EU-Canada Comprehensive Economic and Trade Agreement
(Limited Text - Ministerial Extracts only)
Read Full debateThe Committee divided: - Ayes: 5 / Noes: 7 - Question accordingly negatived.
The Minister for Trade and Investment (Greg Hands)
Welcome to the Chair, Sir Edward. I believe that it is my first time serving under your chairmanship. I am pleased to have the opportunity to discuss the comprehensive economic and trade agreement today. I apologise for the fact that the parliamentary calendar has meant that we were unable to have this debate in the Chamber of the House of Commons, as we had hoped to. My officials, however, worked hard with business managers in the House, at a busy time for Parliament, to agree time for this debate prior to next week’s vote, on 15 February, on CETA in the European Parliament. I am pleased that we have the chance to hold this debate today, within the appropriate timetable.
The Government are clear that CETA is a good trade deal for the United Kingdom that will promote jobs and growth and help our businesses to develop and strengthen trade links with Canada, which is an important Commonwealth partner and a like-minded country on many issues. It is an important achievement, given that it is one of the most ambitious and comprehensive agreements that the EU has concluded with a major economic partner to date.
The agreement is consistent with the UK’s objectives in trade policy and with relevant wider policy goals. It is well balanced and ambitious, and will provide substantial gains for all parties on market access and rules. It will significantly improve business opportunities for UK companies in Canada by increasing our ability to access Canadian goods, services and procurement markets.
It is estimated that the deal could be worth as much as £1.3 billion per annum to the UK while we are a member of the European Union. Those benefits will be across a range of sectors. To provide a few examples, the agreement will remove all tariffs on industrial products and substantially benefit the UK’s wines and spirits industry by removing not only tariffs into Canada, but behind-the-border barriers that have limited our companies’ access in the past. It will benefit our life sciences industries, giving them greater protection for research-based pharmaceutical products.
By opening markets in that way, CETA will support jobs and growth in the UK and bring further benefits for British consumers. It has the potential to keep prices down and provide consumers with a greater choice of quality products. It is critically important that the UK continues to do all it can to support such agreements while we remain in the EU. Not only will we directly benefit from such agreements while we remain a member, but we will also benefit from the more open and prosperous trading environment that agreements such as CETA provide for the global economy. By supporting agreements such as CETA we demonstrate to the world that we remain, and will remain, the strongest global advocate for free markets and free trade. That is fundamental to the prosperity of the United Kingdom and the world economy, and is a key part of the Government’s vision for a truly global Britain.
The Government look forward to the successful passage of the CETA agreement in the European Parliament following the vote that is scheduled for 15 February, and the provisional application of the agreement in the coming months. Following the vote in the European Parliament and the start of provisional application, the Government will move towards ratifying the agreement on a timely basis, but the exact timetable is not yet decided. We will look at the parliamentary timetable and listen to the plans of other member states when deciding on a timetable for ratification in our Parliament.
It is worth clarifying that only those areas of the agreement that fall solely within EU competence will be provisionally applied. Those areas of the agreement that are within member states’ or mixed competence will not. Those areas of CETA will still require ratification by the UK and other member states before they come into effect. Those areas not being provisionally applied include a large part of the chapter on investment; the areas being provisionally applied relate only to foreign direct investment. In particular, the investment court system of arbitration referred to by the hon. Member for Swansea West is not being provisionally applied.
I know that the investment court system is one of the areas of CETA over which hon. Members have raised concerns. I look forward to discussing that further and answering any questions today. I would also like to highlight that the right of member states to regulate in their own markets is reiterated throughout the agreement. The agreement provides that member states will not have to reduce their labour and environmental standards to encourage trade and investment. Nothing in CETA prevents the UK and other member states from regulating in the pursuit of legitimate public policy objectives, such as the health of their citizens. That is in line with the Government’s clear position that protecting the NHS is of the utmost importance to the UK.
To conclude, I welcome the increased scrutiny of free trade from both Parliament and the public, and the opportunity to make the case for free trade in times of uncertainty. We will take advantage of all the opportunities available to us to ensure that Britain becomes a global leader in free trade once we leave the European Union. We will look to build on our trade and investment links with key trading partners around the world, including Canada. We are aiming to increase our ability to access markets, with a trade policy that has a global outlook, in order to ensure the prosperity of our nation in the years ahead.
The Chair
I will now take questions to the Minister, which will be brief because there will be an opportunity for debate later. I am happy to take supplementary questions.
Barry Gardiner (Brent North) (Lab)
First, I would like the Minister to clarify a point. He said that nothing stops us protecting the NHS. Of course, he will be aware that, uniquely, CETA adopts a negative list approach. The German Government have incorporated their health service in that negative list to protect it, but the UK Government did not see fit to do the same. They reserved that for private ambulance services, but not for the NHS. Will the Minister explain why that was the case?
Greg Hands
The Government have always been clear that protecting our NHS is of the utmost importance. It is important to understand that nothing in CETA prevents the UK, or other member states, including Germany, from regulating in pursuit of legitimate public policy objectives such as those relating to the NHS. CETA will not force or incite Governments to privatise or deregulate public services, and nothing in CETA will prevent any Government from reversing any decision to privatise in those sectors. Moreover, the joint interpretative instrument that was agreed by the European Union—by the Commission—and Canada in October affirms
“the right of governments, at all levels, to provide and support the provision of services that they consider public services including in areas such as public health and education, social services and housing and the collection, purification and distribution of water.”
Barry Gardiner
The Minister will know that although the joint interpretative instrument has legal force, it does not supersede the agreement. He talked about taking back into public ownership any aspect that had been privatised; will he explain further how the ratchet mechanism works? That seems to be in place precisely to stop any country doing exactly what he has just said.
Greg Hands
I thank the hon. Gentleman for the follow-up question, but he has no need for concern in this space. The October joint interpretative instrument is a clarification of what was already in the agreement, which is clear: the NHS will be protected by our right to regulate. Other member states have those same rights.
Barry Gardiner
Many, Sir Edward. Further to my question on the NHS, will the Minister explain why the German Government and other Governments saw fit to protect their health services in their entirety, while the British Government felt the need to protect private ambulance services by listing them in the annexe, but not the health service as a whole? That is the key question. What was the rationale for that? If he believes that health services are protected under the generality of the agreement, why did he bother specifying private ambulance services?
Greg Hands
The simple answer is that it was not necessary to put that in the JII. For the benefit of the Opposition—I know there is a lot of public interest in this—I will repeat the six points to make about protections taken with regard to the NHS in CETA. First, as I have said, simply nothing in CETA would require the UK to privatise public services. Secondly, CETA contains a reservation allowing EU member states to impose a public monopoly on services considered, at national or local level, to be public utilities, including in the health sector, so even if public services are contracted out or privatised, the Government would remain able to impose a public monopoly.
Thirdly, Government procurement decisions relating to sensitive public services such as the health service are excluded from the scope of CETA. Fourthly, CETA contains EU-wide reservations specifically designed to protect particularly sensitive public services, such as health and education, ensuring that the Government may act as they consider appropriate in relation to such services when they receive public funding. Fifthly, in particular areas, the UK has taken a number of UK-specific reservations that go beyond those applying to other member states. For example, as the hon. Gentleman rightly pointed out, the UK retains the right to take any measures that it sees fit concerning privately funded ambulances, because that right is not explicitly stated in the rest of the agreement—they are not a public utility.
Sixthly, CETA contains general exceptions that allow parties to take measures necessary to protect certain key public interests, including public health. Those are the six key protections. There is a specific reservation for services considered as public utilities that overrides the ratchet mechanism. Other reservations are also relevant in this space.
Barry Gardiner
I have to say that I am not satisfied with the Minister’s explanation, and nor indeed with what he said about the ratchet mechanism. I trust that we will have a chance to debate those issues. Will he provide more information on how the Government intend to transition CETA to apply to the UK once we have left the EU? He was right that the mixed investment part of the agreement would not apply in the provisional application, but he did not explain what transitional arrangements he is looking at to apply the agreement in the UK after we have left the EU.
Greg Hands
I thank the hon. Gentleman for that question, which allows us the opportunity to explore the matter. However, we do have to bear in mind that, with regard to what transitioning might be done, that is looking fairly far into the future. We are looking to maintain existing commitments, which I think would necessarily be less complex than starting from scratch, in places where such commitments are appropriate. We will seek to achieve continuity in our trade and investment relationships with third countries, including those covered by EU free trade agreements and other preferential arrangements.
Barry Gardiner
I am grateful to the Minister for that reply. Does he accept that because CETA was negotiated as an EU-Canada agreement, there will be areas in which what would be most beneficial to the UK has been sacrificed for the benefit of the rest of the EU, because that was the basis of the negotiation? Therefore, given that we will shortly be coming out of the EU, would it not actually be better for us to have a separate bilateral treaty? No doubt CETA could provide the basis of much of what would be contained in that. To sign ourselves up now to elements negotiated to our detriment and for the betterment of other countries in Europe would seem rather comical.
Greg Hands
Inevitably, a future UK-Canada free trade agreement or similar things would balance taking what is already there or agreed between Canada and the European Union and seeking to do something specific to the UK. Clearly at some point in the future there will be a balance to strike between continuity and seeking advantages for the UK compared to the previous agreement. However, that is a discussion for the future. The Government are strongly supportive of CETA, and at the moment we are looking to get it through the European Parliament for it to have its provisional application. The UK remains strongly supportive of CETA going through, as part of our message overall that the UK is a strong supporter of global free trade. The Prime Minister herself has said that the UK will be the most passionate, compelling and convincing advocate of global free trade, and we see CETA as part of that key agenda.
Barry Gardiner
Of course, Sir Edward. To pick up on what the Minister has said, I think he accepts the basic premise that CETA was an EU-negotiated treaty and therefore some aspects of it will have been negotiated for other countries’ benefit and to our detriment. He then said that we are firm supporters of free trade—I totally agree with him that we want fair and open trade, because that is to all our benefit—but he has failed to articulate how we will be in a position to renegotiate the basis of the agreement we will have entered into under the European Union. The ratchet mechanism will still apply. He seems to think that once we have left the European Union we will be able simply to renegotiate the treaties we had, but that would be to an investor’s detriment; it would be to the detriment of Canada, which had already negotiated a better deal with us when we were part of the EU. It is very unlikely that it would concede to that. Indeed, the ratchet mechanism is there precisely to stop that.
Greg Hands
I simply do not accept the hon. Gentleman’s premise that the UK sacrificed some key interests on the altar of getting an EU-wide common position before going into these complex and intricate negotiations. The important thing is that CETA would no longer apply after we leave. Having negotiated at an EU level can form a basis but there is nothing to stop us negotiating our own deal thereafter.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
It is a pleasure to serve under your chairmanship, Sir Edward. A number of the points I was going to make have already been made and, breaking with tradition, I will not repeat them. However, the Minister said that this is a good trade deal. I would like to know what the implication is especially for the UK and an EU free trade deal post-Brexit. We will be looking for own free trade deal, so will this be used as a model?
Greg Hands
I thank my hon. Friend for asking that very good question. The answer is yes, of course there will be some benefits in looking at the deal and its benefits once we are outside the EU. We remain strongly supportive of the deal. It is UK Government policy to support CETA going through, so of course we welcome it. We would of course look at that as the basis for a future deal. Notwithstanding that, it does not prevent us from having the flexibility also to look at the deal afresh.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
It is a pleasure to serve under your chairmanship, Sir Edward. I am grateful to the Minister for his opening remarks. In October the Secretary of State for International Trade apologised to the Committee as there had been no debate before the decision was made in the Council in relation to this agreement, and he promised that time would be made. We then had another apology from the Secretary of State to the International Trade Committee last week, again proffering excuses in relation to timetables.
There is no doubt that this matter should be debated on the Floor of the House. It is not good enough for a deal of such a nature to be debated in this manner. I simply do not buy the excuse of timetabling. I have sat through business questions week after week, and we have had discussions about business collapsing because there has not been enough business going on. It is not good enough to use timetabling as an excuse for this matter not to be debated as it should be.
I say that not just for our benefit. Scotland is, of course, a trading nation and there are many businesses in Scotland that have welcomed this agreement. That does not mean that it should not be scrutinised. In the light of what I call the brief Brexit White Paper, which refers to CETA, we are now looking at a different relationship. The Government will be negotiating trade deals in their own right. It does not bode well if the Government intend to proceed by doing it on their own, without seeking authority, approval and discussion. Hon. Members will have something positive to offer that might be quite instructive in negotiations. It does not bode well if this is the way the Government are to proceed. I ask the Minister to reconsider an opportunity for this matter to be debated on the Floor of the House, because that is the respect the House deserves.
Greg Hands
I thank the hon. Lady for that intervention. We warmly welcome parliamentary scrutiny of trade and of this agreement. Those points were made by the Secretary of State when he appeared at some length before the European Scrutiny Committee in October. To go back to the history, the European Scrutiny Committee referred the documents on 7 September, before the European Council meeting on 18 October, with barely two parliamentary sitting weeks in which to get that debate in place. It was not possible. The Committee decided to release the scrutiny override on the signature of the agreement but not on the provisional acceptance and not on the conclusion of the agreement.
When it came to the European Council meeting, of course all three decisions were taken together as a package, so it was not possible for us to, as it were, sign up to the signature of the agreement; it was “take it or leave it” on all three parts. It was decided that it was strongly in the UK national interest for us to agree to it, rather than follow the route that was ultimately taken by Belgium, among others—although it also signed up.
The Secretary of State appeared before the European Scrutiny Committee on 26 October at a stand-alone hearing, at which the hon. Member for Swansea West was definitely present, to give extensive evidence on the reasons for what happened. We have all worked very hard with business managers, and I am sure that you, Sir Edward, will have noticed other things that have come along to take charge of aspects of the parliamentary business calendar, such as the two days last week taken by the debate on article 50, or the important three-day debate under way downstairs at this moment on the EU (Notification of Withdrawal) Bill.
The Secretary of State has at all points set out his strong preference for a debate on the Floor of the House, and we would of course prefer that and welcome the scrutiny. However, it has simply not been possible, given the limited number of days in the parliamentary calendar, for us to do that. I am confident that the right thing is for us to debate the issue in Committee, giving Parliament the chance to scrutinise the agreement in advance of the European Parliament debate during the parliamentary recess on 15 February.
Ms Ahmed-Sheikh
I am sure that the Minister agrees that it is reasonable for us to expect the Secretary of State to have a handle on the business to come before Parliament over a period of time. That was promised on two separate occasions. Does the Minister agree that at the very least we should be able to rely on Secretaries of State to keep their promises to the House?
Greg Hands
As I have already explained, and as you will know, Sir Edward, I was deputy Chief Whip for some time.
Greg Hands
You will certainly know that there is pressure on the parliamentary business calendar, Sir Edward. A certain number of days are given over for Opposition day debates. Both Opposition parties have had numerous occasions on Opposition days—17 since last summer, I think—to choose the treaty as a topic. You will know, Sir Edward, about the pressure on the parliamentary calendar in unforeseen circumstances, such as the judgment of the Supreme Court.
The Chair
Order. I do not know why the Minister constantly has to pray in aid the Chair. Get on with your own arguments. Is that it?
Geraint Davies
I want to press the Minister on this point: there have been two Back-Bench business debates—one in November and one the previous November. There was a consensus on a vote in both debates that the international trade agreements—the transatlantic trade and investment partnership and CETA—should be scrutinised across Parliament in full parliamentary debates. With respect to the timetabling of the present matter, there have been three and a half months since the provisional agreement of CETA. There was a prior opportunity for the Government to call a debate. They could have done so in the knowledge that the Council of Foreign Ministers was going to sign. The Government could have timetabled it.
Instead, the Secretary of State was dragged kicking into the European Scrutiny Committee by the hon. Member for Stone (Sir William Cash), who demanded answers. At that point the Secretary of State said he would ensure that there was a full debate in Parliament, which he has not done. Now the issue has been hidden under the cloud of Brexit, so the media and others will take no notice of something that, if ICS goes forward, is a threat to our democracy, human rights and the rule of law. Will he answer the timetabling point again, and when he does will he also say whether he supports the ICS in principle?
Greg Hands
As I have already said, the ICS is not part of the provisional application.
Greg Hands
Let me deal with the hon. Gentleman’s point about the two Back-Bench business debates. As I understand it, they were not actually about CETA at all; they were about TTIP, which is not the agreement we are considering today. The European Parliament has pushed back its own debate on CETA to 15 February, which is significantly later than when it originally intended to debate and vote on this agreement. We are ensuring that our debate in the House of Commons takes place in advance of the European Parliament’s debate. That is the right thing to do, and I am confident that Members will back the decision today to go ahead with the provisional application of this agreement.
Geraint Davies
On a point of information, the debates were about international trade agreements and embraced TTIP and CETA. May I press the Minister on whether he agrees with ICS? He stated that it would not be applied, but does that not depend on how the Singapore agreement goes? He said that labour and environmental standards would not be reduced, but could they be increased, in particular with the advent of ICS? ICS would empower transnational companies, through arbitration courts, to sue the Government if they introduced new laws such as a tax on sugar to protect public health, or constraints on the effect that fracking could have on water quality, due to the extra cost or lost benefits resulting from those laws? According to him, the ICS provisions will not be ratified yet, but does he agree with ICS in principle?
Greg Hands
Let me try to take each of those two points. The UK has had its reservations about ICS, but importantly, that is part of the negotiation. We want and expect to see the details of ICS thrashed out in the coming months. The Commission and the Council have pledged to keep talking, and we are not alone in having reservations about ICS. We believe it is important to have investor protection in these agreements.
As for any decision to increase regulation, that comes back to nation states having the right to regulate. A right to regulate means an ability to decrease or increase regulation in accordance with whatever a Government and Parliament think is an appropriate course of action.
Geraint Davies
On saying that we will sign up to CETA and then do our own thing after Brexit, is the Minister aware that when CETA is fully signed, it will tie us into the agreement for 20 years and bind future Governments? We cannot just jump up and say, “We will have another agreement”, quite apart from the fact that it will be a worse agreement, because we have less negotiating power than the EU. Will he confirm that this is a 20-year agreement, and that he can give no firm undertaking that we can exit it?
Greg Hands
I thank the hon. Gentleman for his question. I will say two things. First, it does not stand to reason at all that the UK standing alone would negotiate a worse agreement than the European Union; he makes a massive set of assumptions there. Secondly, the 20-year provision relates only to investments made while CETA is in force in the UK, which there may or may not be, and while the UK is still party to CETA.
Geraint Davies
If we sign up to CETA and existing investors’ rights continue for 20 years, a fracking company that comes from the United States via a Canadian subsidiary could be subject to the capital tax concessions of 75% now in place for frackers, and to loose planning restrictions that meant that frackers could frack under your house, Sir Edward. Does the Minister agree that if a future Government decided that the planning constraints and tax concessions were too lenient, and wanted to focus on renewables, in line with the Paris agreement, the frackers could sue the Government, within a 20-year timeframe, for lost profit under ICS?
Greg Hands
That is an extremely hypothetical case. Let me be absolutely clear: CETA will no longer apply to the UK if it has been only provisionally applied. Only once CETA has been ratified by all EU member states and Canada can it be brought into force. Investments made during provisional application will not benefit from that sunset clause. The hon. Gentleman’s case is very unlikely to happen.
Peter Grant (Glenrothes) (SNP)
May I first ask the Minister to clarify two points on the documents? Will he make it crystal clear that there is nothing in them that will cause any risk of our losing our publicly owned NHS?
Greg Hands
I am confident. The Government take the NHS extremely seriously. We believe ourselves to be the party of the NHS, and the protections for the NHS are absolutely clear. Those were made clear not just by ourselves but by the Canadians and by Cecilia Malmström, the EU’s Trade Commissioner. To be fair, she said this in relation to TTIP rather than CETA, but she made it plain that the protections for the NHS in that agreement would be clear. I am confident that the NHS will remain protected.
Peter Grant
The Minister niftily changed an absolute assurance to “confidence”. This may depend on how much confidence we have in the Government. My second point has not yet been raised: will the Minister tell us in how many instances the UK Government have asked for Scottish produce to be given the protection of geographical status? I think “protected names” is the terminology used in CETA. Those are massively important to a lot of producers in Scotland and elsewhere. How many of those names were put forward by the UK Government for inclusion under CETA?
Greg Hands
Let me come back on that specific point, but I will mention the importance of CETA to a lot of Scottish industries. There will be a big benefit, for example, for the Scotch whisky industry in Scotland, which as we know is hugely important for the UK as a whole; it will be able to be sold in Canada with no tariffs. That will be very important progress. That is just one industry; a host of other industries across the UK, including Scotland, will benefit from this agreement.
Peter Grant
I am being advised from a sedentary position that Scotch whisky should thank the UK Government; I think that the Chancellor of the Exchequer should thank Scotland for the bonus to his coffers, but that might be a discussion for another time. I want to pick up on the question asked earlier. A lot of people will find it difficult to understand why the Government are telling us that as soon as we are out of the EU, there will be a queue of major economic powers battering at the door to sign better trade deals than we could ever get under the EU, while at the same time Ministers have had to override waiver after waiver of scrutiny to get this deal signed as quickly as possible. Does the Minister understand that, if this deal is better than we could get after Brexit, it raises big questions about what kind of deal we can get from anybody else after Brexit?
Greg Hands
I thank the hon. Gentleman for that question. I come back to his earlier question on UK foodstuffs to be added to the list for protected geographical indicators. The Government consulted relevant trade associations when CETA was being negotiated in 2011. At that time, no protected product was being exported to Canada in large enough quantities to be included on the proposed list of protected geographical indicators. However, CETA provides a mechanism for products to be added to the list of protected products. The Government recognise the benefits from protecting the best of our traditional and geographical food products, and will continue to work with producers to ensure appropriate protections are in place, now and in the future.
To respond to the hon. Gentleman’s question about better trading arrangements, we will have to wait and see. Article 50 has not even been triggered yet; we are still members of the EU. It is not possible for us to sign future free trade agreements while we are still a member of the EU. We are confident that the UK will be in a good position to negotiate future free trade agreements, but let us not jump the gun, and let us consider today what useful work the UK can do, in supporting agreements such as CETA, to show the importance that the UK attaches to the global free trade agenda.
Peter Grant
After its meeting on 12 October, the European Scrutiny Committee, of which I was a member at the time, agreed to a conditional waiver on the first part of the process, which is signing the treaty, but explicitly withheld consent for the other two parts. I want to ask first about the conditional waiver. One of the conditions was that the promised—not asked for, but promised—debate on the Floor on the House would be scheduled urgently. Does the Minister accept that this debate does not comply with that condition, and that even after we finish our deliberations this evening, the Government will still be in breach of the conditions of the scrutiny waiver?
Greg Hands
I have explained at some length the process that has got us from September to today. I am satisfied that the Secretary of State and the Department have put in considerable effort to enable us to have this debate today, in advance of the European Parliament debate, which is next week, during our parliamentary recess. This is a great opportunity—we have two and a half hours scheduled for today’s debate—to give the agreement proper scrutiny. I am satisfied that we have done what is in our power to make sure that is the case. I look forward to the debate.
The Chair
That is quite a long question. Shall we stop it there and let the Minister reply?
Greg Hands
I really do feel that I have already answered these questions. The hon. Member for Glenrothes, or perhaps the hon. Member for Swansea West, said that the Secretary of State was dragged before the European Scrutiny Committee. May I say that my right hon. Friend appeared just six days after the signing of the agreement, and could hardly have been quicker? That happened very quickly after scrutiny had to be overridden for the reasons that I explained: at the European Council, it would have been damaging for the UK to have appeared to obstruct CETA. That would have damaged our relations with the Commission and the EU member states, and greatly damaged our relations with Canada, one of our most important partners in the world, not just for trade but on security and other matters.
My right hon. Friend spoke to the Chairman of the European Scrutiny Committee on a number of occasions at that time, to explain what he was doing. He made a considerable effort to make sure that the Committee was brought into that decision process. We have today’s debate, and it might be time now, Sir Edward, to move to consider the substance of the debate, rather than these process arguments. After all, we are having the debate in advance of the European Parliament debate on 15 February.
Barry Gardiner
I do want to address all the issues of substance. The joint interpretive instrument was prayed in aid by the Minister but, of course, that says that the right to regulate applies only to procurement conditions that do not represent unnecessary barriers to trade.
Does the Minister consider that that is a proper restriction of the right to regulate, given that the trade dispute panels, as he well knows, have interpreted that word “necessity”—the necessity test—very narrowly in the past? Therefore, to pray it in aid as showing there will be no restriction is fine-tuning the interpretation in a way that experience would belie.
Greg Hands
I repeat that the JII is there to help as an addition to the agreement. It is agreed as an extra rider, as it were, to that agreement. The agreement itself provides for the right to regulate for parties and national Governments, including for the environment, public health, public ownership and all those other important issues. I think that, in his fears about the JII, the hon. Gentleman is chasing after something that does not exist.
Greg Hands
I have already talked about some of the concerns that the UK has had over some time in relation to the ICS. For example, some things still need clarification, such as how the arbiters are chosen, the cost of the ICS, the appointments and all of those kinds of things. Those will be matters for the future for the ICS. I repeat that the ICS is not a part of what is being provisionally applied; that is, what is in front of us today.
Barry Gardiner
Would the ICS not operate with general exceptions, rather than with country-specific reservation?
Greg Hands
Can I answer the hon. Gentleman’s specific point on the ICS in a moment?
Geraint Davies
The Minister said his reservations about the ICS were about costs and choosing arbitrators and so on. He did not suggest that there was anything intrinsically wrong with the ICS. Does he agree with me that it is intrinsically unnecessary because investors are protected in Britain and Europe by three tiers of law: national, European law and the European Court of Human Rights? Similarly and in parallel in Canada, investors are protected by provincial courts, appeal courts and the Canadian Supreme Court.
Those established systems of public and contract law have protected trade between Canada and the EU in the past. The problem with the arbitration courts is that they are unnecessary, apart from the fact that they may be inherently dangerous to our democracy.
Greg Hands
Let me repeat that the ICS has not been provisionally applied. I know that I keep having to say that but it is an important point in relation to today’s debate. CETA confirms the right of state parties to regulate in the public interest. Non-discriminatory action by states should not give rise to a successful investor claim in the first place. A lot of the hon. Gentleman’s fears are not well grounded.
Tribunals can only award compensation to investors in the event of a breach of the agreement being proven. The ICS cannot force a state to amend or remove legislation. With this kind of thing, in a general sense it is important for there to be investor protection in trade agreements. How precisely that is done will be a matter for debate later. I will repeat that it is not part of what is being provisionally applied in this agreement.
Geraint Davies
With respect, the Minister has just said that arbitration courts cannot overturn legislation. What about the case of Ethyl v. Canada, which overturned a law to protect public health? What about the case of Metalclad v. Mexico? The authorities’ attempt to stop planning permission for a landfill that was polluting an entire town was overturned by an arbitration panel. The list goes on: the case of Cargill v. Mexico overturns a soft drinks tax of the sort that the right hon. Member for Tatton (Mr Osborne) was trying to introduce here. There are consistent international examples of arbitration courts overturning publicly agreed, democratically agreed laws. What the right hon. Gentleman is saying is not true.
Greg Hands
I am not aware of the specific cases the hon. Gentleman cites. I do not believe that we in the UK have been forced to change our regulation or our legal system as the result of an arbitration. The ICS cannot require us to change our laws; it is only a compensatory mechanism. Finally, I repeat that that is not what is provisionally applied under the CETA agreement.
Geraint Davies
Changing the subject, during the European Scrutiny Committee hearing the Minister and the Secretary of State said that the driving force behind signing up was our desire not to damage our relations with the EU and Canada, rather than the detail of whether the agreements might have a negative impact on our industries and, more important, our rights to decide. On the Minister’s final point, the issue here is that fining countries that pass laws to protect their citizens, public health, the environment or rights at work is intimidatory—it is the fine, the pressure, the cost. The ICS does not come in and literally write legislation. It says, “If the Government introduce a fizzy drinks tax, we will penalise you, so don’t. Let people have diabetes and die early.”
Greg Hands
It would have to be proved that that is a discriminatory action against a particular company, which I am not clear would be the case in the example the hon. Gentleman gives.
Let me return to the point about not wishing to damage relations with Canada. May I ask the hon. Gentleman—
Greg Hands
That is a fair point, Sir Edward. Let me instead ask members of the Committee to consider what the situation would have been on 18 October had it been not the Walloons who said no to the provisional agreement, but the UK. Bear in mind that the Government’s position is that we want this country to be at the global forefront of promoting free trade. Had it been the UK, which had been party to the negotiations for many years, that said no on 18 October—no to Canada, no to the Commission, no to Cecilia Malmström—it would have been catastrophic for our international relations and our trading relations. The Government’s position was and remains that this is a good agreement. Even though we are leaving the European Union, I cannot stress enough how important it is for us that CETA is passed and comes into effect.
I happened to note that earlier in the week the Opposition tabled a different amendment, one that was opposed to CETA—the actual content of CETA—rather than the procedural aspects and the lack of time, which the amendment before us today deals with. I ask all members of the Committee to consider whether we are believers in global free trade and want to have a good free trade agreement with Canada. I strongly believe it is in our country’s interests to do so, and I have yet to hear that from the official Opposition.
Greg Hands
The answer is this, Sir Edward. Starting “Line 10, leave out from “part;” to end and insert”, this amendment in the name of the hon. Member for Swansea West continues: “regrets the signature and the provisional application in the coming months of the Comprehensive Economic and Trade Agreement; is of the opinion that the provisions regarding the Investment Court System are potentially harmful as they have the potential to empower corporate trade interests to the detriment of public bodies protecting the environment, food safety, public health and social rights”. This amendment expresses regret about the signature and the provisional application, even though the hon. Gentleman was a member of the European Scrutiny Committee that, at its meeting in September, agreed that the treaty should be signed.
Geraint Davies
Okay, then I will go on and ask a question. I will take up the matter with the House authorities. It is disgraceful.
The previous draft amendment, which the Minister read out, expressed concern about the implementation of the investment court system. There is enormous concern about this across Europe, which is why it has been taken out of the agreement and put to one side. Such expressions have been made across the Council of Europe, representing 830 million people, which passed a legal affairs resolution only the week before last stating that the ICS should at least be amended to be in accordance with the European Court of Human Rights, that there should be a one-year opt-out, and that fines should be strictly limited to actual damages. There is nothing anti-CETA about that amendment. It says that there are concerns, so there should be a debate. It is outrageous that the Minister got hold of that somehow—perhaps he can tell us who leaked it?
Greg Hands
Sir Edward, as I understand it, amendments can be tabled in the Public Bill Office and withdrawn, which is what I understand the status of the amendment I read out to have been. It was tabled, and it is perfectly possible for people to go in and see what amendments have been tabled. Contrary to what the hon. Gentleman says, the amendment does express regret about the signature and the provisional application. I think the onus is on the official Opposition to work out what their position is on CETA. Are they in favour of CETA or against it?
Peter Grant
May I refer the Minister to the resolution of the House of 17 November 1998, which prohibits Ministers from giving agreement to decisions in the European Council while they are still under scrutiny, and in particular to the paragraph that allows a Minister to take that action in certain circumstances? In the case of a proposal that is awaiting consideration by the House, the Minister is required to
“explain his reasons…to the House”—
not to the Scrutiny Committee but to the House—
“at the first opportunity after giving agreement.”
Agreement was given on 18 October. On what date was the statement to the House made?
Greg Hands
I am not sure that I fully followed that, but on why the UK overrode scrutiny at the European Council on 18 October, the Secretary of State wrote to the Committee to outline what he intended to do, given the fact that the three motions were to be taken as a package. He then appeared before the Select Committee as soon as possible—really as soon as possible—after that European Council, in this case on 26 October. The European Council that took place on 18 October ultimately led to the signing on 20 October. You will recall, Sir Edward, the delay caused by the Walloons seeking further clarification.
As for the provisions of the 1998 resolution, it is not entirely clear to me whether that refers to the House as whole or to the European Scrutiny Committee, which acts on behalf of the House in these matters. I am happy to write to the hon. Gentleman setting out some clarification. I was not a Member of the House in 1998, but I am happy to write to him to outline the impact of that measure on our interactions since it was passed.
Greg Hands
I thank the hon. Gentleman for that question. If it is all right with him, I will write to him in some detail in response to those detailed questions about whether a risk assessment has been undertaken or not.
The Chair
That is the end of the time for questions. We will now proceed to the debate on the motion. I must inform the Committee that I have selected the amendment in the name of Geraint Davies.
Motion made, and Question proposed,
That the Committee takes note of European Union Document No. 10968/16 and Addenda 1to 16, a Proposal for a Council Decision on the signing of the Comprehensive Economic and Trade Agreement (CETA) between Canada of the one part, and the European Union and its Member States, of the other part; further takes note of European Union Document No. 10969/16 and Addenda 1 to 16, a Proposal for a Council Decision on the provisional application of the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part; further takes note of European Union Document No. 10970/16 and Addenda 1 to 16, a Proposal for a Council Decision on the conclusion of the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part; welcomes the signature of the Comprehensive Economic and Trade Agreement in October 2016; looks forward to provisional application in the coming months; and notes that this is a mixed agreement which must be laid before Parliament for at least 21 sitting days without the House having resolved that it should not be ratified before the United Kingdom can ratify it.—(Greg Hands.)
The Chair
The Minister could speak now, but I think I will call Mr Gardiner and then Mr Grant. However, they must allow the Minister at least 15 minutes to reply. Is that all right with the Minister?
Barry Gardiner
Thank you, Sir Edward. I welcome the opportunity, under your chairmanship, to address the Committee in this important and long overdue debate. My hon. Friend the Member for Swansea West speaks here for the European Scrutiny Committee. I speak for the official Opposition, and I am delighted to support the cross-party amendment tabled by me, my hon. Friend and the hon. Member for Glenrothes.
For the avoidance of any doubt—there was doubt, because the Minister tried to sow it—the Labour party believes in an open, fair system of trade. Trade is one of the most effective means of creating shared prosperity and decent jobs. From the very first, when free trade was a radical cause in British politics, my party argued for open markets in the crisis years of the 1920s and ’30s, as mounting calls for protectionism led the world towards disaster.
We understand the power of fair and open trade today. We share the dream of the vast majority of people around the world who want closer ties between countries. We want to build trade links, not protectionist walls. Trade is one of the most important mechanisms for binding peoples together, but we want trade agreements that respect—
Greg Hands
Does the hon. Gentleman agree with his party leader, who described free trade as a dogma?
Barry Gardiner
I am not interested in university debating points ad hominem. Free trade has become narrowed in its interpretation. The right hon. Gentleman will have noticed that I have focused on the benefits that an open and fair trading system can bring, and that is what we want, but we want trade agreements that respect sovereignty and that benefit little companies, not just major corporations. We want trade agreements that make our society a more, not less, equal place. That is why I am delighted to support the amendment tabled by my hon. Friend the Member for Swansea West.
I want to deal with the process first. I will try to be brief because we talked a great deal about this issue during the questions. The failure to bring consideration of CETA to a full debate on the Floor of the House should be a matter of not only regret by the Government, but deep disquiet for hon. Members from all parties. The job in front of the Committee today is very clear. It is not to decide whether CETA should proceed or not. It is to decide whether it is appropriate, given all the concerns there are about CETA, that the Secretary of State should honour the promise and commitment he gave to the House in his written statement and to the European Scrutiny Committee and that we should debate this on the Floor of the House.
I welcome the fact that we have finally today been given the opportunity to discuss this issue, but I cannot help but record that at its meeting on 7 September last year the European Scrutiny Committee recommended CETA for an early debate on the Floor of the House. It did so in view of the unprecedented public interest shown in this new generation of international trade agreements and the complex legal and policy issues raised for the UK. The Committee granted the Government a waiver to allow them to sign CETA at the EU Council of Ministers, but that waiver was conditional upon the promised debate being scheduled urgently to take place on the Floor of the House and at the very latest, it said, before the provisional application of CETA.
As I said, the Secretary of State appeared before the Committee on 26 October. He said that that he was “very happy” to have that debate on the Floor of the House and claimed that the failure to do so had been the result of scheduling problems in the parliamentary calendar. In reality, as the freedom of information request I referred to earlier showed, the Government had not been delayed by a scheduling problem in the parliamentary calendar at all. In fact, the first time the Secretary of State’s Department even approached the business managers to discuss a potential debate on CETA was 25 October—one day before the Secretary of State was due to appear before the European Scrutiny Committee to account for his failure to do so.
“What advice would you give”—
the Department asked—
“would it be better to have an actual date or do you think we can just tell the chair we are in the process of scheduling a debate”.
That does not sound like a Secretary of State committed to full parliamentary scrutiny and to keeping his promise. The Government confirmed in their subsequent letter of 30 November that they recognised a debate on the Floor of the House of Commons to be “of the utmost importance”.
Greg Hands
We have had a good, wide-ranging and lengthy debate, which I welcome. I would like to address some of the important issues raised by members of the Committee, but first I make it clear that the NHS is not at risk from CETA. That is of fundamental importance to the Government. A careful assessment of the legal protections was carried out by lawyers, and we ensured that we were fully satisfied that the NHS is not at risk.
Nothing in CETA prevents the pursuit of legitimate public policy objectives, such as protecting the NHS. To reinforce that point, CETA does not get in the way of our sovereignty on any such matters. The joint interpretive instrument clearly states that the parties have the right to regulate in this manner. The UK can choose to protect public health—by regulating fizzy drinks, for example; that was one of the issues raised earlier. Linked to that is the fact that Governments are also allowed to protect labour rights—
Greg Hands
I am going to make progress first. There are a lot of points to answer after two hours of debate.
Linked to that is the fact that Governments are also allowed to protect labour rights and human rights. A fair, non-discriminatory and proportionate action taken by a member state Government, including to protect human rights, would not breach investment protection. Governments are also able to take action to protect the environment as they see fit. I want to restate that this Government support transparency and proper scrutiny of the agreement. We have followed the usual procedure and engaged extensively with the scrutiny Committees in both Houses, as I outlined. I will add more detail in a moment. Crucially, we have worked hard to secure this debate in advance of the vote on CETA in the European Parliament on 15 February.
To be clear, the Committee requested the debate on 7 September, ahead of the conference recess, which, as we all know, ran from 15 September to 10 October, so it was not possible to schedule the debate before then. CETA was fast-moving, and was originally scheduled for agreement at the end of September. It was only later on that it slipped to 18 October, and eventually 20 October. I hope that the hon. Member for Brent North understands that it has not been possible to schedule the debate on this timetable. The Government have, as has been noted, opened a TTIP reading room for parliamentarians; that is not dissimilar to the operations of the European Parliament. We warmly welcome that ability of Members of Parliament to engage. We have also written proactively to the scrutiny Committees in both Houses on the subject of ongoing trade negotiations; that goes back some time.
The Government are fully committed to transparency and consulting with a wide range of stakeholders during trade negotiations, including the devolved Administrations, while recognising that trade policy is reserved to the United Kingdom. We have provided updates to the devolved Administrations during the process, and my Department looks forward to consulting with them going forward.
On the investment court system of arbitration, the UK welcomes the investment protection provisions in CETA. We also welcome the clear statement of the right of Governments to regulate. We support the inclusion of dispute settlement provisions. It is important for there to be a dispute settlement procedure, but we continue to have concerns about the cost and effectiveness of the proposed ICS. The UK will continue to work with other member states to improve the system.
Geraint Davies
If we must have a dispute settlement system, how is it that we have had successful trade between Canada and the EU based on the fact that we have national courts, European law and the European Court of Human Rights in Europe, and provincial courts, the Supreme Court and appeal courts in Canada? Investors are happy. We do not need the system. No case has been made.
Greg Hands
Foreign investment is incredibly important to this country. It is also important that we protect our investors in markets such as Canada. It is important that we ensure those things are protected, while also protecting the right of member states and Parliament to legislate as they see fit, and the right to regulate. The UK will continue to work with other member states to improve the system. I restate that crucially, the ICS is not being provisionally applied here. Parliament and the UK will therefore have the option further to debate and scrutinise the system, and CETA in its entirety, as part of the ratification process.
In the time available, I will deal with as many of the many points raised as I can. The hon. Member for Brent North asked why there has been no impact assessment of ICS or its predecessor, ISDS. The answer is that ISDS has been in operation for some time. The UK Government have never had a successful case taken against us. All the cases listed earlier were not actions against the UK Government. I reinforce that the system does not, will not and cannot supersede national laws.
Greg Hands
I am going to make a bit more progress, because a lot of points have already been raised. We had an extensive question-and-answer session and extensive speeches that I need to respond to, to be fair.
A question was asked about the methodology for the £1.3 billion figure, which is what the UK will likely gain from the agreement once it is fully in operation. Contrary to what the hon. Gentleman said, that was not produced simply by restating EU estimates. The figure is the result of modelling commissioned by the Government during the course of the negotiations, and it shows broad benefits across a range of sectors.
Barry Gardiner
I refer to the explanatory memorandum of July last year, which explicitly states the way in which the figure was calculated. I can find the exact reference.
Barry Gardiner
It is the Department for International Trade’s “Explanatory Memorandum on European Union Document: Proposal for a Council Decision on the provisional application of the Comprehensive Economic and Trade Agreement between Canada of the one part, and the European Union and its Member States, of the other part”, from July 2016.
Greg Hands
The figure of £1.3 billion may be the same one that the hon. Gentleman cites, but I am confident that my figure is the result of modelling commissioned by the Government.
I was asked whether environmental standards can be increased. Article 24.3 of CETA specifically provides that parties are free to establish their own environmental standards. The hon. Member for Swansea West raised fracking. Contrary to what he said, CETA does not get in the way of the right to regulate. Exactly as we would expect, it does not give fracking companies the right to invest in the UK if they are in breach of UK national laws.
Greg Hands
No, because I am worried about finishing within the time limit.
Crucially, the mere loss of profit is not sufficient to ground a claim in the ICS process. Even if it were, it would not require us to change our laws. Why did we not raise reservations, as other countries did, and protect our public services? Well, we do have a few reservations in CETA, but we have never been subject to a trade dispute concerning public services. We are confident that if one arose, we would defend it.
On geographic indicators, CETA allows for future protection of geographic status, as I have already said. When the negotiations took place in 2011, there was insufficient trade in specific goods for us to qualify. However, it is incredibly important to think about the impact that CETA will have on our ability to export key UK products. I mentioned Scotch whisky earlier; UK cheeses will now be able to enter the Canadian market free of tariffs or other barriers. There will also be zero tariffs on industrial goods. There are a host of things, and all of them will be of immense benefit to the UK and all its constituent parts.
We have delivered on our undertaking to have a debate on CETA. The hon. Member for Brent North was right to draw attention to the European Scrutiny Committee’s request for a debate before the provisional application of CETA at the very latest, but there has not yet been provisional application; that is subject to the European Parliament’s vote on 15 February. Nor has the matter fully progressed through the Canadian Parliament. We are fully in conformity with the European Scrutiny Committee’s request. I urge Members to vote against the amendment.
I am glad that the hon. Member for Swansea West raised previous debates on international trade treaties. One fascinating aspect of this debate is where the official Opposition stand on these subjects. I am glad that he mentioned his debate on 15 January 2015, because two of the then Back Benchers who featured in that debate were the right hon. Members for Islington North (Jeremy Corbyn), and for Hayes and Harlington (John McDonnell), who spoke out very strongly against TTIP and against this kind of international trade treaty.
Geraint Davies
The Minister will also remember the right hon. Member for Hitchin and Harpenden (Mr Lilley) speaking strongly against this proposal, with reference to national sovereignty and interference. All sorts of people take all sorts of angles on this; that is why we need a debate. All we are saying is, “Have a debate”, because we cannot agree. It is absolutely outrageous to railroad democracy in this way, and it is a recipe for future railroading.
Greg Hands
I note that we have already had two and a quarter hours tonight—there has been quite a good debate. The hon. Gentleman is right that concerns have been voiced, but there is not necessarily outright opposition. We, too, have concerns about ICS, and I have raised some of them tonight. However, I have to point out that he is wholly opposed to CETA. At least, that is what he said last week.
Geraint Davies
In essence, I am in favour of free trade, and I think CETA and TTIP could be blueprints for future trade. The issue is to get them right, and not to give them special powers whereby transnational companies can undermine our democracy and liberties.
Greg Hands
I am not going to dwell on this for too long. We heard this evening the hon. Member for Brent North make what sounded like a very long speech against the agreement; it now turns out that he is in favour of it. The hon. Member for Swansea West was strongly against it last week and called for debates on this subject previously, in which the leader of his party and the shadow Chancellor appeared with him. The hon. Member for Nottingham East, who is a member of the International Trade Committee, is not here this evening but may well have a different view. As for the Labour Whip, who knows where Labour Whips stand these days on party policy?
I have two other points. The hon. Member for Brent North talked about a study showing that apparently the UK would suffer a loss of exports. He carefully did not mention what that study was. I suspect it is the Tufts University study, which uses an approach that is useful for analysing a number of global macroeconomic issues, but is not suitable for trade policy analysis. The ICS is not a supranational court. It cannot override or amend national laws and is, in any case, not subject to provisional application. I urge all Committee members to support the original motion proposed by the Government.
Greg Hands
No, I will not. It was not possible to schedule a debate ahead of the extraordinary Foreign Affairs Council trade meeting on 18 October. It was strongly in the interests of the UK to signal political agreement at that Council. We worked hard to secure this debate—in advance, crucially, of the vote on CETA in the European Parliament on 15 February. Owing to the pressures of the legislative timetable, it has not been possible to have this debate in the main Chamber of the House, for reasons that are clear if Members look at the Annunciator.
I am pleased that we have had this opportunity to debate this important matter within the appropriate timetable. I urge the Committee to vote against the amendment. The Government are strongly committed to engaging further with Parliament as we move towards ratification of the agreement on a timely basis. I commend the Government’s motion to the Committee, and urge Members to support the motion and oppose the amendment.
Amendment proposed: line 10, leave out from “part;” to end and insert
“welcomes the prospect of enhanced trading relations between the United Kingdom and Canada; is disappointed that the Government has so far failed to provide a full debate on the floor of the House as recommended by the European Scrutiny Committee; notes that this is a mixed agreement which must be laid before Parliament for at least 21 sitting days, without the House having resolved that it should not be ratified, before the United Kingdom can ratify it; and believes that the Government should provide an opportunity for the House to come to a decision on this issue following a full debate on the floor of the House in advance of ratification.”—(Geraint Davies.)
Question put, That the amendment be made.