. They include implementing agreed modifications and rectifications to coverage and updating the names of Government entities
I assure the House that my Department has engaged constructively with the devolved Administrations throughout the Australia and New Zealand trade deal agreement negotiations, and I thank them for working so collaboratively with the Department. I am pleased that the devolved Administrations have indicated that they are satisfied with the outcome of the negotiations on the procurement chapters in both agreements. As procurement is a partially devolved matter, this Bill seeks a concurrent power. I remind the House that such powers are included in the Trade Act 2021, to allow the UK Government to make secondary legislation on behalf of Northern Ireland, Wales and Scotland when it is practical to do so.
Jonathan Edwards
I am glad there has been some progress. My understanding is that the Welsh Government were calling for concurrent-plus powers; have those been conceded by the UK Government?
Anne-Marie Trevelyan
I can update the hon. Gentleman: those discussions are continuing and our officials are continuing to work out the best way forward, and I will make sure they give him an update in due course. I also stress that we are committed to not normally using the concurrent power in this Bill without the devolved Administrations’ consent, and never without consulting the Administrations first.
While technical and narrow in nature, the Bill’s measures will help our businesses and citizens enjoy the enormous benefits offered by our Australia and New Zealand trade deals. Without this Bill we cannot bring these two landmark agreements into force. We want to unlock new trade for our businesses, support thousands of jobs throughout the country and provide a boost to our economy worth billions of pounds as soon as possible, so that we can strengthen both the bonds of commerce between our businesses and Governments and the bonds of friendship our countries share.
The Australia and New Zealand free trade agreements demonstrate in the most practical way what global Britain means to this Government and what we know the UK can achieve as an independent trading nation. This Bill is an essential step towards turning these FTAs’ extraordinary promise into firm reality. I commend it to the House.
Nick Thomas-Symonds (Torfaen) (Lab)
It is a privilege to open this Second Reading debate on behalf of the Opposition—in what is evidently the biggest political event of the day.
I welcome the fact that we are finally here for a longer debate on trade, albeit after the ratification of the two deals we are discussing, and let me say at the outset that the Labour party is in favour of securing trade deals with countries around the world that deliver for communities up and down the country. We are in favour, too, of deepening our trade links with our friends in Australia and New Zealand, and I want to put on record my thanks to the high commissions of Australia and New Zealand for their openness to dialogue and to providing information throughout the process.
The trade deals are of course significant in themselves, but they are also crucial because they set precedents not only for what other countries can expect when negotiating with us but for the process of scrutiny provided by this House, and, frankly, that process has been wholly inadequate. Ministers have hidden away rather than answer to this House for what they have negotiated. Ten months after the Australia deal was signed and seven months after the New Zealand deal was signed, the Bill in front of us today is only a short Bill that gives the Government the power to implement the procurement chapters in the Australia and New Zealand deals along with the associated provisions about regulations and the devolved authorities. So today’s debate is not about ratification, as the Government have avoided that.
In respect of the New Zealand trade deal, no Minister from the Department even came to the House to speak about it and open themselves up to questions; instead, they just issued a written statement, so no questions could be put. The cross-party International Trade Committee has rightly been scathing about the way the Government have handled scrutiny of the Australia trade deal and their premature triggering of the 21-day Constitutional Reform and Governance Act 2010 process without full Select Committee consideration being available to Members. When pressed on that, the Government then refused to extend the process. The current Secretary of State has by my count swerved eight—eight—invitations to attend the International Trade Committee.
The Government’s failure to be open to parliamentary scrutiny and make parliamentary time available for debate is both a completely unacceptable way to treat this House and a clear breach of the Government’s own promises.
Angus Brendan MacNeil
I am grateful to the right hon. Gentleman for mentioning the International Trade Committee, which I chair, and he highlights our frustration. Committee members have different political views, but they were united about the Government’s disappointing attitude to scrutiny. If we get these things right, more people win, but if we are slipshod and slapdash, more people lose.
Nick Thomas-Symonds
I completely support what the Chair of the Select Committee says. It is a cross-party Committee, so this is not a partisan point. Whatever has been negotiated by Ministers, they should be willing to open themselves up to scrutiny from this House.
As I said, this is also a breach of the Government’s own promise. Lord Grimstone wrote in May 2020:
“The Government does not envisage a new FTA proceeding to ratification without a debate first having taken place on it.”
But that is precisely what has happened, and I think we are entitled to ask why.
Why are the Government so worried about being held to account on their own trade policy? Could it be because the 2019 Conservative manifesto promised that 80% of UK trade will be covered by free trade agreements by the end of this year when the reality is far short of that mark? Could it be because that same manifesto promised a comprehensive trade deal with the United States by the end of this year and it is nowhere in sight?
Or is it because Ministers have been letting down farmers? Members need not just take my word for that; the right hon. Member for Richmond (Yorks) (Rishi Sunak), the former Chancellor—and, as of yesterday at least, a Tory Leadership candidate—made exactly the same point over the summer. No wonder the now Prime Minister failed to attend a hustings with the National Farmers Union last month; as the former Chancellor put it, that
“raises questions about her willingness to listen to the needs of farmers and the wider food industry.”
I agree entirely with the former Chancellor; I could not have put it better myself.
Anthony Mangnall (Totnes) (Con)
I congratulate the right hon. Gentleman on his book, which was a page-turner. Will he not take comfort, as I do, from what was said by the Prime Minister a few days ago to the National Farmers Union about wanting to see an improved scrutiny process?
Nick Thomas-Symonds
I thank the hon. Member for his congratulations on my biography of Harold Wilson; that is greatly appreciated. On scrutiny, if only the Prime Minister had held the trade brief in the past and been able to do something about it then.
Is not the truth perhaps that the Government are running away from scrutiny because they are failing to support exporters properly? The Opposition have been arguing that the Government are not doing enough to support exporters, and over the summer that became clear. The former Minister for exports, the hon. Member for Finchley and Golders Green (Mike Freer)—he intervened on the Secretary of State but is no longer in his place—appears to agree. He argued that the trade access programme is underfunded and said of it:
“We support too few shows, we don’t send enough business, our pavilions are often decent but overshadowed by bigger and better ones from our competitors.”
Perhaps it is therefore no surprise that there has been failure in the Department for International Trade.
We then have what the Secretary of State said about her own Minister for Trade Policy, who I think is still the Minister for Trade Policy today. She said:
“There have been a number of times when she hasn’t been available, which would have been useful, and other Ministers have picked up the pieces.”
The former Chancellor says that Conservative trade policy is letting down farmers, the former Minister for Exports says that the Government are not supporting exporters as they should be, and the Secretary of State is criticising the performance of one of her own Ministers. This is not the good ship Britannia delivering trade for global Britain; it is more like “Pirates of the Caribbean”, with a ghost ship manned by a zombie Government beset by infighting, mutiny and dishonesty. The calamity might have been mildly amusing were it not so serious a matter for our country’s future, with people across our nation needing a trade policy that delivers for them.
In other negotiations and future negotiations, countries will look at what was conceded in these negotiations and take that as a starting point. We already have a UK-Japan trade deal that benefits Japanese exporters five times as much as UK exporters. On the Australia deal, the Government’s impact assessment shows a £94 million hit to our farming, forestry and fishing sectors and a £225 million hit to our semi-processed food industry. On the New Zealand deal, the Government’s impact assessment states that
“part of the gains results from a reallocation of resources away from agriculture, forestry, and fishing”,
which will take a £48 million hit, “and semi-processed foods”, a £97 million hit.
The Opposition will press four issues in Committee: farming and animal welfare; climate change; labour standards and workers’ rights; and, as has been raised in interventions, the role of the devolved Administrations in the process of negotiation and ratification, and the protection of geographical indicators. Let me deal first with farming and animal welfare. Labour is proud of our farmers and the high standards that they uphold, and we are confident in British produce to be popular in new markets, but we also recognise the need for a level playing field for our farmers.
The Government claim that they are trying to mitigate the impact of the two deals with tariff-free access being phased in. In the New Zealand deal, there are tariff rate quotas and product-specific safeguards that last 15 years. Similarly, in the Australia deal, the phasing-in period on beef and sheepmeat is 15 years, but the quotas set by the Government for imports from Australia are far higher than current imports. As I have previously pointed out in the House, on beef imports, when Japan negotiated a trade deal with Australia, it limited the tariff-free increase in the first year to 10% on the previous year. South Korea achieved something similar in negotiations and limited the increase to 7%. But the Government have negotiated a first year tariff-free allowance with a 6,000% increase on the amount of beef that the UK currently imports from Australia. On sheepmeat, they have conceded a 67% increase in the first year of the deal.
It is not as if other countries have not done significantly better—they have—so why did our trade Ministers not achieve the same as Japan’s and South Korea’s? Why have our Ministers failed to ensure that Australian agricultural corporations are not held to the same high standards as our farmers?
The Government have agreed to a non-regression clause on animal welfare. To be clear, that does not mean equality of standards across the two countries—it is not fair competition. What will actually happen is that meat produced to far lower animal welfare standards will get tariff-free access to the UK market.
John Spellar
Has it not been a long-standing problem—even within the EU—that different animal welfare standards have allowed our farmers to be undercut? On beef, might it not be farmers in the Irish Republic who face greater competition? After all, why would people want to send meat to the UK all the way from Australia rather than get it from just down the road? Should we not be looking at supporting our industry domestically, particularly through public sector procurement?
Nick Thomas-Symonds
My right hon. Friend is right to raise what we should do domestically. He also illustrates another point. There is a history of trade negotiations, including on different standards of animal welfare, that Ministers could have taken heed of, sought to learn lessons from and put into these negotiations.
The now Prime Minister said that the Government had no intention of striking any deals that did not benefit our farmers, but the reality is that the vast majority of trade deals, which she trumpeted in her leadership campaign, were roll-over deals replicating existing EU agreements—not so much an exercise in driving a hard bargain as a national exercise in cut-and-paste with accompanying photographs on Instagram.
Perhaps it is no surprise that the Prime Minister’s own colleagues have been so critical of her approach to trade. The right hon. Member for Camborne and Redruth (George Eustice) as Secretary of State for Environment, Food and Rural Affairs said that he faced “challenges” in trying to get her to enshrine animal welfare in deals. No wonder the NFU said that it saw
“almost nothing in the deal that will prevent an increase in imports of food produced well below the production standards required of UK farmers”.
Jonathan Edwards
Is the right hon. Member aware of the article run by Politico in July indicating that the new Prime Minister was warned by her officials that the trade deals that she was negotiating with Australia and New Zealand would negatively impact on UK farmers?
Nick Thomas-Symonds
I am grateful for that intervention. Yes, it seems that the Prime Minister ploughed on regardless, despite the clear advice that she was given.
The concerns that we are discussing must be taken seriously. We need to hear so much more from the Government about how they will support our farmers—that includes smallholding farmers, as were mentioned in an intervention by the hon. Member for Louth and Horncastle (Victoria Atkins)—about the robustness of animal welfare protections and about how we can prevent our farmers from being sold short for doing the right thing and upholding high standards. Ministers also need to be clear about what support farmers can rely on in the next 15 years so that they can navigate the transitional period. Those matters will be pressed by the Opposition in Committee.
Given the Government’s poor record in standing up for UK interests in negotiations, perhaps it is no surprise that Australia’s former negotiator at the World Trade Organisation said:
“I don’t think we have ever done as well as this”.
Is it any wonder that the National Farmers Union said, of the Australia agreement,
“there is little in this deal to benefit British farmers”?
As we consider the impact on our agricultural sector, why are the Government promising a monitoring report about two years after the agreement comes into effect and every two years thereafter? Why not every year? They could do that, particularly given the level of concern in our rural communities.
I turn to climate change. I realise that the Conservative party has a long-standing reliance on conservative allies from Australia, not least with the appointment of Tony Abbott to the trade board, but surely it has not signed up to some of the more extreme views that he and his colleagues hold on climate change, including that it is “probably doing good”. The current COP26 President, the right hon. Member for Reading West (Alok Sharma)—
Nick Thomas-Symonds
On 1 December 2021, in this House, the right hon. Gentleman said that the Australian deal would reaffirm
“both parties’ commitments to upholding our obligations under the Paris agreement, including limiting global warming to 1.5°.”—[Official Report, 1 December 2021; Vol. 704, c. 903.]
Frankly, I would have cheered as the hon. Lady did if, a few weeks later, the deal had actually contained what the right hon. Gentleman said it would. However, the explicit commitment to limit global warming to 1.5° was not in the deal, despite what had been said. What went wrong in the final couple of weeks of the negotiation? Did Ministers simply give in for the sake of getting a completed deal? It is a lesson that tariff-free access to our UK market should not be given away easily. Looking at the concessions made by the Government in those final weeks, are people not right to worry that the Government are more interested in the press release announcing the completed deal than they are in standing up for UK jobs and livelihoods? It surely cannot be right that, as across the world we debate the devastating impact of climate change, we are not capturing that fully in deals like this. Not only is it dangerous to the planet, but it fails to recognise the huge business and export potential that climate change technology, innovation and services can create. It is not only environmentally unsound, but it also makes bad business sense. I implore Ministers to speak again with the new Administration in Australia to see what more can be done to take joint action on climate change, and to put it at the front and centre of the very well established and historic relationship between the two countries. I am sure that the recent change in Government in Australia will be beneficial in enabling that to happen.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
In addition to climate change and the other areas that my right hon. Friend raises, the British Medical Association and the royal colleges are still very concerned about the impact on our NHS of the new trade deals being negotiated, with profit rather than patients being the prime focus. Is he reassured by the passage of the Bill?
Nick Thomas-Symonds
My hon. Friend is absolutely clear that our NHS should never be on the table in any trade negotiation, but that is one of a number of significant issues that could have been properly raised and ventilated had there been a proper process of scrutiny.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Does my right hon. Friend share my concern that the Bill, not just the trade treaty, allows, through the negative procedure, Ministers to change procurement rules? We can say here that the NHS is not for sale and not on the table, and Ministers can say that, but this House does not have a cast-iron guarantee that we would have a vote before any change in procurement rules. An amendment to the Bill to allow that to be done through the positive procedure would be one commitment the Government could give to ensure Parliament gets a cast-iron guarantee.
Nick Thomas-Symonds
My hon. Friend is absolutely right. If the Government do not give that commitment, we will bring forward an amendment in Committee to seek that commitment.
John Spellar
Can we slay this particular red herring, which was also mentioned in relation to the US trade deal? It is not about privatising the NHS. All the Americans said, and in this they were right, was, “We are not saying what you should do with the health service; we are saying that if you decide to privatise it”—which we should not do—“then we want to be treated as equal partners.” That has nothing to do with trade; it is to do with the Government’s health policy. We should not mix up the two, following a political campaign on it.
Nick Thomas-Symonds
It is not the threat of the American Government to our NHS that worries me; it is the threat of the Tory Government to the NHS. My right hon. Friend is absolutely right to make that distinction.
Nick Thomas-Symonds
I will give way once more and then I will have to make some progress.
Matt Rodda
I very much appreciate my right hon. Friend giving way; he has been very generous with his time. He mentions the threat of the Government to British agriculture—he is absolutely right on that—and the threat to the environment in some of the measures. Does he agree that there could also be risks for many small exporting businesses who face a series of hurdles to get over because of the Government’s trade policy?
Nick Thomas-Symonds
My hon. Friend is absolutely right to raise the position of small businesses. Support for small businesses, particularly exporters, is something on which the Government really have to do far better.
Nick Thomas-Symonds
I will take one more intervention and then I will have to make some progress.
Katherine Fletcher
I am very grateful. I speak because I am genuinely passionate. I do not know how many Members have actually exported to Australia as a small businessperson, but I have. The trade agreement makes it easier and better. Does the right hon. Gentleman agree?
Nick Thomas-Symonds
I sincerely hope it does; absolutely. I am glad I took the intervention, because of the hon. Lady’s experience of exporting. I am sure she agrees with me that businesses have different amounts of resources to spend on supporting their exports and getting information about markets around the world, and that the Government should stand by all those exporters and make that process as easy as possible. The trade deal is, of course, a step forward, but we also must support our businesses in taking advantage of the opportunities she is speaking about.
Returning to climate change, we really must use future trade deals to drive forward this agenda and recognise the mutual benefit of tackling the biggest challenge of our generation.
On the third issue, labour standards and workers’ rights, Ministers need to go further, especially given some of the rhetoric briefed to the newspapers about bonfires of workers’ rights, and ensure that the Bill will not undermine workers’ rights, particularly in relation to Australia. The TUC said, in relation to the Australia deal, that the agreement
“does not contain commitments to ILO core conventions and an obligation for both parties to ratify and respect those agreements”,
and that it provides
“a much weaker commitment to just the ILO declaration”.
That is a profound error. We should not be setting off on the road of establishing new trade agreements across the globe that sell short our workers here, or indeed elsewhere. A race to the bottom benefits no one. Put simply, it is self-defeating to think that Britain would prosper via deals in which labour standards are a trade-off. We should be promoting the highest standards here and around the world, in the interests of our workers here and as a force for good around the world. It is what a Labour Government would do, working with all trading partners, including Australia and New Zealand, to drive up protection for workers and to have a trade policy that truly delivers for working people.
On the devolved Administrations, an issue raised on a number of occasions, the Government have spoken about trade benefiting all parts of the United Kingdom. Central to that, however, is taking into account the strengths of different nations and regions, and listening to their democratically elected representatives. That needs to be done in overall trade policy, in the negotiating mandate and negotiation process, and in ratification. That could be—I say this to the Secretary of State—formalised in a concordat or agreement on how the Government interact with the devolved Administrations. I urge the Secretary of State to look at that. We are also calling for the UK Government to undertake nation-specific impact assessments on trade deals. That would ensure a clear understanding of the implications and opportunities for the whole country, and also ensure that the deals can best align with the economic strategies of the devolved Administrations.
There is also—if I may just mention it for a moment—an issue around geographical indicators. As the International Trade Committee put it, the
“Government has failed to secure any substantive concessions on the protection of UK Geographical Indications in Australia.”
We should be backing our fantastic national producers, from Stilton cheese to Anglesey sea salt and Scotch whisky, and not failing to achieve concessions in this way.
Nick Thomas-Symonds
Indeed.
I will not hold the Government to impossible standards and of course there are aspects of the deals that I welcome. In particular, the provisions to advance women’s economic empowerment across the New Zealand agreement are to be welcomed. Chapter 25 enables collaborative work between the UK and New Zealand to support women business owners, entrepreneurs and workers to access opportunities for international trade, complementing other areas, such as small and medium-sized enterprises—mentioned in an intervention—services, procurement, labour, development and digital trade. I was pleased to meet the Prime Minister of New Zealand on her recent visit, and I know that the New Zealand Government share ambitious climate goals and the need to uphold workers’ rights. However, after looking at the two deals and the differences between them, I observe that they seem to be more a consequence of the political persuasion of the Governments with whom Ministers here were negotiating, rather than a deliberate strategy on the part of Ministers.
On procurement, the Government will need to show how businesses here can bid in Australia and New Zealand. In particular, support needs to be given to facilitate the participation of small and medium-sized enterprises in the procurement process and to promote the use of paperless procurement. Suppliers must have easy access to information about procurement opportunities. Words and promises on that are not enough; it has to be made a reality.
Lloyd Russell-Moyle
Is my right hon. Friend concerned about the fact that we should allow British authorities to put conditions on procurement that pertain to labour rights, trade union rights, local recognition and the employment of workforces at a rate that is higher than the national minimum wage? It is important that the Government do not provide foreign companies with easier access to bid for British contracts than that which British companies would have.
Nick Thomas-Symonds
My hon. Friend makes two very good points: first, we should ensure that our British firms have the support that they need to compete in the procurement process; and secondly, this should not be some sort of cloak beneath which there is a race to the bottom on workers’ rights. Both those things are important.
The concerns that have been raised about these two deals and the process of scrutiny amount to a problem with the Government’s approach to trade policy. There is no core trade policy and no clear strategy or direction. That criticism has been echoed by the International Trade Committee.
There has been a lot of talk from the Conservative party, but the delivery on trade agreements has been noticeable by its absence. There is no US trade deal in sight, and we await the India deal—as promised by the now previous Prime Minister—and the meeting of the target of 80% of UK trade being covered by FTAs.
Anthony Mangnall
Does the right hon. Member recognise that we have started negotiations on the CPTPP and with the Gulf Co-operation Council, and that we have started negotiations and to look into the Canada agreement? It is not technically that fair to say that we are not ploughing ahead with signing as many trade deals as we can.
Nick Thomas-Symonds
I am holding the Conservative Members to the standard that they promised in their manifesto. It is not the standard that I have set, but the standard that they set when they went to the electorate in 2019.
Is not the problem that, for too long, Britain has been led by a directionless and, frankly, distracted Conservative party? Conservative Members spent months propping up a discredited Prime Minister. They decided to leave him in office over the summer while they fought among themselves, leaving people up and down the country facing economic devastation.
A dynamic trade policy that aligns with a clear industrial strategy is vital to boosting our appalling levels of growth and averting recession, yet we find that the Australia deal does not even mention the specific target on climate change, despite that being one of the great challenges of our generation.
As an Opposition, we will of course not vote down this short Bill. However, if we were to attempt to change the deals that have already been agreed, or if anyone went back on their word on them, that would further sully our international reputation, which, frankly, has already been badly damaged by the conduct of the Conservative party. However, we will push a number of amendments in Committee to support our farmers and to ensure that exporters have the support they need. The Government must urgently learn lessons from where things have gone wrong in these negotiations.
Lloyd Russell-Moyle
An additional amendment that might be useful would be to change the requirement for secondary legislation so that we enable the Secretary of State to introduce it only when they “must” comply according to the trade deal and not at their whim, whereby they “can”. That change from “can” to “must” will be vital to ensure that there is not an open door for Executive action.
Nick Thomas-Symonds
My hon. Friend makes another very good point about the inadequacies of the scrutiny process.
Access to British markets is a huge prize for many other global economies. The Government have to stop selling us short and put in place a proper, core trade strategy that will allow our world-leading businesses to thrive and, for once, truly deliver for communities across the country.
Mark Garnier (Wyre Forest) (Con)
I thank the shadow Secretary of State for International Trade, the right hon. Member for Torfaen (Nick Thomas-Symonds), for his speech. Broadly speaking, I agree with a great deal of what he said—although not everything—and I think that his speech will probably set the tone for this debate, which is less about the content of the trade deal and more about the process of scrutiny of it. As a member of the International Trade Committee, I have been heavily involved in the process. It is no easy job to consider several tens of thousands, if not hundreds of thousands, of pages of detailed documentation. The abridged version comes to eight volumes, so it is quite a challenge.
As a basic principle, I very much welcome the fact that we have signed these two trade deals. It is absolutely fantastic that, having got Brexit done, we are now delivering what Brexit has to offer. However, there will be an interesting argument, perhaps in relation to some of our constituents, that having taken back sovereignty from the European Union, we cede a bit of sovereignty every time we sign a trade deal with other countries around the world. That illustrates the point that we have taken back control from the EU, but we will give a bit of control to the CPTPP or the GCC. That is an interesting debate, but it is not what we will talk about today.
The trade deals are good. As we heard from the Secretary of State, on the Australian side, there will be an increase of £2.3 billion in economic activity, with increased income of £900 million to people working who benefit from it. As for New Zealand, there will be an increase in economic activity of £800 million, with increased income of £200 million for people working in the relevant sectors.
These two trade deals are incredibly important, because they are the first trade deals that we have signed ab initio since leaving the EU. All the trade deals that we have done until now have been roll-over trade deals, aside from the Japanese trade deal, which was a quasi-roll-over deal. When we were leaving the EU, it was incredibly important in the Department for International Trade—having been a Minister in that Department, I was very aware of what was going on—that we did not interrupt trade with all those countries around the world. That is why the shadow Secretary of State is right to say that they were cut-and-paste deals, because their objective was to not interrupt trade. I suspect that we will come back to some of the trade deals and renegotiate them, so that we get better outcomes for UK businesses.
Anthony Mangnall
I think that my hon. Friend and I met when the South Korean Trade Minister came to speak to members of the International Trade Committee. He said that the benefit of the roll-over trade agreement that the UK has with South Korea was that we could look to improve it. Indeed, South Korea had sent a letter to the Department for International Trade in August last year and it received a response shortly afterwards in September, and discussions were already under way in the Department, whereas the letter that it sent to the EU warranted no response. The roll-over deals already provide the opportunity to improve on them and, in the case of South Korea, that is happening. Does my hon. Friend think that that is what the Opposition should look at when it comes to trade agreements and roll-overs having real value?
Mark Garnier
Yes, I agree. It is incredibly important that we have a basis on which we can improve and that is absolutely the case. We would not be able to improve on these deals if we did not have them in the first place.
The Japan deal was a relatively easy one to scrutinise, because it was basically about looking at whether we had secured better terms than the European Union, based on the fact that we all started at the same time with that deal. It was a cut-and-paste deal with added lines, but the important point is that it was a modification of a roll-over deal.
These two deals are massively important, because there are two fundamental things that we need to consider. First, what are the UK Government’s negotiating objectives? We have never really understood what they are. A number of documents have laid out bits and pieces here and there, but there has never been a cohesive document to tell us what we are negotiating against or how we are doing relative to the outcome that we want.
The second important point is that this is the very first time that we are looking at the process of ratifying a trade deal, and it falls short of what we really need. I welcome this debate, which is an incredibly important one, but it is not the debate that we should be having. This is a debate about enabling certain legislation to ensure that the trade deal goes ahead. The Opposition have already said that they will support the Bill, but in the unlikely event that the Bill did not pass, that would leave us in breach of our international obligations under the trade deal. The trade deal has happened, so we would now be in trouble if we did not pass the Bill. It is incredibly important that we understand that this is an enabling Bill; it is not about how we scrutinise the deal itself.
Lloyd Russell-Moyle
The hon. Gentleman highlights the point that we have passed CRaG before passing the enabling legislation, which is quite an unusual thing to do; normally in this country we pass enabling legislation and then ratify treaties. Does he think that perhaps the Government should have done things in a different order to ensure that the right scrutiny would happen and that there would be no risk, not even a minuscule one, of our breaching international agreements?
Mark Garnier
My International Trade Committee colleague gives me a fantastic prompt for the next part of my speech, which is about that part of the CRaG process. The CRaG process allows 21 days in which Parliament can hold up the process of ratification of the trade deal. In the lead-up to the recess, the International Trade Committee was desperate to get more scrutiny. We went out and spoke to huge numbers of interested parties such as the NFU, we read countless pages of written submissions, we heard from experts and all sorts of people, and we went through the whole thing, but it was not until the final days before the recess that we heard from any Ministers.
The Secretary of State, to her absolute credit, came and spent some five or six hours giving evidence to the International Trade Committee, but it was too late for the Committee to publish a full report or get a debate in Parliament. My hon. Friend the Member for Totnes (Anthony Mangnall) went to huge efforts to secure a debate on the two trade deals in order to hold back, if necessary, the ratification by 21 days under the CRaG process. We even applied to Mr Speaker for a debate under Standing Order No. 24, but unfortunately that debate was not allowed.
That means that the CRaG process is completely meaningless. If we cannot get a debate in Parliament, there is no way under the CRaG process to hold up—admittedly only by 21 days—the ratification of the deal. We cannot extend the process of scrutiny to get better scrutiny of the deals. That is a real problem, not just for these trade deals, but for Parliament and for its ability to scrutinise the Government properly under the CRaG process.
This is an incredibly important debate, because Parliament is an institution that learns by its mistakes, and we have made a lot of mistakes in the process of scrutinising these trade deals. We cannot afford to continue making mistakes. I am very disappointed by what has happened.
Angus Brendan MacNeil
I pay tribute to the hon. Gentleman: if people are not paying attention in their offices or wherever, what he says is a very gentle reminder to the Government and to Government Members that things could have been done better. He and I see scrutiny from very different political angles, but the point, which he makes eloquently and well, is that the scrutiny could have been far better than it is. I share his frustration, as do the hon. Members for Totnes (Anthony Mangnall) and for Brighton, Kemptown (Lloyd Russell-Moyle)—we are all utterly frustrated. I praise him as a parliamentarian: he is in perfect flow and is doing an excellent job. This is a very important point, and I hope that Parliament will listen, because it comes from all sides and it probably comes best from him.
Mark Garnier
I thank the Chairman of the Select Committee for his kind words. In the spirit of collaboration, I think there is an opportunity for us all to work together. The Department for International Trade has reached out to us, and we have a visit to the parliamentary team coming up in the next couple of weeks.
There is a problem somewhere, but we are not too sure what it is. I was a Minister in the Department, and I found that the civil servants we worked with were second to none. As one of the Prime Minister’s international trade envoys—I believe I am on my fourth Prime Minister as a trade envoy—I continue to work with civil servants in the Department. It is important that we get this right. My experience with the Secretary of State is that she has been incredibly generous with her time and has been very engaging. I believe in her sincerity in trying to move things forward, but something fundamental has gone wrong with the interaction between the International Trade Committee and the Department. I do not know what it is, but we need to find out.
Something has also gone wrong with the process of scrutiny of international trade deals and with the CRaG process, so I urge the House to think hard about how to ensure that they run smoothly. At the end of the day, we have left the European Union and we ain’t going back. These are exactly the opportunities that are presented to this country. We must get this right. We must take advantage of global Britain.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
This is a time when people and businesses across the nations of the UK are facing an absolute crisis. When it comes to our responsibilities for trade, it has never been a more important time to look at the detail and impact of the decisions made on their behalf about things like trade.
We should have the ability to look at the details. We should have the ability to scrutinise these things, see what the impact is, find out the granular effect and find out what is going to happen in Scotland, Wales, Northern Ireland and the regions of England. We should have details on all those things in front of us to make the correct decisions, but of course we do not. What we have today is this debate to approve the technical details to allow this trade Bill to pass. That is simply not acceptable: it is not what was promised, and it is not what people and businesses facing crisis deserve or want.
It is not too late for an epiphany. It is not too late for the Secretary of State to go away and say, “You know all those things that were said by all the various parties? We will take them on board today and get something done.” I am not holding out much hope, but it is not too late. Perhaps there will be a bit of listening.
Let us look at what the Government are publicising as the benefits for the people and businesses who are going through these pressures just now. They say that we will be able to get machine parts—I am sure that that will be good for some people—and Tim Tams, surfboards and boots. I am sorry, but none of my constituents is writing to me about the lack of availability of those kinds of items at the moment. There is a positive for Scotland—the export of Scotch whisky to Australia will be a benefit—but let us not forget that that market is three times smaller than the market for Scotch whisky in France, for example. All in all, there is a UK GDP opportunity of 0.02% with Australia, and not even that with New Zealand.
Angus Brendan MacNeil
As my hon. Friend mentions whisky, it would be remiss of me not to take the opportunity to stand up. It should be noted that one of the things we highlighted was that Australia has to get its definition of whisky together. That is a real problem.
Drew Hendry
Indeed, and I want to return to that point later. My hon. Friend makes a very good point about details and description.
The Government are trying to sign away the downsides of the deal—they are basically saying that there are no downsides—but when we listen to people who are actually affected, it is not the downsides that they are worried about; it is the cliff edge. First among them are the farmers in Scotland and across the other nations of the UK. This deal betrays Scottish and UK farmers—that is not my rhetoric, but a quotation from National Farmers Union president Minette Batters, who also talked about the detail causing “irreversible damage”. She was joined by Phil Stocker, the chief executive of the National Sheep Association, who said that the deal had “betrayed the farming industry”. Martin Kennedy, the president of the National Farmers Union of Scotland, has said
“Our fears that the process adopted by the UK government in agreeing the Australia deal would set a dangerous precedent going forward have just been realised.”
Those farmers face a flood of lower-quality, mass-produced, cheaper cuts of meat into UK markets.
David Mundell
Is the hon. Member aware that the biggest concern expressed by upland farmers in Scotland about the future of the sheep industry relates not to these trade deals, but to the SNP Scottish Government’s plans to allow tree planting over vast areas of agricultural land that is currently cultivated for livestock?
Drew Hendry
The right hon. Member is skating over the fact that the Tory Government have neglected their tree-planting duties in terms of their actions on climate change. [Interruption.] Perhaps—if he will stop chuntering from a sedentary position—he should also have a conversation with Irish farmers to see what their position is on this matter.
As we have already heard, but I will now repeat it, the Government’s own trade impact analysis shows that the Australia deal will mean a £94 million hit per year to farming, forestry and fishing, and the New Zealand deal will mean a hit of £145 million to agriculture and food-related sectors. The New Zealand media have been reporting that New Zealand farmers are jubilant about the deal. They are nonplussed; they cannot understand it; they are baffled by this, because, as they have pointed out, the benefits to the UK are negligible.
The UK Government are kicking Scottish farmers while they are down. Farmers are gasping for air, and they already face spiralling uncapped energy costs, crops rotting in fields owing to a lack of pickers, rising diesel costs, the loss of EU farming subsidies, and rocketing fertiliser costs. I can assure the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) that the sector in Scotland will not forgive this. Food and drink manufacture is twice as important to the Scottish economy as it is to the UK economy. As we have heard, even the recent Tory Chancellor, who lost the race to the new Prime Minister by the slimmest of margins, has said that the deal is bad for farmers.
The news for consumers is, of course, not much better. Because we do not know what the split is across the nations and regions of the UK, we cannot say what the impact on people will be, but the best that the UK Government can come up with as a justification for the deal is a prediction that UK households will save £1.20, on average.
Drew Hendry
I will in a minute.
Perhaps households can get together to buy a single cup of coffee at Starbucks if they pool their resources—
Drew Hendry
Or a unit of electricity, as my hon. Friend has chimed in to suggest.
Drew Hendry
I have said to the right hon. Gentleman that I will give way, but not at this particular moment. If he does not mind, I will continue with the point that I was going to make.
I have just talked about the risible benefits, in this crisis, to UK households. Perhaps the Government are counting on the fact that farmers, and others who are losing out, can drown their sorrows with 20p off a bottle of Jacob’s Creek. Now I will allow the right hon. Gentleman to intervene.
John Spellar
I thank the hon. Gentleman. Can he make it clear to us whether he thinks we should have free trade agreements on agricultural products with any countries? If he thinks we should have them, why should we not have them with our great ally Australia? If he thinks we should not have such agreements with Australia or New Zealand, which countries does he think we should have them with?
Drew Hendry
I think we should have free trade deals with countries—of course we should—but we should take into consideration whether we will win or lose from them. Those deals should be scrutinised by the parliamentarians who are elected to scrutinise them on behalf of their constituents.
Angus Brendan MacNeil
Perhaps the right hon. Member for Warley (John Spellar) misunderstands the idea of free trade. None of it is free; it is just that there are various degrees of restriction. How restricted or unrestricted we make that trade is the issue at hand. No one is opening trade carte blanche—certainly not the Australians. They may come before Select Committees and tell us that they are very open, but they are not, as we see from the various areas in which they are restrictive. Australia may say that it believes in free trade, but it does not practise free trade as we understood it in the free market and the single market of the European Union. That is not happening anywhere.
Drew Hendry
Indeed; my hon. Friend has made his point very well. However, this is also about the pluses and minuses of what is signed, and what the Government are prepared to sign away just for the purpose of getting the deal done. For example, it was noticeable during the leadership contest that the newly elected—by our Tory Members—Prime Minister again refused to agree to enshrine animal welfare and environmental standards in trade deals, so intent was she on signing away Scottish farmers’ livelihoods, as this is the key factor in imports undermining domestic products on price. As it stands, the UK has placed no—none, nada, nil, zilch—environmental conditions on agricultural products that it will accept into the UK. Of course, it is not too late to set robust core standards for all food to be sold in the UK, and I will wait to see if there is a response on that.
Carla Lockhart (Upper Bann) (DUP)
The hon. Gentleman will share my fear that this trade deal will allow the import of food products produced in ways that would be illegal here—for instance, on land deforested for cattle production, or through systems that rely on the transport of live animals—and that such an outcome will disadvantage UK producers, penalising them for abiding by better standards.
Drew Hendry
Indeed, and of course we should have the promised opportunity to go into the detail of this. As FarmingUK has pointed out,
“The Australian-UK trade deal has gone through its scrutiny phase without MPs having a chance to have their say on behalf of constituents.”
Unless this Government take action, we will see the opportunity for imports, as a result of these deals, of meat from animals raised on land that has seen 1.6 million hectares of deforestation, and from animals raised in sow stalls, intensive feed lots and battery cages and treated with steroids or antibiotics. As for pesticides, even the UK Government’s own advisers have conceded that pesticide overuse is a valid concern. Less than half the 144 highly hazardous pesticides that are authorised for use in Australia are allowed here. Many of those in Australia are of the bee-killing variety. Food standards are devolved to the Scottish Parliament, but, of course, the Scottish Parliament has no powers to stop imported products on the basis of how they are produced. I will say more about the Scottish Parliament in a while.
During the summer, the record hot temperatures caused by climate change should have caused the Government to think about the detail of trade business and how to incorporate protections and enhancements to ensure that we took measures to tackle that, but no. As we have heard, despite Australia’s huge reliance on coal and its less than impressive record on climate change, there is no reference to coal in the final text. Perhaps that is no surprise, given that Tony Abbott was involved in the process. This could and should have been pushed. The UK Government must go back and demand that specific parts of the Paris agreement references are reinstated in the pages that the UK removed just to rush this deal over the line.
Anthony Mangnall
The hon. Gentleman is making an interesting point about climate issues and accords. The problem that I have with the suggestion he is making is that if we asked every country to put those terms into every trade deal, we would not end up with the eight volumes and 2,000 pages that we had to go through in the International Trade Committee. Australia and New Zealand have signed up to the Paris climate accords. They have come to agreements in COP26. They have looked at this stuff, and they stand by those treaties, those agreements and those statements. There is not really a requirement to put them into the trade deals, because those countries are already committed to them on an international stage.
Drew Hendry
I am disappointed that the hon. Gentleman chose that for his intervention, because I have a great deal of time for him; he is a good speaker and very knowledgeable on this subject.
If we have seen one thing from this summer, it is that it should have been a wake-up call—an alarm bell to say that this is important enough to put into the detail of the agreement. The Scottish Government advised the UK Government to prioritise the Paris agreement in any deal with Australia, but as with all the Scottish Government’s other attempts to persuade the UK Government to add protections for Scottish consumers and businesses, including on the issue of climate, they were treated more as a nuisance than as a partner in this process.
There was no specific consultation on the content of the Bill, but—surprise, surprise—it includes provisions that constrain the exercise of powers afforded to Scottish Ministers and devolved competencies covering procurement. The Scottish Parliament’s legislative consent memorandum document states that
“there is fundamentally no reason why the UK Ministers need to hold this power in relation to devolved Scottish procurement.”
This Bill gives secondary legislation empowerment to Ministers in this place to undermine devolution without being required to seek further consent.
As if that were not bad enough, this Bill coincides with a deal that has just been signed by the EU and New Zealand. I note that this was not referenced by the shadow Secretary of State, the right hon. Member for Torfaen (Nick Thomas-Symonds), in his excellent speech. That deal has better terms and stronger farming conditions and safeguards than the UK managed to negotiate. In the first year, the UK will allow 12,000 tonnes of New Zealand beef into the UK, while the EU will restrict it to 3,333 tonnes across all 27 countries. By year 15, the UK will allow 60,000 tonnes into the UK, while the EU figure will be capped at 10,000 tonnes, again across all 27 countries.
Angus Brendan MacNeil
The data that my hon. Friend has just read out helps to make a point. Although those two deals are both described as free trade agreements, anybody can see from those bits of data that the deals are very different. When people talk about free trade, they must remember that the devil is absolutely in the detail and that the headline usually bears no relation at all to what is going on or to the different levels of restriction.
Drew Hendry
Indeed, and with the safeguards and other measures in the EU deal, there is a similar position for sheepmeat, for example. There are also protections for butter and cheese. I am sure that that was the new Prime Minister’s favourite subject a while ago, but maybe she has moved on from dairy products to something else. As has been said, there are no agrifood geographic indicator protections in the UK deal—for example, for Scotch beef or Scottish salmon—but the EU has its own protections enshrined.
Let us recap the prospectus for Scotland. This is the UK Government checklist for Scotland: a betrayal of our farmers and crofters; job losses and reduced income in food production, forestry and fishing; no protections on environmental or animal rights; no inclusion of the Paris agreement requirements on climate change; and a further power grab on the Scottish Parliament. And, to top it all, a much worse deal than the EU. This UK Government continue, every day they are in power, to make a stronger case for Scottish independence than even we can.
Sir Paul Beresford (Mole Valley) (Con)
I am not a member of the Trade Committee. I have listened to the technicalities with considerable interest, but having looked at the volumes that have been referred to, I shut them down and turned away. My interest in this, which I must declare, is—as my accent gives away—the fact that I am of dual nationality. I have a New Zealand passport and a United Kingdom passport. When I am in New Zealand, they all think I am a pom, and when I am over here most people think I am an Australian, which is an insult if ever there was one. My interest in this is not quite emotional, but it goes back to where I came from and where we are going, which I hope will be a vast improvement.
This new trade deal puts all three nations more or less back to where we were before the United Kingdom entered the common market. When we entered the common market, the people of the antipodes—Australia and New Zealand, for those who do not know the word—lost many of the trading advantages that they had at the time. To put it mildly, they were very upset. Many Australian and New Zealand professionals, especially in the medical and paramedical services, were effectively discouraged from emigrating to this country. It was very sad, because the net effect was that some of the brightest professional people from those countries—I can add lawyers and accountants to that list—left not for this country but for the United States. When I was chairman of my old university alumni, I ran a big dinner in the House of Commons to which we invited anybody and everybody from the university. Thirty high-class New Zealand professors came over from the United States. They would have come here, except for the restrictions. So this is going to be a really interesting side effect.
When I go back to Australia or New Zealand—I have not been back to Australia for quite some time, but I have been to New Zealand—I am shocked to see the streets and shops full of Asian vehicles and goods. The British cars that filled the streets in my youth are not there, because of the tariffs that were put on them. We have to change that. I look forward to their return, and not just on the streets, because I come from a farming background. When I go to the farms there, there are no Land Rovers; they have Mitsubishis and other vehicles like that.
Angus Brendan MacNeil
Tempted though I might be to sell the hon. Gentleman my late father’s 1954 Morris Minor, which is still in my shed in Barra in the Hebrides, I just want to say that I think this is a worldwide phenomenon. I remember Land Rovers being about in my youth, but the vehicles my neighbours are driving now are generally Japanese, Korean and far eastern 4x4s, so I would tell the hon. Gentleman not to be too despairing: this might just be a global vehicle choice.
Sir Paul Beresford
I am sorry that the hon. Gentleman mentioned a Morris Minor, because as a student I was taken backwards and forwards between university and home in a Morris Minor and it was the most hideous vehicle I had ever been in.
Sir Paul Beresford
I know exactly why the car is sitting in his shed. It is because no one will take it out.
The opportunity is there. The last time I was in New Zealand, I was talking to people about British cars and I mentioned the word “Jag”. They all said, “I would love a Jag, but they are too expensive.” That is what this trade deal is going to turn around. Most New Zealanders and Australians would like to buy British. It still has that mark, and I am not just talking about cars. I have not seen an Aga stove in a New Zealand home for ages, but they would go right into the farming community given half a chance. The removal of tariffs and the consequential price drop will encourage the sale of our vehicles, and much more than that.
My right hon. Friend the Secretary of State mentioned small firms. I have a small firm in my constituency that I visited recently. It has only been going for three or four years. It is run by two or three people, and it produces gin. It is called Silent Pool, and it is becoming a niche and famous gin. When they started, they filled the bottles by hand. Now they have increased production such that it is all done by machinery. They have a huge warehouse on the edge of the property, packed with hundreds—if not thousands—of tonnes of gin, on pallets, wrapped ready to be exported to Australia. They are an example of what this trade deal can do for small firms in this country, because the British people have regained their ability to be entrepreneurs, and to work and to push forwards.
I am interested in the comments made from the Scottish Front Bench. Going back a couple of generations, the peoples that emigrated to Australia and New Zealand were Scots and English, almost entirely. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) might recall that there is a place called Dunedin, the fourth city in New Zealand. I understand—although I will probably be corrected instantly—that the name means “new Edinburgh”. People there would be scathing at his comments about the absence of such a link. Even if they are second or third-generation, it is a truly Scottish town, and in the middle of the Octagon in the centre of the town they have a statue of Rabbie Burns. With good Scots thinking, he is placed there with his back to the church, and faces the pub. How Scottish can you get?
I am a member of the UK National Farmers Union, and this is where I have had some wobbles. In a Westminster Hall debate on free trade with Australia and New Zealand, I mentioned—as has been mentioned here time and again, and indeed my right hon. Friend the Secretary of State for International Trade covered it—that free trade cuts both ways. We have, in the main, an excellent UK agricultural industry, although it is hampered somewhat; but we must recognise, as has been recognised by speakers today and will be again, that Australia and New Zealand are formidable agricultural giants.
I have many farms in my constituency. The biggest dairy farm has about 350 cows and my biggest sheep farmer has perhaps 1,000 sheep after lambing. Two dairy farms that I know of in the north of the south island of New Zealand are milking 1,500 and 2,500 cows twice daily. In the farm that I left in the high country of Central Otago—which is a bit like the hill country of Scotland, with hill farming—after lambing we had 50,000 sheep. The difference is staggering. The idea that has been put forward by my right hon. Friend the Secretary of State for International Trade of staggering and layering the approach must be the right one.
The difference for farmers in New Zealand is that they are free to farm. I was really disappointed and cross with the comments on the standard of farming and of animal welfare in New Zealand. It could not be higher; it is equivalent to here, but they do not work under all the restrictions, regulations and so on that our farmers here and in Scotland do—many of which come from the EU, and could be removed now that we have come out of Europe. So the chance must be taken now, as we move forward, as these layers change, for the Government to work with the NFU and our farmers—they are not always the same—to ease the strain and make sure that our farmers can farm better and freer.
The UK needs its farmers and food producers. The potential competition from Australia and New Zealand is an imperative that we must look out for, as my right hon. Friend the Secretary of State said, but we must use the time we have, because we must keep those farmers.
I am delighted with the trade agreement—obviously, for reasons of my background—and hence with the Bill. I will not read all seven volumes of the agreements—I leave that to the Committee—but for me, it means a return towards normality in our relationship with our nearest kith-and-kin nations and kith-and-kin people. It is a natural thing for us to do, and it is natural that we will get an understanding without the damage that has been predicted, I think incorrectly, by some on the Opposition Benches.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It is a great pleasure to follow the hon. Member for Mole Valley (Sir Paul Beresford). Despite my attempts to be a second-hand car salesman and flog a 1954 Morris Minor, the real reason I am here is not to turn the Chamber into a car showroom but to speak as Chair of the International Trade Committee. Before I say too much more on that, though, I can confirm, following the Antipodean mentions of Dunedin, a city of 117,000 souls, that it is indeed the Gaelic for Edinburgh; I am glad that the hon. Gentleman mentioned that. To reciprocate on his awareness of Scotland, let me say that Mole Valley is important to many crofters, because online shopping for many medicines is done at Mole Valley Farmers—that is a wee punt in his direction as well.
While I am throwing compliments about, let me praise the shadow spokesman, the right hon. Member for Torfaen (Nick Thomas-Symonds), for reading our report on the Australian trade agreement. It is a gripping read, and I have good news for him: a next instalment is coming out on New Zealand fairly soon. I am sure that he is looking forward to that and that all of us on the Committee will gladly sign a copy for him just to make that an extra special experience for him. I can see nods. [Interruption.] Some are looking for a paperback version; there is a cheapskate from Northern Ireland at the back there, But it is good that that has been read. While I am in salesman mode, let me say to those who are into trade agreements and looking for good-quality information tomorrow that we have our meeting on the comprehensive and progressive agreement for trans-Pacific partnership at 10 o’clock. The exact Committee Room escapes me—
Angus Brendan MacNeil
I thank my colleague very much for that.
I was reminded of something by what the hon. Member for Mole Valley said about the size of farming in New Zealand and the Scots exiles. I met a man named Andrew Morrison, who is from his part of the world, but originally from mine—his ancestors came from my constituency—and we talked about sheep, because he had sheep. I told him that I had 32 to 33 breeding ewes, depending on the year. He looked at me and said that he had 26, and there was a big pause. My chest was going out during the pause but, unfortunately, he went on to say, “Thousand”. So the hon. Gentleman is indeed right to say that the scale of agricultural production is massively different there.
We are here today to talk about these trade agreements and the legislation that is going forward. Trade agreements, on the whole, are to be welcomed. They are clawing back GDP that was lost by Brexit, although the Government figures do not say that. There are many nuances, and I will come to those by the end of my remarks, but I wish to start with the broad brush by asking why we are doing this. Surely we are doing this for our economic benefit and gain. We have then to set that in the context that the Government are doing it because Brexit is a damaging event to GDP, by up to about 5%.
Sammy Wilson (East Antrim) (DUP)
Does the hon. Gentleman not accept that the reason we are now doing separate trade agreements, especially with the south-east Asian part of the world, a lot of developing countries and countries such as Australia and New Zealand, is that they are the parts of the world that are growing and where markets are going to expand, while Europe is in stagnation? Having the freedom to do that and be released from the EU is going to be good for GDP, business and employment in the UK.
Angus Brendan MacNeil
I hear exactly what the right hon. Gentleman says, and he is right to an extent. However, let us suppose I were to give him £1 this year and £1.50 next year, and ask him how his income from the Member for the hon. Member for Na h-Eileanan an Iar had changed. He could say that it had grown by a staggering 50%”, but it would have grown by only 50p. When you are starting with something very small and you say that the percentage is going to be very big as a result of the growth, you still have something very small at the end of it. We should bear that in mind.
I return to the point about the Brexit damage of 5% of GDP and the effect of this Australian trade deal, depending on which type of modelling we use. The first model gave us a 0.02% gain—that was on the Armington trade theory spectrum, which all members of the Committee know just like that. When we moved to the Melitz-style spectrum, we were given a figure of 0.08%, which represents growth of 400%. That is a fantastic bit of growth, but this was still only 0.08%. If Brexit is 5%, this is like saying, “I am losing £500 but the Australian trade deal is taking in £2, if I am using the pessimistic option, or £8, if I am using the optimistic option.” That still leaves the UK economy as a whole £498 to £492 out of pocket by this entire transaction. The joy and boosterism that comes from some parts of the former Government, at least, should be seen in that context. If we add in all the other trade deals—the American trade deal represents 0.2% of GDP, the New Zealand one that we are considering today represents about 0.1 % or 0.2% of GDP and the CPTPP represents about 0.08% of GDP—we might find ourselves up around the £40 mark. It is a bit like going to the races with £500 and coming back with 40 quid. That is basically what is happening here.
Anthony Mangnall
The hon. Gentleman is bamboozling us with some of the statistics, but is it not the case that in every trade agreement signed either by the UK or by other countries, every economic forecast has been underestimated? Trade deals evolve as they go on—professional services or manufacturing develop, which actually enlarges the benefit. So the forecasts are not accurate and they are usually a fantastic underestimation of where we end up.
Angus Brendan MacNeil
The hon. Gentleman is a very fine member of my Committee, if not the finest, bearing in mind that there are at least two fine members in front of me. He is right that the modelling can be wrong, but it is not usually out by £492 to £500. It may be out by £2 or £3. I caution him that if those models say that the outcome could be better, the flipside is that Brexit could be worse than the 5% that has been modelled using the same sort of criteria. I hope it is not. I would rather the optimistic side, but let us be aware that this thing can go either way.
We are often told that there are winners and losers in these trade deals. We have certainly identified losers today, including the crofter I alluded to. Certain losses are hitting agriculture. I decided as Chair of the International Trade Committee to write to the Australian high commission to ask if it could identify some losers in Australia we could speak to. It wrote back and told us that everyone was a winner in Australia and nobody at all was a loser. We set that in the context of the figures that were mentioned earlier for Australia and New Zealand. For New Zealand alone, agriculture, forestry and fishing will lose between £48 million and £97 million.
The chair of the Trade and Agriculture Commission Professor Lorand Bartels told us:
“I cannot think of another country that has significant agricultural production— so not the Hong Kongs or the Singapores of this world—liberalising fully in agriculture, even over what is almost a generation. … That is unusual.”
So the UK has done something very unusual here in opening up. It comes back to the point about free trade that was mentioned earlier. None of this is free trade. It is trade that still has restrictions. Rather than paying a tariff, now you need the paperwork. As people have found, paperwork itself is quite costly.
I am reminded of the man in the weekend paper—the brewer, I think from Kent. He had lost a large part of his £600,000 export market for beer to the European Union. It has now become a £2,000 market. He has lost 99.7% of his exports. He is now not exporting and cannot export to any country in the world. When he exports to the European Union, he is going to need paperwork, and the paperwork costs him. It is a hurdle to 99.7% of his trade.
Mark Garnier
On the question of farmers and agricultural producers here in the UK, the hon. Gentleman makes an important point. He says that there is an increased risk to those agricultural producers, but the one thing that has not come up in the debate so far is consumer choice. It is an interesting point. Ultimately, we have to look after our farmers—that is incredibly important—but we also have many constituents who may well feel slightly aggrieved that we are restricting the amount of food that can be brought in, which means people having to pay more Waitrose prices. Would it not be all right to get Kentucky Fried Chicken that comes from Kentucky?
Angus Brendan MacNeil
Absolutely. This is the tension that there has always been in trade policy over the years—do you abandon your countryside and rural places? I use stark words deliberately, but it is a sliding scale between various points. Political judgments are made for various reasons, and people will come down on one side or the other. I do not belittle what the hon. Gentleman says, and is important that we recognise that spectrum. I am sure that he can argue the other way as well if he chooses. He is presumably making a devil’s advocate point or giving perhaps a strongly held viewpoint. It is a good point, but it is a point of debate. That is what we are here to do—to enlighten and illuminate that debate.
Angus Brendan MacNeil
I will make a little progress and then come back to the right hon. Gentleman.
The point I was making earlier was that the UK now finds itself in the position of being outside the European Union, of talking about the comprehensive and progressive agreement for trans-Pacific partnership, which we will be debating at tomorrow’s Committee, and of not being able to export anything anywhere in the world without masses of paperwork. The proverbial prawn sandwich or the chicken leg cannot be exported without an equivalent weight of paper accompanying it. We know the difficulties that we have in sending that to the European Union, and we are talking about CPTPP and trade agreements. The reality is that it will still be easier to send stuff to the European Union under the EU–UK Trade and Cooperation Agreement than it will be under all those other trade agreements, so let us put trade agreements into some kind of context. They are not a panacea. They are not a replacement for the European Union. What we have done is raise our fences to the European Union to a certain height and lowered some of our fences to other countries, although they may still be higher or even at the same height as those to the European Union, but the global point is that exporters from the UK are finding it difficult to send stuff anywhere. Anything that has to go anywhere requires paper, admin or tariffs. That is a fact for the United Kingdom and a fact that is often missed in our understanding of trade.
Sammy Wilson
The hon. Gentleman has rightly said that there are tensions between producers in the UK, who may well find themselves with greater competition as a result of trade deals, but that there are also benefits to consumers, who, of course, far outweigh the number of producers that might be affected and who will benefit from cheaper prices. Will he not also accept that we can help our producers be more competitive, especially now that we are out of the EU, by reducing their costs and removing some of the costly and unnecessary regulations, which push those costs up and make it more difficult for those producers to compete anyway?
Angus Brendan MacNeil
I can kind of see a bit of what the right hon. Gentleman says. For example, perhaps we should not have to stick ear tags on lambs before sending them to market. At one time, we did not have that hassle of having to put a 50 pence tag in a lamb’s ear, but then consumers said that they wanted traceability; they wanted to know where the lambs came from. We then have a debate between this regulation that is costly to the farmer/crofter and the consumer wanting a bit of traceability. Again, there is a political decision to be made. Do we want to get rid of tags in sheep’s ears, for instance—that is the easiest example that I can think of. That is one of the problems of getting rid of regulations. Which regulations do we want to get rid of? That is a legitimate point of debate, but if we get rid of our regulations, we do have to understand what the impact will be, and who does not want that regulation to be got rid of. Certainly, getting rid of ear tags in sheep—if anybody is listening—would be a help, because they often get lost in the fences. However, I do not think anybody will be listening and we will still have ear tags in our sheep to deal with.
The shadow International Trade Secretary mentioned that, in the early days, there had been a lot of headline chasing. When Brexit was being done, the Government were scrambling around for ideas. Freeports was one such idea—let’s have freeports, they said—but GDP was unquantifiable, whereas, as I have said, the Government have quantified the GDP of Brexit. The Government then alighted on free trade agreements. I have said this often—members of the International Trade Committee are probably ready to fall asleep at this point—but it reminds me of Neville Chamberlain coming back from Munich talking about peace in our time. This is the equivalent; it is trade deals in our time. It is not about what they mean for the economy, but about them looking quite good.
A former Trade Minister—I will not mention his name—was telling me that he had a bit of boosterism from the former Prime Minister. He was told to get on planes and to sign these bits of paper. He was very, very positive. If it was a car he was selling, I would have bought it. When I asked him what was under the bonnet—or what was the GDP gain from this trade deal—he did not know. That goes back to the point about there being no strategy; it is very concerning that he does not know what his trade decisions are doing for the economy. Unfortunately, with all the difficulty and fluff, the economic gain of trade deals is not being looked at, which is disappointing. Certainly, Brexit has left the GDP of the UK weaker, and at a time when we face a cost of living crisis, things are more expensive and people have less money in their pockets.
The final point I want to touch on is food security and what is happening around the antipodean sale of meats. They will say that they do not fill their quota at the moment, but what they will be enabled to do is to fill it more than the European Union’s free trade deal, which is more restrictive than the UK’s—the UK’s is one of the most relaxed, or lax, trade deals. The best cuts can be sent, which helps them with what they call carcase efficiency, with certain parts sent to specific parts of the world, meaning they can take the top part of the market away quite effectively. As I have said, Professor Lorand Bartels found this the most liberal case that he could think of in the world of anybody opening up their food area.
The deal also enables what I would describe as a parachute market for Australia and New Zealand. If something goes wrong in another market, they now have somewhere else to put a big quantity into. That might have an effect in future of displacing and damaging production in the UK. If the current UK is used as a parachute market for a number of years and then the other market is re-established, we cannot turn on production as quickly as we can turn it off. That is a big problem.
I have mentioned that CPTPP will not be like the European Union. It is not a replacement; it is a smaller GDP and it will be more difficult still to sell into that market. In the CPTPP, I do not think that access into one country will be access into all countries, as it is for the European Union, although that will be clarified tomorrow for those who want to tune in to the International Trade Committee.
We have a situation where the Australians cannot believe they have done so well. New Zealand television is utterly amazed and asking, “How come it is so easy?”. It is because the UK Government have been seen coming. People know they are desperate to get into CPTPP and they think that if they get these trade agreements done, that will happen. That goes back to the point made by the hon. Member for Mole Valley (Sir Paul Beresford) that the antipodeans were furious about the changes in the ’70s; this time perhaps they feel collectively that they have got one over the Poms, as they might describe them.
Angus Brendan MacNeil
Having mentioned the hon. Gentleman, I will certainly give way to him.
Sir Paul Beresford
The hon. Gentleman has to recognise that they are also looking for other things that we can produce and that we will send there. I mentioned Jags, but there are all the cars, all the farm machinery and those sorts of things, and that is the opportunity they see. They naturally would prefer to buy from here than from some other countries that I will not name.
Angus Brendan MacNeil
I am grateful to the hon. Gentleman. In Scotland “jags” means something that goes into your arm, usually against covid—I think they are called jabs down here—but I think he means the Jaguar car. Of course it is in Australia’s power to buy the Jaguar car; it is then Australia that puts the tariff on the cars coming in. If Australians are moaning that they cannot buy Jaguar cars because of the tariffs, they need to see the Australian Government, who, despite what they say, are not producing any cars and whose very free and open market is not as free and open a market as they let on.
Sammy Wilson
To give the hon. Gentleman a piece of good news, adjacent to my constituency there are already 150 new jobs making drilling machines for the mining industry exclusively in Australia. There are already benefits showing through in the manufacturing of goods and 150 people adjacent to my constituency are employed in a factory and enjoying those benefits.
Angus Brendan MacNeil
That is fantastic news, and it has happened before the free trade agreement. That just goes to show that the fantastic people of Northern Ireland do not need Westminster to give them a free trade agreement.
I am coming to the end of my remarks. I will give several views to the Chamber on the vote tonight. This trade deal is globally good for the UK, as the figures show, but its level of goodness is very small compared with the badness of the Brexit debacle. Is it good for Scotland? The Scottish Government do not seem to think so. They were engaged with perhaps the way that the umbrella engages with the rain: more with disdain than any sort of welcome.
When it comes to fish and agriculture, we know that Brexit has been most damaging for the highlands and islands of Scotland, including my constituency. The Government cannot break down the effect of this agreement, but it looks like it will also be damaging. That means we have two events that are locally damaging. I am here as a constituency MP. I can weigh up the arguments as Chair of the Committee, but I am mindful that I vote as a constituency MP. All of Brexit—the entire process—has been economically damaging, but the final upshot of this deal is that in years to come, as we move towards independence, that damage will be used as an argument against Scotland being independent. It is a very disappointing state of affairs that this deliberate policy—chosen in Westminster—will do that to us, so we will not be listening to arguments like that in the future.
It is disappointing that this debate was not done properly, and that Members did not get to put their tuppence worth and argue the points that we have debated with the hon. Member for Wyre Forest (Mark Garnier) and my good friend from Northern Ireland, the right hon. Member for East Antrim (Sammy Wilson), because there are legitimate things to consider, to ponder and to change our minds about so that we can get a good—and a better—deal. Some people would say that the European Union has struck that better deal. Had we remained in the European Union, we would not have lost the 5% of GDP. We may well have got the GDP gains anyway from the trade deals that the European Union has just done with those two countries. The upshot might well be that there has been no gain whatever in these trade deals, because they would have come had we not decided to damage the beer producers and exporters of Kent and many others places that have been trading, as has been done.
Mr Deputy Speaker (Mr Nigel Evans)
I used to be a fine member—but not the finest member—of the International Trade Committee, so you have just inherited my mantle, Anthony Mangnall.
Anthony Mangnall (Totnes) (Con)
Thank you, Mr Deputy Speaker; I am honoured. I am delighted to follow the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), the second most humble crofter who is at home in this place. I pay tribute to him, because he has been and is an extraordinary Chair of the Select Committee. Despite some of the disagreements that we might have had throughout our deliberations on this deal, other deals and other trade matters, he has carried on and managed to get through a very lengthy trade agreement—at times with great frustration. It is right to pay tribute to him, as well as to the secretariat, who have done an extraordinary amount of work and have found it equally as frustrating as we have when we have not had the scrutiny or access to Ministers that we would like.
It should be no surprise that I support the Bill. Given the course of the debate, we have not spent a great deal of time speaking about the contents of the Bill, which is because it is remarkably uncontroversial in this instance. Wherever we have gone in our objectives and ambitions to sign new trade agreements, we are confounding expectations. It was not that long ago that, when we talked about signing a trade agreement with Australia or New Zealand, those on the Opposition Benches said that it would be impossible and we would not be able to do it in the timescale. Well, we have done it, and now we are looking faster than expected on New Zealand. As I said in an intervention, we are also already in discussions with the Gulf Co-operation Council, India, the comprehensive and progressive agreement for trans-Pacific partnership and Canada, and we have the Singapore digital partnership and the Japan agreement under our belt. To discount those is an enormous mistake, because what the UK has done in terms of Japan and the benchmark for digital trade is truly remarkable. The world is now following our digital trade agreements, and that will be an enormous benefit to our businesses and services, and to this country.
The striking thing in the course of this debate has been the discussion of import impacts versus export opportunities. I am not remotely surprised to hear the Opposition talk about imports that will impact us in the most adverse possible way, but our export opportunities have been underestimated and not given the full attention that they should have been given. My hon. Friend the Member for Mole Valley (Sir Paul Beresford) talked about such opportunities, including the exports of machinery and professional services. We have to look at this in the round and not just cherry-pick the bits we think are going in a good way or a bad way; we have to look at them as a whole.
When we look at the Australia trade agreement, we are saying that farmers may have been adversely affected. I do not believe that. What I want to look at is all the trade agreements that we will have signed by the end of this Parliament. When the hon. Member for Na h-Eileanan an Iar and I visited the middle east to study whether we should join the Gulf Co-operation Council, we sat with representatives of the small amount of farming done in that region who said that, actually, a trade agreement with them would be hugely advantageous. The NFU has gone on the record saying that an agreement with the GCC will be a massive boon for our farmers and food producers in this country. We cannot look at one trade agreement on its own.
Angus Brendan MacNeil
Reflecting on the big dairy production we saw in the desert, did the hon. Gentleman not get the feeling that that was born of Saudi Arabia’s blockade of Qatar, and that Qatar might be keen to protect and defend that trade interest? For that very reason, it might not result in what we assume it will result in for farmers across the nations of the UK.
Anthony Mangnall
That is a perfect example. What we saw in Qatar was small compared with Saudi Arabia’s industry—a 30,000-strong herd milking parlour versus one in Saudi Arabia for a 200,000-strong herd—so yes, that is a fair point, but there also is a meat market there whose doors are opened to us, so I think the NFU’s insight is particularly useful. It is important that we do not cherry-pick; we have to look at the agreements in the round.
In an intervention on the Chair of the Select Committee, I made a point about the economic forecasts. One of the best examples of a fantastically low forecast that was a total underestimate relates to America’s membership of the North American free trade agreement. Initially, very low growth and very low opportunity were predicted; the reality has been very different because, over time, businesses evolve and take advantage of opportunities. The onus is now on the Department for International Trade to ensure that we reach out to businesses across the land so that they take the opportunities available to export and to benefit from imports of parts and anything else that comes under an agreement. The figures might seem low or insignificant at this point, but we must also think about our expectations—how we want our economy to grow and our businesses to develop, and how we want to be able to exchange the benefits of services and industries.
A related point was made by the former Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), about professional qualifications and equivalence. We have an enormous opportunity to share and develop those sectors.
Angus Brendan MacNeil
I am grateful to the hon. Gentleman for giving way to me again. You, Mr Deputy Speaker, may remember from your time as an august and esteemed member of the International Trade Committee that we discovered very early on in the negotiation and discussions with trade interests in Australia and New Zealand that one thing that could be done overnight was for the Home Office to ease up on work visas. This process requires Departments across Government to be aware that these things can happen if they are not being silly and obstructive in what I think is the most silly and obstructive Department in the Government, no matter who is in power.
Anthony Mangnall
I am delighted to hear the hon. Gentleman ask Whitehall and Westminster to sing a better tune and work better together. Truly, he will be a parliamentarian here for many years to come.
I am doing my best to fill your shoes on the International Trade Committee, Mr Deputy Speaker, but when it comes to farming, we have been talking about the impact of imports into this country but not about consumer choices. My hon. Friend the Member for Wyre Forest (Mark Garnier) raised this point, and I pose this question to the House: what do hon. Members think the environmental, social and governance policies of any of the major supermarkets or purchasers of food abroad say about meat purchasing in the UK? Would Members think it acceptable if Tesco, Morrisons, Aldi, Lidl or Waitrose started importing lower quality meat that does not fulfil their ESG standards? That consumer choice already exists; the opportunity for us as members of the EFRA Committee or the International Trade Committee, or as constituency MPs, is to make the case and ensure that meat that does not meet those standards is not purchased. That very effective tool has been overlooked.
I am not saying that everything in this agreement is right for farmers. There are serious concerns. My hon. Friend the Member for Louth and Horncastle (Victoria Atkins) was right to raise the issue of small farms. DEFRA has taken some steps and pushed in the right direction to ensure that small farmers work together more effectively to use their purchasing power, so that they can rival some of the bigger farmers. We need to continue to have that conversation and ensure that we are providing reassurance.
That brings me on to scrutiny, about which I have been quite animated in the past. I must begin with an apology to my hon. Friend the Member for Huntingdon (Mr Djanogly), because when I was first elected to this place, in the early days of discussing free trade agreements, he stood up and vociferously made the case for why the CRaG process was not right. In my youthful enthusiasm, I stood up and said that he was wrong and that the Government’s system under CraG was absolutely perfect. Well, on the record, I say that I was absolutely wrong and he was absolutely right. I thank him for his time and expertise, and for talking to me about how we might be able to improve CRaG.
As my hon. Friend the Member for Wyre Forest said, members of the International Trade Committee of all political colours worked extraordinarily well to make sure that scrutiny was at the heart of what we were trying to do. The fact that we had to spend countless hours going through eight volumes and 2,000 pages of the Australia trade agreement to make sure that we could even try to produce a report on the UK’s first major trade deal was a tough challenge at best, but to not have access to Ministers at the beginning and as the process went on was not acceptable. I ask the Minister to make sure that the process is better in future, because that cannot be allowed to continue.
As was outlined under the Labour provisions for CRaG, and as has already been said, we asked for the House to essentially have 21 sitting days after CRaG was initiated to have a debate and a votable motion on whether to extend the CRaG process for a further 21 days. Members of this House would have had the power to continually do that if the questions were not being answered or if the Government decided not to table that free trade agreement.
On 19 July, I applied for a debate under Standing Order No. 24. Mr Speaker rebuffed me on that, but graciously granted me an urgent question to make the point about why we need to have a debate about free trade agreements. I hope that the Opposition will not take this the wrong way, but we on the Conservative Benches have far more rural constituencies. The Government should not be afraid of their own Back Benchers having a conversation about the merits or implications of free trade agreements, so that we can return to our constituencies, speak to the Country Land and Business Association and the NFU, and make sure that we are alerting them to the impacts and the positives or negatives, whatever they may be.
Unfortunately, the clock has run out. We cannot legislate for the Government to find time. As I have said to the Chief Whip and any Ministers who will listen, the Government need to consider adding a new clause to the Bill that would enshrine the scrutiny process, because if this Bill does not pass, we cannot actually ratify the Australia or New Zealand trade agreements. I hasten to add that we have not even produced a report yet on the New Zealand trade agreement, so the House has not had time to see the expertise of the International Trade Committee and its secretariat or the Chair’s views on it. We need to consider that.
If I can put it as bluntly as this, I would like to hear some assurances in the Minister’s closing statement about what we will do on the scrutiny process. We in this House deserve a say on the free trade agreements. I happen to be very optimistic—not naively optimistic—about the trade deals that we are signing, because there are real opportunities for the services and producers across the country that we should welcome. In fact, even in the course of the debate, there have been a number of things that I suddenly thought that we might be able to export to Australia, such as signed copies of the book of the shadow Minister, the right hon. Member for Torfaen (Nick Thomas-Symonds), and vintage cars—or at least one of them, the price of which is perhaps coming down. We have to take the opportunities to our advantage.
Perhaps one of the greatest moments on the International Trade Committee, which the Chair is far too humble to mention, was when the Australian Trade Minister was sitting there talking about what he was doing. The Chair decided to pop outside to do some lambing and came back in with a newborn lamb that he decided to christen Dan Tehan in honour of the Australia trade agreement.
There is a big opportunity for us to ensure that we get our scrutiny process right and to improve it in Committee and in this place. As the excellent NFU spokesman put forward yesterday, the point is that Members have that right and that opportunity. We have to balance imports versus export opportunities. We have to talk about consumer choice and the competition within the market. The Australia trade agreement will deliver far more than people expect, and when we couple it with the many other things that will be done with the GCC, India and Canada, we will see enormous benefits, as I have already said. I thank the Secretary of State for her opening remarks and look forward to the Minister’s response.
John Spellar (Warley) (Lab)
I think we should initially recognise that trade does not exist in a vacuum. It is about relationships and trust, and which country is better to trust than Australia? In April, we have the Anzac Day commemoration in Whitehall, where we acknowledge and remember the hundreds of years of joint working and joint operations against tyranny and dictatorship. We have the long-standing and deep Five Eyes intelligence relationship, which also underpins our defence of our freedoms, and only this morning the Defence Committee was conducting an inquiry into the AUKUS agreement. We also have much wider relationships—family, political, trading, business, trade union, cultural and sporting—and of course a common basis in the common law.
Therefore, if we are going to do trade deals with anyone—and this is what has always surprised me about the opposition shown by some on the Opposition Benches—it should be a deal with Australia, as we have so much in common. That is why the contribution from the shadow Secretary of State, my right hon. Friend the Member for Torfaen (Nick Thomas-Symonds), was so welcome today. It had a very different tone from some speeches we have heard previously, and it is all the more welcome for that.
We have to recognise—and I forget which colleague mentioned this—that there is always a dynamic between free trade and fair trade. It is a debate that has dominated British politics from time to time over the last 150 or so years, and it has even twice torn the Conservative party apart. It is right to have such a debate, and we therefore need to focus on the details and on the principles, because such agreements cannot be an open door to pillage. We also have to make sure that the other parties are living up to the commitments they make in these agreements. Probably the most telling example is the accession of China to the World Trade Organisation, in that the great failure of the WTO and partner countries has been the failure to hold China to the commitments it made in joining that organisation.
At the same time, unlike some on the right and left of politics who seem to be opposed to trade in and of itself, we should recognise the huge benefits that trade has brought throughout history. Otherwise, we would have to go back to the days before the industrial revolution, when not only did trade drive the growth of Britain as the world’s leading industrial power, but imports of food from the new world fed the new urban masses running such industries. We cannot ignore that.
Equally, while we should not dismiss some of the particular impacts of trade—with sometimes the movement of work and sometimes the exploitation of those opportunities—we should recognise the huge reduction in poverty worldwide post war through the growth in trade. That is especially so, frankly, in China, where hundreds of millions have moved out of poverty in what is probably the biggest move out of poverty in history. Our starting point should be to encourage the development of trade, but with caution. We should not have predatory trade, and certainly not trade based on a race to the bottom on standards.
Angus Brendan MacNeil
Does the right hon. Member agree that the trade pursued by the European Union with Australia and New Zealand, which will see economic growth, has on the face of it been done with less risk to certain sectors, including the agriculture sector? Yes, trade is good, but there is also what we are throwing away, and the UK Government have admitted that they are throwing away a few tens of millions on agriculture in the New Zealand deal alone. There was a better balance to have been reached, but in being too keen on getting into the CPTPP and other things, the UK has just thrown the baby out with the bathwater, unfortunately.
John Spellar
I have always believed in the basic principle in any negotiations: that it is the terms of the deal, not the fact of the deal, that matter. Too often in takeover bids in this country, the intermediaries are far keener to get the deal done than to make sure it is a good deal for the participants.
However, I also caution the hon. Gentleman that in terms of meat production, we ought to be looking more at the problems posed by, for example, Brazil, or indeed the EU—in many cases there has been EU competition with less favourable animal standards than we have in this country. We should recognise that this is not unique in any way to the Australian agreement. I also point out that some of the hon. Gentleman’s arguments about percentages may also apply in meat terms to these two trade deals.
Returning to the topic of basic standards, particularly workers’ standards, a welcome development in international trade discussions has been the strong position taken by the Biden Administration in making sure that the beneficiaries are the working class—middle class in American terms—who have built the trade union movement in America and built America, and also workers in other countries. The British Government should note that. I am pleased that the TUC has been brought along to the trade talks with the United States in both Baltimore and Scotland; I fear that was probably at the insistence of the United States rather than willingly from the UK, but it is a good precedent and I hope it will be applied in other trade talks, particularly with Australia and New Zealand.
Australia and New Zealand have strong trade union movements and high labour standards. This deal is not about making ourselves liable to face undercutting competition; this is about opportunity and the ability of firms to trade, perhaps on much more equal terms than with some other countries.
That was touched on earlier in the debate, in relation to the movement—particularly in services and professional areas, but also in manufacturing—of skilled and technical workers. The Minister must acknowledge that previous Home Office restrictions on visas have been a real point of friction with both the Australian and New Zealand Governments. It would be a welcome development if other Government Departments influenced and pressurised the Home Office about that, not just for the economies on both sides but for individual development and to give skilled and professional workers in all three countries the opportunity to move and develop their careers and experience.
Alongside that, I hope there will be mutual recognition of qualifications. Instead of, frankly, allowing professional bodies’ self-interest to override that, we should look at where there is enough common ground and make sure that retraining and recertification, if needed, is very limited rather than taking a blanket approach. As I said earlier, the fact that we are common-law countries should help to facilitate that.
Political, geopolitical and trade interests often meet. For example, China has launched a massive campaign against Australian wine to put pressure on Australia on policy issues. We should work with the Australians as much as we can to facilitate our ability to import Australian wine, although not to the detriment of the growing number of British vineyards, obviously. That would have the side benefit of getting the attention of the Australian trade Minister, Senator Farrell, who represents the great wine-producing state of South Australia.
Angus Brendan MacNeil
The right hon. Gentleman makes a great point. Australian wine producers have argued that Treasury banding undermines the spirit of the agreement. To those who are exporting to another country, it would feel like a bit of skulduggery if that country’s Treasury undermined the agreement.
John Spellar
The Chair of the International Trade Committee makes the exact point made to me by Senator Farrell. I hope that that was heard by those on the Government Benches.
To broaden that point, with reference to AUKUS, following the Russian assault on Ukraine, there is a much deeper understanding across the world of the fragility of supply chains and the imperative of supply chain resilience. That is about not just physical industrial capacity, but a skilled workforce. Indeed, AUKUS is in part about the movement of skilled workers in the defence industry to sustain the agreement. It is also about critical materials, such as rare earths. Actually, they are not particularly rare, and Australia has the ores in abundance, but China has consolidated them—often through unfair competition and under-pricing competition —by dominating the refining capacity. Those are areas where we need to work with our security allies, but they also need to be our trade allies. Of course, that is also about trusted suppliers, so there could not be, for example, a “buy America first” policy. There is one level of understanding of that in the United States, but there needs to be greater understanding. That must be an objective of Government.
We should welcome the deepening of relations with our Australian friends and, in particular, with the new Government and Prime Minister Albanese. We look forward to building on that for a successful and shared future.
Dr Neil Hudson (Penrith and The Border) (Con)
It is a great pleasure to follow the right hon. Member for Warley (John Spellar). I welcome the chance to speak in this important debate as a Member of Parliament representing a rural constituency up in Cumbria that has a huge agricultural and farming footprint. I also speak as a vet who has worked on farms in the UK and in Australia, and I am a member of the Environment, Food and Rural Affairs Committee. Quite rightly, there has been much talk about the International Trade Committee’s great work in looking at the trade agreements. The EFRA Committee has produced a report on the Australia trade deal, to which I refer colleagues. I preface my comments by very much welcoming the new Prime Minister and the new Government who are coming in. I am fully supportive of them. However, as a constituency MP and given my interests, I do need to speak out.
I am broadly very supportive of trade deals in principle, and I absolutely adore Australia. I cannot be the only Member in the House who welled up this summer when watching the last episode of “Neighbours”. I am very supportive of everything that goes on in Australia. However, as I have said in the Chamber before, trade deals need to be fair to both partners—as the Australians would say, “You would want a fair crack of the whip”—and the trade deal with Australia is, unfortunately, imbalanced.
Earlier this year, in our UK winter—the Australian summer—I spoke of the one-sided nature of the Australia trade deal, which was reminiscent of the one-sided nature of the men’s Ashes cricket series that was ongoing. We will all be well aware that the England cricket team are now doing a lot better—the New Zealand cricket team will testify to how England have really lifted their game. I firmly believe that we must take a lesson from that, apply a bit of the Ben Stokes “Bazball” technique and go back into bat on these trade deals to make them much more level between the two trading partners.
Angus Brendan MacNeil
I am very grateful to the hon. Gentleman, a member of the Environment, Food and Rural Affairs Committee, for giving way. He makes a very interesting point. A trade deal depends on our own inputs and balances, and on where we stand in the world. The trade deal that one country might do with another will be very different from others, and they are all different in certain ways. I am pretty sure that if, for instance, an independent Wales, with its big sheep interest, was making this trade agreement with Australia, it would be very different. A Wales in the UK making this trade agreement is as it is, and a Wales in the European Union would have a different trade deal again.
The hon. Gentleman makes a point about where we strike a balance. Very often, it depends on where we stand and what our inputs are. I think his fear, which I share, is that the trade deal has been so good for Australia that it just cannot believe its luck. That is a bit disappointing and it is why we should have had parliamentary scrutiny earlier, because we might have reached a different deal that we could all have been happier with. We think free trade is a good idea, but it is just about where we put the balance. Where we stand as Scottish MPs, unfortunately, is that it is not as good as we would have wanted.
Dr Hudson
I thank the Chair of the International Trade Committee for his intervention, and I will come on to his point about scrutiny later. He makes fair points. Individual trade deals are tailored towards trading partners and the home country—they are bespoke. The important thing we need to think about with Australia and New Zealand is that they are the first trade deals through the gate. They set a precedent. That is why we need to get them right and why the scrutiny needs to be right.
We have heard talk about some of the products that might be involved. This trade deal is more than Tim Tams and some bottles of Hunter Valley shiraz coming over in exchange for Scotch whisky. There are key challenges for our home domestic market. Specifically, I will talk about the beef and sheepmeat sectors, which feel very much under threat. I speak regularly to my Cumbrian farmers in farms and in livestock markets, and they are relaying to me their concerns about what the precedent set by those deals will do for their futures. We have heard from hon. Members on both sides of the House about smallholding farms and tenant farmers—the people who are really on the edge with their profit margins. We need to keep a close eye out for them.
So, here we are today. The Australian free trade agreement has been through the CRaG process. We have talked about the CRaG process. Sadly, it ended on 20 July, which was too late for us in this Chamber to do anything about it, in terms of scrutiny or voting on it. There was no option for MPs. For two and a half to three years, I have been calling for MPs to have the ability to delay, amend or potentially reject trade deals if they are not in the best interests of our constituents.
Some of the concerns have been highlighted today. Some have been highlighted by the International Trade Committee and some by the Environment, Food and Rural Affairs Committee. The EFRA Committee produced a series of recommendations for the Government to take forward in future trade negotiations. Much of what we heard in the EFRA Committee was about speculation and forecasts, and we talked about the accuracy of forecasts. There are a lot of unknowns in relation to how much produce will, ultimately, come our way. When we questioned our experts, there was still a bit of crystal ball—“We still don’t know how much is going to come in.” That is why we need key safeguards for protection and to ensure we can slow down the supply of products if they come in at levels that were not predicted.
Currently, the Australian meat market is pivoted to south-east Asia. In global geopolitics, we have seen in recent months things that we did not predict, such as what has happened in Ukraine, and what that has meant for the world’s food security and the movement of food supplies around the world. We just do not know what will happen throughout the world in the future. At the moment, the Australasian market is pivoted to south-east Asia, but what if, for some reason, it needed to pivot to the west and to Europe? We just do not know. That is why we need strong safeguards.
As a rural MP and a veterinary surgeon, I am concerned and passionate about animal health and welfare standards. We should be very proud of the fact that our Cumbrian farmers and UK farmers farm to the highest animal welfare standards in the world. There is an animal welfare chapter in the Australian trade deal but, unfortunately, there is a discussion to be had about the fact that that is not subject to the dispute settlement mechanism. I believe that the teeth of that chapter are not sharp enough.
Members have touched on the concept of tariff rate quotas. As we have heard—we on the Environment, Food and Rural Affairs Committee have looked at this issue—the levels of the tariff rate quotas are very high. Therefore, the levels are very high for the produce that is coming in during that phased period of the next 15 years. That period is time-limited and, at the end of the 15 years, all bets are off and we move to free trade. I postulate that the tariff rate quota mechanism needs to be more precise and sophisticated, so that if the flow of produce coming into this country is too high, we can turn it down. It is important to have safeguards through core standards and appropriate tariff rate quota mechanisms.
I have been labelled a protectionist, but this is not about protectionism; it is about standing up for our values and what we believe in. I believe that we in the UK can be a beacon to the rest of the world in the way that we farm and through our animal health and welfare standards. That is why these precedent trade deals are so important: we can send out the message, “If you want to trade with us, bring your standards up to those that the UK population wants from our UK farmers.” These deals are precedents, and this is not about protectionism, but about standing up for our beliefs and values.
I am very glad that, throughout this process, when I and colleagues have raised concerns about some of the products that could come in, the Government have confirmed that a ban will be maintained on hormone-treated beef and chlorine-washed poultry so that it is illegal for that to come into the country. It is important that that is on record. That is brought into this debate a lot and it is a bit of a red herring, because those products will not come in through these trade agreements.
We have talked a bit about chlorine-washed poultry. It is important to mention that the chlorine washing process does not kill all the pathogens, as a study from the American Society for Microbiology in 2018 showed; it just makes many of them undetectable in the lab. That needs to be put on record.
There are practices that people use in farming around the world that we are concerned about in this country. We have heard much about mulesing in Australia. I firmly believe that if we had taken the advice of the Trade and Agriculture Commission and put core standards in our trade deals, that issue would have been resolved. If we put in a red line and said, “We do not find these certain types of products acceptable in this country,” that would influence production methods around the world.
There is competition between New Zealand and Australia in rugby, cricket and other sports, and it is a shame that the New Zealand deal did not land just in front of the Australian deal, because in many areas, the New Zealand farming systems are more akin to ours and are often ahead of the curve on many issues. New Zealand has banned such things as mulesing. It is also ahead of the curve on non-stun slaughter of animals, so it is a shame, strategically, that the New Zealand deal did not land first, because in setting a precedent it would have had a knock-on effect on other deals.
I also get very frustrated in this debate when people stand up in this Chamber and outside and give Australian farmers a real kicking. As I said, I am passionate about Australia. When people say, “The Australians have no concept of animal husbandry or animal welfare,” that is deeply offensive to the vast majority of Australian farmers. I have worked as a vet on farms in Australia. They have some fantastic farming systems and are passionate about animals, as we are, so to say that they have no concept of animal husbandry is deeply wrong and offensive. It is important that we bear that in mind. As we have heard today, because of geography, environment and regulation, it is cheaper to produce beef and sheepmeat in Australia than it is in the United Kingdom, so we have a competitive disadvantage for our UK farmers.
We have heard from many colleagues on both sides of the House about scrutiny of and input into free trade agreements. The first iteration of the Trade and Agriculture Commission made clear recommendations about inserting core standards for things like animal welfare and environment into our trade negotiations. Sadly, the Government chose not to take that advice.
The second iteration of the TAC is a lot narrower and more targeted in scope. Quite alarmingly, when we questioned it for our scrutiny report, we found that it is not very well resourced. Its chair actually admitted to us that he had to supplement the commission’s administrative support with university moneys from his own research allowance. Our report makes clear recommendations to the Government that the Trade and Agriculture Commission needs to be adequately funded and resourced. It has some big work coming up with the CPTPP, so it needs more administrative support. If we set something up, it has to be resourced properly.
We have also heard about a lot of the challenges that our UK farmers face. Throughout the pandemic, people in the food production sector were quite rightly acknowledged, recognised and clapped as key workers. Sadly, I feel that we are now moving away from that: people are forgetting how important farmers and food producers, deliverers and processors are to our communities. Food security was brought into sharp relief during the pandemic and has been brought into even sharper relief by the hideous war in Ukraine. It is so important that we acknowledge and support the people who are producing and providing food for us and those elsewhere in the world. We need to understand the huge challenges that they are facing with their fuel costs. All households and businesses across the country are facing the cost of living crisis in fuel and energy, but in the farming sector the costs of fuel, energy, animal feed, fertiliser and supply have rocketed.
Importantly, our Select Committee has launched an inquiry into food security. I have spoken about it before in this Chamber, but I am concerned about the resilience of the UK’s food security and about some of the inputs, such as labour. We need to look at a good, sensible and pragmatic visa system that allows people to come and work in different sectors. Another input is fertiliser. Last year we heard the alarming news that CF Fertilisers had mothballed its complex in Ince, and just three or four weeks ago it announced that it was ceasing ammonia production at its Billingham complex in the north-east. That has a huge impact on the production not only of fertiliser, but of carbon dioxide.
CO2 is so important for our food and beverage sector, but what really worries me as a vet is that it is needed for the humane slaughter of poultry and pigs. If we end up without adequate supplies of CO2, we may see more of what we have seen over the past few months: healthy pigs being culled on farms in the UK and put in the ground, not into the food production sector. Having been involved as a vet in culling animals during the foot and mouth crisis, I can tell the House from personal experience how upsetting it is and how deeply damaging it is to the mental health of vets, farm workers and abattoir workers if animals have to be killed senselessly. We have to ensure that we are resilient in our food and in all the inputs.
Anthony Mangnall
My hon. Friend is making a truly brilliant speech: it is a perfect reminder of why we should have had this debate during the CRaG process, and it shows why we might have wanted a delay to consider the points that he makes. Under the Agriculture Act 2020, the Secretary of State must come to the Dispatch Box every three years and report on the UK’s national food security. Does my hon. Friend agree that we should have that report this autumn so that we can take his points into account?
Dr Hudson
My hon. Friend makes a very good point. He is right that the Government must report on food security every three years, but our Committee—the Select Committee on Environment, Food and Rural Affairs—made a recommendation that the report should be annual. We need that report on the country’s food security, especially now that we are facing these awful crises with an impact on so many levels of the food production sector.
I have mentioned some of the inputs, including fertiliser, but our UK farmers face other challenges. The EFRA Committee has just launched an inquiry into the environmental land management transition, looking into uptake and asking for a status report on how it is going now that we have left the European Union, and the different way in which farmers and land managers will be rewarded for farming and looking after their land. We want to see how that is going, and whether we need any rethink or any adaptation because of the acute situation in which farmers find themselves.
My plea to the Government is this. In the context of the current deals and that of future trade deals, our UK farming and food production sector is under challenge and under threat. Let us not challenge it further with our international trade policy. So many other things can happen in rural communities, such as infections disease outbreaks, mental health challenges and isolation. In the EFRA Committee—I am referring to it quite a lot today, because we have already heard a great deal from members of the International Trade Committee—our inquiry into rural mental health is approaching completion. It deals with the stress factors in rural communities that affect farmers and livestock managers: the threats that they face have a real impact on their communities and on their mental health.
Angus Brendan MacNeil
This debate seems more like a discussion at times, but a good discussion. The hon. Gentleman has made an important point. Let us say that we are negotiating a trade deal that will result in both winners and losers in our own country—forget Australia—and the losers happen to be in, say, rural Wales and the winners happen to be, say, City financial whizz kids. If there is then a demand for some sort of fiscal transfer within the country to offset the damage from the new policy, it will often be resisted by those who have benefited, and there will be no cognisance in the policy that has been negotiated of the more important point that the hon. Gentleman is making about the damage that the new outlook and the new policy will inflict on individuals who find that their industry has been undermined and kicked away.
Dr Hudson
I thank the hon. Gentleman for his intervention. I think it important that when we are striking trade deals with other countries, all parts of the United Kingdom—all parts of the devolved nations, rural and urban—should benefit from those deals. I hope that the Government will take away the strong message that this comes down to individuals, it comes down to small businesses, it comes down to tenant farmers, it comes down to abattoir workers: a great many people need to be considered in this. We need to stop challenging our farmers and food producers, and help them along the way.
As I said at the beginning of my speech, I welcome the new Government coming in today, and I was pleased that the new Prime Minister, during the leadership campaign, talked about unleashing British food and farming to improve food security. I was also pleased that my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) talked about supporting farmers in future trade deals. However, I would gently say to the Government, “Let us be doing that with our current trade deals, not just the future ones.” Yes, the ink is drying on our deals and perhaps it is too late to change parts of them, but we must ensure that these precedent deals set a template with which we are comfortable when we are negotiating with other countries.
I am supportive of the Prime Minister and the Government, but on this issue—for my constituency and, speaking as a veterinary surgeon, for Cumbrian and for UK farming—I want to stand up and say clearly that I have real concerns about what we are doing as a country, and that we need to ensure that we do not make mistakes. I think the scrutiny process that has been mentioned so often during the debate would have helped us, and we would not be in this position today.
I apologise for not being here for the start of the debate. I was chairing a Bill Committee elsewhere.
I agree with much of what the hon. Gentleman is saying. However, he mentioned a template for future deals. Does it concern him not only that the Australia and the New Zealand deals done were without proper scrutiny because of the way in which the CRaG process was bypassed, but—given that he is involved in agriculture through the Committee and, probably, through his own past as well—that farmers in this country in particular have been sold down the river? This is nothing like what should have been done; for instance, the consultation with the National Farmers Union and others was not as good as it should have been. If this is indeed a template for future deals, it does not bode well for the future.
Dr Hudson
I thank the hon. Gentleman for that intervention. As we heard earlier, the paucity of scrutiny is something we are very much aware of.
I will stand up for my Cumbrian farmers and our UK farmers. If they are under threat in, say, the beef and sheep sectors, we have to stand up for them and ensure that we are looking out for them. As I have said before, this is not protectionism; this is about standing up for our values and what we believe in. I have been consistent on this since I was elected to Parliament, and I have voted accordingly on the Agriculture Bill and the Trade Bill.
As we have heard today and during the leadership campaign, things have changed in the United Kingdom and policy decisions are having to be made. The national insurance rise is going to be reversed, for example. I know that today’s Bill is narrow; we have talked today about what it means. It is about changing UK domestic procurement law, and this is enabling legislation, but what we have seen today is that the Bill and this debate have become a proxy for the scrutiny debate that many of us on all sides of the House are really calling out for. I note that in the other place there was a full three-hour debate and scrutiny. Hopefully this will be a lesson for the Government: please, please bring MPs from all sides of the House with you, because we want these deals to work for both partners. We want them to work for the UK, for Australia and for New Zealand in a mutually compatible way.
With regret, I will not be able to support the Government on the Bill today. I am asking them to think again. I started with comments on cricket. I know that the ink is drying on the Australian trade deal—I am mixing my metaphors now—and perhaps the stable door is bolted and the horse is way down into the next paddock, but the New Zealand deal is still chugging away. I ask the British Government to put their cricket pads back on and to go back into bat on these FTAs while the ink is still drying. I plead with them to drive a harder bargain and to back British farming. We have heard a lot about different cultures across the world, but I have a sneaking suspicion that if we did so, our closest allies and friends in Australia and New Zealand—our Australasian friends—would probably say to the negotiators, “Good on you, mate! Fair play, well batted.”
Ms Anum Qaisar (Airdrie and Shotts) (SNP)
It is a pleasure to follow the hon. Member for Penrith and The Border (Dr Hudson). His contribution was incredibly reasoned and, as someone who grew up in a cricket-loving household, I appreciated his cricket references.
These are the UK’s first independently negotiated free trade deals over 50 years, and the agreements are being hailed as a Brexit success by those on the Conservative Benches. However, today we are left to scrutinise a technical Bill that does not work in the interests of Scottish farmers and does not reflect the Scottish Government’s vision for trade. Frankly, this Bill threatens the devolution settlement through provisions designed to constrain the powers of Scottish Government Ministers. These measures have forced the Scottish Government to lodge a legislative consent memorandum in the Scottish Parliament recommending that Holyrood does not consent to the Bill in its current form.
Procurement is of course a devolved matter—a power exercised by Scottish Government Ministers—but this Bill seeks to constrain those powers. It allows UK Government Ministers to make secondary legislation on devolved matters of procurement without further consent from the Scottish Parliament. Additionally, any future amendments made to the trade deals will not receive further consent. Crucially, this removes a level of oversight.
Under the Constitutional Reform and Governance Act 2010, Parliament lacks an effective method of scrutinising as well as examining treaties and trade deals. Concerns over the lack of scrutiny of agreements are not limited to these Benches. Members on both sides of the House, alongside my good friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), Chair of the International Trade Committee, have expressed those concerns about being unable to debate the impact of trade deals, crucially, on their constituents. These deals will have significant consequences for people, businesses and the climate. There must be effective scrutiny of these deals to make sure that we have a positive impact on society.
Scottish farmers, including those in my constituency, are already struggling. They face a crisis of uncapped energy prices and labour shortages causing crops to rot in fields, as well as the lost EU farming subsidies. We now also face trade deals that will harm their interests and have been described by the president of the National Farmers Union of Scotland as,
“very one sided, with little to no advantage for Scottish farmers”.
Of particular concern are the concessions on animal welfare and environmental standards, which could cause lower-quality produce to undercut farmers from across these four nations.
The lack of environmental and animal welfare standards in these trade deals risks food that is pumped full of pesticides and antibiotics entering our markets. The reality is that these goods fall short of UK standards, with Which? finding that 72% of people across the UK do not want food coming in through trade deals that does not meet current standards.
Angus Brendan MacNeil
I have hesitated to interrupt the hon. Lady, because her speech is going really well—as well as I hope Celtic will be going tonight when they are cuffing Real Madrid after about 8 o’clock. But the point that she raised earlier, and the point I hesitated on, was that if this United Kingdom was a proper Union, we would not have a situation where the United Kingdom Government were imposing on the Scottish Government in devolved areas that it independently controls. It does not happen in the European Union; there is respect there. We see a sad lack of respect when it comes to the UK Union, when they think they can impose it. That aspect gives us a problem around this deal.
Ms Qaisar
I thank my hon. Friend for his contribution and I must admit, as I said earlier, that I grew up in a cricket-loving household and football, sadly, is not my forte.
Once again Scotland is paying the price for being outside the EU, even though over 60% of the country voted remain. The recently negotiated deal between the EU and New Zealand saw stronger safeguards for farmers in comparison to the UK deal. Of course, as an independent country in the EU, Scotland will be able to regain stronger protections.
The Bill bypasses essential parliamentary scrutiny of the Australia and New Zealand trade deals. The elements of the Bill that are up for debate erode the devolution settlement, thus reducing the power of Scottish Government Ministers on matters of procurement. It puts Scottish farmers, along with food and drink manufacturers, at risk of being undercut by meat that potentially may be produced to a lesser standard than that which we currently enjoy.
The UK Government must achieve better protections for Scottish farmers or, crucially, grant the Scottish Parliament the powers to prevent goods of lower standards from being sold in Scotland.
Mr Jonathan Djanogly (Huntingdon) (Con)
These Australian and New Zealand free trade agreements are in the round, I believe, a good thing for the UK and they have my support and good wishes for their potential in binding our countries ever closer together.
I have heard various attacks on various aspects of the deals, but some of the complaints are a bit like comparing apples with pears—like those who complain about falling trade with the EU and then say that there will not be much coming in from Australia under this deal to compensate. Surely, given where we are, and now that we can negotiate our own trade deals post Brexit, we need to be getting out there and negotiating those deals, like we have with this deal, even if we also need to be organising a better deal with the EU. It might be more persuasive if opponents suggested that the EU had a better FTA with Australia than we do; but of course that case cannot be made—perhaps because the EU and Australia do not yet have a deal. Many provisions here are uncontentious and just good to have, for instance, procurement provisions that create the level playing field, developed beyond WTO minimums, to provide for non-discrimination and anti-corruption, meaning that bidders for contracts will not be put off by the likelihood of local businesses getting preference. Co-operation on the recognition of professional services, business mobility and the recognition of qualifications will be a great help, not only in enabling UK plc to promote our excellent professional services to Australia, but allowing Australian professionals to work here in areas where there is a crying need for such highly qualified workers, such as City law firms. The import of young talent will be a significant benefit to us. I would be interested to hear the Minister’s view on how these immigration provisions will impact on future free trade agreement negotiations. For instance, in our FTA negotiations with India will the Australian worker mobility provisions constitute the starting point?
Some people complain that the additional trade figures proposed are small, that Australia will sell more to us under this deal than we sell to it, at least in the short term, or that Australia has got a better deal. This is short-term political point scoring and it is short-sighted, because we need to look at the future potential to increase trade. If UK business is provided with anything like what the Government say will be approximately £10 billion of new legally guaranteed market access, this deal represents a huge opportunity.
Earlier in the debate there was a discussion as to how this FTA might help smaller businesses in practice. In that regard, I was contacted only a few days ago by a Huntingdon family-run mid-size company called Le Mark Group, which makes high-value work clothes, tapes and stage flooring. It is now targeting Australia and is already grateful for help from the international fund. Apparently, the Australians are very keen on its “Dirty Rigger” range of work gloves. The key point the company makes is that having the FTA in place has meant that it has had the solid platform to find a dealer that would truly commit to promoting and stocking a sufficient quantity of product. So this deal will help business, small as well as large, and I think more positivity in this debate would have been justified in that regard.
Representing a rural seat, I understand concerns about food and meat imports and ensuring that quality is maintained and that UK farmers are not left in an uncompetitive situation. Given that full market access will not happen for 15 years, there should be plenty of time to cater for the harmonisation of environmental and welfare issues, and we should be looking to ensure that that happens. I heard the Secretary of State confirm that that is the intention. In any event, all existing Australian beef and lamb is currently eaten domestically in Australia or in Asia; there is no spare capacity. One also needs to ask: whatever levels of imports are set or not set, given the increase in meat consumption in Asia why would Australia want to switch to exporting mass-market, high-volume, low-cost meat products to the UK, with ever more expensive transport costs? My hon. Friend the Member for Penrith and The Border (Dr Hudson), in a thoughtful speech, suggested that Australia might stop trading with China and then start flooding our markets as a result. One can argue that, as it is possible, but it is highly unlikely, given the number of other meat-hungry countries that are close to Australia.
Angus Brendan MacNeil
It is good to have these sorts of discussions. To paraphrase, the hon. Gentleman is saying, “The UK is opening the door to Australia but it is not going to come through the door because it has got so much going through other doors.” That raises the question, first, as to why Australia would want this door to be open, because it seems that it does not want it. Is it because of some of the cuts? Or is it because this is an insurance policy: a parachute market if something goes wrong in the future in some other sphere? If that is the case, it leaves somebody else very vulnerable.
Mr Djanogly
I think it is because there are many people in this world, including myself, who fundamentally believe that the starting point should be free trade and that the peoples of the world improve their lot generally by having free trade.
In any event, we are facing a revolution in the meat sector and it is looking increasingly likely that within 15 years cultured meat will have almost replaced low-value minced meat, chicken and pork. Furthermore, I think it unlikely that UK producers of pricey high-end meat products, particularly ones selling to local markets with strong local followings, need to fear Australian meat imports.
Sir Mark Hendrick (Preston) (Lab/Co-op)
The hon. Gentleman is putting a very brave face on this. Many commentators in the agricultural communities in this country see it far more negatively than he does. I take his point about the 15 years. The agreement will be phased in over 15 years. Many of them see this as a car crash in slow motion. If the hon. Gentleman had argued that the agreement was good for free trade reasons, fine. The minuscule GDP gain from it has been accepted. I see the most positive thing about it as access to the CPTPP, which will be coming on stream. Britain aims in the longer future to join that organisation, which I am sure he will agree is a good thing in itself. That begs the question that, if we can do that why not—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Interventions, by their very nature, should be short.
Mr Djanogly
I think 15 years is a very long car crash. There will be time to regularise, and the world will be a very different place in 15 years. I take the hon. Gentleman’s point on the CPTPP. It was made at the right moment, because I was about to come on to it.
A further reason for supporting the free trade agreement, as the Secretary of State mentioned, is the more strategic one. If we consider that world growth over the next century is going to be dominated by Asia-Pacific, we need to be in on the action there. Negotiations for the UK’s accession to the CPTPP have now started and Australia, New Zealand and Canada are parties to that agreement. Clearly, if we had not settled a deal with Australia and New Zealand, not least given their Commonwealth status, we could have had a much weaker pitch with which to start negotiations with CPTPP. I see this Australia FTA as helping to set out our Pacific stall, enabling us to then move on.
Angus Brendan MacNeil
I am interested in the hon. Gentleman’s philosophy and approach to trade. He said it was a 15-year lead-in to almost complete openness. Would he want that to be quicker? Would he want it to be 15 months? Would he want it to be slower? Would he have wanted the deal to be more like the Australian deal? I am genuinely interested in his trade philosophy, given what he said about free trade. He sounded like he wanted it to be open immediately.
Mr Djanogly
I do not have any objection to the 15-year period. I would be interested to have heard from his Committee whether more or less would have been preferable, and I am going to come on to scrutiny right now.
I have explained why I support this deal in outline. We need to appreciate that with an FTA, the devil will always be in the detail—something that the hon. Gentleman said himself earlier. These deals do get very detailed, which is why scrutiny of them is so important. I wish now to explain why I believe that not only has the FTA scrutiny process been flawed within the current scrutiny system on this FTA but it has shown up an urgent need for reform of the system itself, as many of us predicted would be required during consideration of the Trade Bill 2021. I thank my hon. Friend the Member for Totnes (Anthony Mangnall) for his kind and generous recognition of that.
At that time, the Government argued, as they do now, that the existing Constitutional Reform and Governance Act 2010 process would be adequate. In reality, the process, which itself was based on an outdated 1920s convention, was little regarded before Brexit as our trade agreements were then negotiated and predominantly scrutinised and voted on by the EU. As has been described, the CRaG process basically provides a period of 21 sitting days, after but not before a Government have signed a trade deal, to debate and possibly delay ratification, although in practice no delay has ever been voted for.
Before the recess I wrote to the Secretary of State on the scrutiny process for the Australia FTA and she kindly sent me an explanation, but one that frankly did not fill me with confidence. Australia has not yet ratified so there is no pressing urgency here. At the time of the Trade Bill and before signing of the Australia deal, ministers said that there would be full Committee scrutiny pre-signing, and the CRaG consultation with a debate post signing; so why did the Government start the CRaG 21-day clock ticking before the International Trade Committee report came out - effectively stymying the opportunity for debate? The scrutiny of this Bill, I am sorry to say, has been a poor performance on behalf of Ministers. Surely we urgently need to review this outdated and inept system now and move to a similar scrutiny system as used in other democracies. In the US, Japan and the EU, for example, scrutiny, including a final vote on the deal in Parliament, is what happens before signing the FTA, not just before its ratification. The bizarre reality is that, post-Brexit, the UK has given more power to Ministers and has less accountability and scrutiny over its trade deals than when we were in the EU. Now we have a new Government in place, this should be the perfect time to move on and update this creaking system.
Sarah Green (Chesham and Amersham) (LD)
I wish to focus my remarks on the precedents being set and the signals being sent by this Bill and the two free trade agreements that it facilitates. The Government promised us an independent trade policy set by the UK’s representatives in Parliament. They claimed that agreements would be in the interests of small businesses, farmers and manufacturers throughout the UK. They reassured us that standards would be upheld. With the UK negotiating free trade agreements for the first time in decades, it seems that they are going back on these commitments. There are, however, three specific areas, which have been discussed extensively, that I wish to touch on today: the ratification process and parliamentary oversight; the concerns of the devolved nations; and the fears that certain standards are not being upheld by these agreements.
I am not the only Member of this House disappointed that the promised debate and vote on the Australia free trade agreement never materialised. It is true to say that the ratification process itself technically does not require such a debate or vote, but the Government gave Members of this House assurances on several occasions that one would take place. Trade affects us all and there are many who wish to participate in the shaping of these agreements. That is why it is so important to engage with them and get their buy-in. It would build trust in the process itself and in the treaties. The precedent that is being set is that free trade agreements will get no parliamentary scrutiny and it sends a signal that the Government will do the bare minimum to get them over the line.
The second area of concern relates to the devolved nations, which have so far declined to give their consent to this Bill. Both the Scottish and Welsh Governments have indicated their concern that this Bill will undermine devolved powers, and it is not difficult to understand why. For example, although the Bill gives Welsh Ministers powers to make regulations in devolved areas,
“it also gives those powers to UK Ministers without any requirement to obtain Welsh Ministers’ consent”.
This is not a precedent that should be set. It signals either a misunderstanding of the point of devolution, or a disregard for it. It would be helpful for this House to know what conversations are taking place with the Scottish Parliament and Senedd Cymru to address their concerns and reassure them that this Bill will not undermine them.
We have also been warned that these deals threaten to undermine high UK environmental standards, food standards and animal welfare standards. The president of the NFU has said that
“we will be opening our doors to significant extra volumes of imported food—whether or not produced to our own high standards”.
Australia continues to permit farming techniques and chemicals that have long been banned in the UK—battery cages for hens and pesticide use among them. These lower standards allow for lower production costs and cheaper goods, which undercut UK farmers. Here in the UK, we are rightly proud of the high standards that we uphold in relation to animal welfare and the environment. We must not allow them to be undermined.
Earlier this year, I spoke to farmers in Chesham and Amersham who told me that they are already facing rising costs for essentials such as fertiliser and fuel. These farmers are frightened for the future, and worried that their Government are selling them out. It is not only farmers who will suffer; the impact will be felt along the supply chain. The food and drink industry has voiced its concerns about the potential of UK producers to be undercut by Australian competitors.
Angus Brendan MacNeil
The hon. Lady is making an excellent speech and is speaking up well for her constituents in Chesham and Amersham as well as being understanding about the situation in Scotland and Wales. Is the point not that the Government really could have done this much better? They could have brought along the Scottish Government, the Welsh Government and the farmers in Chesham and Amersham by having a bit of debate, a bit of reflection and a bit of consultation and by securing a better deal that people could have united behind?
Sarah Green
I thank the hon. Gentleman for his intervention; I think we are in agreement. In fact, I agree with the International Trade Committee that we need transparency on the real impact of these new trade deals and the Government to publish a full assessment of the winners and losers across all economic sectors and the nations of the UK.
There are also serious questions to answer about how this Bill will prevent cheaper and lower-quality food products from flooding the UK market, threatening our agriculture and food safety. The Government must outline how they will monitor the impact of that and what action they will take to minimise any damage done to UK business.
The trade-boosting deals promised by the Government have not yet become a reality. The impact assessment of the agreement with New Zealand shows only a 0.03% increase in GVA for the south-east. My constituents in Chesham and Amersham will see next to no benefits from the deals this Bill facilitates.
Sir Mark Hendrick
I agree with the general drift of the hon. Lady’s speech—it is very good indeed, and I agree with most things. There has been emphasis on the regional devolved Governments, but that applies to England as a whole as well. We see people from English constituencies complaining about this deal just as much. The whole problem is about transparency. The Government have bent over backwards to do everything they can to ensure that the Australia deal, which is a template for future deals, was not properly scrutinised, and in my opinion that was deliberate.
Sarah Green
I think the precedent that is being set with these deals is important, and that point has been made quite eloquently by others.
Anthony Mangnall
The hon. Lady opened her remarks with this point and I am sorry to come back to it, but she asks what benefit there is to small businesses. This is a 100% removal of tariffs. That is an enormous benefit for businesses that are exporting, and even within our respective constituencies I know there are a number of businesses that export to that part of the world.
Sarah Green
Of course there are benefits to be found in these agreements, but I want to focus specifically on areas of concern. The agreements will now set a precedent for the trade deals we negotiate with Canada, the United States and others. Given that parts of these agreements were negotiated by our newly appointed Prime Minister—I am not sure she has started her speech yet—I can only hope that she is not looking to make a habit of reneging on promises as she continues in Government. As the UK pursues a new trade policy, we must not abandon our high standards, we must not run roughshod over our parliamentary democracy or the voices of the devolved Governments, and we must prioritise the quality of the deals we strike over the quantity.
Mrs Flick Drummond (Meon Valley) (Con)
This Bill relates to an important agreement for our country as we establish new trading relationships, although in this case the agreements are with two countries with which we have very close bonds in many ways, as the right hon. Member for Warley (John Spellar) mentioned in his contribution. One of the great controversies when we joined what was then the European Economic Community was that it weakened strategically important trading links elsewhere in the world, especially with Commonwealth countries. Opportunities are now open again.
My priority is to help my farmers and producers, and all our other industries, to make the most of these two deals and to export the brilliant produce of Meon Valley. We had an urgent question from my hon. Friend the Member for Totnes (Anthony Mangnall) on 19 July about scrutiny arrangements for this agreement. I was looking for assurances then that the deal does not affect our ability to defend strategic national interests, especially as we have recently announced the national food strategy, which rightly aims to safeguard our supplies and our production. The Minister reassured me at that time, but in future we need more scrutiny on each deal, and I will come on to that in a minute.
Anthony Mangnall
Since my hon. Friend is making a point on food security, I will take this opportunity to see whether she might be open to join the somewhat growing campaign to see a national food security report from the Minister for Farming, Fisheries and Food this autumn, to ensure that we can address the point she is now making?
Mrs Drummond
Absolutely. I am very happy to back that campaign and hope that we will have an annual report, because it is incredibly important.
In Meon Valley, we have some exceptional farmers, and I have listened carefully to their concerns about the future. I will watch the operation of all our trade deals closely, especially the impact they might have on smaller farmers, as some of my colleagues have already mentioned. As the chair of Wine UK, I am looking at the export of sparkling wine, which is growing in quantity—including in my constituency where Hambledon Vineyard and Exton Park Vineyard are growing fast—and I hope will soon match the success of Scottish whisky.
Everyone can be reassured that standards and protections are not being weakened to the detriment of producers or consumers—a fair and key concern of my constituents—but we must have more time to debate the provisions of trade deals during the CRaG process in the future, as others have mentioned. There is still the opportunity to do so with the New Zealand deal, and doing so would reassure many people about the process as we look to strike more of these innovative deals for our industries.
The Bill supports the completion of the two deals with Australia and New Zealand. As such, it is important that it passes its Second Reading today, so that we can plan for future deals. Even during these turbulent times, the pace of global trade and markets is relentless. We see some signs of the pandemic easing and freeing up world trade generally, even though the pressures of the Russian invasion of Ukraine are still felt. Freight rates are beginning to fall and some supply chain blockages are dissolving, although others remain. I support the Bill, and look forward to being able to scrutinise future deals and support our industries through them in the years ahead.
Paul Blomfield (Sheffield Central) (Lab)
Speaking so late in the debate has been of real value, as I have been able to listen to so many contributions from both sides of the House. The debate has been a long time coming, perhaps even longer than many Members have alluded to. Its origins go back to the referendum campaign in 2016, when leave campaigners dangled before us the prospect of trade deals with Australia, the US and India as the main reasons for leaving the European Union, making extravagant claims about the economic benefits. The reality has clearly been very different. With a US deal off the agenda as long as the Government continue with their irresponsible approach to the Northern Ireland protocol, and other deals that have been much proclaimed in fact largely rolled over from those we had previously enjoyed as members of the EU, the Australia deal in particular was lauded, not least by herself, as the great achievement of the new Prime Minister during her spell at the Department for International Trade. It is therefore curious that the Government have been so reluctant to engage with Parliament on the discussion and detail of the deal.
When the deal was announced, Members on both sides of the House probed the Government about it. They brought their experience, as the hon. Member for Penrith and The Border (Dr Hudson) did strikingly in his contribution, and they raised their constituents’ concerns, as others have done today, but they got nowhere. The Australia deal was signed last December and the New Zealand agreement in February. After several months, the Government laid the Australia FTA before Parliament under the CRaG process on 15 June. Ministers promised —as others have made clear, including most recently the hon. Member for Huntingdon (Mr Djanogly)—that there would be full opportunity for debate and a chance to shape the deal.
Angus Brendan MacNeil
I thank the hon. Gentleman for giving way; I know I have made a lot of interventions today. One of the reasons for Brexit, of course, was to leave the EU to make trade deals with the likes of New Zealand and Australia, which we are discussing today, but the EU has done a trade deal with New Zealand that is arguably better—[Interruption.] It is better, in fact. And the EU is heading for a deal with Australia as well. That might annoy the Brexiteers, but I really wonder what the future status of these deals might be if at some point the UK rejoins the European Union, or if, after Scotland becomes independent, it rejoins the European Union, and England and Wales trot in behind. Where will these trade deals be then? I do not think the Government have given that point any consideration. The deals are transitory.
Madam Deputy Speaker (Dame Rosie Winterton)
That was a very long intervention.
Paul Blomfield
I note the hon. Gentleman’s intervention and expertise on trade deals, but I do not think his question is really directed at me. He and others have made the point that the fact that the parliamentary scrutiny period for the CRaG process expired without debate means that there has been no real opportunity for us to look at the deal. The International Trade Secretary studiously dodged meetings of the Select Committee until it was too late for meaningful engagement. Today we are being asked to pass bare-bones legislation implementing an agreement that we have not been given the opportunity to scrutinise.
This matters because these deals set the scene for the way we approach post-Brexit trade negotiations. We have not done trade negotiations for many years, so it is important that we learn from the way this deal is handled and get it right in the future—we clearly did not get it right this time. Parliamentary scrutiny and oversight matter. As the Chair of the Select Committee pointed out, they are important not simply for the health of our democracy, but for our economy. Members have a valuable contribution to make, as we have heard in this debate.
The reasons for the avoidance of scrutiny are becoming clearer. I know the hon. Member for Huntingdon requested positivity, but we need honesty as well. The Government’s own estimate of the benefits of the Australia deal are that it will contribute 0.08% to GDP by 2035; their assessment of the New Zealand deal is that it will add nothing to GDP. As many Members have highlighted, for key sectors, the figures are worse.
The NFU is concerned that UK agriculture will suffer as a result of the Australia deal. Its president, Minette Batters, explained that
“Despite assurances that these sectors would be afforded some level of protection, we will see full liberalisation of dairy after just six years, sugar after eight years and beef and lamb after 15 years.”
That means no restrictions on imports and open market access, which leaves no protection for UK agriculture or our standards, rights and protections. She continued:
“Just as concerningly, the UK has agreed to beef and lamb quotas which will favour imports of high-value cuts, despite this being the end of the market where British farmers tend to derive any value from their hard work. It’s also difficult to discern anything in this deal that will allow us to control imports of food produced below the standards legally required of British farmers”.
Standards are not just important to farmers; 95% of British people think it is important to maintain British food standards through trade deals. There is also concern in the agriculture sector that Australia approves the use of almost three times the level of pesticides as the UK does.
I served with representatives from every party in this House and representatives from across business and industry on the UK Trade and Business Commission. As part of our work on this deal, we heard, for example, from a beef farmer, Jilly Creed, who explained that hormone beef and antibiotic use is a big concern in the sector. She illustrated the differences between UK and Australian practice in the industry in relation to animal welfare and environmental safeguards, telling us that
“Our cattle go 30 miles down the road and are slaughtered within two hours of leaving this farm. Cattle in Australia can travel up to 24 hours without food and water”.
Kieran Box, of Friends of the Earth, talked to us about environmental issues, saying that
“Prioritising a negotiating partner like Australia…with a lack of progress towards climate targets, with some fairly poor enforcement of environmental laws at the state level, and with the lack of enforceable commitments that we see in the FTA to progress on multilateral environmental agreements, it just feels that we have a set of multilateral environmental commitments on one side and we have a set of trade agreements on the other that pay lip service to those, but in practice they are contributing…to emissions.”
The TUC told us that the sanctions mechanism in these deals for issues such as workers’ rights degradation are so
“restrictive and difficult to be actually brought into action that we don’t think it’s going to be possible to use”.
It is clear that, desperate for a post-Brexit deal, the Government were willing to secure this one at any price, regardless of the damage to communities, industries and the environment. That underlines the importance of effective parliamentary scrutiny. There is real concern that the regulation-making powers in clauses 1 and 2 will enable existing legislation to be amended significantly without scrutiny, undermining parliamentary sovereignty and transferring yet more power to the Executive.
Sir Mark Hendrick
Is it not the case that the whole trick of Brexit was to pretend that trade deals with other countries could compensate for the loss of trade with the EU? We have seen the Government conducting a tick-box exercise where roll-over deals from the European Union were turned into so-called successes, when they were not successes—they were just a copy of what we had with the EU. Australia was the first opportunity to have a template for future deals, but the Government have fallen at the first hurdle.
Paul Blomfield
My hon. Friend echoes the point that I am making.
I am drawing my remarks to a conclusion, but I will make a further point. Trade deals and their implementation must be developed with engagement from business and workers so that they can operate effectively.
Angus Brendan MacNeil
I am grateful for the hon. Gentleman’s indulgence again. He has made some cracking points in his speech, including one about parliamentary input. We could argue that if we had a debate in Parliament beforehand, it would help our negotiating hand, because the negotiators at the table could tell their opposite numbers, “We won’t get this past Parliament, given the debate that we’ve had.” The involvement of Parliament might actually be—and have been—very helpful in those deals.
Paul Blomfield
The Chair of the Select Committee makes an important point. In an early intervention from the Government Benches—I do not think it was representative of the views of Conservative Members in general—it was said that Parliaments should not be involved in negotiating trade deals. That is clearly nonsense. That sort of early debate in Parliament would have informed and strengthened the negotiating process, and many of the concerns that have been expressed today would have been avoided.
When the Minister winds up, I hope that he will outline his response to the points that have been made, and what steps he feels should be taken to improve the scrutiny of future deals. I hope he would also agree that the powers exercisable under clauses 1 and 2 of the Bill should be constrained by an objective test of necessity, or at least be subject to the affirmative resolution procedure.
The Australia deal in particular damages our farmers in return for little economic benefit, by the Government’s own measure. It weakens food and animal welfare standards. It falls short on protection for workers. It fails to meet the commitments on climate action that Ministers promised. It is obviously—this is the point that everybody is making—a done deal; it is the new Prime Minister’s flagship agreement. But we need to address its deficiencies and learn the lessons for future FTAs, particularly about the process that we adopt as a Parliament.
I echo the comments made by the hon. Member for Huntingdon about the approach that we need to look at, which is used by other countries. It would provide the engagement that the Chair of the International Trade Committee talks about at an early stage of the process, and it would provide genuine involvement as the deal is secured. It would ensure not only that we have effective parliamentary scrutiny, but that we exercise parliamentary sovereignty, as we should.
Helen Morgan (North Shropshire) (LD)
I will keep my remarks brief—mercifully brief, most people might think—because I do not want to repeat much of what has been said in the debate. I am particularly grateful to my hon. Friend the Member for Chesham and Amersham (Sarah Green) for her remarks and to the hon. Member for Penrith and The Border (Dr Hudson) for his excellent speech.
I will put on record some of my concerns on behalf of my constituents. It is disappointing that there will not be a meaningful vote on the content of these trade deals, as we have covered at length today. My farmers have made it clear to me that they feel very much sold out by this agreement and that their interests have been bargained away for the sake of a good newspaper headline and an agreement with little forecast benefit to the UK.
I would like for a moment to touch on the concept of forecasts, having done them as a career before this one. Forecasts are by their nature not facts and are uncertain things, but there is no way that in my previous career I could have gone to my director with a forecast and said, “Well, it’s not as good as we wanted, but fingers crossed, as my last one was a bit on the low side, I’m sure it’ll turn out okay.” I do not think I would have walked away from that meeting with my job intact. I think we need to recognise that forecasts are always going to be wrong, but they reflect a range of possibilities and they are the best information we have. We should rely on the most likely outcome and bear in mind the upside and the downside provided. I do not think we should be dismissing forecasts as too pessimistic, because we do not have any better information to work from.
We have heard from many people who have said that the main point about farming, and it is a very good point, is that the failure to ensure that the world-leading environmental and animal welfare standards we are so proud of in the UK will be required of farmers who import to us risks undercutting our own farmers, and particularly our small family-owned farms. This comes at a time when the industry is being battered from all sides. The costs of doing business are spiralling, and we have heard today about fertiliser, animal feed and fuel prices. We are seeing the basic farm payment being reduced before its replacement is fully available, and we have an increasingly unpredictable climate for farmers to grapple with.
This is happening to such an extent that some of my farmers are now considering hanging up their wellies for good. I am sure that is not the Government’s intention—as the hon. Member for Totnes (Anthony Mangnall) pointed out, many Conservative Members represent rural constituencies—but, along with the financial incentives to encourage farmers to shut up shop, I fear that it may be the result. In rural constituencies, agriculture may not be the biggest factor, but it is the backbone of daily life and food production and, certainly in my constituency, is one of the most significant employers. It is just not okay to take these rural voters and these constituencies for granted by allowing these poor deals to go ahead.
I want to pick up a point about food labelling and consumer choice, because food labelling in this country is already confusing. British consumers can go into a supermarket and buy bacon that has been processed and packaged here and has a Union flag on the package, and they believe they are buying British. In fact, that pork will have been reared overseas, probably in the EU, in a place where lower standards are allowed, for instance in the use of farrowing crates. I have met local pig farmers who have been forced to kill pigs on farm while European carcases are processed in the factory down the road because those carcases are cheaper to import. I can see the situation becoming worse for our farmers, particularly for the beef and sheep farmers we are talking about in respect of these deals, if we allow this to go ahead.
As many Members have said, this Bill sets a precedent, so even if the volumes from these two deals are relatively small, when we go forward into our new negotiations we could be opening the floodgates to a large amount of produce that will undercut our farmers. We have also heard from Members that this is a time when food security should be top of our agenda. We should be producing as much as we reasonably can to keep food on the table, not introducing extra risks into British farming. I am disappointed to see the Conservative Government doing that, because they made iron-clad commitments that new trade deals would not undermine British farming.
It is important to mention the environmental cost. Allowing food produced to lower standards simply offshores our responsibility to lead the world in sustainable food production. I am reminded of a very silly joke, and I am afraid it is not funny: “What is that farmer doing over there? Well, he’s out standing in his field.” It is silly, but it is true, because our farmers are outstanding in their field. Of course, we can do more in British farming to protect the environment and improve animal welfare, but we have already shown global leadership and we should proudly continue to do so by insisting on a level playing field in the trade deals we sign.
The new Prime Minister was personally involved in negotiating both these deals. They have been assessed as damaging to the British farming sector and as producing little benefit to the wider economy, and they have not been allowed the full scrutiny of Parliament and the meaningful vote on their contents. I think that is an alarming precedent for the future, so I hope she improves in her new role.
Richard Foord (Tiverton and Honiton) (LD)
The chairman of the Farming Community Network in Devon wrote a column last year for the Devon Churches Rural Forum. John Wibberley wrote that he had collected agricultural postage stamps from around the world since he was a child, and one Australian stamp proclaimed that Australia should “produce food”. It seems that there is no such focus on food security from the UK Government, who are requiring British farmers to compete with exporting countries while eating away at the basic payment. The west country is home to more livestock than any other region of the UK. Can the Minister assure farmers in Devon that the Trade (Australia and New Zealand) Bill will not trade off the benefits for professional services firms with farmers’ livelihoods when we see a significant increase in the imports of Australian beef and New Zealand dairy products next year?
Gareth Thomas (Harrow West) (Lab/Co-op)
This has been an interesting and important debate, and the frustration of the House about the lack of scrutiny of these deals to date has been marked, with interventions from the Labour Benches and across the House, most notably from members of the International Trade Committee across parties. They have expressed striking concerns about, in the words of the hon. Member for Wyre Forest (Mark Garnier), the completely meaningless CRaG process that the Secretary of State allowed to unfold. It is also striking that there was absolutely no apology to the House in the Secretary of State’s speech for the process she had allowed to unfold. As my right hon. Friend the Member for Torfaen (Nick Thomas-Symonds) said, Ministers have hidden away whenever they could, rather than face sustained and serious questioning on the substance of these deals. The shadow Secretary of State also made it clear in his opening remarks that we will not oppose this Bill tonight, but we will seek to amend it in Committee.
Australia and New Zealand are two of this country’s greatest friends: allies in the Commonwealth; with us in the darkest moments of our shared history; and with shared values, similar governance and mutual security interests. We have so much in common. We should, and we will, want to work even more closely with both countries for our mutual benefit, as my right hon. Friend the Member for Warley (John Spellar) underlined in his contribution, in particular in deepening our economic and other ties in the months and years to come.
Angus Brendan MacNeil
The hon. Gentleman is in full flow, but I want to rewind to the CRaG process, on which he has shared the disappointment expressed across the Chamber and across parties. May I press him? Is he putting the House on notice during the current prime ministerial musical chairs that if Labour were to occupy the seats of power this would indeed change and there would be a more meaningful process than CRaG? That would of course put pressure on the Government to change it now.
Gareth Thomas
Of course we will want a much more meaningful process of scrutiny of trade deals when we switch Benches, but we also want to make sure there is a much more meaningful process in the few months left of the Conservative party’s time in government.
As I have set out, it was deeply disappointing to hear and share so many concerns of Conservative Members about the scrutiny allowed to this House of the trade deals the Conservative Government have negotiated with such key partners. We know the ministerial team at the Department for International Trade was in crisis, with the Secretary of State at loggerheads with the Minister of State, open and clearly deep personal animosity, and then junior Ministers resigning in protest over lack of support for British exporters. The chaos was obvious and clearly profound. As with so much from Conservative Ministers, the difference between what was promised and what was delivered is considerable.
The now Prime Minister said when she was still the Secretary of State for International Trade:
“I can confirm that we will have a world-leading scrutiny process…That will mean the International Trade Committee scrutinising a signed version of the deal and producing a report to Parliament”—[Official Report, 8 October 2020; Vol. 681, c. 1004.]
Only then, she said, will the CRaG process start.
The reality has been somewhat different. The Secretary of State was asked eight times to front up at the Select Committee and only finally turned up to answer questions after being shamed into doing so by her rightly angry Back Benchers. Ministers have failed to publish in full vital analysis or modelling to justify key provisions in the agreement, not least on agricultural quotas. The Government began the formal 21-day CRaG process before the International Trade Committee had produced its report, and even before the then Secretary of State had had the courage to show up to defend the agreement.
The Government refused to grant the Committee’s perfectly reasonable request for 15 sitting days between the publication of that extra critical information and the start of ratification of the CRaG process. As my right hon. Friend the shadow Secretary of State underlined, Lord Grimstone—then a trade Minister—confirmed in May two years ago that the Government did not envisage a new FTA proceeding to ratification without a debate having first taken place. World-leading it has not been.
It is similarly extraordinary the Trade and Agriculture Commission is not properly resourced. If that does not change, it will be clear that Ministers do not intend to allow serious scrutiny of future trade deals, either.
Sir Mark Hendrick
My hon. Friend mentions the Trade and Agriculture Commission, which it was promised would have proper trade union representation, but many months after it was set up, that has still not materialised.
Gareth Thomas
My hon. Friend is right to highlight that ongoing concern. His intervention reminds me that it would be remiss of me not to praise the International Trade Committee, whose work on the deal, notwithstanding all the difficulties that it has faced, is an example of the very best of our Select Committee system at work. Indeed, I say gently to its Chair that perhaps his Committee’s work is one small example of how the UK is stronger together.
I sympathise with the frustration of cross-party Committee members that no cohesive strategy for trade negotiations has been published, making it that little bit easier for Ministers to be pushed and pulled in whatever direction those with whom we are negotiating want. I hope that whoever is confirmed as Secretary of State for International Trade will address that key issue quickly. Why has there been such a contrast between what was promised to the House for such key deals and what has happened? Is it just incompetence, laziness or poor performance from individual Ministers, or is there something more profound here? Is it that the implications for procurement, British agriculture and tenant farmers—the hon. Member for Penrith and The Border (Dr Hudson) and others flagged up that issue—as well as for our food standards, for labour and human rights, for action on climate change, for buying British and for good digital regulation are so significant that Ministers felt it better to try to discourage a sustained look at the provisions in these deals?
The Australia and New Zealand trade deals are not going to deliver the sustained boost to economic growth that the country needs. Many have made that point. Welcome as the deals will nevertheless be, they will deliver at best marginal benefits for business, limited gains for consumers and few additional jobs. In the post-truth world that the Conservative party now sadly inhabits, the deals have been sold to us all as the start of a brave, amazing, fantastical post-Brexit era for British trade and growth. One can only wish that the same effort had been put into the actual negotiations as into the stories being told about these deals.
To be fair, there is genuine excitement from some about these deals: Australian farmers, Australian negotiators and New Zealand farmers were all delighted. On the upside, too, the deals have not led to the value of the pound dropping or a decline in foreign investment, and British farming and food businesses have not seen an immediate hit to their contracts. That, at least, is an improvement on the trade deal that the previous Prime Minister negotiated with the European Union. The overwhelming sense of the trade deals—with Australia in particular, and with New Zealand—is of deals done in a rush, with the now Prime Minister desperate for any deal, at almost any cost.
Some commentators have suggested—this point has been echoed by many in the debate—that in the rush to sign off the two new free trade agreements and bring the Bill to the Floor of the House, Ministers have failed to grasp how the deals leave Britain badly exposed for future negotiations with, for example, the US or Brazil. They argue that by undermining our food, animal welfare and environmental standards, the deals create difficult precedents in key parts of our economy, and that English farmers—and those in the devolved nations too—have been left most at risk of a long-term cumulative hit to their, and our country’s, economic interests, with the terms of these deals being used against us in even more significant negotiations.
It is, I have to say, extraordinary that Ministers made such a big offer to Australian farmers and got so little in return. The unconditional abolition of tariffs on Australian farm produce with few safeguards—a very big concession—is particularly surprising given that Ministers did not even negotiate basic protections for our most famous products, a point made by my right hon. Friend the Member for Torfaen (Nick Thomas-Symonds) and the SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). Why did Ministers not prioritise protections of UK geographical indicators for our most iconic brands, such as Scotch whisky, Swaledale cheese, traditional Grimsby smoked fish, Yorkshire Wensleydale and Cornish pasties, to name just a few?
It is not just in Australia and New Zealand that Ministers cannot negotiate protections for our country’s best brands. Ministers still have not secured GI status in Japan for half the products they claimed they would. Indeed, ironically it appears Ministers are hoping their failure here will be partially put right through the knock-on impact of the EU’s negotiations with Australia.
John Spellar
My hon. Friend rightly concentrates on the Government’s deficiencies in handling the negotiations on agriculture, but, as a Member of Parliament representing the heartland of the industrial revolution, does he not see advantages for British industry in this agreement?
Gareth Thomas
Absolutely, I see advantages for British exporters, which is why, in my praise for my right hon. Friend in the opening part of my speech, I underlined that we want to see increased trade with Australia and New Zealand going forward.
Given the huge concessions Ministers made on access to our agricultural markets, it is frankly also surprising that they did not insist on more protection against competition from food imports produced to lower standards. Human rights, labour rights and climate change have also been largely unmentioned.
Turning specifically and lastly to the Bill, it gives Australia and New Zealand better access to our Government procurement market, worth almost £300 billion, in return for our firms getting a little better access to their procurement markets, worth just £200 billion together. We will seek to amend the Bill in Committee to ensure there is better scrutiny of the procurement sections of both UK trade deals. The Conservative party has been missing while the people of our country are struggling to make ends meet and deeply worried about how their businesses and other businesses will survive. The Bill will make little substantial difference to those challenges. A more robust trade strategy to generate wealth and share it more fairly is long overdue, and much more robust parliamentary scrutiny needs to be one of the lessons that Ministers learn from the passage of these two deals. We want greater trade with both Australia and New Zealand. We will not oppose the Bill tonight, but we will seek to amend it during its remaining stages.
The Parliamentary Under-Secretary of State for International Trade (Andrew Griffith)
It is a pleasure to reply to what has been a serious and, if I may say so, well-informed debate.
The passage of the Bill will allow us to ratify the agreements and thereby unlock a new chapter in the proud and vital tradition of Britain trading freely with the world. These are the first trade agreements that the UK has negotiated from scratch in over half a century and it is wholly appropriate that they are with our friends in Australia and New Zealand. My hon. Friend the Member for Mole Valley (Sir Paul Beresford) reminded us of the close links between our three nations, including his own dual nationality. My own brother lives in Australia and has an Australian family. According to the 2021 Australian census, a third of Australians have English ancestry. Similarly, 72% of New Zealanders are of European origin, with the majority of those estimated to hail from the UK. The right hon. Member for Warley (John Spellar) reminded us of the Anzac memorial in Whitehall, the Five Eyes partnership and AUKUS. As my right hon. Friend the Member for South West Norfolk (Elizabeth Truss), now the Prime Minister—if I may be the first to congratulate her from the Dispatch Box—said when she launched the negotiations, these deals
“renew and strengthen our bond of friendship, help bring greater prosperity to our peoples, and send a clear signal to the rest of the world that like-minded democracies are prepared to stand up for free trade and the rules underpinning international trade.”
Sir Paul Beresford
We have been listening to Members, particularly from the Opposition, saying that we need protections and so forth to be built in. This goes two ways: if we build in protections, Australia and New Zealand will want to build them in, so a free trade agreement will cease to live up to its title.
Andrew Griffith
My hon. Friend is absolutely right. Although one has to work quite hard to find them, we have heard throughout this debate about a legion of opportunities that the Bill will open up. My hon. Friend the Member for Finchley and Golders Green (Mike Freer), late of the parish of this Department, spoke about the importance of the mutual recognition of professional qualifications, and we heard the same point from my hon. Friend the Member for Huntingdon (Mr Djanogly).
The nationalist spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), somewhat grudgingly accepted the benefit of the deal for Scottish whisky. My hon. Friend the Member for Mole Valley conjured up an image of a warehouse full of Silent Pool gin waiting to be shipped down under. We heard from my hon. Friend the Member for Meon Valley (Mrs Drummond) about her opportunity, and she does great work as chair of the all-party group on English sparkling wine for Hambledon Vineyard and Exton Park in her constituency.
We heard from the right hon. Member for East Antrim (Sammy Wilson) about the number of jobs in his constituency that are dependent on mining machines, with Australia, again, as the sole market for those. We even heard about the opportunity for the right hon. Member for Torfaen (Nick Thomas-Symonds) to export his book down under.
Angus Brendan MacNeil
I am hearing an awful lot of the typical boosterism from the Government—the spin and froth—but does the Minister accept the numbers? We need 62 and a half of these Australian-style deals to match the damage that Brexit has done to the United Kingdom economy.
Andrew Griffith
We also heard from my hon. Friends the Members for Totnes (Anthony Mangnall) and for Wycombe (Mr Baker) about the serial underestimate of the benefits of free trade. We Government Members are very clear about the benefits for consumers and producers and the competitiveness of this nation alike.
I will try to address as many of the other points as time allows. As is so often the case, I am afraid that the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle) raised the prospect of the NHS being at risk. Let me be very clear: this and our other free trade agreements do not, and will not, cover healthcare services in the UK—neither will they threaten the standard of care nor the Government’s ability to decide how we and this Parliament organise our healthcare services in this country in the best way for patients. The NHS is not at risk from free trade agreements and I agree with the right hon. Member for Warley that the House should not conflate the two.
A number of serious contributions were made about agriculture. We understand fully hon. Members’ concerns—we heard from my hon. Friend the Member for Penrith and The Border (Dr Hudson) and, again, my hon. Friend the Member for Totnes. British farming is vital to our trade policy. Any deal that we sign needs to work for UK consumers, farmers and food producers. I have many of those in my constituency and will always look out for them.
Matt Western (Warwick and Leamington) (Lab)
Like the Minister, I have farmers in my constituency; I met them last week and we discussed the trade deal and its likely impacts. Is he concerned, as they are, about the sort of economic impact that it will have? Will he confirm that the Government have undertaken a full economic impact assessment of the deal?
Andrew Griffith
The Government have undertaken that and, indeed, the independent Trade and Agriculture Commission has given the deal a green light and a clean bill of health, in terms of its impact.
Andrew Griffith
I will make some progress, but I will come back to many of the points that the nationalist spokesman made.
The issue of antimicrobial usage was raised. The TAC outlined in its report on the Australian deal that the free trade agreement will not lead to increased imports of products commonly produced using antimicrobials, largely because it does not reduce tariffs on those products. They are out of scope.
The nationalist spokesman and the hon. Member for Airdrie and Shotts (Ms Qaisar) talked about the role of the devolved Administrations in the process. The negotiation of trade agreements is a reserved matter, whether the hon. Member for Inverness, Nairn, Badenoch and Strathspey likes it or not, but the devolved Administrations are responsible for implementation in matters of devolved competence, which includes certain provisions relating to public procurement. The Bill applies, as it should, to the whole United Kingdom and will confer concurrent powers on both UK and devolved Ministers, or on a Northern Ireland Department, to implement public procurement provisions in both the Australia and New Zealand free trade agreements. They are limited powers specific to implementing these agreements alone.
Not for the first time, nationalists are promoting an act of self-harm. These trade agreements have the potential to deliver sizeable benefits across the four nations; the Australia agreement alone could mean an increase in GVA of about £200 million for Scotland, Wales and Northern Ireland, which will be valued by their citizens. My Department is seeking legislative consent from each devolved legislature and is engaging with the DAs, building on the extensive engagement—acknowledged on both sides—that was undertaken during the negotiation of both trade agreements at ministerial and official level.
As my right hon. Friend the Secretary of State said in her opening remarks, we are committing not normally to use these concurrent powers without a devolved Administration’s consent, and never without consulting them first. The same commitment was made regarding the use of powers in the Trade Act 2021 and has been honoured by the UK Government.
The nationalist party spokesman—[Hon. Members: “National!”]—was positively wistful for a European agreement with New Zealand. What he talked about is much more protectionist, offers far fewer benefits for UK consumers, and if we were still in the European Union, he would have had no scrutiny or influence over it.
Angus Brendan MacNeil
On a point of order, Madam Deputy Speaker. Is it in order to send this Government to Brussels to learn some lessons in respect and how to run a Union? This is not a way to run a Union.
Andrew Griffith
A number of right hon. and hon. Members, including my hon. Friends the Members for Wyre Forest (Mark Garnier), for Huntingdon, for Totnes and for Meon Valley, raised parliamentary scrutiny. They made their points eloquently and in a collaborative way. I am sure that they will have been listened to, especially as they relate to the interaction with the Select Committee. It is clear—the point has been made across the House—that the Committee has done its work diligently and that its Chairman and members are effective.
The Government acknowledge the importance of parliamentary scrutiny of our ambitious trade agenda, and we want to get it right. Indeed, it is always a delight for this House to debate the life-enhancing virtues of trade. In human evolution, it must rank alongside language and the opposable thumb in its utility and impact. Free trade has vastly extended the length and quality of life of billions of people on this planet, many in the most desperate and impoverished parts of the world. That is why it such is a serial disappointment on this side of the House that Opposition Members seem so determined to place a spoke in the wheel of this country’s ability to set its own independent trade policy. With respect, we will take no lessons on scrutiny from those who voted again and again for the zero scrutiny that comes from British trade policy being decided not in Holyrood or Westminster, but by bureaucrats in Brussels.
Anthony Mangnall
The Minister is doing an excellent job at the Dispatch Box and is making a very good speech, but given what has been said in this debate, when the Committee has done a report on the New Zealand free trade agreement, will he commit to a debate under the CRaG process with a votable motion at the end?
Andrew Griffith
I thank my hon. Friend for his contribution. He has made his point very clearly, and I am sure that the Government have heard it.
This Bill is the first step in the creation of the outward-looking, internationalist, truly global Britain that we envisage for our future. It is not the end of the Government’s ambition, but the beginning. It is our objective to place the UK at the centre of a network of values-based free trade agreements spanning the globe. Trade is an issue that transcends party politics. It is intrinsic to our way of life. Fewer barriers mean more opportunities for our business, more economic growth, better jobs, and higher wages for our people. I commend the Bill to the House.
Question put, That the Bill be now read a Second time.
Trade (Australia and New Zealand) Bill (First sitting)
Wednesday 12th October 2022
(1 year, 6 months ago)
Public Bill CommitteesRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 12 October 2022 - (12 Oct 2022)
The Chair
We are now sitting in public and proceedings are being broadcast. I have a few preliminary announcements. Hansard colleagues would be very grateful if Members emailed their speaking notes to hansardnotes@parliament.uk. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings. I am happy for Members to take off their jackets, if they so wish. Date Time Witness Wednesday 12 October Until no later than 10.20 am Federation of Small Businesses; Confederation of British Industry; and British Chambers of Commerce Wednesday 12 October Until no later than 10.35 am Trade Justice Movement Wednesday 12 October Until no later than 10.55 am International Chambers of Commerce Wednesday 12 October Until no later than 11.25 am TheCityUK Wednesday 12 October Until no later than 2.15 pm British Phonographic Industry Wednesday 12 October Until no later than 3.05 pm National Farmers Union; National Farmers Union of Scotland; and Scottish Crofting Federation Wednesday 12 October Until no later than 3.25 pm Professor Albert Sanchez-Graells, University of Bristol Wednesday 12 October Until no later than 3.45 pm UK Trade Policy Observatory Wednesday 12 October Until no later than 4.05 pm Trades Union Congress Wednesday 12 October Until no later than 4.30 pm Wine and Spirit Trade Association
We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of the written evidence for publication and a motion to allow us to deliberate in private about our questions before oral evidence sessions, although we might not need to do that. In view of the time available, I hope that we may settle those matters formally, without debate. I call the Minister to move the programme motion that was agreed yesterday by the Programming Sub-Committee for the Bill.
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 9.25 am on Wednesday 12 October) meet—
(a) at 2.00 pm on Wednesday 12 October;
(b) at 9.25 am and 2.00 pm on Tuesday 18 October;
(c) at 11.30 am and 2.00 pm on Thursday 20 October;
2. the Committee shall hear oral evidence in accordance with the following Table:
3. proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 and 2, Schedules 1 and 2, Clauses 3 and 4, new Clauses, new Schedules, remaining proceedings on the Bill;
4. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00pm on Thursday 20 October.—(James Duddridge.)
The Chair
The Committee will therefore proceed to line-by-line consideration of the Bill next Tuesday at 9.25 am.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(James Duddridge.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room and will be circulated to Members by email.
We could go into private now, but the indications are that no one wants to. If that is acceptable, we can go straight on to questions and the formal evidence session. We are still sitting in public and the proceedings are being broadcast. Before we hear from the witnesses, Members should make any declaration of interest in connection with the Bill.
Examination of Witnesses
Lucy Monks, Andy Burwell and William Bain gave evidence.
The Chair
The first panel of witnesses is Lucy Monks, head of international affairs at the Federation of Small Businesses, who will appear in person; and Andy Burwell, director at the Confederation of British Industry, and William Bain, head of trade policy for the British Chambers of Commerce, who will both appear by Zoom. I understand that there are some problems with Zoom at the moment, but we will bring the two other witnesses in later. Lucy Monks is present, so we will deal with questions to her. Lucy, will you introduce yourself, before I ask Members if they have any questions?
Lucy Monks: My name is Lucy Monks. I am head of international affairs at the Federation of Small Businesses. We represent the UK’s small and medium-sized businesses.
The Chair
Thank you, Lucy. I remind Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has agreed. For this session, we have until 10.20 am. I will be strict about the time. I first call Gareth Thomas.
Gareth Thomas (Harrow West) (Lab/Co-op)
Q
Lucy Monks: The entire free trade agreements?
Gareth Thomas
The entire deals—or are they so wonderful that they could not be improved in any way?
Lucy Monks: Absolutely not. For a long time, Australia and New Zealand have been areas where UK small businesses have been interested in doing a greater amount of trade, so anything that reduces those barriers and makes those markets more accessible is welcome—not only for access to those markets, but because Australia and New Zealand are useful territories as jumping-off points, especially for smaller businesses that might need to take smaller steps into export support.
The areas in which we would want to see a little more movement have been around the movement of people, in essence. We think that there is scope for further discussions with both Australia and New Zealand about moving skilled workers in and out of the UK—lending our skills to those markets, and vice versa.
The Chair
I remind Members that questions must be in scope—they have to be about the Bill, not the general issue of trade.
Gareth Thomas
Q
Lucy Monks: I think the rush will come as far as people are able to be encouraged into those markets. Again, it is useful progress, but it is the implementation that matters. Small businesses have problems accessing public procurement in the UK as it stands, because they find it technically difficult. They obviously do not have the ability to take the same kind of risks as larger businesses. They might not have the technical departments, lawyers or whoever might support them through that process. That is in the UK, which means that small and medium-sized enterprises are basically underserved in the UK procurement processes as well. Those issues need to be addressed if we are to get UK small businesses into Australia and New Zealand as well.
First, SMEs have to understand the opportunities, which have to be made as clear as possible. The scope of the Bill and of the FTA makes it clear that measures have to be put in place to open up transparency, so that small businesses are more aware of the opportunities in front of them, but we have to wait for those things to happen to know how successful they will be.
I am cautiously optimistic. There are small businesses that are working very successfully, but obviously public procurement is just one part of the regime. There are construction businesses, architects and engineers working very successfully to deliver public projects in both Australia and New Zealand, usually because they have a particularly niche skillset that they can provide to those markets—for example, they are experts in delivering railway stations or bridges, with a particular set of expertise that those countries might not have the skills base for. It is about enabling a bigger basis of those businesses to take advantages of potential opportunities and to understand them.
Gareth Thomas
Q
Lucy Monks: We have, yes—
Gareth Thomas
Or has a unit in the Department for International Trade been set up to support you?
Lucy Monks: We are having those conversations. I think there is more focus on it, because International Trade Week is coming up soon. The Department for International Trade has been talking to us and other bodies about encouraging opportunities. It is an ongoing process, because the Australia and New Zealand deals are very new in the context of the UK, so it has to be an ongoing process in which businesses are also able to feed back and to say, “This is working”, or, “That isn’t working.” There has to be a degree of flexibility, because we do not want to be landed with a product that essentially does not improve with time. But the Department is talking to us lots.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q
Lucy Monks: If it is a matter of process for Parliament, I guess you will have discussions with relevant Ministers about your concerns about scrutiny. There is always a point at which it is useful for us to be able to be part of those conversations. The more information that is available to us and the public, in general, and that we are able to feed into, the better.
Drew Hendry
Q
Lucy Monks: In all honesty, we have had extensive conversations with the Department for International Trade. We have also given evidence to your colleagues on the International Trade Committee. I feel that we have had the opportunity to have thorough conversations. In all fairness to colleagues at the Department for International Trade and the civil servants leading on it, they have been proactive in engaging and pursuing those conversations for a number of years. I have been doing this job for only six months, but I was doing a similar job at a similar organisation before this and we engaged quite extensively with the Department there.
Drew Hendry
Q
Lucy Monks: I think the process issue is one for you to take up with your colleagues. It is obviously critical because this is new and, as I said, there has to be a feedback process. However, the way in which you and your colleagues across Government and Parliament interact is one for you, I think.
Dame Nia Griffith (Llanelli) (Lab)
Q
Lucy Monks: Yes. There are SME chapters in the Australia and New Zealand agreements. If we had a concern with the Bill and the issue around procurement, it would be that, as I said, small businesses tend to be cut out of the procurement process even in our own country, so both the FTA and anything that impacts procurement legislation need to be done in a way that supports small businesses. I am not as concerned about competition from Australian and New Zealand small businesses as I am about the ability for larger businesses to take opportunities that could be sitting there for smaller businesses.
Separate from that, for a long time there was a conversation between various Government Departments about trying to improve the central Government procurement system, not only for small businesses, but generally in its ability to encourage greater social value through public spending, basically. A couple of years ago, the Government finally published a social value model, part of which is supposed to be about encouraging engagement of small businesses both in the direct procurement system and as part of that supply chain. Obviously, larger businesses can go and bid for contracts, but they kind of have to promise that they will engage with x, y, z number of small businesses in delivering bits and pieces.
The Government have promised to keep monitoring how that model is implemented. I would ask that we keep monitoring how these measures are implemented in terms of both the ability for small businesses to actually access those procurement markets in Australia and New Zealand, and the impact of larger businesses that are going forward and trying to procure those projects and their ability to bring along UK small businesses as part of the process.
Bill Esterson (Sefton Central) (Lab)
Good morning, Lucy. You talked about the potential challenge of larger Australian and New Zealand businesses winning UK Government contracts. Is there anything in the legislation you would like to see amended to support small UK businesses in winning Government contracts when facing that international competition?
The Chair
Lucy, just before you answer I should say that we have now been joined by Andy Burwell and William Bain. We have had a few technical problems, but welcome to you both. Will you please introduce yourselves briefly to the Committee?
Andy Burwell: Apologies, everyone, that I am not there with you—I have had a few childcare issues this morning. I am Andy Burwell, international director at the Confederation of British Industry. My team covers everything from trade to foreign policy, national security and, increasingly, supply chains.
William Bain: Good morning, Chair and Committee. I am pleased to be with you this morning. I am William Bain, head of trade policy at the British Chambers of Commerce.
The Chair
Thanks very much. Lucy has been holding the fort and was just about to answer Bill Esterson’s question, if she has not forgotten it.
Bill Esterson
Q
The Chair
We will take Lucy first as she was asked first.
Lucy Monks: Under the terms of the FTA, I guess we cannot be too defensive; otherwise, we will slightly defeat the point of what we are trying to achieve. I am sorry to bore on about this, but there are ways that small businesses can be encouraged to take opportunities that are available to them. For example, the Department for International Trade could support the implementation of, say, the small business chapter or the procurement chapters, where there is a clear push for the degree of information and support that would be needed for businesses to compete on an even keel. At the moment, small businesses are not even competing on an even ground.
The Chair
William, do you want to add anything to that?
William Bain: We are obviously aware of the interplay between the Government procurement agreements at World Trade Organisation level and the different FTAs that have been and will be signed. Our view would be that some of the issues are probably best sorted through the joint committee apparatus that will be created once these two FTAs come into effect. We can then examine, in a sort of full way, how things are operating for small businesses here and for their counterparts in Australia and New Zealand. Of course, we also have the ability to raise issues under the Government procurement agreement, should they arise, at Geneva. We would see those options as the best means to try to resolve any issues. Overall, we want to see the agreements ratified as quickly as possible.
The Chair
Andy?
Andy Burwell: I hope you gave Lucy all the difficult questions on procurement while she was sitting there with you.
From speaking to our members about these free trade agreements and procurement, which I presume this specific line of questioning relates to, we know that they are broadly content with where the FTAs are. They are very supportive of a competitive public sector market in principle—one based on quality, cost and value, and innovation. Increasing the competition in the market drives British firms to be more innovative, to have better quality and to drive better value. Also, the Government’s social value commitment ensures that anybody who wins a contract for goods or services in the public market contributes to the UK economy, which is an important principle.
Our members are very conscious that the vast majority of companies that win contracts in the UK are either EU participants or EU-headquartered companies or UK-headquartered companies, with the large majority having presence in the UK, so in general our members were not concerned about the provisions or the Bill’s impact on their ability to win contracts in the UK.
The Chair
Mr Esterson, have you finished your questioning or do you have further questions?
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Q
Lucy Monks: The point that William made about the potential to address these issues in future forums is really important. We should make clear what is and is not possible. If you go through the annexes to the Bill and the agreement, there are obviously quite a lot of bits that are scoped out because of the more federal system in Australia and New Zealand. It is a matter of seeing how far we can progress these things and address them further down the line through the appropriate forums.
Lloyd Russell-Moyle
Q
Lucy Monks: Yes.
Lloyd Russell-Moyle
What about the other two?
William Bain: Again, our response would be that trade deals tend to unfurl once they are ratified. We have strong joint committees set up under the agreements to look at implementation. We have just taken part in recent implementation discussions around the EU-UK trade and co-operation agreement, so they are very rigorous indeed. The committees have the ability to make clarifications and small improvements that do not change the overall text but can provide greater context about what the text actually means. At this stage, it is unlikely that we will be able to amend a closed agreement with Australia and New Zealand, but through the joint committee apparatus and the engagement that you as Members of Parliament will have with your colleagues in Australia and New Zealand, you can secure further clarifications that might lead to some of the changes that you are seeking.
Andy Burwell: Just to add to that, there is an important principle that will be a running theme throughout today’s discussion, which is that free trade agreements are only one means of achieving market access. Although at a national level, there is reciprocal access for procurement, there needs to be greater clarity at a federal level. Equally, there are opportunities and means of gaining access in Australia and New Zealand outside the free trade agreement process, through the market access work that DIT regularly does. Industry and the Government need to continue to work with our counterparts in Australia and New Zealand to seek greater opportunities between the nations.
Lloyd Russell-Moyle
Q
Lucy Monks: I guess that is always a concern with these kinds of processes. An opportunity to feed in if changes are made would be great. I know there is sometimes a need to move quickly to change regulations, but the opportunity to feed back into that process is obviously always welcome. That does not even have to happen within the context of what happens through a parliamentary scrutiny process; there can be conversations with the Department and parliamentarians, too.
Lloyd Russell-Moyle
But a requirement for the Secretary of State to consult before regulations are made might be useful.
Lucy Monks: Yes.
Lloyd Russell-Moyle
William and Andy, do you have any views on this?
William Bain: The maximum consultation with business and other stakeholders is important when important regulatory changes are being made, so we would encourage the greatest possible transparency from the Government in that respect. In relation to whether things are done through the negative process or the affirmative process, those will be issues for you as lawmakers to address. I am aware that if this Bill becomes an Act, it will be replaced by the Procurement Bill in due course, so there will be another opportunity to revisit this issue if it is considered that the legislative processes around order-making are ripe for improvement in some way.
Andy Burwell: Much like William, I am going to say that the decision about whether the negative or affirmative procedures are used and the processes in the House are for you to discuss and debate. In terms of business consultation, I have no doubt that if the Secretary of State and the Department deem it necessary to make further changes, they will consult with industry, and we would encourage them to do so in depth. Given the existing discussions, I have no reason to doubt that that would happen. The key thing is that if changes are made, industry is notified in a timely fashion, there is clarity as much as possible, and the changes are communicated clearly to all parties to enable them to utilise whichever provisions are changed, as well as prepare for them.
Lloyd Russell-Moyle
Q
Andy Burwell: I am broadly content with where we are. I do not think a specific process necessarily needs to be set down in legislation because, as we all know, the world changes and in future we may need to have a process different from what we have right now. We should not hamstring ourselves with a particular approach in this legislation.
Gareth Thomas
Q
Lucy Monks: Basically there needs to be more done to help businesses—especially small businesses—export. There is so much potential with the kind of businesses we have in this country and the kind of markets that might be able to open up to us. We are entering into a new world. We have had conversations with the Department for International Trade over the export support service, which is meant to cover the EU and basically help businesses find their way through the new relationship. Has that worked as well as it could have done? Has it been as targeted as it could have been in the level of support? Not really, but the Department has promised and is in the process of introducing a new system that is supposed to address some of the concerns we have levelled, such as providing detailed information in a way that is accessible to small businesses, rather than just pointing to bits of the Government website, which is what was happening before.
We need to keep working in the direction we are talking about and trying to improve the availability of those kinds of services, while also looking at, for example, new ways of working with the FSB or DIT to encourage more people to understand and to export. We would be happy if that were to continue. There are so many different things that will have to happen to encourage businesses, and especially small businesses, to think about exporting if they are not doing it already, or to export into new markets if they are unfamiliar with exporting to Australia and New Zealand, because the cost and the risk can potentially be so high. We all need to work together to ensure that that can take place.
Gareth Thomas
Q
Lucy Monks: I am the head of international affairs at the FSB, so I always think that more could be done to help exporters enter into new markets. I do not want to take up the Committee’s time by running through a list of things, because there are so many things—for example, helping businesses mitigate some of the financial risks that they might face, because there are broader benefits to the UK economy if we can get those businesses into those new markets in the first place; providing the right kind of information; encouraging larger businesses to bring smaller businesses along with them; and doing more to allow for market access support. There is so much more that can be done, and we want to ensure that it will be done. If you want to have another conversation about all those things, I would be thrilled to have that conversation with you and with colleagues in DIT.
The Chair
May I remind the Committee to make sure that questions are within the scope of the Bill?
Gareth Thomas
Q
Lucy Monks: It is not the only type of risk, but it is a very clear risk—again, especially for smaller businesses that do not necessarily have the experience or the access to the legal departments and trade departments that larger businesses have. The points he raised need to be looked at and addressed for the sake of legal clarity, because he brings up some interesting points.
Gareth Thomas
I wonder if Mr Bain or Mr Burwell have a view.
William Bain: In terms of the question about the export capacity of these two trade agreements, we would see the case for a refresh of the export strategy. We think that some elements of it have worked well, so it is a case of examining and rocket-boosting those but also leveraging what business groups and other trade bodies do collectively, in terms of turning what are otherwise dry legal texts into growth-generating instruments for our export companies. In the chambers network we have particular strengths in trade promotion and trade facilitation. We are doing the paperwork that makes international trade happen.
In the other business groups and trade bodies, we all have expertise that can be leveraged with what the DIT is providing, to ensure that we get more exports from agreements such as the two that we are considering today. It is more of a refresh than to discard the export strategy. That seems to us to be the best way forward with both these agreements.
Andy Burwell: I will jump in off the back of that. Thank you for the question, Mr Thomas. I am probably going to have a slightly more positive tone than Lucy and William. The export strategy did take a step forward. The 12-point plan was broadly welcomed by business. If we look ahead for these two agreements and put them in the context of these two free trade agreements, as William said, to a degree it is about utilisation. It is about how industry and Government can work together to really push that utilisation. Due to covid and other reasons, we have had a dearth of trade missions and support from Government for trade missions. There now needs to be a really concerted effort to get out, shout about the UK and excellent goods and services and get British business thinking about travelling overseas.
Under the Trade Act 2021, His Majesty’s Revenue and Customs has an excellent dataset of British exports, which at the moment the Department does not leverage as it could or should. Giving the Department the ability to use that alongside business groups, as part of the approach to encouraging and promoting exports, would be a real opportunity for the Department and industry.
The final point I would make is the importance of continued work between industry and Governments on market access. The issues do not stop at the signing of an FTA and its ratification. There needs to be continual discussion between Departments in the UK and in post about market access issues and non-tariff barriers that we can work on together to further the opportunity for growth.
Gareth Thomas (Harrow West) (Lab/Co-op)
Q
Andy Burwell: From his perspective, from a technical point of view it is accurate, but it all depends on how the new access is used and what the experience will be. I think we will have to wait and see whether those concerns come to the fore. It is hard for me to judge right now whether they are correct.
Gareth Thomas
Q
Andy Burwell: The professor will be much more the procurement expert than me. Speaking to members about these two agreements specifically and whether they had any concerns about the Procurement Bill and its powers, in the grand context of the changes that the Procurement Bill is making and the reforms within it, in a way these pale into insignificance. They are very minor in the grand context of that Bill. In broad terms, our members felt that they would be positive for industry.
The Chair
If there are no further questions, I thank the witnesses for their evidence. We will move on to the next witness.
Examination of Witness
Leo Verity gave evidence.
The Chair
We will now hear oral evidence from Leo Verity, the senior political adviser at the Trade Justice Movement, who is appearing via Zoom. The session will last until 10.35 am. Could the witness introduce themselves?
Leo Verity: Good morning. My name is Leo Verity. I am the senior political adviser at the Trade Justice Movement. We are a network organisation that represents around 60 non-governmental organisations and trade unions, and we work on issues around trade rules, including trade democracy and scrutiny, which is something I would like to focus on this morning.
Drew Hendry
Q
Leo Verity: Yes, that is a problem with the trade scrutiny system we have and the parliamentary processes we follow. There are major inconsistencies with the way the Government are approaching parliamentary scrutiny, so it is maybe worth touching on some of the problems we saw during the Australia ratification period. You will be aware that the 21-day CRaG period took place before summer recess, so Parliament has officially given its consent to that agreement.
Parliamentarians had major problems during that period with trying to secure parliamentary debates in the Commons. In the end, an urgent question that was tabled was the only opportunity for parliamentarians to debate the Australia agreement. Now we are in a situation, as you say, where New Zealand has not been through that process. There is a question here about what chronology Parliament should be following. It seems illogical that we are talking about legislation implementing an agreement that Parliament has not yet given its consent to, and that is probably a reflection of the way in which the Government view the CRaG process. Given that the Australian CRaG process was so fast that it was difficult to get meaningful scrutiny, I think that debating and implementing the legislation on New Zealand at this point implies that the Government are not expecting any further meaningful scrutiny of the New Zealand agreement in the CRaG period.
We would like to see consistency, and the logical standpoint should be that Parliament should approve these treaties through the CRaG process before Parliament discusses the legislation needed to implement them for future agreements. I certainly think that consistency is the key thing we need to see for future agreements.
Drew Hendry
Q
Leo Verity: I think so, yes. In truth, I think that awareness of the ratification process for Australia among not only the public but parliamentarians was extremely low, given the way it was snuck through, really, before the summer recess without meaningful notice of when it would be coming. I have seen that the new Secretary of State has made a commitment that for future agreements there will be at least 10 sitting days between the Government’s final report on trade agreements—the section 42 report—and the triggering of CRaG. That is less than the ITC requested—they wanted it to be a 15-day period—but at least it is some kind of structure that we can work by, so there is something about how these processes are supposed to work. But given that we saw that the CRaG process for Australia was so unfit for purpose, I certainly think it needs reform for future agreements.
Gareth Thomas
Q
Leo Verity: In terms of Australia and New Zealand, I know that in Australia the treaty is in front of joint committees that are constituted to properly scrutinise the agreement line by line, which is certainly more thorough than what we have. I think that is a relevant point about the Australia timeline. It is another question about why CRaG was rushed through for the Australia agreement prior to the summer recess, given that in Australia the treaty is done in front of a committee and then the implementing legislation will come forward, so there was certainly no rush for that happen.
In terms of other scrutiny processes to learn from, it is worth pointing to places such as America and the European Union, where there seem to be more meaningful scrutiny opportunities throughout the whole process of negotiation. For example, in America negotiating objectives come before Congress; that would be something that we would really welcome. As it stands, Parliament has no opportunity to debate the negotiating objectives that negotiators take forward. There are also more meaningful opportunities for legislators to see texts during negotiations; again, at the moment, parliamentarians do not see negotiating texts at any stage of the process. We would argue that it would be beneficial for the International Trade Committee to at least have a view of the negotiating text during the process. Finally, there will be guaranteed votes and debates on the content of trade agreements after signature; that is the big omission that we saw with the Australia CRaG process. The International Agreements Committee was debated in the Lords, but the International Trade Committee and the Liaison Committee pushed extremely hard for an opportunity to debate the Australia agreement, which was not forthcoming. In the end, an MP tabling an urgent question provided the only opportunity to debate the agreement, but there was still no vote on its content, which is something that happens elsewhere.
Finally, and linked to that, CRaG allows for parliamentarians, in lieu of a vote, to pass a motion against resolution. There is no opportunity to amend the text or anything like that. Even that motion, as I understand it, would just delay ratification rather than resolve against it. Given that there is no precedent, it is not completely clear what form that motion would have to take for parliamentarians, so it seems that ultimately there is no meaningful way for parliamentarians to express dissatisfaction with the trade agreements that our negotiators are coming back with. I think that is a problem.
The Chair
Can I remind everybody to stick to the scope of the Bill? A lot of the debate is very relevant, but please keep that in mind, in both asking questions and answering them.
Bill Esterson
Q
Leo Verity: In terms of amending the content of the agreement, as it stands I do not think so. One of the things we would be concerned about with the Bill in particular is that it is going to entrench some of the failures we have already seen in the scrutiny process. For example, we submitted written evidence, alongside the Public Law Project, that talks about the fact the secondary legislation brought in under the Bill will be subject to the negative procedure, and how that compounds the overall scrutiny deficit. There will be no opportunity for further regulations to be brought in to implement the procurement chapter. There will be no opportunity to debate those statutory instruments, which I think is a problem.
This Bill is a vehicle for debating the agreement in the round. We had concerns that the Secretary of State said, in a session with the International Trade Committee during the CRaG process, that the process of implementing legislation was an opportunity to discuss the content of the Bill; we do not see how that is the case. I have spoken about the scrutiny context, but given how narrow this legislation is, and given that it focuses on one specific chapter of the agreement—the procurement chapter—there is no meaningful scope for that further debate. The thing that I think could be done with the legislation would be to ensure that our treaty scrutiny deficit is not furthered, by ensuring that regulations brought in under the Bill will be debated. There is nothing to reopen the content of the agreement.
Bill Esterson
Q
Leo Verity: I have a couple of minor points on that, which, again, are covered in the written evidence that the Public Law Project did some fantastic work on. Some of the powers in clause 1 are not constrained by any kind of necessity test. I believe the wording is that regulations can be made where they are considered appropriate. I think that could potentially be problematic.
I know that concerns have also been expressed by the devolved Governments about the content and powers in the Bill. The Scottish Parliament has passed a legislative consent memorandum against the Bill on the basis that UK Ministers would be able to make further regulations without the need to refer back to Scottish Ministers. In addition to that, there are also some concerns expressed that there would not need to be further consultation with Scottish Ministers if the agreements were altered in the future. The Scottish Government have pointed out that that is a strange thing to include, given that the agreements have just been signed and this legislation will ultimately be superseded by the Procurement Bill that is with the Lords at the moment. Those are some of the areas that refer to treaty scrutiny and ensuring that any powers brought in under the Bill can be subject to proper scrutiny.
Bill Esterson
Q
Leo Verity: It is a good question. It also goes back to the point about the timelines for the Australian ratification of the agreement from their side. As far as I can infer, it is because the view is that this legislation can be passed quickly, and it is anticipated that the Procurement Bill will last for a long time. It often seems to be the case in the passage of these trade agreements that the Government have a tendency to impose arbitrary deadlines on themselves. We see it with the UK-India free trade agreement at the moment: we are two weeks away from the deadline that the Government imposed on themselves to come back with an agreement. That has been subject to criticism from ourselves, but also from lots of business groups and others.
There is no reason to be hasty in these agreements. These are new, from-scratch and comprehensive agreements, and as far as I can infer this legislation is in place so that the agreements can be signed off more quickly. That is what we have seen reflected in the scrutiny processes: there seems to have been a rush where none was needed. People on all sides of the argument accept the principle that more scrutiny is worth while, but that is all that I can read from it. Whether it is a good use of parliamentary time for this Bill to be debated in detail before being superseded by the Procurement Bill, I am not altogether certain, but that is an open question.
Lloyd Russell-Moyle
Q
The Bill allows the Secretary of State to make regulations in a relatively broad way. First, do you think it would be useful to restrict more tightly what the Secretary of State can make those regulations on? If so, how? Secondly, would it be useful to include on the face of the Bill a requirement to consult with stakeholders and non-governmental organisations, or even with the advisory committees and standing committees that already exist in the Department, and/or the International Trade Committee, which as we know was treated appallingly by the Department under its previous leadership?
Leo Verity: Absolutely. That would be extremely worthwhile. We have talked about the parliamentary processes, but there are lots of big problems with the kind of consultation that has been available for civil society and for business organisations. We have certainly found it difficult to have those opportunities. Groups do exist—advisory groups, as you mentioned—that we take part in, and others within the Department for International Trade, but sometimes it is difficult to see the outcomes of the first discussions and, as you said, the relationship between the Department and the ITC has not been good enough either. It would be good to have some kind of meaningful mechanism for proper consultation with Committees, the public and also devolved Governments, which have been sidelined.
In response to your first point, on restrictions on what the Secretary of State can do, I think that would be worth while. I mentioned that the wording we were concerned about in the Bill was about regulations being made where considered appropriate; I am not an expert in procurement and I do not know what the intentions of the Government are in terms of the specifics of the regulations, but some kind of constraint on that language would be extremely helpful.
The Chair
We do not have time for any further questions so, on behalf of the Committee, I thank the witness for his answers.
Examination of Witness
Chris Southworth gave evidence.
The Chair
Q
Chris Southworth: Good morning everybody. It is a great pleasure to be here; thank you for the invitation. My name is Chris Southworth. I am the secretary general of the International Chamber of Commerce here in the UK. I am also the co-chair of the legal reform advisory board at the ICC digital standards initiative in Singapore and the ICC representative to the Commonwealth, so I am pretty well plugged into the digital trade agenda and very supportive of the Government’s efforts, in its trade negotiations, to develop and drive forward new digital trade corridors with commitments to reform laws and remove legal barriers to the handling of key documents and paper forms. The Australia and New Zealand agreements were the beginning of that process, if we look back in time.
There are a few points that I would like to make here. The first relates to the time of the negotiations; these were the first after the EU roll-over deals. Of course, the world has moved on quite significantly since then, and you can see that through the UK-Singapore digital economy agreement.
In terms of the context of the agreements, the Australia and New Zealand agreements are what we call a minimal requirement; they have got the basics, but they are not the gold standard, which is the digital economy agreement with Singapore. However, they are perfectly sufficient for us to modernise trade systems, remove all paper, enable our platforms, systems and processes across the public and private sectors to go fully digital and paperless, and, importantly, standardise those processes. All of those are key barriers to the digitalisation of trade, so this is quite an exciting opportunity.
I should mention that, although the value and volume of trade with both countries is relatively small in the UK context, this is about positioning in Asia. That is an important piece of the way we need to look at these agreements. This is about the UK preparing the ground to be closer to the Asia space and closer to relationships with the likes of the CPTPP. This was one of the first stepping stones towards that overall objective, which is the right objective; I do not think there are many people out there saying that is the wrong thing to do. Obviously, we are now in CPTPP accession negotiations, so we have moved on considerably. This is step one.
In terms of the context of the agreements—
The Chair
Order. Sorry, Mr Southworth. This is very useful information and we are very grateful, but we need to move on to questions. I will ask Gareth Thomas to start the questioning, and I am sure you can add what you need to add at that point.
Gareth Thomas
Q
Chris Southworth: Others may have comments on that. I am looking at this through the lens of the digitalisation of trade, and I do not think there is any conflict there at all. I think the two things are quite complementary, so we are not concerned by that. There has been no discussion raising those sorts of concerns in any of the networks we are involved in. I hope that answers your question.
Gareth Thomas
Q
Chris Southworth: I think we would all hope that it is opening up opportunities for everybody. SMEs are obviously crucial. It is great to have the big companies using these deals, but ultimately most traders are SMEs, and those are either operating within supply chains or operating independently. I hope that small companies across the UK look at this as a great opportunity to increase their trade with another part of the world—Australia and New Zealand in this context.
Gareth Thomas
Q
Chris Southworth: I would not say it is rosy. You only have to look at the trade figures to see that. There is a range of issues here. If you look at it in the context of digitalisation of trade, it is not as simple as just putting an agreement in place and then expecting it all to happen, which is exactly why we have created the Centre for Digital Trade and Innovation. We need to help industry understand what systems and processes they can use to make trade simpler, cheaper and faster. That is the big opportunity in terms of digitalisation, and that has to be a joint effort. The Government are doing a stellar job in that area. In fact, we are leading in the world on that. Lots of other countries are looking at what we are doing. So there is no issue there in my view.
If there is an issue, a question that I would pose is around the practical model of export support. We are the only big nation that delivers B2B support through Government. Every other major exporting economy works in partnership with the likes of chambers of commerce. This is a great point to reflect on whether we have the right model or whether we could be leveraging the private sector far better. I would argue, having been in government myself, in what used to be UKTI, and looked at exactly these issues, that you do not have to spend very long with other countries—Japan, France, Germany or anywhere else—to see that if Government can streamline and really focus where it adds value, which is more in Government-to-Government negotiations, Government-to-business on the big strategic opportunities where the Government are required, and then in partnership with business on the B2B support, that works exceptionally well. It is very efficient. You can mobilise whole value chains into markets on a whole different level than we can in the UK. That is a huge opportunity and is something that should be reflected upon and debated—whether we have got the right model or whether we can do that in a better way.
Gareth Thomas
Q
Chris Southworth: Like I say, I have been around this particular discussion for many years now, both in government and outside government. I personally think it was the wrong call. I think we can do it better. There are lessons to learn from others—particularly the Japanese model. The Japanese chamber of commerce operates like we do, with a voluntary membership model, but it has legislation that provides legal certainty, meaning that it can drive in investment over the long term. That is what we too need to do in the private sector, to make sure we have the right capabilities. It has a really effective relationship with METI, its DIT equivalent.
I personally think we can do this better, and we can do it more efficiently. Ultimately, trade is a business activity. Governments do not trade; businesses do. When a company picks up the phone and asks for advice, it wants business advice from people who do this stuff day in, day out, and it wants proper advice quickly on what to do and what not to do. That is a far more efficient way of doing that B2B piece than it is coming from Government, where you are naturally restricted. On top of that, you are constantly chopping and changing with contracts and different approaches. All that does is create more and more uncertainty, and you cannot build for the long term. We need to build for the long term. There is a big opportunity to do this much better, and I would strongly argue that that has definitely got to be the way forward, but it needs more debate from all those involved.
The Chair
Can I remind you again that, in both questions and answers, we must stick to the Bill and not debate the wider policy?
Gareth Thomas
Q
One of our later witnesses is a gentleman called Professor Sanchez-Graells, who gave evidence to the International Trade Committee on some of the legal issues relating to remedies for businesses that feel they have been unfairly treated in a tendering process. If I have understood his evidence correctly, he argues that the remedies available under the UK-Australia FTA are worse for businesses that have been treated unfairly than those available under deals we have done with similar countries, such as the EU and New Zealand. As a result, there might be regulatory chill—it might put businesses off bidding for Government contracts in Australia. Is that something that you worry about? If his evidence suggests that there is a serious issue, do you think the Government would need to address it quickly?
Chris Southworth: To be honest, I would defer to others to advise on that. Obviously, the trade remedies framework is very important, for all the reasons you have just set out, but I am not in a position to comment as it is not a space that we are focused on. Others are much more into that space than we are and would be better placed to advise on it.
The Chair
We will now hear oral evidence from John Cooke, chair of TheCityUK’s liberalisation of trade in services committee, appearing via Zoom. We have until 11.25 am for this session. Mr Cooke, would you like to introduce yourself? I will then ask Members to ask you questions.
John Cooke: Thank you. Am I the only person giving evidence?
The Chair
In this session. There are a number of evidence sessions.
John Cooke: Thank you very much. I am John Cooke. I am a consultant with TheCityUK, and I co-chair an expert advisory group at TheCityUK on liberalisation of trade in services.
Gareth Thomas
Q
Gareth Thomas
Yes, in respect of the Bill.
John Cooke: One has to remember about the agreements with Australia and New Zealand that, as far as services are concerned—that is my particular area, and financial and professional services within that—they are agreements with trading partners that already had pretty liberal regimes, so there was only a limited amount extra that could be achieved in the agreements. All the same, they are useful agreements to have, and in particular they have provisions in them on regulatory co-operation that provide frameworks for building further points in the future into the relationship between the United Kingdom and the two countries.
Gareth Thomas
Q
John Cooke: I think they have value in themselves, certainly on public procurement and Government procurement. The view we have always taken on financial and professional services is that while Government procurement is often thought of in terms of procurement of goods, such as medical supplies and so on, the UK sector in these areas is very keen that it should be absolutely explicit that Government procurement also applies to services.
We look at this globally, not just in relation to Australia and New Zealand. The example I would give is that if, say, a country has a pensions regime that is provided by the state but also has a private sector pillar for extra investment, we would want to be quite sure that that private sector pillar is open to bidding and tendering by UK financial product suppliers. Sometimes there is a tendency in that sort of thing for a Government to feel, “Well, as the pension provision is in the main a state pension that is Government controlled, any private sector pillar should also be somehow confined to the country concerned.” We are very keen to remove any such assumption and make sure there is open competition, so—[Interruption.]
The Chair
We have lost the witness, so I will suspend the session until—hopefully—we get Mr Cooke back.
The Chair
Welcome back. Mr Cooke, can you confirm that you hear us okay?
John Cooke: Yes, I can.
The Chair
I think you were halfway through an answer, or coming to the end of it. Do you want us to move on to the next question?
John Cooke: I do not know at what point I was cut off exactly. The point I was making was that Government procurement is commonly associated with supplies of goods, but we in services, and in financial services in particular, are keen that, where the Government are commissioning the private sector, for example, to provide a private sector pillar of pension provision, UK financial services providers should be in a position to bid for that; it should not be confined just to financial services within the country concerned, or to nationals of the country concerned. That was the point that I was making. We value the public—Government—procurement provisions for their own sake, as well as for whether they prove to be a stepping stone to CPTPP membership.
Gareth Thomas
Q
John Cooke: I am not familiar with that particular comment. I think it depends very much on the context of an observation like that. For us in financial and professional services, we look for particular kinds of help. On the whole, when dealing with financial businesses —with very big businesses—they might need a certain amount of door-opening help from missions abroad, which I think they get. I do not think that we have expressed any discontentment about that. The question may be much more open for smaller businesses, where the Government might be in a position to do much more by way of helping them in particular markets. The other kind of help that is of course very important for all exporters is the implementation of a trade agreement. The making of a trade agreement is not an end in itself; its implementation needs to be carried through. Where the other party might not implement it fully, that needs to be attended to actively.
Gareth Thomas
Q
John Cooke: It is not a point that I have been made aware of, frankly. I will gladly make inquiries and, if appropriate, submit some written evidence to the Committee, but it is not something that has been brought to my attention.
The Chair
As there are no further questions from Members, I thank the witness for his evidence.
Ordered, That further consideration be now adjourned. —(Mark Jenkinson.)
Trade (Australia and New Zealand) Bill (Second sitting)
Wednesday 12th October 2022
(1 year, 6 months ago)
Public Bill CommitteesRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 12 October 2022 - (12 Oct 2022)
The Chair
We are now sitting in public and the proceedings are being broadcast. We will now hear oral evidence from Sophie Jones, director of public affairs at the British Phonographic Industry, appearing via Zoom. We have until 2.15 pm for this session. Please will the witness introduce herself for the record?
Sophie Jones: Good afternoon. My name is Sophie Jones. I am director of public affairs at the BPI, representing UK record labels.
Gareth Thomas (Harrow West) (Lab/Co-op)
Q
Sophie Jones: I do not know how much. It did feel like something of a rush, but while some relatively modest progress was made, we welcome a number of strong improvements. I think you are referring particularly to Australia, but that was to New Zealand as well. Some of the things we were most interested to see, particularly around the Australian system of placing broadcast caps on the royalties that can be paid through to music rights holders, artists and musicians, is a commitment to make progress on those matters through ongoing dialogue, rather than firm commitments within the trade agreement itself. Perhaps that, as a significant focus and priority for us, with more time might have been able to make even more progress than the bilateral discussion approach that is being taken. While very welcome, that is perhaps an area that might have been given a firmer commitment.
The commitment is important because currently, in effect, the music industry provides a cross-subsidy to the broadcast sector, so that when musicians have their music played on broadcast channels in Australia, the amount of royalties paid is significantly capped at 1% of the gross revenue from the broadcaster. It is a significant policy area, and we hope to see progress made on that so that artists both in Australia and the UK can see the benefits of it flowing through.
Gareth Thomas
Q
Sophie Jones: The trade agreements themselves are significant in opening up markets to exporters, such as ourselves. British music is a phenomenal export success. In recorded music, we have seen our export revenues grow steadily year after year. That is partly due to the strength of the UK music sector and partly to do with the phenomenal talent we have here in this cultural capital, as well as the soft power of our music throughout the world. Outside of free trade agreements, we seek to—it is the example I just gave—bring countries more into line with the UK’s gold-standard IP framework and ensure that the value of the music we are creating is fairly recognised.
There are other parallel, accompanying schemes that we think could be more bold and ambitious. For example, we run something called the music export growth scheme with the Department for International Trade and the Department for Digital, Culture, Media and Sport. That provides a really important foothold for British artists—independent artists in particular—when exporting into those territories.
We think there should be bigger, more ambitious support for that scheme, particularly with the rise of streaming, to enable access into markets such as those of Australia and New Zealand, which are really important touring markets but of course very far away, expensive and difficult to get to. The opportunities opened up by the rise of digital streaming mean that British artists have more access into those markets to generate export revenue and engage with fans, but smaller independent companies and artists need extra help to do that.
There is a huge growth opportunity there. We think that recorded music exports are set to double in the next two years, and by the end of this decade they will be at more than £1 billion a year. We need initiatives such as that and investment that helps bridge some of the gap in marketing, so that we can promote into those territories more than we ever have done before.
Gareth Thomas
Q
Sophie Jones: If you are an SME or an independent artist, there is a cost of either going to tour in that territory or market yourself in that territory, particularly in a streaming-led environment where competition is so fierce and you are competing against the whole catalogue of music on streaming platforms. The music export growth scheme that we run provides grants that help support that kind of marketing, promotional and touring activity in a way that companies and artists at that scale in the market struggle to be able to meet. It is an investment injection to help bridge that gap.
The scheme is really successful. It generates £13 back for every £1 that is put in through the Government partnership. We see it very much as a valuable, even necessary, scheme to enable that export activity to happen for those who are at the earlier stages of their career development.
The Chair
If there are no further questions from Members, I will thank the witness for her evidence. We will now move on to the next panel. Thank you, Ms Jones.
Examination of Witnesses
Jonnie Hall, Donald MacKinnon, Gareth Parry and Nick von Westenholz gave evidence.
The Chair
We will now hear oral evidence from Gareth Parry, senior policy and communications officer for the National Farmers Union of Wales, Jonnie Hall, director of policy for the National Farmers Union Scotland, and Donald MacKinnon, chair of the Scottish Crofting Federation. All three will be appearing via Zoom. Welcome also to Nick von Westenholz, director of international trade at the National Farmers Union. We have until 3.5 pm for this session. Please could the witnesses introduce themselves for the record?
Nick von Westenholz: I am Nick von Westenholz, director of trade and business strategy at the National Farmers Union of England and Wales.
The Chair
Thank you, Mr Parry, for joining us at comparatively short notice. I very much appreciate you taking the time today. Will you introduce yourself?
Gareth Parry: Thank you, Chair. I am Gareth Parry, senior policy and communications officer for the Farmers Union of Wales. Thank you for that acknowledgement.
Jonnie Hall: Good afternoon, everyone. I hope you can hear me loud and clear. My name is Jonnie Hall. I am director of policy with NFU Scotland. I am speaking to you from Edinburgh.
Donald MacKinnon: I am Donald MacKinnon, the chair of the Scottish Crofting Federation. I am a crofter from the isle of Lewis.
The Chair
Thank you. Some might ask why we are doing that twice, but it is because we do not know who you are even though I am reading out the names. Now we do, so we are very grateful. We now have questions from colleagues.
Dame Nia Griffith (Llanelli) (Lab)
Q
The Chair
For those of you joining us via Zoom, I can see all of you clearly, so if you raise your physical hand, we can go from there. Nick.
Nick von Westenholz: Generally, the position of the NFU on procurement—this will not surprise you—is that we are keen to encourage it, perhaps as in the UK guidelines, which encourage the purchase of locally produced food. That is broadly shared by many MPs, that our schools, hospitals and other things should as much as possible be able to provide British food on the menu. Agreements such as those found in the trade deals, as well as the Government procurement agreement that the UK is a signatory to, put some restrictions on that. The potential quid pro quo, of course, is that we might be able to benefit from greater procurement access to overseas markets.
First, it is not clear to us exactly the extent to which food procurement will be central to the chapters in this sort of agreement; it might be other, much bigger procurements that are more likely to benefit from the arrangements, whether in the trade deals or the GPA, to a large degree because we are very far away from each other. If we are looking at a total service contract, it is not necessarily straightforward for businesses in Australia to provide that to schools or hospitals in the UK, and vice versa. Nevertheless, this potentially captures those kinds of contracts.
I am not sure that I am at the moment aware of UK businesses that are looking and eager to capitalise on this or to provide UK food directly to Australian public procurement markets. It is obviously a long way away to be doing that. I suggest that the opportunities are modest, probably both ways. Nevertheless, there is some concern that these sorts of arrangements do restrict the ability of the UK Government in future to look at ways of increasing the amount of British food subject to UK public procurement guidelines.
The Chair
Would any other witnesses like to respond?
Jonnie Hall: Yes, if I may come in on that, first to echo Nick’s points about the need for Governments and public bodies throughout the United Kingdom primarily to source their procurement locally, certainly within the UK or within the devolved Administrations, as it is here in Scotland. One additional slight complication to this issue on Government procurement, which I am sure the Committee is well aware of, is that over the summer the Scottish Parliament passed something called the Good Food Nation (Scotland) Act. This has measures in it here in Scotland on public procurement and so on.
Alongside lots of questions around what is UK legislation on the one hand and devolved legislation on the other would be questions in my head around the intersection between UK Government procurement in the food arena and what the Scottish Government are trying to achieve through legislation here in Scotland. Maybe that is a complication too far at this stage, but I just raise that as an issue, in addition to supporting what Nick has already said.
In terms of overall Government procurement, I do not believe that food issues will be of huge significance. That is not to say that food, trade and agrifood trade issues as a consequence of the free trade agreement with Australia and New Zealand are not of huge significance. I am sure you are well aware of some of our concerns around that.
Gareth Parry: From the FUW’s point of view, specifically with regards to procurement, it is worth remembering that New Zealand and Australia are huge net exporters, particularly of red meat and agricultural goods. It is assumed, at least, that there would be more scope for those countries to make the most of procurement contracts in the UK compared with vice-versa, where for certain products there may be an opportunity to make the most of that procurement benefit in those two countries. From our understanding, there would be scope for them to make use of our markets rather than the other way round.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q
Nick von Westenholz: I do not have a concern with that specific issue of the timing of the implementing legislation. Clearly, it is the Government’s position that a number of things need to be in place before they go ahead and ratify this deal: the implementing legislation such as the Bill, certain regulations that flow from that and the requirements of the Constitutional Reform and Governance Act 2010 process itself. The chronology, as it were, is not necessarily the most important thing. They all need to be done.
What is a much bigger concern of ours is the fact that the debate on Second Reading, and I suspect some other debates on the Bill, will be used as a proxy for a general debate and discussion about the merits or otherwise of these two trade deals. This is the wrong vehicle for that, frankly. It turns out that it is possibly the only vehicle for that and we will make do with that, but we understood, through the exchange of letters from the Government and the International Agreements Committee in the House of Lords, that the process would be—and should be—a debate tabled during the CRaG process. That is important because that is the only period of time where MPs retain the ability, if they so wish—I suspect with this deal they would not have wished to do so—to delay the ratification. Once that CRaG process is completed, that power for MPs falls. That process with Australia has been completed, so MPs no longer retain the right to delay ratification under the CRaG for the Australian trade agreement.
We are where we are, but I would say that with a number of other FTAs coming down the track, it would be very good to hear a commitment from the Government that they will allow time for debate on a relevant motion—not a neutral motion—prior to the end of the CRaG period. In that case, they can satisfy normal expectations of parliamentary scrutiny and accountability for what are very important trade deals that will have a big impact on all our members.
Jonnie Hall: May I come in here? Again, to echo everything that Nick has just outlined, the whole issue of the scrutiny of free trade agreements, particularly in the context of agrifood, has been a major concern for farming and crofting interests here in Scotland. Throughout this process in the last two years, as we saw first the Australia FTA and then the New Zealand FTA quickly follow suit, a whole host of questions were raised about the role and efficacy of the process. In particular, it rekindled the thoughts around the role of the so-called Trade and Agriculture Commission, and its powers or otherwise to essentially scrutinise FTAs in the agricultural sphere before they have gone through all of the other processes. That was rather than it being a retrospective scrutiny, by which time it was too late—the horse had bolted in many respects. There are still concerns here in Scotland, which I am sure are shared across the United Kingdom, from the agrifood sectors in that regard.
Donald MacKinnon: I agree with the two previous comments, but I reiterate that it is so important that these trade deals are given the scrutiny that they deserve. The really important thing is that we consider all the potential unintended consequences—for our sector, in particular—of what may be well meaning motivations. To pick up on the point that Nick made, the really important thing for us is not just these trade deals that are in front of us just now, but the precedent that they set for the future, and the precedent that the process sets for the negotiation of future trade deals, the scrutiny that is applied to those and the implications of that.
The Chair
Before I call Anum Qaisar, I think Nia Griffith has a supplementary, or another question.
Dame Nia Griffith
Q
Nick von Westenholz: We take the Government’s impact assessment at face value. It is not surprising, if you look at the basics of the trade deals, that the deals themselves change very little for UK exporters to Australia or New Zealand. They are open, liberalised economies already, with tariffs generally at zero, although there are some tariffs on some products. Of course, coming the other way, the deals are very liberalising—over a period of years, admittedly, but eventually we will liberalise our markets in a way that they are not for other countries that we do not have trade deals with. It makes sense that there would potentially be a negative impact in those sectors of the economy where Australia and New Zealand are particularly strong, such as agrifood. So, yes, those impact assessments sound right to us.
Jonnie Hall: To complement what Nick has just said, for agriculture and agrifood as a whole, it looks like a potentially damaging impact, but I think we need to be a bit more nuanced about it, and look at it in terms of particular sectors in agriculture. New Zealand is very strong in terms of red meat—beef and lamb—but also dairy and horticultural production. Australia is likewise, and you can add grain to that. There are clear potential impacts for particular sectors that are already really quite vulnerable in large parts of the United Kingdom, not least in Scotland. I am thinking particularly of the red meat sector and how important that is to the rural economy of Scotland and, indeed, the whole economy. Scotch beef and Scotch lamb are iconic products, but we are not in a situation whereby we can stack it high and sell it low, as it were. Anything that comes along and undermines our position in that respect is clearly going to be a considerable threat—I use that word advisedly—to the viability of agricultural businesses here in Scotland.
Donald MacKinnon: I agree with everything that Jonnie said there. I think of the impact, particularly on the red meat sector, which, we cannot forget, operates in some of the most fragile areas of the country and really underpins the rural economy in these areas, particularly in the highlands and islands, where my members are crofters.
I just want to add another point about timescales. Often the argument is put to us that New Zealand is not ready to flood us with lamb on day one—I am sure we will get on to the safeguards that have been put in around the 15-year transition—but that was never something that we were concerned about. This is about changes that can happen over a much longer period of time. Agriculture does not operate on year-to-year, short lifecycles. We operate in generational terms in our businesses, and 15 years is a relatively short period of time in that sense. So it is not that we are concerned that the negative impacts are going to happen straightaway. This is about the long-term future of our industry. That is what my members are concerned about.
Gareth Parry: I would take that a step further, from a Wales perspective at least. Without going into too many details of the figures from the UK Government and the impact assessments of all the different sectors and the different nations across the UK, I think it is worth highlighting how much more Wales relies on agriculture when it comes to rural economies, rural communities, our Welsh language, and a number of other, tertiary businesses that rely on agriculture. We believe that those impacts would be much more significant in Wales.
Dame Nia Griffith
Q
Nick von Westenholz: I am not sure it could be done via the Bill, because I guess the Bill is simply legislating domestically for what has been agreed under the Government procurement chapters in the FTAs themselves. My understanding is that if they were to do that, they would have to go back and open up the negotiations, which are obviously completed. I think the Bill either stands or falls. I am not sure an amendment would be possible in that sense.
I would have to examine the text closely, but under the relevant chapters in the agreements and, indeed, in the wider Government procurement agreement, there are provisions that allow Governments to stipulate provisions around environmental protection and so on, and environmental standards for procurement contracts, as long as those are not discriminatory between domestic and overseas potential bidders. I am not sure that that would extend to, for example, animal welfare and those kinds of production standards, but I could not be absolutely sure about that. I would suggest that there is some degree of flexibility for Governments to stipulate certain requirements in the contracts for these public procurement arrangements, but on the question whether that extends to specific animal welfare requirements, I do not believe it would.
The Chair
I remind colleagues that the scope of the Bill is quite narrow, as Nick alluded to. I do not know whether any other witness wants to comment on that question.
Jonnie Hall: The question raised the issue of standards, and how you could build and ensure standards through any procurement contract. We all have standards in mind around all sorts of trading arrangements, and that has been one of the major focal points of the FTAs with New Zealand and Australia, but we have to bear in mind that it is not just about animal health and welfare and environmental standards; it is about the way in which the production systems operate in New Zealand and Australia. Their costs of production are different from those in the UK, often because of the very high standards and compliance costs that go alongside production here.
Ultimately, an awful lot of procurement contracts will be negotiated on price, given that there will be a written understanding, at least, that the standards in them will be of an equitable value, if that is the right expression. It is the competing on price piece that will probably be of more concern to Scottish producers than anything else, because we operate under different agricultural production systems and our cost structures are therefore different. If it comes to Government procurement issues, it may be that New Zealand and Australian produce is more attractive simply in terms of value for money—I will call it that, but the word “value” is not right.
Ms Anum Qaisar (Airdrie and Shotts) (SNP)
Q
Nick von Westenholz: As I said at the beginning, these kinds of arrangements, whether through FTAs or more generally through the Government procurement agreement, obviously put restrictions on the ability of the UK Government to encourage purchasing of UK goods in public procurement contracts. You understand why: these are liberalising arrangements that are intended to encourage trade. But we also know that there is widescale political support for “buy British” provisions in Government procurement, so there is a tension between the sorts of provisions in these chapters and the stated desire from the Government to encourage more Government procurement of British food.
In terms of how much that will come to bear in practice, Australia and New Zealand are obviously on the other side of the world; it is not clear the degree to which they will be pitching for procurement contracts around food, but this would facilitate that if they wanted to. It is part of a wider picture of essentially facilitating more overseas provision of food in public procurement, and that is a concern if your policy objective is to encourage more “buy British” in public procurement.
Jonnie Hall: I agree with what Nick just said. There seems to be some divergence between a policy that is intended to stimulate trade, as opposed to backing local Scottish and British food producers and manufacturers. There will obviously be some sort of trade-off in that situation, and I am not clear where that would leave Scottish producers in the longer term.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Q
The deal does not cover schools in New Zealand and Australia, because those public institutions are at the state level, not the federal level. If, for example, we produced a certain crop or fish, such as British cod, cheaper, those products would not have that easy access, so people in Australia having fish and chips would not necessarily have British fish or British potatoes. Do you not think there is an inherent unfairness in this deal? Should there be some procurement conditions in the Bill to ensure that it is about reciprocity and, where reciprocity does not exist, to allow devolved or local authorities to take a divergent approach, as Australian local authorities will be able to do?
Nick von Westenholz: I certainly agree with the principle of what you say: these deals should be reciprocal. There are a number of elements of the Australia deal where there is an asymmetry. In some of the environmental aspects, there are provisions that apply to UK-wide environmental regulations, but only to Australian federal regulations rather than those at state level. Most Australian environmental laws actually exist at state level, so the vast majority of environmental laws are not covered by this trade deal. I would say that that is an imbalance and an asymmetry in the deal.
As I say, as a point of principle, I agree with you. The rather lengthy annexes to the FTA set out which bodies are covered at both national and sub-regional levels. It is not always easy to discern exactly what is and is not covered, so I will bow to your knowledge on the exact differences in the bodies that are covered—I would not be able to confirm that myself—but, where there are differences, we would be concerned about that.
I would temper that a little with the fact that I am not sure we think there will be a major exchange of business through procurement contracts on food as a direct result of this deal. We will need to keep an eye on that. It will probably be other, bigger industrial services contracts that are likely to benefit, so I would not want to over-egg it. However, as a point of principle, I agree with you.
Jonnie Hall: I will add one thing quickly. There was a reference to the carbon content of lamb from New Zealand versus the carbon content of Welsh lamb, or indeed Scottish lamb. I think that would be a real sticking point in many ways, because that carbon is not necessarily calculated using the same process and the metrics may not be directly comparable. We need a level playing field in how we measure the carbon or climate impact, or indeed any other environmental impact, of production in Australia and New Zealand versus production in the UK before we can draw any sort of comparison. If you cannot do that, you have to be very careful about any assumptions you make about importing any product because of its smaller carbon footprint or any other environmental impact before you rush into any deal.
Gareth Parry: I agree with everything that has been said. I have not seen the figures relating to the carbon footprint, but if they are correct, thank you for challenging them. I also agree with the point about carbon calculators, and as a union we have been raising that issue on a national level. The same calculator may be used to compare neighbouring farms, or even on a national scale, but the issues become even more apparent when we look further afield and discuss trade deals: the issues that arise in comparing the carbon footprints of two farm holdings five miles apart also apply when we compare the carbon footprint of a product produced in a UK nation with that of a product produced on the other side of the world.
It is really important to consider the scale of production in countries such as Australia and New Zealand, compared with the UK. I guess that has something to do with the conclusion that the carbon footprint is lower. The scale of production over there—and things are produced to different standards there, as has been said—cannot be compared to that in the UK.
Lloyd Russell-Moyle
Q
Nick von Westenholz: As a general rule, we are nervous about the overuse of secondary legislation to implement Government policies. That goes back to the earlier point about parliamentary accountability and scrutiny.
Lloyd Russell-Moyle
Q
Nick von Westenholz: Yes, indeed. I would not like to comment, because you would need more expert legal commentary on the precise powers available in the Bill. I sit on the Trade and Agriculture Commission to which you referred, and our experience from that supports the points made by Jonnie Hall. We found very varied calculations of the relative carbon emissions from New Zealand and UK red meat production, which is exactly the point made earlier. To give New Zealand farmers due respect, on a global scale, they have comparatively very sustainable and good global emissions—as do we; we should be proud of ourselves as well.
Bill Esterson (Sefton Central) (Lab)
Q
The Chair
Order. The hon. Gentleman, who is a very experienced Member, tempts our witnesses to comment on other Bills. Even though he does so in the context of this Bill, that is slightly out of scope of the Bill. Perhaps he might rephrase his question.
Bill Esterson
I can certainly rephrase it. What sort of provisions would you ideally like to see in this Bill?
Chair
Excellent. You confirm your experience and political agility.
Nick von Westenholz: I touched on it earlier: much as we might want to say, “We can amend the hell out of the primary legislation in order to amend the FTA,” that will not happen, and I also do not think that would be right. The FTA has been negotiated by the UK Government’s negotiators, and what they have come back with has been agreed with Australia and New Zealand. Trying to change the details of it through primary legislation would simply mean opening up the negotiations again; we would have to go back and renegotiate.
I might think that there are elements of the FTA that need renegotiating, but the way to do that is to have much more transparency and scrutiny throughout the negotiation process. As I said earlier, that was agreed in the exchange of letters between the International Agreements Committee and the Government. The Government committed to sharing their objectives before negotiations opened, to sharing updates throughout the negotiations with Parliament, and to providing for a debate on an amendable motion at the end of the process. If the Government do that, one could be pretty assured that the negotiations would end up with a result that is more palatable to a whole range of UK stakeholders. That did not happen in this case, and that is why there has been serious disquiet, particularly in the farming sector, about the deals.
Gareth Parry: Ever since the trade deals were mooted, we have been calling for a level playing field when our producers are in competition, or even greater competition, with producers in Australia and New Zealand. We could be here for hours discussing differences in production methods and standards between the countries, but my understanding is that there is no provision in the trade deals that would allow us to influence how those countries produce food and vice versa. From my understanding, that is why quotas and tariffs are used in trading across the world. If we are not allowed to influence how food is produced in another country, we use quotas and tariffs to create that level playing field. As Nick said, perhaps they cannot be incorporated to negotiate the current FTAs, but they definitely need to be considered when future trade deals come down the line.
Jonnie Hall: I thought the issues of concern were articulated very well in the first question. If they are the issues of concern, it strikes me as being a bit odd that they would be dealt with in legislation on Government procurement, rather than in the original process governing the trade agreements. I guess I am echoing what has been said by Nick and Gareth.
Gareth Thomas
Q
Nick von Westenholz: As I said, I sit on the Trade and Agriculture Commission, but maybe it would be right to say that I am making my comments as a representative of the NFU. Obviously, my role on the commission is as required and set out by the Secretary of State, who asks us to do what she would like us to do and says what she would like us to look at. We do that job as requested, essentially.
From the NFU’s perspective, I think the strength, or role, of the Trade and Agriculture Commission is as strong or as weak as the parliamentary scrutiny process around it. We look very closely, in considerable depth, at the standards aspects of trade deals, and we have produced two reports that go into some depth on that. The value of that is in providing parliamentarians with as much information as possible, so that they can assess the strengths and weaknesses of the FTA. Obviously, that goes alongside the broader assessments that Select Committees in both Houses make. We hope that, armed with that information, parliamentarians can then an informed decision as to whether they like an FTA or not. If parliamentarians, as I mentioned earlier, are not given the opportunity to vote on that, or even to debate it during the CRaG process, that clearly seriously undermines the effectiveness of any assessments, whether from the Trade and Agriculture Commission, Select Committees or, indeed, anything else. The scrutiny process and the role of Parliament in this is vital.
We still are using the CRaG process as the main process. As I say, I do not think that it has been used at all well in this situation, but that is what we have. That process was designed while we were a member of the EU, and really it did not envisage that free trade agreements like these would be subject to the process; it was for international treaties covering many other sorts of things. It seems to me pretty obvious that, having left the EU more than six years ago, we should design a parliamentary process, in statute, that actually deals with the fact that we are an independent trading nation doing these very important and often in-depth free trade agreements. The current situation is not designed to do that, and that is being shown up already in the Australian FTA.
Jonnie Hall: I completely endorse what Nick says. The Trade and Agriculture Commission was set up with the best intentions, and gave the agricultural industry and probably the whole agrifood sector a bit of encouragement that proper scrutiny would take place as trade deals were being negotiated. That was enhanced even further in November 2020, when the UK Government said that the commission would be placed on a full strategy footing, to ensure that the voices of farmers, growers, those in the supply chain and environmental, animal health and welfare groups could be heard while the UK Government were securing trade deals.
However, in March 2021, the terms of reference were published by the UK Government, and they stated that TAC would scrutinise free trade agreements once they were signed. That takes the whole point of the commission away from under its feet in many ways. It would work well, was effective and, I think, did perform a useful function—as Nick says, in informing parliamentarians, more than anything else. It has now been somewhat sterilised in some ways. We still need some sort of body to function in that way.
Gareth Thomas
Q
Nick von Westenholz: I would not want to give a long answer; we all have opinions on what happened with the negotiations. I would just say that if you are doing a trade deal with a country such as Australia or New Zealand—countries that are, particularly when it comes to goods, already almost totally liberalised, and are very big and effective agricultural exporters—agriculture in the UK will probably be the main sector to come under pressure as a result. If you wanted to do a deal, and particularly if you wanted to do it quickly, and wanted it to be liberalising, as was the Government’s intention, I am not sure that you could do it in any way that did not at least have the potential to have a negative impact on UK agriculture, though none of us knows exactly what the outcome of the deals will be in the next few years.
Jonnie Hall: If you look at modern trade deals—deals in the last 20-plus years—agriculture has often been the sacrificial lamb in those trade negotiations, no pun intended, so the expression, “being thrown under the bus”, resonates quite clearly with the agrifood sector. In modern-day economies, it is in digital, tech, manufacturing and finance that great gains are to be made. We are the primary producers of a primary product; when it comes to overall value, agriculture and food products will be relegated to the tail end of a trade agreement between modern economies. If you ask other sectors of the economy, they will probably think that the agreements that have been signed are very much in their interests and create opportunity. We tend to see them in another way.
Gareth Parry: I wanted to answer the question on the Trade and Agricultural Commission. Forgive me, but I am not 100% sure of the full list of TAC members; however, we have long had the policy that representation on the commission needs to reflect the potential impacts on the agriculture and food sectors across the UK. I emphasise the need for good representation of all nations. I fully agree with what Nick and Jonnie said about the effectiveness of the TAC. As was said, it is no secret that the agricultural sectors in both the countries that we are talking about are huge. There will always be winners and losers in these types of liberalised trade deals, and unfortunately, as we can see from the impact assessments, agriculture is predicted to be one of the sectors that is a significant loser from these deals.
Dr Kieran Mullan (Crewe and Nantwich) (Con)
Q
Nick von Westenholz: When we were a member of the EU, all trade agreements by the EU were scrutinised directly by Committees of Parliament. There was, through that process, a good degree of parliamentary scrutiny. At that time, Parliament retained a theoretical ability to either accept or reject all regulations stemming from the EU. A lot of people might argue that the power was exercised rarely, if ever, and that played greatly into the debate on our membership of the EU, but certainly formerly Parliament had a greater ability to oppose trade deals.
The Chair
Order. If colleagues have got something to say, they should say it through the Chair for the benefit of Hansard, the broadcasters, the public and most of all out of courtesy to our witnesses. Thank you Dr Mullan. If there are no more questions, I thank the witnesses for their time. In particular, if I may, I thank Mr Parry, who came in at late notice; we certainly wanted to hear from Wales.
Examination of Witness
Professor Albert Sanchez-Graells gave evidence.
The Chair
Professor Albert Sanchez-Graells is professor of economic law and co-director of the centre for global law and innovation at the University of Bristol law school. He is appearing via Zoom, and this session will end at 3. 25 pm. For the record, could you please introduce yourself, professor? Thank you, sir.
Professor Sanchez-Graells: Good afternoon. Thank you for the opportunity. I am Albert Sanchez-Graells and, as you said, I am a professor of economic law at the University of Bristol.
Gareth Thomas
Q
Professor Sanchez-Graells: Yes, that is correct. Thank you for the opportunity to expand on those ideas. Basically, the starting position is that both the UK and Australia, as well as New Zealand, are members of the World Trade Organisation plurilateral Agreement on Government Procurement. That means that free trade restrictions are already bound by a standard of rules with which they comply, and then they have bilateral agreements on market access. You would have expected that if the UK and Australia wanted to deepen that market access, or the UK and New Zealand wanted to do so, they would do it by adding to the annexes of the GPA, basically by keeping the rules as they are, but accepting that this or that market at national or sub-national level is also open to the tenders of the other jurisdiction. By the way, that is the approach that has been followed in the EU-UK trade and co-operation agreement, basically because that is a clean legal approach. We agree on the rules, we just negotiate on market access.
The difficulties with the chapters in the UK-Australia agreement in particular, and to some extent in the UK-New Zealand agreement, is that they have not done that. They have copied the rules of the GPA and then tweaked them. In those tweaks, there are problematic changes. I have identified two main areas of problem: one is the national treatment rules on access to markets, which applies in particular to suppliers in different jurisdictions, and the other is access to remedies. The access to remedies is the one that worries me because under the chapter with Australia, not the one with New Zealand, there is a clause that allows for the exclusion of legal remedies completely on the basis of public interest. That means that, for example, for very high-profile projects, or very high value, the courts might just set aside any claims for a suspension of the procedure or even for the compensation of damages to admit that there has been a loss to be excluded on the grounds that that is not in the national interest. It is a very open-ended clause. I think that this will make tenderers from Australia, in particular, think twice about tendering in the UK now, when they could basically be mistreated or even illegally excluded from tenders and then not have access to legal redress.
I think that that can be problematic. What is also problematic is that of course it plays both ways. If I am a UK small or medium-sized enterprise and I have to decide whether to invest my limited time and resources in bidding for a contract in Australia or bidding for a contract in, for example, the European Union, I know that, in the European Union, my interests are protected to GPA-plus standards, whereas under the FTA, in Australia, my interests are protected to GPA-minus standards, so I would probably refrain from bidding in Australia, which then brings a big question mark to the practical advantages of the enhanced market access that the Government have claimed the chapter will bring.
Gareth Thomas
Q
Professor Sanchez-Graells: Thank you; those are good examples to flesh this out. Let us take High Speed 2 as the first example. Let us imagine that for any bit of the construction of the lines or for the supply of the rolling stock, the UK conditions wanted to prioritise UK steel, as is Government policy at the moment. Imagine that an Australian construction company wanted to tender for the contracts, but the steel that it wanted to use for the rails was South Korean steel. In the current conditions, before the FTA enters into effect, the Australians have to be treated equally to a UK company even if they want to use South Korean steel, because South Korea is also a member of the GPA.
What would happen under the FTA is that, because of the specific wording in the provision—I do not want to bore you with the detail—there would be an option for the UK buyer to take a narrow understanding and say, “You are not offering Australian steel and you are not offering British steel, so I no longer have to treat you equally to UK bidders. Therefore I exclude this construction company from the tender.” The construction company probably would want to challenge that, especially because it spent money tendering but also because it is potentially a profitable contract, so it goes to the High Court. Let us say that the High Court dismisses the claim, on the basis that HS2 is already so delayed and so over budget that there is no public interest in looking at this issue. Then the Australian company is left with maybe one final resort option, which is to try to bring an investment protection claim on the basis of that denial. But certainly it seems strange that if the FTA had not entered into effect, the Australian company would have had access—maybe not to suspending the project if the interest is high, but certainly to claim the damages for that unfair treatment of its tender.
The same thing would happen the other way. Let us imagine that an innovative British company that wants to sell low emissions rolling stock for that metro link in Melbourne airport goes and tenders in Australia. It is excluded for any number of reasons and it wants to challenge the decision. It could also be barred from access to remedies in Australia, which means that the UK tenderer has lost its time and probably made a loss on the project. That would generate a very big disincentive for anybody to try to tender in future projects. But also, again, there would be a risk of maybe trying to raise this issue as an investment protection issue. That would basically, in simple terms, open up a trade war between the UK and Australia.
To me, it is counterintuitive that when we are trying to deepen our trade liberalisation on a bilateral basis, we are creating problems that do not exist under the current multilateral basis, where these issues are not allowed.
Gareth Thomas
Q
Professor Sanchez-Graells: Yes, that is absolutely correct. In the tender process that we are imagining for the Melbourne airport rail link, if a French company, a British company and an Australian company was tendering, and the Australian company was preferred, the French would have access to remedies that could not be excluded, at least in terms of claiming for compensation for lost profits, or at the very least for the cost of having bid, but the UK tender could be barred from those remedies. Again, that does not seem like a post-Brexit improvement of the position of UK businesses under these stand-alone free trade agreements.
Gareth Thomas
Q
Professor Sanchez-Graells: I would make two points on that. First, even if the CPTPP were to resolve these problems, which it will not—I will explain why later—there would always be the problem of how long it takes between these FTAs entering into force and CPTPP basically overturning them. The reason why CPTPP would leave these FTAs without effect is that both Australia and New Zealand are members of CPTPP, and therefore the later international treaty modifies the previous ones. For any tender that started between the entering into force of these FTAs and the entering into force of the UK’s membership of the CPTPP, the rules of these FTAs would apply. So this is not an issue that might be on the books and is then fixed by CPTPP; it could run for years even if CPTPP enters into force.
The second and more important point is that CPTPP is very close to the Australian procurement chapter, which is probably where its inspiration was drawn from. So it would keep the same problems under the Australian chapter and make the problems under the New Zealand chapter worse, because on remedies the New Zealand chapter is aligned with the GPA, but once CPTPP entered into force all single relationships with New Zealand would have the problematic clause that would allow the barring of access to remedies. So CPTPP would not make it better, and in any case we would have to live with the consequences of these FTAs for the period between the entering into force of them both.
Gareth Thomas
Q
Professor Sanchez-Graells: Of course, I am not privy to the negotiations, but my impression is that these chapters very much started from the position of the trading partner. I do not think the reason why the New Zealand chapter is different from the Australian chapter has to do with the UK Government learning from mistakes; I think it has to do with different starting positions among the New Zealand negotiators and the Australian negotiators. Australia has the same sort of clause in most of its trade deals, and it also pushed for it under the CPTPP. You may call it luck, but I think we may just call it an effect of the rush in which the deals were negotiated. Effectively, they have made the UK a rule taker, because they have accepted the proposals of the counterparty just to progress negotiations. That is my observation.
Gareth Thomas
Q
Professor Sanchez-Graells: This would be an issue that would depend on the terms of the investment chapters in the FTAs, and, again, the investment chapters are different under the Australian and New Zealand deals. The New Zealand deal excludes procurement from all of those outstanding obligations of the investment chapters. That would not be a problem in that FTA, but in the Australian investment chapter there is an obligation to provide fair treatments, which includes common customary law on access to justice.
The point I am trying to make without being too complicated is that the Australian company that had bid for HS2 and had been thrown out on the basis that it wanted to use South Korean steel goes to the High Court and sees its action thrown out on the basis of public interest. It could then say, “Okay, I was trying to acquire an investment in the UK. The UK has to give me fair treatment in the process of trying to gain this investment. They have denied me access to remedies. Also, they have denied access to remedies on grounds that they cannot play with other companies that are in a very similar position to me, including other companies that come from GPA countries.” They could make the case of having been discriminated against in not being given access to remedies and make that an investment dispute.
The difficulty in this context is that under the Australian chapter, to the best of my knowledge, and I am not an investment expert, there is no possibility for the Australian company to sue the UK Government. They have to raise the issue with the Australian Government so that they could raise it as a dispute under the agreement with the UK. That is why I think it opens up the problem of potential trade wars. It is not an issue even of relatively secretive arbitrators determining whether the UK has to compensate the Australian company, but it immediately becomes a potentially very high-profile trade issue between the two countries. It is very difficult in that case to foresee how it will end up being resolved. There will be a panel which will also work relatively similarly to an investment arbitration tribunal. If what the panel decides is not implemented, then we can just go to countervailing measures and other types of sanctions. The prospects are not looking good, unless the UK Government at some point decides to settle the dispute to avoid those problems.
There is a long story, starting with the Brexit process, of very expensive settlements for procurement mishaps, for example, with the ferry contracts or with the Nuclear Decommissioning Authority. Potentially, these could be very expensive claims to settle and the terms of those settlements are never very clearly controlled, and the process whereby those settlements are achieved is also not necessarily well scrutinised in time. That opens up all sorts of other issues with how, instead of being dealt with in the courts, the misbehaviour of a procuring entity in the UK ends up becoming a political and potentially very expensive issue.
Gareth Thomas
Q
Professor Sanchez-Graells: I always said from the beginning that it is difficult to know how realistic the impact assessment is because the details have not been made public, so we would need to take the Government’s word at face value. It is difficult to see that some of the touted advantages are going to be exploited, because we are talking about high-profile, high-value projects. We know that usually there is always a risk of protectionism, especially in the current circumstances. If I were advising a big company, I would flag the risk that going to Australia means we are basically putting all of our investment at risk because we may not be able to recoup it. I wonder whether that was taken into account in the impact assessment, but I would think not. That £10 billion probably has to be adjusted downwards for that uncertainty, which will make some companies not take advantage of the opportunities.
The other issue that makes me wonder how accurate the impact assessment was relates to the claims that the Government made in some of the documents that tried to promote the advantages of the FTA. For example, they said that there is now a massive improvement in access to financial services contracts because some authorities in Australia are now covered. But those authorities are already covered under GPA, just at the higher value threshold. There is quite a lot of marginal improvement on market access. I would have wanted to see some evidence that UK companies would have been interested in those contracts but were not bidding because they did not have a legal right to bid, which I have not seen anywhere. I think that the £10 billion is a quite theoretical, best-case scenario. I advise caution in assessing that figure.
Gareth Thomas
Q
Professor Sanchez-Graells: That is correct; I think that is what the UK impact assessment claims. When the International Agreements Committee raised this issue in the report, the Government’s response did not provide any further details; they simply said that the figure was properly checked. It may be the cynic in me, but when those figures are not put out for public scrutiny, perhaps we naively accepted the benefit suggested by the counterparty.
The Chair
If there are no further questions, I thank the witness for his evidence. We will move on to the next panel.
Professor Sanchez-Graells: Thank you for your time.
Examination of Witness
Michael Gasiorek gave evidence.
The Chair
We will now hear oral evidence from Michael Gasiorek, director of the UK Trade Policy Observatory, who is joining us via Zoom. This session will end at 3.45 pm. Will the witness please introduce himself?
Michael Gasiorek: Yes. Good afternoon and thank you very much for inviting me to give evidence. My name is Professor Michael Gasiorek. I am a trade economist. I am director of the UK Trade Policy Observatory and co-director of the Centre for Inclusive Trade Policy, and I am based at the University of Sussex.
Dame Nia Griffith
Q
“This may endanger…the EU’s…adequacy decision to the UK”,
and public trust, which would obviously be a very serious issue. Is there any way that we could remedy your concerns through the Bill?
Michael Gasiorek: The short answer is that I do not know. The issue that arises is to do with the agreements in the UK-Australia and UK-New Zealand deals on transmission of data across countries, and whether they accord with the EU’s data adequacy decisions. I am not a legal scholar, so I would not be able to tell you with regard to the specific terms of this Bill. My understanding was that I was coming to the Committee to address questions about the economics of the agreement, not the legal technicalities; I am afraid that I am not a lawyer.
Dame Nia Griffith
Q
Michael Gasiorek: I think the reason that the economic impact is limited is largely driven by the fact that we trade very little with both Australia and New Zealand. In each case, it is not much more than 1% or 2% of our trade—less with New Zealand than with Australia—and they are both very far away. There is very little that could be done to increase the aggregate economic impact of the agreement. Logically, these are countries that we do not trade very much with, and that are very far away—that is one of the reasons why we do not trade very much with them; another is that their GDP is smaller than that of larger trading partners. There is little that could be done in the Bill to change that outcome.
Dame Nia Griffith
Q
Michael Gasiorek: Once again, I will pass on that question. As I informed the Committee’s secretary, I am not a specialist on procurement processes; I am a specialist on the economics of the agreement.
The Chair
Okay. If there are no further questions from Members, I thank the witness for his time.
Michael Gasiorek: Thank you very much.
Examination of Witness
Rosa Crawford gave evidence.
The Chair
We will now hear evidence from our next witness, Rosa Crawford, policy officer at the TUC, who is appearing via Zoom. Rosa, thank you for being available a little early. We have until five minutes past 4 for this session. May I ask you to introduce yourself, for the record?
Rosa Crawford: I am Rosa Crawford, policy officer lead on trade and Brexit at the Trades Union Congress, the national union centre that represents 48 affiliated unions, and over 5.5 million workers.
Gareth Thomas
Q
Rosa Crawford: We as trade unions believe that public procurement has the potential to create tens of thousands of jobs and many apprenticeships, but they need to be on the right terms; we have to make sure that these are decently paid jobs, on good, secure terms and conditions, that support a just transition and promote equality. What causes us concern about the Trade (Australia and New Zealand) Bill is that it does not provide guarantees that those social objectives will be promoted through our public procurement procedures. In fact, there is potential to undermine them, particularly in the parts of the UK-Australia trade deal about public procurement, which this legislation would allow to be implemented.
Article 16.17 of the UK-Australia agreement says only that environmental, social and labour considerations “may” be taken into account by procuring entities, and only when those considerations are
“based on objectively verifiable criteria”.
That could open up scope for Australian companies, via their Government, to challenge social criteria in UK public procurement processes as being potentially unverifiable, because that is an undefined term. Multinational companies are eyeing up our procurement market—this is a big objective in trade deals—and will be looking for any means of challenging any social criteria that they regard as being a burden for business, such as a requirement to pay a living wage or to provide secure conditions. We are very worried about the language in the UK-Australia procurement provisions, which the Bill would allow to be implemented.
Let me connect that to the Procurement Bill going through Parliament. It does not give us the assurances that we need that social criteria will be promoted through its provisions, unlike the EU-derived procurement rules in the Public Contracts Regulations 2015, which allowed the Government to refuse a tender on the grounds of its non-compliance with International Labour Organisation conventions, and required social value criteria to be taken into account in the most advantageous tender criteria. There is no such requirement in the Procurement Bill. That means that now, in UK procurement rules, there are no provisions to prevent public money from being given to suppliers who abuse fundamental workers’ rights. For us, that is going in completely the wrong direction.
In the EU-UK trade and co-operation agreement, we made commitments to promote fundamental International Labour Organisation standards, yet in the Procurement Bill and the UK-Australia agreement, we do not see them promoted. I will highlight two more concerns about the Procurement Bill. There is no requirement for high labour standards—
The Chair
Order. Forgive me, but we are not talking about the Procurement Bill. There is clearly some crossover, but if we can try to avoid the temptation to spend too much time on that crossover, I would be very grateful. Thank you.
Gareth Thomas
Q
Rosa Crawford: CPTPP could create an even more problematic situation for us. Members will know that the CPTPP contains the investor-state dispute settlement provisions, and unless the UK explicitly opts out of those provisions, we will be bound by them. That obviously means that foreign investors could sue the UK Government for any actions that are interpreted as being a burden on business. That could mean living wages and decent conditions. If we accede to the CPTPP, we could be allowing social criteria that we include in our public procurement provisions to be challenged by foreign investors from across the CPTPP countries, which obviously include some of the largest multinationals in the world.
It is extremely problematic to us that the UK is considering acceding to the CPTPP, and the TUC is opposed to that, as are the majority of trade unions in CPTPP countries. It should be said that the CPTPP takes a very broad, liberalising approach towards its service commitments, which means that a number of public services that are part-privatised could be locked into that privatisation through the CPTPP. The direction taken by the CPTPP, as well as by the UK-Australia trade agreement, which the Bill will implement, seems to us very problematic. It could undermine the expenditure of public money through public procurement—[Inaudible.]—and decent-quality public services.
Gareth Thomas
Q
Rosa Crawford: We have specific concerns about the lack of scrutiny provided for through the Bill, because paragraph 2 of schedule 2 states that any regulations made under clause 1 will be subject only to the negative procedure. Obviously, that will deny MPs the opportunity to scrutinise the procurement legislation introduced via the Bill, so it will not be possible for Members to challenge legislation that undermines social standards in procurement. We believe that clauses 1 and 2 should be subject to the affirmative procedure.
We also have more broad concerns about the lack of scrutiny of the UK-Australia trade deal specifically, as well as of all the trade deals that the Government have negotiated to date. For us, it is really important—[Inaudible.]—scrutiny, and scrutiny by trade unions. Otherwise, those deals will not deliver the best outcomes for workers, public services and all sectors of the economy. We really regret the process that was followed for the UK-Australia deal; Members were not provided with the opportunity to debate and vote on the agreement when it was brought before Parliament in June. The Bill is the only opportunity we have to debate the provisions of that deal, but the legislation is extremely narrowly drawn, and that is completely inadequate, in terms of the democratic process.
Trades unions have also been completely shut out of negotiations. We released a joint statement with our counterpart in Australia, the Australian Council of Trade Unions, at the start of the negotiations, setting out our positive agenda for what we thought a UK-Australia trade deal should look like. We said that trade unions should be in the room to provide expertise from across different sectors about the kind of protections that workers need, as well as the agricultural safety standards required. That impacts on workers’ conditions, and has to do with workers not being exposed to unsafe chemicals and unsafe procedures. We said that unless trade unions were in the room, we would not get the outcomes that workers needed.
The Government made a lot of positive noises about trade unions being included in the negotiations, and last September, the then International Trade Secretary, Liz Truss, said that the trade unions would be included in their trade advisory groups, which are consulted on the text of trade negotiations. We were not given those seats, and we were not consulted on the text of any of the UK-Australia trade deal as it was being negotiated. As a result, we have a trade deal that does not have adequate enforcement mechanisms and has very weak commitments on workers’ rights; there is only a reference to the International Labour Organisation declaration, not to the fundamental conventions. The terms of the deal refer to listing for services, which, in common with the CPTPP, will expose part-privatised services to being locked into that privatisation. The deal also has very problematic provisions on data liberalisation, which could mean that workers’ data is not properly protected. It could allow for that data protection to be challenged as a barrier to cross-border flows of data.
We have ended up with a deal that is completely inadequate and threatening, from a workers’ rights point of view, and from the public point of view, because we did not have engagement with that deal. As I said, that is also the case with the UK-New Zealand deal. In fact, we have not had input to any of the trade deals that the Government have negotiated to date. We really want a change of direction; we want trade unions consulted, as they are in other countries, such as the US; there, they are routinely consulted during trade negotiations. We want Parliament to be given a full say, and to have the ability to debate and vote on any trade deal brought before the House.
The Chair
Thank you. We have a little bit more time than we expected, but we also have quite a few questions to get through, as I am sure colleagues will be pleased to hear.
The Minister of State, Department for International Trade (James Duddridge)
Q
Rosa Crawford: I understand that there can be a debate, but that it is much more difficult for the regulations to be voted down, and that a debate is not guaranteed. There must be an active initiative to pray against the regulations to create that debate. That is much less likely to happen. Such a number of SIs come through that it is quite difficult to trigger a debate on each one and vote against them. Full democratic scrutiny is much harder to achieve under that process than through primary legislation.
The Chair
The supplementary point was made, and a supplementary supplementary point is now on the record as well, so I think we will move on.
Drew Hendry
Q
I would like to ask Ms Crawford a question that I have asked others, and it is very much on the theme of what you have been talking about. You have said that questions have not been answered on jobs, climate change, workers’ rights, environmental considerations, and indeed the correct way to spend public money. What is your view of the fact that implementing legislation is being introduced on the New Zealand FTA before Parliament has had the opportunity to debate it under the CRaG provisions?
Rosa Crawford: We believe, again, that there is a deficit of democratic scrutiny. Much more parliamentary scrutiny should have been possible throughout those negotiations, as well as the negotiations on the UK-Australia FTA. The International Trade Committee has not been consulted on the text of that agreement as with UK-Australia, and there has not been the possibility to have a proper debate about the agreement before it is implemented, as you say. We are extremely concerned about that process and very worried that the Government will again try to push this through Parliament without having the proper debate required. Obviously, the negative resolution procedure will apply there, and it means that unless there is a resolution against, which can only delay the agreement for 21 days, it will become law. It is going to be very difficult for that process to be triggered by parliamentarians, so we are very concerned about the approach taken with UK-New Zealand as well
Lloyd Russell-Moyle
Q
I have asked people about the scope of the secondary legislation that the Secretary of State can lay down. In regard to the trade deal, the scope is slightly wider than “must”; it is currently phrased as “may”. Do you think that the scope is correct at the moment, or should it apply only to things that the Government are legally required to bring forward under the trade deal?
Rosa Crawford: Yes, we are concerned that the scope is very broad. As has been said by you and a number of members of the Committee, the negative resolution procedure makes the process for scrutiny and debate, and for full democratic—[Inaudible.] Using “may” terminology, rather than what the Government are legally bound to implement, introduces an element of concern that there might be a whole range of things brought in through this legislation that are not strictly required to be brought in, and that could be problematic because this Government have not suggested they are going to take an approach that is about protecting social standards and ensuring that social criteria are indicated in public procurement. We are therefore worried that there might be additional measures that would allow for further liberalisation of the public procurement processes, and for businesses that do not respect workers’ rights to be awarded public money. That would completely undermine the standards, so we are very concerned about the broad drafting of the Bill.
Lloyd Russell-Moyle
Q
Rosa Crawford: We would strongly support the inclusion of such a provision because, as I say, it is essential to consult trade unions on the provisions in all parts of the trade agreement. On public procurement specifically, we need consultation with the unions to ensure we have the requirements there so that international labour standards and environmental standards are upheld, and that we pursue public objectives such as reducing inequalities through public procurement. That consultation with trade unions and parliamentarians is really important. The International Trade Committee is an important Committee that should be consulted, because there is expertise there on the public procurement provisions; then maybe other Committees that are relevant and have an interest should be consulted. Having that requirement for consultation with MPs would be a welcome addition to the Bill.
Bill Esterson
Q
Rosa Crawford: Yes, that is correct. With both the UK-Australia and the UK-New Zealand trade agreements, you have a weak labour chapter that makes reference only to the ILO declaration, rather than a requirement of fundamental international labour organisation standards respected by both parties. That is an issue in Australia and New Zealand because, despite the fact they both have progressive Governments, neither has ratified all the fundamental ILO conventions. New Zealand has not ratified the fundamental conventions on minimum age, health and safety, or freedom of association, and Australia has not ratified the fundamental conventions on minimum age, and health and safety.
Without that base of fundamental rights, there can be potential for a pressure on rights to lower here, as businesses take advantage of the market access they can get through the UK-Australia and UK-New Zealand trade agreements to places where they can potentially respect rights less. That could pressure rights to be lowered here. You do not have a labour chapter that has high standards, requirements and rights, and it has an ineffective enforcement mechanism that requires a proven effect on investment and trade, which we think will be difficult to meet.
There are similar provisions in the CPTPP labour chapter, despite the fact that CPTPP contains countries that are egregiously breaching labour rights—such as Vietnam, where trade unions are banned, as well as Brunei. We have not seen the CPTPP labour chapter being used at all. To us, those kinds of provisions are ineffective when they are included in a trade agreement, so it is concerning that the trade agreements we have with Australia and New Zealand do not have those effective provisions in place for labour standards. It sets a concerning standard for trade agreements we might sign with future partners, particularly as the Government are considering signing trade deals with places where labour rights are much worse, such as Gulf states, India and Israel.
The direction of travel is concerning in Australia and New Zealand. The inadequate protections around environmental standards also have an impact on workers’ rights; allowing produce with lower environmental safety standards to be imported into the UK potentially exposes workers here to more dangerous chemicals and other production methods that impact on workers’ safety and protection. We are concerned about the approach taken in both agreements.
Gareth Thomas
Q
Rosa Crawford: No. We have just had several pledges from successive Secretaries of State for International Trade. Liz Truss, when she was Secretary of State, had a meeting with our general secretary, Frances O’Grady, in which she assured her that unions would be included on these trade advisory groups. As I say, that was in September 2021.
Then our general secretary had a series of meetings with Liz Truss’s successor, Anne-Marie Trevelyan, including a meeting that also included the US trade ambassador Katherine Tai. She also made the pledge that trade unions would be included on these trade advisory groups. After that meeting, she appeared before the International Trade Committee in April this year, where she said that she hoped that trade unions would be included on the trade advisory groups as soon as possible, but we still have not seen any sign of that.
We hope that the new Secretary of State for International Trade will make good on that promise. We have written to Secretary Badenoch to request that the Government fulfil their pledge to include trade unions on the trade advisory groups, but we still have not seen anything. We are surprised and concerned that we have not seen progress in over a year since the Government pledged to include unions in the group. As I say, the outcomes are that we are getting trade agreements that are undermining workers’ rights, and new trade talks are being launched with really serious implications for workers’ rights with countries such as Israel, India and the Gulf states.
Gareth Thomas
I do not know whether it is in order, Chair, but to save time for the Committee next week, I wonder whether the Minister might want to reassure the TUC representative that the Secretary of State will grant access to the TUC in the future. It would save a bit of time next week if he were willing to give that pledge.
The Chair
I am very grateful for that very kind offer from the shadow Minister, but it is not for the Chair to adjudicate on what the Minister may or may not say in the future. I am sure that if the shadow Minister raises it next week, he can hear it directly from the Minister.
If there are no further questions, I thank Rosa Crawford for her time, and for spending a little more time with us than advertised. We very much appreciate it. Thank you very much indeed.
Rosa Crawford: Thank you.
The Chair
We will now hear oral evidence from Miles Beale, chief executive officer of the Wine and Spirit Trade Association, who is joining us via Zoom. This session will last until 4.30 pm. May I ask the witness to introduce himself for the record? Thank you for being prepared to join us slightly earlier than advertised; we are very grateful. Over to you, sir—[Interruption.] I think you are on mute. [Interruption.] We still cannot hear you. I think we will suspend the sitting while we iron out some of the technical difficulties.
The Chair
Yes, we can hear you loud and clear.
Miles Beale: Fantastic. Thank you to my team, and apologies for that technical issue. We ought to have got used to it by now, but I am afraid that every now and then it defeats us.
Good afternoon, my name is Miles Beale. I am chief executive of the Wine and Spirit Trade Association. We have approximately 350 all-UK members. All our members are involved in buying and selling, importing and exporting, or advising on the sale of wines and spirits in the UK market.
Gareth Thomas
Q
Miles Beale: I think there is a small difference between the two deals, in any event. From a wines and spirits point of view, there was—still is—a low tariff that the deals are getting rid of in both cases: a 5% tariff for exports and imports in either direction. Obviously, it is of benefit to consumers and businesses in both countries when those fall away. That is pretty straightforward—fairly simple.
I think we see an improvement on the Australian trade deal in the New Zealand one, because the New Zealand deal includes an annex and has a bit more of a dynamic element to it. The wine and spirits annex will allow us to have conversations over time, and improve on the deal that is already there. That was not available as an annex in the Australia free trade agreement.
There are a couple of things that we were expecting to be able to get out of the New Zealand deal that we are not yet able to get out of the Australian one, particularly around the wider variety of wines and spirits being available on both markets, and better traceability and brand protection, particularly for spirits. There is a distinction you can draw between the two deals, and you can see some progress being made; the New Zealand deal is slightly better than the Australian one.
Gareth Thomas
Q
Miles Beale: Yes, in general terms that is true. There was an effort to get the Australia deal done quickly. You could say rushed; one person’s rushed is another person’s achievement in a shorter period of time. We were keen to support a deal that got over the line. There has been a bit more time for the New Zealand deal and it is probably slightly simpler to do, but the New Zealand deal also benefits from being the second one after a 42-year gap. I think that, certainly on the UK side, officials were in a slightly better position and knew a little bit more.
Gareth Thomas
Q
Miles Beale: Yes, I think we would share that view, particularly for our exports. Let us take British gin as an example: we think it has significant cachet, and we particularly see smaller gin brands doing very well in the Australia and New Zealand markets. At the Wine and Spirit Trade Association we have organised our own trade missions for some of our small businesses. We normally take a group of them to markets that we think are likely to prove fruitful for them. We have not been able to do Australia and New Zealand, partly because they are geographically very far way and are smaller markets than some of the others we have chosen to go to, such as parts of the US and Japan.
We would like to see significantly more support for British SMEs that have export potential. It is one of the things we have talked to the Department for International Trade about quite a few times. Anything we can do to bring down the costs of entry into markets where we think the products would be successful would be a good idea. We know that other countries do that to a greater or lesser extent. One of the opportunities we see in the next few years is speeding up some of our SMEs getting into exporting wines.
Gareth Thomas
Q
Miles Beale: It is not quite as simple as that. The Department has certainly listened to what we have had to say. In practical terms, we get some support for our SMEs going into market from the posts—the embassies and high commissions in the markets that are out there, usually in capital or larger cities. What we have not had is any financial support. To be honest, that is the thing that would make the greatest difference for small businesses in particular.
Occasionally, there are large food and drink festivals that the DIT—or, in some cases, other Departments such as the Department for Environment, Food and Rural Affairs—encouraged us to point our members towards. In truth, it is rather hard to appear as a small British gin brand or a new sparkling wine brand next to different types of British food and drink where there is probably a more established market, so that tends not to work so well for our members. We would need something more tailored to get the results we need.
Gareth Thomas
Why do you think the financial support has not been provided? Is the Treasury just not interested, or does it prefer to concentrate on other areas of support?
The Chair
Order. Forgive me; we need to keep within the scope of the Bill. I am sure that the shadow Minister will have ample other opportunities to raise such issues, but today is not the occasion. Mr Beale, you do not have to respond to that.
If there are no other questions, I thank our witness for taking the time today, and I reassure him and his office that Zoom issues happen to us all. It is no problem at all. We are glad that we were able to hear your responses and evidence today. Thank you for your time; it is much appreciated.
Miles Beale: Thank you very much.
Ordered, That further consideration be now adjourned. —(Mark Jenkinson.)
Trade (Australia and New Zealand) Bill (Third sitting)
Tuesday 18th October 2022
(1 year, 6 months ago)
Public Bill CommitteesRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 18 October 2022 - (18 Oct 2022)
The Chair
Before we begin, may I make a few announcements? Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk. Please make sure your phones and other electronic devices are switched to silent mode.
We will now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. Please note that decisions on amendments do not take place in the order they are debated, but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates.
Decisions on each amendment are taken when we come to the clause to which the amendment relates. A Member who has put their name to the leading amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any of the amendments within that group. A Member may speak more than once in a single debate.
At the end of a debate on a group of amendments, I shall call the Member who moved the leading amendment again. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or to seek a decision on it. If a Member wishes to press any other amendment in a group to a vote, they need to let me know.
Clause 1
Power to implement government procurement Chapters
Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move amendment 19, in clause 1, page 1, leave out subsections (2) and (3).
It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate the Minister on being knighted. [Hon. Members: “Hear, hear!”] It is a pleasure to see him and, indeed, his fellow members of the anti-growth coalition in their places this morning.
Labour Members had hoped that the Bill would provide an opportunity for a much bigger debate on the entirety of the trade agreements with New Zealand and Australia. Sadly, however, the way in which the Bill has been drafted means that it is only the procurement chapters of those agreements that we will be able to debate. I shall illustrate why this is a restrictive approach. There are more than 2,500 pages in the Australia deal—a member of my staff has counted them—but only 30-odd of them are on Government procurement. The New Zealand trade deal has fewer pages, but there are more than 500 of them, with only 30-odd pages on Government procurement. Our opportunities to scrutinise are, therefore, far more restrictive than the House would have liked. None the less, we will raise one or two of the concerns that have been put to us about the Government procurement chapters of both deals.
I should stress at the outset that we welcome increased trade with Australia and New Zealand. They are key allies led by strong, progressive, effective leaders in Anthony Albanese and the incomparable Jacinda Ardern. Their legal systems and value systems are similar to ours, and it makes enormous sense to deepen the economic ties between us.
Our concerns about the procurement chapters arise from the fact that the now Prime Minister appeared to be in a bit of a rush when negotiating both deals. Perhaps one or two mistakes were made and a deal of insufficiently high quality was secured. Members will remember the context in which the Australia deal in particular was negotiated. The flaws in the deal that the now Prime Minster had negotiated with Europe were becoming very obvious, and Ministers were clearly desperate to divert attention from them by negotiating a deal with Australia.
Amendment 19 seeks to delete subsections (2) and (3) from clause 1. Those subsections allow Ministers to extend specific provisions that are included in the UK-Australia and UK-New Zealand agreements, and which go beyond provisions of the Government procurement agreement to all covered procurement. They also bring procurement within the scope of the GPA and other UK trade treaties. These GPA-plus provisions of the UK-Australia free trade agreement could be made part of domestic law and would apply to all suppliers, not just those from Australia. On the GPA-plus elements of FTA clauses relating to estimating values of contracts without a fixed term, the UK-Australia FTA requires that all contracts with unknown value are deemed as covered procurement. Other examples of the so-called GPA-plus provisions that this clause makes available to all suppliers include the advertisement of procurement opportunities and the termination of awarded contracts.
Our amendment seeks to prevent Ministers from quietly slipping into law measures that they have negotiated as part of the trade agreements with Australia and New Zealand, in particular the procurement chapters, that they suddenly think should apply generally. The specific concern that has been brought to our attention relates to contracts of unknown value and length.
Let me go into more detail, to help the Minister and the Committee to understand those concerns. Under current UK rules, contracts of an unknown duration or without a fixed term are advertised only if their estimated cost over 48 months exceeds the relevant value threshold. Under the free trade agreement with Australia, those contracts always have to be advertised. To give effect to the FTA, our domestic UK law will have to be reformed as a result of this Bill.
That surely raises two issues. First, more contracts will have to be advertised, and that will benefit not only Australian tenderers but all tenderers in countries that are members of the Government procurement agreement. That is because the contract opportunity will be advertised online and will be in English. I will explain shortly why that raises concerns. Secondly, domestic legislation is being reformed as a result of free trade agreement, which gives rise to the question whether a trade discussion is the most appropriate way in which to address reforming UK contract law. It certainly gives rise to the question of how much consultation Ministers have had, not only across Government but with business, industry and others who might be affected.
Why does the Minister think it is a good idea to extend to very other member of the GPA the so-called GPA-plus provisions negotiated as part of the Australia trade deal? That gives rise to an obvious question: does it mean that every other member of the GPA will offer us the same arrangement?
I have been describing the concerns in technical detail, so let me give some specific examples to bring the concern to life. On contracts of unknown value, a contract for office printing—a pay-as-you-go service—would come under the scope of the concerns put to us. Let us imagine that a local authority did not want to buy or lease printers, but rather preferred an all-inclusive service comprising availability of equipment, maintenance, help-desk services and supply of paper and other consumables. The contractor would be remunerated on a per-printed-page basis—a pay-as-you-go price. Let us say that the contract was for five years and that the contracting authority—a council on its uppers, perhaps, one like Northamptonshire that had either gone bust or very nearly gone bust—had provided an estimate of the average number of pages printed over the last few years, so as to allow tenderers to price their offers up. However, the contracting authority would not know the total value of the contract at the time of advertising because future consumption could vary.
We have been given similar scenarios that could emerge from cloud computing services. In the cases that I have described, regulation 6(19)(b) of the Public Contracts Regulations 2015, which apply at the moment, requires the contracting authority to calculate a likely monthly value of the contract and multiply it by 48 months. If that estimate exceeded the relevant threshold, which is currently just over £213,000, the contract would have to be advertised. If the estimate was below that threshold, it would be possible that no advertisement was required. If the contract was estimated at below £25,000 in value for the next 48 months, there would be no obligation to advertise the contract opportunity at all. The contract could be directly awarded by the local contracting authority, perhaps following a request for tenders to two or three local small and medium-sized enterprises.
Conversely, under the requirements of the UK-Australia free trade agreement’s procurement chapter—paragraph 9 of article 16.2—given that the total value of the contract over its entire duration is not known in the example I gave, there would be an obligation to advertise the contract. Surely that would reduce the chances of local small and medium-sized businesses getting the contract. There seems to be a clear negative potential effect for SMEs that seems at odds with the Government’s declared policy of boosting SME access to public contracts. Paragraph 13 of the national procurement policy statement refers to that, and paragraph 10 notes as a strategic priority the need to improve
“supplier diversity, innovation and resilience”.
It explicitly refers to the goal of creating a more diverse supply chain to deliver the contracts that will better support start-ups and small and medium-sized businesses in doing business on public sector contracts.
The Minister will remember the clear evidence we heard last Wednesday from Lucy Monks, the Federation of Small Businesses representative, who said:
“Small businesses have problems accessing public procurement in the UK as it stands, because they find it technically difficult. They obviously do not have the ability to take the same kind of risks as larger businesses. They might not have the technical departments, lawyers or whoever might support them through that process.”
She went on to spell out, in even starker terms, that
“small and medium-sized enterprises are basically underserved in the UK procurement processes”.––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 5.]
SME representatives are already expressing serious concerns that the people they represent are struggling to win sufficient UK Government contracts. It appears that under clause 1(2) and (3), Ministers are about to make the situation even more difficult for SMEs. That is particularly the case because it is not just Australian and New Zealand businesses that might want to try to win these contracts in future; every other member of the Government procurement agreement could also bid for these contracts.
Although it might seem unlikely that GPA members such as firms based in Hong Kong would want to bid for contracts of unknown value, a business based in the Republic of Ireland, which is part of the GPA, could conceivably think, “Well, now we’ve got an opportunity to bid for a contract in Northern Ireland, Scotland or Wales. It is within the realms of possibility that we could win that contract and offer it for our purposes.” I gently emphasise to the Minister that he needs to explain not only to the Committee but to SMEs across the UK, which are at the moment able to secure contracts of unknown value and length, why he thinks it is in the interests of our country to make it more difficult for them to do so.
If the printing example has not helped the Committee enough, let me give another example from a different economic sector. The Minister will understand just how important procurement is as a means of supporting the UK’s food and agricultural industries. To be fair to the Prime Minister, even she understood that role very clearly when she was in a previous role as the Secretary of State for Environment, Food and Rural Affairs. She published a plan for public procurement, which was designed to help SMEs to win contracts, especially SMEs from the food and agricultural sector.
Public procurement in this type of situation could sometimes involve the direct delivery of agricultural products, perhaps bought in bulk by local government, but that is less likely than the outsourced provision of meal services for schools or the NHS. With that in mind, tenders for meal services can and increasingly tend to include supply chain considerations that can support local agricultural industries through criteria in the contracts that schools and local NHS hospitals set. That involves shortening the supply chains, perhaps as a way of reducing carbon footprint. Again, that is something that one would have thought we all wanted to continue supporting.
Contracts for meal services can be very difficult to price at a tender stage, especially if there is an element of price competition, which is the norm. It might be surprising that school meals are very difficult to price. However, my own offspring often change their minds over whether they want a school meal or a packed lunch, and I imagine that that scenario is mirrored in families across the country. That makes it difficult for those who are setting the tender terms for meal services to be able to guarantee a set amount of products.
The Minister of State, Department for International Trade (Sir James Duddridge)
I followed the hon. Gentleman’s printing example, in the main, but on school meals, is he just being illustrative? I cannot quite see how the meals that my children have at their school might be contracted out and delivered from Australia or New Zealand.
Gareth Thomas
Let me come on to the example. I am not saying that at all; absolutely, it is highly unlikely that an Australian firm will decide that it wants to rush over and provide schools in Southend or Harrow with meals. That is difficult to see. But it is not difficult to see that a business based in Ireland might think it could provide services in Northern Ireland. It is also not beyond the realms of possibility that it might think it could offer the same terms in Scotland and Wales, such is those countries’ relative proximity.
The Minister is saying that, under the agreement that the Government have negotiated, the opportunity to advertise contracts of unknown value will be extended not only to Australia and New Zealand but, effectively, to every GPA country. Businesses based in the Republic of Ireland will be made aware of contracts across the UK, and more easily able to bid for them as a result, making it that little bit more difficult for small and medium-sized enterprises based in Northern Ireland, or in Scotland or Wales, to win those contracts.
The other concern that has been put to me in relation to these examples is that the activation of the FTA could generate significant legal uncertainty about the compatibility of supply chain considerations that prefer UK produce over Australian produce, especially where the Australian produce has been given extensive market access under other chapters of the FTA. The practical impact of the duty to advertise would be a risk of a reduction in the likelihood of UK-based SMEs, offering UK-grown produce, winning the contract. The Minister might think that is a good thing, but given the difficulties that SMEs have in winning contracts for Government procurement, why has he made the judgment that all contracts of unknown value should be advertised online and in English, and therefore available to all members of the Government procurement agreement to bid for? Why are we making it that little bit more difficult for British SMEs to win contracts?
I want to ask the Minister some other questions related to the clause, and in particular to the issue of contracts of unknown value and length having to be advertised online and in English. What consultation did his Department have with SMEs about the clause? Is it the case that we were rule takers, and the Australians insisted on its inclusion in the FTA? Given that the benefits will extend to every other GPA country, has he had any discussions with those countries about whether they might now offer the same terms to the UK? What assessment have the Government made of the impact of contracts of unknown value and length being advertised online and in English to all GPA members? What impact does he think that will have on the desire of all of us to see more buying of British produce, goods and services? We on the Labour Benches are strong enthusiasts for “buy British” campaigns, so it would be good to hear the Minister’s assessment of the damage to that aspiration.
I briefly flagged the issue of legal uncertainty. The Minister will know about, and may be directly involved in, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership accession talks. Does the CPTPP procurement chapter include similar provisions? If we accede to the CPTPP, that will trump the Australia and New Zealand FTAs; businesses that have got used to operating in this new context might suddenly find there is a whole series of new rules they have to adjust to very quickly, and may not realise that the Australia and New Zealand FTA provisions that were negotiated under the procurement chapter have been jumped as a result of our accession to the CPTPP.
I am interested to hear the Minister’s responses to the concerns that have been put to us about the extension beyond Australia and New Zealand of this series of provisions. No doubt they were negotiated with the best of intentions, to improve opportunities for Australian and New Zealand businesses here, and for UK businesses in Australia and New Zealand, but they might—inadvertently or otherwise—have a series of other consequences that could damage the ability of British SMEs to win procurement contracts here.
The Chair
If colleagues would like to remove their jackets, they can—it is rather warm in here. I remind colleagues to put their electronic devices on silent. I call Bill Esterson.
Bill Esterson (Sefton Central) (Lab)
It is always a pleasure to see you in the Chair, Mr Pritchard. I was struck by a number of points that my hon. Friend the Member for Harrow West made about the fact that the Bill is about procurement alone, and about the way that it has been drawn up. He said at the start of his speech, in talking about the then Trade Secretary, who is now the Prime Minister, that a few mistakes were made in negotiating the trade agreements—that things were done in a rush. In listening to my hon. Friend make the case for the amendment, I wondered whether that is becoming something of a habit of this Government. It was not just the way the agreements were negotiated but the way that the Bill was brought forward—and just last night, of course, the Prime Minister apologised to the nation for the mistakes that she made as head of the Government in the recent mini-Budget and the disastrous effect that it had on the economy.
The clause gives Ministers the powers to put into operation what my hon. Friend and others have referred to as GPA-plus, with contracts of unknown value, and more contracts being advertised, to benefit not just companies from Australia and New Zealand but companies across the world whose countries are GPA members. I found what my hon. Friend said about the—I assume—unintended consequences extraordinary. I hope we all agree that if they are intended consequences, that would be a very retrograde step, because it would be deliberately harmful to small and medium-sized businesses in the country. As we heard from the Federation of Small Businesses and the other business groups that gave evidence to the Committee last week, it is already very difficult for smaller firms to get contracts in this country. Like my hon. Friend, I hope that the Government genuinely mean it when they say that they are trying to improve the situation for smaller firms bidding for Government contracts.
Government procurement is one of the best ways to stimulate the economy and push funds through smaller firms, which are a source of growth, of much innovation and creativity, and of job creation across our country. That is an incredibly important part of what any Government should offer if they want success, and it is at the heart of the Labour party’s offer in our industrial strategy and in our plans to make, buy and sell more in Britain. I hope that the Government’s approach to the legislation has not undermined support for small firms.
As my hon. Friend set out, if that has not been considered because the Bill has been rushed, some countries—the example of the Republic of Ireland is a good one, but the same applies to other European Union countries—may see an opportunity to win contracts in the United Kingdom at the expense of UK firms, in particular smaller ones, purely by dint of the fact that they have gained a competitive advantage through very poorly drafted legislation. I fear that that risks making it harder, not easier, for domestic companies to benefit from Government spending.
My hon. Friend was also right to mention the carbon footprint aspect. It cannot make sense for us to move away from the idea that, where it is sensible, domestic firms should win contracts from public bodies and, in building a more resilient, local supply chain and delivering British jobs, should have the best possible advantage. I will add one thing to my hon. Friend’s excellent point about the carbon footprint: in the light of the international situation—we all know that we face serious times because of Putin’s invasion of Ukraine—building greater domestic resilience in our supply chains must be a fundamental part of public policy. Moving away from that, which would weaken supply chains and make it harder for small firms in this country to win contracts from our own Government, sounds to me like the opposite of improving resilience and supporting the economy around the country.
I share my hon. Friend’s concern that the consequence of subsections (2) and (3) would be to weaken potential support for UK businesses and the jobs of the people who work in them. For those reasons, I agree with him that we should support amendment 19 and remove those subsections from the Bill.
Sir James Duddridge
Thank you very much, Mr Pritchard. I thank the Members of His Majesty’s official Opposition for their kind words.
The debate on amendment 19 has been useful and wide ranging. I am working on the assumption that we will not have a clause stand part debate, so with your permission, Mr Pritchard, I will speak widely and address all the points made by the shadow Minister—the hon. Member for Harrow West—and the hon. Member for Sefton Central. I will address the shadow Minister’s points more generally before moving into the detail of amendment 19.
The Federation of Small Businesses said that it had been consulted widely and was happy with what the Government have done on this process. The FSB is also part of various strategic advisory groups and trade advisory groups, so, structurally, it is wedded in with the Department on all issues, including procurement.
Sir James Duddridge
I look forward to that.
There were some wide-ranging comments about the Bill. This is a very focused Bill, and I will focus on the procurement element. The Government did not produce a focused Bill by design; we focused the Bill on what there was a legislative need to change. Everything else is done through statutory instrument and there has been wide consultation on the deal overall.
There was talk of GPA-plus. It is in the British interest to have many people tendering, beyond Australia and New Zealand, and to have transparent information. There was also a question about CPTPP, on which I think there is a bit of misunderstanding.
Gareth Thomas
I intend to come to some of the tensions between competition and “buy British” in our next group of amendments, but let me give the Minister the example of Essex County Council. He seems to be saying that it is fine for SMEs in Essex to face greater competition if they want to win contracts of unknown value and length as a result of the council’s having to advertise such contracts online and in English, even though we have not secured similar pledges from other GPA countries. Those small and medium-sized businesses that might hope to bid for a contract in, say, France or Ireland do not have the same advantages, as Ministers have not achieved that. Why give that bit of negotiating leverage away at this stage?
Sir James Duddridge
I think Essex County Council, which is Conservative-run, would think competition is good. The more people applying, whether they are from Essex, Kent or New Zealand, the better. If that provides better services procured with our money—taxpayers’ money—that is fundamentally good. Clearly, local businesses and SMEs have a competitive advantage because there is less transport and a closer understanding of the marketplace; there is a plethora of reasons why that would work. Competition is also good for driving change. If an SME or an organisation in the UK is not competitive or does not have exactly the right product, by not getting that one contract it will try to develop and improve. That is how we grow as a society—but I am straying slightly from the provisions of the Bill.
Let me return to CPTPP. There are some fundamental points here. The Australia and New Zealand trade deals do not die once CPTPP starts, for two reasons. First, they will remain in place because they will be the way we judge what has happened before; deals done in the period before CPTPP will be judged on the Bill. Secondly, the deals will sit alongside CPTPP, in that some of the provisions in the Australia and New Zealand trade deals will be better than those in the deal with the 11 nations in CPTPP, and we would not want to remove those benefits that we have given to our Antipodean colleagues.
Gareth Thomas
The Minister is describing an interesting context—the idea of the CPTPP sitting alongside the Australia and New Zealand free trade deals. Specifically on the issue of contracts of unknown value and length, is that provision contained within the CPTPP as well? We will be a rules-taker. That is the evidence that has been put, certainly to me, in terms of the procurement chapter of the CPTPP. Is it the same provision? I gently suggest that if it is going to be in the CPTPP, with largely the same wording, procurement experts have put it to us that we risk having some legal confusion between the procurement chapter of the CPTPP and the procurement chapters of the Australia and New Zealand FTAs.
Sir James Duddridge
The wording is in line with the CPTPP. Australia, New Zealand and ourselves are conscious that while this deal is in all three nations’ interests, it is also a potential stepping stone to a bigger deal. Throughout the negotiations we, on all sides, thought very carefully about what will be replicated in the new trade deal—what goes through—and also what we wish to retain in our special relationship with those two nations. As the hon. Gentleman knows, trade is always evolving. These deals contain some new and exciting provisions. I will focus my comments on amendment 19 specifically and pick up on thematic issues later, if the hon. Gentleman probes me on them.
I reassure the Committee that the scope of these powers is only to make regulatory changes that are absolutely necessary to implement the procurement chapters. Subsections (2) and (3) of clause 1 are there to ensure that the regulatory changes can be made. Some suppliers do benefit from a separate set of regulations to suppliers from other nations, including the UK. These provisions simply ensure that any supplier participating in a tender that is covered by the agreements do so under the same rules and processes. The amendment would fundamentally undermine the bringing forward of the deal that has been done with Australia and New Zealand in relation to procurement. I hope I have provided some reassurance to the Committee.
Gareth Thomas
Will the Minister explain how the provisions in the procurement chapter of the Australia and New Zealand FTAs sit with the Procurement Bill, which is going through Parliament at the moment, and whether this requirement to advertise contracts of unknown value and length is also touched on in that Bill? If so, there is a risk of confusion, not just as we accede to the CPTPP, but also from our own domestically introduced procurement legislation.
Sir James Duddridge
The Opposition Front-Bench spokesman is tempting me to speak to two Bills under one. When the Procurement Bill goes through, this Bill will not be needed. The trajectory the Government are taking is consistent across the board, but it would be wrong for me to debate a future Bill. We should focus today on what is before us, rather than on what might happen. It is still an active debate. That Bill is not even starting in this House; it is starting in the other place. Therefore, I hope the reassurance I have provided are satisfactory. I ask the shadow Minister to withdraw the amendment.
Gareth Thomas
I am grateful to the Minister for his reply. Although I am not 100% convinced by the argument that he advanced, this is a probing amendment and we will reflect on what he said.
We cannot find any evidence that there was a consultation with the FSB or anyone else on the impact of extending contracts of unknown value and length and on the requirement to advertise them online and in English to every other country with which we have a trade agreement, notwithstanding the Minister’s argument and the evidence we heard in Committee that there have been consultations between the Department for International Trade and the representatives of small and medium-sized businesses. I wonder, therefore, whether this so-called GPA-plus provision has had quite the attention it merits.
Bill Esterson
Did my hon. Friend notice that the Minister did not actually address one of the central points that he and I raised, which is that the opportunity would be widened to all countries that are signed up to the GPA? That causes great concern about the loss of contracts to businesses in this country.
Gareth Thomas
To be fair to the Minister, he sort of touched on the issue in very loose terms. Perhaps my hon. Friend may be reassured that amendment 5, which we are inching towards, would require much more consultation down the line. Perhaps that is a way to try to improve things for SMEs across the UK.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Is not the big problem—my hon. Friend rightly pointed this out earlier, but the Minister did not really reflect on it—that we are giving away negotiating elements for future deals? Opening this up to all GPA countries means that no GPA country will need to put it on the table. We have opened up our markets for them, and they have not opened up their markets—fantastic. We have cut off the nose to spite the face of all our small and medium-sized businesses, but other countries have not acted similarly. If we do this repeatedly with all areas of trade, in the end we will have unilaterally opened up all our borders but received no benefits for our small businesses. That is the basis of the Conservative negotiating strategy, and it is a disaster, is it not?
Gareth Thomas
I appreciate that Conservative Members will be focusing on other mistakes that the Prime Minister has made, but my hon. Friend is absolutely right. One wonders whether, in the rush to get a deal with Australia, Ministers essentially decided just to give up their negotiating leverage on these issues and hoped to push it through quietly without too much attention. None the less, we have aired these issues. We will reflect on what the Minister says, and we may well come back to this matter on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Ms Anum Qaisar (Airdrie and Shotts) (SNP)
I beg to move amendment 1, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) will not come into force before the date on which the procurement Chapters come into force.”
The amendment is pretty self-explanatory. It is about the timing of entry into force. As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey and I have mentioned, the Scottish Government have consented to the intent of the Procurement Bill. The UK Government’s procurement provisions in the Procurement Bill will supersede this Bill’s procurement provisions when it receives Royal Assent.
The draft Bill was not cleared with the Scottish Government in advance of its introduction, while the drafting of key elements of clauses relating to cross-border procurement—which directly engage the legislative consent process—were not cleared with the Scottish Government until the day before the Bill’s introduction. There has therefore been no meaningful opportunity for the Scottish Government to engage on the specific drafting of provisions before their introduction. It is key that we pass legislation that is thorough. That is why such amendments as this are so important. I encourage colleagues to consider the amendment.
Sir James Duddridge
It is good to see the hon. Lady in her place. I think it is the first time we have served in Committee together—no doubt, not the last time—and I welcome her to her place.
I also welcome her probing amendment—I assume it is probing, forgive me—but it is unnecessary. Australian and New Zealand suppliers will not gain the benefit of the procurement chapters until the agreements have entered into force, in accordance with the existing framework for domestic legislation.
By way of example, the text of the Australian FTA states that the default date of entry into force of the FTA is 30 days after the date on which notifications confirm completion of domestic procedures on all sides, although both parties may agree otherwise. If for whatever reason we made it 31 days or 29 days, and that was acceptable to both parties, the change could be made to allow for all eventualities.
I argue that the amendment is not necessary and that, were we to pass it, it would remove the flexibility of that small change. I welcome the amendment, but ask the hon. Lady to withdraw it.
Gareth Thomas
The hon. Member for Airdrie and Shotts rightly raises an important issue about the linkages between the Procurement Bill and the measures in this Bill. One wonders why Ministers could not get their act together and get that Bill through both Houses of Parliament first. That would have been the sensible thing to do, rather than introducing specific and narrow legislation to implement the procurement chapters of these two free trade agreements, even though they will be completely usurped by the Procurement Bill coming down the line. Does the Minister have any insight into why there has been such a delay in getting the Procurement Bill through both Houses? Is it the chaos in the Conservative party? Is it that there was a need for more consultation with business about the Bill? Why has there been such a delay in the progress of the Procurement Bill?
Sir James Duddridge
The Procurement Bill is in the House of Lords. It has still not reached us. I do not wish to be disparaging about the House of Lords, but had the Bill started here and were the hon. Gentleman, the hon. Member for Airdrie and Shotts and I on the case, no doubt we would have sorted it earlier. I ask the hon. Lady to reflect and to withdraw her amendment.
Ms Qaisar
It will come as no surprise to the Minister that the SNP will disagree with what he is saying. However, we are content to reconsider the amendment and will perhaps bring it back at a later stage. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Ms Anum Qaisar
I beg to move amendment 3, in clause 1, page 1, line 15, at end insert—
“(3A) Where the appropriate authority is a Minister of the Crown, regulations under subsection (1) may not be made until the appropriate authority has consulted the relevant Scottish Ministers in relation to any matters affecting Scotland.”
The Chair
With this it will be convenient to discuss the following:
Amendment 4, in clause 1, page 1, line 15, at end insert—
“(3A) Where the appropriate authority is a Minister of the Crown, regulations under subsection (1) may not be made until the appropriate authority has consulted the relevant Scottish Ministers in relation to any matters affecting farming in Scotland.”
Amendment 5, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not be made before completion of such public consultation as the appropriate authority considers appropriate with the relevant—
(a) Scottish ministers,
(b) Welsh ministers,
(c) department of the Northern Ireland Executive, and
(d) representatives of the English Regions.”
Amendment 7, in 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.”
Amendment 20, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not be made before publication of an impact assessment setting out the potential impact of the procurement Chapters on—
(a) employment rights and human rights in the United Kingdom, and
(b) climate change.”
Amendment 22, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not be made before publication of an impact assessment setting out the potential impact of the procurement Chapters on—
(a) Scotland,
(b) Wales,
(c) Northern Ireland and
(d) English Regions.”
Ms Qaisar
I should say, Mr Pritchard, that it is a pleasure to serve under your chairmanship.
Amendments 3 and 4, which I tabled with my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey, can be summed up as standing up for Scotland and Scottish farmers on procurement. The Bill fails to ensure that Scottish Ministers have the ability to scrutinise matters of procurement that impact on Scotland. The powers in the Bill are drafted too broadly. They confer too many powers on UK Government Ministers without securing consent from the Scottish Government. That does not appear to be democracy in action.
Scottish farmers are already struggling with energy costs, crops rotting in fields for a lack of pickers, rising fuel costs, the loss of EU farming subsidies, and fertiliser prices spiralling. Experts have spoken about the deal. We heard from the president of the National Farmers Union Scotland, who said that it appears to be very one-sided, with little to no advantage for Scottish farmers. That is heightened by so little having been done to ensure the continuity and expansion of Scottish and British agrifood exports to new and existing EU markets. Scottish interests and Scottish farmers are not expendable.
Gareth Thomas
I entirely understand and agree with the hon. Lady’s concerns about how Scottish farmers have been treated. They must rightly be very angry with the Government. Does she accept that the concerns of Scottish farmers are replicated among Welsh farmers and many farmers across England, for similar reasons? There is a sense that there has been a huge giveaway to Australia and New Zealand by the Government, perhaps because they were desperate to do a deal. The anger is only made worse by, as she rightly alludes to, the cost of living crisis facing many farming communities. Is she also sympathetic to amendment 5, which references not only the concerns that she articulates in respect of Scotland but those of the people of Wales, England and Northern Ireland?
Ms Qaisar
I thank my colleague for his intervention. He is correct that the challenges that Scottish farmers face are the same as those faced by Welsh farmers and farmers from across the four nations. A key point that he failed to mention, however, is that in Scotland over 60% of people voted to remain in the EU, and there is still a lot of anger from Scottish farmers in that regard.
Last week, we also heard from Jonnie Hall from NFU Scotland. He said something that struck me:
“There are clear potential impacts for particular sectors that are already really quite vulnerable in large parts of the United Kingdom, not least in Scotland. I am thinking particularly of the red meat sector and how important that is to the rural economy of Scotland and, indeed, the whole economy. Scotch beef and Scotch lamb are iconic products, but we are not in a situation whereby we can stack it high and sell it low, as it were. Anything that comes along and undermines our position in that respect is clearly going to be a considerable threat—I use that word advisedly—to the viability of agricultural businesses here in Scotland.”––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 32, Q40.]
Concerns have also been raised by the Scottish Cabinet Secretary for Finance and the Economy, Kate Forbes, and the Minister for Business, Trade, Tourism and Enterprise, Ivan McKee. They recommended that the Scottish Government do not give consent for the Bill in its current form. We need to be really careful. The UK Government must not continue on the path of creating delegated powers to implement the Bill.
Amendments 3 and 4 seek to ensure that there are high levels of dialogue and discussion between Scottish and UK Government Ministers. That dialogue would ensure that matters of procurement in Scotland are at the heart of this legislation, crucially protecting the interests of Scottish farmers. In order to support Scottish interests and farmers, I ask Members to please support the amendments.
Dame Nia Griffith (Llanelli) (Lab)
I rise to speak in particular to amendments 5, 20 and 22. I am sure that the Committee will be pleased to hear that in talking about amendment 5 and consultation, which is vital, I will also refer to amendment 22 and the issue of impact assessments, so as not to repeat myself. To avoid excessive repetition, I will give examples based on the Welsh Government, but that will certainly apply to Scottish Ministers, to the Northern Ireland Administration and to regions across England. The issue for us is that here we have a clause that will implement part of a trade agreement in which we would have liked to have seen better consultation and a more nation-specific impact assessment. What we can do here is try to put in appropriate consultation before the legislation that clause 1 will allow is finalised.
It is essential that there should be consultation specific to the nations and regions of the UK for a number of reasons. In the case of Scotland, Wales and Northern Ireland, devolution means that within areas of devolved competence, such as agriculture and economic development, there is increasing divergence in the way that things are done. Indeed, public procurement policies are different, and it is important to see the impact of the implementation of the Bill on each nation.
There may be very different economic profiles for the different nations and regions. In the case of the Bill, what is of particular significance is the relatively greater importance that the production of beef, sheep meat and dairy products has in certain nations compared with the UK as a whole. The same may be said for specific regions of England, for example, the relative importance in Cumbria of the beef and sheep meat sectors. Equally, there can be concerns for a particular region because of its reliance on fishing or a specific industry. To give an example, 70% of agricultural output in Wales is beef, sheep meat or dairy, and 70% of the farmland in Cumbria is for beef and sheep livestock farming, with a further 16% for dairy. The importance of livestock farming in Scotland has just been mentioned by the hon. Member for Airdrie and Shotts.
It is no secret that the farming and food processing sectors are most concerned about the treaties; those are the sectors for which ongoing consultation on the implementation of the treaties and their impact on public procurement is absolutely vital. The Government’s impact assessment singled out agriculture, food and fishing, and food processing, as the sectors that lose out in both the Australian deal and the New Zealand deal, with gross value added down in the Australia deal by £94 million, and in the New Zealand deal by £48 million. Food processing is down in the Australia deal by £225 million, and in the New Zealand deal by £97 million. Obviously, there is real worry about what will happen to our farming industry because that has a massive impact on the guardianship of the local rural community, the family farms, and affects our culture—the Welsh and Gaelic languages.
Regarding the markets, let us take the example that 85% of the beef produced in Wales is consumed in the UK, as is 60% to 65% of sheep meat. There is a question about the impact that the huge and rapidly increasing tariff-free quotas of meat from Australia and New Zealand will have on our own farmer’s ability to sell into the UK markets. While we have mentioned the issue of school meals, it is not necessarily in the public procurement of the finished product, but in the supply chains of ingredients, where we will potentially see Australian and New Zealand products—cheese or meat—displacing UK produce. That is in conflict with some of the devolved nations’ procurement policies, where there is a wish to support the local and circular economy.
Further concerns have been raised. In the New Zealand deal the weights allowed in under the tariff rate quotas refer to the carcase weight equivalent, whereas in the Australia deal the volumes are shipped product weight, which means that they could be used disproportionately for the Australians to send their most expensive cuts, thus challenging the most lucrative part of the market for our farmers. We saw something similar to this during covid: when restaurants were not allowed to open, there was a drop in demand for steaks and higher end meat products, while supermarkets continued to demand the lower value products, and that had repercussions for our farmers and food processing industry.
Bill Esterson
My hon. Friend is making the case very well about the need to involve the farming and agriculture industry in trade agreement scrutiny. Was she struck, like I was, by the comments from Jonnie Hall of NFU Scotland about “retrospective scrutiny” and the fact that this weakened the role of the Trade and Agriculture Commission? Does she share my view that the evidence we heard is exactly why we need the kind of analysis referred to in amendment 7 before the regulations are implemented?
Dame Nia Griffith
I absolutely agree with my hon. Friend. The whole point is that there should have been much better consultation, either directly with the farming unions or by their representatives in the Scottish and Welsh Governments who have raised these points and have very good, close relations with the stakeholder groups in their respective nations. As my hon. Friend rightly says, a number of concerns were raised by the NFU. The whole point of having consultation and impact assessments is that those concerns can be properly documented and we do not rush into the legislation produced by clause 1 and leave people in a more difficult predicament.
Gareth Thomas
Does my hon. Friend agree that one reason why the Minister ought to be tempted by amendment 5 and amendment 22 is that they would give Essex County Council—which is currently Conservative-run but probably not for much longer, given the mess the Conservative party is leaving our country in—the chance to consult directly with small and medium-sized businesses about the procurement chapter deals that have been done in the UK-Australia and UK-New Zealand free trade agreements? As a representative of the people of Essex, he would surely think that that sort of consultation is a good thing that might remedy some of the mistakes that his predecessors have made in this area.
Dame Nia Griffith
I absolutely agree with my hon. Friend. The point is that locally based devolved authorities have much closer contact with the people they represent, so the consultation on how this is working out, what we are going to do next and what the next part of the implementation is must be able to take account of the feelings of those stakeholders on the ground who perhaps feel that they have not had a voice until now.
I pay tribute to officials in the Department for International Trade and the Welsh Government for their very positive and professional engagement. Indeed, the Welsh Minister for the Economy, Vaughan Gething, notes that there has been some improvement between the Australia deal and the later New Zealand deal, and I hope that the experience has been similar for colleagues in Scotland and Northern Ireland, and indeed for representatives of local government across the regions of England.
On procurement, the Welsh Government go as far as to say that there may be scope for businesses in Wales to take advantage of the provisions included in the UK Government procurement agreement, and that some Welsh interests in procurement were protected during the engagement with the Department for International Trade. However, Vaughan Gething says:
“I hope we continue to see improvements in the engagement we have with the UK government, and that future deals provide opportunities and benefits for producers and consumers in Wales.”
It should not be a matter of hoping or relying on good will, which is why the concept of consultation should be enshrined in the wording of the Bill and a meaningful consultation should take place before the clause allows for the implementation of the procurement chapters of the FTAs. Of course, there are certain powers that the Welsh Government have already. Under section 62 of the Government of Wales Act 2006, they have the power to make representations about any matter affecting Wales, but we still feel that this needs to be stated explicitly in relation to the Bill.
One of the issues that relates to procurement is the gradual elimination of tariffs on beef and lamb. Under the New Zealand treaty, for example, the UK or New Zealand can unilaterally accelerate the elimination of tariffs. This is clearly of huge importance to Welsh farmers, so the Welsh Government want to know that they will be fully consulted by the UK Government on any possible acceleration of the elimination of tariffs on goods from New Zealand well before any decisions are made, because secondary legislation could emanate from the clause to put that into action. Clearly, we need that consultation beforehand. Why? Because if we had had better parliamentary scrutiny of the trade deal, we might not be in this position in the first place.
Gareth Thomas
Given the comments that my hon. Friend has just made, perhaps the Minister will take advantage of this debate and reflect on whether his ministerial colleague, the right hon. Member for Chelsea and Fulham, was wrong to reject amendments to the Trade Act 2021 that would have increased scrutiny. As many suggested at the time, perhaps we should have a debate on each free trade deal as the negotiations are just beginning to get under way, so that interested bodies can set out their concerns and Ministers can properly understand the depth of concerns that particular sectors might have—especially on procurement, given that that is what we are debating at the moment, but more generally as well. We are only having to oppose the amendment because Ministers will not do the sensible thing and have proper parliamentary scrutiny much earlier and at the end of things.
Dame Nia Griffith
Indeed. As I said, there are a number of unanswered questions. For example, it would have been nice to have had some analysis from the UK Government to understand why such huge increases were agreed in the quotas of tariff-free beef and sheep meat. Indeed, the Welsh Government requested that but have not had an answer. During the negotiations, the Welsh Government also made calls for market access offers that recognise the risks that large increases in imports could pose to Welsh producers, who have to meet high animal welfare standards. All of this points to why consultation is so important from the very outset and all the way through to the stage we are at now and beyond.
This is not just about the things that have been done by the Bill; it is also about areas where the free trade agreements could have been made better. Let me take the example of antimicrobial resistance. It is okay to stay where we are at the moment, but it would have been useful to work towards a better situation and to use procurement to do that. We do not want just to say, “Well, we don’t want any more use of antibiotics.” Actually, we want to look to reduce their use, although we seem to have missed that opportunity in the trade deals.
We welcome the commitment in the free trade deal to regulate our own standards, as well as the commitment to non-derogation with respect to welfare standards, but the point is that we need the consultation. We want the statutory basis for consultation to extend much further to the point of having some form of concordat with the Welsh Government, the Scottish Government and the Northern Ireland Administration that set out exactly what the consultation would be throughout the process. Indeed, we have a similar concordat on justice between the Welsh Government and the UK Government.
The point is to try to give some shape to the framework, and some certainty, and such a concordat would have so much to contribute. I made a point earlier about the fact that the devolved Administrations are in many ways much more able to engage with stakeholders to represent their views. Going forward, we need to think about issues that might cause problems, such as rules of origin and the fact that small and medium-sized enterprises might struggle and need support in that respect—consultation, impact assessment and feedback are so important to getting this right.
Gareth Thomas
Surely one of the other benefits of consultation is that it might start the Welsh Government and the Department for International Trade thinking about how, together, they might help businesses in Wales to capitalise on a free trade agreement. My hon. Friend will remember that a previous trade Minister criticised the Department for not doing enough to support businesses trying to export. Early consultation with the Welsh Government presumably might help to address some of those failings and enable businesses, together with the Welsh Government and the Department, to begin to think more quickly about how they might take advantage of the benefits of an FTA.
Dame Nia Griffith
Indeed. Not only might there be a benefit, but the high penalties that can be incurred by the respective parties if, for example, they do not understand rules such as the rules of origin might be avoided. Such fears could be fed back through proper consultation and support put in place to ensure that we were able to take advantage of the free trade deals.
Another pertinent issue is the fact that we are debating legislation that overlaps with areas of devolved competence —for example, procurement policy, agriculture and economic development. We do not want the situation that arose with respect to the United Kingdom Internal Market Act 2020 whereby instead of a proper negotiation on where we should end up and what we wanted and required, we were frightened by the thought of being driven to the lowest possible common denominator on standards by the over-powerful influence of a UK Government purporting to represent the whole UK, but in fact listening only to themselves and not taking into account the views of the devolved Governments.
It is important that we recognise the powers that we have, and that the way forward is through consultation and negotiation, rather than riding roughshod over the issues. For example, the Welsh Government have devolved responsibility for setting domestic sanitary and phytosanitary strategy and policy. Clearly, that is of direct relevance to procurement and the way the FTAs were drawn up.
Gareth Thomas
In referencing Manchester, my hon. Friend has stimulated a thought in my head that, if I am lucky enough to catch Mr Pritchard’s eye, I hope to return to: the issue of levelling up. If levelling up is going to take place—I appreciate that it appears Conservative Members have now given up on that ambition—something we will have to sort out is the Government procurement market. It is quite clearly skewed away from regions such as the north-east and north-west, and nothing seems to have been done about it for the past 12 years. Perhaps a little consultation on how the procurement chapters of these two trade agreements will be introduced might give Government Ministers and Members some ideas as to how we can use Government procurement to facilitate levelling up.
The Chair
I reassure the shadow Minister that he will always catch my eye as long as his comments are—as they are always are—in the scope of the Bill.
Dame Nia Griffith
My hon. Friend raises the importance of consultation, working together and wanting to make things better by negotiation, rather than by imposing a view by one central Government Department on areas that are actually within the devolved competence of other Governments.
I will move on to speak more specifically about the issue of impact assessment. There are various reasons for wanting a proper impact assessment of the effects on Scotland, Wales and Northern Ireland and on regions of England. Clearly, there is the levelling-up agenda. There is the fact that different sectors are of different importance to different areas. There is also the fact that the Government’s impact assessment in respect of the FTAs is literally just a table. This is the sop we have to anything to do with the individual nations or regions. We do not have a real study of the impacts of the FTAs on those areas.
As we go forward with the Bill and clause 1, with the powers it provides, it is absolutely essential that it should include a clause for proper impact assessment. The Welsh Affairs Committee was very critical of the lack of detail in that respect. The Committee referenced the Japan comprehensive economic partnership agreement, which includes a better attempt at regional impact assessment—of Wales, for example—but that again did not go far enough. There is a real need for proper impact assessment.
We have mentioned already the impact on agricultural producers and, as I have mentioned, the wellbeing of future generations. The importance of that is of course that FTAs have obligations that bind future generations. They are not things that we can go back on. That is why it would have been nicer to have had impact assessments earlier. If we had them now we could at least prevent mistakes going forward and not have negative impacts on our agricultural sector in the surrounding communities. Given that we already start with negative figures, there is clearly some work that needs to be done. The risk has been exposed. That has been detailed, yet the impact of what that means for farming families and our communities has not been thoroughly explored.
Gareth Thomas
The beauty of having a consultation before regulations are introduced as well as an impact assessment once regulations are about to be brought forward is that we can try to prevent mistakes and understand what might happen as a result of procurement regulations. An impact assessment can highlight to the Welsh Government and other Government agencies what ameliorative support might be needed to help businesses adjust to the impact of new procurement regulations as a result of the procurement chapters. That is an advantage of two of our four amendments as well.
Dame Nia Griffith
Indeed. In respect of support for businesses, there is a real concern about the cumulative impact. That, again, refers to the first amendment we debated today—the issue of what other FTAs with other countries might be included in the legislation. Also, we need to see what the situation would be if the agreement has a negative impact—for example, unfair subsidies made by New Zealand or Australia to help their businesses, or if there is a particularly high volume of imported goods. It is important that Welsh businesses can report and escalate any concerns to the relevant trade bodies and authorities. Again, the proper relationship with devolved Governments can facilitate that.
To sum up on the issue of impact assessments, the impact on sectors is very important. That dovetails with the question of the different regions in England and the different nations of the UK because different sectors can be affected by trade agreements in very different ways, particularly regarding the output and the employment in the different areas. What is the GVA in those areas? Those are all reasons why we want an absolute commitment from the UK Government to a proper consultation procedure and a proper impact assessment before the implementation of clause 1.
I want to sum up with the question of rights and the rights that we are concerned about. The Joint Committee on Human Rights did not give exactly give the ETAs a clean bill of health as they went through. We have had concerns from the trade unions. The Joint Committee on Human Rights raised the fact that in the Australia deal there is no language about the protection of human rights. I note that in the response to the International Trade Committee, the Minister at the time, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), rather brushed that off as “Oh, there are other ways we can deal with that.” However, as we know, it has become more common for trade deals to have a wider focus.
Whereas historically trade deals would just have focused on the economic benefits of trading relationships, they have now expanded to address a wider set of cross-cutting areas, such as small and medium-sized businesses and gender, labour and environmental policy, including climate change. Those wider considerations are particularly relevant to public procurement implementation because of the role of procurement policies in protecting the environment and fair work.
The Joint Committee on Human Rights was not exactly happy—[Interruption.] It was pleased to see provisions on forced labour, modern slavery and human trafficking, but noted the limitations on enforcement and supply chains, limitations that the trade unions also raised. The trade unions also pointed out that they were not part of the stakeholder consultation and did not have their rightful place at the table. Again, consultation through the devolved Governments could give them a better voice, because there tends to be a better relationship, but trade unions should be at the table, full stop.
I will not go into more detail on climate change, apart from to say that at the time of the negotiation of the Australia deal, Australia had a terrible reputation on climate change, ranking very low in the world, with a terrible record on emissions. This might have been an opportunity, perhaps, to do rather more.
Dame Nia Griffith
It was indeed. I hope that the new Government in Australia may do something of their own accord, but we should not be leaving it to them to act of their own accord, and hoping. That is the point of the amendment. It is not enough to leave things just to happen, because they do not. Unless we put positive steps in to make something happen, it does not happen.
Gareth Thomas
My hon. Friend is making a very good point about climate. Is that not one of the differences between the New Zealand FTA and the Australian FTA? Negotiating with a conservative Administration in Australia led to a deal that does not reference climate. Negotiating with a Labour Administration in New Zealand led to substantial provisions on climate—[Interruption.] Would it not be good to hear the Minister explain how he has been talking to the new Labor Administration in Australia about how they might perhaps insert some more climate provisions into the trade relationship between the UK and Australia as a result of some of the joint committees that have been set up under the FTA?
Dame Nia Griffith
Indeed, absolutely. One rather suspects that it was not thanks to the UK Government, but thanks to the New Zealand Government that the climate provisions found their way into the trade agreement; they somehow got completely lost in the Australian FTA.
All these points are reasons why we have tabled the amendments. These issues are too important to be left to chance. They should be fundamental to any form of procurement policy, which should be based on a full impact assessment, full consultation and full respect for human rights and employment rights, and our goal of getting to net zero. Those are all very important points.
The Chair
After that big bang, I am very tempted to call the ghost of Christmas past, but instead I call the very living and very present, Lloyd Russell Moyle.
Lloyd Russell-Moyle
I will take that in the good manner that it was meant. Thank you, Mr Pritchard.
I speak to amendments 5, 7, 20 and 22 for three main reasons: first, because we heard evidence of great concern from businesses and other organisations about the consultation that this Government will do when bringing forward regulations and the trade deals themselves. The Government have established the Trade and Agriculture Commission, but it is able to produce reports only after the trade deal is signed, defeating one of the main points of its existence—it produces a long report but we go and ratify the trade deal anyway, after the horse has bolted. That is same with the International Trade Committee.
Bill Esterson
My hon. Friend makes good points about the way that France and European Union scrutinise trade agreements. In the context of agriculture, the other really good example is the United States. Recently, the United States trade unions had access to negotiating texts during the negotiation period and were able to insist on improvements to employment rights in the recent United States-Mexico-Canada agreement, which, crucially, protects workers in Mexico who face draconian approaches and attacks on trade unionists. Does my hon. Friend agree that we should have a similar process in this country? In the absence of that process, the amendments are a desperately needed back-up.
Lloyd Russell-Moyle
I totally agree. The US is a much better example than us of scrutiny and engagement. It engages its elected representatives early on. We see a Democrat Government there—one of our sister parties—putting trade unions and small businesses front and centre in their ongoing prosperity, rather than trying to run roughshod and have corrupt practices, which the previous party of Government in the US was all in favour of.
There is a better way of doing this. The amendments are not the ideal. I am, desperately unfortunately, missing my Select Committee inquiry this morning on international trade agreements and how we how we process them. I am sure I will read the transcript of the evidence hearing with fascination this evening. The Public Administration and Constitutional Affairs Committee’s inquiry makes it clear that the current ways that we produce trade deals and scrutinise their implementation—what these amendments are about—are inadequate. They are inadequate because they were created in an age when most of it was farmed off to the European Union and we had strong scrutiny processes of secondary legislation that came via the European Union—Committees that looked at that and debates in Parliament.
All that was swept aside—I will not get into the rights and wrongs of leaving the European Union. We have then just relied on a CRaG process and no other proper form of ongoing scrutiny process, which we would have accepted under the European Union, or which every other country has now developed, because trade deals are dynamic.
Gone are the days when trade deals were fixed in one piece of writing; they are ongoing, living, breathing documents. That is quite right, because trade deals really are multilateral deals on numerous issues: on not just direct trade but intellectual property and procurement, as we are discussing today. They affect the domestic implementation of issues, affecting how councils and public bodies are able to go about their day-to-day business, and the ability to consult.
Gareth Thomas
I apologise to my hon. Friend for missing his opening remarks. However, as he was reflecting on the weaknesses of the CRaG process, does he not think that perhaps part of the reason why Government Members genuflected towards the CRaG process so much, despite all its weaknesses, is that it was initiated by a Labour Secretary of State, Arthur Ponsonby, albeit 100 years ago? Perhaps that is what gives them some comfort. However, I absolutely agree with my hon. Friend that it is time to uprate and modernise it.
Lloyd Russell-Moyle
I do not think that even the most foresighted Labour politician would expect the rules that they designed 100 years ago to still be in operation today. Even if I managed to get one amendment through in my career here, I would not expect it to last 100 years.
The CRaG process, I am afraid, is not fit for purpose in the modern world. Although I do not want to prejudge what my other Committee will say, I suspect that is the conclusion that all sides are coming to—that it needs to be updated. These amendments allow a sticking plaster so that secondary legislation and regulations that are made must go through that process. That is what we heard businesses wanted.
The amendments would also ensure that all regions and nations of our country are properly consulted. The other part of my constitutional affairs hat is that we visit the devolved Administrations every year and speak to them about how they feel their relationships with the Union are going. I can tell Conservative Members that they think it is going very badly. That is not just the SNP in Scotland but Labour in Wales and the Democratic Unionist party in Northern Ireland. They think that the way this Government consult and work with them is arrogant and dismissive. That is what every single one of them said, and what Conservative colleagues in the devolved Administrations said to us too.
Sir James Duddridge
I thank the hon. Gentleman for his constructive criticism. In the 25 meetings between the chief negotiator and the devolved Administrations, what, specifically, did the DAs raise on procurement issues that they were unhappy with?
Lloyd Russell-Moyle
Well, I can go and look at my notes and see if they said that procurement was a particular problem. Their concern was that they were presented with a faits accomplis time and time again. They were presented with, “This is the way that you can have it; accept it or leave it.” That was in a wide range of areas, but trade was one of their many concerns.
The amendments are not to say that the Government are not meeting with the devolved Administrations or are not in communication with them, but to say that the Government must consult and work with the devolved Administrations and the English regions before the regulations are laid, in a co-operative, rather than dictatorial, way. It is therefore important that they are agreed to, because they would provide the reassurance that is needed to rebuild the way that regulations are laid that affect the whole UK. We have seen how, when legislative consent motions have not been provided, they are still run roughshod over.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
The Minister has just informed the Committee that the chief negotiator met the DAs 25 times in the run-up to this trade Bill being put down. Will the hon. Member for Brighton, Kemptown inform the House, if he knows the answer to this, how many times the chief negotiators from the EU consulted the devolved authorities in the UK and, indeed, the UK Government and Members of this House when trade deals were being negotiated, given that he seems such a fan of the way the EU conducts itself in trade negotiations?
The Chair
Order. I am sure the hon. Member for Brighton, Kemptown would give a very full and articulate answer to that, but we are slightly straying out of scope. The points about devolution have been well made and can continue, but only in relation to the United Kingdom. Thank you.
Lloyd Russell-Moyle
I am sure that my Committee’s report will include a fantastic comparison and I will ensure personally that the hon. Member for West Aberdeenshire and Kincardine gets a copy of it when it is out. I can tell him, though, that when we were in the European Union, the devolved Administrations met the different sections of the European Union weekly, because the devolved Administrations had representatives in Brussels who would meet weekly on trade issues, and they would meet daily with the European Union officials. Anyway, we will move that to one side.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
It may help to underline the hon. Gentleman’s point to quote Ivan McKee, the Scottish Government’s Trade Minister, who said:
“Once again we were not consulted by the UK Government before the introduction of proposed legislation that as currently drafted, bypasses the Scottish Parliament and undermines Scotland’s powers. That is…disappointing, but sadly no longer surprising.”
Lloyd Russell-Moyle
I think that is the case here.
These amendments, particularly amendments 2, 20 and 22, which relate to the devolved Administrations, provide a failsafe for the devolved Administrations and English regions to know that they will be consulted. They provide a failsafe for the businesses, including small businesses, that we heard in evidence to know that they will be consulted beforehand. Of course, with all consultation, the Government can still go away and say, “We have listened to you. We have heard you. We have put forward our suggestions. You don’t agree with them, but we are still going to push forward, because we think that is necessary.” That is democracy; of course that has to be allowed, but what we cannot have is people being bumped into things at the last moment or presented with things as faits accomplis, and that is the situation at the moment.
I rose to support the amendments. I think that they are vital; more importantly, they are vital in preserving our Union. I know that some colleagues have a different view, and it is people’s own right whether they want to leave or not—it is not my choice—but I would like to see the Union preserved. I think that those on the Government Benches would like to see the Union preserved as well. I am afraid that if we do not start treating the devolved regions and nations of this great country with more respect and more humility, people will be out the door and it probably will be understandable.
Gareth Thomas
I rise to support amendments 5, 7, 20 and 22, which were tabled in my name and which my hon. Friend the Member for Llanelli spoke to. In so doing, I want to indicate, as I hope my interventions on the hon. Member for Airdrie and Shotts indicated, my strong sympathy with her two amendments as well. I hope that amendments 5 and 22, in that they are more wide-reaching because they cover Northern Ireland, Wales and the English regions as well as Scotland, might be sufficient to encourage her support for them.
Amendment 5, as we have indicated, seeks to lock in the opportunity for more consultation with the whole UK about particular regulations that might emerge around the procurement chapters. As I said in my opening remarks, the Australia free trade agreement is more than 2,500 pages long, and it is quite easy for the bits on procurement to be largely missed. The opportunity to lock in a bit of consultation at this point—before implementing regs have to be made—would help to ensure that there is specific focus on the procurement chapters in both deals.
Bill Esterson
My hon. Friend is talking about consultation and amendment 5 refers to the representatives of the English regions. Earlier, the Minister was talking about Essex County Council. He did not mention Southend-on-Sea City Council, where he is a Member of Parliament. I could not help but notice that the procurement objectives of Southend are:
“Maximising the opportunities for Social Value, Economic Sustainability, and benefits for the local community”.
Does my hon. Friend agree that the Minister, in accepting the amendment, would do well to engage with the objectives of his own local authority to ensure that procurement policy is put into practice in a proper way?
Gareth Thomas
My hon. Friend makes a very good point in suggesting that the Minister look to his own backyard in the troubled times that he and his party are in at the moment. In the context of the free trade agreements’ procurement chapters, it would be particularly helpful for the Minister to seek the views of Labour-run Southend-on-Sea City Council and see whether it agrees with the stance that he is likely to be advancing, which I suspect will be against the idea of more consultation—
Trade (Australia and New Zealand) Bill (Fourth sitting)
Tuesday 18th October 2022
(1 year, 6 months ago)
Public Bill CommitteesRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 18 October 2022 - (18 Oct 2022)
The Committee divided: - Ayes: 2 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 2 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 4, in clause 1, page 1, line 15, at end insert—
“(3A) Where the appropriate authority is a Minister of the Crown, regulations under subsection (1) may not be made until the appropriate authority has consulted the relevant Scottish Ministers in relation to any matters affecting farming in Scotland.”
Amendment 5, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not be made before completion of such public consultation as the appropriate authority considers appropriate with the relevant—
(a) Scottish ministers,
(b) Welsh ministers,
(c) department of the Northern Ireland Executive, and
(d) representatives of the English Regions.”
Amendment 7, in 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.”
Amendment 20, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not be made before publication of an impact assessment setting out the potential impact of the procurement Chapters on—
(a) employment rights and human rights in the United Kingdom, and
(b) climate change.”
Amendment 22, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not be made before publication of an impact assessment setting out the potential impact of the procurement Chapters on—
(a) Scotland,
(b) Wales,
(c) Northern Ireland and
(d) English Regions.”
Gareth Thomas (Harrow West) (Lab/Co-op)
Thank you, Mr Twigg, for the opportunity to resume my speech in this debate that was opened by the hon. Member for Airdrie and Shotts. I will speak in particular to amendments 5, 7, 20 and 22.
It is a particular joy that you are chairing the afternoon sitting, Mr Twigg, because you will know, having been both a Minister and a shadow Minister, just how much the odds are stacked against a shadow Minister in a Bill Committee, with 1,000-plus civil servants backing up the Minister versus just one researcher and, fortunately, some very high-quality Labour colleagues. The odds are very uneven.
When this morning’s sitting ended, I had begun some preliminary remarks on the case for amendment 5. I was about to highlight some of the issues around the differences between the New Zealand free trade agreement procurement chapter and the Australia FTA procurement chapter. I suspect that businesses will need some help to navigate those differences, so consultation with interested businesses across the UK would seem sensible.
It is tempting to think that the differences are so marginal that they can be ignored and that any flaws in the procurement chapters can be swept away by the upcoming procurement Bill or our accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. As the Minister briefly alluded to, with the CPTPP not yet on the statute book and with plenty of issues to be addressed before it gets there—if it does—we have to get the trade deal procurement chapters and their implementation right, as they will, without question, affect the legal landscape in which businesses bid for contracts here in the UK and in which British businesses bid for contracts in Australia and New Zealand.
Not only are there subtle and important differences between the New Zealand and Australia deal procurement chapters, but they are not the only such chapters that we have signed up to since our departure from the European Union; of course, we have the procurement chapter in the deal that the previous Prime Minister negotiated with the European Union. Again, there are subtle but none the less significant differences between the EU procurement chapter and the Australia and New Zealand chapters. It would seem an obvious and sensible thing for Ministers to embrace some help to navigate those differences, and amendment 5 would help them to do that.
Where do the differences lie? It is important to remember that the Government procurement agreement is the foundation text for procurement negotiations. The procurement chapter in the EU deal—the first we signed—keeps the GPA text and builds upwards from it. I hope to come to the evidence of the procurement expert Professor Sanchez-Graells in a little bit. He argues that the text of the procurement chapter in the Australia deal not only replicates but, crucially, modifies the text of the GPA. That creates a GPA-minus agreement and risks all sorts of complications and legal problems when bidding for contracts, both here in the UK for Australian and New Zealand businesses, and in Australia and New Zealand for British businesses.
Another reason that we should perhaps consult firms is that, as I understand it from the evidence that Professor Sanchez-Graells gave us, a UK firm could be barred from all remedies—the interim relief remedy, judicial review, as well as full redress, compensation—if they felt they were being unfairly treated in an Australian Government tender process, on public interest grounds. In a similar process in Australia, a French firm could be barred from interim relief but not from a redress claim. So the French firm could potentially secure compensation if it was treated unfairly if the contract was moved forward on public interest grounds, but the British firm could not. Apparently, that is because the UK firm’s rights are considered under the UK-Australia FTA, while the French firm’s rights would be governed by France’s membership of the Government procurement agreement.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Is not this another worrying sign that the trade deals and the Bill often sell British businesses short? British businesses are being deprived of rights that they currently have. I am sure my hon. Friend will confirm that, if we pass the Bill without amendment, it will mean that British businesses have less access and security in the Australian and New Zealand markets than they currently do under the GPA rules that extend to everyone already.
Gareth Thomas
That is certainly my understanding of the evidence that Professor Sanchez-Graells gave this Committee, the Select Committee on International Trade in this place, and the International Agreements Committee in the other place.
Let me spell out for the Committee where the problem lies. As I understand it, the Government procurement agreement allows countries to bar access to some but not all remedies, on public interest grounds, for companies that are unhappy with Government procurement decisions, but, crucially, it does not allow a ban on remedies involving compensation. That is the difference with the Australia FTA procurement chapter, which does allow a ban on remedies involving compensation.
Potentially, the firms of other GPA countries will have more comfort and ability to risk tendering for big Australian Government contracts, because they will know that they have some access to remedies if things go wrong in the procurement process and they want to try to get compensation. As my hon. Friend the Member for Brighton, Kemptown rightly says, it takes some skill to negotiate a worse position for British businesses in terms of access to remedies than the situation we have now. That is probably not the biggest mistake that the now Prime Minister has made in her time in office, but it feels like a significant issue, and I look forward to the Minister addressing it.
Government procurement matters enormously. We have touched a little on some of the reasons for that. It helps if Government procurement is done well. One of the reasons why amendment 5 is necessary is to ensure that we do not make the current set-up for Government procurement in the UK worse but, instead, enhance it. Done well, Government procurement can help to build supply chain resilience. We saw the significance of that during the covid lockdowns, when our dependence on China became ever clearer and the need to re-onshore some of our supply chains became a topic for discussion by business and, I suspect, in Whitehall.
We are all too familiar with the horror stories about some of the dodgy personal protective equipment that was procured. We understand the context in which some of those decisions were made, but it is striking that Transparency International, with which I worked when I was a development Minister trying to tackle corruption in developing countries, felt the need to investigate the Government procurement market for PPE. It identified some 73 contracts, worth 20% of all the contracts, that it said raised one or more red flags for possible corruption. That suggests there is work to be done to improve the quality of Government procurement. The National Audit Office also highlighted concerns, where the Government admitted that they were not getting full value for money on PPE.
We also know that good conditions for Government procurement can create more choice and more scope for innovation, and can achieve better value for money. One thinks about the digital procurement expertise that we need, and the potential for artificial intelligence to help revolutionise public services. We need to make sure that the framework under which Government procurement contracts are being offered works well, and that this new injection of uncertainty—but also, potentially, enhanced opportunities for other firms to come into the Government procurement market—does not destabilise the UK procurement market but improves things. A bit of consultation might help in that regard.
I touched on some issues around levelling up, which, to my surprise, prompted murmurs of disagreement from Government Members. I understood from their chuntering that they think everything is rosy with Government procurement outside London and the south-east. However, some figures I have seen from the House of Commons Library suggest that at the moment, there is a clear bias in the Government procurement market towards businesses operating in London and the south-east. The last thing we would want is for the procurement chapters of the Australia and New Zealand trade agreements to exacerbate the difficulties for businesses, not only in London and the south-east but in the west midlands, the north-west, the north-east or the east of England, that are trying to get into the Government procurement market.
House of Commons Library data demonstrates that of the 445 most lucrative contracts awarded by central Government in 2019, 202 went to companies in London or the south-east. That does not suggest that Ministers are using Government procurement to level up. We know they are not doing much else on levelling up, so one would hope that they would take the opportunity to consult more, as our amendment 5 would require them to, in order to ensure that the Government procurement market is not being made worse for businesses outside London and the south-east that want to get involved. It might be an opportunity to look at reforms and think about how businesses outside London and the south-east can be encouraged to do so.
The Minister of State, Department for International Trade (Sir James Duddridge)
Would the hon. Gentleman concede that it is possible that the reason those figures are so weighted towards London is that that is where a lot of headquarters are, yet some of those services are delivered from around the United Kingdom and, indeed, from the devolved Administrations?
Gareth Thomas
I absolutely concede that point—that is possible, without a doubt—but I gently suggest to the Minister that there are real concerns that, unless there is proper consultation, the procurement chapters of the Australia and New Zealand FTAs could make the situation worse for businesses that are not headquartered in London and the south-east.
Gareth Thomas
Nevertheless, it seems a reasonable question to pose. A bit of better consultation might allow us to think about how we encourage more British businesses to secure Government contracts. The Minister rightly said that there is a good argument for extending the contracts covered by this legislation—he was thinking of contracts of unknown value and length—on the grounds that it would encourage more competition and better value for money, but we need to ensure that that does not put off good British businesses, particularly small and medium-sized ones in the local area, from getting contracts. I am yet to hear any convincing story from this Minister or, indeed, Business Ministers or Cabinet Office Ministers about what they are doing in that space to shift things forward.
Let me come to some of the specific concerns that Professor Sanchez-Graells raised, which are the most troubling of the many issues raised in the evidence sessions last Wednesday. It is worth highlighting Professor Sanchez-Graells’s experience. He is a professor of economic law at the University of Bristol Law School and co-director of the Centre for Global Law and Innovation. He has done a lot of research on economic law, particularly competition law and procurement, and his research concentrates on the way the public sector interacts with the market and how it organises the delivery of public services, especially healthcare. He is a significant witness. He was clearly taken seriously by the International Trade Committee and by the International Agreements Committee in the House of Lords.
Professor Sanchez-Graells argued that there are a series of problems with the way in which the procurement chapter has been written that, in effect, create the GPA-minus problem, which could have a chilling impact on the appetite of British businesses to bid in Australia and New Zealand, unless Ministers can rectify those problems and provide comprehensive reassurance that Professor Sanchez-Graells may not have considered the whole picture. He has been explicit in saying that he wants the procurement chapters of both the New Zealand and Australia deals renegotiated and only then put into law, so it is important that we hear the Minister’s reaction to those concerns.
I had thought that the biggest problems with the Bill were the huge giveaway to Australian farmers, the lack of protection for British agricultural goods, the lack of progress on geographical indications and the shocking levels of scrutiny, but Professor Sanchez-Graells appears to suggest that there are serious issues with procurement and whether the procurement chapters present the huge opportunity that Ministers have been keen to big up. He says that the legal uncertainties in the chapter that the Bill would write into law ensure that the rules clash with the World Trade Organisation’s rules on procurement, and we would then risk breaching international law, be it the GPA or the two trade deals.
We know that Ministers have a record of not being bothered about breaking international law—one thinks of the Northern Ireland protocol or other aspects of the trade agreement with Europe—but if Britain’s reputation for international lawbreaking gathers ground, that could have a chilling effect on our ability to negotiate other trade agreements and implications for the confidence of the markets, which is particularly worrying.
The GPA is the baseline for opening up access to procurement contracts. I commend Ministers for the objective of creating a GPA-plus regime, and the Australia deal secures some more substantive obligations that point in the direction of such a regime, such as the electronic publication of contracts by authorities, the inclusion of a clause on environmental, social and labour considerations and a clause on SME access to procurement opportunities, the expansion of economic coverage through the inclusion of concession and build-operate-transfer contracts, and so on. However, it also deviates in ways that alter or reduce substantive obligations, so we have the creation of a GPA-minus regime instead.
The scope for legal uncertainty risks having a chilling effect in terms of British businesses wanting to bid for Australian and New Zealand contracts, and vice versa. Amendment 5 makes it clear that consultation is key, and amendment 22 would give us the chance to understand fully the impact of these GPA-minus changes. Both would be helpful additions to the legislation and would allow us to address some of the concerns.
The concerns Professor Sanchez-Graells expressed in evidence to the Select Committee were very technical and challenged members of the Committee—they certainly challenged me when I read back over them to fully understand their scope. To bring them to life at our witness session last week, I asked him to give some examples of where his concerns might have played out. One example I asked him to think about was a British construction business bidding for a contract to help build the Melbourne airport link, which the Australian authorities are tendering. He said:
“Let us imagine that an innovative British company that wants to sell low emissions rolling stock for that metro link in Melbourne airport goes and tenders in Australia. It is excluded for any number of reasons and it wants to challenge the decision. It could also be barred from access to remedies in Australia, which means that the UK tenderer has lost its time and probably made a loss on the project.”––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 42, Q52.]
That business could lose its access to remedies if the Australian courts embraced the decision of the contracting authority on public interest grounds—that the contract could not be delayed and the compensation not offered, because it was so important that the Melbourne airport link got built on time.
If the UK tenderer had spent substantial amounts to get that contract and then could not get any compensation for all that money, that would create a big disincentive for anyone from the UK thinking of trying to tender for future projects in Australia. It is important that the Minister and the Department for International Trade explain what steps they will take to prevent that risk from coming to fruition.
Lloyd Russell-Moyle
Is there not also a danger that an international company could choose which of its subsidiaries a bid should come from? Rather than choosing the British company and channelling the money through it, it might consider that the protection offered would be marginally better should the bid come from the French or German company. The multinational company will choose to channel its bids through their other subsidiary companies outside the UK, which could deprive UK taxpayers of money and British workers of the contract, when the British company has done some of the necessary paperwork and processing. There does not need to be a material change; there only needs to be a theoretical risk that that could happen.
Gareth Thomas
Unfortunately, that is absolutely right, as Professor Sanchez-Graells argued. That is a real risk. There are potentially chilling impacts on British authorities that want to issue contracts, should New Zealand companies, and particularly Australian companies, bid.
On the possible GPA-minus provisions, a broader issue is relevant to the argument for amendments 5 and 22. Is the GPA being undermined? The GPA-minus provisions are not just an issue for the UK-Australia FTA, but are likely to be an issue under the CPTPP. Given how difficult it was to negotiate the GPA and how long it can take to secure improvements, enhancements and modernisation, one has to ask whether Ministers have given up a little on that multilateral process. Have they decided that it is so important to get individual procurement chapters agreed under trade deals with potential allies that we will give up on the process of modernising the GPA? Surely it needs to be a living document, because it dates quickly; the current version was negotiated more than 10 years ago and is already out of date on digital procurement and sustainability. The more GPA-minus provisions there are in trade agreements negotiated around the world, the more difficult it will be for the World Trade Organisation to negotiate an enhanced, modernised GPA. It would be good to hear what plans the Minister and the new Secretary of State have to prevent the UK-Australia chapter, with its GPA-minus provisions, from stopping any effort to modernise the GPA. One hopes that Britain would seek to lead that process at the WTO.
The second major concern of Professor Sanchez-Graells is why we are putting the two procurement chapters into law if we plan to accede to the CPTPP? It has its own procurement chapters, and both Australia and New Zealand are members of it. Those chapters are very similar to the Australia and New Zealand FTA chapters, so there is similar scope for uncertainty. We have been led to believe by the current Prime Minister and the previous Secretary of State for International Trade—presumably the present Secretary of State will tell us something similar—that CPTPP remains the top trade priority for Ministers. Professor Sanchez-Graells is concerned about the Government’s rush to get two procurement chapters on to the statute book when there is scope for future uncertainty. I am not sure what I think about that particular argument, but I would be interested to hear what the Minister has to say.
Lloyd Russell-Moyle
We heard from the Minister this morning that potential accession to the CPTPP will not replace this agreement but be additional to it. Therefore, British businesses will have to cope with three different systems. We have also heard from the Minister that the Procurement Bill will not entirely replace the chapters and agreement before us, so there will be four potential regimes that people have to navigate. Is that not creating more bureaucracy for businesses rather than less?
Gareth Thomas
We know that Conservative Ministers have become enthusiasts for red tape—that was the reality of the deal the previous Prime Minister negotiated with the European Union. I gently suggest that my hon. Friend should not be too surprised that Ministers do not seem bothered about more legal uncertainty for businesses interested in Government procurement contracts.
Either way, a bit more consultation, which amendment 5 would lock in, and a bit more thought as a result of an impact assessment under amendment 22, might help to encourage debate and consultation about how serious the problems are and how to resolve them. That might help to advertise the many apparent benefits of these agreements, which the Government’s impact assessment mentioned. However, I caution Committee members to hold on a second, because the third argument that Professor Sanchez-Graells advanced in public was that the procurement chapters will not lead to the huge benefits for British businesses that Ministers have claimed they will and that the impact assessment Ministers published over-eggs all of those benefits. For example, Ministers say there will be lots of new opportunities for transport firms to run transport contracts in Australia, despite there being many transport networks in the UK that are run by foreign companies. I hope to pick up that issue in the Committee’s discussions on new clause 4, but it would be interesting to hear which companies have indicated to the Minister that they are interested in the procurement opportunities in Australia and New Zealand that he and his colleagues have alluded to.
Professor Sanchez-Graells also noted the consequences of clauses 1(2) and (3), which we debated this morning. He noted that contracts of unknown length and tenure would be extended by regulations to cover more than just Australian and New Zealand firms, with no reciprocity in mind. If only the Secretary of State had given evidence in good time to the International Trade Committee, which my hon. Friend the Member for Brighton, Kemptown sits on, some of those concerns could have been addressed.
To help me understand Professor Sanchez-Graells’s arguments, I asked him to explain them in the context of the Elizabeth line—Crossrail, as it was known—and of the need to rebuild a hospital. Members will remember the significance of the Elizabeth line, stretching as it does from Paddington in west London through to Abbey Wood and Stratford in east London. Its cost to date is almost £19 billion, and it will be fully operational this year. It is a huge public procurement exercise—that £19 billion does not include new trains or a number of other things. It has been a huge success story for the UK and London. It has generated 14,000 jobs, it comprises 42 km of tunnels and it has used 13,500 cubic metres of concrete. In short—
The Chair
Order. I understand the argument the hon. Gentleman is making, but I think we get the point about Crossrail. He needs to move on to the relevant argument.
Gareth Thomas
The argument I am making is that Professor Sanchez-Graells highlighted the risk of a chilling effect on the progress of the Elizabeth line had the Australian and New Zealand procurement chapters been in force. Let me set out how it might have played out—fortunately, neither agreement was in place, so there was not the same legal uncertainty and we have not had such a delay.
Let us suppose for a second that both procurement chapters had been in force. To slightly simplify it, the Elizabeth line offered three contracts—one for the construction of Crossrail, one for the supply and maintenance of the rolling stock and one for the operation of the line, which was a services concession. That services concession would not have been covered by the UK-Australia free trade agreement, but the construction contract and the rolling stock contract would have been covered under both the WTO’s Government procurement agreement and, crucially, the UK-Australia FTA. There would effectively have been dual regulation contracts.
There could have been a real, substantive clash of provisions between the GPA and the FTA. The crucial issue of access to remedies could then have played out. If an Australian company had expressed an interest in the relevant tender—for construction or for supply of the rolling stock—and had ended up not getting the contract, it could have been barred from access to remedies under the UK-Australia FTA on grounds of public interest. Why would we have wanted to delay the completion of the Elizabeth line?
The Australian company would have missed out on compensation and scope for judicial—
Gareth Thomas
This is relevant to clause 5. If we had consulted better with firms across the UK that benefited from the supply chain of the Elizabeth line, they might have been able to highlight their concerns at an early stage, preventing any problems going forward.
If you, Mr Twigg, are not convinced of the relevance of an argument that looks back, let me put to you an argument that looks forward and give the example of a hospital that needs to be rebuilt. Let us say it is the Queen Elizabeth Hospital in King’s Lynn, which we know needs rebuilding. The Australian and New Zealand free trade agreements, and the procurement chapters of both, will be in play at this point, assuming the Bill becomes law. If they are, and an Australian company bids for the contract to rebuild the Queen Elizabeth Hospital, there could be a chilling effect.
Let us say the company is denied access to the contracts, for whatever reason, thinks it has been treated unfairly, tries to put in a bid for judicial review to stop the contract being won and started by the relevant British company, and cannot get judicial review to stop it, because of public interest grounds—because the hospital is falling down. The court might say, “We’ve got to crack on with this.” The Australian company would miss out on judicial review, also on public interest grounds, and the court would be open to rule against giving it compensation. Australian companies would now look askance at the NHS procurement market and think, “We won’t take the risk of bidding for contracts there. We may well miss out because of the terms that have been agreed under the procurement chapter of the UK-Australia agreement.”
It does not just go one way. That same risk is potentially in play in Australia for British firms bidding to rebuild Australian hospitals. If one were falling down and a British company bid and lost out and then thought it had been treated unfairly, it might initially turn to its lawyers and say, “Let’s put in a judicial review bid to stop the contract going ahead while we try to persuade the court to restart the tender process. Let’s at least try to secure compensation for all the money it’s cost us to put the bid together.” In my understanding of the arguments advanced by Professor Sanchez-Graells, under the terms of the UK-Australia free trade agreement, if the contract is not awarded to the UK firm but to an Australian one, and the court decides on public interest grounds that that is fine, the British business would lose an awful lot of money that it might have invested in bidding for the contract.
The irony is that if a French firm bid for the same contract, it might not be able to stop the contract or get judicial review, but under the terms of the GPA, it could argue for compensation. The British firm would not even be able to apply for compensation, but firms from other GPA jurisdictions could. In those circumstances, British firms that specialise in overseas procurement may be tempted to look not at the Australian or New Zealand markets, but at other markets in which they have better protection if future contracts go wrong.
That is a substantive and serious concern, and it would be good to hear the scale of the Minister’s concern about such risk. Ministers and Committee members may still think that companies take risks all the time, so if a contract does not go their way and they cannot secure compensation or judicial review, then tough luck. However, it is also worth considering the effect on the bit of Government that is trying to issue the contract.
I pray in aid the case of Draeger Safety UK v. the London Fire Commissioner, which has been substantially protracted. The London Fire Commissioner wants to upgrade the quality of equipment available for its firemen and women—quite understandably, it wants the best, most modern equipment. Draeger Safety UK lost the contract, thought the contract was unfair, and is trying to secure compensation. That is not an isolated case; similar cases are going through the UK courts.
Adding to the process the complex GPA-minus provisions of the UK-Australia and the UK-New Zealand FTAs could have a chilling—or certainly a delaying—effect on the issuing of tenders. For that reason, I hope that a little more consultation by Ministers with each part of Government around the UK that might want to issue a contract, and a little more thought—perhaps through an impact assessment—about the impact of the GPA-minus provisions that Professor Sanchez-Graells set out, might help to avoid those sorts of problems, and that the procurement chapters of both FTAs could actually be really useful.
I look forward to hearing what the Minister has to say about Professor Sanchez-Graells’s concerns, and I strongly encourage the Minister to support amendments 5 and 22.
Sir James Duddridge
I haven’t said anything yet. This morning was incredibly jolly. I am sure that Mr Pritchard will be devastated that he cannot be here, but I will send him a copy of Hansard so that he can catch up.
The debate was interesting. A Labour speech literally brought the house down—one could hear things crashing down from the ceiling. Thankfully, no members of the public were hurt. I was amazed by the wide-ranging discussion, and the ability of Members to pop in the word “procurement” here and there to make their remarks orderly. It was a masterclass in Opposition debate, verbosity and probing—in a good way. I was surprised that there was a proposal to provide free hot school meals daily from New Zealand to the good burghers of Southend, which I am sure was heard by Essex County Council and Southend-on-Sea City Council—I was going to say it was Labour-run, but it is a bit of a shambles of organisation and coalition in Southend.
Sir James Duddridge
If I am given some leniency near the end, there might be an opportunity to intervene then, if there is a particular element that I have not picked up on, because there are about 25 issues that I need to cover.
Broadly speaking—officials will not like me saying this—I agree with a lot of what has been said. I agree about the importance of consultation, and of reviewing and evaluating what we have done. There is a lot of that in the Bill, and a lot of it has been done by the Government already. I will go through what we have done, but just because we have consulted, that does not mean we do what someone wants. It is a balancing act. I suspect the hon. Member for Harrow West would do things differently from me if he was in the hot seat, but I am sure he would have consulted as widely as the Department and officials did on behalf of His Majesty’s Government. I am disappointed to hear that he will press two of these measure to a vote. He has thrown down the gauntlet, and I have picked it up, so hopefully I can persuade him not to vote on them, because we are covering a lot of the issues raised.
Communication with the devolved Administrations is integral to not only the way the Department conducts its negotiations but ensuring that legislation operates effectively in each and every nation of the United Kingdom. I am more than happy to reiterate the commitment of the then Secretary of State for International Development that the UK Government would not normally legislate without the consent of the devolved Administrations. The hon. Member for Airdrie and Shotts may well say, “Why not put that in the Bill?” That is a valid point, but it is not one about procurement; it is about the fundamental nature of devolution. Treaty making is done at the UK level on procurement, as it would be in an international treaty on, for example, nuclear non-proliferation.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The point that the Minister is making underlines that it would do no harm to make this commtment in the Bill. What would be wrong with that?
Sir James Duddridge
If the hon. Gentleman wants to bring forward a devolution Bill and completely revolutionise how our nations are run—
Sir James Duddridge
He clearly does, but that is not for this Bill. On scrutiny, Members drew comparison with the EU and the US. I gently point out that those are very different democratic bodies. The EU is a body of 27 nation states, remotely located; and the US has a presidential system, and an Executive that is more detached from the legislature, whereas we are much more integrated here.
On consultation, there was a wider discussion that related to all types of scrutiny but included procurement, so with your permission, Mr Twigg, I will go through how we have looked at scrutiny through the lens of procurement.
Lloyd Russell-Moyle
The Minister is quite right to mention that those two systems are different. Norway operates a dualist system for international treaty agreements in the same way that we do. It operates a prime ministerial system with a constitutional monarchy in the same way that we do. Their Parliament has the ability to scrutinise the heads of terms of international agreements, and its committees can agree the additional measures that are coming through, and can be consulted on them. So, yes, he is right in relation to the two big examples that I gave, but there are many other international examples, and I do not want to bore the Committee by going through more of them. Will he not at least acknowledge that we are on the worse end of the scale when it comes to the consultation of Parliaments, devolved areas and civil society, not on the better end?
Sir James Duddridge
No, I do not. I do not want to go through a comparative analysis of every country around the world, but we are not. There is a lot in legislation that we have to do; there is a lot that is not in legislation that we do on a repeated basis. For example, on issues of the scrutiny of the New Zealand and Australia trade deals, particularly in relation to procurement, prior to our talks, we published all of our objectives. We published the economic scoping document and a Government response to the call for input. During the negotiations, we published six public reports of what happened, so Parliament and the public could input and lobby. We published extensive information at the agreement stage and at the in-principle stage. We also engaged in Parliamentary activity. All together, there were over 12 sessions with either the International Trade Committee or the Lords International Agreements Committee.
Sir James Duddridge
I will just finish the point and then I will certainly give way to the hon. Gentleman. I was rather hoping that he was going to be at a Select Committee, but it is a pleasure to see him here—[Interruption.] I will finish my point and then I will give way. I apologise, Mr Twigg, for being slightly disorderly. We made nine ministerial statements and there were eight formal MP briefings; Ministers also made themselves available more informally to Members on both sides of the House.
Lloyd Russell-Moyle
I could not resist this Public Bill Committee and so I am missing the opportunity to grill the Secretary of State for International Trade. Hopefully I would not just be grilling her, but having fruitful discussions, such as those that we will now have. I look forward to doing that on future occasions.
The Minister listed a number of documents that the Government have published, but he has confused publishing information with having detailed, constructive and structured dialogues—with sitting down and engaging with people.
I have already publicly put blame on the previous Secretary of State, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), and I will not repeat myself. However, for one reason or another, more than five times, she was unable to meet the International Trade Committee, and she was unable to meet it before it published its report on the Australia and New Zealand free trade agreements. That led to an urgent question in the Chamber and a Westminster Hall debate. Will the Minister not at least accept that there is more that the Department could do to engage co-operatively with the International Trade Committee and others, to stop the contention that we have had?
Sir James Duddridge
During long interventions, sometimes Ministers jokingly ask to intervene, but I had been sitting down for so long that I genuinely thought I was listening to a speech.
Relations with the International Trade Committee have not been as good as the Government, the Committee or the House want. That is going to change. We will make ourselves fully available. I know the Secretary of State has already started having those meetings with the Committee. Her diary obviously shifts quite quickly, so I cannot say where she will be, when. I know there is a whole series of activities planned. I am looking at the Public Gallery; there are civil servants looking into how we can link better with members of the Committee. I will play my part as Minister of State at the Department, and will always make myself available to the Committee, if at all possible. It will be my top priority, over and above speaking to the House or taking part in other Committee processes.
The hon. Gentleman said, “You just publish reports. That’s not enough.” If that is all we did, it would not be enough, but it is not all we have done. There are inter-ministerial groups on these issues, which are attended by Ministers from the devolved Administrations, particularly those with responsibility for trade. The forum that we are discussing was established to consider all trade policy, and its effective implementation, and will be able to review and evaluate that policy’s impact.
The hon. Member for Harrow West seems incapable of using the word “effect” or “impact” without prefacing it with the word “chilling”, as if these were haunting issues. We want to evaluate policies, to look at the impact assessment, and to improve all the time. As has been said, the agreements are evolving. They get built on and improved. The forum has met eight times since its inception in 2020. It provides for open discussion about negotiation, and allows Ministers from devolved Administrations to contribute their views directly, both formally and, in the sidings, informally.
Gareth Thomas
How many of those meetings have focused purely on procurement?
Sir James Duddridge
I have absolutely no idea. As the hon. Gentleman said early on, procurement is a very small section of these matters. Most, if not all, of these meetings were probably open, so I could check the minutes, but I suspect that not every nuance is captured in them. Also, sometimes trade issues can be looked at through lots of lenses. For example, one issue might relate to the motor industry, procurement and Wales.
There are bilateral meetings with counterparts from the devolved Administrations, and there is weekly engagement by UK Government officials. That all helps to build a better relationship. The hon. Member for Llanelli asked whether the relationship could be better. I am unsure of how well sighted she and the Committee can be of the details of that—I think that is what the hon. Member for Harrow West is alluding to—but it would be interesting to look at the Welsh example, in particular; there have been a lot of compliments, with people saying that engagement has increased and is better. That is not to say that it cannot be even better, but let us give credit where credit is due—not to Ministers, but to the Department.
Dame Nia Griffith
Absolutely, and I made that point clearly. Large questions remain unanswered, including why the quotas were set so high. Those sorts of things could have been sorted out if consultation had gone back a bit further and had been more timely.
Sir James Duddridge
I will focus my comments on the devolved Administrations, and I will come back to meat later, in the meaty bit of my speech. We have been discussing the necessary changes to procurement regulations with devolved officials since they were first raised in negotiations. I hope that our level of engagement demonstrates that consultation is already integral to what we do. The remit of the Trade and Agriculture Commission, in which there has been some interest, focuses on a critical issue for Government, the public and farmers: agricultural standards. Its analysis is an absolutely critical part of the scrutiny framework for new free trade agreements, and it supports the Government’s clear commitment to upholding the United Kingdom’s high agricultural standards.
The commission’s remit is very specific, so that it can produce high-quality advice that speaks to its collective expertise. The Government would not want to dilute its important work by widening its remit; that would weaken its focus on its core mission. If amendment 3 is intended to allow the commission to consider the impact of the procurement chapter on agricultural standards, it is unnecessary; the commission can already consider any part of an agreement that it thinks is relevant to the issue of domestic standards—specifically to animal and plant health, animal welfare or the environment. The amendment would widen the commission’s focus beyond what we want it to focus on. I respectfully suggest that that would have unintended consequences.
The Department committed to including in the impact assessments, every two years, a monitoring report on the deal. Furthermore, within five years of the agreements entering into force, there will be a comprehensive evaluation report on both deals. These evaluations will do exactly what I think hon. Members want and seek Government assurances on, because they will aim to show how and why the agreements were made, whom they benefited, what the outcomes are, and how they could be better. I am happy to assure the Committee that those reports will look at all the regions—Northern Ireland, Wales, Scotland and England—and, if necessary, consider the regional picture if that is still a concern, notwithstanding my comments and the evidence over that period.
Bill Esterson (Sefton Central) (Lab)
Rosa Crawford pointed out that the trade unions had never been given a place on the trade advisory groups since they were set up, if the Minister remembers last week’s evidence session. Why is it that in the United States the trade unions have access to negotiating texts and are able to influence changes, as they did in protecting workers in Mexico? Does he think that that is right or wrong? If he thinks it is right, why does he not allow it to happen in this country?
Sir James Duddridge
The unions are involved in the trade advisory groups. There is, I think, one issue with an offer that has been made to one union to join, but it is holding out because it wants another union also to be involved and is therefore not participating.
On returning to the Department after the previous sitting, one of my officials expressed surprise at the evidence given because it contradicted something she had been at—she had been present at one of those meetings. While I am happy to look again and the current Secretary of State has made it clear that she wants all consultees to be included in the process, we are the decision makers in our process, and I would not want to contract out UK Government decision making to any organisation.
I am not going to answer the question on the United States. I am responsible for many things, but not the system in the US.
Lloyd Russell-Moyle
The Minister has said that the trade unions are members of trade advisory groups, but I have looked up the membership of those groups, searching for the word “union”, and there are only four union members, and they are all farmers union representatives. I understand that farmers unions are important, but they are different from trade unions and the TUC, so either the list on the website is not up to date or there is some confusion here. It would be useful if we got some clarity.
Sir James Duddridge
Absolutely. On unions—I mean unions in the broadest sense; I am not trying to pull a fast one by referring to four regional national farmers unions—my understanding is that six unions, as the hon. Gentleman would understand the term “union”, as opposed to the Conservative and Unionist party, for argument’s sake, are genuinely involved in the trade advisory groups. That is what we would want.
That is on the record. If I am wrong and if I have misread my brief, I will correct the record later and write to the hon. Gentleman with the details of the unions, and perhaps with more information around the issue of the union being invited to something and there being some type of deal, if it is in the public interest to put that out. I want to encourage the unions to come and be part of the process, and I want us to make decisions.
Gareth Thomas
To be clear, is the Minister saying that if the TUC, as the representative of the trade union movement, is not on any of the relevant trade advisory committees, he is committing himself to inviting the TUC?
Sir James Duddridge
The Minister did not commit to that. I think the question is, will I commit to that? The answer is no. I will commit myself to ensuring that unions are on those trade advisory groups. I think they are on the trade advisory groups—
Sir James Duddridge
Because there are many unions out there. That is not part of the Bill—
Sir James Duddridge
This is an interesting question, but the hon. Gentleman, who was an able Minister, would not have made such an on-the-hoof commitment when he was sitting on this side of the Committee without consulting and without thinking about the implications for other unions. However, I am more than happy to go away and look at the issue if that makes him happy. I am picking up the gauntlet to try to bring him onside and get the Bill through, so perhaps that is a nice suggestion.
Gareth Thomas
Almost nice. All I would say to the Minister is that I would have known the question was coming.
Sir James Duddridge
There were no telepathic Ministers available, so the hon. Gentleman is stuck—
Sir James Duddridge
I certainly want us to make progress.
Let me turn to the meat of my speech—the lamb and beef. We have secured a large range of measures to safeguard farmers generally within the tariff quota with respect to a number of products, but specifically, on the New Zealand side, I would point out that UK sheep imports from New Zealand have fallen over the past decade, so I do not think the idea that these measures will radically change the relationship is right. On Australia, increases in beef imports are likely to happen, but rather than displacing our domestic farmers, those imports are more likely to displace slightly more expensive beef from the EU. That means that beef will be coming from Australia, not France, for argument’s sake, and it will be cheaper for my constituents—my Sunday roast, their Sunday roast. That is part of levelling up and getting on with tackling the cost of living.
More broadly, there is a strong case for free trade. Earlier, the hon. Member for Brighton, Kemptown made the case for not unilaterally making moves and to hold back the negotiating power. That is a valid argument, because some of these things could be traded off for something else. However, there is actual underlying value in reducing tariffs and minimising systems; it makes products cheaper. That is what we are trying to do as a Government and I do not think that anyone would disagree with that. So, it is a third balancing act within that arena.
Dame Nia Griffith
Would the Minister accept that there really is a need for consultation and that there is also a need for an ongoing impact assessment, because the situation for Welsh farmers is so different from that of farmers in Australia and New Zealand, where the quantities involved and the farms themselves are absolutely huge? We are obviously very aware here that our hill farms are in some of the areas that are hardest to farm and that really there is no straightforward comparison with Australian and New Zealand farms. Then add to that the other costs of production, such as the costs arising from the higher standards that we have. Again, it seems that the cards are already stacked, and that consultation and a continued impact assessment are absolutely essential in trying to protect our farmers.
Sir James Duddridge
Fundamentally, I agree with the hon. Lady that that needs to be done. However, I think there is a question of frequency. We talked about the evaluation at the five-year point; we have talked about a two-year evaluation. Should there be consistent—I am trying to find the words that she used—or repeated evaluation? Well, there might be some value in that, but there is also a big cost in that, and if you produce annual report after annual report, sometimes they just go on the shelf. So, there is the right point to do the evaluation rather than doing it too frequently.
The other point that I would make is that we cannot flick a switch overnight and suddenly go from one trading situation to a new one, with a whole different array of goods and services being traded. It happens over time. So, over the first year, I will take on the responsibility for both implementing the deal and for what we call within the Department utilisation, which is basically taking advantage, because there is no point in this pile of new trade deals just sitting on my desk. They need to be explained to British businesses; we want to take them out to Australia. Only a few weeks ago, I went to Ipswich, where there is a company producing recyclable bottles. I hope that I have got this in the Register of Members’ Financial Interests—they gave me a bottle of gin and the bottle was a reusable paper container. That company will want to export to Australia, I think, one of their machines; the New Zealanders will no doubt want a similar thing; and we will then import lighter weight, lower cost wine, which I think benefits everyone.
I will return a bit more forensically to some of the points that have been raised, while being conscious of time. The issue was raised of farming and discussions with Ministers in devolved Governments about procurement. While there would have been the overall discussion, I am not aware of the specifics on procurement in farming, because that is more about the consultation for the deal and not about the consultation for the Bill, which is more narrowly focused.
I think that I have covered off the issue of impact assessments. What I would say is that they are not forecasts; they are indicative. But in many ways my criticism of some of the forecasts is that they are not dynamic enough—that is, we are underrating the potential value of some of these deals. However, the process allows for a level playing field and a comparison between different things.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey talked about the Scottish Minister for Trade. In respect of the content of the Bill, the procurement policy teams met with officials from the devolved Administration for roundtables on the text of the procurement chapters in both negotiations: for this Bill; and for the procurement regulations that are consequently developed from the Bill. We have been discussing the necessary procurement regulations that will follow on. So I can reassure the hon. Gentleman that that is happening.
There was some discussion around trade remedies. The hon. Gentleman said that I am blessed with a box full of wonderful officials and no doubt behind the scenes they are texting backwards and forwards. The resources are slightly less. I think there has been some misunderstanding, effectively, on what happens.
The same exclusion of trade remedies in the Bill applies to GPA, but the exclusion on remedies only applies to temporary measures to suspend a supplier from the procurement process. Crucially, it does not prohibit them from bringing a claim, so they can still do that.
Gareth Thomas
If the Minister cannot elaborate on this now, will he commit to write to the Committee with a more detailed respond to Professor Sanchez-Graells’s analysis? He had substantial concerns, which the International Trade Committee and the International Agreements Committee accepted, and nobody challenged it in the evidence he gave last week. I understand that the Minister may not have access to all the information he needs, but I wonder whether he would be good enough to write to us. I hope he is right—I really do—that the provisions negotiated are GPA-plus, but there seems to be doubt that some of the tweaks that have been made might make them GPA-minus, and that needs to be ironed out as a matter of urgency for British business.
Sir James Duddridge
I am happy to iron it out. The departmental advisers respectfully disagree with the professor, and I am more than happy to write with their analysis of why they disagree. Clearly, we cannot take evidence from 30 academics and say, “This is an outlier out of 30,” but I will send the Committee that letter.
On the unions, it is slightly more complicated than what the hon. Gentleman asks and what I said. The TUC has already been offered roles on the advisory groups but unfortunately has not taken them up so far. The TUC has been represented on the Department’s Strategic Trade Advisory Group, and in 2021 we offered six unions—that is where the figure six came from—roles on the group. I assumed incorrectly that they had taken us up on that offer. I do not know why, but they have not. They are still welcome, and I am more than happy to write again making that offer, to try to understand why they have not taken it up. We are saying that we want to consult more widely. We have offered the unions a consultation role, and Members say that unions want to have an even bigger role, but they have not come to the table. I am sure that there are complicated, good reasons for that, and we will try to work through those.
Hopefully I have answered the questions sufficiently and have only failed in my lack of telepathic skills to know which questions would come up. I will try harder next time and get the best brains on providing said facility to the hon. Gentleman.
Gareth Thomas
I am grateful to you, Mr Twigg, for allowing me briefly to respond. I am grateful for the Minister’s willingness to write to the Committee with a more detailed response to the concerns that Professor Sanchez-Graells raised. I am happy not to press amendments 7 and 20. However, tempting as it is to think that the Minister has given comprehensive answers, he was almost comprehensive but did not give quite enough for us not to press amendments 5 and 22. We will press them to the vote.
Ms Anum Qaisar (Airdrie and Shotts) (SNP)
The legislation does not reflect the values that Scotland stands for, and it does not adequately safeguard food and farming standards in Scotland.
The powers in the Bill should not be exercisable by UK Ministers in relation to Scotland without a requirement for them to secure the consent of Scottish Ministers. That is what amendments 3 and 4 propose. While negotiation of international agreements is a reserved matter, the implementation of such agreements in devolved areas such as public procurement is devolved. There is no reason for UK Ministers to hold such powers in relation to Scotland.
The Scottish Government have consistently and successfully implemented international obligations on procurement since 2006, when they first transposed the EU directives, and they have been consistent in their commitment to upholding international law. The Scottish Government continue to engage with the UK Government on the issue, and I understand that officials are in continual contact with counterparts in the Cabinet Office and the Department for International Trade.
It might be better to make provision in the Bill for the implementation of those agreements, rather than using a delegated power. The Minister mentioned the issue, although I still do not understand why that is not possible and there appears to be no particular reason for powers needing to be provided. Such agreements are signed and there is common understanding of the amendments that need to be made to procurement legislation in order to implement them. That could be done in the Bill, which in turn could provide for commencement regulations to ensure that the amendments took effect at the desired moment.
I thank the shadow Minister, the hon. Member for Harrow West, for his sympathy, as he put it, towards amendments 3 and 4. Those amendments are specific to discussion and dialogue between the UK Government and the Scottish Government, and I would argue that amendment 5 is not as strong as our amendments. However, we do support Labour amendments 7 and 22.
Question put, That the amendment be made.
The Chair
Before we come to the question that clause 1 stand part of the Bill, I note that I was quite lenient in the previous sitting about interventions. I would like to remind Members that interventions should be short and to the point.
Clause 1 ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Schedule 1 agreed to.
Schedule 2
Regulations under section 1
Gareth Thomas
I beg to move amendment 9, in schedule 2, page 9, line 5, leave out from “section 1” to end of line 6 and insert—
“may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.”
The Chair
With this it will be convenient to discuss the following:
Amendment 10, in schedule 2, page 9, line 8, leave out “negative” and insert “affirmative”.
Amendment 11, in schedule 2, page 9, line 11, leave out from “section 1” to end of line 12 and insert—
“may not be made unless a draft of the instrument has been laid before and approved by a resolution of Senedd Cymru.”
Amendment 12, in schedule 2, page 9, line 13, leave out from “section 1” to end of line 16 and insert—
“may not be made under this Act unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.”
Amendment 13, in schedule 2, page 9, line 25, leave out from “applies” to end of line 26 and insert—
“may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.”
Amendment 14, in schedule 2, page 9, line 28, leave out “negative” and insert “affirmative”.
Amendment 15, in schedule 2, page 9, line 29, leave out sub-paragraphs (5) and (6).
Amendment 16, in schedule 2, page 10, line 2, leave out from “Ministers” to end of line 3 and insert—
“may not be made unless a draft of the instrument has been laid before and approved by a resolution of Senedd Cymru.”
Amendment 17, in schedule 2, page 10, line 5, leave out from “department” to end of line 7 and insert—
“may not be made under this Act unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.”
Amendment 18, in schedule 2, page 10, line 9, leave out sub-paragraphs (9) to (12).
Gareth Thomas
Thank you, Mr Twigg. You will understand the frustration of Labour Members present that Ministers are once again seeking to get through a whole bunch of regulations using the negative procedure, rather than the affirmative resolution procedure. Amendments 9 to 18 seek to make it a requirement that the affirmative resolution procedure be used for every set of regulations that Ministers want to propose under the procurement chapters of these two free trade agreements.
In making the case, I note that the affirmative resolution procedure is by no means a perfect process. However, it is better than the negative procedure. Without the affirmative process, Ministers would have carte blanche to introduce regulations based on these procurement chapters without the slightest hint of anything resembling parliamentary scrutiny. The negative resolution procedure that the Government propose is the least rigorous of all parliamentary procedures available to the House for scrutiny.
Having served in government, I can understand the Minister’s appetite to avoid scrutiny. There is very little to be gained for a Minister of State or an Under-Secretary of State in having to come and justify to a parliamentary Committee why particular regulations should be introduced. However, it is none the less important that Parliament has the opportunity to ask questions about regulations that are being introduced and to consider whether they fit with the objectives that were set out for the trade negotiations and actually seek to achieve those objectives.
It is worth remembering that the last negative instrument to be successfully annulled, as I understand it, was the Paraffin (Maximum Retail Prices) (Revocation) (No. 3) Order 1979. With such a small chance of a negative instrument being successfully annulled, I can well understand the appetite of Ministers to use this process.
Sir James Duddridge
Does not the evidence that the hon. Gentleman has brought forward actually negate his case? If there was a genuine problem and there had been some error, the Committee would have voted against it or, indeed, the Government would have withdrawn the measure.
Gareth Thomas
I gently suggest to the Minister that it is much better not to get ourselves into the position where we have to persuade Members from all parts of the House to vote down an order. One swallow does not make a summer. Just because there is an example in the far distant past that we should endorse negative instrument, a little bit of parliamentary scrutiny and pressure on the Minister, and a few nerves to make the Minister check their brief in more detail before signing off on a set of regulations, would seem sensible. The scrutiny arrangements for the Australia FTA to date have been poor, and we have had no debate on the Floor of the House on the New Zealand FTA, apart from the Second Reading of this Bill. Given that, we should switch from the negative to the affirmative process, and I gently encourage him to adopt an even more reasonable tone than he has adopted up until now.
Sir James Duddridge
I am sure the Whips will note with criticism the hon. Gentleman saying that I have been reasonable. In all seriousness, I thank hon. Members for the amendments and I hope to provide reassurance as to why the measures are necessary. The hon. Gentleman says he wants to hold my feet to the fire. He suggested that I may not read the brief quite as closely if I do not have to defend it in Parliament, but I will ensure that I do that anyway. I will regularly check my brief.
It is worth remembering that the amendments would not be a vote on the agreements. They would be a vote on the secondary legislation of a trade agreement. By the time these agreements enter into force, Parliament will already have had the opportunity to scrutinise the obligations of the procurement chapter in these agreements through the process set out in the Constitutional Reform and Governance Act 2010. The Government are certainly committed to transparency in our trading arrangements, and we have put in place a suite of enhanced transparency and scrutiny arrangements that go well beyond our statutory obligations, and we will continue to do so. That includes providing the International Trade Committee and the Lords International Agreements Committee with at least three months to report on the agreements before Parliament scrutinises them more formally through the process set out in the Constitutional Reform and Governance Act, which comes later.
For the Australia agreement, the period was triggered after Parliament had had the deal available to scrutinise for over six months, and it has already been subject to scrutiny through the Trade and Agriculture Commission, which published its report in April 2022. The Department has since responded with the publication of the Australia agreement report under section 42 of the Agriculture Act 2020. In addition, future changes in the procurement chapters will relate mostly to machinery of government changes and the subsequent updating of lists.
This is not a novel procedure. Section 1 of the Trade Act 2021 enabled the implementation of the UK’s membership of the World Trade Organisation agreement on government procurement to operate in a similar way. This approach was acceptable to Parliament, and we received no negative comments from the Delegated Powers and Regulatory Reform Committee. These sessions and holding Ministers to account are useful, but Ministers are a limited resource. We are not an infinite number, and we should perhaps focus on the more critical pieces of legislation rather than just statutory instruments. I therefore ask the hon. Member to withdraw his amendment.
Gareth Thomas
I am grateful to the Minister for his response, but I gently suggest that we have not been deluged with regulations from the Department for International Trade, so I do not buy his argument that Ministers or shadow Ministers are so busy that there is no time to discuss regulations. If our amendment is accepted, it may well be that our debates would be relatively short, and they would provide the opportunity to ask questions and raise issues that are slightly outwith this debate but important to a range of stakeholders outside the House. It would make sense to switch from the negative to the affirmative process, so I intend to press the amendment to a vote.
Question put, That the amendment be made.
Gareth Thomas
I beg to move amendment 6, in schedule 2, page 10, leave out lines 31 to 38.
Amendment 6 would delete part 3 of schedule 2. I want to focus on what that would mean. Part 3 says:
“The power to make regulations under section 1 in relation to”
both Government procurement chapters, 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.”
The Minister seems to be asking for carte blanche to be able to make any change to the procurement chapters without proper parliamentary scrutiny, and certainly before the UK-New Zealand FTA has been ratified. I am open to persuasion as to why such a requirement is necessary, but I wonder whether Ministers are again seeking to avoid serious parliamentary scrutiny, specifically on the terms of the UK-New Zealand FTA. The Minister will know that there has not been any sustained debate in the Chamber on the whole of that free trade agreement. I look forward to hearing his justification for this particular part of schedule 2.
Sir James Duddridge
I hope to be able to provide that assurance. This part of the Bill is there not at the request of Ministers, but at the request of lawyers, to give legal certainty and predictability. It is a necessary part of the process of implementing trade agreements to make the legislation before ratifying.
The amendment would create legal uncertainty regarding the process of implementing the two agreements. Several steps need to be taken to get agreements into force and allow UK businesses and, indeed, consumers to benefit from the significant economic advantages that they provide. Entry into force is the final step. However, the UK can proceed to enter into force only after it has ratified the agreements. In turn, ratification may only be agreed to once all the necessary domestic legislation is in place. Without the provision that the amendment seeks to change, there would be legal uncertainty about whether domestic legislation could be made before ratification. That is the reason behind it. I hope that the hon. Gentleman, having heard my response, will withdraw what I hope will turn out to be a probing amendment.
Gareth Thomas
I am grateful to the Minister for his explanation. I now understand a little better the reason for the provision. I will reflect on his remarks, but for now I will not press this to a vote. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Clause 3 ordered to stand part of the Bill.
Clause 4
Extent, commencement and short title
The Chair
With this it will be convenient to discuss the following:
Amendment 8, in clause 4, page 3, line 5, at end insert—
“(4) This Act expires at the end of the period of two years beginning with the day on which it is passed.”
Amendment 21, in clause 4, page 3, line 5, at end insert—
“(4) If the United Kingdom becomes a full member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, this Act expires on the day that the United Kingdom becomes a full member.”
Ms Qaisar
The UK Government are negotiating trade deals for the first time in more than 30 years, and that is not an easy task. Trade deals in matters of procurement are not just for Government photo ops; they impact on every fibre of our and our constituents’ being. Therefore, we must have high levels of security at the start, during and at the end of discussion about the legislation. I appreciate that we have the CRaG—Constitutional Reform and Governance Act 2010—process during the drafting of legislation, but as has been said this afternoon, it does not guarantee a debate or any votes in Parliament. It is a poor scrutiny tool from the outset.
In setting an expiration date, our amendment would allow for scrutiny at the end. That would enable Parliament to judge the legislation’s effectiveness on the proposed date of December 2027. That would also allow our constituents to examine the usefulness of the legislation in matters of procurement that have arisen over the years. We must also consider the potential of traders across the country getting locked into agreements that do not work for them. Consumer group Which? has already found that 72% of people in the UK do not want food that does not meet current standards coming in through trade deals. The majority of survey respondents—67%—also felt that the UK Government provide a poor level of information about new trade deals. The amendment would ensure that we bring public and parliamentary scrutiny to the forefront. I urge colleagues to support the amendment.
Gareth Thomas
Amendments 8 and 21 are probing amendments, to understand better how the Procurement Bill and potential accession to the CPTPP might affect the provisions in the procurement chapters of the Australia and New Zealand free trade agreements.
As I understand it, the Minister has touched on some of the reasons why the New Zealand and Australia free trade agreements need to stay on the statute book for considerable time to come, but I want to understand whether the Procurement Bill will provide the opportunity to sweep up the measures proposed by the two amendments, so that this Bill can be taken off the statute book to avoid any legal uncertainty. Clarity on that would be helpful. If there is a chance that the legislation will not be necessary, because the Procurement Bill would take the matter forward, that creates additional opportunities for Members to consider the impact of the trade legislation going forward.
I wonder whether Ministers might be tempted to think, “Let us stick with the Trade (Australia and New Zealand) Bill because we have no idea whether the Procurement Bill will survive in its current iteration.” I say gently that, given the chaos in the Minister’s party, one does not know which legislation will survive if there are further ministerial changes. He will understand that there has been considerable criticism of the Procurement Bill. Clearly, it would not be appropriate to dive into that now, but it would be helpful to understand the interplay between that crucial piece of UK domestic legislation and the two procurement chapters. If the experts in his Department are wrong about the concerns that Professor Sanchez-Graells outlined about possible GPA-minus provisions now being the problem for British exporters to Australia and Australian exporters coming here, the Procurement Bill might provide an opportunity to sort those problems out.
Amendment 21 refers to the CPTPP and the potential accession of the UK to it. It would be good to hear from the Minister how the negotiations are going and what might be a reasonable timeline for the House to have the chance to consider the accession documents to the CPTPP. I ask that because the provisions in the procurement chapter of the Australia free trade agreement appear to largely mirror the provisions in the procurement chapter of the CPTPP. Everything that has been written about the CPTPP suggests that we will be rule takers and will not be able to shape in any significant way the procurement chapter of the CPTPP that we might wish to join. Was that part of the motivation for Ministers deciding to just roll over and accept the request of the Australians for the GPA-minus provisions in the procurement chapter of the Australia FTA? We would simply have to accept them on joining the CPTPP.
The Minister will know that a series of trade experts have suggested that we will be rule takers if the CPTPP comes into force. We will not have much opportunity to influence the negotiations, and that is a considerable concern given that the idea of Britain being a rule taker was a motivation for many to vote for leaving the European Union. I look forward to the Minister explaining the interplay between provisions in the Trade (Australia and New Zealand) Bill and those in the Procurement Bill and the CPTPP.
Sir James Duddridge
I welcome the probing amendments tabled by the official Opposition and the amendment tabled by the Scottish National—or nationalist—party. Forgive me, but I forget which word it is. [Interruption.] I will do my homework better next time.
Amendments 2, 8 and 21 would ensure that the power in the Bill expired, even if provision under it was still required. The Bill is about implementing and maintaining our commitments in the procurement chapters of the agreements. That means that we need to ensure day one compliance as well as compliance beyond that. That is why the amendments that would remove the power are inappropriate. Although the amendments would permit the procurement chapters to be implemented, they would remove the power when it might be needed for modifications, and that would not be a satisfactory position to be in. Future modifications in the procurement chapters may relate to machinery of government changes and updating of lists. An example is when the Department for Culture, Media and Sport added digital. I do not think that we would want to come back to this Committee to make such a change.
Let me deal with amendments 8 and 21, tabled by the hon. Member for Harrow West. Bilateral trade agreements, like the ones dealt with in this Bill, sit alongside agreements like the comprehensive and progressive agreement for trans-Pacific partnership and the World Trade Organisation agreement on Government procurement. The procurement chapters of these deals will not be superseded by the accession to the trans-Pacific partnership. Accordingly, the powers in this Bill will still be needed after the accession in order to implement future modifications to both these agreements.
Sir James Duddridge
I will, but I suspect I am coming to the hon. Gentleman’s point.
Gareth Thomas
The Minister mentioned the GPA, which provides me with the opportunity to intervene and press him on it. Presumably the Government are still significant supporters of the GPA, but I hope that the Minister accepts my point about the need for the GPA to be a dynamic and more modernised agreement. If he does accept that, what are Ministers doing to try to convene signatories to the GPA in order to start the process of modernising that agreement?
Sir James Duddridge
I agree that the GPA should be dynamic. In terms of what Ministers are doing, I can speak for myself: at G20, I met Dr Bright Okogu, Professor Ngozi’s right-hand man in the WTO, and I agreed that I would go to Geneva for probably a week and meet all the officials there to get up to speed with the detail at a quiet time, rather than the busy time of a multilateral agreement, to raise exactly these types of issues, because we believe in a free trading system globally and the value of promoting that for all UK equity—it is not just exports, but the cost of living and also development, which both of us care massively about.
I think that I have covered the issue about the CPTPP. I cannot give a running commentary on negotiations there. It is a high priority for the Government. At my most recent meetings with internationals, I raised it, both bilaterally and multilaterally, and I will continue to do so, as will other Ministers. The Australia deal and this Bill are a stepping stone to get there. As a precondition, we want to get this done so that we are on a firmer footing for the next transition.
Gareth Thomas
The hon. Gentleman will be well aware, I suspect, that one of the big concerns about the CPTPP relates to investor-state dispute settlement. One of the mildly reassuring things about the procurement chapters of the Australia and New Zealand FTAs is that they do not allow for investor-state dispute settlement to kick in in a very obvious way. The CPTPP appears to be much more explicitly in favour of ISDS. It would be helpful to understand from the Minister, at a time of his convenience, whether the Government are accepting the principles of ISDS, locked as they are into the CPTPP, or whether he is actively pushing for them to be deleted from the requirements that Britain has to sign up to in order to accede to the CPTPP.
Sir James Duddridge
I really cannot, as part of this Bill, give any more to the hon. Gentleman than I have done on my discussions in international forums and my intention to go out to Geneva. I want to go out there open-minded. A number of issues will be discussed in Geneva above and beyond this one, and I want to have an open discussion. I do not want to prioritise the hon. Gentleman’s equities and desires, or anything else; I want to listen openly to what Dr Ngozi says, and talk about how her priorities fit with the Government’s and how we can move forward together. That is the nature of multilateralism: because every member has a vote, the process can easily be held up, so I am resistant to being too strong in accepting what the hon. Gentleman has said. However, I am very sympathetic to it.
Gareth Thomas
I am grateful to the Minister for his explanation about his upcoming meeting with the staff of Professor Ngozi, who is a great figure internationally. The Minister—I do not chastise him in any way for this—had to have a discussion with his Whip, the hon. Member for Workington, but the question I asked was whether ISDS was included in the CPTPP. I wonder whether the Minister might be willing to look at the record and perhaps drop me a note about the question I actually asked.
Sir James Duddridge
I will certainly do so.
Turning to the question of whether the powers fall away, as ever it is slightly more complicated than yes or no. The powers in clause 1(b) for dealing with matters arising out of, or related to, the FTA chapters will cease to exist for England, Wales and Northern Ireland when the new procurement system becomes law through the Procurement Bill, assuming that all happens; those functions will instead be carried out through the powers in clause 82 of that Bill. It is different for Scotland, because competency for treaty making is at the UK level, but the actual procurement legislation and processes are done by the devolved Assembly. Scotland has separate procurement regulations from the rest of the UK and will retain those regulations after the Procurement Bill comes into effect.
Ms Qaisar
The Minister struggled to say the name of the Scottish National party at the start of his speech. I was a modern studies teacher before my election, and I would be more than happy to share my old PowerPoints on Scottish politics with him if he is struggling to remember the name of the largest party in Scotland.
Over the course of today’s sitting, we have heard time and time again—mainly from Opposition Members—that there has been a lack of scrutiny of this legislation. The amendment proposes that we can come back to this House in five years’ time and discuss the reality of how this trade deal has impacted not just us but our constituents. Trade deals are no longer pieces of paper that are signed by Trade Secretaries—they impact the fibre of our constituencies across all four nations. We therefore intend to push the amendment to a Division.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss the following:
New clause 2—Assessment of impact on hill farmers and crofters in Scotland—
“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on hill farmers and crofters in Scotland within six months of Regulations made under section 1 coming into force and every six months thereafter.
(2) The impact assessment under subsection (1) must be laid before both Houses of Parliament and before the Scottish Parliament.”
New clause 3—Impact assessment: Geographical Indications—
“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on the operation of Geographical Indications in the United Kingdom within two years of Regulations made under section 1 of this Act coming into force.”
New clause 4—Impact assessment—
“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters within twelve months of the coming into force of Regulations made under section 1 of this Act and every three years thereafter.”
Ms Qaisar
The SNP has proposed new clauses 1, 2 and 3 because we need impact assessments to fully examine the practicalities of these trade deals in matters of procurement, which is so important. I will begin with new clause 1. By examining the social, economic and environmental impacts, we can ensure that we are presented with a fair assessment. That is especially important, as we believe that the UK Government have rushed these trade deals and matters of procurement through Parliament with little to no scrutiny.
While the Bill is narrow in its focus on the procurement chapters of these two agreements, it is important to note the huge potential for imports to increase. Australia currently exports 5,000 tonnes of beef to the UK each year, but the agreement will allow 35,000 tonnes in the first year, increasing each year after that. We know that Australian producers do not have to adhere to the same animal welfare and environmental standards as Scottish farmers. It is a similar story with the agreement with New Zealand, under which exports to the UK beef market will rise to 68,000 tonnes by year 15 of the agreement.
Crucially, there are almost no benefits in this deal for Scotland’s food and drink sector. All this legislation achieves is to expose the Scottish agricultural market to the most export-orientated food producers in the world. Our new clause seeks to ensure that we can examine the impact of the deal. The UK Government’s own analysis shows that the deal with New Zealand will deliver a mere 0.03% of UK GDP benefit over 15 years, and the Australia deal will contribute 0.08%. Scotland has been forced against its will to trade outside the EU, tied to this UK Government, so that they can pretend Brexit is working. That is an undesirable position to be in, but unfortunately it is the position we are in, so we must try to protect Scottish interests as best we can. The impact of this agreement will be felt all across Scotland, so I urge colleagues to back new clause 1, as an impact assessment will improve this piece of legislation and future trade deals.
New clause 2 would provide for us to assess the impact of the implementation of the procurement chapters on hill farmers and crofters in Scotland every six months. Scottish producers are likely to be undercut by lower-quality goods in procurement, and regular impact assessment would allow us to keep track of any potential undercutting. It would also highlight the potential harm that this deal would do to Scottish farmers.
We know that Australia and New Zealand producers are not held to the high standards that Scottish producers are. The UK has put no environmental conditions on the agricultural products it will accept from Australia and New Zealand. The UK Government’s own advisers have conceded that pesticide overuse in Australia is a valid concern for UK farming. There are 144 highly hazardous pesticides authorised for use in Australia—many of the bee-killing variety—which is almost double the figure in the UK. Australian poultry farmers use 16 times more antibiotics per animal than British poultry farmers, and the Australian pig industry uses three times more antibiotics per animal.
While matters relating to food standards fall within the competency of devolved Administrations, they have no power to exclude imported products on the basis of how they have been produced. The Scottish Government have no power to exclude produce awash with pesticides and antibiotics from Australia, and already since Brexit the UK Government have fallen behind the EU on farm antibiotic standards. This undercutting of standards means that meat costs less in the UK if it has been shipped in from Australia or New Zealand. Where does that leave Scottish farmers? Analysis by Quality Meat Scotland has found that
“New Zealand beef farmgate prices are 25-30% lower than Scottish farmgate prices”
and that New Zealand lamb farm-gate prices are
“10% lower than their Scottish counterparts”,
undercutting Scottish farmers on price.
We are in a food security crisis within a cost of living crisis. New clause 2 would ensure that future generations of hill farmers and crofters in Scotland are protected. Last week, during the Bill’s evidence session, we heard from Donald MacKinnon from the Scottish Crofting Federation, who said
“I reiterate that it is so important that these trade deals are given the scrutiny that they deserve. The really important thing is that we consider all the potential unintended consequences—for our sector, in particular—of what may be well meaning motivations.”––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 32, Q39.]
None of us has a crystal ball to show us what potential unintended consequences may result from the legislation we are debating. Therefore, it makes logical and economic sense for the UK Government to commit to impact assessments and to back new clause 2.
Going beyond the unfair economics, we do not believe that the community-level impacts that these deals will have on our rural languages, rural local cultures and landscape and on the mental health of farmers, food processors and all those who support them across Scotland have been adequately taken into account. Therefore, supporting new clause 2 would ensure that we put Scottish hill farmers and crofters at the heart of this legislation. Crucially, having impact assessments could help to mitigate the damaging impact that these deals could have on Scottish producers. They would also ensure accountability, as we have stated that they would
“be laid before both Houses of Parliament and before the Scottish Parliament.”
Moving on to new clause 3, we also propose an impact assessment on geographically indications. The food and drink industry is vital in Scotland. Scotland is, of course, world-renowned for its production of whisky, beef and lamb.
Drew Hendry
My hon. Friend mentioned Scotch whisky, and having the safeguard of geographical protections is absolutely vital to that industry, as it is for many others, and I am sure she will touch on that. Is it not a small ask for the Government to include this, in a week where they have just abandoned their pledge to freeze alcohol duty, costing millions, and where their mishandling of the trade negotiations with India threaten even higher tariffs for the Scotch whisky industry, which is a massive export for Scotland? Of course, it sits very proudly in the UK balance of trade as well.
Ms Qaisar
I thank my hon. Friend for his intervention. He is correct, because there is real concern that these industries will be threatened by imitation products, which risks undercutting Scottish companies.
Geographical indications are of considerable importance for Scotland because, as I say, they protect the origins of our world-renowned products. Examples include Scotch beef, Scottish-farmed salmon and, as my hon. Friend said, Scotch whisky. The UK Government did not secure recognition of agrifood geographical indications in their agreement with New Zealand, which has, with the EU, now succeeded in gaining recognition of its agrifood GIs in its free trade agreements.
The UK-Australia deal only commits to letting the UK put forward potential geographical indications if Australia introduces bespoke GI schemes for iconic Scottish spirits and agrifoods, rather than including a full list of recognised GIs from day one of the deal, as well as the ability to enhance the list.
Drew Hendry
Does my hon. Friend find it strange that this has been omitted from the Bill and has not been considered until now, given the impact on rural constituencies across Scotland and the fact that one of the people who presented the Bill is in fact the Secretary of State for Scotland?
Ms Qaisar
I thank my hon. Friend for his intervention; he is completely correct. What people may fail to consider—it is important to remember this—is that the food and drinks industry is twice as important to the Scottish economy as to the UK as a whole, and the food and drink export trade is four times as important to the Scottish economy. The legislation in front of us will impact industry, with the UK-Australia trade deal expected to cause a £94 million hit to UK farming, forestry and fishing per year and a £225 million hit to the semi-processed food sector per year. However, UK Ministers pressed ahead with these deals despite prior warnings, effectively treating Scottish interests as expendable.
Dame Nia Griffith
I rise to speak about new clause 4, but I will briefly mention new clauses 1, 2 and 3. I commend the SNP for laying them, but I gently suggest that the issues in them could be covered in new clause 4, which proposes having a proper impact assessment that takes account of the interests of the four nations.
I will not repeat everything I said this morning, which I am sure the Committee will be glad to hear, but the reasons for wanting country-specific impact assessments—and region-specific impact assessments in England—of the ongoing implementation of the Bill, its effect on procurement and the economic effects of the procurement clauses of the FTAs are very much to do the different characteristics and the different proportions of GVA that are countable by different sectors, as mentioned by the hon. Member for Airdrie and Shotts. Within the devolution settlement there are powers regarding agriculture, economic development and procurement policies that the different nations have, which all overlap with what is in the Bill.
There are particular areas that are of great concern. Earlier I mentioned—I do not think the Minister has quite answered this—the power to unilaterally accelerate the elimination of tariffs. Clearly, it would be of huge importance if the UK Government wished to do that and allow in more meat from Australia and New Zealand. We would clearly want consultation on that, but we would also need proper impact assessments to evaluate the situation, and those need to be country-specific impact assessments. As I mentioned earlier, we have is just a group of figures that are region and nation-based.
The other issue—the Minister looked rather quizzically at me before—is the massive use of antibiotics by certain farmers in Australia and New Zealand and the cumulative impact that that will have on the food chain. Again, that needs to be looked at in detail from the perspective of not only the potential commercial advantage it could give over Welsh, Scottish and Cumbrian farmers but what it is doing to our food chain. Linked to that, of course, are pesticides and the sad fact that the Government have accepted the use of pesticides that we would not use in this country. None of these things is going to go away—they will be there for some considerable time and could be in our systems permanently.
On geographical indications, it is an immense disappointment that neither the Australian nor the New Zealand trade agreements include geographical indications. It is a complete failure by the UK Government. The EU made an agreement with New Zealand that did include geographical indications. There will clearly be a competitive advantage for goods from the EU being able to fly their flag and show geographical indications that our goods and our exports will not have. That is a great pity.
I return to the impact on the different nations of the procurement parts of the Bill. The New Zealand agreement contains a general bilateral safeguard mechanism, which is available if the elimination of customs duty causes an increase in imports that threatens or results in serious injury to domestic industries for any given good or products. The Welsh Government does not have that power, because it is not regionally or nationally based—a challenge on those grounds has to be put forward by the UK. We need to have information from the nations about the impact on the particular sectors, which will inform whether there is a danger and whether to flag it up and invoke that bilateral safety mechanism.
It is extremely important that we should not let negative impacts accumulate. That is why we propose an impact assessment within 12 months, and repeated assessments every three years. We know there is a 15-year gap until the full free tariffs come in, on meat, for example, but it is no good waiting 15 years and then finding we have no industry. We should be flagging up and knowing exactly what is happening. As the Minister said, it will not happen on day one; it will be gradual. We need a very specific impact assessment so that we know what is happening.
It may surprise people to know that New Zealand has only ratified six of the eight core International Labour Organisation conventions, which we touched on briefly this morning. It does not have a minimum age for starting work, as long as the work does not interfere with school or is not a matter of concern for health and safety. The Welsh Government have asked for clarification from the UK Government on whether not adhering to the same labour standards as the UK will give New Zealand an advantage. In addition, New Zealand does not protect strikes on economic and social grounds, only on collective bargaining and health and safety. These are important issues and we must keep an eye on exactly what is going on with the procurement and what opportunities and challenges there are, and ensure that the Minister takes action sooner rather than later if we find there are difficulties.
Finally, I would reiterate that there are huge differences between different parts of England and different nations of the UK in terms of the sectors they are dependent on and the impact that anything injurious to any of those sectors might have for their populations.
Sir James Duddridge
May I clarify, Mr Twigg, that we are considering all the new clauses together?
The Chair
Yes. There will be separate votes, but we are considering the new clauses together.
Sir James Duddridge
Thank, you Mr Twigg.
The Government are committed to transparency. We have put forward a suite of enhanced transparency and scrutiny arrangements that go well beyond our statutory obligations.
Lloyd Russell-Moyle
I am pleased to hear about the Government’s commitment to transparency, but at 3 o’clock, the Secretary of State cancelled her meeting with the Chair of the International Trade Committee. He turned up to the Department, where an official said, “The Secretary of State is going to be in the House for votes so cannot meet you now. We will have to postpone to another week.” Is that the reset that we were promised and the kind of openness and transparency that we should expect?
Sir James Duddridge
I have made the point that we want to establish a good relationship with the International Trade Committee, and the Secretary of State giving evidence to it is clearly part of that. The hon. Gentleman will know that Ministers sometimes need to deal with matters urgently. I do not know what other matters are going on, but I am sure that the Secretary of State has apologised profusely and looks forward—as I do—to attending that Committee. I am more than happy to update the hon. Gentleman in a bit more detail, informally—perhaps even later today if I have time to go back to the Department.
Gareth Thomas
As part of this new spirit of transparency from the new ministerial team at the Department for International Trade, will the Minister commit to publishing the analysis used to produce the impact assessment that the Government published for the FTAs? As I understand it, Ministers are refusing to publish the modelling used to generate that assessment. That leaves a slightly cynical taste in the mouth. One suspects that the economic model is not being released because the impact assessment was perhaps slightly inflated.
Sir James Duddridge
I would like to make it clear that this is not a new plan for transparency. I am being credited, to a degree, with what is just the old order and transparency—[Interruption.]
Sir James Duddridge
I am sorry, Mr Twigg. I will stick entirely to new clauses 1, 2 and 3.
I am more than happy to take away the issue of impact assessments, and look at the formula and what was disclosed. I have read the document, but it is very big. I will probe and look at what has already been disclosed before asking the Department to disclose further information.
Sir James Duddridge
I am more than happy to give way but I think I am unlikely to be able to provide the hon. Gentleman with more information than I already have.
Gareth Thomas
I suggest to the Minister that he should approach that discussion with his officials in a slightly different way. Why does he not go to his officials and ask, “Is there any reason why we cannot publish all the economic modelling behind the impact assessment?”
Sir James Duddridge
I thank the hon. Gentleman for his suggestions but, with respect, I will do things my way if that is okay.
We published impact assessments within the agreements—we have spoken about that already. In the reports, the Department provides analytical evidence as a base, but we will do more. I have already spoken about the five-year and two-year assessments.
On UK suppliers competing for procurements, there is a designated team in the Department—complemented by staff from Australia and New Zealand—who will support UK businesses across the country. I have already seen a bit of that.
Sir James Duddridge
I believe that the Secretary of State was tasting Scotch whisky in Scotland last week—that was certainly the plan, but forgive me if things changed. I have plans to go to Scotland myself, but I do not want to say where I am going because I have not yet informed the Member of Parliament for that area. The Department will ensure that I do visits across every nation, every region and in every sector, so that I am not going back to Ipswich or the east of England to look at food and drink every single time. As a reward to this wonderful Committee, if anyone wants me to come and visit their constituency—particularly with the Bill’s export or procurement angles in mind, and perhaps some other bits and pieces as well—I would be more than happy to do so.
Sir James Duddridge
I may just be coming to the point that the hon. Lady wishes to make. The UK prohibits the use of artificial growth hormones in both domestic production and imported meats. Nothing in the deal changes that important issue. The Trade and Agriculture Commission found that there was
“no reason to believe the scheme is not reliable and robust.”
The Chair
Order. I will suspend the sitting for Divisions in the House. I remind Members to come back promptly so that we can get on, as we are nearing the end of proceedings.
Sir James Duddridge
Yes. I have just two or three points. On the argument of the hon. Member for Llanelli, who challenged me outside the Committee Room to go further and be bolder, absolutely the Government should go further and be bolder in this regard, but not in this procurement Bill.
On Jersey potatoes, I was tempted to offer a PowerPoint presentation on the United Kingdom, given that the hon. Member for Airdrie and Shotts is going to send me one on Scotland. I remind the Committee that Jersey is a Crown dependency, and Crown dependencies and overseas territories are not part of this Bill.
I turn to some of the issues raised by the Scottish National party. I think they are inadvertently—I am sure not vertently, if that is a word—part of the anti-growth coalition, because my briefing says that this Bill is rather good for Scotland. I find myself in the position of promoting Scotland—perhaps quite rightly, as the Minister—while the hon. Lady is talking it down a little. The Australia FTA alone is expected to boost the economy by approximately £120 million. Adopt this good news; put it in a press release. Tariffs on Scotch whisky have been cut to 0%.
Drew Hendry
It is on that subject. I am grateful to the Minister for giving way. To be clear, this is about the geographical indicators not the deal itself, in terms of the trade involved. It is about protecting Scottish whisky and the brand.
Sir James Duddridge
There are no changes to geographical indicators in the Bill, but that is not to say we could not do something differently in future. I know there are issues with different spellings of whisky in different places, including in Northern Ireland. I also understand that there is a Northern Ireland issue to this. It has many distilleries—I believe eight—and Members of the Committee are invited to taste the products of some on 27 October.
Gareth Thomas
May I point out gently to the Minister that the point on GIs is that Ministers secured nothing in terms of protection for British GIs in the Australia deal. That comes on top of a very lengthy delay to get any GIs agreed with Japan. There is a worrying pattern of British businesses and good British products not getting the protection they deserve.
Sir James Duddridge
This is not an adverse change. It is just the start of an agreement and not everything can be done on day one.
I have further good news for the Scottish National party. It is slightly outside the scope of procurement, but there will be big benefits from the financial services industry, particularly in Edinburgh. Exporters were very keen, when the Secretary of State went there, to explain that they were happy about tariffs being reduced. That will reduce prices and increase profit. There is good news for Scottish salmon—not for the salmon themselves, as they will be dead—because they are guaranteed to clear customs in six hours. Hon. Members will know that time is an issue with fresh products. Scotland’s services firms, of which there are many, will benefit from access to millions of pounds worth of extra Government contracts. That is good news for the United Kingdom and good news for Scotland.
Ms Qaisar
Thank you, Mr Twigg. I thank the Minister for his contribution. He is more than welcome to come to Scotland. I have a distillery in my constituency of Airdrie and Shotts and he is more than welcome to visit, though I warn him that he may not get as good a response as he hopes, as a Tory MP walking the streets of Scotland.
The Chair
Order. A Division has been called. The maximum is 15 minutes but please be back as quickly as you can after the vote. We shall continue then if the Whips are happy.
The Chair
Anum Qaisar, I am not sure you had quite finished speaking. Do you want to continue?
Sir James Duddridge
Any misunderstanding, I am sure, was accidental. The hon. Lady did actually invite me. I understand how comments can be misinterpreted, and we need to be very careful. Inadvertently, some people might have taken fright at the suggestion that I might not be welcome in Scotland. I have always found Scotland to be very hospitable and welcoming, and look forward to visiting. This perhaps ups the priority of visiting the hon. Lady’s constituency.
Ms Qaisar
That invite is on the table. The reality is, of course, that Ministers in the UK Government have not protected geographical indications. The Minister claimed that he could not do everything on day one. That is understandable, but this is before day one; he has a prime opportunity to do something. I urge him and his colleagues to back new clauses 1, 2, and specifically 3, which protects geographical indicators.
I should say to Labour colleagues that new clause 1 does not mention Scotland specifically. We would like impact assessments on all four nations. The hon. Member for Llanelli said that it was a complete failure of the UK Government not to include geographical indicators, so I hope that I can look forward to her and her colleagues’ support for new clause 3.
Question put, That the clause be read a Second time.
Sir James Duddridge
On a point of order, Mr Twigg. I thank the Clerks for their advice, the Doorkeepers for keeping good order, my super-excellent team of officials, and my private office, who are truly wonderful—so much so that I have asked my private secretary to take a note of all the Clerks and Doorkeepers who helped, and have asked them to drinks in the Churchill Room, in the hope that we will soon complete Report and Third Reading. I extend the invitation to you, Mr Twigg, and to Mr Pritchard. This legislation implements the Department’s first from-scratch agreement, and officials of the Department have done us proud.
As we await Report and Third Reading, however, issues are bound to crop up. I encourage hon. Members to discuss those with me. In fact, at 7 o’clock this evening, I will be available in the Smoking Room, if anyone wishes to continue discussion on the agreements. I am more than happy to buy Members whatever tickles their fancy—an Australian wine, a New Zealand wine, an English wine, or whiskies from all nations.
Gareth Thomas
Further to that point of order, Mr Twigg. On behalf of the official Opposition, I add my thanks to you and to Mr Pritchard for the generous way in which you have chaired proceedings. I must also thank the Clerks for their assistance with drafting, the Hansard staff for the challenging job that they will have to do to understand my notes in particular, and the Doorkeepers for keeping order. I can well understand why the Minister praises his officials; I hope others will understand if I take the opportunity to praise my one member of staff, who has assisted me in preparing for the Committee.
We have had a lively and provocative debate, in which a whole series of serious issues were raised by hon. Members from the Scottish National party and from the Labour party. I am grateful to my hon. Friends the Members for Llanelli, for Nottingham South, for Brighton, Kemptown, and for Sefton Central for their support.
I note that not one Conservative Back Bencher took the opportunity to praise the person who negotiated the Australia and New Zealand deals today—
Ms Qaisar
Further to that point of order, Mr Twigg. I will not keep the Committee much longer. I echo the thanks to the Clerks and the Doorkeepers, who are the backbone of this place. Somehow, I seem to have had more help than the official Opposition: Katie, Clo and Calum have been fantastic on the research and background. I am sure that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey and I, and others in the SNP, will be knocking on the Minister’s door in coming weeks, championing Scotland, Scottish farmers and Scottish products.
Bill to be reported, without amendment.
Trade (Australia and New Zealand) Bill: Programme (No. 3)
Monday 12th December 2022
(1 year, 4 months ago)
Commons ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 12 December 2022 - (12 Dec 2022)
Trade (Australia and New Zealand) Bill
Monday 12th December 2022
(1 year, 4 months ago)
Commons ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 12 December 2022 - (12 Dec 2022)
18:07 - The House divided: - Ayes: 192 / Noes: 296 - Question accordingly negatived.
18:21 - The House divided: - Ayes: 192 / Noes: 299 - Question accordingly negatived.
18:33 - The House divided: - Ayes: 34 / Noes: 300 - Question accordingly negatived.
18:59 - The House divided: - Ayes: 294 / Noes: 46 - Question accordingly agreed to.
Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
New clause 2—Assessment of impact on farmers—
“At least three months, but not later than six months, after the coming into force of the government procurement Chapter of—
(1) the UK-Australia FTA, and
(2) the UK-New Zealand FTA,
a Minister of the Crown must lay before Parliament an assessment of the impact of the Chapter on farmers in—
(a) each region of England
(b) Scotland
(c) Wales, and
(d) Northern Ireland.”
New clause 3—Impact assessment: equality and human rights—
“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on equality and human rights within three years of the coming into force of Regulations made under section 1 of this Act and every three years thereafter.”
New clause 4—Impact assessment (No. 2)—
“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters within five years of the coming into force of Regulations made under section 1 of this Act and every five years thereafter.
(2) The impact assessment under subsection (1) must present an analysis of—
(a) the impact on each of the four nations of the United Kingdom; and
(b) social, economic and environmental impacts.”
New clause 5—Assessment of impact on hill farmers and crofters in Scotland—
“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on hill farmers and crofters in Scotland within six months of the coming into force of Regulations made under section 1 and every six months thereafter.
(2) The impact assessment under subsection (1) must be laid before both Houses of Parliament and before the Scottish Parliament.”
New clause 6—Assessment of impact on Geographical Indications in the United Kingdom—
“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on the operation of Geographical Indications in the United Kingdom within two years of the coming into force of Regulations made under section 1 of this Act.”
New clause 7—Impact assessment: British farmers—
“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on—
(a) livestock farmers,
(b) arable farmers,
(c) upland farmers,
(d) tenant farmers, and
(e) family farmers.
(2) The impact assessment under subsection (1) must be published within six months of the date of Royal Assent to this Act.”
This new clause would require the Secretary of State to report on the impact of the procurement Chapters on British farmers.
New clause 8—Impact assessment: environmental standards etc—
“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on—
(a) environmental standards,
(b) food standards,
(c) animal welfare standards, and
(d) biodiversity.
(2) The impact assessment under subsection (1) must be published within six months of the date of Royal Assent to this Act.”
This new clause would require the Secretary of State to report on the impact of the procurement Chapters on environmental, food and animal welfare standards, and biodiversity.
New clause 9—Review of effect on small businesses—
“(1) Within six months of the passage of this Act, the Secretary of State must lay before Parliament an assessment of the impact of the implementation of the procurement Chapters on small businesses.
(2) The assessment must consider in particular the impact of those Chapters on the ability of small businesses—
(a) to import goods,
(b) to export goods,
(c) to employ staff, and
(d) to remain solvent.
(3) In this section, “small businesses” means any business which has average headcount of staff of less than 50 in the tax year 2022-23.”
This new clause would require the Secretary of State to report on the impact of the procurement Chapters on small businesses.
New clause 10—Impact assessment: National Health Service—
“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on the National Health Service within three years of the date of Royal Assent to this Act.”
New clause 11—Review of negotiation of procurement Chapters—
“Within one year of the date of Royal Assent to this Act, the Secretary of State must publish—
(a) a review of the lessons learned from the negotiation of the procurement Chapters, and
(b) an assessment of how this experience might inform negotiations of future free trade agreements.”
New clause 12—Super-affirmative procedure—
“(1) This section applies where an instrument is, or, as the case may be, regulations are, subject to the super-affirmative procedure.
(2) A draft of the instrument or regulations must be laid before the relevant institution.
(3) The appropriate authority must have regard to—
(a) any representations,
(b) any resolution of the relevant institution, and
(c) any recommendations of a committee of the relevant institution charged with reporting on the draft,
made during the 60-day period with regard to the draft.
(4) If after the expiry of the 60-day period the instrument is or, as the case may be, regulations are approved by a resolution of the relevant institution, the appropriate authority may make an instrument or statutory rule in the terms of the draft.
(5) If after the expiry of the 60-day period the appropriate authority wishes to proceed with the draft but with material changes, the authority may lay before the relevant institution—
(a) a revised draft, and
(b) a statement giving a summary of the changes proposed.
(6) If the revised draft is approved by a resolution of the relevant institution, the appropriate authority may make an instrument or, as the case may be, statutory rule in the terms of the revised draft.
(7) For the purposes of this section an instrument or statutory rule is made in the terms of a draft if it contains no material changes to its provisions.
(8) In this section, references to the “60-day” period in relation to any draft are to the period of 60 days beginning with the day on which the draft was laid before the relevant institution.
(9) For the purposes of subsection (8) no account is to be taken of any time during which—
(a) if the relevant institution is the Scottish Parliament, Senedd Cymru or the Northern Ireland Assembly, that institution is dissolved or is in recess for more than four days;
(b) if the relevant institution is both Houses of Parliament, Parliament is dissolved or prorogued, or either House of Parliament is adjourned for more than four days.
(10) In this section, “relevant institution” means—
(a) in the case of an instrument to be made by a Minister of the Crown—
(i) for the purposes of subsections (2), (5) and (8), both Houses of Parliament,
(ii) for the purposes of subsection (3), either House of Parliament,
(iii) for the purposes of subsections (4) and (6), each House of Parliament
(b) in the case of an instrument to be made by Scottish Ministers, the Scottish Parliament;
(c) in the case of an instrument to be made by Welsh Ministers, Senedd Cymru;
(d) in the case of regulations to be made by a Northern Ireland department, the Northern Ireland Assembly;
(e) in the case of an instrument to be made by appropriate authorities acting jointly—
(i) for the purposes of subsections (2), (5) and (8), both Houses of Parliament,
(ii) for the purposes of subsection (3), either House of Parliament,
(iii) for the purposes of subsections (4) and (6), each House of Parliament
and, as the case may be, the Scottish Parliament, Senedd Cymru or the Northern Ireland Assembly.”
New clause 13—Impact assessment: climate change—
“The Secretary of State must lay before Parliament an assessment of the impact of the implementation of the procurement Chapters on tackling climate change, not less than two years, but not more than three years, after the passage of this Act.”
New clause 14—Impact assessment: labour rights—
“The Secretary of State must lay before Parliament an assessment of the impact of the implementation of the procurement Chapters on labour rights, not less than two years, but not more than three years, after the passage of this Act.”
New clause 15—Welsh sectoral impact assessment—
“The Secretary of State must publish an assessment of the impact of the procurement Chapters on each economic sector in Wales within twelve months of the coming into force of regulations made under section 1 and every 12 months thereafter.”
This new clause would require the UK Government to publish Wales-specific impact assessments which include an assessment of the impacts on specific sectors.
Amendment 1, in clause 1, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not be made before completion of such public consultation as the appropriate authority considers appropriate with the relevant—
(a) Scottish ministers
(b) Welsh ministers,
(c) department of the Northern Ireland Executive, and
(d) representatives of the English Regions.”
Amendment 2, page 1, line 15, at end insert—
“(3A) Where the appropriate authority is a Minister of the Crown, regulations under subsection (1) may not be made until the appropriate authority has consulted the relevant Scottish ministers in relation to any matters affecting farming in Scotland.”
Amendment 3, page 1, line 15, at end insert—
“(3A) Where the appropriate authority is a Minister of the Crown, regulations under subsection (1) may not be made until the appropriate authority has consulted the relevant Scottish ministers in relation to any matters affecting Scotland.”
Amendment 4, page 1, line 15, at end insert—
“(3A) Regulations under subsection (1) may not come into force before the date on which the procurement Chapters come into force.”
Amendment 5, in clause 4, page 3, line 5, at end insert—
“(4) This Act expires on 31 December 2027.”
Amendment 6, in schedule 2, page 9, line 5, leave out from “to” to end of line 6 and insert “the super-affirmative procedure”.
Amendment 7, page 9, line 8, leave out from “to” to the end of line 9 and insert “the super-affirmative procedure”.
Amendment 17, page 9, line 8, leave out from first “the” to the end of line 9 and insert “affirmative procedure (see section 29 of the Interpretation and Legislative Reform (Scotland) Act 2010).”
Amendment 8, page 9, line 11, leave out from “to” to end of line 12 and insert “the super-affirmative procedure”.
Amendment 9, page 9, line 14, leave out from “to ” to end of line 16 and insert “the super-affirmative procedure”.
Amendment 10, page 9, line 20, leave out sub-paragraph (2).
Amendment 11, page 9, line 25, leave out from “to” to end of line 26 and insert “the super-affirmative procedure”.
Amendment 12, page 9, line 28, leave out “negative” and insert “super-affirmative”.
Amendment 13, page 9, line 29, leave out sub-paragraph (5).
Amendment 14, page 10, line 2, leave out from “to” to end of line 3 and insert “the super-affirmative procedure”.
Amendment 15, page 10, line 5, leave out from “to ” to end of line 7 and insert “the super-affirmative procedure”.
Amendment 16, page 10, line 8, leave out sub-paragraphs (9) to (13).
Gareth Thomas
We made it clear on Second Reading that we want real and meaningful increases in trade, particularly with two of this country’s greatest friends and allies, Australia and New Zealand—both led so ably by progressive Labour Administrations. We therefore made it clear that we would not oppose the Bill. After all, trade is fundamental to this country; it is part of what being British means and it will be a vital weapon in our armoury to tackle the economic crisis that this country faces, which the incompetence of the governing party has so greatly deepened.
We also made it clear, as others have done on both sides of the House, that there are significant concerns about the consequences of the slapdash way in which these deals, especially the Australia deal, were negotiated by Ministers. I am told that Canada is already using the precedent of the Australia deal to press for similar access for its farmers. These amendments are needed to mitigate some of the impact of those mistakes that Ministers made to try to make the best of a bad job.
I am afraid that in Committee there was little attempt to acknowledge, or indeed apologise for, those failings. Nothing since suggests that Ministers at the Department for International Trade have learned the right lessons. Indeed, the recent detailed comments by the former Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Camborne and Redruth (George Eustice)—now freed from the burdens of office and therefore the requirement to cover up for his colleagues—confirmed the widely held view that the Australia deal was bad for Britain. He reinforced the need for significant reforms to how deals are delivered. The current Prime Minister also thought that this was a one-sided deal. Therefore, our amendments and new clauses would help ensure that the procurement chapters, at least, of both deals could be implemented only following serious consultation with all parts of the UK, proper impact assessments, and further detailed and specific scrutiny by this House.
On new clause 1, the Public Bill Committee and the International Trade Committee heard detailed concerns from one of Britain’s leading procurement experts that the Australia deal would worsen the protection for British firms seeking to win Government contracts in Australia, and that major infrastructure or other high-profile British national projects could be disrupted if an Australian firm, unsuccessfully bidding for a contract, went to court to try to overturn the decision using the legal uncertainties that, he argued, are being written into our contract law by this procurement chapter. He also stated that the potential benefits for British businesses of these procurement chapters were likely to be somewhat less than Ministers had claimed.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
My hon. Friend is making a very good point—a point that the Secretary of State for International Trade unfortunately did not seem to be fully up on when we questioned her last week. She has now promised to investigate this area. Is it not a good example of how, not necessarily the legal risk, but the uncertainty will lead multinational companies to divert their trade through regimes that are certain? Britain will therefore lose out as long as there is uncertainty, even if that is not a reality.
Gareth Thomas
My hon. Friend makes an important point. Equally significantly, Professor Sanchez-Graells, in his evidence to the Bill Committee and to the Select Committee, suggested that the protections for British businesses trying to win Government procurement contracts across CPTPP—comprehensive and progressive agreement for trans-Pacific partnership—countries would be damaged if Ministers continued to negotiate similar provisions to those that are in the Australia procurement chapter. We examined his detailed concerns in Committee. The absence of a cogent and compelling rebuttal from the then Minister was striking. To be fair, shortly after the end of the Committee stage, a further letter from the outgoing Minister of State was sent to me, and a copy was placed in the Library. I shared a copy of that letter with Professor Sanchez-Graells, who reiterated his concerns, noting the lack of clear counter arguments for the assertions in that letter. Indeed, there were not any worked-though, real-life examples of the sort that I raised directly with the Minister in Committee to explain why the concerns articulated by Professor Sanchez-Graells are misplaced.
Given that this Bill is specifically about procurement, and given that Professor Sanchez-Graells was one of only two witnesses asked to comment on procurement by either the Bill Committee, the other place’s International Agreements Committee or this House’s own International Trade Committee, it was a little surprising that there was not better preparation by the Department for consideration of his arguments. I do recognise that the Department was in a degree of chaos at the time, with Ministers coming and going, but one can only hope that the Minister replying to this debate has a little more to offer.
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend agree that this underlines the fact that there is not enough scrutiny and democracy in the process, and that this House should have the opportunity to look at the mandate for future deals and to scrutinise the negotiations as well as the ratifications, so that we do not get a deal that offers a hopeless 0.1% GDP growth over 15 years?
Gareth Thomas
Not surprisingly, my hon. Friend leaps ahead of me; I will come on to the issue of parliamentary scrutiny in just a moment.
My last point on the case for new clause 1 is that such an impact assessment would also allow us to explore the extent to which small and medium-sized enterprises were able to take advantage of this trade deal. We know that SMEs need the most support to take advantage of free trade agreements and, given the cuts to the tradeshow access programme, for example, we know that SMEs are likely to face real challenges in exporting. New clause 1 cannot change the way Ministers negotiate future procurement chapters, but it would at least require an honest and detailed assessment of the impact of those chapters on British businesses.
Sir Mark Hendrick (Preston) (Lab/Co-op)
As a member of the International Trade Committee, may I reiterate that point? It was clear to me and many other members of the Committee, as the negotiations went on under two previous International Trade Secretaries, that it was going to be the first deal negotiated from scratch and that therefore there was an attempt to use it as a tick-box exercise, to add to those roll-over deals that were already agreed, and there was haste to get the deal done so they could say for the first time that a separate deal had been done that was not a roll-over.
Gareth Thomas
My hon. Friend makes his point well, and I hope he is able to catch Mr Deputy Speaker’s eye later on so that he can draw it out further.
New clause 2 cannot, I am afraid, put right the disregard of those on the Government Front Bench thus far for the vital role that British farmers play in the economic and social fabric of our country, but we can at least learn from that desperate rush to get any deal with Australia, regardless of the price. I hope Ministers will take this opportunity to acknowledge the mistakes made during the negotiations and will back this new clause. If not, I will seek the permission of the House and put it to a vote. I have said I hope Ministers will acknowledge mistakes, but we do not expect any apologies. After all, there have been so many apologies from the Government over the last few months that their worth has devalued more quickly than sterling under the last Chancellor.
New clause 12 and the consequential amendments 6 to 16 are designed to address some of the cross-party concern about the obvious failures on parliamentary scrutiny that my hon. Friend the Member for Swansea West (Geraint Davies) alluded to. In the usual Conservative tradition, having made such enormous errors in her leadership of the negotiations with Australia, there was only one option for the then Secretary of State: she was promoted. Indeed, in the lucky dip that was this summer’s Tory leadership contest, she won the chance to be Prime Minister for the month and, consistent with her achievements on trade, delivered economic chaos, higher mortgage bills and a return to deep austerity.
The following Secretary of State, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), swiftly fell out with her colleagues—a scenario almost too difficult to imagine. Tories falling out with each other? Who on earth would have seen that happening? Instead of the world-leading scrutiny process we were once promised for new free-trade agreements, she adopted a new one: invisibility. On at least eight separate occasions, the previous Secretary of State failed to front up at the International Trade Committee to answer important questions about the new deal. She seemed somewhat keener to tour the TV studios questioning the work ethic of her then ministerial team.
There is, I have to say, a striking consensus outside the House—across business groups of every economic sector, and among trade experts, charities and non-governmental organisations working on trade—that the CRaG process is not fit for purpose post Brexit, and that one of the key lessons from the Australian FTA negotiations is the need for better parliamentary scrutiny. We cannot deliver that better scrutiny for all FTAs today—not least given the narrow context of this legislation—but we can certainly make sure that Parliament considers further the regulations that implement the procurement chapters of the deals. A super-affirmative provision would give Parliament an additional layer of scrutiny for trade deal regulations under the Bill before those regulations can come into force. I hope, again, that Ministers will have the grace to accept the amendment and will not force me to divide the House.
New clause 10 underlines our concern that trade agreements must work for the NHS and not undermine or make even more difficult the task of repairing a great public service after 12 years of callous mismanagement by this Government. On procurement specifically, the last thing that anyone would want in a trade agreement is carelessly drafted provisions that enable a dispute about whether an overseas-owned building firm lost a redevelopment contract fairly, for example, to delay much-needed investment in new NHS hospitals, or vital funds that could have been spent on new doctors and nurses having to be used to compensate overseas firms for not winning a procurement contract. If the independent expert from whom the Select Committee and the Bill Committee heard evidence is correct, the drafting of the procurement chapter in the Australia trade deal—and, I understand, this is also likely to be so in the CPTPP—creates legal uncertainty in the remedies available to overseas businesses bidding for UK Government contracts. It is possible, then, that major public services such as the NHS could see delays to the rebuilding of hospitals and/or money that could have been spent on recruiting doctors and nurses being wasted on compensation for overseas firms that have lost out in a procurement competition.
Take the Queen Elizabeth Hospital in King’s Lynn, for example, which urgently needs replacing. Its roof must be monitored daily, four out of seven operating theatres have had to be shut, and the roof is held up by 3,600 props. That is, I suggest, one powerful example of the neglect and mismanagement of the NHS under the Conservative party. Imagine if funding were committed to and tenders issued for such a rebuilding project, only for building work to be held up because of the legal uncertainties in the Australia deal on remedies for firms that lost out unfairly in procurement processes. Surely, a proper understanding of the impact of trade deals on our public services is essential. If there is nothing to worry about, Ministers should not find it difficult to commit to providing such assessments, should they?
On new clause 11, it is clear that these trade deals are not going to deliver the sustained boost to economic growth that this country desperately needs. Yet in the land of make-believe that the Conservative party now inhabits, the Australia deal was sold to us as the start of a brave and amazing post-Brexit era for British trade. The deal does not look like global Britain; it looks to the world like gullible Britain. On the upside, unlike the Conservative party’s trade deal with Europe, the Australia and New Zealand trade deals did not lead to the value of the pound dropping, but the tendency of Ministers in the Department for International Trade to exaggerate the benefits of the deals they sign underlines the need for a full review of the lessons learned from each negotiation.
We all remember talk of an “oven-ready” trade deal with the EU—it turned out to be anything but. Then there was the promise of 77 of Britain’s most iconic food and drink products, from Shetland wool and Whitstable oysters to Carmarthen ham, getting immediate protection in Japan as a result of the UK-Japan deal. That has yet to happen. We have had the promise of billions more in procurement contracts for British business, but there is little evidence that that will happen.
Geraint Davies
My hon. Friend knows that a large of amount of New Zealand and Australian trade is historically in left-hand-drive cars that were made by Japanese companies based in Britain. Those companies are leaving the UK, and the EU has now got a trade deal with Japan and will have one with Australia and New Zealand. It is therefore likely that those Japanese companies will produce left-hand-drive cars and sell them to New Zealand and Australia, but not via Britain. In other words, the deal will prove negative rather than marginally positive.
Gareth Thomas
I hope my hon. Friend accepts that the case I am making for providing serious and detailed impact assessments for future trade deals will help to ensure that his point gets proper consideration in future.
I hope that new clauses 13 and 14 remind Ministers of the significance of trade for working people and of the need for trade to play its part in helping to tackle climate change and accelerate progress towards net zero. When the Australia deal was negotiated, two Conservative Governments, both with distinctly underwhelming records on climate and workers’ rights, were in the negotiating room. In this country, the Conservative party has consistently sought to exclude representatives of working people in the trade unions from all significant consultation on trade deals. The trade deals that we as a country sign should raise standards, support better employment and help to tackle climate change instead of, as the Conservative party seems to want, heralding a race to the bottom.
We have tabled amendment 1 to stimulate serious and sustained detailed consultation with all the nations and regions of the United Kingdom on the details of the chapters of the trade deals. It is a reminder to Ministers of the need to step up and improve further their discussions with the devolved Administrations and with the regions of England about the impact of deals on specific communities and economic sectors. My hon. Friend the Member for Llanelli (Dame Nia Griffith) gave the example in Committee of farmers in Wales, where 85% of the beef and 60% to 65% of the sheepmeat produced are consumed in the UK. There is genuine concern about the impact of a huge hike in tariff-free quotas of meat from Australia and New Zealand on our farmers’ ability to sell into our markets, with all the obvious implications for rural communities, family farms and economic, social and cultural life.
There are similar concerns across the regions of England, in Scotland and in Northern Ireland. The Select Committee on International Trade heard evidence that the Department cannot yet model fully the impact of trade deals on the nations and regions of the UK. That is all the more reason for better consultation before new trade regulations come into force.
John Spellar (Warley) (Lab)
On livestock and meat, is not it the case that a sizeable amount of our imports comes not from Australia or New Zealand—and they would not under the agreement—but from the EU and South America?
Gareth Thomas
Absolutely, but we have conceded that the deals are important and that they must be supported, and we want more trade with Australia and New Zealand. I gently say to my right hon. Friend that it is right to ensure that the deals work much better than they appear set to do at the moment. I hope that our amendments will help to achieve that.
Jim Shannon (Strangford) (DUP)
I support the hon. Gentleman’s point in relation to Northern Ireland. We export some 65% of our agriculture produce to the EU and across the world. Ever mindful of that, we seek the same assurance from the Minister—perhaps it will come at the end of the debate—that those in Northern Ireland will not be penalised in any way. I support what the hon. Gentleman is saying.
Gareth Thomas
I am grateful to the hon. Gentleman for his comments and support, and I look forward to the Minister attempting to answer his concerns as well as ours.
Free trade agreements were supposed to be one of those freedoms that would bring us prosperity after Brexit, but, in truth, this is not about Brexit; it is about the competence and ability of this Government, and about the honesty and transparency of Ministers. If they believe in any of those qualities, Government Members will adopt these amendments without Division. If they do not, we will have even more proof that this Government do not even believe in themselves.
Richard Thomson (Gordon) (SNP)
I rise to speak in support of new clauses 4, 5 and 6 and amendments 2, 3, 4, 5 and 17 in the name of my colleague, my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry).
The top line for us at this stage of proceedings is that we cannot support this Bill with the agricultural terms of the trade agreements left unamended, particularly as the Scottish Government have responsibility for agriculture in Scotland but have had no direct role in negotiations and remain deeply concerned by the impact that both of these agreements could have on the Scottish farming sector as well as food and drink.
These deals are being rushed through at an horrendous time for UK farmers. Farmers are already battling with skyrocketing fertiliser prices, animal feed prices jumping by on average 30%, the avian flu outbreak, the Brexit labour shortages, and the rising diesel costs, to name but a few of the issues at present. Therefore, we would think that at this point, rather than rushing on at breakneck speed, there would be opportunity to take the time to get this right—to make sure it is carefully calibrated and is in the interests of farmers and the food and drink industry, and indeed all industries across the totality of the UK economy.
Richard Thomson
If the hon. Member can explain why there is such indecent haste I will be delighted to yield.
Anthony Mangnall
I apologise for interrupting the hon. Gentleman, but perhaps he might tell us what the perfect amount of time is for a trade deal to be signed?
Richard Thomson
I am not sure there is a perfect amount of time, but we can certainly spot a duff deal when it is being rushed through.
Richard Thomson
If the hon. Gentleman will be patient and remain seated I can perhaps go through some of the shortcomings that have arisen, because we were helped enormously in coming to an assessment—
Hywel Williams
Perhaps the hon. Gentleman would like to inform the hon. Member for Totnes (Anthony Mangnall) that the Canada trade deal took seven years and that the much-heralded trade deal with the United States is still awaiting further progress.
Richard Thomson
The hon. Gentleman has communicated that most deftly. The House can see why there was such a rush because we were done a very valuable service the other week by the right hon. Member for Camborne and Redruth (George Eustice), who blew the gaff comprehensively when he revealed that at some point in early summer 2021 the then Trade Secretary took a decision to set an arbitrary target to conclude the trade deal by the G7. I am sure the hon. Member for Totnes (Anthony Mangnall) can see straightaway the problems in trying to conclude any trade deal on such an arbitrary timeline and that the outcomes from doing so would be suboptimal even if it were not for the revelation that was about to follow.
Anthony Mangnall
Since the hon. Gentleman has challenged me, I see no problem in setting timelines if we can achieve them, and in fact what the Government have managed to do is start negotiations with the comprehensive and progressive agreement for trans-pacific partnership, do a trade deal with Japan on digital partnerships, do a digital partnership with Singapore, undertake the Australia and New Zealand deals, look at where we can do a trade deal with India, and start negotiating with Canada. If we set ourselves some objectives, that sets a standard for what we can achieve.
Richard Thomson
If only that were actually the case—[Interruption.] When it comes to achieving good outcomes, the problem here is that this was not done from a position of strength; it was done from a position of considerable weakness, as we will go on to hear. Perhaps the hon. Gentleman was not in the House to hear what the right hon. Member for Camborne and Redruth said, but allow me to elucidate and then he might elect to put the shovel down for a moment. He said that
“at one point the then Trade Secretary asked her Australian opposite number what he would need in order…to conclude an agreement by…G7. Of course, the Australian negotiator…set out the Australian terms, which eventually shaped the deal. We must never repeat that mistake.”—[Official Report, 14 November 2022; Vol. 722, c. 425.]
I accept that there has been a duality in much of what the right hon. Member has said at different times. I wonder whether the hon. Member for Totnes is also to reveal such a duality.
Richard Thomson
No, he is not. Somehow, I did not think that he would.
Clearly, there is nothing quite so liberating as a loss of ministerial responsibility. The right hon. Member went on to tell the House that
“the Australia trade deal is not actually a very good deal for the UK”,
that
“the UK gave away far too much for…too little in return”
and that, further, in his 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.”—[Official Report, 14 November 2022; Vol. 722, c. 424-5.]
The SNP happens to agree that that is probably the best clause in the Bill as it stands—
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
It is the only good clause in the Bill.
Richard Thomson
I hear my hon. Friend say that it is the only good clause; we are not looking to amend it.
Clearly, the right hon. Member’s views in 2022 are significantly more closely aligned with reality than those that he was obliged to defend publicly in 2021 and those which the current crop of Trade Ministers are clearly obliged to defend now.
Drew Hendry
My hon. Friend is doing a much better job than the previous guy did in his role [Laughter.] Is it not a fact that while Government Members try to defend this awful deal, not only have they lost the support of a former Minister who once supported the deal and now, freed from office, thinks it is awful, but, actually, their own Prime Minister thinks that this is a bad deal as well?
Richard Thomson
I thank my hon. Friend for that. It is quite clear that the objective was to get chalk on the board rather than to get any trade deal in place that might actually improve on or even equal or replicate that which was there. The thing is, the Government did not need to travel far to get the feedback that this was not a good deal. Scottish sheep and beef farmers could have told them that it was not a good deal; indeed, they tried to do so from the outset. They knew fine well that these deals would undercut UK farmers while delivering next to no benefits for the agrifood sector at large. It was clearly far more important for the then Prime Minister to be seen to be getting Brexit done and forging on with deals—whether they were any good or not—than to secure positive outcomes for consumers and producers in this country.
As there is clearly nothing quite so liberating as the loss of ministerial office, there is evidently nothing quite so constraining as the gaining of ministerial office. While I am glad to congratulate my constituency neighbour, the Under-Secretary of State for International Trade, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), on his elevation to his new post—this is the first chance we have had for exchanges across the Floor since he took that role—I will take him back to comments he made on the BBC’s “Debate Night” programme in March 2021. I am sure that he is already pulling that out of the memory banks. In response to a question from the audience, he said that young people are not reaping the benefits of Brexit. Surely that is a candidate for understatement of the year. I think we can now add the Scottish food, drink and agrifood sector to that, for whom there are absolutely no benefits.
Richard Thomson
I am spoilt for choice. I think I heard the hon. Member for Tiverton and Honiton (Richard Foord) first. I will then come to the right hon. Member for Warley (John Spellar).
Richard Foord
I thank the hon. Member for giving way. Mary Quicke from my part of Devon has become an export mentor, but she has indicated that exporting cheese to the Indo-Pacific is becoming more difficult. She said that
“we’ve had cheese that’s taken four weeks to leave here, with a vet’s certificate to Japan and then it sits at customs at Tokyo for three weeks.”
Given that it is now more difficult for cheese sellers to sell to the UK’s biggest market in the EU, does he agree that that is a disgrace?
Richard Thomson
Absolutely. As I was listening to the hon. Gentleman’s intervention, I was working out what my punchline was going to be, and I see that he already had it there. It certainly is a disgrace that those barriers have been put in place to hinder the exports of what I am sure is fine produce indeed.
John Spellar
Surely it is not as simple as the hon. Gentleman is making out. Did we not have a substantial trade deficit in agricultural products with the countries of the EU as well?
Richard Thomson
There may have been a deficit in totality, but I hope the right hon. Gentleman is not trying to contend that the situation has been made any easier by the trade environment we now find ourselves untimely ripped into.
We have to ask, “To what end?” Even the UK Government’s own analysis shows that the trade deal with New Zealand will deliver a mere 0.03% benefit in GDP to the UK over 15 years and the Australian deal 0.08%, all the while the UK-EU trade and co-operation agreement will lead to a contraction of UK GDP by 4.9% over 15 years.
A number of safeguards could have been put in place in the agricultural chapters to protect farmers: no full liberalisation irrespective of time period; lower quota terms; percentage controls on the ratio of frozen to fresh carcases to protect the high quality Scottish fresh meat trade; clauses that work out beef and lamb tonnage quotas in a carcase-specific way, so premium cuts are protected; seasonality clauses; clauses to ensure the exports and imports of high value meat are properly valued; and trigger safeguards that could have been applied to protect the domestic market against any surge in imports in a particular year.
On new clause 5, it is important that an assessment is carried out on the impact of implementation of the procurement chapters on hill farmers and crofters in Scotland. Many in the hill farming and crofting communities are highly economically marginal. They have a huge economic importance in terms of supporting their areas, but the economics can be precarious at the best of times and they will certainly not be made any easier by the terms of this trade deal. The risk of undercutting standards through the deal means that meat is likely to end up costing less in the UK if it is shipped in from Australia or New Zealand, rather than if it is produced at home.
Analysis by Quality Meat Scotland has concluded that New Zealand beef farmgate prices are anywhere between 25% and 30% lower than Scottish farmgate prices, and 10% lower than their Scottish counterparts for lamb, undercutting on price. Matters relating to food standards fall within the competency of the devolved Administrations, but they have absolutely no power to exclude imported products on the basis of how they have been produced or on the undercutting of standards that feed into the undercutting of prices.
Donald MacKinnon, the chair of the Scottish Crofting Federation, speaking of the 15-year-long transition period, said:
“This is about changes that can happen over a much longer period of time. Agriculture does not operate on year-to-year, short lifecycles. We operate in generational terms in our businesses, and 15 years is a relatively short period of time in that sense. So it is not that we are concerned that the negative impacts are going to happen straightaway. This is about the long-term future of our industry. That is what my members are concerned about.”
Jonnie Hall, director of policy, National Farmers Union of Scotland, said:
“Ultimately, an awful lot of procurement contracts will be negotiated on price, given that there will be a written understanding, at least, that the standards in them will be of an equitable value, if that is the right expression. It is the competing on price piece that will probably be of more concern to Scottish producers than anything else, because we operate under different agricultural production systems and our cost structures are therefore different…it may be that New Zealand and Australian produce is more attractive simply in terms of value for money—I will call it that, but the word ‘value’ is not right.”
It is notable that the EU managed to secure the same market access into New Zealand for its exporters as the UK, but at a much lower cost to its domestic producers.
The Secretary of State has said that she is a huge believer in British farming and the role it plays in our national life, and has written about her fears of the impact that opening up our markets will have on domestic producers. We firmly believe that she should allay those fears by renegotiating the agricultural chapters of these deals with the new Australian Administration and the New Zealand Government. We should ensure that we monitor very closely the impact it has on our agricultural communities. While renegotiating, she might also want to consider the fact that Australia is one of the few countries in the world that maintains an effective absolute ban on the importation of UK beef. The Secretary of State has said that she does not believe the Department for Environment, Food and Rural Affairs raised concerns with the World Trade Organisation via the Department for International Trade on this issue. That should certainly happen, and it should certainly have been addressed in the trade deal to make sure that this barrier was lifted.
Lloyd Russell-Moyle
Is it not the case that in most countries that have federal, confederal or other such arrangements with devolved nations, those nations are involved and embedded in the negotiating teams? Does that not show the arrogance, in relation to co-operative relations across the Union, of this Conservative party, which seems determined to fulfil the hon. Member’s party’s wish, which is to annoy people in Scotland so much that they want independence?
Richard Thomson
That is certainly an interesting take, and entirely understandable, but I would far rather be making the arguments for Scottish independence on their merit, rather than on how much we and all the devolved Administrations are being vexed by a high-handed UK Government who are over-mighty and overreaching in this respect.
We have already been forced against our will in Scotland to trade outside of the EU and to be tied to a UK Government who seem hellbent on agreeing trade agreements at almost fire-sale prices just so they can pretend that Brexit is working. That is a thoroughly invidious position to be in, but it is the position we find ourselves in, for the moment at least, and we are determined to do all we can to try to mitigate the damage on this before we go back to the issue of principle that the hon. Member has raised. Make no mistake: the impact of these agreements will be felt throughout Scotland, and to that end it is vital that not just the Scottish Government but all devolved Administrations can have a full role, with their input being listened to, respected and acted on in future negotiations.
The Bill did not have to be like this. It was entirely possible to take a longer period of time to reach a more considered view. For those absolutely hellbent on leaving the European Union, there were better ways of doing it than the unmitigated car crash that has followed from the way successive iterations of Conservative Governments have gone about it. They seem to have spent more time negotiating among themselves than negotiating with those who matter. There are better ways of doing this, and there are better outcomes that can yet be agreed. I strongly urge the UK Government to repent, go back and try to achieve something better. It is within their grasp if they have the will to do so.
Sir Mark Hendrick
I support the new clauses on impact assessments after various periods on issues affecting farmers, procurement, the UK regions, equality and human rights, and I shall make reference to the way in which the negotiations have been handled, the attitude of various Secretaries of State to scrutiny and, in particular, the role of the International Trade Committee.
As a member of that Committee, I have seen at first hand the Government’s mishandling of the trade measures that the Bill will implement, as well as their lack of transparency and of a coherent strategy on negotiating free trade agreements. Under the two previous Secretaries of State—the right hon. Members for South West Norfolk (Elizabeth Truss) and for Berwick-upon-Tweed (Anne-Marie Trevelyan)—the Government have deliberately prevented MPs from having a say in the details of the deals. It is painfully obvious how haphazardly negotiations have been handled.
Meanwhile, the Government have continued to tout the number of trade deals that they have secured, but the truth is that a majority of those deals are simply rolled-over deals forged when the UK was a member of the European Union. They are not even close to achieving the 80% of UK trade that they claimed would be covered by trade agreements by the end of 2022, including an agreement with the USA, which was pledged in the 2019 Conservative manifesto.
Australia and New Zealand have the distinction of being non-EU countries with which the UK negotiated trade deals from scratch post Brexit, but the proof is in the pudding. The trade deals are terrible for Britain. They benefit Australian and New Zealand exporters more than UK exporters, while UK agriculture, forestry, fishing, and its semi-processed food industry are left to suffer the consequences. Australia and New Zealand received full liberalisation on beef and sheep and unfettered access to the UK food market, but the UK did not receive the same concessions in return. The Government’s own Back Benchers have exposed what we have known for some time—that securing those trade measures was a box-ticking exercise, rushed through to get a deal done, and not necessarily in the best interests of the UK.
The former Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Camborne and Redruth (George Eustice), recently criticised the Australia trade deal in the Chamber as not actually being a very good deal for the UK, admitting that
“the UK gave away far too much for far too little in return.”
Indeed, he said that
“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.”
He went on to say:
“We did not need to give Australia or New Zealand full liberalisation in beef and sheep—it was not in our economic interest to do so, and neither Australia nor New Zealand had anything to offer in return for such a grand concession.”—[Official Report, 14 November 2022; Vol. 722, c. 424.]
Tim Farron (Westmorland and Lonsdale) (LD)
The hon. Gentleman is giving a very good speech. The former Secretary of State for Environment, Food and Rural Affairs, whom he has just quoted, also said that he felt that the Government were in such a rush to get a deal signed off before the G7 summit in Cornwall last year that they bypassed a great deal of scrutiny of the agreement, even by themselves, so for political reasons they cast aside the interests of British farmers. Does the hon. Gentleman agree that that is truly reprehensible?
Sir Mark Hendrick
I totally agree that that is reprehensible, but it was not the first time that it happened. The Japan deal was a roll-over deal, but parts of it were new and were added at the last minute. The Government delayed the details until 24 hours before the report was published, so the International Trade Committee could not scrutinise it properly and comment on it. It happened with Japan before it happened with Australia.
John Spellar
Does my hon. Friend agree with me about the irony that the Liberal party, which was founded on free trade and campaigning against the corn laws, is now becoming an agriculturally protectionist party?
Sir Mark Hendrick
I will not comment too much on that. There are rules to free trade—it is not a free-for-all—but at the same time, I do not think that the Liberal Democrats believe in totally free markets any more than we do.
Records show that the former Prime Minister, then the Trade Secretary, the right hon. Member for South West Norfolk, pressed ahead with the deal despite receiving detailed warnings from her own officials in 2020 that she was acting against the UK’s best interests. The British agricultural industry and farmers already facing pressures from inflation and labour shortages stand to lose the most from this Bill, as the NFU has long maintained. These deals are not in our economic interest and are a threat to domestic business and food security. They could also force many farmers out of business, according to the NFU president, Minette Batters. Ultimately, the Government may see implementation of these deals as a stepping stone to accession to the comprehensive and progressive agreement for trans-Pacific partnership, but I am dismayed that that is at the expense of our own farmers and our wider economy.
May I ask the Government to review the negotiations on the chapters of this agreement, and the lessons learned from those negotiations, and to make an assessment of how this experience might inform the negotiation of future trade agreements? If other countries, in CPTPP or elsewhere around the world—whether in South America or wherever—can see that this country can be rolled over so easily in its negotiating power, it sets a bad precedent for future trade deals.
Sarah Green (Chesham and Amersham) (LD)
The trade deals between our country and Australia and New Zealand are historic. They are the first deals that this Government have negotiated outside of the European Union. They will have significant consequences for our farmers, exporters and a number of key industries and, importantly, they chart the course for the UK’s journey as an independent trading partner and negotiator. It is disappointing, then, that today’s debate is the most extensive opportunity many of us will have to feed into such agreements.
The provisions of the Bill apply to just one of the 32 chapters of the UK-Australia agreement, and one of the 33 in the New Zealand agreement. That means that the impact of the Bill and the amendments tabled by Members is restricted and does not go nearly as far as we might like. It is no secret that these deals are a disaster for British farming. That is why the Liberal Democrats have proposed new clauses 7 and 8, which would require the Government to report on the impact of these chapters on British farmers and on environmental standards, food standards, animal welfare and biodiversity.
Our farmers have been sold out by a Government willing to sacrifice far more than they should have to get new deals across the line. It is farmers who will be forced to pay the cost of the Government’s shiny new deals, with a combined hit to the agricultural, forestry and fishing sector of £142 million and to the semi-processed food sector of £322 million. The costs of producing sheepmeat are 65% lower in Australia and 63% lower in New Zealand than in the UK. While the Minister, the hon. Member for Mid Worcestershire (Nigel Huddleston), has reassured us that his Department is confident that the UK market will not experience an influx of the import of such meat as a result of these agreements, the risk remains that the complete removal of tariffs will allow UK markets to be filled with this cheaply produced meat.
Tim Farron
Does my hon. Friend agree that it is obvious that one reason why Australia and New Zealand can compete with us unfairly and more cheaply is that, with no offence to those two great countries—they are friends of ours—their animal welfare and environmental standards are significantly lower than the United Kingdom’s? It is not right to give their farmers an advantage over our farmers by virtue of their having lower quality standards.
Sarah Green
I agree. This country’s high environmental and animal welfare standards, which we are rightly proud of, mean that if such an outcome were to happen, British farmers would simply be unable to keep up. It is hardly surprising that the chief executive of the Meat Industry Association of New Zealand hailed the FTA as delivering
“a major boost for sheep and beef farmers and exporters”.
The Australian farming industry has similarly celebrated its deal. By contrast, the UK’s NFU is clear that the deals will benefit those in the southern hemisphere far more than farmers here at home. Even a former Secretary of State, the right hon. Member for Camborne and Redruth (George Eustice), has commented that these deals are “not very good” for Britain.
Lloyd Russell-Moyle
We are here to talk about a very small part of a much wider trade Bill. To some extent, we are only talking about it because the Procurement Bill has not been brought to this House from the other place. If it had, we might not even be talking about some of this Bill’s clauses at all. Is that not a disgrace? Almost no other country has such poor scrutiny of its trade arrangements.
Of course, Britain did not have such poor scrutiny of its trade arrangements before we left the European Union. In this place, we were able to use the negative resolution procedure at several stages, including the pre-stage. The European Parliament had the right to vote down the deal at the pre-negotiating stage, as well as the final deal, and our Government could do so through the Council.
Now the Government, in all their ineptitude, are the ones who decide. They forced the CRaG process through, which in itself was unnecessary because ratification cannot be fully implemented until all the legislation has been laid down. There was no need for the CRaG process to happen last year without any substantive debate or vote in this place, because the trade deal cannot be fully brought into force until this Bill has passed.
The Government’s whole about-arse process on trade —we have heard all the criticisms made by the former Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Camborne and Redruth (George Eustice)—shows that they have no real plan and no real idea about how to negotiate. When I ask my Australian colleagues what they may have compromised on and what we may have gained, they say, “It’s a pretty good deal for us—we wrote it.”
Through the amendments on procurement, there are several things we can do to ameliorate the mess that the Government have made of this deal. First, we can ensure that Parliament has scrutiny over how the details will be implemented. If the deal goes through, as we heard in the speech of my hon. Friend the Member for Harrow West (Gareth Thomas) and in my intervention on him, it might weaken the protections on procurement.
Ensuring that the statutory instruments laid before the House are not written as poorly as the Bill and the trade deal, so there is no wiggle room on procurement, should be our first step. The way to ensure that is by holding Ministers’ feet to the fire. In the Bill Committee, the Minister seemed a bit unsure about how the affirmative procedure and the negative procedure work. It is clear that if statutory instruments are made via the negative procedure, there will almost never be a debate in this House. They will go through without debate, because Members of this House will not be able to pray against them in time; sometimes we have seen Governments deliberately laying statutory instruments when the House is not sitting and cannot pray against them. That is the reality.
The only way to ensure debate and discussion, either on the Floor of the House or in Committee, is to ensure that the affirmative procedure is applied. That must be the bottom line. It is not hard, and it will not delay the process, because the Australians themselves need to go through an affirmative procedure when they implement measures. This is asking for nothing more than our counterparts are getting; to offer anything less would be to devalue and degrade Britain. We know that the Conservative Party is doing quite a lot of that at the moment, but come on; let us, at least on this one, show that Britain counts. Britain should be able to get something as good as what is available to Australia and other countries around the world. Underselling Britain is disgraceful, and we need to reverse that.
Secondly, we need clarity on the legal clauses. It needs to be made clear that they will not undermine the current protections around the world. As I said in my intervention, it is not a question of whether, in a court of law, we might reach a point at which British companies would be successful; that is irrelevant. The question is, would it be necessary to go to a court of law to determine whether British companies would be able to obtain compensation, or would everyone be so clear about the fact that a French company would be able to obtain compensation that a French competitor would be given a marginal competitive advantage? That is the question that arises from the poor wording in the Bill.
If a marginal advantage is given—even a theoretical advantage that in practice does not come about—multinational companies that can channel their trade either through their British company or through their French company for large procurement deals will do it through the French company, and then where will the tax be paid? Where will the revenue return? It will return to France, and Britain will lose out again. It is therefore vital for this clause to be included.
I am also deeply disappointed—and I wish the Government would accept some of the amendments that deal with this—about the fact that for Australia, the procurement requirements do not count at state level because Australia is a federal system. All its procurement, in respect of education, roads and building, universities and community facilities—I could go on—is at state level, so this trade deal does not bind the Australians. Because of the way this Government have negotiated the deal, they want to tie the hands of our devolved authorities and local government in a way in which Australian hands are not tied; again, selling Britain short. What we could see is the proper integration of our devolved authorities and local government, particularly big strategic local government—for instance, London-wide government and Metro Mayors. We could include them in the negotiations, or, even better, ensure that future negotiations do not allow an asymmetrical position in which we are included and others are not.
This is a poor deal, as we know from the other side. This is a poor Bill, which accepts everything from one side and protects Britain not one jot. The Opposition new clauses and amendments go some way towards ameliorating that. Ministers should accept them, thus ensuring that we can truly champion British businesses that are trying to trade around the world. That is what I genuinely believe we all want.
Jim Shannon (Strangford) (DUP)
I was not expecting to be called at this point, Mr Deputy Speaker. I was just removing a mint from my mouth.
Jim Shannon
Yes, I would expect the hon. Gentleman to do that—but what a pleasure it is to follow the hon. Gentleman, who brings knowledge to these debates and, probably, to every debate. Let me also to say how pleased I am to be able to throw some of my thoughts and those of my party into this debate.
As a proud Brexiteer—that is no secret—I am pleased to see the opportunities that can and will come from Brexit, and we in Northern Ireland hope that we too will benefit from them. We await the Government’s endorsement of the Northern Ireland Protocol Bill, which will give us the same opportunities as everyone else, but that is for a future debate rather than this one.
The potential of the Australian and New Zealand trade agreements is exciting for me and many others. The agricultural and fishing sectors are vital for my constituency, so my request to the Minister will be to provide the support to enable our agricultural sector to be protected. We in Northern Ireland are fortunate, in that we export food and drink products worth some £5.4 billion, and we export some 65% of that produce to the EU and across the world. We are already the epitome of what the Government are trying to achieve through this deal, and we are doing that right across the whole world. Lakeland Dairies is a good example. It is already moving to sell its produce in the far east, the middle east, Africa, south America and the USA, so it is very much to the fore. We also have Mash Direct, a buoyant company that is seeking markets overseas, and Willowbrook Foods and Rich Sauces, which likewise have farmers who feed into them. So we have a strong agri-sector in my constituency. The Minister knows that already; I am not telling him anything he does not know. He is always very astute and does his research so he will know what I am referring to, but I seek that wee bit of reassurance that my agri-sector in Strangford will be in a position to have those protections, and that we can be part of that export push that the Government clearly want to bring about.
Hywel Williams
It is a pleasure to follow the hon. Member for Strangford (Jim Shannon) for once. It is a unique experience.
New clause 15, standing in my name and in the names of my hon. Friend the Member for Ceredigion (Ben Lake) and my right hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts), would require an assessment of the impact of the procurement chapters on different sectors of the Welsh economy. It is worth noting that the Senedd’s Economy, Trade, and Rural Affairs Committee has called for future trade deals to include impact assessments for the sectors and sub-sectors in Wales, which is important.
The assessments published so far for both the Australia and New Zealand free trade agreements are light on Welsh-specific detail, particularly regarding the potential sub-sectoral and regional impacts within Wales. Understanding the full impact of FTAs on the Welsh economy is necessary to assess what support businesses and organisations will need from the Welsh and UK Governments to prepare for implementation. The better the economic information available to Westminster and Senedd Ministers, the more effectively this can be done. As has been said, farming is not a five-minute occupation; it takes 10, 15 and 20 years.
I urge the UK Government to commit to publishing cumulative assessments, updated every time a new FTA is signed, showing the impact of post-Brexit trade policy on Wales’s economy and on the UK economy. That is particularly important for our agriculture and semi-processed food sectors. As a result of the agreement with Australia, the agriculture and semi-processed food sectors across the UK are expected to see a reduction in gross value added of £94 million and £225 million, respectively. The New Zealand agreement is expected to lead to a reduction of £48 million and £97 million, respectively.
Welsh farming unions have warned that both FTAs have set a damaging precedent for unfettered access to agricultural produce. We need to understand how individual procurement agreements and individual FTAs impact different sectors, and how those sectors are affected in the long term by post-Brexit trade policy. Many in those industries believe that Ministers were dashing heedlessly for glossy headlines and failing to fight for the interests of the Welsh and the UK economies, as we have heard. Rather than plugging the Brexit-sized hole in trade, these tiny trade deals will be a body blow to Welsh agriculture and food production. In general, they are not of great interest across the UK, but they are of huge interest to Welsh agriculture and food reproduction.
Today’s debate narrowly relates to the procurement chapters of both FTAs. It looks like the control that we supposedly took back from the EU goes no further than the Minister. Had Parliament and the devolved legislatures been able to properly scrutinise these deals, the former Environment Minister, the right hon. Member for Camborne and Redruth (George Eustice), might not have been on his feet just a month ago criticising the Australia FTA for giving away too much for too little in return. Plaid MPs have met both the Australian and New Zealand ambassadors. Without divulging anything improperly, I would say that both were very pleased with the deal that they secured, and more than a little surprised by the UK’s generosity.
The right hon. Member for Warley (John Spellar), who is not in his place and is very much in favour of Brexit, talked about the value of free trade. He would profit, as would many people, from reading the proceedings of the Exiting the European Union Committee, on which I served for a while. We had before us Mr Pascal Lamy, who was twice Trade Commissioner for the EU, and also head of the World Trade Organisation. He said that all trade, in theory, is free, and that tariff and non-tariff barriers are there partly as bargaining chips. If we abandon those bargaining chips, as appears to have happened to a great extent in these two FTAs, we have nothing to offer in return. What do we get? Happy ambassadors from countries that have profited enormously and our own sectors, such as agriculture and food production, dismayed because so little has been secured.
We believe that MPs and the devolved Administrations should have full votes on the objectives of each future trade deal, and access to negotiating texts for that very reason—to ensure that the people of Wales, Scotland and parts of England and Northern Ireland are getting a good deal. Giving the Welsh Government a say is vital if we want trade deals that enhance rather than undermine our local economies. For example, had the Welsh Government been able to amend the FTAs, we would have likely seen a push for geographical indications in the UK-New Zealand FTA. That would have proved extremely valuable for Welsh lamb and Welsh beef, as I am sure the trade body Hybu Cig Cymru would confirm.
I add my support to new clause 6 tabled by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). NFU Cymru has argued forcefully that the use of geographical indicators would have allowed Wales to differentiate our products in the world market, thus accessing a premium and increased profitability. I add our support to amendments 3 to 5, tabled by the Scottish National party. Both the Welsh and Scottish Governments have expressed their grave concerns about the use of concurrent powers in this legislation.
On Second Reading, the former Secretary of State for International Trade, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) told this House that discussions were taking place with the Welsh Government on their request for the Bill to be amended to include concurrent-plus powers. Therefore, I would appreciate it if the Minister updated the House on what progress has been made in those discussions with the Welsh Government.
Geraint Davies
It is a great pleasure to follow the hon. Member for Arfon (Hywel Williams), who has underlined what this debate is about. The Government are in the dock for selling out British interests, in particular farming interests, at a time when Parliament has basically been blindfolded in the process, unable to see the mandate or the negotiations, or to properly ratify the outcome.
What we have before us is an array of amendments to address the impact of these deals, which have already been signed, on all our sectors—in particular on agriculture, procurement and the NHS. Those are fundamentally important sectors. The amendments, which I support, have been tabled because it is still unclear how much damage has been done by these deals. They were done in haste and rushed through the door, which put us in a weak bargaining position. Any concession was simply just given. We do not know the detail of how much harm has been done. The former Secretary of State for Environment, Food and Rural Affairs said that we gave far too much for far too little, which I would call the understatement of the year. The Government’s projection is that GDP will grow by 0.1% in 15 years, but we do not really know the details.
What we do know though, to take the perspective of a Welsh sheep farmer—we heard from the hon. Member for Arfon—is that Australian sheep farms are on average 100 times the size of Welsh ones. We know too that in New Zealand and Australia they only focus on three or four main breeds of sheep. There are also economies of scale—New Zealand focuses on ensuring that nearly all sheep give birth to twins, as opposed to three lambs, which might kill the mother, or one, which would be less productive. We also know that their shelf life and mechanisation of food processing are far in advance of ours.
We know, therefore, that our farmers face a major threat, at a time when exports to the EU have been stifled by unnecessary barriers as a result of a botched Brexit deal, thanks to which we have seen a 15% reduction in overall trade. So it does not look too good; and what is more, the Government have signed up to giving Australia and New Zealand unlimited access in 15 years, in terms of beef and lamb. What precedent does that set for food exports when we do a deal with Brazil, for example?
With the war in Ukraine, we are now in a world where people are quite rightly concerned about food security, yet we are basically undermining our domestic production, at a time when Russia has increased its overall agricultural production by 15% since invading Crimea and facing sanctions. Basically, we are saying that we will turn our back on the EU and do a deal with Australia, undermining our own farmers. Is that a good idea? Surely, we need to be producing more healthy food locally, at a time when one in four people in Britain is in food poverty.
As it happens, I take a particular interest both in food, as a member of the Environment, Food and Rural Affairs Committee, and in trade, as the rapporteur for the Council of Europe, charged with ensuring that democracy, human rights, the rule of law and sustainability are embedded in agreements, but none of those are embedded in the Australia and New Zealand agreements. On democracy, there is no facility for the mandate, the negotiations, or ratification to be properly looked at, hence all these amendments. On due diligence, there is none when it comes to climate change, human rights and so on, where we can find best practice. For example, the EU deal with New Zealand refers to the rights of indigenous people, the Maori people, and various issues about due diligence in supply chains. Our deal does not have those things because it was rushed forward.
Trading further afield is more environmentally damaging, at a time when we should be concerned about climate change. We also know that Australia is the worst carbon emitter in the world, at 17.5 tonnes per person, compared with the 4.8 tonnes claimed for Britain in terms of production—for consumption, it is 8 tonnes per person. I hope we will have an opportunity to superimpose a carbon border tax in due course and that this deal will not rule that out.
Sir Mark Hendrick
I have recently returned from visiting Singapore on behalf of the International Trade Committee, where it was mentioned to us that Singapore has done a green economy agreement with Australia, which looks at emissions as part and parcel of that trade package. Given what my hon. Friend has said about Australian emissions, could he perhaps comment on that?
Geraint Davies
My comment would be that Britain should be taking a lead, as it claims to, on mitigating climate change. The way to do that is to take best practice, from Singapore or anywhere else, and hardwire that into current and future agreements. That has not been done, because our economic, climate and other interests have been thrown to one side in order to just tick a box and say that we have got a trade agreement.
Lloyd Russell-Moyle
My hon. Friend mentioned carbon border adjustments. Is it not the truth that both Europe and America are now leading on these discussions, because they understand that trade deals without proper carbon and border adjustments are just ways of exporting jobs out of countries—degrading those countries, their workers and the environment in one fell swoop?
Geraint Davies
I am certainly a big supporter of what the EU is doing on carbon border adjustments, for instance ensuring that we have a level playing field for steel made in south Wales, which emits half the carbon of Chinese steel, and that there is an incentive to invest in green production domestically. The EU has taken a lead and we need to catch up. The United States is subsidising green industry and, as my hon. Friend will know, there is a tension between the two different strategies when it comes to ensuring a sustainable and greener future for all.
Turning to procurement, clearly it is not exactly a new idea that big multinational corporations will use unelected, private, often secretly held tribunals to try to fine democratically elected Governments who want to pass laws to protect the environment and public health. We saw that in investor-state dispute settlements. Most obviously, at the moment, we have got the Energy Charter treaty, which binds countries for 20 years to being sued if they try to pass laws to help the environment.
People will know that Germany, France, Poland, Spain and others are trying to withdraw from that treaty, although we have not heard much for the United Kingdom—because of its fossil fuel interests, I assume. My question is: why, when we know those companies will be quick on the draw in taking us to court and suing us, do we allow them a way in on procurement, so that when they do not get the business with the NHS, they can suddenly sue us? That concern is covered in new clause 1, which I very much support.
Finally, it is obvious that, out of the carnage of the botched Brexit deal, while obviously we want deals with Australia and New Zealand, the haste with which we have approached these deals has left us in a situation where they get all the benefits and we face a prospective loss. That is absolutely disgraceful maladministration from the Government, and I support the amendments to try to mitigate some of the harm done by their hopeless negotiation.
The Parliamentary Under-Secretary of State for International Trade (Nigel Huddleston)
May I say what a pleasure it is to speak on behalf of the Government today as we scrutinise this landmark piece of legislation? I thank colleagues for their contributions to the debates on this Bill, including the general debate, where many of the points raised today were also covered and responses were given by my hon. Friends on the Government Benches. I will try not to repeat that debate now.
The Government are of the view that the amendments tabled are ultimately unnecessary, and I hope that I will be able to persuade right hon. and hon. Members to withdraw them. The new clauses that deal with issues on impact assessment are unnecessary, as the Government have already committed to undertake assessments of impact of these deals at regular intervals.
First, the Government have committed to publishing a monitoring report every two years and a compressive evaluation report for each of the agreements within five years of their entry into force. Those evaluation reports will aim to show how, why and for whom the agreements and their implementation have delivered, addressing many of the points raised by hon. Members in the debate.
Hywel Williams
Can the Minister therefore confirm that there will be detailed assessments for Wales, including within regions and sectors in Wales?
Nigel Huddleston
We will be happy to discuss with many stakeholders the precise nature, content and scope of those reviews, and we will do that in due course.
This Bill is based on procurement, but while procurement is the only area that requires primary legislation for implementation, it should not be the only area that is subject to review. Therefore, publishing and considering impact assessments that only cover procurement implementation would not be an effective use of parliamentary time, nor would it give parliamentarians a full picture of the economic impact of the agreements. On multiple levels, the proposed amendments relating to impact assessments would not be fit for purpose.
Regarding the negotiation of the procurement chapters, both chapters build on the baseline in the World Trade Organisation’s agreement on Government procurement, or GPA, setting new international precedents, notably on data transparency and facilitating SME involvement in procurement. While all negotiations are different, my Department is committed to learning from each negotiation and applying those lessons directly to its work. I am confident that that approach towards negotiating procurement chapters allows for high-quality chapters that work well for British business and consumers.
As mentioned by several hon. Members today, the Bill Committee heard evidence from Professor Sanchez-Graells. We respectfully disagree with the professor’s reading that the chapters do not align with the GPA or that suppliers will not have access to legal remedies against contracting authorities and so cause confusion for and disadvantage British businesses. We do not believe that is the case. My predecessor, my hon. Friend the Member for Rochford and Southend East (Sir James Duddridge), wrote in detail to the Committee on that and I have nothing more to add.
The Government are resolute in our determination to protect the NHS, recognising that it is an institution that is very important to the UK and its citizens. That is reflected in the specific protections negotiated in respect of the NHS in the agreements: health services are expressly excluded from coverage under the procurement chapters and both agreements specifically refer to the NHS and the general exclusions that apply to it.
On small businesses, the procurement chapters in both agreements include articles on facilitating the participation of SMEs in procurement. We will have people on the ground in the UK, Australia and New Zealand to help to fully exploit the opportunities, and I can assure the hon. Member for Strangford (Jim Shannon) that we will be providing that support across the UK. The Government have an active agenda of facilitating SME participation and continue to advance that agenda across the free trade agreement programme. We have consulted with businesses throughout the negotiations, including with small and medium-sized enterprises, and will continue to do so throughout the implementation.
On protecting farmers—again, a hot topic in previous debates—in both the Australia and New Zealand FTAs, the UK secured a range of measures to safeguard our farmers, including tariff rate quotas for a number of sensitive agricultural products and product-specific safeguards for beef and, for Australia, sheepmeat, alongside a general bilateral safeguard mechanism providing a temporary safety net for all products. Equally, this Government are committed to ensuring that UK farmers have the tools they need to secure the export benefits of these trade deals.
Additionally, it is unlikely that products from Australia or New Zealand will flood the UK market. In 2021, more than 80% of Australian beef exports and nearly 70% of Australian sheepmeat exports went to markets in Asia and the Pacific. New Zealand already has a significant volume of tariff-free access into the UK for sheepmeat but used only a third of that quota in 2021, meaning that New Zealand could already export more sheepmeat to us tariff-free, but chooses not to.
Geraint Davies
If New Zealand is not utilising its current quota, why have we chosen to give a completely unlimited quota in 15 years’ time? Given the Minister’s reasoning, New Zealand presumably does not need it, and it just exposes us to unnecessary risk.
Nigel Huddleston
All negotiations involve give and take. The hon. Gentleman will also acknowledge, I am sure, that we are also seeking market access right across the globe for farmers and our fantastic food and beverages—for example, by opening up the market in the US for sheepmeat for the first time in 20 years. At the same time, we are seeking opportunities right around the world. Of course, as several hon. Members have mentioned, we are proud of our high animal welfare and food safety standards, which is why we are ensuring that this deal does not compromise on them and that no new permissions for imports such as hormone-treated beef were granted.
On the Government’s engagement with the devolved Administrations, right hon. and hon. Members will be aware that the Minister for Trade Policy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), chairs the inter-ministerial group for trade, previously known as the ministerial forum for trade. That forum provides an opportunity for discussion on all matters of trade policy, including the implementation of UK free trade agreements. The forum is not the only opportunity for ministerial discussions; there are frequent bilateral meetings between Ministers. Indeed, later this week, my right hon. Friend is set to meet the Scottish Minister for Business, Trade and Enterprise, to whom I spoke last Tuesday. I also spoke to the Welsh Minister for the Economy on 1 December on a similar basis. In addition to ministerial engagement, discussions with devolved Administrations at official levels have totalled hundreds of hours across the Australia and New Zealand FTAs, including frequent updates by chief negotiators and detailed discussions to draft text.
It may be helpful to also remind the House that on Second Reading, the previous Secretary of State for International Trade, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who is sitting near me now, committed at the Dispatch Box never to use the power in clause 1 without consulting the devolved Administrations first. That is a sincere commitment, and one that we will honour.
Hywel Williams
Is not the Minister confirming that taking back control extends to Ministers and officials in the devolved Governments but not to the elected representatives?
Nigel Huddleston
I am afraid that the hon. Member is misrepresenting the situation. In terms of concurrent powers, this is an established part of our devolution settlement. We are not, in these proposals, proposing anything unusual.
The breadth of our trade agreements means some policy issues will be within the competence of the devolved Administrations. The Government have always recognised that modern trade deals cover an increasingly broad array of policy matters. To enable more technical discussions, of course, we share draft treaty text with devolved Administrations for comment. That facilitates more detailed and comprehensive discussions between Department for International Trade officials and officials in devolved Administrations. There have already been discussions with the Scottish Government on the drafting of secondary legislation. In respect of the amendments, I understand that the Scottish Government wish to make the necessary statutory instrument to amend Scottish procurement regulations.
On new clause 12 and its consequential amendments, the super-affirmative procedure is used for statutory instruments when an exceptionally high degree of scrutiny is thought appropriate. An example would be 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. It is therefore wholly disproportionate to use that process to approve a minor technical change needed to implement procurement commitments in the Australia and New Zealand deals. The potential unnecessary use of the affirmative or super-affirmative procedure could lead to delays in those agreements entering into force.
The Government are working to enter the agreements into force to ensure that UK businesses and consumers can benefit from the significant economic advantages as soon as possible. That is, of course, also the desire of the Labour Governments in Australia and New Zealand.
I hope that I have reassured hon. Members and that they will not push their amendments.
Gareth Thomas
It is always a pleasure to listen to the Minister, but it was rather striking that not one Conservative Back Bencher was willing to come along tonight to defend their party’s deal. We have nevertheless had an important debate with important speeches from my hon. Friends the Members for Preston (Sir Mark Hendrick), for Brighton, Kemptown (Lloyd Russell-Moyle) and for Swansea West (Geraint Davies), and the hon. Members for Gordon (Richard Thomson)—whom I congratulate on his appointment—for Chesham and Amersham (Sarah Green), for Strangford (Jim Shannon) and for Arfon (Hywel Williams), as well as important interventions from my right hon. Friend the Member for Warley (John Spellar) and the hon. Members for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), for Totnes (Anthony Mangnall), for Westmorland and Lonsdale (Tim Farron) and for Tiverton and Honiton (Richard Foord).
Ministers know that there are real concerns about the Australia deal and the precedent that it sets for future deals, and that here have been real concerns across the House about the parliamentary scrutiny of all trade deals, particularly the Australia deal. The behaviour of the previous Secretary of State, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), has only underlined those concerns. Many have noted the huge giveaway of access for Australian farmers and how little we have secured in return in the same space. That is the fault not of the Australian negotiators but of the Government’s own wilful determination to get a deal by an arbitrary deadline, whatever the price.
The House will inevitably return to the issue of procurement. We will certainly encourage those in the other place to explore the concerns that I in particular have articulated in the debate—particularly as negotiations on CPTPP accession are moving forward. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
Assessment of impact on farmers
“At least three months, but not later than six months, after the coming into force of the government procurement Chapter of—
(1) the UK-Australia FTA, and
(2) the UK-New Zealand FTA,
a Minister of the Crown must lay before Parliament an assessment of the impact of the Chapter on farmers in—
(a) each region of England
(b) Scotland
(c) Wales, and
(d) Northern Ireland.”—(Gareth Thomas.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Mr Deputy Speaker (Mr Nigel Evans)
Before I call the Minister, I should tell the House that we have had reports that Division bells in Norman Shaw South are not working, along with a number of other things. As we anticipate further Divisions this evening, I advise Members in and around Norman Shaw South to look for other means by which they can work out whether a Division is on, including the Annunciators, mobile phones and various other things. If they cannot do that, they should really stay around the main building.
Third Reading
Nigel Huddleston
I beg to move, That the Bill be now read the Third time.
Our deals with Australia and New Zealand are the first trade agreements in almost 50 years that the UK has negotiated from scratch. Members from across the House have rightly been eager to engage with the Bill, and I thank them all for continuing to do so. I also thank Members who sat on the Public Bill Committee for their work in scrutinising the Bill, and in particular my right hon. Friend the Member for The Wrekin (Mark Pritchard) and the hon. Member for Halton (Derek Twigg) for their expertise in chairing the Committee.
Members have rightly shown a great interest in the Bill, and I would like to use this opportunity to give the House further assurances. First, Members expressed concerns about the opportunities that the devolved Administrations have had to shape the Bill. I can assure the House that our procurement teams have consistently held roundtables with their counterparts from the devolved Administrations. During negotiations with Australia and New Zealand, they discussed the text of procurement chapters. Discussions on the Bill, and the changes in procurement regulations that it creates, have regularly taken place. Indeed, during negotiations, ministerial and official level engagement on these free trade agreements totals hundreds of hours. That includes 25 meetings with the Australia FTA chief negotiator, specific discussions at the ministerial forum for trade, and senior official conversations on policy content. My officials continue to work closely with their counterparts at the devolved Administrations to address the concerns raised regarding the powers in the Bill. I myself have also had constructive conversations with Ministers from the devolved Administrations. The Government remain committed not to using the concurrent power in the Bill without first consulting the devolved Administrations. I want to stress to the House that the powers are the most logical and efficient way of making minor, technical changes to our procurement regulations.
On Report, we discussed how the Government are committed to providing, for each agreement, a monitoring report every two years, and an evaluation within five years of entry into force. The reports will assess the entirety of the agreements and not limit themselves to the procurement chapters alone.
I would like to say a couple more thank yous: first, to the Bill team at the Department for International Trade—James Copeland, Donald Selmani, Jack Collins, Alex Garcia-Pineiro and Catherine Ajani—as well as the other officials who make up my fantastic team. I would like to thank the parliamentarians who have taken part in this and other debates on the legislation, and of course the International Trade Select Committee, as well as the wonderful staff here in the House.
I also want to thank the Opposition spokespeople for the constructive way in which they have approached scrutiny of the Bill. It was remiss of me earlier not to welcome the new SNP spokesperson, the hon. Member for Gordon (Richard Thomson) to his role, and I do so now. I also thank his predecessor, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). Who knows, but perhaps under the new leadership we may actually get the SNP to vote in favour of a trade deal. [Interruption.] Indeed, I suspected that may be the case.
Drew Hendry
Will the Minister also extend the hope that the Government may accept one of the SNP amendments one of these days?
Nigel Huddleston
The key thing is that we estimate that these deals will considerably boost the UK economy and all nations. Businesses in every single constituency will be able to grasp new opportunities from this Bill. It will therefore benefit the whole of the country, and I hope that just perhaps it will get the support of the whole House. I am delighted to commend this Bill to the House.
Nick Thomas-Symonds (Torfaen) (Lab)
I want to put on record my thanks to all parliamentarians who have contributed to the passage of the Bill. I thank officials at the DIT for their work and all those House staff who have supported the debates both in the Chamber and in Committee.
I also want to put on record my desire to see a deepening of our trade links with our friends in Australia and New Zealand through trade agreements and, indeed, ever closer relationships at all levels. Both countries are close global allies through a common history, and face similar challenges and have similar opportunities in the years to come. I particularly welcome the two very fine Labour Governments they have in office. The next UK Labour Government will work with these free trade deals for the benefit of our people here, and indeed of our friends in Australia and New Zealand.
Specifically on the negotiations, the high commissions of Australia and New Zealand have been remarkably helpful in briefing colleagues as talks progressed, and I am very grateful to them. I was very grateful this morning to meet Mr Don Farrell, the Minister for Trade and Tourism in Australia, to emphasise the Opposition’s desire to deepen that relationship. The Minister mentioned on Report that he was working on the commencement of the deals, but gave no particular date for that. I urge him to set out the commencement dates for both deals.
Our debate on this Bill has not been about the commitment of the Opposition to our deepening relationship with Australia and New Zealand. Rather, it has been about two things. The first is the failure of this Government to achieve the best possible deals for the United Kingdom. The Australia deal is “one-sided”—not my word, but that of the current Prime Minister. In addition:
“The first step is to recognise that the Australia trade deal is not actually a very good deal for the UK… overall, the truth of the matter is that the UK gave away far too much for far too little in return.”—[Official Report, 14 November 2022; Vol. 722, c. 424.]
Those are not my words, but those of the former Secretary of State for the Environment, Food and Rural Affairs, the right hon. Member for Camborne and Redruth (George Eustice), and we can see why he said it. The impact assessment for the Australia deal shows a £94 million hit to our farming, forestry and fishing sectors, and a £225 million hit to our semi-processed food industry. On the New Zealand deal, the Government’s own impact assessment states that:
“part of the gains results from a reallocation of resources away from agriculture, forestry, and fishing”,
which will take a £48 million hit,
“and semi-processed foods”,
which will take a £97 million hit. Perhaps it is no surprise that Australia’s former negotiator at the WTO said:
“I don’t think we have ever done as well as this”.
British produce can be a huge success in new markets, but we recognise the need for a level playing field for our farmers, and it is to a proper plan for our agricultural sector that Ministers must now turn.
On climate change in the Australia deal, the Government failed to include a specific commitment to limiting the rise in global temperatures to 1.5 degrees. On workers’ rights, there was a failure to include commitments to the International Labour Organisation conventions, and there was a lack of substantial concessions on geographical indicators. Unless there is a change of negotiating approach, this weakness in negotiations will have even further consequences for this country in deal after deal.
Secondly, there is the lack of scrutiny. The deals were already signed and agreed before they came before Parliament, so the scope for any amendments, and therefore for meaningful debate, was fatally curtailed. It is impossible to argue that these processes represent scrutiny worthy of the name. The International Trade Committee has rightly criticised the process on the Australia deal and the Government’s premature triggering of the 21-day CRaG process without the full Select Committee consideration being available to Members. When pressed on that, the Government refused to extend the process, and all the while the previous Secretary of State swerved eight invitations—eight—to attend the International Trade Committee.
Perhaps it is no wonder that the Government keep dodging scrutiny, given their record, because as we approach the end of the year, it is a tale of broken promises on trade: no trade deal with the United States; a trade deal with India done by Diwali—promise broken; and 80% of UK trade under free trade agreements by the end of the year—not going to happen. The truth is that Conservative trade policy is a tale of bad deals or no deals at all.
Richard Thomson (Gordon) (SNP)
On Third Reading, could I take the opportunity to thank the Clerks for all their help in assisting with amendments throughout the process? I thank those on both Front Benches for their kind words on my recent appointment to my party’s Front Bench as a trade spokesperson. I also thank my group’s researchers, Clorinda Luck and Katie Dominy, for the excellent research they have carried out for us throughout. Of course, I thank my good friend, my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), who led for the Scottish National party group of MPs throughout the previous stages, including in Committee.
The Minister said that he hoped, when we scrutinise future trade deals, that he might be successful in persuading the SNP to back them. I would give him a little bit of hope on that. The SNP is in favour of good trade deals, and we are not in favour of poor trade deals. Trying to help Ministers understand the difference does at times appear a little like Father Ted trying to explain to Father Dougal McGuire the difference between cows that are near and cows that are in fact far away. I would observe that certainly the benefits of this trade deal are very far away indeed.
I was going to comment on the existence of some dispute about whether or not the deal is a good one, but I am afraid that description simply would not do it justice. The Australian and New Zealand Governments certainly think that this is a good trade deal, and it is very telling, is it not, that there are so few individuals outside the ranks of the parliamentary Conservative party who are prepared to say the same from the UK side. I think there is a fundamental reason for that. It is quite clear that the Australian and New Zealand Governments were very focused on securing beneficial outcomes for their economies, whereas the UK Government seemed to be focused primarily on getting a deal as quickly as possible, no matter what that cost.
It is often said that the art of negotiation or diplomacy is the subtle art of letting somebody else get your way, and the Australian and New Zealand Governments certainly allowed the UK very successfully to get their way in the negotiations that took place. It is sad to say, but it will be our consumers, our producers and our economy that will end up picking up the price tag for that in the years to come.
Question put, That the Bill be now read the Third time.
Trade (Australia and New Zealand) Bill
Tuesday 13th December 2022
(1 year, 4 months ago)
Lords ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 12 December 2022 - (12 Dec 2022)
Trade (Australia and New Zealand) Bill
Monday 9th January 2023
(1 year, 3 months ago)
Lords ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 12 December 2022 - (12 Dec 2022)
Lord Johnson of Lainston
That the Bill will be now read a second time.
The Minister of State, Department for International Trade (Lord Johnson of Lainston) (Con)
My Lords, I draw noble Lords’ attention to my interests. They include an investment in a New Zealand-based asset management company, but what they do not include are the important personal references to my New Zealand and Australian heritage. Like so many in this House, and indeed in this nation, I have relations from both sides of my family in both countries. My ancestors on one side were part of the original Christchurch experiment in New Zealand, and on the other were founder architects and designers of Melbourne in Australia—an early example of the professional recognition chapters that we have included in this agreement.
I thank the International Agreements Committee, chaired by the noble Baroness, Lady Hayter. These conversations have been in depth and, I hope, open, and I welcome further discussion with Members of this House over the coming weeks as we progress through the Bill’s stages. I am sure that some noble Lords were delighted to receive my calls over the weekend as I made further inquiries as to their input into this important debate.
There is no doubt that, although the Bill is of a technical and necessary nature, it underpins the very essence of our post-Brexit vision of Britain. We are often asked for a coherent trade strategy and here it is—a global interconnectedness of trade deals, with this nation at the very heart of these new routes. It means opportunity for our businesses and citizens. It will result in new markets for our goods and services, and new ways to travel and share our cultures. But it also means change. We are aware of this, and we welcome the debate around this vision of our nation, which is now at the very centre of global trade.
The Bill will enable delivery of the UK’s first “from scratch” free trade agreements since leaving the European Union. They are modern and cutting-edge deals, including an astonishing level of innovation and flexibility. They are aligned with our values and well reflect our strategic ambitions, as well as our economic ones. I stress the cutting-edge nature of these FTAs and use this opportunity to congratulate the Department for International Trade and Crawford Falconer on the way they have been designed and negotiated.
It is important to note that these agreements were not built from a standing start. That is very relevant, since much of the discussion has seemed to assume this. We already trade with these countries. However, the agreements build significantly further on our already strong relationships with both Australia and New Zealand. The UK was Australia’s fifth-largest trading partner in 2020. That trade was worth £14 billion in 2021. In 2020, 15,300 businesses, employing 3.4 million people, exported goods and services to Australia. The UK was New Zealand’s fifth-largest trading partner in 2020, our trade being worth £2.4 billion, with 6,700 businesses, employing 1.8 million people, exporting goods to New Zealand. That is what we are already doing, so imagine what we can do if we cement these agreements. We expect annual trade to increase by £10.4 billion between the UK and Australia, and between the UK and New Zealand by £1.7 billion. These are not insignificant sums; they are life-changing. This is just the start, and does not include the other benefits of a closer relationship which these deals signify.
The Bill, considering what it entails, is uncontentious. It provides a power to give effect to our procurement commitments in these agreements, and improves three areas of our existing procurement legislation in the UK, to the benefit of our public services and our companies trading in these partner countries. By the way, this will unlock billions in government contracts in a more secure way than ever before.
The powers in the Bill will be used to amend the current set of procurement rules to provide guaranteed legal access to Australian and New Zealand suppliers to the procurement opportunities covered by the FTAs; to streamline the options for local government issuing notices for future procurement opportunities; and to clarify that contracts of undefined value are in scope of the trade agreements, which basically means that international commitments cannot be avoided by not adding values to contracts. Finally, it contains enhanced safeguards to ensure that contracting authorities cannot avoid international commitments by terminating the contract process where an international supplier is likely to win.
I assure the House that these changes to our current procurement rules all sit in line with the proposals in the Procurement Bill. The Bill, except the sections covering Scotland, will be repealed by the Procurement Bill, which has already undergone extensive scrutiny by this House and is currently before the other place. However, the rationale for the Bill is clear: we want to start taking advantage of these free trade agreements as soon as possible for the sake of our economy, and this Bill will allow that.
That is why the Australia and New Zealand free trade agreements deliver a number of important benefits, which are sometimes overlooked, and I think it is important to address them now. On mobility, we have agreed ambitious business mobility commitments. For the first time, UK service suppliers, including scientists, lawyers and accountants, will be able to apply for temporary work visas without being subject to Australia’s changing skilled occupation list. This is important: it is the furthest Australia has ever gone in an FTA. On trade in services, the deal goes further than Australia has ever gone before in giving UK services companies significant and non-discriminatory access to the Australian market, with unprecedented levels of regulatory transparency.
On trade in goods, the deal eliminates tariffs on 100% of UK exports, making it cheaper and easier to trade physical goods between the UK and Australia; and 98% of the estimated tariff reductions on UK exports will be eliminated as soon as the agreements, with noble Lords’ support and assistance, come into force. UK businesses will see duties of up to 5% immediately eliminated on the export of cars, whisky, motors, clothing and—I hope noble Lords have taken them down—even Christmas decorations.
The deal provides more opportunities for UK firms to trade digitally with Australia. For example, the digital chapter goes beyond existing precedent for both the UK and Australia. It contains the first dedicated innovation chapter and establishes a strategic innovation dialogue which will drive the commercialisation of new technology. This agreement also includes an ambitious environment chapter with Australia which goes beyond previous Australian FTAs. It includes a commitment not to derogate from environmental laws and affirms international environment and climate commitments, including the Paris Agreement. It also includes provisions to deepen co-operation in areas ranging from biodiversity, forests and fisheries to ozone-depleting substances. We have also secured the most substantive climate provisions that Australia has ever committed to in an FTA, with stand-alone climate change articles. What is more, this free trade agreement raises the bar globally by introducing the first ever animal welfare chapter of any trade deal. I consider this extremely important. My noble friend Lord Benyon was asked what world leadership we are providing on the environment and animal welfare, and I have just given probably the most sensational list ever released in this House.
With the New Zealand deal, the mobility chapter will make it easier for senior managers, executives and specialists to move on intra-company transfers. They will be eligible for visas to work for a period of three years, and family members will be able to join them. In relation to trade in services, we have agreed a professional services and recognition of professional qualifications annexe which will encourage regulators of all regulated professions towards recognition. Additionally, we have agreed a sectoral annexe on international maritime transport services—unprecedented for New Zealand—that will benefit UK shipping companies and ships flying the UK flag. On customs and rules of origin, we have committed to implementing single window systems, and the environment chapter breaks new ground for the UK and New Zealand in supporting our shared climate and environment goals, clean growth and the transition to a net-zero economy.
On agriculture, I reassure your Lordships that these deals deliver appropriate protections for the industry, including through tariff rate quotas, protecting UK farmers. These deals present enormous opportunities for our consumers and farmers. The Australian High Commissioner gave me a fascinating statistic the other day: UK firms own more than 10 million hectares of land in Australia. I am told that agricultural land in the UK totals about 20 million hectares, so, Britons are some of the biggest farmers in Australia. She also told me that her statistics show we export more agricultural produce in all its forms to Australia than we import. There are production differences between Australia and New Zealand which, frankly, we wish to take advantage of. We should welcome these expanded markets, as many farmers do. I read an interesting article in Farmers Weekly, which stated that these FTAs will
“help ensure UK products expand into new markets, taking advantage of our complimentary seasons, and increase consistency of supply to these markets, contributing towards targets, such as the NFU’s … ambition to grow food exports by 30% by 2030, to at least £30bn.”
I also welcome the Trade and Agriculture Commission’s work on these deals, which was, in my view, very clear about the protections still afforded us. It said that
“it can be concluded 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.”
That is a direct quote from the TAC paper. Importantly, we take these issues very seriously and I will try to ensure that I provide further reassurance at the end of the debate in answer to the points raised by noble Lords.
To return to the Bill, I draw noble Lords’ attention to the fact that a number of statutory instruments will need to be laid, in addition to those that will flow from the Bill, to allow entry into force of the deals. These relate to rules of origin and tariffs, intellectual property and technical barriers to trade, specifically in New Zealand. Technical changes to the Immigration Rules have already been made.
As the procurement chapters of these agreements concern devolved matters, this Bill also confers powers on the devolved Administrations so that they can implement the agreements in areas of their competence. As concurrent powers, they also allow the Government to implement the agreements on a UK-wide basis where it makes practical sense to do so. They are entirely reasonable; they ensure that measures contained herein can be applied to all our procurement processes in a consistent manner. In my view, this is desirable. However, I reiterate the reassurance given at every stage of this Bill’s passage through the other place: the Government are committed to not normally using this Bill’s powers without the consent of the devolved Administrations, and we will never use them without consulting the devolved Administrations first.
We have two ground-breaking deals, both opening up new opportunities for Britain’s world-leading industries; an expected £900 million increase in UK household wages as a result of the deal with Australia; an expected £200 million increase in household wages as a result of the deal with New Zealand; ambitious mobility provisions for UK professionals and young people; two trade deals fit for the 21st century, including the first animal welfare chapter in a free trade agreement; modern digital and data provisions, ready for the economy of the future; as a key part of the vision set out in the integrated review, a tilt to the Indo-Pacific, thus building on existing strong ties, including the Five Eyes partnership and recent AUKUS agreement, to deepen our relationships with key allies in the region; and, finally, two values-based deals, which deepen our relationship with like-minded democracies sharing our beliefs in fairness, free enterprise, high standards and the rule of law.
Our Australia and New Zealand trade deals illustrate modern partnerships, and they reflect what the New Zealand Trade Minister said when the New Zealand Parliament was debating the deal—namely, that the partnership between our countries is
“grounded in common traditions, experiences, and values, strengthened and maintained by deep people-to-people links and made relevant by a close cooperation across the entire spectrum of engagement: economic, health, science, sport, defence and security.”
To further showcase this partnership, I believe the Australian High Commissioner has joined us in the Public Gallery today.
Crucially, these agreements are a central element of our work to build a network of trade alliances with the world’s most dynamic economies. These deals represent another step towards our accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
This is a modern, flexible agreement, representing not an end point or a stop sign but a template for growth and deeper partnerships with two of our closest allies and key strategic partners. Importantly, it contains a series of important mechanisms to ensure that these agreements remain flexible and contemporary, including a joint committee to implement and operate the agreement and further sub-committees on intellectual property, services and investment, sanitary and phytosanitary measures, technical barriers to trade and trade in goods. It also includes side letters and dialogues on implementing protections around geographic origins, financial services regulations, professional qualifications, telecommunications, legal services and, of course, a detailed series of mechanisms to manage our tariff rate quotas. These are highly flexible agreements. They allow us to build on them and make alterations as deemed appropriate.
This Bill represents a historic step towards realising this Government’s vision for a forward-looking, sovereign trade policy that delivers prosperity to our citizens. I have every confidence that noble Lords will recognise these immense opportunities. I beg to move.
Baroness Liddell of Coatdyke (Lab)
My Lords, I welcome the Minister to his position. It is quite exciting to do your first Bill before any House and he has got off to a good start. I used to have a colleague in the other place who, at the end of a speech, would often say “it says here” because that way they could get out of any problems that had been created. I used to get notes from the civil servants saying, “Please read out paragraph 3 because that is the one that the judges need to hear about,” because I would quite frequently avoid doing that.
I have to announce to the House that I have no relatives in Australia or New Zealand, but I have spent a little time in Australia as British high commissioner. I followed in the footsteps of the noble Lord, Lord Goodlad, who had laid an excellent foundation for me and managed to keep me out of an awful lot of trouble.
Let me see if I have this right about this Bill. This Bill is needed to ensure that the procurement provisions of the trade deals with both Australia and New Zealand can go ahead with no delays. However, this Bill is to be superseded by the Procurement Bill that is starting in the other place in the next couple of days. That Procurement Bill will repeal this Bill, and both Bills have to go on the statute book around the same time. I have lost the plot here. I know that is not something I should admit to. Sometimes, I think I have followed my namesake Alice through the looking-glass, because this is the most bizarre arrangement I have ever come across in relation to a piece of legislation.
We are going to have to pass this Bill when we have been denied the full opportunity for scrutiny. That is a major issue. On both sides of the House, there have been arguments about the need for scrutiny of trade Bills. Furthermore, there is no published trade strategy, so how can we know whether these deals meet the criteria set for the negotiators? It is a very difficult thing to try to do. I am not casting aspersions on the Minister but there can sometimes be an addiction to hyperbole on the part of the Government. Not everything is an absolutely wonderful deal. There are failings in these deals; they are the first we have done since leaving the EU and it is no surprise that there will be difficulties. I can remember, as a Minister, standing at the Bar of the House and suddenly discovering from some of the experts on these Benches that I had completely ignored engineering in an energy Bill. I had to go back and table amendments. It happens; we do not get everything right all the time. I strive to get some things right occasionally, but my family say that I do not.
If we are to take these deals as setting the pace for trade deals around the world, we need to take into account things that are quite controversial, such as the CPTPP. We need more information and, again, more scrutiny, to be able to go down that path because in the CPTPP countries there are a number of examples of trade deals that we would be quite uncomfortable with—on both sides of the House—in this country.
One thing that concerns me about the Bill—it is very narrowly drawn Bill—is whether this is how we are going to be expected to scrutinise other treaties. Are we going to have to do everything by statutory instruments? That is not the right way to properly scrutinise something as significant as a trade Bill. It raises issues about the responsibility of government to Parliament. It is an unfortunate path to go down. I know that the Minister has met the International Agreements Committee, of which I have been a member since its inception, and we are enormously grateful for that, but we want to know: where are the transparency and openness in the debates and advice that have to be put before us? This very constrained Bill is the only opportunity that both Houses have to scrutinise these trade deals. The United States has better provision for the scrutiny of trade deals than we have in this country. That should be a warning to us that we need much better scrutiny.
Obviously, having spent time in Australia, I am going to concentrate on it. People do not seem to realise that Australia is 32 times the size of the United Kingdom. The United Kingdom can fit into the Northern Territory with quite a lot of space left over. When the noble Lord, Lord Goodlad, was trying to get it through to me that this was actually quite a big country, he showed me a postcard that had the United Kingdom in a corner of New South Wales. It is not just the fact that Australia is a big, big country; it also has 25 million people, while we have 67 million—and there are an awful lot of farms in Australia. They are known as properties and some of them can be the size of countries within the United Kingdom because of their scale. No wonder that we end up with a disparity between what the agricultural community says about the Bill and what the Minister has said from the Dispatch Box.
The Australians are delighted with this deal, as well they should be. But our Government gloss over the projected growth in GDP by 2035, which is only 0.08%. We have to bear that in mind and see what we can do to advance it. That could be why the Australian Government’s website is much more helpful to those of us who want to analyse the deal, while the UK Government have been remarkably coy. If you want information about this trade deal, go on to the Australian Government’s site and then you will get it.
I want to make one very particular point, given my Scottish accent. I want to thank the Australians for the deal done on Scotch whisky. That has suffered from what I used to describe as a nuisance tax, which was introduced to protect Bundaberg rum. I know that the noble Lord, Lord Frost, will be speaking in a few minutes’ time. The one problem that I always found with it was that Bundaberg is owned by Diageo, which owns most of the whisky distilleries in Scotland, so I could not quite work that one out. I have to be absolutely honest: Diageo allowed me to have a Scotch whisky evening every month so that we could promote the case for reducing the tariffs on Scotch whisky. Maybe the noble Lord, Lord Frost, knows the answer to that given his background in the Scotch whisky industry, because I have not a clue what it is.
Labour has said in the other place that the Bill will not be opposed. However, there are very real concerns about, for example, animal welfare, agriculture in general, and the lack of any provision for decent work and social goals through procurement. Lots of us know of young people who have gone out on two-year visas; some of them find themselves in pretty appalling circumstances. We need to make sure, as the migration period into Australia is increased to up to three years, that those who go as migrants are protected by the trade union laws and by the social and political goals. The TUC and the Australian Council of Trade Unions have made the same point, but in this country there seems to have been no interchange with the TUC about the difficulties around migrant workers in Australia. I recommend to the Minister that something needs to be done about that. A lot of Members on the other side, particularly in the other place, depend on rural communities, yet the most vociferous criticism of the deal comes from those communities. There is a problem here and it really has to be addressed.
It is significant that there has been a change of Government and now a much more engaged agenda on climate change in Australia. That could create huge opportunities for UK companies which are forging ahead strongly on renewables, carbon capture, storage and use. I refer to my entry in the register of interests as the president of the Carbon Capture and Storage Association. Under the previous Australian Labour Government there was considerable interest in CCS and use, with an experimental operation in Latrobe Valley. What attempts have been made to open the door to environmental businesses in this country in renewables and CCS and use? Under Prime Minister Albanese, who has made it quite clear he takes a completely different view on climate change from Prime Minister Morrison, there are opportunities to extend our success with the industry in Australia. During the passage of the Bill, we will want to know what prospects there are for that kind of improvement and let it be known that the lack of scrutiny afforded to Parliament casts the Government in a poor light. What are the Government frightened of when it comes to scrutiny?
Doing a deal with Australia and New Zealand is very important. Lots of people in Australia—a very high proportion—carry British passports. That is not true of politicians, because they have to resign their British passport when they enter Parliament, but they all take it back up when they leave Parliament; it is quite a nice little side deal for the Home Office to reissue these passports. We have some of our oldest security arrangements with Australia and New Zealand. They are our friends. It is good that our first deal is with them.
I look forward to the processes around this Bill, but I am deeply concerned that we are going to do scrutiny by statutory instruments. It is not the way in which a sophisticated Parliament should scrutinise trade deals.
Lord Goodlad (Con)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Liddell, who made such a distinguished contribution to British-Australian relations when she was high commissioner—comprehensively erasing my footprints in the process, not least in bilateral trade and investment promotion, which is an important part of the job. It is a privilege to open the batting with her; I just ask her not to ask for any quick singles.
I look forward to the maiden speech of my noble friend Lord Swire, who also made a great contribution to British-Australasian relations during his period as Minister at the Foreign Office. I have some Australasian relations, descended from two uncles who migrated to New Zealand and Australia from the Shetland Islands when they were very young; those cousins were jolly supportive too. I welcome my noble friend Lord Johnson of Lainston to his new job and congratulate him on a very fine opening innings; I hope that we see many more of them.
This Bill is narrow and technical in nature. It is appropriate and important to recognise that our first post-Brexit ab initio—as opposed to rollover—trade agreements should be with Australia and New Zealand. They are important trading and investment partners already, as they have been for many years. They are also close intelligence and defence allies. We share a history that has led to the present deep family, cultural, educational, sporting, diplomatic and political relationships, together with legal systems rooted in the common law. The histories and destinies of our three countries are and will remain inextricably intertwined.
My noble friend the Minister has comprehensively and authoritatively set out the provisions and merits of the Bill. I shall address some of the criticisms that have been made. In a forthright speech in the other place last November, the right honourable Member for Camborne and Redruth pointed out that CPTPP negotiations are under way, as are those with Canada, and he sought to draw lessons from our recent negotiations with Australia and New Zealand. He said that the first and most important was that
“we should not set arbitrary timescales for concluding negotiations.”—[Official Report, Commons, 14/11/22; col. 425.]
In this case, that meant the then-forthcoming G7 summit. There is nothing new in that. I remember negotiations with Australia in the early 1990s, when I was a Minister at the Foreign Office, over our respective shares of the cost of cleaning up the Maralinga test site in South Australia. The senior Foreign Office official responsible rejected the Australian suggestion that the negotiations be conducted while watching a test match. Instead, they were conducted in the Foreign Office and concluded in good time for the Australians to be at Lord’s by 11 am, which is what they wanted. The senior official—who went on to be a very senior official—and I believed that the UK was the beneficiary of that tactic but, as in the present case, we shall never know.
The second lesson that the right honourable Member suggested was on changes to the machinery of government. I have no particular view on this, provided that the chains of command are clear and unambiguous.
The third lesson, which the noble Baroness, Lady Liddell, touched on, was on strengthening the role of Parliament in scrutiny and perhaps in agreeing the negotiating mandate. I am in full agreement on this. Other Members also commented on what some saw as defective scrutiny procedures for the Bill. For what it is worth, my experience, both in the other place and here, is that, in the long run, government has everything to gain and nothing to fear from effective parliamentary scrutiny, as other countries—notably Japan and the United States of America—have demonstrably found. But every Government have to learn their lessons in their own time and reinvent the wheel. I have no doubt that your Lordships will not let the side down in repairing any deficiencies in scrutiny of the Bill, as we always do with any legislation.
Reference was made in the other place to the possibility of triggering Article 32.8 and thereby giving six months’ notice of terminating the agreements. I hope it does not come to that; such a move would not bode well for our success in concluding other negotiations. As the noble Lord, Lord Kerr, rightly said in a different context, pacta sunt servanda. Whether or not a better agreement could have been struck we shall never know. Not every match can be a draw—if Ben Stokes has anything to do with it in the summer, there will be no draws at all. Trade agreements are not a zero-sum game; as in the present case, everyone is supposed to benefit. These agreements are popular with business in all three countries and deserve our support. I hope that noble Lords will give a fair wind to the Bill and all who sail in her.
Lord Frost (Con)
My Lords, first of all, it is a pleasure and honour to follow two such distinguished former high commissioners to Australia: my noble friend Lord Goodlad and the noble Baroness, Lady Liddell. I thank them for their interesting speeches, which provided such a depth of historical perspective on the very important relationship between these countries. I also thank my noble friend the Minister for his comprehensive opening statement. I thank the International Agreements Committee for the work it put into this last year, particularly the work of the noble Baroness, Lady Hayter, as its chair. The Select Committee published a thorough and very important report; it was the first report on a major trade agreement, and it covers all the angles that need to be covered.
As has been said, the Bill covers only the procurement aspects of the agreements that need to be incorporated into our own national law. I will not say too much on the detail of that, other than to note that, when I was conducting negotiations with the EU in 2020, many people advised me that we should simply incorporate into that agreement the EU’s existing procurement rules, as it was said that they were best things for the country. Of course, if we had done that, we would not now have the agreements before us. We worked very hard to ensure that the procurement chapter enabled sufficient flexibility to allow agreements such as these to be made, and I am sure that we will see repeatedly the value of that in future.
I take this opportunity to make a few remarks on the agreements and on our trade policy more generally. I do so because, when I was a Minister in 2021, my responsibilities included establishing cross-government positions on trade agreements in support of the then Prime Minister—a role which, I think, worked well at the time, although, to judge from the subsequent comments from some people involved, it seems that the disagreements within government were suppressed rather than genuinely resolved. However, as those disagreements have come out, I put on record, as indeed my noble friend the Minister has, my support for Crawford Falconer at the DIT, who has been a thoughtful, resilient and extremely important official within that department over the last few years; he was very important for these agreements.
I turn to the substance of the debate. Of course, I support both agreements; that is obvious because they are top-quality and modern agreements, and I particularly welcome the extensive removal of tariffs in both. I am afraid that I cannot quite give the answer that the noble Baroness, Lady Liddell, was perhaps looking for from my professional involvement with Scotch whisky, which is now receding into the dim and distant past. The agreements also include, as has been said already, the liberalisation of services and mobility arrangements for young people, which are all important parts of a modern trade agreement.
I will make three further points in the context of my very strong broad support. First, the aspect of the trade agreements that has been most debated is of course the liberalisation of agriculture, particularly of beef and lamb. As others have felt free to comment on that, again, I want to put on record my view that, in the end, the provisions were not ambitious enough. The very long transitional period of 15 years delays unnecessarily the benefits to our economy of cheaper and high-quality beef and lamb in our market. I have full confidence in the ability of our farming sector to adjust to competition, and we should have pushed for a slightly shorter period in the interests of the UK consumer. I say that while believing that the benefits of trade come primarily from imports and competition in own market, rather than exports to other markets—to think anything else is to take a very mercantilist view of these questions—and therefore I hope that the Government will be more ambitious in the many future agreements that will come forward.
Secondly, as has already been noted, today is part of the parliamentary scrutiny process for the two free trade agreements, and I admit to sharing some of the concerns that have been expressed about the scrutiny of agreements of this sort. I welcome the commitments by the Government in the exchange of letters on 19 May last year and recognise that those commitments on scrutiny go further than we have seen before, but there is more to be done.
Our exit from the EU means that we have repoliticised our trade policy. When I was the UK member of the EU’s Trade Policy Committee, known as the Article 113 committee, 10 years or so ago, I found it very hard to get UK Ministers—they were mostly Lib Dems, under the coalition—interested in trade policy because it was all decided in Brussels and had become depoliticised in our own politics. That is now changing, and I think it is a very good thing that we are having those sorts of debates. Unfortunately, the world has moved on from the early 1970s, when this Parliament and the Government were last fully in control of trade policy. Our arrangements for scrutiny should move on, too.
As I said to the Public Administration Committee in June last year, I think it is desirable that there should be a simple up/down, yes/no vote—at least in the other place—on all substantive trade agreements. As has been noted, there was such a vote when we were a member of the European Union, in the European Parliament, and it seems unsatisfactory to me that we give less scrutiny now that we have brought trade policy back home. Again, I hope that, in the future, the Government will think about this aspect and the value of politicising this and capturing the politics around trade agreements in a useful way.
Thirdly and finally, the Minister noted that the Government are often asked for a trade policy strategy, but we do not yet have one. It would be good to set out a strategy that not only covers trade but goes broader: one big advantage of taking back control of our trade policy is that we are able to integrate it more closely with foreign policy, and indeed development policy. There was a missed opportunity to bring all those departments together in 2020; perhaps that will be looked at again in the future. It would be useful if the Government could set out a trade policy strategy that is really a geopolitical strategy—one that relates to our broader foreign policy ambitions as well as pure trade policy. Our prospective adherence to the CPTPP is of course a major element of that and the Indo-Pacific tilt, but it is only one element and there is room to look at this more systematically, strategically and coherently.
I hope that such a strategy could also usefully set out how the Government see the balance between domestic liberalisation of tariffs—that is, reducing our own tariffs still further to increase competition and reduce prices in our own market—and offensive liberalisation of other countries’ trade arrangements that we seek in free trade agreements. Both are important, as is getting the balance right.
I hope that my noble friend the Minister can comment on these aspects in winding up. Meanwhile, I am of course very happy to support the Government in the Second Reading of this important Bill.
Baroness Young of Old Scone (Lab)
My Lords, I declare my environmental interests, as well as my interest as chair of the Royal Veterinary College. I had not really thought of declaring my Australian and New Zealand relatives until I was reminded by several previous speakers. I have umpteen of them. We were good Scots: we spotted the £10 immigration grant—the Ten Pound Poms scheme, as it was known—and took full advantage of it. I am a frequent visitor to Australia and New Zealand.
Noble Lords have remarked upon the fact that this Bill is very narrow in scope in that it deals only with the power to implement the obligations in the government procurement chapters of the two FTAs, but it is of course an open goal in terms of the opportunity to talk about the wider issues of trade agreements, including the scrutiny process. I would also like to focus on environmental standards. I hope that these broader comments will benefit future agreements.
On the scrutiny process, much of the scrutiny happens far too late. It needs to take place before things are set in concrete. I welcomed the assurances from the noble Lord, Lord Grimstone, about future ground rules and improvements in the processes, but they did not go far enough. We need full parliamentary debate and agreement on negotiating objectives before negotiation starts, and proper opportunity for parliamentary debate in both Houses before the agreement is signed, not after—or, in the case of these two agreements, never at all, as far as the House of Commons was concerned.
As the noble Lord, Lord Frost, said, we used to have such provisions in place for trade and other negotiations within an EU setting. It is slightly bizarre that we do not have such open arrangements now that we are allegedly free to do what we want. Perhaps the Minister will tell us how he intends to reinstitute those processes.
I would also like, in common with other noble Lords, to talk about trade strategy, or the absence thereof. All future agreements need to be set in the context of a proper trade strategy. The International Agreements Committee, the International Trade Committee and the EFRA Committee have all asked for a trade strategy, and I am sure that many noble Lords will today. I hope it will cover such crucial issues as whether the Department for International Trade has a clear role in promoting democratic values and environmental reform through trade.
I turn to some specific areas in relation to environment and agriculture. I was rather taken aback at how almost incandescently messianic the Minister was about the benefits of these two agreements; I thought I might have been reading two different agreements. Let me be a party pooper, perhaps, or diminish the messianic nature of the Minister’s rapture, and talk about some of the issues that some people are not quite so convinced about as he is in terms of the environment and agriculture.
On the process for environmental impact assessments, EIAs happen only after the signing; they take no account of cumulative effects of several trade deals; and they do not really cover such key issues as transport-related emissions and the potential for increased carbon leakage. There are no permanent bilateral safeguards to ensure that imports with lower environmental standards than those we set in the UK do not come into this country. So, the EIAs result in an incomplete picture which can obscure the true risk of offshoring climate and environmental impacts as a result of trade agreements. If we think that was a minor issue in the Australia and New Zealand agreements, we ain’t seen nothing yet—we are going to be dealing with much bigger fish to fry in the future.
I am still monumentally unclear about how environmental standards of imports are monitored on an ongoing basis. During our debate on the Trade Bill, the Minister assured us that systems were in place but gave us no detail. To be honest, at that stage I had almost given up the will to live in dealing with these issues and did not pursue it, but I entirely plan to continue to pursue it now. Will the Minister tell us what the systems are for monitoring environmental standards of imports on an ongoing basis? What review has there been so far of their effectiveness? What remedies are there, apart from the transient remedies in these two agreements, if such standards are infringed?
I turn to agriculture. I was never a great fan of the Trade and Agriculture Commission; it is pretty light on environmental expertise and comes into play only once FTAs are signed, which is a bit like shutting the stable door after the horse has bolted. The Trade and Agriculture Commission reported on the UK-Australia FTA, but this process needs to be strengthened by expanding the remit of the TAC and the scope of the Government’s report required under Section 42 of the Agriculture Act. At present, both are incredibly narrow, and that is compounded by the fact that the TAC also has very limited resources, including limited expertise, to conduct proper scrutiny of larger, more complex negotiations in future. That needs to be addressed before we start playing with the big boys, otherwise the Government will not get proper, early enough and wide enough advice from the TAC. In the Australia agreement, that has resulted in several outstanding questions being left unanswered. For example, how far can Australia’s less stringent regulation of pesticides interplay with and give an unfair competitive advantage to them over UK producers?
We want the TAC to be involved in and comment on how negotiations should be framed rather than only examining agreements once they are signed. I also believe that the TAC should be tasked on an ongoing basis to consider the cumulative impacts of trade deals.
What about the impact of the two agreements on farmers in the UK? It is interesting that the National Farmers’ Union is not so messianic about the benefits for British farming as the Minister is. The flaw in these agreements is that they offer us very small markets which already have only low-tariff barriers, so there is not a huge benefit in the agricultural sphere to this country. On the downside, both of the countries with which we are making free trade agreements are big exporters, which could swamp our smaller-scale UK markets. The temporary bilateral safeguards that are our freight quotas are just that: temporary. They are also bilateral and probably will not persist in the face of WTO arrangements. Can the Minister tell us how swamping UK markets can be prevented in future negotiations with even bigger producing and exporting nations? Or does he really want us to be a niche agricultural product nation?
I hope over the course of this Bill we can tempt the Minister down from his ecstatic heights at these two FTAs to address some very real concerns about these deals and the future processes. With our traditional relationship with, no doubt, hundreds of my relatives in Australia and New Zealand, these agreements were conducted on comparatively friendly terms. We need to sort out these processes before we start playing footsie with some bigger and more aggressive beasts in the trade jungle.
Lord Kerr of Kinlochard (CB)
My Lords, I have made a new year’s resolution to try to be more congenial, so I need to start by saying that I warmly welcome the last three substantive points made by the noble Lord, Lord Frost. It has been a very long time since I have been able to say that I entirely agree with the noble Lord, Lord Frost. It is also a great pleasure to see the Minister back on the Front Bench, and I greatly appreciated the balanced and understated analysis he put forward. The noble Baroness, Lady Liddell, spoke of hyperbole. I heard no hyperbole; I heard no geese misclassified as swans. I believe that we will all benefit from such a calm, rational analysis. I think it would be as well that the Minister does not pay any early visits to the hill farmers of Scotland, Wales or Northern Ireland.
I have only two points to make on the substance of the Bill and two points on the agreement. On the Bill, I do not understand its rationale—I am like the noble Baroness, Lady Liddell. It is bizarre. The Procurement Bill—which has gone through this House and will have its Second Reading, I think, today in the other place—overtakes this: it confers on the Government powers to implement procurement provisions in trade agreements. So why do we need a separate and specific Bill, primary legislation, in respect of Australia and New Zealand? I really do not understand. It is not as if the Australian and New Zealand agreements were massive agreements urgently requiring to come into effect, or agreements with momentous procurement provisions. I am not against the Bill, but I did not hear from the Minister any convincing rationale for it. It may be helpful if he could go on record to explain why we are doing what we are doing.
I am a little more concerned about the substance of what the Bill says. It is a skeleton. That came as a surprise because the Explanatory Memorandum on the agreement with Australia told us that primary legislation on procurement would be required. The Bill, however, makes none of the apparently necessary changes to the current statute book and does not tell us what they are. Instead, it asks us at Clause 1 to delegate regulation-making power to an “appropriate authority”—not just power to make the changes required by the Australia and New Zealand agreement but power to make any changes that the appropriate authority deems appropriate. Clause 2 suggests that such appropriateness can be construed liberally. That all seems a little permissive to me. The wording of Clause 1 and, possibly, Clause 2 may need some careful consideration in Committee.
I also note that the regulations making the changes that the appropriate body thinks appropriate would be subject only to the negative procedure. I wonder whether choosing that, rather than the affirmative, procedure is necessary or appropriate. That, too, is a point the House may want to think about in Committee.
My third, more general point is that the Minister might find the House more relaxed about implementing legislation if the Government felt able to be more open—perhaps as open as the Australians and New Zealanders—about the process of negotiating trade agreements. As our EU Committee pointed out in 2019, the Constitutional Reform and Governance Act 2010, CRaG, which defines our role now, is
“poorly designed to facilitate parliamentary scrutiny”
of trade agreements. That did not matter much in 2010 because the EU was then our trade negotiator and the European Parliament was required by treaty to approve the mandate for trade negotiation, to be fully informed at all stages of the negotiation and to approve its eventual outcome. Because the European Parliament was fully in the picture, so were we. However, we now have none of its three means of scrutinising and controlling the process of treaty negotiation. Therefore, we can be taken by surprise, as the Scottish, Welsh and Northern Ireland hill farmers were, by the agricultural elements in the deals with Australia and New Zealand. Those concerns were not entirely justified—again, I am with the noble Lord, Lord Frost, on this—but greater openness would reduce the risk of such surprises and I hope that the Minister will look again at the International Agreements Committee’s proposals on how to mitigate the defects in CRaG and restore effective scrutiny of trade agreements. “Taking back control” did not have to mean slamming down the shutters.
My second-to-last point illustrates why I am one of those who strongly believe that we need a government strategic document setting out the trade policy strategy. Let me try to do that, this time, by giving examples of strategic issues which I am sure the Government and department are greatly concerned about, but about which we have been kept a little in the dark. First, and most urgently, I ask the Minister: where do we, and should we, stand in the debate touched off by the Washington agreement to invest nearly $750 billion in green energy under the Inflation Reduction Act? Over in Brussels, our EU friends still seem to be on their plan A, which is to seek to ensure that more non-US firms benefit from this enormous US investment. That is a rather unlikely outcome, particularly given the change in the composition of the House of Representatives. But if, as I expect, the European Union falls back on its plan B, which is to enact similar national preference provisions on energy investment, I would have thought that this would be rather detrimental to our interests. So, where do we stand in this debate, and what are we trying to do about it?
A second and equally strategic issue which could be addressed in a government trade strategy document is the trade policy consequence of our hardening attitude to China, given the increased belligerence towards Taiwan and our increased concern about supply chain resilience. I do not know what the agreement between the Foreign Office and the Department for International Trade is on the attitude we should take. I hope that there is an agreement, and I cannot see any reason why public debate should not be enhanced by the position being made known.
Thirdly, to what extent should our approach in trade relations with friendly third countries such as India take account of their compliance or non-compliance with our and our friends’ sanctions on Russia over the invasion of Ukraine? I do not think trade can be regarded just as a watertight compartment. As we try to negotiate a trade agreement with India, we need to know the Government’s view on how watertight that compartment is.
Fourthly, how does trade policy interact with environmental policy? To me, the surprise in the agreement with Australia was not the agricultural provisions—we clearly decided to give the Australians what they wanted, perhaps for good reason—but the weakness of the environmental provisions. We knew that the Australian Government were determined to protect their coal industry. We remember Alok Sharma’s tears at the COP in Glasgow; the Australians drove him into that corner. However, we knew that the then Australian Government were behind in the polls and likely to lose the imminent election, and that the incoming Government would take a much more constructive line on global warming. Since we were giving the Australians what they wanted on agriculture, why were we not trying to extract a price on environmental policy commitments? In addition, why the rush? Why were we not waiting for a Government whose views on global warming, like those of the New Zealand Government, were closer to ours—a Government like the one we have in Australia now? I do not know the answer to that question. Maybe Mr Lynton Crosby is part of the answer; I do not know. I think it would be easier for the Government to maintain a credible position in public debate if they set out the principles they see as governing the interaction between trade policy and environmental policy.
I have a final example of the sort of issue which should be covered in a trade strategy. By the way, I think that the trade strategy should be submitted for debate in Parliament on a regular basis. It should be renewed year on year and provide the basis for this kind of debate, but on a wider stage than just that of Australia and New Zealand. The elephant in the room for trade policy is how we can reduce the non-tariff barriers to trade with our biggest and closest market. If you look at the queue on the Dover road, you must think that this is a strategic issue with direct daily consequences to the detriment of British business.
One of my more poignant memories of 2019 is of the then Prime Minister proudly announcing that his trade and co-operation agreement contained not a single non-tariff barrier. I cannot remember any trade agreement that set up a non-tariff barrier. The purpose of trade agreements tends to be to take barriers down; on the other hand, leaving a customs union, a single market and an area of free trade and free movement is bound to erect barriers—it certainly did, and the treaty did nothing to mitigate them. However, there will be a review in a couple of years’ time and, in my view, mitigations are possible if trust can be restored.
So it is not too late—or, indeed, too early—to start thinking about a plan. I hope that the Government are thinking one up. I do not know whether this has been entrusted to the Department for International Trade; I fear that the matter may be being handled by the Foreign Office, which, in my view, would be unwise. The Government would do well to produce some inkling of what they think is the best way to reduce the barriers that have now made the channel so wide.
With that, I had better stop. If I do not, the House may think that I have forgotten my resolution to be congenial.
Lord Swire (Con) (Maiden Speech)
My Lords, over the recent Christmas Recess, I spent some time—not all the time—reading some maiden speeches made by those coming into this place. It strikes me that there is an accepted formula in being uncontroversial while paying tribute to the friendliness, efficiency and tolerance exhibited by all the staff in this place, from the Lord Speaker and his office to Black Rod and her office, the clerks, the Vote Office and the doorkeepers, who are of course the people who run this place. I had thought that the kindness exhibited to me was exceptional but, clearly, it is a common experience; none the less, I wish to add my gratitude to them.
Having spent almost two decades in the other place, I am acutely aware that nothing must be more irksome to your Lordships than somebody coming here from there and thinking that they know everything. This place is different and all the better for it. I am therefore hugely indebted to my noble friend Lord Lindsay for helping me to avoid the many potholes and pitfalls. I am also indebted to my noble friends Lord Strathclyde and Lord Marland, of Odstock, who were kind enough to be my supporters and guided me what looked to be so effortlessly into place—no mean achievement as I am not very good at these things. I think I am the only living former Guards officer who went the wrong way in the Changing of the Guard on the forecourt of Buckingham Palace some 40 years ago, to the consternation and delight of hundreds of Japanese tourists.
It was never really my intention to make my maiden speech so soon, having come into this House only recently. I am still reminded of my maiden speech in the other place in July 2001, which, while perfectly workable, is never likely to be studied or quoted from. I remember on that occasion having to follow on, in a not ideal fashion, from the then new Member of Parliament for Henley, one Boris Johnson. While no such threat confronts me this afternoon, following on from not one but two former high commissioners to Australia, a PUS at the Foreign Office and the Government’s main trade negotiator presents challenges to me in themselves.
Having thought about this, I feel that I can no longer continue with my role as a Trappist monk, since there are so many issues before us that I wish to share my views on and hopefully contribute something useful to. Having served as a Minister of State at the Northern Ireland Office, I maintain a deep appreciation and understanding for Northern Ireland and the problems that it has confronted, and which confront it at the moment, not least with the protocol. I very much welcome the recent noise coming from Dublin, given the utterances from Leo Varadkar the new Taoiseach—obviously, he was Taoiseach before and is Taoiseach once more—which will hopefully go some way towards resolving what has become a stalemate.
Also, having spent almost four years as a Minister of State in the Foreign and Commonwealth Office, with responsibility for the Commonwealth as an institution but also with responsibility for Asia as part of my portfolio, I wanted to take part in this debate, since this trade deal is of great interest to me. In that role, I had the opportunity of visiting both Australia and New Zealand, and I am very grateful to my noble friend Lord Goodlad for his kind remarks about that.
As we have heard, the devil of these trade agreements is in the detail, and I have no doubt that there will be plenty of conflicting views about this one. It is of course right that we should debate it thoroughly and scrutinise it in detail, but for my part I very much welcome this trade deal. I am not quite 74, which is what my introductory biography in this place said—that was amazing, and there was a certain amount of squinting at me on my first day. However, I am old enough to remember the sense of abandonment that our cousins in Australia and New Zealand felt when the United Kingdom joined the EEC in 1973. Their consensus was that this represented imperial preference in reverse and threatened particularly their exports of beef and lamb. Therefore, it is somewhat ironic that one of the criticisms levelled at this deal is that it will disadvantage our own agriculture sector, particularly in beef and lamb, although this ignores the fact that Australia and New Zealand’s main export markets are now heavily weighted towards Asia. The sense of betrayal at the time was understandable, so I am pleased that half a century later, we can put this to rest and look forwards, not back. Australia and New Zealand are, and have always been, more than just allies and friends. We have so much in common, and no one should underestimate the importance of the Five Eyes agreement and the AUKUS partnership, not least at a time of rising belligerence and influence in the region from China.
I also applaud this Bill because it is the first post-Brexit trade deal to have been negotiated from scratch and, moreover, it is with two fellow members of the Commonwealth. I should at this point draw your Lordships’ attention to the register of interests and my role as deputy chairman of the Commonwealth Enterprise and Investment Council, a not-for-profit organisation revitalised and chaired so dynamically by my noble friend Lord Marland, which promotes intra-Commonwealth trade.
For too long, we have behaved as if the Commonwealth is an embarrassment and not an asset. During my time in government, it sometimes felt as if I was pushing water uphill whenever there was anything to do relating to the Commonwealth. Here I pay tribute to my noble friend Lord Howell of Guildford and the now retired Lord Luce, who at times appeared to be the only two parliamentarians keeping the Commonwealth flame alive. I intend to join them and all those who feel similarly in promoting the Commonwealth, which provides a unique and ready market for British business.
In a recent, not uncontroversial Netflix documentary, which some of us may just have seen—and others may not admit to having seen—one of the contributors labelled the Commonwealth “Empire 2.0”. Either this was deliberate mischief-making, or it displayed astonishing ignorance; perhaps it was both. What it was not was in any way an accurate description of what today’s Commonwealth is: a voluntary grouping of now 56 countries, some of which, not least the two most recent countries to join, namely, Togo and Gabon, owe nothing in their history to the United Kingdom, having fallen historically within the francophone sphere of influence. Of course, your Lordships will remember that the last Commonwealth Heads of Government Meeting in June was held in Rwanda, another country with nothing to do with the British Empire or colonialism historically.
This afternoon, we heard a call for the Government to come up with a comprehensive trade strategy, which I would welcome. If the Government do that, I would remind them that the modern Commonwealth is one such opportunity—a Commonwealth that has a population of 2.5 billion people, 60% of whom, critically, are under the age of 30. It represents a third of the world’s population—a billion middle-class consumers. The combined GDP of Commonwealth countries is estimated to reach $19.5 trillion in 2027, almost doubling in 10 years from $10.4 trillion in 2017. It also represents 40% of the global workforce and half of the top 20 global emerging cities. I am sure we will hear from other speakers about the Commonwealth advantage, whereby it is cheaper for one company in a Commonwealth country to trade with another company in another Commonwealth country, with a saving of 21%, based on a common language and legal system.
The opportunities for trade with Australia, New Zealand and the wider Commonwealth are clear. I welcome this trade agreement, which will increase the United Kingdom’s chances of joining the trans-pacific partnership, which is the bigger goal. I hope that the new Minister, my noble friend Lord Johnson of Lainston, will take this opportunity to reaffirm this Government’s commitment to the Commonwealth and everything it represents, and that we can rely on him to be a passionate advocate for it.
Lord Howell of Guildford (Con)
My Lords, I am delighted to follow my noble friend Lord Swire’s excellent maiden speech. He was my second successor—or was it the third?—in the job of Commonwealth Minister in recent times, and he made a great fist of it and a great success. He continues to do so in working with my noble friend Lord Marland, whom he mentioned, in the highly successful Commonwealth Enterprise and Investment Council. Together, they and their brilliant team have opened Whitehall eyes—although not nearly wide enough yet—to the vast trade and other advantageous linkages that the modern Commonwealth offers. My noble friend Lord Swire’s wisdom and experience will be hugely valuable here. Whatever he may have done on the parade ground, I do not think he will lead us the wrong way; on the contrary, he will lead us the right way, to a better understanding of what is happening in world trade.
I come to the Bill. Although the impact assessment tries to do so, it is difficult to predict how this agreement will affect trade flows, because it depends on whether or not opportunities are seized and on a range of technological developments, some of which we cannot even foresee, which will affect the pattern of trade as they have done for the last two or three decades. Despite the challenges and difficulties for our farmers, which I recognise, we should see the Bill in a very positive light.
The Bill is welcome too because it is part of the new jigsaw of an utterly transformed world trade system and, as the excellent report from the International Agreements Committee observes, it gives us a glimpse into the Government’s longer-term vision for trade expansion. This inevitably means not just trade but, inseparably, political and security expansion. All these matters are intertwined and involved. It may also tell us something about the Government’s policies to develop their role in the Commonwealth, which embraces about a third of the human race and is the biggest network on the planet by far. The modern expanding Commonwealth is, in the late Queen’s words, “an entirely new conception”, and Australia is key to that new and fast-growing Commonwealth world. Whether Australia’s status is as a realm or a republic does not matter at all; it does not affect things. This is good on both fronts, because we do not hear nearly as much as we should in this House or in Parliament about either of these major areas of policy, despite their outcomes being central to our security and future prosperity, and to the welfare of the world.
On my first point, about our involvement in new trade patterns that are booming, with countless new networks in Asia, with this Bill and these agreements we are obviously stepping further into a world dominated by the Chinese giant—far too dominated, many feel, especially in Australia but here as well. I find the consultants Dezan Shira, which has offices all over Asia and Africa, to be one of the best pan-Asian interpreters of what is really happening in the region. It estimates that the total current value of belt and road projects put forward by China is $4 trillion. Of course, there is in fact a whole spread of belts and roads winding through the developing world.
The belt and road initiative is not just loans and eye-catching projects; it is creating a major value chain for services, engineering consultancy, legal and advisory services, all professional services, and of course much more investment opportunities. It is very good that the Bill covers the same sort of ground and opens the door to better professional services access both ways—although of course that is just a small start on one front in countering China’s remorseless BRI advance. I am very glad that the Minister, who I welcome to his job, mentioned that when he introduced the Bill.
Incidentally, when it comes to bilateral investment treaties, which are just as important and are the key to more trade, China is miles ahead of the United Kingdom, with 145 treaties with developing countries against 20 UK treaties, mostly with Commonwealth countries. In effect, through past inattention we have let the Chinese take the lead in financing and getting the benefits from Commonwealth countries, which ought to be our asset, not theirs.
It could be that this Chinese ascendancy is now being checked, as Australia in particular finds its export routes to China closed down and rightly seeks other outlets for its burgeoning modern economy, which is based still largely on raw materials and food products but increasingly on very advanced technology and services. That is a far cry from the image of the past trade pattern.
London’s own past neglect has let the Chinese in too far. Our financial sector is supposed to be the kingpin area of worldwide development finance. It is incredible that we have let this aspect slide and allowed the Chinese to make the running. Admittedly, during Liz Truss’s short-lived premiership a new British International Investment body was announced, intended to mobilise £9 billion of funds as a counter to strings-attached Chinese loans, but frankly this is small beer compared with the size of the BRI advance.
At the G7 summit last summer, President Biden revived his Build Back Better World plan from 2017, which had not gone too well, and his Blue Dot Network initiative with Australia and Japan, all hopefully designed to counter the BRI juggernaut. But what remains is an enormous cat’s-cradle of trade expansion and criss-cross deals throughout Asia, all steaming ahead under a Chinese aegis and generating enormous potential world growth, from Australia to Japan, from the UAE to Russia, and through the so-called middle corridor that links the Caucasus to the Chinese sphere.
So here we are just putting a toe into the world of high-technology trade expansion. I am frankly amazed that our policymakers have not made infinitely more of the modern Commonwealth network in getting deep into this new world. Important though it is to get on and build the best possible relations with all our European neighbours, it may surprise some that the Commonwealth has been outstripping the EU in three aspects: population size, economy size, and economic growth rate.
It is good that this UK-Australia agreement gives major access for UK professionals—lawyers, auditors, scientists, architects and so on—to the Australian and New Zealand markets and allows us to join freely in procurement bids for Australian and New Zealand government contracts and, I presume, vice versa. Will the Minister say whether that we are completely released from having to consider bids from EU suppliers first as a priority, as we used to?
Then there is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—a clumsy name—which we are trying to enter and which has already been mentioned. I am glad that we are getting strong support from Japan, but again I have no idea what use we have made of our Commonwealth ties. I hope we will hear more about that. The unhappy appearance, which I hope the Minister will dispel, is that we do not really have a policy for steady development of our relations with the rest of the gigantic Commonwealth network. What we need is a patiently executed plan to keep pace with Commonwealth and Asian expansion and new alliances growing up, which I hope that the provisions in the Bill will allow, at least for Australia and New Zealand as a start. Many people today feel acutely this lack of purpose and unifying narrative in Britain’s world direction, and therefore in what should be the focus of their loyalties.
As has just been observed, the Commonwealth may not be treaty-based, may not be a trade bloc or an alliance, and may have members back-sliding from its central commitment to liberal values and the ways of freedom, yet is clearly a major asset for us—or ought to be, as we struggle to compete in a hypercompetitive world, as my noble friend Lord Swire reminded us. What is more—this is widely missed—the new Commonwealth tableau opening out and growing meshes thoroughly with the entirely new pattern of international relations in which the UK is still working hard to find a place. Beyond all economic considerations, the security dimension of the Commonwealth has swollen dramatically in significance. Our military links with individual Commonwealth countries are growing daily—with Australia through the latest AUKUS submarine project, with India through cyber co-operation, and with African allies through military training links and weapons—and we are at last beginning to perceive what the Chinese have long seen and we have not: that many of the small island states in the Commonwealth, especially in the South Seas around Australia, have a major strategic significance in the new high-technology patterns of warfare and maritime security.
From the British point of view, the modern Commonwealth has evolved from a liability into a series of major trading, investment and market opportunities, as well as an ideally tailored transmission channel for the projection of British soft and smart power, and into a vital part of the UK’s safety and security. The entire enormous network needs to be brought much nearer to the heart of British foreign policy and strategy considerations. Please will the Minister assure us at the end of this debate that this is beginning to happen, and that this trade agreement and its provisions are all part of a bigger and more determined and focused UK strategy for access to the great new markets of the future and for our national safety and security?
Lord Liddle (Lab)
My Lords, I congratulate the noble Lord, Lord Swire, on a most charming maiden speech. Of course on these Benches we welcome the fact that these agreements with our Commonwealth allies in Australia and New Zealand have been concluded.
I mention right at the start one positive aspect of these agreements, which does not have much to do with trade directly but which I think is important: the mobility provisions for young people. The idea that they can spend up to three years as under-35 year-olds, and working at the same time—not just as students—seems a welcome approach to mobility and a very good thing. I hope that this kind of agreement will be matched in future in relations between the UK and the European Union.
I would also like to welcome the noble Lord, Lord Johnson, to his place. I greatly admired the bravado with which he spoke in favour of his Government’s negotiation of these agreements. There is, however, one obvious and, I am afraid, difficult question that I have to ask him. If these benefits are as overwhelming as he described—if billions of pounds of opportunities are being created—why did the impact assessment that went along with the parliamentary papers on these agreements suggest that the Australian agreement would increase our GDP by 0.08% and the New Zealand agreement by 0.03%?
I do not understand this obvious contradiction; I wonder whether the Minister will explain it to us in his reply. Is it because the benefits of these agreements are, in the Australian case, overwhelmingly on the Australian side? I read a lot of gossip about what is going on in the Conservative Party; it is said by some people that the reason why these agreements were concluded so quickly, and at such obvious disadvantage to UK interests overall, was because Liz Truss wanted to be able to claim to Conservative members that she was successfully getting trade agreements in order to be a champion of Brexit. I do not know about that but, if it is what lies behind this contradiction, it is an absolute disgrace.
The noble Lord, Lord Frost, who is no longer in his place, possibly has an explanation for the low economic benefits: that, because of agricultural interests in this country, we have put a brake on the potential for achieving the benefits of agricultural liberalisation. We need a national debate about this; it is a very important issue. I come from Cumberland and I know that its hill farmers earn very little: £10,000 to £15,000 per year. They are among the most hard-working, low-paid workers in the country. The noble Lord, Lord Frost—I wish he were still here—talked of how they would have to adjust. In what ways would they have to adjust and what would be the social and environmental costs, as well as the costs to the traditions that they have pursued for generations? We would like to hear answers from the Government on that question.
I support very strongly what my noble friend Lady Liddell said in her excellent opening contribution about how we are weaker as a result of not having subjected these agreements to proper parliamentary scrutiny. If we want a proper debate about how much we are prepared to liberalise, the Government will have to be much more open with the public about the trade-offs in this situation. Yet, particularly with the Australia agreement, what we saw instead was an attempt to hide from Parliament what it was all about.
When we had the discussions on the Trade Bill post Brexit, we were made promises. I remember David Davis coming along to our Select Committee and saying, “Of course, the UK Parliament will have the same rights as the European Parliament to scrutiny”. What a joke. I worked in Brussels in the Trade Commissioner’s cabinet when Peter Mandelson was Commissioner. One of my jobs was to maintain close relations with the trade committee of the European Parliament. These were very expert people who understood the issues properly, they had to approve a mandate for every negotiation, they had to be kept informed at every stage of negotiation, and the European Parliament as a whole had a vote on whether what had been agreed should go ahead. We have none of those provisions. Is it not absurd that trade agreements should be ratified on the basis of a resolution procedure, rather than something that offers the possibility of serious debate, in which amendments might be moved and different positions taken? If the Government are serious about trade and the difficult choices in trade, they have to be much more forward in their willingness to open these matters to scrutiny.
Finally, I very much agree with the remarks from noble Lord, Lord Kerr, about the absence of a credible trade strategy. We now know that we have lost considerably as a result of leaving the single market: something like a 14% trade loss—we know that is a fact. The Government cannot argue with that; the statistics are all there and obvious. How will we make up for that loss? We know the United States is not interested in an agreement. We know that with China, if anything, our economic relations are becoming more distant, not closer, and that is likely to be a trend. Indeed, one of the reasons farmers worry about the implications of these agreements is that if New Zealand was no longer able to export its lamb to China—Australia has already had difficulties—then it would find its way to the United Kingdom, flood the market and cause immense difficulties for our own farmers. Where are we on that question?
Where are we on India? Is there really any serious prospect of an India trade deal? If the Government regard as one of their top priorities stopping small boats, they are never going to agree to the thousands of visas that the Indians will want in return for trade concessions for us. That is, basically, the basis of the deal. If immigration matters to the extent that the Government make it their top priority, I am afraid we will never have a trade deal with India.
I do not know what the strategy is, and I think it is high time that the Government produced one. I hope the Minister, whom I greatly welcome to his place, will provide us with some answers in his summing up.
Lord Marland (Con)
My Lords, I greatly welcome my noble friend the Minister to his place—or the return to his place, as it has appropriately been said. He will bring great vigour and energy to this job as he done in his business life beforehand. The thing that has impressed me most about him is that he is always open to suggestions and ideas, and I hope he will take my suggestion and idea on board when I have finished.
I declare my interest, which has of course been declared by my noble friend Lord Howell. He is my PR assistant, as he always says nice things about me. I am incredibly grateful to him for that because he has been the godfather of the Commonwealth, as my noble friend Lord Swire said—and what an excellent maiden speech we had from him earlier. My noble friend Lord Swire was particularly kind about me, which made it even more excellent. I think he will find his job as deputy chairman of the Commonwealth council is assured for quite a long time for that reason alone. Naturally, we want to hear more from him for that reason.
I should congratulate the Government on doing this trade deal, which is a first. All these things are difficult because it is a new process. It is very good that something has happened and that we are having traction. Of course, any deal will have criticism, as we have heard from a number of people today. There will always be noises off but the idea, as some noble Lords have proposed, that you should bring the suggestion of how a deal should be negotiated to Parliament so that we, as parliamentarians, can ensure that it is negotiated properly is, frankly, not practical or reasonable.
However, I am taken by what the noble Lord, Lord Kerr, said—unfortunately, he is not in his place, which is what normally happens when I make speeches—supported by the noble Lord, Lord Liddle. We must understand the process which the Government are going through when negotiating these trade deals. If they do not have a process, then how on earth can they have a direction of travel? I would love to hear what my noble friend the Minister will say about that.
These two deals are of course quick tricks, as they would say in the bridge world, in that they are with reliable and trustworthy nations with which we have had long associations, not least because we share the same sovereign. Their markets are open and free; we share the same rule of law; and they are the easiest people in the world with whom you could choose to do trade deals. Having been the Prime Minister’s trade envoy and set up the trade envoy network, I am delighted to think that our trade envoy to Australia is someone who is no doubt in the good books of the noble Lord, Lord Goodlad, because, to go back to his cricketing analogy, the noble Lord, Lord Botham, scored lots of runs. I am delighted that the noble Lord is doing such good work within the trade envoy network.
However, having travelled the world and travelling it now with my Commonwealth hat on, I know that trade deals are going to be very difficult to do, particularly with the bigger markets such as America. We have known for years that the US FDA is the biggest protectionists of American interests; I am sure that India will share the same views. These will be very difficult trade deals to do, and it is therefore important that the Government understand the process, because if they do not, they will get a very good kicking when they come to this place, not least in the other Chamber.
The noble Lord, Lord Kerr, is now back so he could have heard the kind things I said about him, but the noble Lord, Lord Frost—another man who is not in his place—also said that there is a lack of trade policy, and we need that. It will be fundamental when dealing with those two markets.
As has been mentioned, the Commonwealth gives an incredible opportunity to the Government, not just to do trade deals but to show leadership within the world as to how they can be done with free-market nations, a number of which are of course Commonwealth countries. This is no substitute for the trade deal that we do with the European Union; it is an adjunct. The Government should therefore consider embarking upon a trade deal with the Commonwealth. It will not embrace every country, because not every country embraces free trade, rule of law, transparency and a lack of corruption, et cetera, as we supposedly do, and as Australia and New Zealand clearly do.
If we were to start a Christmas tree, for want of a better phrase, we could start a free trade deal with those countries which embrace that—we can already mention Australia, New Zealand, Canada, Singapore, Rwanda, Botswana and Ghana; they are all free trading, open countries. We could then build upon it as other countries embrace those fundamental points, which in many ways underpin the Commonwealth but are not necessarily practiced: the rule of law, a common language, transparency and openness to business.
What better opportunity have the Government got than with the current, and new, Chair-in-Office of the Commonwealth, His Majesty the King? He has worked tirelessly for the Commonwealth and will do in the future, because it is in the DNA of the Royal Family to ensure that it is an effective organisation. It goes without saying that our organisation stands ready to help the Government in this way if they choose to grasp this fantastic opportunity. We would be only too delighted to work with them for the betterment of this country, the Commonwealth and 40% of the world’s population as a whole.
Baroness Bennett of Manor Castle (GP)
My Lords, I perhaps do not really need to declare my interest—my accent makes my Australian origins obvious. Your Lordships’ House has heard before that my academic origins are in an agricultural science degree in Australia. The noble Baroness, Lady Liddell, spoke with some surprise about the nature of Australian farming, with its huge, extensive properties, half the size of an English county. I have worked on those properties and can talk at some length—I will not today—about mustering the bull paddock; we trucked the horses down to the end of the bull paddock before dawn, mustered the 500 bulls in that paddock and got them into the yard at 3 pm.
We have heard from the noble Lord, Lord Liddle, about Cumbrian hill farmers. I invite your Lordships’ House to think about the difference in production methods between Australia, which I have just been speaking about, where livestock are not seen by human eyes from one month to the next, and the kind of care and attention that livestock get on your average British farm. Think about that difference if you are trading between those two production models.
I have written extensively, particularly for the Yorkshire Post, on the atrocious animal welfare and environmental standards in Australian farming. I will not repeat all of that now, but I will tell your Lordships’ House that I bore in mind when writing such articles that many people would be reading them over their morning bacon and eggs, and so toned down significantly the tales I could have told about the things I have seen in Australian agriculture.
I note that the Minister in his introduction, which many have remarked on, spoke proudly of the animal welfare chapter in this Bill. I have a very specific question for the Minister. I am sure he is aware of the practice of mulesing, where large pieces of skin are cut off the rear of merino sheep without anaesthetic or pain relief. Those large, gaping wounds typically remain open for seven or eight weeks, and for many weeks veterinary observation reveals that those animals display, unsurprisingly, the impact of considerable pain and suffering. This is a Bill about government procurement. Will it enable the British Government to make sure that any British procurement is done in a way that ensures that no wool products which are the products of mulesing will be brought in under this Bill? If the Government wish to act on animal welfare in Australia, mulesing would be a very good place to start.
As I am speaking some distance into your Lordships’ debate, I am going to attempt not to repeat what others have said. Somewhat to my surprise, I agree with the noble Lord, Lord Frost, about the need for democratic scrutiny in trade policy. Many other noble Lords have covered that ground. It is very obvious that we have gone greatly backwards in democratic control over trade since we left the European Union. That is simply unarguable. It is in the Government’s hands to ameliorate that situation.
I thank the noble Baroness, Lady Young of Old Scone, who is not in her place, for setting out the many great environmental concerns. I associate myself with all of those, rather than repeating them.
In his initial speech, the Minister described the Bill as the “very essence” of government strategy. In a way, this demonstrates the fact that Conservative views of trade are directly opposite, by 180 degrees, to Green ideas of what trade should be. The Bill says trade at any cost, for reasons that I will get to later, but the Green vision of trade is fair trade, rather than free trade: trade in necessary goods where this benefits all sides—both communities, both societies and both economies. In our current free trade model, huge amounts of environmental costs and costs to workers’ rights are borne by the many, while a few gain financial profit from these deals.
There is also the problem of resilience. I note that, with remarkably little fanfare, the Government finally released their national resilience strategy on 21 December. If we are to base our Government’s economic strategy on long-distance trade, I would point your Lordships to the fact that, in just the last 24 hours, yet another vessel ran aground in the Suez Canal. This time they managed to refloat it after a couple of hours, so it was not the six-day blockage that we saw with the “Ever Given”, but this is none the less a reminder of the lack of resilience of an economy built on trade in this age of environmental, geopolitical and broadly political shocks.
We have talked a great deal about food in this debate, but if we are thinking about a policy for food security for the UK, I put it to your Lordships’ House that Australia and New Zealand are not part of a secure food supply that will feed the people of Britain under whatever circumstances might arise in the future.
I will raise some more specific points about the Bill. The Minister outlined the rather strange situation where we expect to see the Bill enacted for a few months and then replaced by the Procurement Bill. Like quite a number of people in your Lordships’ House today, I spent many hours grinding through that Bill in Committee and on Report. We heard then from the Government, and from all sides of your Lordships’ House, the desire to support small and medium-sized enterprises in government procurement. It is great to see that change: we did not hear this from the Government a few years ago, but we now see the idea that government procurement should look at social benefit—although the Bill still does not deliver what we desire from this. But what is the social benefit and the benefit to small and medium-sized enterprises of trade with Australia? Is it really they that will benefit, or is it the big multinational alcohol companies, for example, which one noble Lord referred to?
I am sure that most noble Lords received the detailed report from the National Farmers’ Union on the Bill and its concerns. In his introduction, the Minister suggested that farmers welcome the Bill, but that does not reflect the overall view that we hear from many quarters of the farming community. The NFU points out that the trade deal is not balanced: the main tariff reduction is on the UK side, and UK farmers have been pushed by government policies towards types of production with high input costs, which are very different from the extensive Australian production, and they are likely to suffer. The NFU points out that the trade deal has no safeguard mechanisms if imports reach a certain level. This comes in over various periods of years: there are no safeguards for sugar after eight years and none for dairy after six.
We again come to the question of government policy being joined up. We have a huge problem with massive over-consumption of sugar in the UK, particularly among young people. Do we really want a trade deal that potentially opens up a flood of more sugar into the UK? Where is the benefit of that?
On dairy, I was reminded, in my reading for the debate, of some figures from a few years ago, before Brexit, that showed that British exports of ice cream to the European Union were going up, as were imports of ice cream from the EU. So we were swapping over a manufactured product and using huge amounts of energy to do so. Let us imagine that we export cheese to Australia all that distance away, and Australia exports cheese to us. What would be the point of that?
Baroness Bennett of Manor Castle (GP)
I hear calls from the other side of the House saying, “Better cheese”. Would the trade of different cheeses be truly worth the environmental cost? That cost is not included on the price tag, as it is the externalised cost.
In the briefing from the TUC, concerns are expressed about workers’ rights and protecting public services. I again draw on my experiences of an Australian childhood to note that, if the UK is one of the worst places for workers’ rights in Europe, Australia is, broadly speaking, even worse and one of the worst places in the developed world. As others have referred to, there is a new Government in Australia, so that situation may change, but that is the starting point we are beginning from with this trade deal.
Finally, I must come back to the tone of the Minister’s introductory remarks, to which many noble Lords have referred. I will offer the Government some constructive advice: if they really want to convince the House, the country and the world of the benefits of what they think they are achieving, they really need to tone down the rhetoric. The trade deal, we hear, means immense opportunities. Is that really so? As the crow flies, Australia is 15,000 kilometres away and New Zealand is 18,000 kilometres away. Port to port, the freight time is 50 days or more. They have absolutely opposite time zones. We have heard some reference to trade in services, but, as I speak now, it is 5.17 pm in the UK and 4.17 am in eastern Australia. As the UK finishes its working day, Australia and New Zealand are sleeping. That is not an ideal circumstance in which to conduct trade in services—I say that as someone who occasionally needs to make calls to Australia, because calculating the time to do so is thoroughly inconvenient. Australia has a population of 25.6 million and New Zealand a population of 5 million. How can the Government say that there will be immense opportunities? Let’s get real.
Lord Udny-Lister (Con)
My Lords, it is a real pleasure to speak in support of the Bill. It will enable the Government to get on with the job of implementing the FTAs that have been secured with both Australia and New Zealand, two of our closest historical allies. I draw the House’s attention to my declared interests in the register.
I take this opportunity to thank my noble friend the Minister for his introduction, in which he set out clearly the benefits of the Bill. I also thank my noble friend Lord Swire for his maiden speech.
It is important to note, and to underline, that the agreements are the first the UK has negotiated from scratch in almost 50 years. That demonstrates that, at long last, the UK has started to unshackle itself from the restraints of the single market and to embark on its own independent trade policy, which will develop growth right across these islands in time.
As a member of the International Agreements Committee, I have followed both trade deals with much interest as they have passed through the long-established and thorough scrutiny processes of our parliamentary system. On that point, there has been much commentary already this afternoon about whether the Government have fulfilled their scrutiny obligations. Having been involved, playing a very small part, in the scrutiny of these deals, I for one am satisfied that the Government have gone above and beyond in providing this Parliament with a plethora of opportunities to examine the details and to get involved in the process of making sure that our free trade deals deliver for all. Indeed, if we compare the passage of these deals with that of the Japan FTA back in 2020, it is evident that the Government have not only exceeded their statutory obligations on the sharing of materials but are continually putting in place more and more opportunities for Parliament to provide effective scrutiny. When it comes to assessing the future impact of these FTAs, can my noble friend the Minister reassure the House of the Government’s commitment to publishing both a monitoring report and a compressive evaluation report at the appropriate time?
Throughout the passage of these FTAs, much has been propagated on the topic of agriculture. Last year, when your Lordships took note of the fourth report from the International Agreements Committee, I warned the House that the National Farmers’ Union, among others, had repeatedly tried to peddle the myth that these agreements would fail to deliver for British farmers and that our standards would somehow be eroded over time. Like my noble friend Lord Frost, I am concerned that the long lead times before we get true trade running in agriculture will slow down the benefits of cheaper food. Although I acknowledge that there are challenges for our hill farmers, these two things have to be resolved; we need a solution.
I put it to your Lordships’ House, as I did in July last year, that the Government have been highly successful in achieving significant safeguards for British farmers, namely through tariff rate quotas, product-specific safeguards and bilateral safeguard measures. The Government should be commended for securing these safeguards for the most vulnerable parts of the UK farming community.
That said, it is important to note, however, that both Australia and New Zealand have systems similar to our own. With that comes the ease of upholding the UK’s long-established and globally renowned standards. As we progress additional trade agreements with countries such as India and Mexico, and when we eventually start going into South America, it will become increasingly hard for us to secure such safeguards. I therefore hope that we can use the experience gained in these negotiations to uphold our standards in the future, and I wish the Government well with that endeavour.
Importantly, the implementation of these deals will be an important stepping-stone in our accession to the CPTPP, the benefits of which for the UK are well known: joining one of the largest trading blocs in the world and having access to a vast network of modern deals spanning the Americas and Indo-Pacific. With Australia and New Zealand as leading members of the CPTPP, supporting the UK’s bid for membership, we should not be looking at this Bill as simply the ratification and implementation of two well-negotiated deals, but as a fundamental component in the UK gaining future access to a free trade area encompassing 11 strategically important states, with a combined GDP of £8.4 trillion.
When evaluating the impact these deals will have on the UK’s nations and regions, I am filled with optimism and excitement, especially for our SMEs. It is evident that the Government have worked hard to ensure that both London’s and Scotland’s financial service industries will directly benefit from these deals, while also ensuring that thousands of jobs are set to be created in the north-east and that tariffs are reduced for textile exports in Northern Ireland.
On examining the details of both deals, I am convinced that there will be a UK-wide benefit, and I call on our regional mayors and the Ministers of the devolved Administrations to stand ready to build on the benefits that these deals will deliver. With this in mind, could my noble friend in his summary inform the House of how the Department for International Trade is supporting the nations and regions to make the most of these deals? Does he agree that it is now time for some of these officeholders to put aside their Brexit-bashing views so that their constituents may fully embrace the opportunities to come?
Throughout the progress of the Bill, both here and in another place, the Government have been quick to address any concerns raised. I therefore find myself drawn back to the essence and scope of the Bill, which is the ratification and implementation of two highly scrutinised and beneficial free trade agreements with two of our oldest and most important allies. With the businesses and citizens of this country facing the challenges of the cost of living crisis, we need the growth and job creation that will be delivered only by agreements such as these. I conclude by welcoming the Bill, as we need to allow His Majesty’s Government to get on with the job of delivery, so that businesses and citizens all around the UK can start to feel the benefits of these historic deals and many more deals that I hope will come.
The Earl of Sandwich (CB)
My Lords, I shall start with enthusiasm, but I may not be able to keep it up. The Australia and New Zealand agreements have been trailblazers among the FTAs post Brexit and I am glad that the Minister and the International Agreements Committee, to which I belong, have helped to see them through government as well as Parliament. They are, in general, excellent and productive agreements with two old friends and allies which bring undoubted benefits to this country across the whole spectrum of goods and services.
We should also acknowledge the co-operative attitude of the Government, or the various Governments, to our committee and our various reports. I thank successive Ministers for recognising the critical role of Parliament in scrutinising these agreements—the new Secretary of State’s response to our Australia report has confirmed this—but the CRaG process itself is inadequate, as the noble Lord, Lord Kerr, and the noble Baroness, Lady Young, have said so well already. The committee itself has pointed out several times, over nearly three years, that to have any useful role we have to assess the negotiation objectives of an agreement right at the start. The noble Lord, Lord Goodlad, said that the Government have everything to gain by this. We also need to discuss the outlines of the agreement, without of course giving away any of its content, in which case the NDA process would be involved. I am not convinced that Ministers have gone far enough to meet these requirements but, since we have had more than one change of personality, maybe we will be better understood in future. Our relationship is still being developed. We have not yet received the response to our New Zealand report, and when we do, the horse will have long bolted.
I recognise that this is a somewhat artificial procurement Bill due for instant repeal, but it seems appropriate to make concluding remarks on the FTAs themselves, as others have. On the content, we were concerned about three issues on Australia in particular: agriculture, the environment, and the role of the DAs in both these agreements. I suspect that none of us was wholly satisfied with the way these three issues were handled. I shall use the helpful “Myth” and “Reality” sections in the DIT explainer accompanying the Bill. On agriculture, HMG persist in saying that 15 years of TRQs and safeguards provide sufficient protection for UK sheepmeat and beef producers, simply on the grounds that “it is unlikely” that Asian and Pacific countries will cease importing Australian meat. The noble Lord, Lord Frost, for example, said this was much too long and that we need adjustment and competition. On the contrary, it is just the sort of thing that could happen given an unfavourable political climate in China or elsewhere in Asia. It remains unsettling for farmers planning ahead. Here I also speak as an NFU member.
On animal welfare, it is quite true that standards are going up and the TAC did provide convincing reassurance, as the Minister said, that Australia was raising its animal welfare performance. However, the Government admit that they are raising standards only to the level of many other countries. The noble Baroness, Lady Bennett, mentioned the procedure of mulesing, for example, and she should know. It seems that higher standards apply only to RSPCA-approved farms, so there is still a way to go.
On pesticides, Defra says that the results of monitoring are published after consideration by its Expert Committee on Pesticide Residues in Food. Public concern about residue levels seems to us to justify a more specific monitoring exercise relating to Australia, and perhaps the Minister could say if this will be undertaken. Apart from this, the side letter on GIs and the chapter on SMEs are both to be welcomed as promising support for small businesses, including farmers. The noble Baroness, Lady Liddell, mentioned migrant workers which was extremely helpful because it has not been covered.
Moving to the environment, I say that the new Government in Sydney are likely to prove much more positive about climate change, although it is too late for the FDA itself. Our Government claim that illegal logging will be tackled under the agreement, but there are no policy statements or details as to what happens in the separate states of Australia. It is another case of wait and see and further monitoring. Australia’s reliance on coal remains a major issue, but the Government have promised that the committee will receive reports and updates over time. This is welcome, and perhaps the Minister will confirm it. The noble Baroness, Lady Young, who is no longer in her place, pressed the Government on monitoring, so I hope the Minister will be able to respond fully.
I need say only one word about the devolved Administrations. This has been said time and again and I am surprised it has not come up today: devolved matters are not just matters for consultation. They are integral to the national policy of each of our member nations. This means that agriculture in the DAs comes right at the front of negotiations. This did not happen in the case of these agreements. I believe the Government still claim that the DAs have been fully engaged. Of course, the overlap of policy in different departments does make life more difficult for them.
I have touched on only three issues, and I have left New Zealand to last. On agriculture, environment and climate, New Zealand is and has been a model country. We can learn a lot from her. I recognise the other benefits that have come in, such as extending copyright—another thing not mentioned—and the growing importance of motor vehicles and machinery in UK exports by value under this agreement. New Zealand has been a model in one other respect: it has published an exemplary policy document summarising its aims and objectives in trade agreements, including more difficult issues such as human rights. I could spend some time on this, but I will not. The noble Lord, Lord Kerr, has said that trade is not a watertight department. It is surely natural to discuss wider policies with friends who are also our trading partners. The Minister knows from our recent meeting that most of us in the committee have strong views on this. As we have heard today, we are hoping that the Government will take them seriously.
Finally, I should add that our application to the CPTPP will be greatly assisted by these two FTAs, while providing access to new markets in Asia and standing up to China, as the noble Lord, Lord Howell, given all his experience, fluently reminded us. But that will be a subject for another day.
Lord Lansley (Con)
My Lords, I am glad to follow my noble friend for these purposes, the noble Earl, Lord Sandwich, as we are fellow members of the International Agreements Committee. I ask noble Lords to bear with me, as I am the fifth member of that committee to speak in this debate. I hope not to repeat too much of what my colleagues have said but, in so far as the scrutiny of these two agreements is concerned, the committee in this place was able to produce a report in June last year, which was debated here on 11 July. To that extent, I think that many of the criticisms of the scrutiny of these deals were of the other place, rather than here. They have been scrutinised here, as was demonstrated by that debate, in a timely fashion under CRaG.
My friend the noble Earl, Lord Sandwich, referred again to the importance of the Government having a trade policy document, and referenced the New Zealand Trade for All strategy. This was the first agreement entered into by New Zealand after the publication of that policy document. That demonstrates the benefits of a high-quality document. I was rather struck that noble Lords have been quoting George Eustice, the former Secretary of State at Defra, who I will refer to later. It was important when he said that we should look at strengthening the role of Parliament in scrutiny and perhaps even agreeing the negotiating mandate. My noble friend Lord Frost referred to that. As he said, countries such as Japan and the US, and the European Union, all use their parliamentary processes to their advantage. As my noble friend said, we do not want disagreements to be suppressed within government and then erupt afterwards, with Ministers saying, as George Eustice did, that we gave away far too much for far too little in return. I do not happen to agree with him but that is not the point. We should be able to see what the Government’s objectives are in trade policy—not necessarily the detailed negotiating trade-offs but certainly the objectives. As the noble Lord, Lord Kerr of Kinlochard, said, we can illustrate that by reference to examples. We ask about matters such as the Government’s approach to investor-state dispute settlements but all we get in reply is, essentially, the conclusion that they have reached on any individual negotiation, not what the Government’s approach is in general.
The result was different in different agreements, depending upon the approach of the other counterparties. There are a number of illustrations of that. The noble Earl, Lord Kinnoull, chair of the EU Affairs Committee, was here a moment ago. That committee and the International Agreements Committee have a right to expect that we are consulted soon about what the Government’s policy is in relation to carbon border adjustment mechanisms and the implementation of emissions trading schemes, not only between ourselves and the European Union but on the impact that the policy will have on our trading policy more generally. If we do not do that, we will find that, as a consequence, it is potentially one of the largest non-tariff barriers being erected across the globe, alongside the issue that the noble Earl raised about the Inflation Reduction Act in America.
This has been an interesting and wide-ranging debate. In the rest of what I have to say, I want to focus on the Bill itself. This has been a great debate, and I have much enjoyed it, not least the maiden speech of my noble friend Lord Swire. We overlapped for only 14 years in the other place. I hope that perhaps we will overlap a little longer in this place—who knows, as he is not 74? It is a great pleasure to have him here and the benefit of his experience in our debates.
It is not in my register of interests, but I should say that my sister-in-law is a sheep farmer in north Wales. Even over Christmas, she did not raise the question of the Australia or New Zealand trade agreements with me at all, so I do not know what her view on these may be—just as well, perhaps.
Those of us on the International Agreements Committee welcomed these agreements as being of high quality and demonstrating what can be achieved; that is also my personal view. There is a feeling that some of the 32 chapters were included without sufficient substance and that the substance will have to be added over time. For example, I thought that the innovation chapter in the agreement with Australia was a very good thing, but we will not know what it is going to mean for some time to come. I hope it will mean something pretty substantial.
This Bill simply provides the power to implement the procurement chapters—chapter 16 in each of the two agreements—and it is necessary because the powers are not there already. Once the Procurement Bill passes, the powers will be available in that legislation to do this by statutory instrument in the future; the noble Baroness, Lady Liddell, made this point earlier. The Procurement Bill means that we will not see primary legislation for purposes such as this in the future. I think that is probably correct, because the changes in our domestic legislation are relatively modest. In future, this kind of thing should be done by statutory instrument, as long as—taking the point made by the noble Lord, Lord Kerr—it is done by an affirmative procedure, because there will be a whole range of changes. The other place implements the tariff changes, and this place looks at things such as the procurement changes and a whole raft of others, but we should be doing such things by affirmative procedures wherever possible. That will enable us to exercise some control if need be—if there is a serious problem—at each stage. I hope that the ratification process will be under way by then; we will have seen it under CRaG. If there are serious problems associated with an agreement, we should know beforehand.
I said I wanted to refer to George Eustice again; I am going to mark the card of the noble Lord, Lord Purvis of Tweed, in advance of his speech, because he referred to George Eustice’s speech at Oral Questions. The point that George Eustice was making was that he believed a problem with the agreements was that they could lead to hormone-fed beef coming to this country but that this would also be possible under the CPTPP. I do not think he is right about that. In any case, it is not a problem associated with the Australia and New Zealand free trade agreements; it is an issue we need to address in the CPTPP. That is when it comes up. What is the dispute resolution mechanism under the CPTPP? If necessary, that would need to be addressed by our Government in the context of that agreement itself.
I took part in the passage of the Procurement Bill and tabled amendments which would have limited the nature of the repeal of this Bill by that one in due course. The problem is not that the Procurement Bill will take future powers instead of this Bill but the way it repeals it. The Procurement Bill will repeal:
“An Act of Parliament resulting from the Trade (Australia and New Zealand) Bill that was introduced into the House of Commons on 11 May 2022.”
So if we amend this Bill, it will be repealed by the Procurement Bill in due course. This is not a satisfactory procedure. The assurances that we received in this House from my noble friend Lady Neville-Rolfe during the passage of the Procurement Bill were that, if we amend this Bill, the Government will look to ensure that any necessary changes might be made to the nature of the repeal during the passage of the Procurement Bill in the other place. I ask my noble friend Lord Johnson of Lainston simply to reiterate, if he may, that same reassurance.
I am not aware of a necessity for amendment. In the other place, the Official Opposition supported the Bill, and the amendment they were looking for was for further impact assessments. As my noble friend Lord Udny-Lister rightly said, the Government have committed themselves—and I hope my noble friend will further commit the Government—to two-year monitoring reports and a five-year comprehensive evaluation of both agreements. Frankly, that should be sufficient for this purpose, so I do not think we need to amend the Bill to make that happen.
From my point of view, there are issues that we have raised and issues that I feel strongly about in the agreement. For example, there is the fact that we managed to get an agreement with Australia before the European Union did; perhaps that is one of the benefits of Brexit. However, is it not ironic that, for example, the geographical indications element of our agreement is wholly dependent on the European Union securing changes in the Australian geographical indicators regime so that we might take advantage of it? It is ironic and regrettable. It is just one more of the many illustrations of how we want to see what our trade policy should be and, in future, to see that we scrutinise not only the deal that the Government return with but the negotiating mandate that they take with them in the first place. In those circumstances, I think we would find our overall scrutiny and the support we were able to give to the Government’s trade policy all the better, all the stronger and probably all the more effective internationally.
Baroness McIntosh of Pickering (Con)
I welcome this opportunity to speak at Second Reading. I am delighted to follow my noble friend Lord Lansley and add my congratulations to my ever-youthful noble friend Lord Swire on his maiden speech. We look forward to many such contributions in future.
I have no known relatives in Australia or New Zealand, but I have close friends there who are, bizarrely, of Danish heritage. The House will remember that I am half-Danish; obviously, I took great interest in the fact that, 50 years ago last week, Denmark, Great Britain and Ireland joined the European Union, on 1 January 1973.
On a general note, I accept that no one can deny the importance of our relationships with Australia, New Zealand and other Commonwealth countries in relation to trade, security and other aspects. However, as noble Lords who have referred to the importance of those relationships will accept, those countries are a very long way away. Historically, geographically and perhaps more normally, our natural trading partners over the past 50 years—notably the European Union—have been closer.
Although I welcome the Bill before us, it seems to lend itself to being fairly asymmetrical, favouring foreign imports over domestic producers here. While we are told that the Bill is necessarily largely technical in nature, it is thin in substance; the Minister used the word “flexible”. I echo the sentiments of others who have spoken—notably our two august former trade commissioners to Australia, both of whom spoke very eloquently—about the impact of the lack of scrutiny on trade deals, such as is enjoyed in large measure in the US legislatures and the European Union, which we left only recently. I also support the comments made by the noble Baroness, Lady Young, and others on the key role to be played in this Bill and others by the Trade and Agriculture Commission; we must ensure that it has all available resources and expertise.
If one is in any doubt about the perhaps limited nature of the agreement before us, let me refer to the Government’s own impact assessment estimates. The impact assessment in relation to the New Zealand deal states that the UK’s
“agriculture, forestry and fishing and semi-processed foods sectors are expected to experience a reduction”
in gross value added
“of around 0.35% (£48 million) and 1.16% (£97 million) respectively.”
As regards Australia, that impact assessment states that the UK’s
“primary agriculture and semi-processed foods sectors are expected to experience a reduction”
in gross value added
“of around 0.7% (£94m) and 2.65% (£225m) respectively relative to baseline growth in the sectors.”
The Government estimate that as a result of the Australian deal we will see a reduction in gross output of around 3% for beef and 5% for sheepmeat due to liberalisation. This is equivalent to wiping £87 million off the output of UK sheep production and £67 million off the UK beef sector and does not take into regard the cumulative effect of agreeing similar liberalisation terms with New Zealand.
The trade figures for October show a decline in trade with non-EU countries, which obviously is a source of concern in the context of the Bill before us. I had the honour of representing for 18 years in the other place a deeply rural constituency in North Yorkshire with a proud tradition of producing spring lambs and fatstock beef. I fear that with the potentially asymmetry in this Bill, they will be damaged in the long term by the lack of a permanent safeguard clause. I will revert to that as one of my asks of my noble friend and his department in the context of the Bill this afternoon. I echo my noble friends Lord Frost and Lord Udny-Lister, who recognise the concerns to be faced by sheep farmers and particularly by hill farmers and fatstock producers across the UK and that those concerns must be addressed sooner rather than later.
In terms of Commonwealth trade, once Britain, Ireland and Denmark acceded to the European Economic Community on 1 January 1973, I understand that a trade deal was done with Australia, New Zealand and other members of the Commonwealth through the African, Caribbean and Pacific agreement. This has been updated periodically, most recently in European partnership agreements. As the noble Baroness, Lady Bennett, said, initially mention was made of the importance of sugar in trade and obviously the vital importance of trade to certain Commonwealth countries. Initially, a stable price was set for sugar, which was replicated in other products.
I again pay tribute to my mentor, the late great Lord Plumb, who was president of the NFU, the first and last British President of the European Parliament, and co-president of the assembly for the African, Caribbean and Pacific countries. He played a central and crucial role in these negotiations. Can my noble friend clarify the position under the Bill, which was raised in Oral Questions this afternoon, regarding products emanating from Australia, New Zealand and other Commonwealth and, now we have left the EU, third countries? Will those products meet the same standards of production, particularly in terms of animal welfare and environmental protection, as our home-produced foods?
I take great comfort from the commitment in the Conservative Party manifesto of 2019 that British high standards of animal welfare and environment would be maintained and that they would be replicated in imported food and food products. Can my noble friend the Minister take this opportunity to reconfirm and echo the comments made by our noble friend Lord Benyon, who, answering at Oral Questions, assured us that our free trade agreements, such as those before us in this Bill, will never conflict with stated UK policy in this regard?
The promise of open trade was, as I said, mentioned in the manifesto. It was repeated during the Conservative Party leadership contest in summer 2022 by my right honourable friend Rishi Sunak, now the Prime Minister. He made a commitment at that time that 50% of all publicly procured foods supplying local authorities, our schools, hospitals, prisons and defence establishments would be locally sourced. He went further, and I will quote his letter following his meeting with the NFU during that leadership contest in terms of international trade:
“I know that farmers are concerned by some of the trade deals that have been struck, including with Australia. I will make farmers a priority in all future trade deals. On my watch, we will not rush through trade deals at the expense of farmers. They will take as long as they take, and we will not water down our standards. We will also build on existing support mechanisms to help farmers export to the world’s emerging markets. We will maintain the high standards of animal welfare, environmental protection, and food safety.”
I support those desires and wishes of my right honourable friend the Prime Minister. I hope that my noble friend the Minister will also support them when winding up this debate.
There is disappointment—as my noble friend Lord Lansley, other noble Lords and I discussed at length during the proceedings on the Trade Act, and more recently the Procurement Bill, during this Parliament—that the wishes of my right honourable friend the Prime Minister seem to have met insurmountable obstacles in meeting our domestic public procurement target for 50% locally sourced food. I hope that I can rely on my noble friend’s good offices to ensure that that target is met going forward.
I conclude by seeking assurances from the Minister today that, for the wine and spirit producers—who welcome this Bill, as do I—a separate chapter will be opened and the Government will vigorously apply for export opportunities for UK wines and spirits to both Australia and New Zealand. I understand that the New Zealand agreement is preferable, as it allows for a committee to improve trade in UK products without reopening the agreement. I would be very interested to learn why that same provision was not available for the Australia agreement.
I seek the further assurance for UK farmers and consumers that our high levels of food production will be maintained and that inferior products will not be allowed entry. We heard earlier from the noble Lord, Lord Purvis, that hormone-produced beef and pesticide-induced crops may form part of the produce to be imported under the procurement provisions of the Bill before us. Neither would be acceptable to UK home production.
I also ask for the assurance that local authorities and military establishments will have the opportunity to source locally produced food to at least 50%, as previously sought by our Prime Minister.
Finally, I seek the assurance that an adequate and permanent safeguard clause will be introduced and that all the relevant statutory instruments, flowing directly or indirectly from this Bill, will be adopted under the affirmative procedure.
Lord Inglewood (Non-Afl)
My Lords, I have enjoyed listening to this debate, with its splendid opening from the Minister and the maiden speech of the noble Lord, Lord Swire. I have learned a lot about things I did not know much about before. But, since we are declaring interests rather like throwing confetti at a wedding, I ought to say that my cousin is married to a very senior New Zealand diplomat. I assure your Lordships that, when we meet on social occasions, we do not talk about the Trade (Australia and New Zealand) Bill but plenty of other more amusing topics. I should also declare that I am a Cumbrian farmer and we have a hill farming enterprise. I am also patron of the United Kingdom Livestock Auctioneers’ Association, president of the National Sheep Association and chairman of the Cumbria local enterprise partnership.
I will divide my comments into three parts: scrutiny; free trade agreements; and the impact on farming. I am not sure that I have a lot more to say about Parliament’s role and the wider public scrutiny of trade deals. In the world we are in now, even if the letter of the law is followed, the wider process is inadequate and needs root and branch reform. The royal prerogative should not be used as a fig leaf to cover up important political and legislative initiatives, which have far-reaching domestic implications. In many ways, the process is worse than the criticisms of the workings of the EU. We need to revisit the whole thing, from the basis of not what happened in the past but what is necessary in the future.
On free trade agreements, which I understand are being proposed as a replacement for the EU single market, the underlying problem is that they may be a replacement but they are not a complete substitute. Much of the criticism of the single market and its rules came from those who do not have supply chains of the kind many businesses have, in particular much advanced manufacturing. These supply chains are extremely complicated and often very long. Physical proximity is, on many occasions, very important. For example, someone in London must be more likely from choice to do business in Newcastle upon Tyne than with Newcastle, New South Wales. It is a reality. In this context, geography matters. Fine-tuning and dispute resolution are much easier when you are close to hand.
Indeed, I had an example of this kind of problem only this autumn. My farm is replacing its dairy parlour. For the new system we are adopting, we decided that the best product was a New Zealand parlour, which we organised. It was due to be in the boat for three months—this is the kind of point that the noble Baroness, Lady Bennett, made. Bad weather got in the way and after about four months we were getting really very worried about the whole progress of our contract.
In any event, free trade areas and single markets are distinctly different. Free trade areas do not of themselves permit goods allowed through the tariff wall of another country to be traded on an equivalent basis as domestically produced goods. Non-tariff barriers can be and are at least as significant as tariffs in inhibiting trade, as has been pointed out. In short, the point of a single market is frictionless trade. The purpose of the European single market, devised, as we know, principally by Lord Cockfield, a Conservative Cabinet Minister and European Commissioner, through the 1992 programme, was to achieve that. That was the purpose of the whole exercise, because the then European internal market was not delivering the benefits to the public which were hoped for and which it was felt capable of delivering, which had been advocated in perhaps too sanguine and hyperbolic terms—possibly, dare I say it, slightly along the lines of some of the Minister’s opening remarks.
The evidence of trade in the 1990s clearly showed that this worked, which was endorsed by the Government’s helpful The UK and the Single Market topic paper of 2011, which predicted a similar trajectory along the lines of household income gains of 2% to 6% per annum. Clearly, this has gone into reverse. Interestingly, the recent statistics that I have seen for the Cumbrian economy, where, as I said, I chair the local enterprise partnership, suggest the general accuracy of that assessment from 2011. The new good things—let us not overlook the fact that there are good things—do not begin to off-set the damage that has been done.
Clearly, although any free trade agreement with our friends—as has been said, Australia and New Zealand are our friends—is unlikely to damage our prosperity, it cannot recapture all that is lost. We have now left the European Union. There is a tabula rasa in front of us. The single market is not the same as the European Union, be it in whole or in part. As a matter of urgency, we have to try to seek a better trading relationship with our neighbours for the reasons that I have touched on.
Finally, I turn to farming. As I explained, I am a farmer in the red wall area. I am a hill farmer; part of my business is hill sheep. I have done that for a lot of years—if I am allowed to give people some financial advice, if you want to make money, do not try that. The crucial point from the Cumbrian perspective is that farming is an important and significant part of the local economy, which together in harness with the visitor economy becomes a very important part of our economy, which is struggling under all the obvious and various difficulties these things face. This sector has to be a focus of the levelling-up agenda. It is just as important as some of those that have been specifically targeted. I am afraid that the Government have been extremely quiet about their approach to this important sector of the economy in a part of the country that is in need of all the help it can get at present. That is not to say that nothing good is happening; good things are happening, but there are still enormous problems.
Against that background, I ask myself: what then are the Government doing even contemplating allowing agricultural products into our market which are produced to lower welfare and environmental standards than those stipulated here? I am not complaining, and I do not think anyone else can complain, about competition on a fair and even-handed basis in the marketplace, but this is not. It looks potentially positively discriminatory against the UK producer. I do not think we should forget quite how clear it was made in the debates in this Chamber on the then Agriculture Bill how strongly the country as a whole wants high environmental and welfare standards. The noble Baroness, Lady Bennett, made a point about mulesing. I just do not think it is an acceptable practice for farmers selling meat into this country. The public would not entertain it.
What is more, there is the question of extraterritoriality. Here we are trying to stipulate certain conditions on trade which will have a direct impact on another country. That is something that is completely accepted. If we look back at the Ivory Bill, which we discussed in this Chamber not that long ago, we will recall that its whole point was to change a series of environmental activities and actions somewhere completely outside the jurisdiction. That is something that we are familiar with, and I do not think we should be concerned about taking steps to do so if it is right in the circumstances.
The Government have said that all these animal welfare and environmental things are basically de minimis and we do not need to worry about them, but we all know that this is what Governments always say when they are skating on thin ice and cannot think of anything better. However, if that really is the case, why are the provisions there at all? If they actually do not matter, surely the counterparties will be only too happy to clarify things and to agree. I say to the Government: reassure the public and the farming community about this because if you do not, given what I am afraid to say is the mess of the current agricultural policy, it is kicking a man while he is down. I was told many years ago that one of the significant differences between France and Britain was that in France the ministry of agriculture was on the side of farmers and rural communities. Does this state of affairs not suggest that this may still be the case now? Like a number of other speakers in this debate, I have real reservations about a number of aspects of the Bill. However it is achieved, the outcome should be not as projected by the Government. Amendments are necessary, be they in this Bill or in the Procurement Bill.
Lord Hannan of Kingsclere (Con)
My Lords, I refer to my declaration in the register of interests as president of the Institute for Free Trade and an adviser to the UK Board of Trade. I had not been aware prior to this debate that we were also expected to make familial or genetic declarations of interest, but for the record I have a large family in New Zealand, a lot of whom are Labour voters. We are about as distant as we could be geographically, but about as close as we could be in every other respect. Actually, some of them have moved to Australia, as many Kiwis have done, where they can very easily work under the terms of the ANZCERTA deal between the countries. I hope that we will work towards the long-term goal of going deeper than we have with these treaties and try lateralising ANZCERTA. We share extraordinary closeness and interoperability economically.
It is also a huge pleasure to welcome the maiden speech of my noble friend Lord Swire, whose wit, effervescence and largeness of spirit will delight our debates and elevate our counsels.
I am asked on occasion whether I have any regrets about Brexit. My chief regret is very easily stated: it is that it was followed by an unpleasant culture war through which prism we still judge almost everything. It is extraordinary that six and a half years after the debate, questions such as this are still being approached fundamentally by where people stood on the original referendum. I am not talking about people who are against trade in general. I am not talking about the Trumpsters or the Corbynites or those such as the noble Baroness, Lady Bennett of Manor Castle, who has always been very clear that she does not much like free trade. She wants self-sufficient communities, and she sees the exchange of goods as a contingent necessity and a necessary evil—fine. She has been completely consistent in that position in all the interventions she has made in your Lordships’ Chamber.
I would, however, address those who see themselves as generally supporting the liberal order and the free exchange of goods and services. I put this general question to them: would you judge the Bill in the same way if it were a trade deal between the EU and Australia and New Zealand? Would you still be talking about getting swamped by cheap food and so on, or would you be celebrating its provisions?
When my right honourable friend Liam Fox was at the Department for International Trade, he did a series of opinion polls and focus groups and found a fascinating switch in opinion—a polar switch if you like. The kinds of people who had previously been the most in favour—the most open and liberal—in their attitude to commerce had now begun to associate global Britain with people and arguments that they did not like, and were therefore falling back into these protectionist and mercantilist arguments about standing up for our producers. Happily, the opposite was also true: a certain type of UKIP voter who, 10 years ago, would have been grumbling about whether the French should be able to own our energy companies had become much more in favour of international trade.
Let me address the people who are in favour of trade in general; let us leave aside the people who think it is a bad idea. Is there anything in the Bill that you would seriously object to were it not for this ongoing culture war? I will not rehearse in full all its advantages; we have already heard them from my noble friend the Minister, who really knows his onions, as well as his Australian iron ore, his New Zealand lamb and his trade and tariff quotas—rarely has someone been so fitted to the ministerial office by their interests and enthusiasms. The fact that we have the removal of 100% of tariffs is, of course, a very good thing and has attracted more comment than almost everything else, but I would say it is virtually the least important aspect of the Bill.
We are not in the 19th century, when we were mainly interested in foodstuffs and manufactured goods. We could look at the provisions of these treaties on mobility, which the noble Lord, Lord Liddle, was generous enough to acknowledge as a major positive: the ability of people who speak the same languages and have similar qualifications from, often, the same educational institutions to work without hindrance in each other’s economies. We could look at the provisions on services; we always think of financial services, but there is also shipping, architecture, and the audio-visual sector. We could look at the rules on cross-border data, on investment and, indeed, on procurement; it is extraordinary that the British companies will effectively be treated as if they were Australian or New Zealand companies for large measures of procurement in those countries. This is an extraordinarily successful negotiation. Yes, of course it could go further, and we will all find one or two aspects with which to disagree, but there is no world in which we are worse off after the Bill than before it.
I would like to address some of the criticism that we have heard in this Chamber and outside its walls. Something that we heard from a number of noble Lords was the mercantilist objection. People have said that this is an asymmetric Bill; that we are lowering tariffs faster on this side than on the other side. Good—that is the advantage of trade; it means that you can buy stuff cheaper. I am amazed by how many people think of themselves as free marketeers but, in the post-EU context, struggle or affect to struggle with this point.
I think of the number of times I have been asked, “We are letting in all this Australian beef—what are we getting in return?” The answer is that we are getting the beef: high-quality, nutritious and excellent beef. If you do not want it, do not buy it; that is the basis of how a market system works. The idea that you judge a country by its trade surpluses—that exports are the only thing that matter—was debunked by Adam Smith, but it continues to come back as a zombie argument in every generation.
I have big trade deficits with all the pubs around me in the Hampshire-Berkshire borders—with the Watership Down, Bel and the Dragon, and the White Hart in Overton. Sometimes they engage in dumping; they will say, “Have a free glass of wine if you have a meal on a Monday,” or whatever. Who gets the better end of that deal? There is nothing wrong with getting cheaper imports; that is what drives the economy. It means that people spend less money on the basics so they have more resources to spend on everything else; that is what drives growth.
That brings us, rather neatly, on to the farming or NFU objection. The NFU is in this curious position now where it opposes trade deals with everyone except the European Union. It does not phrase it like that, but that is the practical position it has taken. It does it by deliberately conflating what is allowed in other countries for domestic purposes, and trade deals. We have had a bit of that in the Chamber today: “Australia permits x or y and we do not like it”. Yes, but that does not affect our own standards of what is permissible and may be sold here. No country has ever tried to insist on exporting its own production standards, as opposed to its own food standards. The EU has never done so and, by the way, if we did so—if we consistently said we would not import food unless the production standards were identical—we would not have a free trade agreement with the European Union because we diverge in a number of areas from the EU. No one has ever done that, and it is mischievous to suggest that somehow, that could be done in this case. We are talking about countries with high welfare standards, countries very similar to our own.
I ought to address the hill farms question because it is important. The people who are stewards of our upland areas perform a service for the rest of us that goes well beyond food production. They are looking after a common resource: a beautiful countryside. It is a difficult thing to monetise. We drive past it and it looks very nice. It is what economists would call an externality. If we regard that as an important service, then we should reward them directly for doing so, and that has nothing to do with the levels of tariffs on New Zealand lamb. In some cases, these hill farmers will be getting more than 50%—significantly more in one or two cases—of their income from the Government in direct grants. There is an argument for being more generous, but their income will not be affected by the levels of tariffs we have on Australia and New Zealand. Indeed, when it comes to beef, the beef currently being imported from Ireland and France will instead be imported from the Commonwealth. It will have almost no impact on our domestic producers.
On food miles, the point was made by the noble Baroness, Lady Bennett, and others that we should not be trading with distant places, other things being equal, and we should try to do everything as locally as possible. We live in an age where geographical proximity has never mattered less. When the European Union was founded, there was an argument for regional blocs, but advances in refrigeration, the internet and cheap air travel have completely revolutionised the situation. There have been studies of the environmental impact of importing New Zealand lamb. Astonishingly, it turns out that New Zealand lamb eaten in London has a smaller carbon footprint than Welsh lamb eaten in London.
That may seem counterintuitive, but think about it. First, the overwhelming preponderance of carbon production is in the food production phase—on the farm. The things that make the Kiwi farmers efficient, the economies of scale and so on, tend also to mean they use less fertiliser, less heating and so on. By being cheap, they also make themselves more environmentally friendly. The very same thing that noble Lords were complaining about—the imbalance—tends to make things cheaper. In terms of transport, if we think about the size of one of those tankers, the tiny proportion of it take up by one lamb chop, and the efficient route it takes it straight from port to port and then to distribution, that is a very different thing from driving a small number of bits of frozen meat from a remote hill farm. So, even in the transport phase, often, there is no difference. I wonder how much of the argument about food miles is results driven or based on resentment of the fact that we are in this situation at all.
Finally, on the point raised by the noble Baroness, Lady Young of Old Scone—whether trade deals should be about the environment and democratisation—we all share her concern about those things. Who does not want a cleaner environment and the spread of democracy? But we should be careful of a category error: these are not things to be squeezed into a trade deal as a coda. The more important they are, the more they should be dealt with in their own right with an international treaty. In fact, if I have a criticism of these two deals and of the DfIT’s approach so far, it is that it has been too ready to get into areas that have nothing to do with the removal of trade barriers and to have chapters on indigenous rights in New Zealand, or whatever. That is a perfectly valid and important issue but it does not belong in a trade agreement.
Let us not lose sight of what we stand to gain. Your Lordships’ Chamber is, in a sense, our national institutional memory and it is our duty to recall the things that worked and that raised this country to success. Few things are more clearly in that category than free commerce and free exchange. We invented in theory with the writings of Adam Smith and David Ricardo; we then invented in practice as the first country to remove tariffs, from the 1840s. We did so unilaterally because we understood that the biggest advantage in trade was allowing prices to fall, so that our people were better off and would have more wherewithal to drive economic growth. Let us be worthy of the deeds of our ancestors. Let us pass on their success to our descendants.
Lord Purvis of Tweed (LD)
My Lords, I think I followed the first eight minutes of the interesting speech of the noble Lord, Lord Hannan, which were against government intervention, followed by four minutes of supporting state subsidies, but I will read Hansard tomorrow to see if I have got that wrong. I am also keen to find out how long the new year’s resolution of the noble Lord, Lord Kerr, lasts. With all this optimistic chat about scotch whisky, my one for dry January will not be lasting very long.
I thank the Minister for engaging with me and others before this debate. I note that he said in his opening remarks that he has a continuing financial interest in New Zealand. I wonder if he could provide some more information on what that is and place it in the Library. That would be useful to know, since he is the Minister for Investment implementing this series of agreements. I also welcome the maiden speech of the noble Lord, Lord Swire. I can reassure him that if he marches in the wrong direction towards a different Lobby from that of his Government, he will not be roundly condemned by all sides. I welcome him to this House and look forward to his contributions.
Last week was going to be a momentous week for us regarding trade. It was to be the week in which we secured, according to the promise in the 2019 Conservative manifesto, that 80% of our trade would be conducted through trade agreements, but that has been missed by a very large margin. Instead, we have seen new barriers and burdens on businesses trading with our nearest neighbours repeatedly increase, while trade with and imports from less free countries, such as China, also continue to increase. But we should take solace that this agreement, representing 0.08% over 15 years, will edge us that little bit closer to the 80% mark.
I also welcome the Minister’s enthusiasm for these debates. He was giving full-throated support for FTAs, but I noted that just a few days ago it was reported that the Secretary of State, Kemi Badenoch, told MPs that she
“wanted us to move away from the DIT being seen as the Department for free trade agreements and back to the Department for International Trade”.
I am not sure how it can go back to being that department, given that there has been list after list of boosterism with regard to FTAs. I understand that her favourite quote refers to trade deals being like motorways. She has said that if cars are not going back and forth, then you might as well not have built them in the first place. The problem is that we are building one lane for exporters from the UK to their markets, and three lanes from theirs to us. As George Eustice highlighted in the debate, on this agreement we
“gave away far too much for far too little in return”—[Official Report, Commons, 14/11/22; col. 424.]
Agreeing with the Conservative former Secretary of State for Defra does not necessarily make you anti-free trade. It just means that you are concerned about poor negotiations in free trade agreements. They are not necessarily inconsistent. It is interesting that George Eustice, Liam Fox and others now say that it would strengthen their hand in these negotiations if Parliament approved negotiating mandates. I disagree with the noble Lord, Lord Marland, on this. At the time, Ministers say that it will weaken their hand in negotiations. But when they are no longer Ministers, all of a sudden, they say, “I wish Parliament had approved my negotiating mandate because it would have been stronger”. How much precedent do we need to be persuaded about this?
I have a collection of press releases on my desk in the Lords because I have been covering international trade for a wee while. Those press releases relate to agreements. There could be a quiz at the end of the year on which press releases relate to which trade agreements. “Gold standard” is one; “world leading” is another; “Brexit bonanza” is a third; “most advanced ever signed” is a fourth and
“a major moment in our national history”—[Official Report, Commons, 14/9/20; col. 25.]
is a fifth. If boosterism was a commodity, then we would be world leading. That does not necessarily bring about any extra GDP growth. My favourite one was from Anne-Marie Trevelyan, the former Secretary of State, when she was in Australia last year. She said that this agreement would bring down UK inflation. She said it as a Minister on a visit to Australia. I would be grateful if the Minister could write and say how much it is going to contribute to this and how.
The Australians, probably quite rightly, referred from their perspective to this as a “once in a generation” agreement. It is not a good deal for us, as George Eustice has said, but the Australians, to give them credit, have negotiated a good deal. The noble Lord, Lord Liddle, is absolutely right that there was a degree of suspicion among government that extra scrutiny would not help the Government’s case on the agreement they signed.
On the Grimstone rule, I would say to the noble Lord, Lord Lansley, that he is right. We debated the Australia agreement in Grand Committee, but the Commons did not have an opportunity to do it and had to call for an Urgent Question to have time to discuss it. What had then been the Grimstone rule—on cue, the noble Lord is soon to resume his place as I refer to him—no longer applies. When he gave that commitment with great sincerity in debate on 23 February 2021, he replied to the noble Lord, Lord Lansley, and me:
“What have we done? It includes committing to allow time for the relevant Select Committees to report on a concluded FTA before the start of the CRaG process.”—[Official Report, 23/2/21; col. 729.]
It is not before the conclusion, or during the scrutiny period, but before the start of the CRaG process. That is no longer in place, which is to be regretted.
I asked the Minister a Question before Christmas on a separate agreement to incorporate human rights in all FTAs, which has now been reneged upon. The noble Lord, Lord Udny-Lister—I was interested in his contribution today—asked a follow-up question and said that he hoped FTAs would not be “Christmas trees”. The Minister agreed with him. However, he is supporting a bauble of a Bill, because procurement is not trade but public finance policy. How Governments choose to spend taxpayer money is not like businesses doing business with others or the consumer. It is about public taxpayers’ money being spent; it is extra. If it is okay to have procurement, then it is also okay to look at labour standards, human rights, sustainability and indigenous communities. That is what makes these deep and comprehensive agreements about the trading relationship—and, critically, fair trade.
I have to warn the Minister that his comment on setting aside trade and human rights, which I hope he will reflect on, will concern those in Northern Ireland, because human rights is hard-wired into both trade agreements and procurement rules within the United Kingdom. Moving dramatically away from that will mean that we will also have to change our development policy and strategy, because trade, human rights and trading with free nations with human rights standards is an integral part of the development strategy published by this Government. If that is no longer the case, we need a new development policy as well to remove this utter incoherence.
A ridiculous element raised in this debate is that we are almost going through the last rites of a Bill before it is made deceased by the Procurement Bill, which is receiving its Second Reading in the Commons today. This is simply not the way we should properly legislate—but we will do our job and scrutinise it properly. But, yet again, we are debating a Bill that has a significant impact in devolved areas and that is introducing new concurrent powers. I remind the House that concurrent powers are the invention of this Government, where they say that, if a devolved Government do not make a decision to act in their areas of competence, the UK Government will do so if they want. This is not consistent with the principle of devolution, and it is therefore no surprise that there is significant concern in the Welsh Senedd and the Scottish Parliament. Due to the fact that statutory instruments will likely be brought forward to directly act on devolved policy—without LCMs themselves—we need to know what they are before the conclusion of the Bill in this House. So I hope that the Minister will be able to publish draft instruments expected from the Bill.
As we have heard today, a question then arises about the impact the Bill will have overall. We know that it is likely to cause 0.08% to 0.1% GDP growth over 15 years, but I note what the former Secretary of State said about giving away “too much” for “too little in return”. From the contributions of the noble Baroness, Lady McIntosh, and others, we know that some of these critical sectors—beef and lamb—will decline by 5% and 3%. This will disproportionately impact areas such as those in the lowlands of Scotland that I was elected to represent. The noble Lord, Lord Hannan, made the point, which I referred to, that that is okay because you can give state subsidies to those areas, presumably as long as it is consistent with WTO subsidy rules. But, as the noble Baroness indicated, what is the point of having a procurement policy that proactively supports purchasing from a sector of the economy that the Government know is being reduced by an agreement that they negotiated? This is utterly contradictory and pointless.
On the procurement side, the Government’s press release indicated that the agreement
“gives UK firms guaranteed access to bid for an additional £10 billion worth of Australian public sector contracts per year.”
I was interested in this because, according to the Australian finance ministry, total public procurement spend in Australia was £46 billion. The UK equivalent is £379 billion, so there is no dispute about who is more attracted to getting access to a bigger market. But from that 81 billion Australian dollars, you deduct 10 billion for thresholds differences, 12 billion for things already procured by overseas interests and another 11 billion for defence. You are therefore left with a total market of £27 billion, which is already governed by the GPA. So I simply do not know where this extra £10 billion-worth of opportunity, which we were not able to access through global procurement, comes from. I would be grateful if the Minister could give a detailed breakdown, because I am interested in how we are able to get another £10 billion—which does not exist—from that £27 billion. Perhaps this is boosterism, but I will allow the Minister to write to me with a detailed breakdown.
I would be grateful to know, because it has not been mentioned so far, why there is no detail in the Government’s impact assessment on the fact that the Australian approach is to allocate at least 20% of all their procurement to their SMEs, which means that that element of the market is still closed. I would also be grateful to know if the Government could say why we acquiesced to Australia’s carve-out for local government to be excluded from the agreement—we only found out about that in a side letter which confirmed it. Why is local government procurement, which the Minister did not mention, not included in the agreement?
There is a very interesting contradiction between this Bill and the Procurement Bill, which the Commons is discussing at the moment: unique to the agreement on procurement with Australia, and to satisfy the Australians, we have increased the threshold for procurement. We did not receive any information on this from either the noble Lord, Lord True, or the noble Baroness, Lady Neville-Rolfe, during the many debates on the Procurement Bill. All procurement for subcentral government levels in the UK is £213,477, but for Australia that figure has gone up to over £350,000. I do not know why the threshold for procurement, as it stands in the UK across all areas of procurement, is different for the Australians. That is deeply confusing for all those procurement bodies, because they will likely need to state whether a source of procurement is from an Australian enterprise and therefore operating under a different threshold from all other procurement within the UK. I simply do not know how that will operate, but I would be grateful if the Minister could put us right on that or if we could pursue it in Committee.
I will make two final points in drawing to a conclusion, one of which is a point of principle on some of the differences on agriculture we have heard in the debate. We have heard from some noble Lords—including the noble Lord, Lord Frost, and others—that the elements of agriculture should have been accelerated. It should not have been over a 15-year period, because consumers, as the noble Lord, Lord Hannan, indicated, should receive sooner the bounty of what this agreement was intended to give. Theoretically, that is an interesting argument for full liberalisation, but, as George Eustice has said, we already had full liberalisation from us to them; what we have done is given them full liberalisation to us with nothing in return.
I checked the impact assessment during the debate, and paragraph 5.2 states that the total sum impact on UK consumers of the agreement with Australia is, in the long run, over 15 years, £2.4 million annually—thruppence per person a year in year 15. So what are the consumer bounty benefits that will come at the cost of our hill farmers losing 5% and our beef manufacturers losing 3% of procurement? I do not see the benefit for consumers; the benefits which have been presented today are mythical. But the Bill will go into Committee and there will be ample opportunity for us to learn more about the benefit of 3p a year per consumer while seeing our hill farmers being reduced.
In conclusion, this leads us to a very clear case for a comprehensive trade policy which links to our rural economy sector and the need for parliamentary scrutiny. How many former Ministers in the Cabinet does it take for the Government to realise that Parliament approving negotiation mandates will strengthen the UK, not weaken it? We have FTAs that were a priority, but now they are not. Deadlines, which were previously vital for the agreements, are now not helpful. Human rights were integral to the agreements, but now they are not a priority. Data policy was consistent with the EU and then not, and now might be; we do not know where that stands. Dispute resolution mechanisms are different in Canada, Japan, New Zealand and Australia; they are utterly inconsistent. There is labour mobility in Australia, but the Home Office warns against it for India. There are other contradictory areas in what we are asked to approve by the Government. We need a government trade strategy with a policy that is approved by Parliament; that will help us do our job in this Parliament.
Lord Lennie (Lab)
My Lords, I begin by declaring my interests in Australia. They are not about having relations who vote Labour in New Zealand, having the accent or being born with the accent, having been the high commissioner in Australia or having relatives in Australia. I was simply born there and, aged nine months, I was removed by my parents, brought to the UK, and have stayed here ever since. So there is no declaration of interest other than that.
I welcome the noble Lord, Lord Johnson, to his first Bill as a new Minister for trade. I wish him not a long period in office but a reasonable time in office to get used to the seat and so on before the next election. I also congratulate the noble Lord, Lord Swire, on his maiden speech. He has much experience in Northern Ireland, the Foreign Office and elsewhere, and he will bring much to bear in this debate and others in this House. I welcome him. I also thank all other noble Lords for their contributions to the debate.
It seems to me that we have identified two key issues: one is about strategy, or the lack of strategy, and the second is about scrutiny, or the lack of scrutiny. That seemed to be a running theme whichever side of the House, or none, people were speaking from.
I am grateful for this opportunity to add my own remarks to the debate, which presents an opportunity to scrutinise the deals covered by this Bill, as short as it may be, with only four clauses and two schedules. But these are the first trade agreements made from scratch, as others have said, since the UK left the EU, and in the absence of a published government trade policy, this Bill, and the FTAs it helps to implement, represents the premier evidence available of the Government’s post-Brexit approach to trade. This is what we will be judged on. These deals set a precedent both for what the rest of the world will expect from us in this era and, to a certain extent, for the process that we can expect in parliamentary scrutiny of these and other trade deals that will follow. This is a proper precedent. This particular Bill may not have much life, and may be replaced by the Procurement Bill in a matter of weeks, but at least it sets a precedent. I have more to say on that point later.
Before that, let me express our welcome that these trade deals have been secured, with the deepening of links with two old friends—Australia and New Zealand—and the elements of both deals which will be beneficial for our country. The Government have of course highlighted some of the key benefits of the trade agreements—indeed, the noble Lord, Lord Johnson, has not just highlighted them but been vociferous in his welcoming of their benefits, which we also welcome, such as the elimination of tariffs on all UK exports to Australia and New Zealand, creating new opportunities for UK professionals and businesses in both countries, and more. However, while they are welcome, it is impossible to ignore—as referred to by a number of noble Lords—that the financial impact of both deals is insignificant and, we might say, wrapped in a degree of uncertainty. As we have heard, the Government’s own assessment estimates that the Australia deal will increase UK GDP by only 0.08% by 2035 and the New Zealand deal by only 0.03% by 2035. So they are not a big deal for our economy, even though they are a big deal given the precedent that they set for deals that we might negotiate in the future.
Given the significant uncertainty that the impact assessment openly admits, when paired with what is missing it is hard to disagree with the assessments of the Prime Minister, who called them “one sided”, or of the former Environment Secretary, who has been referred to, when he said that the best clause in our treaty with Australia is the one that allows us to rip it up with six months’ notice. They both also suggested that the UK
“shouldn’t be rushing to sign trade deals as quickly as possible”.
Given the lack of progress in deals with the USA and India—we had a Written Statement today on India, which says that there is no deal yet and that the seventh round of negotiations is under way, but nothing like a deal is in sight—that does not seem to be the issue, but may certainly explain the continuing stasis.
These deals were supposed to pave the way for easier CPTPP membership. The Government have said that they hoped to conclude joining by the end of 2022. After 15 months of negotiations, that date has been and gone. What has happened to our purported membership of the CPTPP? Are we waiting to sign individual deals with as many countries as possible before that negotiation can be concluded? Which way is it? Are we trying to join the CPTPP or are we awaiting further deals before we push that attempt?
As for what is missing from the deals, where do we start? Where is the leadership on tackling climate change, as the noble Baroness, Lady Bennett, the noble Lord, Lord Inglewood, and others asked? The Australia agreement fails to set out specific commitments on climate change, with no sign of the reaffirmation of commitments under the Paris Agreement that was promised by the Government. Properly addressing this would enhance all our trade deals, not least because this is a key and growing market for international trade. This was the first opportunity to set the important precedent, and we missed it.
An absence of engagement with workers’ representatives is clearly shown by the lack of a gold standard of workers’ rights found in these agreements. The TUC highlighted the lack of
“commitments to ILO core conventions and an obligation for both parties to ratify and respect those agreements.”
As I said, these deals set a precedent. When we turn to negotiations with countries with inferior worker protections to those of Australia and New Zealand, this will certainly not set a positive foundation for ensuring that workers’ rights are protected there.
The hit to the agriculture sector has been well documented: the noble Lord, Lord Inglewood, and others made this point. The Government’s own impact assessment shows a £94 million hit to farming, forestry and fishing and a £225 million hit to our semi-processed food industry from the agreement with Australia. This has rightly been criticised for both lowering standards and hurting British farmers, as others have said. The procurement provisions in the Bill, while certainly welcome, lack a requirement for the specific support that UK firms could benefit from in order to take advantage of the opportunities created by the agreements in both Australia and New Zealand.
Turning to scrutiny, the elephant in the room is that both of the agreements which form the basis of this legislation are long overdue and have already been signed between the respective Governments. As a result, the scope for changes to the agreements at this time is extremely limited, and we anticipate that our amendments at future stages will show this, through a focus on better assessing the impact of the agreements. In that regard, I particularly thank my noble friend Lady Hayter. She is not in her place today, but I think five members of the International Agreement Committee have spoken in this debate. We are grateful to that committee for its excellent work in scrutinising the agreements themselves through two reports last year, both of which have been very helpful in examining these agreements. The Australia report also presented an additional opportunity for a very useful debate last July, and I understand we are expecting a response to the report on the New Zealand agreement from the Government, probably tomorrow: I await that with keen interest.
This work has given us something of an advantage over the other place, where opportunities have been particularly lacking. It was deeply concerning that the Government limited the time available for scrutiny of the Australian agreement by tabling it late in the day and by the Trade Secretary delaying an evidence session. I understand that provisions in the Procurement Bill, currently in the other place—it has its Second Reading today—will also make Bills such as this one unnecessary for future trade agreements, further curbing available opportunities for scrutiny. I hope the Government will learn from this and not continue to avoid scrutiny in this manner. Ministers have been granted significant powers in trade negotiations and they can expect that we will continue to push for more scrutiny, so parliamentarians and wider groups can properly impact on the process.
Lord Johnson of Lainston (Con)
I thank noble Lords for taking part in today’s debate and for the contributions from all sides of the House: it has been absolutely fascinating. I am extremely grateful also that the Australian and New Zealand high commissioners made themselves available to watch part of the debate: I am grateful to them for their support, morally, in the Galleries. I also extend warm gratitude to the IAC and say how much I appreciate its involvement both before this debate and, I very much hope, in the next few weeks, as we go through Committee and Report.
I join the long line of people congratulating my noble friend Lord Swire on his first-class maiden speech. He was certainly a better speaker and politician than he was a soldier, by the sounds of things, and I am very glad to have him behind me, as a result. Both he and the noble Lords, Lord Marland and Lord Howell, raised the Commonwealth. I totally agree with the importance we place on our links with the Commonwealth and the opportunities that our post-Brexit vision brings us in relation to the Commonwealth. I reassure my noble friends that the Government will and are making the most of the Commonwealth within our trade agenda. We have done 33 trade deals with Commonwealth members and we have a newly launched developing countries trading scheme, which I know my noble friend Lord Swire has discussed with me in the past. Total trade in goods and services between the UK and the Commonwealth was £121 billion in 2021, which I am delighted to report is an increase of 12% on 2020.
I will answer some of the questions that have been raised and I will try to do so in as much detail as possible given the time available to me. I think this is a very important debate.
The first point I would like to turn to is the question of why we are presenting this Bill to you today given that, in theory, there is a Procurement Bill that is being debated in the other place that will cancel this Bill. Well, actually, that is not completely true. All the provisions relating to Scotland are not in the Procurement Bill, so if we are to have consistency then we need to have this Bill relating to Scotland to follow through on top of the Procurement Bill, even when the Procurement Bill cancels this Bill—if that does not sound too bizarre.
There is also an important point on timing. The Procurement Bill, rather than this procurement Bill called the Trade (Australia and New Zealand) Bill, will take many months to get on to our statute books. Following that, there will be a further six-month waiting period before the provisions in the Procurement Bill come into effect; that could be a year, or a year and a half, or it could be longer than that. Who would want to stand in the way of this opportunity to allow our traders and our citizens to benefit from this free trade deal when we are able to present to you today a very uncontentious tidying-up Bill around procurement that, as I say, will have to follow through in any event on the Scottish measures? The noble Lords, Lord Kerr and Lord Purvis, my noble friend Lord Lansley and the noble Baroness, Lady Liddell, all covered this point and I hope I have answered the reason for the logic of this Bill and the importance of it.
I will also cover the issues surrounding negative versus affirmative statutory instruments. It is important to point out that, if you read the Bill, you will see that the powers therein are very specific—they are not intended to relate to procurement beyond the Australia and New Zealand trade Bill. The measures that we are considering that will be brought through as negative statutory instruments will be very procedural; they relate to things like the changing of names of government departments, so to assume—forgive my newness to this place and to Parliament in general—that we need to go through an affirmative process would be extremely cumbersome, time-consuming and really not relevant in this at all. As far as I am aware, the majority of the measures in this procurement Bill are effectively all being employed by procuring agents today anyway, so I am sure this brings much needed consistency, but in terms of changes it would not be significant. As a result, to have an impact assessment around this Bill would be unnecessary because the impact is to ensure that we can do our free trade agreement; it is not necessarily on the procurement processes that we are reforming. In fact, all the reforms seem eminently logical, and we should do them even if we were not doing a free trade deal.
I was criticised for my tone. I am sorry if people think I am too optimistic about what free trade agreements can give us, but I am excited by what we have before us. I am excited by our post-Brexit vision of Britain, I am excited about the wealth that we can create for our citizens, I am excited about the opportunities that we are going to have for our businesses, and I am excited about enhancing our cultural, societal and citizenly relations with our sister nations in Australia and New Zealand. So, yes, I am excited, and I am frankly amazed that people are not more excited than me.
Yes, every trade deal has give and take and it does revolve around change; I am aware of that and we should have a debate about it. I think what my noble friends Lord Hannan of Kingsclere, Lord Frost and Lord Udny-Lister, said about what great opportunities these are for us was right. I am a bit frustrated to some extent that we seem to think we are at a standing start with Australia and New Zealand when we are not and that this is the end of the road for our trade deals. We already trade with Australia and New Zealand; this is an improvement or enhancement; this is future-proofing our relationship and building it stronger. If we did not have this agreement, we could not deal with and look at in detail all the issues that people have purported to raise, like animal welfare, agriculture and the environment.
We can provide the leadership through this process that we could not do without it. That is why it is so wonderful. It is everything that noble Lords opposite should want—the opportunity to encourage trade and wealth creation while showing leadership in our values. That is what this free trade agreement does. We talk about the engagement and scrutiny process. I have great sympathy with that. I am in two minds about the level of scrutiny that is useful when negotiating a free trade deal. It is useful for our counterparts to understand what our citizenry feels about certain important issues, and I know that the Australians and New Zealanders—certainly the Australians—are effective in engaging with their industry base.
I was involved as a board director of the DIT in encouraging greater engagement with industry in the negotiating process and, frankly, we could continue to do more. I am not averse to suggestions. This is an iterative process and is the first of many deals, I hope. This is the simplest and most straightforward deal that we could have presented to the House, but we want to learn as much as possible from it. Therefore, while I would not look to change the process around the constitutional review that this House and the other place bring to bear on treaties in a specific and formalised sense, I am aware of and indeed desire greater engagement with business and the body politic. We otherwise end up with what we have today, a debate about any of the potential negatives of the deal, rather than people rejoicing in the huge opportunities that it presents to us.
I am, to some extent, frustrated that not enough businesses have come out to say how much they are going to benefit from these deals when, in fact, they have spoken to me directly about the huge opportunities that there are. I want to try to build a bow-wave around our free trade agenda. I therefore take to heart the views that noble Lords have expressed today about engagement and scrutiny. As I say, while the processes should not change, there could certainly be more forward footedness in engagement. That is a good process, which helps to spread the power of these agreements and makes them more successful.
I should make one important point. We are looking at these free trade agreements in the wrong way—through the wrong end of the telescope. We are used to trade agreements whereby one does a deal—some 1950s steel-type treaty on tariff allowances or whatever, such as allowing certain amounts of steel into the economy over a certain number of years—and that is it; one is stuck. The reason why the Ponsonby rule came into action was that Parliament was concerned that secret deals were being made that we could not get out of and that we did not know anything about.
This is different. There has been a huge degree of scrutiny and discussion around these agreements—and this is not the end but just the beginning. They are structured to enable us to have intensive debate around each section, whereby all the key points that we have been discussing have committee and dialogue structures built into their mechanisms, to allow us to change and evolve these treaties. Scrutiny starts on day one. We will be able to make changes to these treaties if they do not suit us in the way in which they were intended to suit our economy and people. That is important. This is completely different from how conceptual treaties worked in the past. I congratulated the negotiators because flexibilities are built into this process to allow us not to be fearful of the outcomes of the treaties, because we can change them. That is at the core of the Government’s negotiating strategy and is why I am so enthusiastic about these treaties. Not only do they give us so much and allow us to lead the world in our value offerings but they are entirely flexible. If they do not work as we intend—it is hard to forecast everything—they can be altered through mutual agreement. That is enormously powerful.
As to my final point on the impact assessment, we have a review at two and five years and of course I should be delighted to engage further with the House at those points. That is important; we have to assess the impact of these treaties because we want to learn how we can improve them. I very much support that process.
I conclude on the scrutiny point by saying that I am sorry if noble Lords think that I am too optimistic about what these trade deals offer us. However, the reality is that, because of the way in which they have been structured, one has a high degree of scrutiny over the future of these trade deals and the Government have been forward footed in making sure that Parliament was part of the process, as it was always intended to be.
I will cover three other points, one of which is the environment. These FTAs include environment chapters which recognise our right to regulate to meet net zero and reaffirm our commitments to the Paris Agreement. This is very important: at no point and in no area do these FTAs derogate our ability to control our own destiny. In fact, by having the negotiations with Australia, particularly before the Government changed, we were able to bring to bear on them the pressure to accord with our climate change ambitions. That is amazing. If the Greens want change in this area politically, this is a very powerful way of doing it—and we have done it. We were the first major economy to pass a legislative target to reach net zero by 2050. That was done by the Conservative Government, not by any other party. We lead the world in this area, and these trade agreements reflect that. In my view, this is another matter for us to rejoice in.
The deal commits the UK and Australia to work together on climate change; that is very important. In other areas that have come up in the past—not necessarily in this debate—people have raised concerns about deforestation with regards to the FTA. I have mentioned my gratitude to the TAC for the work it has done in this whole process. It reports that, on a net basis, Australia has been reforesting rather than deforesting. Nothing in this agreement stops the Government taking domestic action on our side to deliver on our commitments to meet our climate objectives. I know there is some head shaking opposite me, but I can only go on the facts; I am slightly beholden by that.
There is a view that Australia and New Zealand are far away, which they are. I like the idea that we are starting at the other end of the world and then working backwards. If you look at overall greenhouse gas emissions associated with UK-based production—largely unchanged from the agreement—you will see that there is a possibility of some increase in transport-related emissions associated with increased trade flows, but, according to the TAC, these impacts are likely to be negligible. This idea that we are going to have huge greenhouse emissions on account of transport increases is simply not being predicted. As my noble friend Lord Hannan pointed out, having a New Zealand lamb chop on your plate in the House of Lords restaurant is better for the environment than having one that comes from another part of the UK. Why can we not ask other parties to celebrate where we see environmental benefits from these trade deals? The assumption is that all trade deals are somehow negative for the environment; how can that possibly be the case? As my noble friend Lord Hannan said—I back up his point; it came from a Board of Trade report—the environmental impact of the production of New Zealand lamb is lower than ours in many cases, even if you include transport costs.
My final point is very important: this agreement provides huge opportunities to boost trade in environmental goods which can speed the development and uptake of environmentally friendly production techniques. I think the noble Baroness, Lady Liddell, also raised this. Again, what are we trying to do with Australia and New Zealand? We are trying to sell them our technology on net zero, where we are global leaders, thus generating wealth for this country and improving our environment. If anyone thinks my tone is too rejoicing at the astonishing benefits that, factually, we bring through this agreement, I apologise again.
I am very sensitive to the issue of agriculture, and I do not want there to be any sense of triumphalism about this trade agreement in that sense. The fact is that there is change and people are affected. However, it is important to note, first, that this agreement will have relatively limited negative impacts on certain agricultural sectors of the economy. That really is a fact, and I will go through that in a moment. The positives are also significant. We export more agricultural produce, in its broadest sense, to Australia than we import from it, so the gain is in our favour. We believe that the amount of meats which are competitive for us being imported from Australia into the UK will increase by very small amounts.
As I have repeated, and repeat again, this is not an agreement starting from scratch. We already import New Zealand and Australian meats, and they are not using the quotas that we already have. Yes, we are liberalising our trade, and I think it is right to do that, but the fears that are being created among the body politic and the press are entirely unreasonable and, if I may say so, slightly disingenuous. There is no reason to fear this trade deal. If we did not have it, it would not make any difference in a negative sense on farmers. That is important for people to understand. This is actually an opportunity, because it unlocks—
Lord Purvis of Tweed (LD)
Is the Minister saying that the impact assessment is wrong about the 5% and 3% reductions? The Minister has just said at the Dispatch Box that, if this agreement were not in place, there would be no negative impact. However, the impact assessment says that this agreement is bringing a negative impact. Will the Minister commit to revising the impact assessment before we reach Committee, because either he has just misled the House or the impact assessment is wrong? They cannot both be right.
Lord Johnson of Lainston (Con)
I am grateful for that point and would be happy to clarify. I will certainly work closely with the noble Lord in Committee.
My point is that Australian imports already operate below the existing quotas. Even if we said that we were not going to have a trade deal with Australia and decided that we did not want to go ahead with a deal that I think will be hugely beneficial, we already have a quota system where the Australians are importing less. If we go to a new arrangement where, over 10 or 15 years, we gradually liberalise our agricultural imports, the very fact that we are increasing that higher level does not necessitate that we are going to put ourselves in a more disadvantaged position. I am not trying to suggest that the impact assessments are not correct. I have been sensitive about that; I said at the beginning that there are impacts and there will be change. We must be sensitive to that. However, I am saying that the claims that we are going to have a significant tsunami of Australian beef coming into the UK simply do not make logical sense when we are already importing less than the quotas imply. It is important to mention that.
We have also touched on another relevant point. There are production differences between Australia and New Zealand; my noble friend Lord Hannan of Kingsclere mentioned this earlier. It is important that we take advantage of that fact. I will not be too much longer but let me quote the TAC, which states that
“different production practices between countries are a function of different climatic, geographical, agronomic, environmental, economic and cultural conditions. Australian cattle and sheep live their lives outdoors, mainly on very large stations, which is different in the UK. It can never be assumed that what is normal in one country needs to be normal in another … Moreover, the international trading system, of which free trade agreements form a part, is predicated upon the understanding that countries should be able to benefit from advantages which they enjoy over their trading partners. Trade law, in principle, prohibits countries from restricting imports of products simply based on how they are made, whether this is by using their more abundant sunshine, land, educational skills or lower labour costs.”
This is important. We are trying to do a trade deal where we have, enjoy and appreciate comparative advantage while at the same time being extremely firm on the controls that we will put in place to make sure that, if there is a significant increase in imports into the UK, we can restrict those imports and ensure that our farmers are protected. Following the 15-year point, we will still have WTO restrictions that we can fall back on.
Baroness Young of Old Scone (Lab)
Before the Minister finishes, I hope that he will give way for a microsecond. During my contribution, I asked whether he could let us have some detail of the systems that are in place to keep under surveillance the environmental, animal welfare and other standards on which he is giving us assurances, including how effectively they are operating. Will he agree to do that before we reach Committee?
Lord Johnson of Lainston (Con)
I thank the noble Baroness. I am about to go on to that exact chapter in making my final point on standards, which are important. I take this issue to heart.
It is absolutely essential for everyone to realise that nothing has really changed in terms of our standards. In fact, we believe that, in some instances, we have increased our ability to protect ourselves. I want to quote from some of the important chapters in the Trade and Agriculture Commission’s report, if noble Lords will indulge me; I know that my noble friend Lady McIntosh wanted me to touch on these matters as well. The report states:
“Importantly, all of these trade liberalisation obligations are fully covered by general exceptions, taken from WTO law, ensuring that the UK can regulate to protect animal or plant life or health … In addition, the FTA contains several rules in its environment and animal welfare chapters that expand on these rights to regulate, which gives the UK more leeway to override its trade liberalisation obligations—
that goes to the whole friction between these points—
“than it would have under WTO law.”
This is very important. We are ironclad in our ability to control our standards.
The concept of mulesing was raised. The TCA sees an increase in imports of mutton from mulesed sheep as negligible, and the FTA does not restrict the UK’s WTO rights to prohibit imports of products from Australia produced using the practice of mulesing without pain relief. I was told that 90% of all mulesing is done with pain relief. Yes, there are different practices and clearly, mulesing is not relevant in the UK because of flystrike and other conditions, but we have the ability to protect ourselves and we still have the ability to ensure that the food and goods we import conform to our standards.
Also, in terms of animal welfare, these chapters are ground-breaking. It is worth using those words, which are appropriate. We have driven change there, and it reflects our values. New Zealand and Australia have a very strong commitment to raising animal welfare standards. It is also very important to point out that we still have complete control over pesticides and other such matters. Our approval process involves audit and assessment of a country’s system. Products entering the UK must be accompanied by certificates and a percentage are subject to physical checks to ensure that standards are maintained. We have worked very closely with the Food Standards Agency and Food Standards Scotland. This is very important and—
Baroness McIntosh of Pickering (Con)
My noble friend will be aware of a briefing from the Food Standards Agency, which is concerned about the increase in what is required of it. He might like to consider that.
On a slightly separate point, my noble friend said that the purpose of the Bill is that the procurement provisions will apply in Scotland. My understanding is that the Scottish Government have withheld consent to the Procurement Bill so I am not quite sure how, constitutionally, we could not be seen to be circumventing the will of the Scottish Government and the Scottish people in this regard.
Lord Johnson of Lainston (Con)
I thank my noble friend for both her points, the first of which is heard. The assumption is that these agencies can police our borders. Clearly, if there are different requirements on account of this trade deal—although I cannot see why—certainly, we should look into that. We covered her second point in the debate. These are concurrent powers. We have consulted consistently and continually with all the devolved nations, and we are not requiring a legislative consent Motion to run those concurrent powers.
I thank all noble Lords for their contributions to today’s debate. I reiterate my willingness to meet noble Lords and discuss this Bill further. Those who have spent time with me over the last month know that I am fully available to ensure that this Bill is a success. I am transparent and open to you and want to ensure that we learn in this iterative process to create even more effective trade deals into the future with different economies. This is not a “one size fits all” process. Just because we have an agreement with Australia and New Zealand does not mean that this agreement will be cut and pasted across to another country. Every country and economy is different and should be treated as such.
Underpinning this Bill are two extraordinarily far-sighted trade deals between our sister nations, resulting in an estimated £10 billion increase in trade with Australia and £1.7 billion increase in trade with New Zealand. There have been discussions about how we get to those figures. Professor Minford suggested a £60 billion benefit for trade with Australia; our government forecasts gave us a figure of £10 billion. I am happy to discuss with the noble Lord, Lord Purvis, how to assess these trade deals more accurately. The impact assessment and the look back will help us in that regard.
As I said to my noble friend Lady McIntosh, we have engaged with the devolved Governments at every stage of the process and have also allowed for greater parliamentary scrutiny than is prescribed in statute. We have shone the torch of the Trade and Agriculture Commission on these issues, and we have built two-year and five-year assessment breaks into the agreement. If we decide that we do not like these agreements, we can cancel them within a six-month notice period. These deals demonstrate our values and leadership on standards—that is very important and has come up in the debate today—how we operate with developing nations, labour rights, gender equality, the treatment of animals and the environment. These deals absolutely protect our agriculture industry and our standards in line with our values, while ensuring that we bring essential benefit to our consumers.
These trade agreements are designed to be flexible, with a whole range of structures established to ensure proper dialogue and recourse. As I have said, they are not some post-war steel treaties. They are, thanks to our leadership and position as the new driver of our unique free trade mission, modern, future-proofed concepts which allow our nations to grow together in commerce and trade.
These deals are being made between us and two allied Commonwealth nations, as has also been said, with the same Head of State and with those who died for our values in two world wars. We are their brothers, sisters, fathers, mothers and cousins. We already live and travel and own properties, businesses and farms in each other’s countries.
As came up earlier, our levelling-up agenda plays an important part in how we will work together in the future. I ask Members of the House to talk to some of the firms and people positively affected by these deals. Your Lordships will see the palpable excitement, as I have shown, from chapters such as the ground-breaking one on SMEs welcomed by the FSB. All that is within a consumer protection section that will ensure that our consumers benefit from greater choice and lower prices in our shops.
Contrary to critics’ view, the Government have thought out our trade strategy well. We want to ensure that our free trade agenda is indeed the framework that launches us on the path to give our citizens the choices and power to reach the ends of the earth. We should be proud of the decisions we have recently taken over our trading destiny and focus on creating a new world order, where we sit at the very centre of a series of geostrategic relationships and prosper from this network of trade and investment, shared culture and values, and build the wealth that gives us security and ultimately control over our destinies, which is at the very heart of our free, liberal and democratic-minded nation.
The Government have taken the first major step on our journey. We are proud of the modern and comprehensive deals that we have negotiated, and I look forward to the passage of the Bill through your Lordships’ House.
Lord Johnson of Lainston
That the Bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee that they consider the Bill in the following order: Clauses 1 and 2, Schedules 1 and 2, Clauses 3 and 4, Title.
Trade (Australia and New Zealand) Bill
Monday 23rd January 2023
(1 year, 3 months ago)
Lords ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-I Marshalled list for Committee - (19 Jan 2023)
Lord Lennie
Member's explanatory statement
This amendment prevents regulations being made in relation to cases falling outside the scope of procurement Chapters of the FTAs.
Lord Lennie (Lab)
My Lords, Amendment 1 would prevent regulations being made in relation to cases falling outside the scope of the procurement chapters of the free trade agreements. The noble Lord, Lord Purvis, will speak to Amendments 6 and 19 in this group.
Amendment 1 would remove subsections (2) and (3) from Clause 1. Clause 1 provides a power for appropriate authorities to make regulations for two purposes. Subsection 1(a) allows an appropriate authority to make regulations for the purpose of implementing the government procurement chapters in the FTAs. Subsection 1(b) allows an appropriate authority to make regulations for the purposes of making other changes for matters arising out of, or related to, the government procurement chapters in the FTAs.
The Explanatory Notes state:
“Clause 1(2) allows the regulations under subsection 1(b) to be made also for cases falling outside the scope of the government procurement Chapters to provide for general application”,
and that
“Clause 1(3) clarifies that a case is outside the scope of a government procurement Chapter if that Chapter does not impose an obligation on the UK in respect of that case, i.e. it is not an obligation owed specifically in the Chapter … The effect of subsection 1(b) read with 1(2) is that certain changes made to domestic law to implement the UK-Australia FTA, i.e. in respect of the rules in the text of the government procurement Chapter … can apply generally and not only to suppliers from Australia. This will ensure procurement regulations remain uniform and coherent by not imposing different or conflicting procurement procedures on contracting authorities for procurements covered by the FTA, and ensure the UK can implement its obligations in the FTA in a way that is consistent with the UK’s other international procurement obligations.”
This explanation makes sense; it is of course important that procurement regulations remain uniform and coherent.
Our intention with this amendment is simply to probe the scope of this, as it reads as almost limitless. Can the Minister tell me whether any case could be outside the scope of the Government’s procurement chapters? Are there any limits on this? What is a “case” defined as?
Lord Purvis of Tweed (LD)
My Lords, I will speak to Amendments 6 and 19 in this group. The questions posed by the noble Lord, Lord Lennie, in moving Amendment 1 are very sensible. I look forward to the Minister’s reply.
According to today’s press, we are now 15 years behind on the commitment that we would reach £1 trillion of trade within a decade. It is now estimated that the target set by the coalition in 2012 will not be achieved until beyond 2035. This highlights the fact that we are starting to see the consequences of the significant non-tariff barriers introduced by this Government over recent years. Therefore, it is vital that mechanisms are as streamlined as possible for procurement and the rest of the trade agreements.
Amendment 6 is designed to probe the discrepancies in threshold levels in the Government’s procurement legislation, currently going through the House of Commons and which has been through scrutiny in the House of Lords. It probes why they are different for those seeking procurement opportunities for Australia as compared with those seeking them here at home. If you are a business seeking to bid for procurement in the UK, you now have to operate under quite a markedly different approach from that if you are looking for procurement opportunities within Australia.
I welcome the Minister’s letter to noble Lords, which he promised at the end of Second Reading and fulfilled. It highlights what we knew: that, factually, there is a difference in the threshold levels. The letter simply states that Australia was not willing to have the same thresholds as us, and so we simply said that we would have its thresholds. What did we get in return? If this is a concession to Australia then surely we got something in return as far as access is concerned.
The report on the agreement from the Australian Parliament’s treaties committee makes for interesting reading, as does our own report from the House of Lords International Agreements Committee. The Australian report is 225 pages long and can be summarised as: “We got a good deal.” Our House of Lords report, which is 36 pages long, can be summarised from our point of view as: “No, we didn’t.”
The Australian report highlights the fact that the Australians wanted to maintain their levels of thresholds—that was very clear. Thresholds are important; a considerable amount of scrutiny that we did on the procurement agreement was about whether the procurement would be below or above the threshold. If it is below the threshold, the reporting mechanisms, the contracts approach, and the way that schemes or pooled contracts can be put together are different. So we now have a higher rate for Australia.
At Second Reading, I raised the fact that this was done by subcentral contracting bodies. The Minister’s letter to me says that in effect I was wrong in saying that Australia was unique, because Canada has the same approach as Australia’s—but not for subcentral levels. The agreement that we rolled over for Canada for the CETA agreement, has the lower threshold, and we have now gone to the higher one. We are simply trying to find out what we got in return for providing a concession to Australia over the threshold levels. The higher threshold means that there will be extra complexity for businesses.
Amendment 19 is simply a probing amendment on the point that was raised earlier on the Procurement Bill by the noble Lord, Lord Lansley, which was simply trying to seek protections. If we try to change this Bill and its mechanisms for the good, those changes will be protected by the Procurement Bill, which, as the Committee will be aware, will automatically repeal this one. We have the rather ridiculous situation that we are in Committee for a Bill that will be automatically repealed by a Bill that is going to go into Committee in the House of Commons. This is a mechanism to try to protect any of what we do. On that basis, I hope the Government might be minded to accept Amendment 19, or indeed they might have their own mechanisms or commitments, so that we are not wasting our time in Committee.
Lord Lansley (Con)
My Lords, three important issues arise from the limited number of amendments here, and I want to say something about each of them.
I shall start with the last amendment, Amendment 19. The noble Lord, Lord Purvis of Tweed, referred to the debates on the Procurement Bill, in which many of us participated. We are in a situation where the Procurement Bill will in due course repeal this legislation. We can see the timing a little more readily now: all being well, we should complete the passage of this Bill and I hope it might reach Royal Assent if not by the end of February then certainly very early in March.
The Procurement Bill in the other place still has a substantial amount of work to be done, and doubtless it will return here with amendments. That being the case, I suspect it would be rash to assume that it would pass before late May at the earliest, especially since the Session is to run longer. The Procurement Bill brings its provisions into force two months after the Bill itself is enacted, so in my view we could be in July at the earliest, and maybe in August or September, before the relevant provisions and the repeal take effect.
That being the case, there seems to be a perfectly good rationale for this Bill being used to create the necessary regulations. One matter that we did not get quite clear in our previous discussion is that this Bill, once enacted, can be used to make regulations. Those regulations will subsist even though this Act will subsequently be repealed by the Procurement Act, as it will become. So there is a purpose in passing the regulations in the meantime. There is a particular purpose, which I will not trespass into, relating to the relationship with Scottish legislation. The fact that this Bill can be used to make those regulations is particularly helpful.
The noble Lord, Lord Purvis of Tweed, knows that I agree with the proposition that, if an amendment were to be made in this House to this legislation, it would be inappropriate for it to be automatically repealed. However, we secured assurances from my noble friend Lady Neville-Rolfe to the effect that the Government under those circumstances would make whatever changes might be necessary to the Procurement Bill in another place. I am hoping that my noble friend Lord Johnson of Lainston will have a similar briefing and a similar reassurance to give us.
Lord Purvis of Tweed (LD)
I am very grateful to the noble Lord; as usual, he is extremely perceptive. The point I am seeking to make is that, under the GPA, subcentral and regional bodies are covered. We have existing arrangements under the previous EU rules for subnational bodies, and we currently have subnational special drawing rights with the EU. My question is: what impact will the higher threshold that we have conceded to subregional bodies within Australia have on those businesses? I fear that it means a great deal of complexity, so, for us to say back to the Government that they should be having discussions with Australia to bring the thresholds down, rather than just give up, would make sense for British businesses.
Lord Lansley (Con)
Well, obviously, if we were in the course of further discussions through the Joint Committee arrangements on the free trade agreements to modify the agreements so as to reduce the thresholds, I imagine that there would be some benefit to our businesses—but that is not the position we are in at the moment. I certainly do not see that we can arbitrarily and unilaterally impose different thresholds through our legislation. The Minister will have to confirm if I am correct, but I did not understand it to be the case that the WTO general procurement agreement gives us existing access to entities in Australia’s procurement below the federal level. I stand to be corrected if I am wrong about that, and I have no doubt that the Minister will have the briefing to tell me if I am wrong. For those purposes, I just do not agree with Amendment 1 as moved.
The Minister of State, Department for International Trade (Lord Johnson of Lainston) (Con)
My Lords, I am delighted to be speaking in what is my first Bill Committee in your Lordships’ House. I start by saying how grateful I am for the engagement that I have had with the noble Lords, Lord Lennie and Lord Purvis, since Second Reading of this important Bill. I am also grateful to them for tabling the amendments in this group. I also thank my noble friend Lord Lansley for those extremely helpful interjections.
As we have heard, this group deals with how the Bill impacts on the UK’s procurement rules, both now and under the Procurement Bill, which is currently awaiting Committee in the other place, once it is enacted. I recognise the concerns raised by noble Lords on protecting UK contracting authorities and the importance of the discussions we are having in this Committee. Having listened to the contributions of noble Lords today, I hope to reassure the House that these amendments are not required. Perhaps I may begin by thanking this House’s International Agreements Committee for its valuable scrutiny of the Australia deal, the report on which stated:
“The Government has been broadly successful in incorporating its objectives on procurement into the agreement and we welcome the procurement chapter.”
On Amendment 1, on general effect, in the name of the noble Lord, Lord Lennie, I reassure the House that these powers cannot make changes beyond what is necessary to implement the procurement chapters of the Australia and New Zealand agreements, while ensuring that the UK procurement system continues to function. I think my noble friend Lord Lansley covered that in his comments. Rather than conferring unnecessary powers on the Government, Clause 1(2) and (3) ensure that, when the regulatory changes are made, they do not have the effect of creating a separate, parallel set of regulations for Australia and New Zealand suppliers alone. This is the concept of conformity.
As a member of the WTO Agreement on Government Procurement—the GPA—the UK, as has been discussed, has a most favoured nation obligation to not discriminate in its treatment of businesses from different parties to the GPA. To meet this obligation, the changes needed to the procurement rules resulting from the Bill need to apply to all GPA parties, as I think we have also discussed. This is laid out in the Explanatory Notes, which, for useful repetition, I restate:
“This will ensure procurement regulations remain uniform and coherent by not imposing different or conflicting procurement procedures on contracting authorities for procurements covered by the FTA, and ensure the UK can implement its obligations in the FTA in a way that is consistent with the UK’s other international procurement obligations.”
The Bill will lead to a wider range of protections for tendering parties and, ultimately, better value and choice for our procuring entities. The changes will make the system simpler, which is something all parties desire.
Turning to Amendment 6 on the equalisation thresholds, I understand the concerns of the noble Lord, Lord Purvis, about these agreements placing additional burdens on suppliers—and, frankly, contractors or contracting parties—by having a different threshold to that in the UK’s procurement regulations. I have great sympathy with his objective. However, I hope to persuade the noble Lord that his amendment is unnecessary and, in doing so, show that the UK can meet its market access commitments in both the Australia and New Zealand free trade agreements and can bring these agreements into force.
Amendment 6 proposes that no regulations can be made in respect of subcentral procurements that are valued above the threshold amount specified for such procurement in the Procurement Bill. The value I have here is 200,000 special drawing rights. By not allowing any regulations to be made for subcentral procurement with a value in excess of the threshold amount, the UK would not be able to give effect to its market access commitments—my noble friend Lord Lansley covered this very successfully—for all subcentral procurement under the UK-Australia FTA, because the threshold for subcentral procurement is 330,000 SDR; or any subcentral procurement under the UK-New Zealand FTA, valued at 200,001 SDR or more.
Having different thresholds—after our discussions, I took this away and investigated it—between parties is commonplace in the GPA, as we have discussed. For example, as I believe I mentioned in the letter sent to the noble Lord, at subcentral level the UK has a threshold of 200,000 special drawing rights, as do New Zealand and Japan, while Canada and Australia have a threshold of 355,000 special drawing rights.
On the question of whether the different threshold values between the UK rules and the FTA present a burden to UK contracting authorities, let me reassure the Committee that, under the current UK procurement rules, the only threshold that contracting authorities need to worry about is the one in the UK rules. That is the core point. This is because the SDR thresholds set out in the FTAs themselves determine the contracts that, in the event of an Australian or New Zealand supplier wanting to challenge a UK procurement procedure, are eligible to be addressed by UK domestic courts. So, effectively, this simply allows the concept of challenge.
Lord Purvis of Tweed (LD)
I am grateful to the Minister for giving that information. I would just like to get this clear in mind. If a local authority in the UK—a combined authority, say, or subnational authority—sets its procurement scheme, operating under the Procurement Bill, at the £213,000 level, which is 200,000 SDRs, it can operate below or above the procurement threshold. Is the Minister saying that an Australian firm can challenge that regional authority on the basis that, under the agreement, for the Australian firm the threshold is higher? Is that understanding correct?
Lord Johnson of Lainston (Con)
I thank the noble Lord. I am not 100% clear on the point he is making. Thresholds are set at whatever is negotiated. Any contract above the level of the threshold is protected from discriminating or unfair practices. Any contract below the threshold is not protected in the same way, in terms of challenge in the courts. It would be unusual for any contracting authority to design its tender to make sure it was not allowing an Australian or New Zealand contactor, or indeed any other contractor, to be below the threshold. The point is it does not make any difference to their thresholds.
Lord Purvis of Tweed (LD)
I will not pursue the point much further, but as we discussed during the Procurement Bill, one of the points about thresholds is that companies will not know that the procurement exists; they can be exempted as far as the Procurement Bill is concerned—that is the point of the thresholds. So an Australian firm could challenge an entire scheme on the basis that it would not be aware of the procurement that is happening in that area because of the non-reporting requirements below the threshold. I will not pursue the point any further, but I hope that, as a result of any regulations that come out of the Bill or the Bill itself, there will be guidance to businesses on how to operate with procurement. If those areas could be spelt out in guidance, I think that would be quite helpful. I will certainly read the guidance, because I am finding part of it difficult to understand myself.
Lord Johnson of Lainston (Con)
I thank the noble Lord. As I say, this does not change the process in any way. It is simply about protection for people bidding for contracts. In terms of advertising for contracts, the UK threshold levels remain the same—whatever they may be, given the various national or subnational governmental entities. That does not change. So for a local council tendering for, say, printing services, it makes no difference to its actions whatsoever. The only thing it does, from an Australian or New Zealand tenderer’s point of view, is that they may decide the threshold for them that affords additional protection to not incur unfair or discriminatory practices. Frankly, I think it is a highly unlikely situation that any contracting authority would try to bend the rules in order to ensure that Australian and New Zealand contractors could be excluded. That simply would not occur, in my mind. It does not require any additional work; it is simply about the challenge on unfair practices in tendering. That is the reason why the thresholds are set, and they reflect the same thresholds that were offered at national and subnational levels in Australia. That is the reason they are set at that level.
I am happy to go into more detail at a later date. Certainly, I am delighted to work with any Members of the Committee on this but, as I say, it is much simpler than it sounds. It is, in some respects, given the efforts prescribed for local authorities and authorities tendering, not relevant from their point of view.
Amendment 19, in the name of the noble Lord, Lord Purvis, addresses concerns around what would happen to any amendments to the Bill that might be passed during scrutiny by noble Lords. The noble Lord, Lord Purvis, raises an interesting point, and I was extremely pleased that my noble friend Lord Lansley explained the position very clearly and takes a strong interest in this—I am very grateful for his interventions. I have enjoyed the intellectual discussion, by the way, and I think this is precisely the sort of matter that this House is purposed to investigate: these are complex issues and we are absolutely right to be discussing them.
I understand the noble Lord’s point that this may appear, on the surface, an unconventional way to legislate; however, we have pointed out the importance of getting these agreements into force, as my noble friend Lord Lansley mentioned. No one in this House would want to delay the benefits conferred on our consumers, business and government by waiting unnecessarily for a later piece of legislation. It would be unfair to our citizens and also, in my view, against the spirit of the FTAs with our sister nations of Australia and New Zealand. Indeed, I met the Australian Agriculture Secretary and the high commissioner last week and they both expressed their keen desire to see this agreement brought into force as soon as possible. I also know that the Labour Front Bench met these individuals, I believe on the same day, to discuss the agreement.
The sense of urgency is also present within industry. I am sure noble Lords will remember the clear and powerful message from the British Chambers of Commerce during the evidence it presented before the other place’s Public Bill Committee:
“Overall, we want to see the agreements ratified as quickly as possible.”—[Official Report, Commons, Trade (Australia and New Zealand) Bill Committee, 12/10/22; col. 8.]
Returning to the core point, and recognising this novel approach, I repeat again the quotation given earlier. My noble friend Lady Neville-Rolfe made an important commitment that, if noble Lords were to amend this Bill, the Government would look to ensure that any necessary changes might be made to the nature of the repeal during the passage of the Procurement Bill in the other place. I personally reiterate this clear commitment today.
I hope I have provided the noble Lords, Lord Lennie and Lord Purvis, with enough reassurance on the Government’s position on these matters, and I therefore ask them not to press these three amendments.
Lord Purvis of Tweed (LD)
Before the Minister sits down, I ask for a final point of clarification and then I will shut up on this group. If the Bill passes, does that mean that we have implemented our domestic legislation in order to say to the Australians and the New Zealanders, through a diplomatic note, that we have put in place our domestic legislation so that this agreement can come into force? Or is that at the point when the regulations under the Bill are made? If it is the regulations, then, as I understand it, one of them will depend on what the Scottish Government and the Scottish Parliament will want to do, because there will be a concurrent power. Just for clarification, is it this Bill or the Procurement Bill, whichever the sequencing, or is it the time when the regulations are made?
Lord Johnson of Lainston (Con)
I thank the noble Lord for his comments. This is one reason why we are pressing ahead with the Bill: it is part of the process that will lead to the agreement coming into force. I will cover this later in Committee, I am sure, but there are other legislative acts that need to be brought into force, to enable the entire agreement to function, at which point we will have the entry into force of the FTA—a moment we are all, frankly, much looking forward to.
Lord Kerr of Kinlochard (CB)
Before the noble Lord sits down, can I ask him about his reassurance to the noble Lord, Lord Lennie, on Amendment 1? He said we need not worry about Clause 1(2) because Clause 1(1) can be used only in cases arising from these two trade agreements. I think I follow the Minister’s argument—until I turn to Clause 2. Clause 2 seems extremely permissive and says one can make provision, general or specific, or
“make provision for different purposes or areas”.
Can the Minister expand on his assurance to the noble Lord, Lord Lennie, and assure me that the Bill as a whole, not just Clause 1(2), cannot be used for purposes other than to deal with cases arising as a result of the two free trade agreements?
Lord Johnson of Lainston (Con)
I thank the noble Lord for that intervention. I think I have made my position clear that any concomitant actions following on from this Bill will relate specifically to the matters necessary for bringing it into force. Pursuant powers—this is an important commitment—are very much linked to what we would describe as minor and specific issues. They could relate to changes in government departments’ names, such as the Department for Culture, Media and Sport adding “Digital” to its name. The effective implementation of that in the agreements is relevant in these texts, so it would be confined to errors such as that. I know that we will discuss the concept the noble Lord raised regarding Scotland later in Committee, so I will be delighted to go into more detail on that then.
Lord Lennie (Lab)
My Lords, the problem is that the Bill does not say that. That is the point being made by the noble Lord, Lord Kerr. I thank noble Lords who have spoken: the noble Lord, Lord Purvis, on his two amendments and the noble Lord, Lord Lansley, for a lot of helpful clarification. Given any future misuse of power through statutory instruments, our super-affirmative proposal later will no doubt be supported, because that will make the scrutiny of the Bill that much more thorough than is intended as we speak. The Minister said that no powers beyond these FTAs are proposed by the Bill, but it does not say that—it indicates that there may be powers in other places that we need to watch for. However, with that, I beg leave to withdraw my amendment.
Lord Lennie
“(3A) Regulations under subsection (1) may not be made before completion of such public consultation as the appropriate authority considers appropriate with the relevant—(a) Scottish Ministers,(b) Welsh Ministers,(c) department of the Northern Ireland Executive, and(d) representatives of the English regions.”Member's explanatory statement
This amendment requires a consultation before regulations implementing the procurement Chapters can be made.
Lord Lennie (Lab)
My Lords, this amendment would require a consultation before regulations implementing the procurement chapters could be made. It would require that consultation to involve the relevant Scottish Ministers, Welsh Ministers, the department of the Northern Ireland Executive, who are not currently sitting, and regional representatives in England, as the appropriate authority considers appropriate.
Colleagues in the Welsh Government have stressed the importance of improving the process by which the devolved Administrations are consulted and formally engaged in trade deal negotiations. Labour is committed to working to improve the negotiation process to better engage with them and we are calling for a commitment from the UK Government to undertake nation-specific impact assessments on trade deals. These two steps would ensure a clear understanding of the implications and opportunities for each part of the country from any new deals—a common-sense step to make sure that new deals are as good as they can be for the whole of the UK in the era of individual trade deals.
Lord Thomas of Cwmgiedd (CB)
My Lords, I will make one brief observation. It seems a deficiency in our processes for negotiating important agreements of this kind that there is no mechanism, as in so much else, for ensuring that we remain a united country. The Government of the United Kingdom also represent the views of the devolved nations. Although it is very important for the United Kingdom that it is seen to be an honourable state that carries through what it negotiates, and although I support this amendment, I also support what was said by the noble Lord, Lord Lennie—that this has been designed after the horse has bolted. Hopefully, we can do something before the horse bolts next time.
Lord Howell of Guildford (Con)
To follow that intervention, we seem to be crawling along the edge of the quagmire, which arises all the time, between reserved powers and devolved powers: whether reserved powers have implications for devolved powers and whether some devolved powers and the actions following from them have implications for the whole of the United Kingdom.
Lord Johnson of Lainston (Con)
My Lords, this has continued to be—and I am not just talking about the words we have exchanged today—a very important debate on devolution and the role of the devolved Administrations in our trade agenda. I am grateful for the interventions from the noble Lord, Lord Howell, and the noble and learned Lord, Lord Thomas. They were very helpful in order to clarify the mind and work through some of the rationale behind the situation we are in.
I will make an important point that may help answer some of the questions. We do not operate a federal structure. We have one Government where there are devolved powers to nations, regions and other authorities. Treaty-making and foreign policy is necessarily a national endeavour, benefiting all. It is this coherence of a national structure that gives us negotiating strength and desirability as a single market access point which enables us to pursue our free trade agenda—something which, I believe, this whole House is united behind. All regions benefit from this process, above and beyond their own specific interests; the sum of the parts is greater than the constituent. We should not confuse the actions here, either. Treaty-making is the reserve of the UK Government. Finally, it would be unfair on our treaty partners not to act in good faith in taking forward legislation which implements these agreements by the most efficient means possible.
Amendment 2, in the name of the noble Lord, Lord Lennie, would require public consultation with devolved Administrations and representatives of English regions before making the secondary legislation which implements the UK-Australia and UK-New Zealand FTA procurement chapters under Clause 1. I know the noble Lord also mentioned the impact assessment, which, if it is okay, I will address in the following section.
Your Lordships will be aware that the Minister for Trade Policy chairs the Interministerial Group for Trade, previously known as the Ministerial Forum for Trade. This forum provides an opportunity for discussion on all matters of trade policy, including the implementation of UK free trade agreements. This group, by the way, last met on 9 January, so very recently. It is not the only opportunity for ministerial discussions and there are frequent bilateral meetings between Ministers. In addition to ministerial engagement, discussions with devolved Administrations at official level have totalled hundreds of hours across both the UK-Australia and the UK-New Zealand FTAs. This includes frequent updates by chief negotiators and detailed discussions on draft text. We are aiming to create—and believe we have—free trade agreements that benefit our nation in its entirety, and factoring in the requirements of each nation is at the very core of our work. In the case of procurement chapters, in both the UK-Australia and UK-New Zealand FTAs, we have found common ground between the UK Government and devolved Administrations in our objectives in the negotiations on this matter. I believe the honourable Member Dame Nia Griffith remarked during the Public Bill Committee in the other place:
“On procurement, the Welsh Government go as far as to say that there may be scope for businesses in Wales to take advantage of the provisions included in the UK Government procurement agreement, and that some Welsh interests in procurement were protected during the engagement with the Department for International Trade.”—[Official Report, Commons, Trade (Australia and New Zealand) Bill Committee, 18/10/22; col. 77.]
As we move toward implementing these agreements, there have already been preliminary discussions on the drafting of secondary legislation. This Government will continue conversations with the devolved Administrations as drafting progresses, in keeping with the Bill’s passage. I also remind the House of the commitment we have made never to use the power in Clause 1 without consulting the devolved Administrations first. I restated this commitment at Second Reading, and I assure noble Lords that this is a sincere commitment that His Majesty’s Government will honour.
On consulting the English regions, they do not have the same role in implementing legislation and these agreements as the devolved Administrations. Given our approach, as demonstrated to date, to engagement in all areas and with the industry and other stakeholders, and given our commitment to continue to consult with appropriate authorities on the use of the power in Clause 1, I believe that the amendment is unnecessary. This was also the conclusion when similar amendments were tabled in the other place. I therefore ask the noble Lord to withdraw the amendment.
Lord Purvis of Tweed (LD)
Before the Minister sits down, may I ask about the interaction of this Bill and the Procurement Bill and the commitments on consultation? We know that Clauses 1 to 4 of this Bill address devolved areas for Wales and Scotland, and that this Bill introduces the concurrent mechanism. The former Secretary of State, Anne-Marie Trevelyan, said that regulations made under these powers that relate to devolved competencies would not be made concurrently without seeking the consent of the devolved Parliaments or, at the very least, consulting with them. If this Bill is repealed by the Procurement Bill and these elements of the Procurement Bill do not apply to Scotland, what is left of the consultation mechanisms for the devolved Administrations in this Bill? They would be repealed by the Procurement Bill.
Lord Johnson of Lainston (Con)
I always thank the noble Lord, Lord Purvis, for his academic approach to these debates, and I am grateful to him for those points. The former Secretary of State was right when she said that we were seeking consent; the Government have sought consent, and we have consulted. Regarding the relationship between this Bill and the Procurement Bill, I am not sure what the relevance of consultation is in relation to Scotland. A number of the actions in this Bill will continue, since they are not being cancelled by the Procurement Bill. I understand that the Procurement Bill will retain the other parts of this legislation. Certainly, we have committed very clearly to making sure we seek consent and consult.
Without prolonging this debate, I think it is essential—I have said this before—that we engage with everyone in this country and all the devolved nations to ensure that we create trade deals that benefit them. I am sure the noble Lord will be aware of and celebrate the opportunities that his own food and drink industry will have under these new agreements. We are reducing tariffs on a great variety of spirits so that industry can sell more at lower prices or use that additional income to market its goods. All the manufacturers I have spoken to were extremely positive about those measures, which will, I am pleased to say, directly benefit Scotland. The intention here is to create powerful free trade agreements that work for the entirety of the United Kingdom. As a result of that, it makes absolute sense—not just in the specific legislative format but in a fundamental negotiating sense—that these are reserved powers for the United Kingdom, and that we have the opportunity to implement them.
Lord Howell of Guildford (Con)
I do not want to be academic, but I am still not entirely clear on what basis the consent is being withheld from the Scottish or Welsh Governments, even though I gather that it is not necessary—in the end, it will just go ahead anyway. What can be done to overcome some of the inevitable additional ill feeling that seems to wander generally over the division between reserved and devolved powers, in order to make this Bill sweeter than it will otherwise be? Otherwise, we will just be left with a bad feeling in the air and a sense that things are being steamrollered through because the precise letter of the law of the devolution agreements, devolution law and all the preceding legislation of preceding centuries says so. I am not sure that this is good enough if we are going to build a good relationship in the future between the two nations of England and Scotland, and the Principality as well.
Lord Johnson of Lainston (Con)
I thank my noble friend for his comments. Consent is either given or not given. For the reasons why, he must make inquiries of the various Assemblies that have not given their consent and ask them why they are not supporting this free trade agreement, which I think will bring them enormous benefits. We remain committed to the consultation process in all our activities. Frankly, it would probably be impractical not to do so in any event.
Lord Lennie (Lab)
My Lords, I am grateful to the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Howell, for their contributions. On the question that the noble Lord, Lord Howell, asked and the Minister tried to answer, the withdrawal of consent is probably a consequence of the lack of consultation—not necessarily the quality of the agreement but the lack of involvement in its development. This amendment is trying to obviate that for the future, so that if there is a formal consultation, it is seen to have taken place, and then an agreement on behalf of the UK is reached and can be properly explored—or not—throughout the UK. However, consent could not then be withheld by Parliament or an Assembly in one of the parts of the UK. That seems to me the main benefit of the amendment, but for now, I will beg leave to withdraw it.
Lord Lennie
“(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 statement
This amendment requires a review by the TAC before regulations implementing the procurement Chapters can be made.
Lord Lennie (Lab)
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”.
It continued:
“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.”
Baroness McIntosh of Pickering (Con)
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?
Baroness Bakewell of Hardington Mandeville (LD)
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.
Lord Lansley (Con)
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 13 April last year by the Trade and Agriculture Commission in relation to the Australia deal and on 16 June last year to the Secretary of State on the New Zealand deal. The purpose of that advice was to answer a number of questions. To characterise them generally, they were, “Do these agreements undermine our statutory protections and our ability to protect animal welfare and human health?”—and, to characterise again, the short answer in each case was “No, it does not”. So it seems me that the starting point, not least of Amendment 3, is undermined. It seems wholly unreasonable to ask for a report from the Trade and Agriculture Commission when the TAC has already had the opportunity to give its advice to the Secretary of State.
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.
Baroness McIntosh of Pickering (Con)
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.
Lord Lansley (Con)
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.
Lord Kerr of Kinlochard (CB)
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.
Lord Howell of Guildford (Con)
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.
Baroness Humphreys (LD)
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?
Lord Purvis of Tweed (LD)
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.
Lord Johnson of Lainston (Con)
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.
Lord Johnson of Lainston (Con)
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.
Baroness McIntosh of Pickering (Con)
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.
Lord Johnson of Lainston (Con)
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—
Lord Purvis of Tweed (LD)
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.
Lord Johnson of Lainston (Con)
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.
Lord Lennie (Lab)
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.
Baroness McIntosh of Pickering (Con)
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.
Lord Lennie (Lab)
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 15 June, which limited the time available for Members to scrutinise the Bill and for the International Trade Committee to publish its report. The Secretary of State for International Trade also failed to attend a meeting of the International Trade Committee to answer questions on the agreement on 29 June, despite a commitment to do so. This made it impossible for the committee to take account of her evidence on the new agreed date, 6 July, and still publish the report before the end of the scrutiny period.
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.
Lord Kerr of Kinlochard (CB)
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?
Lord Johnson of Lainston (Con)
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 11 January. Unlike my previous response, as has been alluded to, it was extremely short. The committee found that there was nothing to note on this Bill’s use of delegated powers. The Government are of course extremely satisfied that the committee is content with the use of the negative procedure in the Bill.
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.
Lord Lennie (Lab)
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?
Lord Johnson of Lainston (Con)
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.
Baroness McIntosh of Pickering (Con)
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?
Lord Johnson of Lainston (Con)
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.
Lord Kerr of Kinlochard (CB)
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.
Lord Johnson of Lainston (Con)
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.
Lord Johnson of Lainston (Con)
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.
Lord Purvis of Tweed (LD)
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.
Lord Johnson of Lainston (Con)
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.
Baroness McIntosh of Pickering (Con)
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.
Trade (Australia and New Zealand) Bill
Tuesday 14th March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-R-I Marshalled list for Report - (10 Mar 2023)
Lord Lennie
“(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 statement
Requires a review by the TAC before regulations implementing the procurement Chapters can be made.
Lord Lennie (Lab)
My Lords, I have two amendments in this group, Amendments 1 and 6. I was thinking that the noble Lord, Lord Purvis, would be here, but maybe the noble Lord, Lord Teverson, will cover for him in his absence—he may arrive while I am speaking, who knows?
I begin by thanking the Minister both for being available between Committee and Report and for facilitating a meeting with Mr Phil Goff, the New Zealand high commissioner in the UK earlier in the Bill’s passage; both were very helpful indeed. Amendment 1 would require a review by the Trade and Agriculture Commission, the TAC, before regulations implementing the procurement chapters can be made. The TAC, as we know, is the independent committee of expert specialists in a number of fields—animal and plant health; animal welfare; environmental standards and so on. Its role is to scrutinise a new free trade agreement once it is signed and to inform Parliament whether measures in the new free trade agreement are consistent with UK levels of statutory protection. The noble Lord, Lord Purvis, has arrived.
Last year, the then Secretary of State for International Trade, Anne-Marie Trevelyan, received confirmation that the Australia and New Zealand trade deals were indeed within that consistency, so one might wonder why we are putting down this amendment. It is not to score political points, or to attack the Government, but to ask TAC to consider the procurement chapters of these two free trade agreements. The TAC would need to be fine-tuned to do this by importing necessary expertise. In Committee in the other place, representatives of TAC agreed that it is only as strong or as weak as the parliamentary scrutiny process around it. We can see no reason to limit it to the agricultural aspects of agreements and not to extend TAC to look at procurement as well. Incidentally, it is regrettable that TAC’s role is limited to post the signing of deals, but that is not the concern of this amendment.
Amendment 6 would require an impact assessment of regulations made under Schedule 1 within 12 months, and every three years thereafter. These trade deals are not short-term, one-off deals: while predictions can be made in advance, they are generally vague or broad and wide of the mark, so impact assessments would consider what the actual situation is after time has passed, to better inform the future, and on a rolling basis. This would provide insight into the effect of these deals and help us learn lessons for the future. Whether the Government like it or not—I think they do not like it—these agreements set precedents for future trade deals. A number of concerns have been raised about these deals and it would be sensible to keep them under formal review and readjust expectations as we gain more knowledge. For example, on employment rights, the TUC has commented that the agreements do not contain commitments to ILO core conventions, and an obligation for both parties to ratify and respect those agreements.
On climate change, it is deeply concerning that vital commitments made to this House on climate change in regard to the Australian deal are not being upheld. Alok Sharma MP, COP 26 president, said on 1 December 2021, that the Australia deal
“reaffirms both parties’ commitments to upholding our obligations under the Paris agreement, including limiting global warming to 1.5°.”—[Official Report, Commons, 1/12/21; col. 903]
This final agreement does not uphold that important commitment. In other areas too—the NHS, small businesses, regions and particularly animal welfare, which I think the noble Lord, Lord Purvis, will speak about in a minute—there are further problems. So, an impact assessment set against these concerns would be very helpful to assess the deals and prepare the UK for future negotiations. I beg to move.
Baroness McIntosh of Pickering (Con)
I am delighted to follow the noble Lord, and I shall speak to Amendment 3 in my name. I congratulate my noble friend the Minister for the close interest he has taken in listening to my concerns—most recently in a phone call on Sunday evening. I apologise for intruding on his weekend.
My concerns in the background, and my reason for tabling Amendment 3 at this stage, are twofold. One, as the noble Lord opposite alluded to, is the need for an impact assessment, particularly looking at the impact of implementing the procurement chapters of these free trade agreements with Australia and New Zealand. What will the impact be on farmers, and indeed on the market for food within the United Kingdom, particularly in relation to lamb and beef? Secondly, in relation to the impact on the market for food, the impact assessment I am calling for must consider the production and food safety standards.
I am trying to impress upon my noble friend and the Government the plight of upland hill farmers, many of whom are tenanted farmers. I am most familiar with those based in North Yorkshire, where I had the honour to represent two different constituencies for a total of 18 years; I grew up in the Pennines in County Durham. Peculiar to those areas of the north of England is that perhaps 50% of the farms are tenanted. They also have very poor land but it does lend itself to grazing, and over the years they have done this extremely well. Therefore, they have thrived through our membership of the European Union and, most recently, the Basic Payment Scheme, through spring lambs and fat-store cattle.
I was particularly concerned to see in an article dated 5 March that it is estimated that in this financial year alone, the typical grazing livestock farm in the English uplands faces a drop in farm business net profit income of almost two thirds, to approximately £16,300. I would like to pay tribute to the work of Julia Aglionby, professor of practice at the University of Cumbria’s Centre for National Parks and Protected Areas. She predicts that the income will recover slightly to almost £23,000 over two years, before slumping back to £16,700. The ballpark figure is going to be between £16,300 and £16,700.
On that basis, the NFU fears that it is not going to be cost effective, as we move from the Basic Payment Scheme to payments for environmental and public goods, for farmers to farm in the uplands, certainly in the north of England, with which I am most familiar. So, they face a drop in farm income. Coupled with that is what I see as unfair competition and the lack of a level playing field. My noble friend Lord Inglewood will remember from our days in the European Parliament this elusive level playing field that we thought we would obtain at some stage in the European Union; it never happened, but I see it becoming more and more elusive as we go forward.
So, the purpose of this amendment is to look at how we can ensure, through proposed new subsection (2) of Amendment 3, that our standards of food production and safety will be met going forward. The NFU is concerned that there are no enduring safeguard mechanisms —that the mechanisms in place are for up to a maximum of 15 years.
I would like my noble friend the Minister to acknowledge when he sums up that, in its impact assessments for the two agreements, the Department for Business and Trade has modelled agriculture, forestry, fishing and semi-processed foods, which include the beef and sheep meat sectors, and these are estimated to see a fall of 0.35% in one agreement, and a minus 1.16% reduction in gross value added, respectively, relative to the base line, over the long run as a result of the FTA. We have to accept that some farmers will take the view that we are doing a deal with the devil.
Australia and New Zealand are very good producers of food. They have large tracts of land on which to produce their food, and they are going to come after our markets very aggressively. Regarding my noble friend’s department’s impact assessment, I accept there may be other areas under these agreements that may benefit, such as automobiles and whisky—which is close to my heart, coming as I do from Scotland—but I am here to argue for the plight of the hill farmer and the upland farmer, who are feeling very beleaguered as we speak.
Another source of concern that I hope my noble friend will address is how these imports are going to meet my test under proposed new subsection (2) in Amendment 3. I have had a note from the Food Standards Agency concerning the percentage of food coming into the UK from third countries, including EU countries, as “checked at port or point of entry”. As we will recall, imports from the EU, which may include Brazilian, Australian and New Zealand imports, have been temporarily suspended at our borders; I think they are due to be phased in toward the end of this year. But imports from Australia and New Zealand through the EU are not being checked at our borders at the moment.
What is concerning me more is that all imported high-risk food and feed from non-EU countries is subject to control at our borders. This includes 100% documentary checks to ensure that the consignment originates from both a country and establishments that are approved to export to this country, and food and feed safety assurances contained with the Export Health Certificate have been correctly completed, meeting our safety requirements. Additional identity and physical checks will be carried out, and the frequency of such checks vary between—if the figures are correct—1% and 30%.
The FSA says that typically, meat and dairy products fall into the 30% frequency, while fish and fish products fall into the 15% frequency, and highly refined products of animal origin fall into the 1% frequency. Lamb and beef fall within the 30% checks, so we are taking an awful lot on trust at our borders from non-EU countries —an example being Australian and New Zealand meat imports—under the terms of a free trade agreement.
The final thought I would like to leave my noble friend with is that the checks undertaken by local authorities in England are a sort of last-chance saloon; at the moment they are patchy, and I hope that enough resources will be made available to them. Those are my main concerns. This is yet another agreement which is asymmetrical in nature, and we are doing a deal which is going to be far more in the interests of Australian and New Zealand farmers than our own. Unlike other free trade agreements, it does not allow for a safeguard measure, so it is putting our own producers of meat, particularly lamb and beef, at risk. It also lays us open, both as domestic producers and consumers, to substandard foods coming in.
Those are the concerns that lie behind Amendment 3, and I very much look forward to hearing some reassurance from my noble friend when he comes to respond.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I wish to speak to Amendments 4 and 5, in the name of my noble friend Lord Purvis of Tweed, to which I have added my name. It is clear that the Government are extremely keen to foster trade deals with any number of non-EU countries. It is also clear that this could be very beneficial to our British farmers if they are able to export their excellent world-class produce to new markets—provided that they are not bogged down with unnecessary and exhaustive paperwork.
However, Australian and New Zealand exporters will in fact gain far more than our UK counterparts. The main tariff reductions are on the UK side. Trade with the UK is likely to be a very small proportion of Australia and New Zealand’s trade; they have other trading nations much closer to their shores. Their animal welfare standards are not as high as those in the UK, and there are no safeguards against Australian imports after 15 years—sugar after eight years, and dairy after six years. Even the previous Secretary of State admitted that the current deal sold UK farmers short.
Regarding tariff quotas, in year 1 Australia will access 35,000 tonnes of beef quota with no duty. This is an estimated 10% of the UK’s total import requirements. This will rise to 30% of total import requirements by year 10, which will be more than 12% of total UK production. It appears that the Government’s aim is to reduce the profitability and viability of our beef farmers, who produce some of the very best beef in the world.
Lord Lansley (Con)
My Lords, I will intervene briefly. We had a substantial debate in Committee on precisely these issues and I will not repeat the remarks I made then. I remind the House that my sister-in-law is a sheep and beef farmer in north Wales.
For these purposes, I draw attention to the fact that each of these amendments refers to the impact of the procurement chapters—on industry in Amendment 1, on farmers in Amendment 3, and so on. This allows the amendments to come within the Bill’s scope, because the Bill is about only the procurement chapters of the two trade agreements. But because the amendments are within scope and relate only to the procurement chapters, they essentially are pointless, since they do not allow for an impact assessment of the impact on farming; as far as I can tell, the procurement chapters do not impact on farming.
I looked at those chapters; I was a member of the International Agreements Committee, which looked carefully at these two agreements and reported to the House on them. Where New Zealand is concerned, the benefit of the procurement chapter in the short run is modest and principally relates to housing and access to procurement of national parks in New Zealand. Where Australia is concerned, the agreement essentially enables us to access procurements at a sub-federal level, but given the thresholds I am unaware of any likelihood of any significant impact on UK agricultural exports to Australia or vice versa, since these are not necessarily public procurements. The question is whether farmers and agricultural produce from Australia and New Zealand have access to the UK market more generally. All these amendments are pointless in this context since they relate only to the procurement chapters.
I hope we get on with this. When we last spoke, I said that I hoped we might have completed the passage of the Bill by early March. The whole point of the Bill is to enable these chapters to be brought into our domestic legislation and to allow the free trade agreements to be ratified and brought fully into force. I had hoped that we would have done it earlier than this, but thus far we have not.
I have one point on impact assessments, since the purpose is to try to get impact assessments. I still do not understand why those who are asking for these assessments to be made have not recognised that the Trade and Agriculture Commission produced reports last year on each of these free trade agreements. The International Agreements Committee and the International Trade Committee in the other place had commitments from Ministers that there would be a monitoring report every two years and a comprehensive evaluation of the free trade agreement after five years. That seems a perfectly reasonable proposition, so I cannot see that these amendments have either procedural or substantial merit.
Lord Inglewood (Non-Afl)
My Lords, I think your Lordships must agree that I am a very fortunate Member of your Lordships’ House, because with the possible exception of the noble Lord, Lord Lansley, everyone has been speaking on my account as a Cumbrian hill farmer. I should declare that interest, and that I am president of the National Sheep Association and of the Livestock Auctioneers’ Association.
The fundamental concern of agriculture about this seems to go back to the fact that when you have a carcass it is not really very clear whether it has been nurtured under benign environmental conditions or malignant ones. Equally, you cannot necessarily tell very easily, because of complicated scientific aspects that I had explained to me but do not entirely understand, whether it has had hormones introduced into it, and so on and so forth.
As I understand the law, under the international agreements, lamb in particular and beef from the two countries that we are talking about can be imported into our country. The legal impediment rests not there but with the fact that we are, under the WTO rules, allowed under certain circumstances to use welfare and environmental standards, as part of our domestic consumer protection legislation, to prohibit such products being placed on the market.
Against that background, what is needed in the context of the wider concerns that we have been touching on seems to be some kind of mechanism so that the British consumer and the British farmer know whether carcasses that might come into this country actually adhere to the appropriate standards. Speaking for myself as a Cumbrian hill farmer, I have no problems about competing with animals that have been reared in accordance with the standards that apply here. My worry is that you might in theory be undercut by products that come in from outside that do not adhere to those standards, for the simple reasons that the noble Baroness, Lady McIntosh, gave about the level playing field. The difficulty in theory is establishing whether that is the case.
Therefore, the question I put to the Minister—if he cannot answer me now, I ask him to do so by letter—is whether the Australian and New Zealand Governments will have proper farm assurance schemes in place to enable the traceability of the carcasses so that they can be identified. That seems to me, and to a number of other people who have been thinking about this, probably the most effective way of ensuring that this provision is properly adhered to in terms of our own domestic production. That would go a very long way towards allaying a lot of the concerns that have been expressed.
Baroness Bennett of Manor Castle (GP)
My Lords, I rise briefly to offer general support for the direction of all the amendments in this group. I am sure that the Front-Benchers will have more to say. In response to the noble Lord, Lord Lansley, I note that the commitment from the Minister to offer regular impact assessments is not the same as something written into the Bill. The Procurement Bill contains increasing promises from the Government for more local and national public procurement for schools, hospitals, prisons, et cetera. I am not quite sure of the timing or how this interacts with the nature of the procurement in this Bill.
I want to pick up on a point from the noble Baroness, Lady Bakewell of Hardington Mandeville. She noted concerns about ongoing negotiations with Canada and Mexico. These amendments can also be taken as a broader expression of concern about the potential impact of opening up our markets to agricultural products from around the world, produced under far worse environmental, animal welfare and public health conditions than the standards we have been used to under EU membership and those of our own producers.
For anyone who has not seen it, there is a very interesting report on Politico reflecting on discussion around the potential CPTPP membership in which Canada is pushing with Mexico to have the same market access for agriculture as Australia and New Zealand have won under their deals with the UK. If we look at Mexico’s production conditions, we see that its beef imports have very high carbon emissions. Canada uses farrowing crates, tail docking, teeth trimming and lots of other practices that we would regard as wholly unacceptable in the pigmeat industry.
These amendments are to be taken together as a real expression of concern about what kind of food we will potentially see on our plates and the environmental impact of the food our farmers will be producing.
Lord Purvis of Tweed (LD)
My Lords, I apologise to the House and to the noble Lord, Lord Lennie, for missing the first minute of his contribution.
I agree with the noble Baroness, Lady Bennett, about why at this stage of the Bill we are seeking to raise some of the concerns that have already been expressed. It is not just we who have been raising issues about these agreements in particular. I can quote from a website that says 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.”
That website is Ready for Rishi. As part of that commitment, he said that as Prime Minister he would introduce a new “Buy Local” campaign. He would also:
“Introduce a new target for public sector organisations to buy 50% of their food locally, to back British farmers and improve sustainability.”
The noble Baroness, Lady McIntosh of Pickering, raised this in Committee. In discussing procurement, we are justified in trying to find out how that target from the new Prime Minister of 50% of public sector procurement through buying local will be implemented, especially since that same Prime Minister has recognised the concerns about these agreements we are debating.
It is also worth noting that there have been significant concerns among not only farmers in England but those in Scotland, to which I will refer, and Wales. Today’s Order Paper notes that Welsh legislative consent has been withheld. We should take seriously why the Welsh Government and Parliament have not been able to provide legislative consent in these areas. We also know the concerns of the Scottish Government.
Before I progress, I thank the Minister for his proactive engagement. I support his commitment to seeking opportunities to promote British exporters. The level of engagement he has shown to the Front Benches and others is to his credit and that of his office. I appreciate his willingness and engagement. He and others, such as the noble Lord, Lord Lansley, are keen to see this agreement put in place. From these Benches, I wish to see agreements where there are opportunities for UK exports, especially in rural procurement. As my noble friend Lady Bakewell has indicated, we will not be shy in raising concerns about what the impacts may be, especially where the Government say when it suits them that these either are gateway agreements for CPTPP or will set precedents. I agree with the noble Lord, Lord Lennie, about this. It is right that we test the impact on our domestic industries.
Lord Lansley (Con)
Going back for a moment to the point the noble Lord made earlier about the sale of food to public bodies and these procurement chapters, does he recognise that the purchase of food locally by schools, hospitals and the like will almost certainly not be, as I judge it, within the definition of covered procurement and not above the threshold; and, therefore, the procurement chapters, in so far as they extend procurement opportunities to Australia and New Zealand providers under this Bill—and under the Procurement Bill—really would not be relevant to that local provision of food?
Lord Purvis of Tweed (LD)
I am grateful to the noble Lord; he knows I respect his work on this area very much. I would like the Minister to confirm that that will be the case, because I am not convinced. I see the noble Baroness, Lady Neville-Rolfe, in her place. She was kind enough to have a meeting with me about it. I am not yet convinced, because of the elements within the Procurement Bill which will require there to be no discrimination for any of the treaty countries for public procurement in this country, that what he is arguing for, which is effectively a carve-out, will in fact be the case. My understanding is that under the Procurement Bill, we are unable to discriminate against any of the treaty suppliers. I am not sure that a public body in this country would be able to discriminate. I hope the Minister will be able to clarify that point.
The reason this is relevant and why I quoted the then candidate for leader of the Conservative Party’s commitment to 50% of public procurement in this country being local is that I do not know how that squares with what will be the legal requirement under the Procurement Bill that we are then unable to discriminate against Australian and New Zealand produce which will enter the market. I do not know how that squares.
I am simply asking the questions, because we have not had more meat on the bone, if that is not too inappropriate an analogy, about what has been published as a government commitment and is in the Procurement Bill. If the noble Lord has any other answers, I am happy for him to intervene on me. I do not know how he knows how this might be squared. I do not at this moment. That is why part of our agriculture sector is also questioning how these two commitments will come together. The different sequencing of this Bill and the Procurement Bill is relevant. Because it also sets the precedent for Canada and Mexico, with new produce coming in, and if these are gateway agreements for CPTPP, we are looking at potential competition with all CPTPP members for public procurement of produce. If you are a public body in the UK looking at cost-effective procurement of food for schools or hospitals and you are unable under the Procurement Bill to discriminate against Australian or New Zealand produce or that from any CPTPP country and state that there is local producing, similarly, I do not know that it is matched.
I hope that, at this late stage, the Minister can offer some reassurance. I hope that he is able to explain how these commitments to 50% of procurement can be matched, as well as give further reassurances, specifically on the impact on tenant farmers and biodiversity. There are genuine concerns here, I do not think they will go away and we need to offer that reassurance to these sectors, which are so vital to our rural economy.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, I draw Members’ attention to my entry in the register of interests, although I do not believe there is any conflict relating to our debate today. I am also grateful for the apology of the noble Lord, Lord Purvis, for being slightly late. I was fractionally late for Questions this afternoon, and was called on to resign, among other things. I hope the House does not mind that I have not taken that too seriously.
I am delighted to be speaking on Report of this very important Bill. If it is appropriate to make a personal comment, I have deeply appreciated the high level of engagement with the Opposition Front Benches, my noble friends and noble Lords across the House. I do not want to put words into people’s mouths, but I think we agree that it is a fundamentally good thing to do a trade deal with Australia and New Zealand. I was watching the news yesterday and seeing the extraordinary advances we have made in collaboration, particularly with Australia, in our defence. It will benefit the economy in many areas in the north-west of this country, among other parts of this nation. The sheer sincerity of the brotherhood between our nations should be expressed very clearly. I very much hope that if the high commissioner of either Australia or New Zealand—I am grateful to the noble Lord, Lord Lennie, for engaging with Phil Goff recently—is watching this debate, they know that the fundamental spirit of the House is for a successful conclusion of this process and a good and successful trade deal with Australia and New Zealand.
At the same time, I am very aware of the issues that trade deals create. I am certainly not triumphal in any way about trade liberalisation or the effects that this trade deal will have on individuals and farming communities. I have been very sensitive to those discussions over the past few months and take this very seriously. I express my personal view that we must support our farming community, and this is unquestionably the view of this Government as well. It is important to have that on the record.
Baroness Bennett of Manor Castle (GP)
I am aware that the Minister suggested that there be no interventions, but I have to say one word: mulesing. That is a dreadful animal welfare issue in Australian sheep farming.
Lord Johnson of Lainston (Con)
I thank the noble Baroness for that intervention. It is not my plan in this debate to be triumphal or to score points or whatever in terms of coming backwards and forwards. I have done a great deal of work in order to satisfy myself that when it comes to mulesing, the reports suggest that a tiny percentage of meats that would appear in this country—I am only going on the reports that I have been given—would be at risk of being from that practice. I have also been encouraged by reports that I have read about changing practices and standards in Australia. In particular, farmers who come under the Australian farm assurance programme certainly insist on anaesthetising before mulesing. I do not want to go down an alleyway, but the point is that great efforts have been made to ensure that, broadly speaking, our standards are aligned.
I have two more important points. The New Zealand Government have introduced a significant upgrade to their animal welfare standards. I cannot recall the name of the Bill, but if noble Lords wish to look, they will see that they are introducing a whole raft of new animal welfare standards and general environmental standards for farming, which will have enormous ramifications for their production and align them even further, if not go even further than we do. I spoke yesterday, specifically ahead of this debate, to the Australian high commissioner and raised this issue again, as I did with the Trade and Agriculture Minister who I met a few months ago. This has been my main issue, particularly when speaking directly to interlocutors about animal welfare standards.
They have confirmed to me that they are doing further work, which is very important. The Government of Australia have announced the banning of other practices, not associated with our exports but relating to live animal exports and so on. The direction of travel is very positive. We have not celebrated enough that our work in negotiating these trade deals has helped to drive up standards in both countries. I applaud our negotiating team for doing that, and applaud the debates that we have, with leadership from individuals such as the noble Baroness, Lady Bennett, ensuring that these areas are properly highlighted and that we can draw attention to our interlocutors and set standards, and that our negotiating partners know that we have these standards and that we wish to be aligned on them.
I have only a few more points to make. The noble Baroness, Lady McIntosh, made some very relevant references to the Food Standards Agency. I wrote to her and the noble Lords, Lord Purvis and Lord Lennie, covering some of the questions raised in the last debate. This issue was raised. I have interviewed staff there to ensure that they carry out physical checks at the border for Australian and New Zealand products. They do not check every container, and frankly it is quite right that they do not. It would be an extreme impediment to trade, especially for food produce. However, they take a very proactive approach to ensuring that our standards—which, to reinforce the point, are not derogated in any way by these trade Bills—are upheld.
On top of that, the noble Lord, Lord Inglewood, raised a point about whether we can be comfortable of certification on the ground. In my recent call with the Food Standards Authority, I particularly covered the topic of Australia, which has a local assurance system, as do we. To be eligible to export, a farmer must sign up to the federal export assurance scheme; I cannot recall its name, but your Lordships will know what I mean. Therefore, vets who are under obligation to perform their duties—
Lord Inglewood (Non-Afl)
The question that follows from the helpful remarks of the Minister is: are the British Government confident and fully in line with what those schemes have to say?
Lord Johnson of Lainston (Con)
I was just coming to that. I may have taken a bit too long to get there but I am trying to reassure noble Lords by describing in detail the lengthy process of assurance that Australia provides us with. It is part of the global trading system and not necessarily unique to Australia. We must do the same, as I understand. If I am wrong, I will ensure that this is corrected, but we must do the same with any agricultural or meat exports that we send to Australia.
Are we confident that Australia is upholding their system and managing it properly? The answer is yes. I have been impressed with the calls that I have had around this subject. It is a detailed and complicated process of assurance that ensures that we are comfortable that what we receive is indeed what is advertised. I do not want to be called back here if there is a case where that does not happen, because clearly that is not my intention, but on whether we are confident about the processes in place, the short answer is yes.
Regarding South American beef being passed off under British beef titles, I understand that this was only from one retailer, and the National Food Crime Unit is investigating. This struck me as an isolated case. Forgive me that I do not have all the details, but the major supermarket retailers have all denied any knowledge of this and it has not affected them. This is a unique case. I am happy to have someone write to the noble Lord because it would be interesting to find out a bit more about this, but it is not relevant in this instance. It does not seem to be widespread, but is specific. That it has been caught and is being investigated is very important.
I come to a conclusion—
Lord Purvis of Tweed (LD)
Can the Minister address the commitment that the now Prime Minister made for 50% of public sector procurement to be sourced locally? Is that government policy? How does that interact with the legal requirements in the Procurement Bill that a public body in this country would not be able to choose a local producer over a treaty supplier producer, on that basis?
Lord Johnson of Lainston (Con)
I appreciate the noble Lord’s comments and was about to come on to that when I said “conclusion”. Sadly, my conclusions can run to several topics, the noble Lord’s being one of them.
It is correct that the procurement legislation prohibits a nationalist tilt towards procurement, which is what we want. When it comes to government procurement, we want the highest quality products at the lowest possible prices, and I would like to think that they will be British products. It will reassure this House to know that 81% of all beef sold in this country is under British brand labels. Only 19% international beef is sold in this country in the first place. The assumption is that you are already looking at a very high level of local procurement. A 50% threshold would be logical for something such as beef, which already fits into that.
There is a further question and further investigation regarding whether procurement can be assessed in terms of other relevant factors. I am happy to have a further debate about that in general. It can apply to a wide range of concepts. It could even apply to how energy is sourced and supplied. There is always work defining what concepts such as sustainability or relevance to the environment could be in terms of transportation distances and so on. They are discussions to have. I have been having discussions in other areas, for reasons not linked to these trade discussions, on whether these factors can be brought to bear in procurement. We are very wary of introducing anything other than straightforward procurement rules, but I assure the noble Lord that—as with beef, where 81% is already UK beef—it would seem logical that a very high proportion of produce is sourced locally.
Lord Lansley (Con)
At the risk of delaying us on this point, the access that is given through these procurement chapters and for treaty state suppliers under the Procurement Bill is to cover procurement, which means procurements larger than the threshold amounts set out in the schedule to the Procurement Bill. For example, for local food production for a set of schools, this would have to be a procurement over £213,000. In truth, the issue is not whether there is an Australian company that is likely to bid for such a procurement, because these procurements will be smaller than that. It is whether beef from Australia is in this country and in circulation in their market which might then be used by local suppliers—but then they are a local supplier to the school.
Lord Johnson of Lainston (Con)
I have appreciated my noble friend’s extremely positive interventions and applaud wholeheartedly his phrase, “Let’s get on with it.” He has also been extremely helpful in pointing out the specifics of the Bill and the difficulty of attaching these sorts of amendments to it, although I am very sympathetic to the overall philosophy of the desire for proper impact assessments, which we have had and agree to wholeheartedly in terms of the two-year and the five-year monitoring report. I stress again that this treaty does not create a precedent. However, it does create a model. I am very impressed and support wholeheartedly the flexibility of this agreement because it will allow us and allow noble Lords to call Ministers to account on a constant and rolling basis concerning the effectiveness of these trade treaties.
I believe that I have covered most of the points raised. I am very happy to continue a dialogue around these and any other measures that may not have been covered on this important piece of legislation. We believe, and I believe passionately, that this trade Bill is a good thing for this country. It will be of huge benefit to our citizens and our consumers. It will give us enormous additional security and allow us to have a closer relationship with two nations that have been, since their founding, sister nations of this country.
I am continually being asked by the representatives of Australia and New Zealand when this treaty will come into force because, as soon as it does, and only then, their businesses and citizens, and ours, will be able to take advantage of it. I call on this House to support the Government in this mission. I ask the noble Lord, Lord Lennie, to withdraw his amendment, and for the noble Baroness, Lady McIntosh, and the noble Lord, Lord Purvis, not to move theirs.
Lord Lennie (Lab)
The TAC covering procurement seems to be a future possibility, and I welcome the Minister’s comments on it. On the questions of food standards and quality assurance that noble Lords have raised, we will wait and see. We will have a review in two years and a conclusion to that in five years, and we will find out whether the assurances that we seek on food standards have been maintained. I do not think that there is any doubt about this being a gateway agreement: it is clearly to do with the CPTPP. The impact assessment that we are calling for is a one-off. This is the first time that we have negotiated a trade deal for some 45 years. To make sure that we have covered all the bases and got things right, we thought that a review—rather more frequently than the five years offered—would have been better. I beg leave to withdraw the amendment.
Lord Johnson of Lainston
Member's explanatory statement
This amendment inserts a word missing from Clause 2(1)(a).
Lord Johnson of Lainston (Con)
My Lords, Amendment 2, in my name, is a minor and technical amendment that has been tabled by the Government to correct a typographical error in the Bill and clarify the power available to Ministers of the Crown or a devolved Administration under Clause 1. I am very grateful for noble Lords’ scrutiny, which was instrumental in highlighting this typographical error in the Bill. In particular, I thank the noble Lord, Lord Kerr, who is not in his usual place, and my noble friend Lady McIntosh, for highlighting this issue in Committee. If I may say so, their laser focus on detail in the Bill shows the real value of your Lordships’ House in ensuring that legislation is as robust and clear as possible. The Government are very grateful to noble Lords for highlighting this issue. I beg to move.
Lord Lennie
“(2A) This Act expires at the end of the period of two years beginning with the day on which it is passed.”Member's explanatory statement
Adds a sunset Clause to the legislation.
Lord Lennie (Lab)
I rise briefly to speak to Amendments 7 and 8 in this group. These two amendments would sunset the ability to make amendments to two years after the law passes or the UK’s accession to the CPTPP. Incidentally, the Government previously said that accession would happen last year, but, as I am sure we are aware, it has not yet taken place.
The Explanatory Notes to these deals state that each party to the free trade agreement should ensure that its domestic legislative framework is consistent with the obligations in the FTA. The UK-Australia and UK-New Zealand free trade agreements require changes to domestic procurement law. Therefore, why not have sunset powers in the legislation? Is there any expectation that achieving this intention would take more than two years, and are there concerns that constant updates would be required for whatever reason? If so, would it be right to do so for more than two years in any event? If accession to the CPTPP will change our trade relationship with Australia and New Zealand, will a domestic legislative framework need to be updated in a manner not possible within the powers in the Bill so that it is aligned with the CPTPP and these deals if they are to coexist? A series of trade experts have commented that the UK will be a rule-taker, not a rule-maker, when we join the CPTPP. The Minister may perhaps wish to comment on this interplay between the Australia and New Zealand trade deals and the CPTPP. I beg to move.
Lord Johnson of Lainston (Con)
My Lords, I turn to Amendment 8 specifically, which seeks for the Bill to lapse when the UK joins the CPTPP. Bilateral free trade agreements, such as these signed with Australia and New Zealand, do not lapse due to membership of plurilateral agreements such as the CPTPP and the WTO Agreement on Government Procurement. They exist alongside each other—that is important to note—with the UK having separate and continuing commitments under each. This is already the case with the numerous bilateral trade agreements that the UK has with members of the GPA, such as Canada, Switzerland, the Republic of Korea, the EU and Ukraine, to name a few.
I emphasise that the procurement chapters of the Australia and New Zealand agreements will not be superseded by the UK’s accession to the CPTPP. Accordingly, the power in the Bill will still be needed when the UK has acceded to the CPTPP, to implement future modifications to the Australia and New Zealand agreements. In light of this, I ask for the amendment to be withdrawn.
Trade (Australia and New Zealand) Bill
Monday 20th March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-R-I Marshalled list for Report - (10 Mar 2023)
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, it is with deep regret that the UK Government have been unable to secure legislative consent for this Bill from the Scottish Parliament and the Senedd. We have also not been able to secure a legislative consent Motion from the Northern Ireland Assembly, given the lack of a functioning Executive. This is disappointing, given that the same approach was followed in the Trade Act 2021, for which the Scottish and Welsh Governments did recommend consent.
The Government have sought to agree compromises with the devolved Administrations. However, despite the best efforts of officials and Ministers, we have not been able to reach an agreement with the Scottish and Welsh Governments. I remind noble Lords again that during the passage of the Bill and the deals it implements, the Government have undertaken extensive engagement with the devolved Administrations, including ministerial meetings, official-level meetings and meetings of ministerial fora, and there were 25 chief negotiator calls with the DAs regarding the Australia free trade agreement alone. In addition, as I have made clear in each debate on the Bill, I reaffirm the UK Government’s commitment to consult the devolved Administrations before exercising the concurrent power in the Bill. I beg to move.
Lord Lennie (Lab)
My Lords, I thank the Minister for taking through the Bill, which is a first for both the Minister and the country—our first trade deal signed following our exit from the European Union. The Minister’s enthusiasm for the Bill was always evident throughout its passage. We now have a trade arrangement with Australia and New Zealand. We will wait to see the overall and specific effects, particularly upon our agriculture sector. While the overall impact is predicted to be very limited, a factor caused by the huge distance between Australia and New Zealand and the UK, there were some specific concerns about certain Australian farming methods and the effect on small hill farmers in the UK. I suspect that these account largely for the failure to get agreement from the Scottish and Welsh Governments.
My thanks go again to the Minister and his team of advisers for their openness and, on this side, to Milton Brown, who again has shown good judgment in facilitating the progress of the Bill.
Lord Johnson of Lainston (Con)
My Lords, it has been a pleasure to take my first Bill through your Lordships’ House. I thank noble Lords for the constructive approach that has been evident throughout the Bill’s passage. We have had robust discussions and debates on the Bill. Likewise, I have had the privilege in recent weeks of engaging with Peers outside the Chamber, and I have benefited from those conversations, which have been in-depth and valuable. The experience, diligence and practical knowledge of noble Lords have challenged and tested the strength of the Bill and its underlying trade deals. I am sure noble Lords will agree that this provides reassurance to the public on the quality of our democratic processes, our accountability and the constructive challenge function of your Lordships’ House. It remains for me only to give a few specific thanks to noble Lords and others before we complete our consideration of the Bill.
First, I thank the Opposition spokespersons, the noble Lords, Lord Lennie and Lord Purvis of Tweed, for the constructive way that they have continued to approach the scrutiny of the Bill—as well as the additional work outside in engaging with our various high commissioners, which I personally appreciated very much.
I pay tribute to my noble friend Lady McIntosh of Pickering for the valuable conversations that we have shared on this legislation and her continued championing of our important agricultural sector. I hope that she has been reassured throughout the Bill’s passage through this House of the Government’s commitment to maintaining our high food standards and safeguarding measures for this sector and UK farmers within both deals. It was due to the scrutiny of my noble friend Lady McIntosh and the noble Lord, Lord Kerr, that we identified the minor drafting error in Clause 2(1)(a), which has subsequently been corrected.
I thank my noble friend Lord Lansley, whose knowledge, frankly, makes my job all the easier as he makes the points in my speech before I get the chance to do so. It is absolutely right that I also thank the noble Baroness, Lady Hayter, and all the members of the IAC for their considered input.
This has been very much a team effort. Behind the scenes, the extraordinary Bill team have put in an unbelievable amount of effort. My thanks go to: James Copeland, Thomas Bingham, Donald Selmani, Jack Collins, Alex Garcia-Pineiro and Catherine Ajani. I also thank my private secretary Sehar Shaheryar and other officials who make up my private office, led by Simon Moore.
Finally, I thank the parliamentary staff, the doorkeepers and the clerks for their professionalism and continued support and to your Lordships’ House.
The Bill provides a power to give effect to our procurement commitments within these agreements, improving three areas of our existing procurement legislation in the UK. We will see benefits to our public services and companies trading in these partner countries—ultimately, unlocking billions in government contracts in a more secure way than ever before.
In conclusion, the Bill will achieve the essence of our post-Brexit vision of Britain. Some noble Lords have questioned the presence of the Government’s trade agenda during the Bill’s passage. In response I say: here it is. These deals guarantee a global interconnectedness of trade deals, with the United Kingdom at the very heart of these new routes, meaning new opportunities for our businesses and citizens. This will result in new markets for our goods and services and new ways to travel and share our cultures. To our friends, trading partners, clients, suppliers, brothers and cousins in Australia and New Zealand, I say, “Hold tight! The UK is coming.” I reiterate my thanks one final time and, with that, I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I apologise on behalf of my noble friend Lord Purvis, who is, unfortunately, unable to be here this afternoon. We thank the Minister for his comments, as well as his patience and expertise during the passage of this Bill. We thank the Bill team for their help and support, as well as the Labour Front Benches and Cross Benches. We also thank Elizabeth Plummer in the Liberal Democrat Whips’ Office, without whose help I do not think that my noble friend Lord Purvis and I would have been where we are today. We support the passage of the Bill and thank the Minister for his help.
Baroness McIntosh of Pickering (Con)
My Lords, I congratulate my noble friend on steering his first Bill successfully through the House—my congratulations go too to the whole Bill team. I am grateful to him for the time he took at every stage to talk me through. He knows of my disappointment that the Scottish Government have withheld their consent, and that this is not the deal that the British farmers would have hoped for; but we live to fight another day and I look forward to future trade Bills coming through.
The Earl of Sandwich (CB)
My Lords, I know that my noble friend Lord Kerr would have loved to be here. I am speaking on behalf of the Cross Benches. I was a member of the IAC until January; the Minister will remember that we had some animated conversations when he first came on the scene. He has kindly sent me a handwritten letter since then. I was sorry to miss the debate last week on agriculture but I welcome the assurances that he gave then. I am speaking now only to congratulate the Minister on taking this enabling Bill through to the end. I am glad that he has obviously enjoyed the exercise. He is not going to be one of those uncomfortable Ministers on the Front Bench, if I can put it that way.
I remind the Minister of one thing that we discussed: the need for HMG to develop a proper trade policy that explains to people what the UK stands for; that is what he was talking about just now. By this I do not mean a checklist but a framework for FTAs in which there is more mutual understanding, in advance, of the issues involved. This does not breach secrecy rules but helps the process of consultation with stakeholders—and there are many stakeholders.
We said in our report that the FTA was politically significant because it offered an insight into the Government’s vision for trade in the absence of a policy. Australia and New Zealand was a relatively easy start in this as we have so many common values and standards with them, but they are not typical of the CPTPP, which is coming quite soon and offers much wider challenges. All I ask is that the Minister and the department continue the dialogue with the IAC that was already started with the previous Secretary of State; as the Minister knows, it is an ongoing process, and perhaps he could confirm that in his reply.
Lord Howell of Guildford (Con)
My Lords, I offer my congratulations to the Minister for skilfully conducting the debates on this important Bill, which I think will lead to much greater things in our future. I want to put before him three issues, almost housekeeping issues, that have arisen during the handling of the legislation, one of which has just been mentioned by the noble Earl, Lord Sandwich.
I declare an interest as a member of the International Agreements Committee, where the issue of trade policy and how specific or general it should be has been a matter of lively discussion. That is of course relevant to everything that we have been talking about.
I ask the Minister to keep the three points that I want to comment on in mind when we enter into future discussions on these sorts of areas in FTAs, of which there are going to be plenty more. First, the CRaG system—the Constitutional Reform and Governance Act 2010—has come under a bit of strain, and the question has arisen as to whether, when the other place resolves that something should not be ratified, the 21 days that then follow are enough to get the appropriate debates organised, or whether in fact the Government are not obliged to have a debate and maybe it does not fit into parliamentary time and the net effect can be that there is no debate at all. Perhaps that is an area that needs looking at again.
Secondly, the whole of the CRaG system depends on the assiduity, energy and powers of the committees. The resources on the clerical and research side of many committees, including all the ones that I have served on for 30 years, have been second to none, and have been particularly superb here in the House of Lords itself—but are they enough, given the size and number of the treaties that are coming through? We are not even talking about the EU treaties that are handled by the International Trade Committee; we are talking about thousands and thousands of treaties and agreements, let alone instruments, pouring through day by day. Today’s giant Executive generates a continuous flow, a cascade, of these things. Do the committees have the resources and underpinning that committees in similar parliamentary systems to ours, here in Europe and elsewhere, seem to have? Should there have been harder thinking about whether, in a modern society with a modern Parliament trying to hold the Executive to account, the resources of committees are the key—the physical resources, clerical resources, research resources and back-up, and the power to summon and so on. These are all matters of lively discussion that have arisen in this area.
My third point is a bit of a puzzle, but we are going to hear a lot more about it: the question of consent from the devolved Administrations. I need to have one thing clarified for me. I thought foreign policy was a reserved matter under the devolution legislation that we passed through both Houses. When the Holyrood Parliament refuses consent, I want to know under what powers it is doing that. As the Minister has indicated, that does not actually stop a Bill proceeding and being enacted, but it is a rather curious situation when, if the devolved Administrations have views on this, they can just sit there and not provide consent. Is it because they think Scotland should have some separate relationship with Australia and New Zealand—I cannot believe that is the case—or is it simply some inner procedural matter where they do not feel there has been adequate consultation? Either way, it is a very uncomfortable situation to encounter. My noble friend has handled it excellently, but these things sit there and require some hard thought if future Bills of this kind, of which there will be many, can be conducted in a reasonable way where Parliament feels that it really is getting a grip on what is happening.
Lord Johnson of Lainston (Con)
I greatly appreciate noble Lords’ comments. I think I was so keen to get this Bill through that I slightly jumped the gun. I apologise to those noble Lords who were waiting to speak. I greatly appreciate the personal comments towards my own enthusiasm. I have hugely enjoyed the process of working with so many noble Lords in the first of what I hope will be a series of very exciting, exhilarating and profitable trade deals for the whole of the UK.
I have always been very specific, as have the Government, that this is a journey. We are very keen to hear how we can engage better. It is absolutely in the interests of the Government and these trade deals that there is a broad consensus around their power and effect to elevate our economy to new heights; otherwise, we will not be able to broadcast the ramifications and specifics of the trade deals to the country and people will not take advantage of them. Personally, I am continuing to engage at all possible points.
I am delighted to answer a few of the questions. In terms of the committee resourcing, I will certainly take that away. I thank the noble Lord, Lord Howell, for raising that. The IAC under the noble Baroness, Lady Hayter, has done a very good job. A number of noble Lords have spoken to that today and during the debate. It is certainly worth making sure we have the resources in this House to ensure we are scrutinising according to the appropriate CRaG process.
The noble Lord touched on the consent issues. They have clearly been an important feature of the debates around these trade deals. It does not necessarily look like we have resolved them for future trade deals. However, as the noble Lord rightly said, these are reserved powers. If you consult your Walter Bagehot, as I did over the weekend, he makes it very clear and is absolutely right that the Executive should be making treaties and be given the freedom of rein to implement them across the entire United Kingdom.
Having said that, we have made huge efforts to consult and engage with the devolved nations. I personally made extra efforts, which I would not describe as effort at all but part of a necessary process of good governance and communication, to ensure that devolved nations felt that they had a way in to this process. It is absolutely confirmed that our negotiators spend a great deal of time with officials from all parts of the United Kingdom to make sure that their views are fed in. This reflects on the sort of trade we are trying to do in terms of the specific industries of these nations. We are one United Kingdom, and our power in negotiating global trade deals comes from that fact. It would be a great mistake to try to abrogate that for any reason. Having said that, consultation and communication are paramount to us, and I personally commit to them.
Lord Lansley (Con)
Will my noble friend confirm that the Bill is about incorporating into domestic legislation the procurement provisions and chapters of the treaty? Although treaty making may be a reserved power, the implementation of the procurement-related legislation reflects directly on devolved matters. That is why consent should have been provided by the devolved Administrations.
Lord Johnson of Lainston (Con)
I thank my noble friend for that comment. I do not believe that is necessarily the case, in the sense that this is a procurement Bill relating to a trade deal, so it is right that concurrent powers can be initiated. I believe that is the case. That is certainly how we have operated on the premise of this Bill.
We wanted to gain consent because that is good practice, but, as I say, we focused on consultation and communication, which has achieved the same goal. The whole point of this Bill and the trade deal it underpins is that it will lead to greater trade, more commerce and economic activity and greater wealth creation for the entire UK, which we should celebrate.
If I may come to a conclusion, I thank noble Lords for their extremely helpful scrutiny. I was glad to hear the noble Lord, Lord Kerr, mentioned. It proves the power and point of this Chamber. Any of the body politic who discuss significant revision of the powers of this Chamber should think very carefully about the actions taken on this Bill. Through the scrutiny of this House and the participation of individual Members, we have been able to draft a more effective Bill and draft it correctly, for which I am extremely grateful. I am very excited about the opportunities that the Australia and New Zealand trade deal will give us, our citizens and this nation. With that, I beg to move.
Trade (Australia and New Zealand) Bill
Wednesday 22nd March 2023
(1 year, 1 month ago)
Commons ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-R-I Marshalled list for Report - (10 Mar 2023)
The Minister of State, Department for Business and Trade (Nigel Huddleston)
I beg to move, That this House agrees with Lords amendment 1.
This Government amendment, tabled in the other place and agreed to, rectifies a minor and technical typographical error in the Bill, and clarifies the power available to Ministers of the Crown or a devolved authority under clause 1. The amendment inserts a single word, “different”, in clause 2(1)(a), making it clear that regulations under clause 1 may make different
“provision for different purposes or areas”.
The intention of the provision overall is to make clear that if it were wanted, the Government procurement chapters could be implemented differently for different types of procurement or in different sectors. The Government do not anticipate relying on this flexibility for the initial set of regulations implementing the procurement chapters, because the chapters will be implemented in the same way for the procurement subject to those chapters. None the less, it is important to retain the flexibility should the need arise in the future—for instance, if it were necessary or expedient for regulations to make provision implementing an amendment to the chapters in one way for utilities and a different way for local government.
The flexibility is also reflected in regulations that may be made to implement trade agreements within the scope of the Trade Act 2021. Section 4(1) of that Act similarly provides that regulations
“may…make different provision for different purposes or areas”.
However, I assure the House that any regulations made under the Bill can be made only for the purposes described in clause 1, namely implementing the Government procurement chapters and/or dealing with matters arising out of or related to those chapters.
Gareth Thomas (Harrow West) (Lab/Co-op)
Last week the Office for Budget Responsibility published figures on trade which changed the context for this debate on what is an apparently innocuous amendment from the other place. According to the OBR, we now face two years of declining exports, with a huge 6.6% drop in British exports this year, a further drop next year, and then an average growth in our exports of less than 1% for the next three years. We are reaping the results of the Conservatives’ failure to negotiate a better trade deal with the European Union or complete a trade deal with the United States, and the impact of significant cuts in support for attendance at trade shows and access to overseas markets is now all too obvious.
This amendment, and the debates in the Lords, strike me as a big missed opportunity—not for want of trying by Opposition colleagues—to start attempting to put things right. Abolishing the Department for International Trade and moving the deckchairs around in Whitehall is not going to hide away the Conservatives’ dismal record on trade and economic growth. We are lagging behind the rest of the G7 on exports to the world’s fastest growing economies in the G20, and nothing that the Minister has said so far, this afternoon or in previous debates, is going to improve the situation any time soon.
I do not want to detain the House too long, but while the amendment might involve the insertion of only one word in the Bill, the difference it makes does matter, both for what it does and what it does not do. Although there is support across the House to increase trade with our friends in Australia and New Zealand—particularly on the Labour Benches, not least because both countries are now led by progressive Labour Governments—there has also been widespread concern, among hon. Members and certainly outside the House, about what Ministers have negotiated, particularly in the trade deal with Australia. As I say, this amendment feels like a missed opportunity to begin to address those concerns.
We know that Ministers decided to throw British farmers under the bus, ignoring the concerns of the National Farmers Union. We know that the Prime Minister could have intervened, but did not. And we know that the desperation to get any deal meant that too much negotiating leverage was given up. One of the questions that the amendment raises is whether its wording in any way helps to offset, even just a little, those significant negotiating failures by the Government. We on the Labour Benches warned Ministers that the Australian deal would be used as a precedent by the other countries with which Ministers are negotiating, and as the Minister knows, that is exactly what is happening. The weaknesses in the deal that his predecessors negotiated are now being used to demand further concessions in our current negotiations, particularly by the countries with big agricultural interests.
I have considered carefully whether this amendment helps us to find any comfort following the devastating analysis of these trade deals offered to the House by the right hon. Member for Camborne and Redruth (George Eustice), when he explained, back in November, that we
“gave away far too much for far too little in return”.—[Official Report, 14 November 2022; Vol. 722, c. 424.]
He also said that
“the value of the UK agri-food market access offer was nearly double what we got in return”.
I have also considered carefully whether this amendment from the other place improved the scrutiny by Parliament, or even the scrutiny of how the regulations bringing into effect the procurement chapters of these trade deals are implemented. If the amendment had forced Ministers to consult with and in the nations and regions of the UK before the regulations were introduced, it would have been extremely helpful. After all, surely one of the most important lessons from these two trade deals is that the process of parliamentary scrutiny for trade deals is not fit for purpose.
Granted, Ministers in the Department for International Trade were busy disagreeing and attacking each other at the time, but when the then Trade Secretary failed to turn up eight times to give evidence before the International Trade Committee on these deals—and despite that, would not extend the time for the Committee to report on the deals to the House—it became clear that something was very amiss with the system of scrutiny. It is hardly surprising that the International Trade Committee has been abolished by Ministers, but instead of improving the scrutiny of trade negotiations, or even just the regulations implementing the procurement chapters of the negotiations, the amendment makes things a little easier for Ministers.
John Spellar (Warley) (Lab)
Will my hon. Friend confirm, notwithstanding the absurdities of the previous Trade Secretary, who was more concerned with a photo opportunity than a proper deal, and some of the other difficulties, that our position is that it is enormously important that we have good trading and all other relations with our great allies in Australia and New Zealand, particularly after we recently strengthened and deepened our strategic relationship through the very welcome AUKUS deal?
Gareth Thomas
My right hon. Friend, as ever, makes a hugely important point. Australia and New Zealand, as I said earlier, are important allies of this country with whom we have crucial security interests as well as trade interests. I accept that anything that helps to maintain and strengthen those relationships is very positive, but I am sure he would agree that we need to learn the lessons from how Ministers carried on those negotiations, particularly with the Australians.
Given the specific context of the Bill and the focus on implementing the procurement chapters of the two trade deals, it is a struggle to see how this amendment will help to improve the implementation of the supposed better access to our partners’ procurement markets.
The leading procurement expert Professor Sánchez Graells set out clearly in his evidence to the other place, and indeed to this House, his concerns that the Australia deal worsens the protections for British businesses competing in the Australian procurement market. We are entitled to ask ourselves whether this amendment helps to address that concern in any way. Sadly, I do not think it does.
Professor Sánchez Graells also made clear his view that the benefits of the trade deal in terms of access to Australia’s procurement market have been significantly exaggerated. The noble Lord Purvis and Labour Lords also picked up on that point in the debates in the other House, but the one Lords amendment that the Government backed does not address this concern. What the amendment does, if anything, is ever so slightly increase Ministers’ powers to implement regulations, wherever and however they want.
Given how Ministers excluded some groups from the negotiations—including trade unions—given the disregard for the legitimate interests of our devolved nations, and given the failure to negotiate commitments on climate change or proper protections for specialist British brands such as Stilton cheese or Scotch whisky, Ministers’ apparent determination to try to claim a little more freedom to implement the procurement chapters does not encourage any sense that they have learned lessons from what has happened.
I have one specific question for the Minister on the implementation of these trade deals. It would be very helpful for small businesses across the UK if he set out the Department’s plan to support small businesses that want to access the Australian and New Zealand markets and take advantage of the trade preferences in these two deals.
We will not seek to divide the House, but this amendment is a reminder of the Government’s woeful performance on trade and exports, and of the desperate need for a new Government determined to lift up the living standards of everyone in this country, not just the already very wealthy, by delivering more exports and sustained economic growth.
Anthony Mangnall (Totnes) (Con)
I congratulate the hon. Member for Harrow West (Gareth Thomas) on taking such a great deal of time to find some contention in a single amendment that adds only the word “difficult.” I am afraid my remarks will be somewhat shorter.
The whole basis and value of this Bill, and of what the Lords have sent back to us, is in taking the opportunities presented to us by our trade agreements. It is undoubtable that, through the Australia and New Zealand trade deals, new trade opportunities have been delivered. We have to be clear about how those values have offered themselves, whether through defence agreements, through creating new digital partnerships, through joining new blocs such as CPTPP, through exploring the idea of the Gulf Co-operation Council, through signing memorandums of understanding with American states and trade agreements with Israel or through finding ways to join up with India to unlock services and industry opportunities for our country and our businesses.
The hon. Gentleman spoke about how we might be able to help small and medium-sized enterprises. Well, only this morning the Department for Business and Trade held an event in the Attlee Suite of Portcullis House on how we can help SMEs achieve their true value and potential beyond our borders. I hope we see more of those events, because it is essential that we find ways to help our small businesses reach new markets.
I will come on to procurement and the amendment in a second, before I stray too far, but it is relevant to talk about the value of these trade deals. All too often, we are told that they are not of enough value to the UK economy, which is to presume that our trade deals are static and that no one takes advantage of them when they are brought into force. After they are brought into force, we always see them grow.
On the International Trade Committee, I always cite the example of the North American free trade agreement. The expectation when NAFTA came into force was that it would be of very little benefit to the signatories’ economies. In fact, the opposite was the case. It grew steadily over time and has evolved into what it is today under a different name. We should look not at the current forecast value of these trade deals but at how we can encourage businesses in each and every one of our constituencies, from Totnes in south Devon to Harrow West and Northern Ireland, to take full advantage.
We talk about procurement a lot and we are trying to shape it in a meaningful way in this House. So far, we are doing very well, with the Procurement Bill. However, as the Minister has rightly said, this is the chance to take the benefit of procurement opportunities that vary. Where there are differences—it will not just be in defence, as it might be in utilities, services, industry and so on—this will allow us to take the opportunity that comes with that range.
I do not think there is going to be much disagreement on this Lords amendment. At last, it shapes a Bill that—
John Spellar
Do we not have to be careful on public procurement and recognise the world as it is, notwithstanding agreements? Even when we were a member of the EU, we found that other countries gave considerable preference to their own producers within procurement. Our civil service and Treasury resolutely, adamantly and stubbornly refuse to support British industry, including small and medium-sized enterprises, and so when they go into the world market, they hear, “If you are not good enough for the British Government, why are you good enough for us?” They are being constantly undermined, even now, on small modular reactors.
Anthony Mangnall
I am grateful to the right hon. Gentleman for that. We have accepted in many instances the terms of the World Trade Organisation and the carve-out measures within them, so we are very compliant in many areas where we can be, for example, in this instance, a little more protectionist in respect of some of the key technologies we are developing in this country. There is a bit of give and take on that point. We do recognise it in some areas, although perhaps not to the extent that he would want to see.
As I was saying, I do not disagree with this Lords amendment, which is a perfectly simple one. There is always a lot in a word, but this will give us the opportunity to take full advantage in our trade deals and through procurement.
Richard Thomson (Gordon) (SNP)
Out of all the potential amendments that could have come back along the corridor from the other place, this is not one that would have been top of my list. Let me surprise the Minister by saying that this is a very good trade deal—for those viewing it from Australia or New Zealand. It is not such a good trade deal—it is a pretty lousy one—for those viewing it from Scotland. We are dealing with a single-word amendment, and I can think of many farmers in my constituency who could probably sum up their views of this deal in a single word—none of their words would be parliamentary, I hasten to add.
I hear what the hon. Member for Totnes (Anthony Mangnall) has to say about this not being a static arrangement, but even then it still requires a great deal of catching up in order to make up the ground here. The UK Government’s own analysis shows that the trade deal with New Zealand will bring in an increase of 0.03% of GDP over 15 years, with a figure of 0.08% of GDP from the Australia deal, all while the UK trade and co-operation agreement with the EU leads to a 4.9% fall for the UK over the same period.
The Scottish National party has a simple yardstick on trade deals: we will support those that are good and oppose those that are poor. Nothing that has come back alters our view of this particular deal.
Nigel Huddleston
I shall be brief. I thank Members for their contributions today. We have had two glass half empty responses and one glass half full one. That does not surprise me at all, because I am still waiting for the Opposition to support one of our trade deals. It is important to remember that the Australia and New Zealand deals benefit every nation and every region of the UK. I am disappointed to hear what the hon. Member for Gordon (Richard Thomson) said, because the attitude of the Scottish whisky manufacturers might be slightly different, as huge benefits will likely come from these deals.
As I said in my opening speech, this Lords amendment is a minor and technical one. It ensures clarity on the point that the power in the Bill can be used only to implement and deal with cases arising as a result of these free trade agreements. Again, the Government do not—
Gareth Thomas
I realise that the Minister probably does not have much more to say, but may I take this opportunity to press him to set out the plan to help small businesses benefit from the trade preferences in these deals?
Nigel Huddleston
The hon. Member is being slightly too impatient. I said that my speech would be short, but it is not too short. There are a couple of comments that I will come on to.
On the amendment, the Government do not anticipate relying on this flexibility for the initial set of regulations implementing the procurement chapters, but it is nevertheless important that the flexibility is retained should the need for it arise in the future.
I will respond to comments made by hon. Members. I have already mentioned the economic benefits of the Australia and New Zealand trade deals. They will generate billions of pounds of economic activity, to the benefit of UK businesses and, of course, the people we represent. This will lead to more jobs, which is why it is unfathomable that anybody would vote against this.
The scrutiny that we give Bills stacks up pretty well compared with other parliamentary democracies and, of course, is based on CRaG—the Constitutional Reform and Governance Act process—which I remind Opposition Members was developed and implemented during the time of the last Labour Government. If they do not like it, they are criticising their own legislation.
On protections to support the most sensitive parts of the UK farming community, we have secured various measures across both deals that are collectively available for 15 to 20 years for the most sensitive products. We have engaged, and continue to engage, with the farming industry. Of course, these and the many other deals we are negotiating are also ensuring that we are fit for the 21st century. We are no longer in a world where all we do is ship widgets from country A to country B via the countries closest to us. Services, particularly those delivered digitally, are now vital to the UK economy. They represent 80% of the UK economy and it is absolutely vital that they form a key part of our trade deals, as is the case with these two deals with Australia and New Zealand.
On support for businesses, of course, as the Secretary of State has said many times, we need to not only deliver on the deals but make sure that businesses, large and small, right across the country are able to benefit from them, so we will continue to support small and medium-sized businesses. My hon. Friend the Member for Totnes (Anthony Mangnall) highlighted this morning’s export showcase event, at which MPs and Lords were surprised at the extent to which support is already, and will continue to be, available, whether in training, export support services or UK export finance. That is not just for big businesses; it is for small and medium-sized businesses as well. There will be extensive support because we want all businesses, large and small, to benefit from these deals.
The Bill’s measures might be technical in nature, but they will make a real difference for people right across our constituencies and right across the United Kingdom.
Lords amendment 1 agreed to.
UK Infrastructure Bank Bill [Lords] (Programme) (No. 3)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the UK Infrastructure Bank Bill [Lords] for the purpose of supplementing the Order of 1 November 2022 (UK Infrastructure Bank Bill [Lords]: Programme), as varied by the Order of 1 February 2023 (UK Infrastructure Bank Bill [Lords]: Programme (No. 2)):
Consideration of Lords Message
(1) Proceedings on the Lords Message shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.
Subsequent stages
(2) Any further Message from the Lords may be considered forthwith without any Question being put.
(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Jacob Young.)
Question agreed to.
Royal Assent
Thursday 23rd March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Amendment Paper: HL Bill 83-I Marshalled list for Report - (23 Jan 2023)