European Union (Definition of Treaties) (Colombia and Peru Trade Agreement) Order 2013

Monday 2nd December 2013 Grand Committee

Motion to Consider

15:30

Moved by

[Lord Popat]

That the Grand Committee do consider the European Union (Definition of Treaties) (Colombia and Peru Trade Agreement) Order 2013.

Relevant document: 13th Report from the Joint Committee on Statutory Instruments.

[Lord Popat (Con)]

My Lords, the EU-Andean free trade agreement covers the trade and investment relationship between EU member states and Colombia and Peru. Although this deep and comprehensive agreement constitutes a small part of the EU’s ambitious programme of bilateral trade and investment negotiations, it is an important and valuable step in improving our trade relations with Latin America. Together with our important trade negotiations with such countries as the US, Japan and Korea, it demonstrates that the EU is looking to advance its trade with countries large and small, developed and emerging. Taken together, all the EU trade negotiations stand to boost the EU’s GDP by over 2% and bring over 2 million jobs to the EU. The Government are proud to be a major voice in support of the EU’s overall trade agenda.

Not only will this trade agreement bring significant benefits to the Andean economies of Peru and Colombia, but it sends an important message of the benefits of open markets and the importance of resisting protectionism to the rest of Latin America. The free trade agreement will aid UK firms in getting a foothold in those two emerging markets, which have enjoyed strong growth figures in recent years. The agreement will also help UK companies already trading in this part of the world. Analysis shows that the deal could benefit our economy by up to approximately £400 million a year over the long term.

In line with other recently concluded trade agreements, the deal is ambitious and comprehensive. It stands to substantially improve the market access for UK exporters to the Andean region through the elimination of tariffs and technical and procedural barriers to trade, improve market access in procurement and service markets, and enforce common standards and rules that will level the playing field. It will also bring stability in areas including the protection of intellectual property. Furthermore, the deal stands to bring in greater transparency on subsidies and implement processes to settle disputes.

Not only have the economies of Peru and Colombia enjoyed strong recent growth, but they provide a combined market of almost 80 million people, and are increasingly becoming important commercial partners for UK firms looking to trade in Latin America. Between 2007 and 2012, overall UK exports to the combination of Colombia and Peru almost doubled. With this FTA in place, providing British firms with improved access to these rapidly growing markets, UK export levels should grow even further. We have already seen a variety of UK firms set up businesses in these countries, from fragrance house CPL Aromas, to retail firms such as Mothercare, Accessorize and Hackett. Those last three firms have all now opened shops in Bogotá, the second largest city for retail in Latin America. It is my hope that further UK firms will follow and take advantage of the new opportunities brought by this agreement.

Since the trade agreement entered into provisional force earlier this year, the UK Government have worked closely with UK firms and the respective Governments of Colombia and Peru to maximise opportunities presented by the deal. In particular, UKTI officials have identified significant opportunities for UK firms in infrastructure markets, financial services and energy. This FTA provides opportunities not only for larger companies but for SMEs. It also provides further opportunities for companies already established in these respective markets, those which are looking to establish themselves in these markets or those which are yet to consider trading with these two countries. A number of ministerial colleagues have also visited Colombia this year. The noble Lord, Lord Green, David Willetts, and the lord mayor of London visited Peru and Colombia this summer. I look forward to more official visits which will build on this momentum.

To assist SMEs looking to trade with Colombia, the Government launched a new business-to-business organisation called UK Colombia Trade, which hosted an event at the UK ambassador’s residence in Bogotá in November to showcase the varied commercial opportunities that arise from this trade agreement. I look forward to hearing about future such events as firms take advantage of the important opportunities that the deal provides.

I am a firm believer in free trade, and trade agreements bring competition in the marketplace. Ultimately, it is the consumers who stand to benefit from increased choice and companies from sourcing inputs and components from abroad. By improving our trade relations with new countries we are improving markets around the globe and not merely with our traditional commercial partners. Increasing trade and investment is at the heart of generating balanced, long lasting and strong economic growth. The United Kingdom continues to be the most influential voice in ensuring that trade liberalisation is at the heart of the EU’s growth strategy. Rapidly ratifying this FTA in the UK will strengthen our relations with these two important Latin American countries, bring major benefits to UK firms and underline the UK’s position at the heart of global trade liberalisation. I commend the order to the Committee.

[Baroness Miller of Chilthorne Domer (LD)]

My Lords, I, too, welcome this trade agreement. I will mostly confine my remarks to Colombia, which I was lucky enough to visit last year as part of an IPU delegation. First, I shall make a couple of slightly regretful general remarks. Originally, this free trade agreement was to be for the whole Andean region of Colombia, Peru, Ecuador and Bolivia. For reasons which I imagine partly are what the Minister was alluding to when he said that this would send a strong message, Bolivia and Ecuador are not included in this agreement. There are two obvious difficulties with that. One difficulty is that, for those of us who believe that open markets and free trade bring prosperity, it will make an even more two-tier Andean region. We have seen some of the effects of Colombia’s successful push against illegal coca growing, which has been pushed towards Bolivia and Peru. I am nervous that we should do anything further to divide the region when I am sure it would benefit from a more cohesive approach.

That said, I shall concentrate the rest of my remarks on Colombia. Obviously, Colombia has particular issues because it is coming out of decades of conflict and is just entering into, it seems, a successful peace negotiation. That puts a particular onus on those of us who are entering into a free trade agreement to put human rights issues right at the heart of our considerations, partly because human rights are self-evidently incredibly important but partly because the speed of development is going to have a tremendous impact on Colombia, with all the interest in it and indeed with the Colombian Government’s own efforts to develop its infrastructure and to raise the people of its regions out of poverty, especially as a lot of the development will be concentrated on the extractive industries and agriculture.

I get the extremely good briefings from our embassy in Colombia, which highlighted in its September briefing that some of the conflicts have resulted in the deaths of protesters: four protesters were killed in one conflict and one in another, and indeed one policeman has been killed, so it is a matter of life and death.

I underline my praise for the British embassy’s work there. We met His Excellency John Dew, who has since handed over to a new ambassador. The embassy’s work in highlighting the importance of human rights in welcoming in various groups, whether from the peace communities, which are small agricultural farmers, or the trade unions, has been very important. I am sure that its efforts will not lessen with this trade agreement going through.

If the first issue is human rights, the second is biodiversity. The country is one of the most biodiverse in the world. I know that the Colombian Government are well aware of the treasures that they have, but again the extractive industries tend to need infrastructure and are often looking at extracting minerals from some of the most sensitive areas of the country. All this poses a challenge for any companies going in, and I hope that all British companies involved will be very mindful of these issues.

My question to the Minister is: how will we monitor the human rights issues and what is happening with them? Clearly our own embassy is doing that but the trade committee in Europe that is concerning itself with the free trade agreement does not really have a human rights remit at all. That is the question that I would like the Minister to answer.

[Lord Avebury (LD)]

My Lords, I share my noble friend’s regret that Ecuador and Bolivia are not included in this treaty. I am hopeful that the Minister may be able to say something in his concluding remarks about the prospects for them joining at some later date. Of course, everyone welcomes free trade between the EU and third countries as a means of enhancing economic prosperity on both sides and, although it is not a stated object of the treaty, potentially reducing the disparities of wealth and income that are an endemic feature of third-world societies.

I am going to speak exclusively about Peru, having been president of the Peru Support Group for 11 years until I was succeeded a year ago by the noble Baroness, Lady Coussins, and I declare an interest accordingly. I am indebted to the support group for advice on the effects of the treaty, on which I am going to base my own remarks.

Women and indigenous people have not benefited proportionately up till now from Peru’s impressive rates of growth. There are also huge disparities between the regions. There is no reason to assume that the benefits of this treaty will be applied so as to reduce these inequalities, but if they were so applied then it would be advantageous not only for the poor but for Peruvians at all levels of the economy, and hence for British investors and traders.

The Minister said that the treaty would benefit the UK economy to the tune of £400 million. Has a similar calculation been made, I wonder, on behalf of Peru? Has my noble friend anything to say about the potential benefits for the worst-off in Peruvian society? Similarly, there is no link between the rising national prosperity that will result from the treaty and the improvement in human rights that rests on the flimsy foundation of a single article, as my noble friend has pointed out, providing that respect for the Universal Declaration of Human Rights and the rule of law constitute an essential element of the agreement. The Minister in another place also referred to Article 8, which deals with the fulfilment of obligations under the treaty generally but is clearly intended to deal primarily with trade matters that are the overwhelmingly predominant purpose of this massive document.

15:45

One apparent advance for Peru’s severely marginalised indigenous people, 78% of whose children are malnourished, was the 2011 consultation law, designed to implement ILO Convention No. 169 on indigenous peoples’ right to prior consultation on government decisions affecting them. That was 17 years after Peru ratified the convention in 1994, but the law is now being watered down by eligibility requirements beyond those permitted under the convention. The Peruvian Government propose that people would have to speak an indigenous language and to practise communal land ownership to be entitled to the right of prior consultation, but these practices may not have survived the disruptive and discriminatory influence of colonialism and subsequent Administrations. In any case, decisions on which communities are to benefit from ILO 169 are not to be made for at least five years, until information from the 2017 census has been analysed. There are concerns about the lack of transparency and participation in that exercise, to say nothing of the lengthy timeframe. What rights are there to consultation in the intervening five years?

I hope that my noble friend will agree that mechanisms for democratic dialogue such as prior consultation are absolutely essential as a means of reducing Peru’s high incidence of social conflict, which has claimed at least 27 lives under the Humala Administration and is contrary to the interests of British companies in Peru.

As an example of what can happen, the British-registered company, Glencore Xstrata, is in trouble with local leaders and civil society organisations after its workers, assisted by dozens of riot police, evicted the Taco Quehue family from their smallholding and beat them up on 5 November. They were in the way of the company’s Las Bambas pipeline. The human rights NGO Derechos Humanos sin Fronteras documented injuries to 10 family members, including four children aged under six. The family’s “offence” was to object to a change in the route of a highway linked to the pipeline, affecting their farmland and water supply, about which there had been no consultation.

In another case, nine people were detained on 11 November following a protest, which lawyers say was peaceful, against the Peruvian-owned Condestable mine in the Lima region. The protesters, two of whom were pregnant, were charged with kidnapping and extortion, which carry sentences of up to eight years’ imprisonment. One of the pregnant detainees, Jane Cristina Rodriguez, miscarried on the day on which she was arrested. A coalition of national indigenous organisations is demanding the immediate release of the detainees, who say that the mine operators are failing properly to contain waste, undermining their farming through excessive water use and failing to make annual payments of $18,000 to the community that were agreed in 2005.

In July, a government impact study on planned expansion of the controversial Camisea gas field, warning of the risk that the Nanti, Kirineri and Nahua peoples living in a reserve affected by the proposal risked extinction, was withdrawn hours after publication, apparently under pressure from pro-investment interests.

Due to the perceived readiness of the authorities to accede to the demands of foreign investors without listening to the views of local people, inevitably there is widespread social protest against extractive industry in particular, and this leads to the criminalisation of protestors and the use of disproportionate, sometimes lethal, force against them by the police.

During Peru’s universal periodic review, the UN Committee on the Elimination of Racial Discrimination expressed concern at the limited enjoyment of economic social and cultural rights by indigenous peoples and Afro-Peruvian communities, particularly regarding housing, education, health and employment. It recommended adopting a framework law on indigenous peoples, covering all communities. A number of states called for compliance with international norms on the use of lethal force by security forces and the need for timely investigation of any violence. Poland, for instance, stressed the need to refrain from applying unnecessary police force during public demonstrations. Yet despite reliable reports of the killing of demonstrators, no police officers have been investigated for these offences and no protesters have been compensated for injuries caused by police gunfire.

In the debate on this instrument in another place last week, the Minister, Michael Fallon, said that private companies were no longer allowed to hire Peruvian police for their own security purposes, a practice which had been made illegal almost a year ago. However, according to Peruvian human rights organisations which have been in touch with the Peru Support Group since then, it is still going on. In the case of the Xstrata mine in Espinar there was a police station on the company’s property where protesters were detained and ill treated in the summer of 2012 and, according to Congresswoman Verónika Mendoza, the local representative, lawyers were initially denied access to the detainees because they were on private property. Would my noble friend ask our embassy to clarify these matters with local NGOs and members of Congress?

The problem with the scanty reference to human rights in this treaty is that it has no links to any of the other human rights obligations to which Peru has acceded. If another party considers that Peru has failed to fulfil its obligations in accordance with Article 8(2), that party cannot cite evidence from the universal periodic review or reports from the UN special procedures on breaches of the International Covenant on Civil and Political Rights. This no doubt explains why the human rights articles in all these EU trade agreements are dead letters and are never invoked.

The Minister in another place says that if there are human rights abuses serious enough to trigger the relevant clause of the agreement, it is for EU mechanisms to collect that information and refer it to the appropriate domestic and international human rights bodies. Can my noble friend cite any instance throughout the history of these trade agreements where such a process has been invoked? Does he consider that automatic inclusion of a pro forma article on human rights in this treaty adds any value to the work that is already being done by Peruvian NGOs, trade unions and members of Congress, together with their international allies and the UN mechanisms, to bring the observance of human rights, and particularly racial equality, in Peru up to the highest international standards?

[Lord Liddle (Lab)]

My Lords, I thank the noble Lord, Lord Popat, for his explanation of this instrument. I also listened with great interest to the speeches of the noble Baroness, Lady Miller, and the noble Lord, Lord Avebury. I will make a couple of general points before coming on to the particulars of this agreement.

First, it is a good thing that the British Parliament has this opportunity to ratify this agreement. It is often said about the European Union that things are imposed upon us against our will. This is a case where we, as Parliament, have to ratify this agreement. That is a good thing. Our Ministers agreed to the opening of negotiations, originally under the Labour Government in 2007, for what was then hoped to be the Andean pact. Ministers have all along supported the Trade Commissioner of the European Commission in pursuing this agreement. Parliament is involved and the Government are involved. This is not imposed by Brussels.

Secondly, I think that there is a general view on all sides of the House and across the United Kingdom that free trade is a good thing and brings benefits all round. The noble Lord, Lord Popat, outlined what those economic benefits are; modest perhaps, but worth while from a European point of view, in the case of these agreements. Free trade has been part of the British progressive tradition ever since the repeal of the Corn Laws in the middle of the 19th century. Business has not always been a strong defender of free trade, though. Joseph Chamberlain wanted the imperial preference as a result of pressure from West Midlands manufacturers who wanted protection. Similarly, in the 1930s there was a lot of protectionist pressure. Generally speaking, however, business has supported free trade, as have the trade unions, on the principle that it brings economic benefits all round. But while free trade brings clear income gains to all the countries that participate in free trade agreements, such an agreement does not in itself ensure that the income gains are fairly distributed within those countries or that the wider questions of democracy and human rights are guaranteed. That is where the noble Lord, Lord Avebury, is 100% right.

My third general observation is that being members of the EU and negotiating these agreements through the European Union gives us enormous potential clout. You have only to look at what happened just this weekend. The Government in Ukraine are tottering because of a free trade agreement that the European Union had signed with Ukraine, but which the Government have decided not to implement. That is an example of how free trade agreements can be a force for democracy and political change. But we have a responsibility as members of the EU and thus part of what is the most powerful trade bloc in the world to use our economic power as much as we can to promote democracy and human rights.

I am not familiar with the situation in Peru in the way that the noble Lord, Lord Avebury, is, but certainly Colombia has had an appalling human rights record. According to one UN source, there have been some 4,716 complaints about extrajudicial killings by the Colombian army. It is country where the rule of law falls well short of European standards and one where trade unionists have been subject to systematic violence and murder. The record in Colombia shows an appalling number of motorbike assassinations of community and trade union activists. Given that, what should we do? If we wash our hands of any kind of economic relationship with countries like Colombia and Peru, we are not advancing the interests of their people. We can pass resolutions of protest at congresses and in committees, and we can try to make such countries international pariahs, although I think if we tried that we would find that there are an awful lot of international pariahs in this world in the form of countries that do not reach the standards we set for ourselves. Indeed, the Prime Minister is presently in a country with, let us say, a poor record of respect for the rights of trade union organisation, free collective bargaining and individual liberty. We cannot go around the world treating countries as pariahs for these reasons. The question is how we use our engagement to try to make things better.

16:00

The European Union was right to open the negotiations for the Andean pact—I think I ought to declare an interest, because I was closely associated with the Trade Commissioner Peter Mandelson when this decision was taken—and right to see what commitments could be obtained. The question is whether, as a result of these agreements, we have made progress on human rights and trade union rights.

Our socialist colleagues in the European Parliament did not think enough progress had been made. That was after a visit by the current President of the European Parliament, Martin Schulz, to Colombia. Last December, the Socialist Group, in the main, including the British Labour MEPs, voted against the ratification of these deals in the European Parliament. However, a majority of the European Parliament approved the deal, and member states approved it too and are set on this agreement’s ratification. What should we do now? Some Labour colleagues in the other place take the view that we should make a gesture of protest against this agreement. My view, and I think that of the Official Opposition, is that we must do our best to ensure that the protections and safeguards in the agreement are used to the maximum extent. One of the innovations in the agreement was, as I understand it, provision for the European Parliament to be involved in the monitoring of human rights in these countries.

I end with a number of serious questions. If the Minister cannot answer them now, I would be grateful for written replies about how the Government propose to ensure that this agreement is implemented and that the safeguards in it are used to the full.

In the other place, my shadow Business Secretary colleague, Ian Murray, called for a human rights report to be produced before the Commons vote on the approval of this order on Wednesday. Can the Minister tell us what is likely to be in this report, and assess the latest human rights situation? There has been news of further killings of community and trade union activists in the last month, and this is causing a lot of concern, because we had hoped that the situation was improving; it may not be.

Secondly, what steps will the British Government be taking to ensure that the monitoring provisions in these agreements—the role of the European Parliament and all of that—are taken seriously, and that there is proper reporting on the human rights situation in these countries? Thirdly, will the Government initiate, possibly at European Union level, a review of the relationship between trade policy and the promotion of ILO 4 standards and human rights monitoring and enforcement? We need to think about what the relationship should be between trade policy and these questions and about what part questions of human rights, trade union rights and social rights should play in the enthusiasm—which we on this side of the Committee certainly share—for more free trade agreements to be concluded by the EU, as a key dimension of our economic reform agenda for Europe.

What are the Government’s objectives here? How do they see the trade-offs and what alliances are they going to build? It may be difficult for the Minister to answer these questions today but I hope that they will be given proper consideration. I do not think we can close our eyes to the human rights issues that occur daily in these countries. We have to be in a position where we can use what leverage we have to improve the situation—a leverage which at least has some significance because of our membership of the European Union. I would be grateful for replies.

[Lord Popat]

I thank Members of the Committee for their contributions this afternoon in what has been a very interesting debate. The major issue that has been raised is that of human rights, although others have been too. First, I will address the issue raised by the noble Baroness, Lady Miller, of the two countries that have opted out for the time being.

Ecuador suspended its participation in the negotiations in July 2009, predominantly for internal political reasons. However, in May 2013, it formally expressed interest in resuming negotiations. The Commission has confirmed that the country has now offered the necessary clarification on the previous stumbling blocks that remain outstanding. Bolivia withdrew from the negotiations in September 2008, predominantly due to its rejection of certain elements of the deal including those on intellectual property and state purchases. Nevertheless, it remains open for Bolivia to accede to the agreement, should negotiations reopen. Contact between Bolivian and EU officials continues.

The Committee’s major concern was human rights and what provisions we have made in this agreement to address those. The European Union is very strong on human rights and we take a strong view too. The UK pushed hard for a legally binding human rights clause in the text of the agreement, which is consistent with our policy to have frank dialogue with Colombia and Peru on human rights. The clause is backed up by international law, and Clause 8 of the agreement allows any party to take appropriate measures against any other party which violates essential elements. Various monitoring mechanisms, which the noble Lord, Lord Liddle, mentioned, are in place to make sure that human rights abuses are well monitored.

The agreement does not have the monitoring of human rights abuses as one of its primary functions. The primary function of the agreement is to support trade between the EU and Peru and Colombia respectively, and therefore to support economic growth. However, increased prosperity should support increased respect for human rights. The role of monitoring human rights rests with domestic and international bodies including the United Nations. We regard trade agreements as important for economic growth and prosperity in developed and developing countries. This FTA supports that growth and prosperity. The promotion of the UK’s prosperity and the promotion and protection of human rights are mutually supportive priorities that are at the heart of the UK’s foreign policy.

It is right that the UK engages with Colombia commercially, as we would do with any emerging power. If we did not, I bet our competitors would do it anyway. Therefore, it is important to this Government that British businesses respect human rights in the places where they do business. The Government part-funded a major event in Cartagena in May on implementing the UN guiding principles on business and human rights.

I will also cover an issue that was touched upon, the role of our embassy in Bogotá. The embassy supported a UN-led research initiative to help improve the protection of trade unionist human rights and the development of positive labour relations, an area cited by the noble Lord, Lord Liddle. Our embassy is very active on human rights issues, including employment legislation. It regularly raises individual human rights cases with the Colombian Government, including those of indigenous communities that are at particular risk, and meets with individual human rights defendants. Staff from the embassy have attended the trials of certain academics and trade unionists. I am pleased to say that our embassy at Bogotá is quite active in this area.

There are a large number of areas which I have not covered in this short debate. I promise to write to noble Lords. I share some of the other concerns which have been raised by noble Lords, but we firmly believe that we should not let these stand in the way of a progressive trade agreement and fostering a context of prosperity in which human rights will improve. Liberalising trade brings prosperity and prosperity, in turn, helps to bring political stability. I strongly commend the free trade agreement to all Members of the Committee. It delivers not only for businesses, but for jobs and for consumers in the UK as well as in Colombia and Peru. Colombia and Peru are fast growing economies where there is and will continue to be growing demand for UK goods and services. As I said earlier, if we fail to grasp this important and valuable opportunity our international competitors surely will. I commend the order to the Committee.

Motion agreed.