European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018

Monday 25th June 2018 Lords Chamber

Motion to Approve

15:19

Moved by

[Baroness Fairhead]

That the draft Order laid before the House on 21 May be approved.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, this order designates the EU-Canada Comprehensive Economic and Trade Agreement, or CETA, as an EU treaty pursuant to Section 1(3) of the European Communities Act 1972. This is a necessary step towards UK ratification of the agreement and part of the process to be followed in laying the treaty before Parliament for 21 days as set out in CRaG, the Constitutional Reform and Governance Act 2010. I am delighted that we have the opportunity to debate this agreement. It follows on from the thorough and constructive debate last year in the other place and the overwhelming support shown in a deferred Division. I very much hope that your Lordships will also agree to support this ambitious and progressive FTA today, and that the other place will again support the agreement when it is debated there tomorrow.

This Government are clear that CETA is a good deal for Europe and a good deal for the UK. Our total trade with Canada stood at £16.5 billion last year, up 6.4% on the previous year, and with a services surplus of £1.9 billion. CETA will improve on this already strong economic partnership. The agreement has the potential to boost our GDP by hundreds of millions of pounds a year: it will bring down trade costs by reducing burdens in the form of both tariffs and procedures; it will boost trade and investment; it will promote jobs and growth; and it will increase our ability to access Canadian goods, services and procurement markets to the benefit of a wide range of UK businesses and consumers. Canada is an important strategic partner too: as one of the Five Eyes group and a member of NATO, the Commonwealth, the G7 and the G20, we have bonds that go far beyond just our trading relationship.

As this House will know, CETA was provisionally applied in September last year, removing 98% of the tariffs previously faced by UK businesses at the Canadian border. Already, UK firms are benefiting from this. We have seen drinks exporters such as Dorset’s Black Cow Vodka and Kent-based sparkling wine producer Hush Heath Estate improve their market access and profitability following the reductions in tariff and non-tariff barriers. We are seeing new UK exporters to Canada, including Seedlip, the world’s first distilled non-alcoholic spirit. Under the agreement, Seedlip does not pay the 11% pre-CETA tariff on its product. Yorkshire-based Moordale Foods entered the Canadian market in March 2017, helped by CETA duty elimination. In services, the UK and Canadian architect bodies, ACE and CALA, have notified the EU Commission that they are in discussions on future mutual recognition.

In September last year, during her visit to Canada, my right honourable friend the Prime Minister and Prime Minister Trudeau reiterated their intention to seek to swiftly and seamlessly transition CETA to a UK-Canada deal once the UK has left the EU. To ensure as seamless a transition as possible, they formally announced a working group to take this forward. Officials from our two countries have already begun to meet to discuss transitioning CETA. It is important as a first step that we prevent a cliff edge for British and Canadian businesses. Of course, while we remain in the EU we continue to support the EU’s ambitious trade agenda. Free trade is not a zero-sum game, but rather a win-win. Ratifying CETA will send a strong message about our determination to champion the cause of free trade. This is a key part of the Government’s vision of delivering a prosperous and truly global Britain as we leave the EU. It is important to the UK that CETA is ratified successfully by all EU member states.

During the implementation period, the United Kingdom will retain access to EU free trade agreements but we will also be able to negotiate, sign and ratify new UK-only free trade agreements for the first time in more than 40 years. In doing so, we will safeguard the benefits already achieved in CETA for UK businesses and consumers and lay a foundation for an even stronger relationship.

Those areas of the agreement that were not provisionally applied in 2017 include a large part of the chapter on investment, including the new investment court system, on which there has been extensive discussion both in Parliament and in wider civil society. The UK supports the principle of investment protection and looks forward to engaging further with the Commission on the technical detail of the investment court system. We support the objectives of obtaining fair outcomes of claims, high ethical standards for arbitrators and increased transparency of tribunal hearings. Investment protection provisions protect investors from discriminatory or unfair treatment by a state. They apply only to investments in place, not to speculative future investments. We have more than 90 such agreements in place with other countries and there has never been a successful investor-state dispute settlement claim brought against the UK, nor has the threat of potential claims affected the Government’s legislative programme. Moreover, the agreement provides that member states should not reduce their labour and environmental standards to encourage trade and investment, ensuring that our high standards are not affected by this agreement.

Nothing in CETA prevents the UK regulating in the pursuit of legitimate public policy objectives—and that, of course, includes the NHS. The Government have been absolutely clear that protecting the NHS is of the utmost importance for the UK. The delivery of public health services is safeguarded in the trade in services aspects of all EU FTAs, including CETA. The UK Government will continue to ensure that decisions about public services are made by the UK and not our trading partners. This is a fundamental principle of our current and future trade policy.

On scrutiny, we have committed, through our White Paper published last year, that we will ensure appropriate parliamentary scrutiny of trade agreements as we move ahead with our independent trade policy. The Government can guarantee that Parliament will have a crucial role to play in the scrutiny and ratification of the UK’s future trade agreements and we will bring forward proposals in due course.

I welcome the opportunity to make the case for CETA today and to give the opportunity for full scrutiny of this important agreement, as the Government have done for previous EU free trade agreements. I look forward to hearing noble Lords’ contributions. I beg to move.

[Lord Whitty (Lab)]

My Lords, I certainly do not wish to oppose an agreement with Canada in this way but I have a number of questions—to some extent the noble Baroness has anticipated me—for two reasons. First, the Government have made it clear that on the one hand they regard CETA as a template for future UK-third party agreements around the world post Brexit and, on the other, they intend that CETA will be rolled over post Brexit into a UK-Canada free trade agreement. Both of those may or may not happen, but two slightly troubling points arise.

My second reason for raising this is the same as I gave in a slightly rambling intervention in a debate initiated last Thursday by the noble Baroness, Lady McIntosh of Pickering. The proponents of free trade, among whom I include myself, need to recognise that there is a negative political reaction in many countries around the world to the prospect of greater free trade. We have seen this in Britain in terms of the Brexit vote, in my opinion, and of course very strongly in America, which has effectively stymied the G7 from making a step change in terms of multilateral free trade around the world. Given that political difficulty, it is important that key sections of our population do not regard the extension of free trade as a threat to their security or to their position.

15:30

That relates in part to the investment court system and in part to how we can enforce the general aspiration in the agreement to maintain high labour and environmental standards. On the latter, while commendable commitments have been made, there is no method of enforcement. As long as we and the EU go on making free trade agreements which pay lip service to maintaining such standards without any process of enforcement, there is a difficulty. There would be a difficulty in a UK/EU treaty, were that to be the case, because at present within the EU we are able, not just as nation states or powerful corporations but as individual small businesses or, indeed, individual persons, to raise through the European system, right the way up to the European Court of Justice, any miscreant breach of those standards. That will go once we are outside the EU and we need to ensure that any new treaty with the EU or indeed with anyone else replaces it with an equivalent system of enforcement. At present, that does not seem to be evident in the CETA agreement.

On the investment court system itself, it is of course true that it is similar to other arrangements made between the EU and elsewhere, but the EU has its own internal mechanism whereby, as I have said, other organisations and international corporations can make appeals to the court. In the case of the ICS, it will in effect be the investors who are able to bring cases against Governments if they believe that their interests are being jeopardised by a decision of a Government in relation to their investment. As we have seen, that can relate to laws enforcing better health standards or indeed restrictions on the public interest dimension of takeovers and mergers.

For the same reason that this was raised in the deal between the EU and the United States in TTIP, the two Governments have to address the issue very clearly before we give our approval to what is being proposed today. I hope that the noble Baroness can say some more about that because while it is clear that the EU and Canada—and, indeed, Britain and Canada if it ends up being a bilateral treaty—have very high standards, that will not necessarily be the case in other treaties which the Government seem intent on pursuing after the end of the transition period when we will be seeking to make free trade agreements with countries whose standards of environmental protection, worker protection and consumer protection are disturbingly lower. While I would not wish to hold up agreement to this treaty, if it is the template, I do not think that it is fully adequate and we need to do some more thinking before we move on to the next stage of our trading arrangements with the rest of the world.

[Baroness McIntosh of Pickering (Con)]

My Lords, following on from the remarks of the noble Lord, Lord Whitty, which essentially I support, obviously it is a matter of regret that, if I understand it correctly, the agreement does not include services. That is a major omission. Also, on the Canada-US border, which I realise is not covered by discussions today, there is already tension, in particular over the flow of food and agri-food goods. This was raised at the G7 summit.

My noble friend said—I welcome this most warmly—that there will be proper scrutiny of the agreement. I wonder whether she will be in a position to share with the House this afternoon what form that scrutiny will take, and perhaps give a commitment that scrutiny will take place while the House is sitting—because I gather some procedures are being considered by the Procedure Committee that will allow some of the regulations flowing from the EU withdrawal Bill to be considered while the House is in recess. I do not know about other noble Lords, but it concerns me greatly that we were promised proper scrutiny and have given vast powers to the Executive to bring in regulations. My understanding was that all the regulations and statutory instruments would be considered while the House was sitting—and we have the September sitting, when we could give instruments close consideration.

My noble friend also said that no case in the investment sector against the UK had yet been successfully prosecuted. When we had the little debate last Thursday on the G7 summit, I pressed my noble friend on what the dispute settlement would be—this is in the White Paper—in relation to the free trade agreement that we seek with our current EU partners, and indeed other free trade agreements that might be agreed. In the context of concerns raised, certainly by the Belgian Government, this obviously is a source of concern that may have greater credence the closer we come to reaching an agreement with the EU, or indeed more broadly.

I take some comfort from the reassurance that my noble friend has given the House this afternoon that public services will remain a matter for the UK Government. Perhaps she could give a bit more substance to that commitment, because a lot of scare stories were going around at the time the TTIP agreement was being discussed, and it would be most unfortunate if, in the context of the CETA agreement, such scare stories were to persist.

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Whitty, was right to highlight consumer and voter concerns about such matters—but I should point out that there are also business concerns about the Government’s stature in the trading environment. It is not just the content but the body language that goes with it. At the weekend we saw some appalling body language from senior Ministers about business and some of our most important exporters, so it is good that we can ameliorate that at least in some way with some positive body language here. It is good for us to be discussing this. Perhaps it is churlish of me to point out that the reason why we are discussing it is that we are in the EU, which has worked hard to deliver this treaty.

It is also heartening that we are discussing something that fits within the WTO legislative procedure rather than—sadly, and increasingly—within a worldview that is moving outside the WTO. So it ticks a number of multilateral boxes. As we have heard, Canada is of course an important current trading partner, and one that we hope to make larger. So CETA and its ratification are to be welcomed. It is a good arrangement and, clearly, as the Minister pointed out, the Canadians have made it clear that this is a framework by which a transition in the event of Brexit can be moved into a bilateral agreement between ourselves and Canada.

As the noble Baroness who spoke before me pointed out, it is clear that this does not include services—that is my understanding. I see that the Minister is shaking her head. Perhaps she might indicate which services are in and which are out. My sense is that very few are in. What would be the attitude towards a bilateral agreement on services between our two countries?

The Minister also pointed out that a working party to transition this has already been set up. Perhaps she could give us some sense of how long “swiftly and seamlessly” really means in terms of moving from one to the other. She used some examples; quite a lot of them were agricultural and food products. Clearly, Canada has a very strong agricultural industry. I would be interested to know what impact analysis has been done of the relative flows in both directions of agricultural and food products between our two countries. The Minister talked about growing trade—I think she used the phrase “hundreds of millions” in extra trade. What kinds of targets do the Government have for increasing the flow between the two countries?

It is all good—except the context in which CETA could be transitioned between our two countries really does depend on the nature of the arrangement we have with the European Union. Canada has already made that clear and has expressed unhappiness on, for example, the division of quotas and other such issues. Perhaps the Minister can tell us how these kinds of things feed in to our negotiations with the European Union.

The investment court system—ICS—has already come up. The Minister mentioned it, as did both the previous speakers. This is clearly an area that has raised people’s concerns. There is a perception that large multinationals will have an advantage in such a system. It is easy to understand that perception because this will be a complex and expensive process. How can the Government allay the fears of smaller traders and individuals that this will not be a charter for the larger, deeper-pocketed companies to play the system? Can the Government confirm that the ICS will be rolled over into any bilateral agreement should CETA be transitioned post Brexit?

Finally, the major exports between the two countries are in the engineering sphere, specifically nuclear reactors, boilers, machinery, vehicles and aircraft. I note that all these sectors could suffer severely under Brexit; for example, due to border friction, the restriction of movement of people, and exiting Euratom. There will be pressure on those businesses, so what assurances can the Minister give them? I note the particular importance in the aircraft industry of the Anglo-Canadian relationship at Bombardier in Belfast. Again, what assurances can the Minister give the workers there?

It is good that, instead of attacks on business by the Foreign Secretary or the Health Secretary, we are having a positive debate about business. CETA adds a long-term view to things, in respect of which business is desperately looking for stability. Within the context of those questions, we welcome this statutory instrument.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for introducing the draft Order in Council which classifies CETA as an EU treaty, and to the others who chipped in to this debate. It is the second week running we have had a debate on trade. Let us keep the momentum going and have more of this. It is a good topic and will become even more so as we get on to the Bill that has been prefigured. This debate is important in itself but, as my noble friend Lord Whitty said, it is also a harbinger of how we might do deals in the future; in particular, how the Government might bring Parliament into the process.

It is interesting and therefore a bit ironic that this order is a draft of an Order in Council—one of the most obscure aspects of our legislative structure—and does not actually deal with the content of CETA at all. The Minister was kind enough to go over some of the main points in it, but of course, as the noble Baroness, Lady McIntosh, said, we lack an opportunity to discuss in detail some of the ways in which this framework agreement has been created. I hope that by the time we get to a rerun of this, or to any other free trade agreement that will be brought forward, we will have a much more substantial, engaged and expert debate on the mechanisms being created, the detail of what is or is not included in the free trade agreement and some idea of the process that we will be involved in.

15:45

We are dealing with Canada, which is not an inconsiderable country and a place with which we in Britain have strong emotional, family and other ties. It is important that we recognise its membership of the Commonwealth. It is good that the EU is trying to create a free trade agreement with Canada, although I thought that what we got from the Minister was a little short on detail, which bears on what I will say later. For the record, in 2016 our exports to Canada were about £8.3 billion. It is Europe’s seventh largest export market outside of the EU. It is our third most important export market and our appetite for Canadian goods means that Canada is running a trade surplus with us of some $6.8 billion. This is not exactly on an equal basis; it is something on which we are spending more money than we are taking back. It is an importing situation.

We have to add to that the fact that a significant majority of the goods that come from Canada to us are going on to Europe; they are not staying here. While that is important, it also has to be factored into any post-Brexit situation. We also have to think about the investment side and the way our businesses work together. Bombardier has already been mentioned, but many other firms have an established presence in Canada. Some 1,100 UK firms, according to the latest figures, are owned or controlled by Canadian interests. It is a partner in more than just goods and services; it is a partner in the very industrial fabric of this country.

A couple of noble Lords mentioned the current state of play. It is a bit confusing so I hope that when she responds the Minister will shed a bit more light on where we are. This trade agreement was agreed by the European Parliament on 15 February 2017. Since then, the ratification process has been going on—but has it? It seems to have stalled somewhat. The Belgian Government have requested the European Court of Justice to examine whether the investment court system proposed in CETA is compatible with EU law, and the ECJ is holding a public hearing on this case in full court tomorrow, on 26 June. It will take representations from 11 EU member states, the European Commission and the Council. It is not clear whether the UK will be represented in that. I would be grateful if the Minister could confirm whether we will be represented on that occasion.

The Dutch Government have stated that they will not ratify CETA until after the ECJ has ruled on whether the investment court system is compatible with EU law. Germany has not even commenced ratification as the German constitutional court had been asked to rule separately on whether the ICS is compatible with the German constitution. The new Italian Government have stated that they do not intend to ratify CETA. Not ratifying a treaty of this type has huge ramifications that are important in themselves, but also important for the future. I hope the UK Government have taken their own legal advice on this. Will the Minister confirm that no other legal concerns are in play at this time as far as the UK is concerned? In any case, should we not wait until we have some clarity from the ECJ about whether this thing is legal before we go jumping into premature ratification of it? Might she comment on that?

We then have the question of what happens in the event that the treaty will not be ratified by the time we leave the EU, which seems rather likely. What happens then? That has real salience relating to the ISDS and the ICS because CETA’s sunset provisions do not apply if we leave before the full treaty is ratified. Again, I would be grateful for some comment from the Minister.

Major concerns in the run-up to CETA mainly centred on services, but also on whether the National Health Service would be subject to the arrangements. The Minister was very clear about this. She said that the NHS would not be affected by it, but could she reflect a little on what she said and, if possible, give even more clarity?

CETA is the most far-reaching of all the EU services trade deals to date, and it is the first to use a “negative list” approach for scheduling of its liberalisation commitments. Under such an approach, all service sectors not explicitly exempted from liberalisation are, de facto, included. The use of this method represents a significant departure from the use of the “positive list” process used in previous trade agreements, where only those service sectors listed for inclusion were subject to the rules and disciplines of the agreement. So we have a default “in” arrangement here.

There are also the “standstill” and “ratchet” mechanisms, which prevent countries reversing liberalisation commitments already made in their service sectors whether now or in future. The standstill clause serves to lock in the existing level of market liberalisation, and states that only already existing non-conforming measures are exempt from the agreement’s market access. The ratchet clause goes even further, so that Governments are allowed to introduce new reforms to their service sectors only if they liberalise the market still further; that is, future Governments will not have the right to reverse any liberalisation measures that might have been introduced in years to come.

Given the concern that many people have about protecting the NHS, which I am sure is shared by the Minister, it is important that we are definitively clear about whether the NHS is subject to CETA now and in the future. If she needs any help, I am glad to see that she has been joined by a Health Minister on the Front Bench. I look forward to any comment that he might wish to make on this.

On a slightly less weighty but still important topic, it was interesting to read in the CETA text that, uniquely among the major member states, the Government have singularly failed to protect the interests of British producers in the negotiations. CETA offers protection on the Canadian market for 145 products with geographical indications at a comparable level to that offered in the EU. While all other major EU member states listed national products for protection, the UK Government failed to list a single one, not even Yorkshire rhubarb—I am sure that the noble Baroness, Lady McIntosh, will be on her feet in a second to complain about that. This is an extraordinary oversight, given that the Government had managed in TTIP, which has been abandoned, to list Scotch beef, Scotch lamb, Scottish farmed salmon—there must have been some concern about the future of the SNP at that point—Welsh beef, Welsh lamb, West Country farmhouse cheddar and both white and blue Stilton for protection. Why not rhubarb? Why are there so few geographical indications for British products, and what assessment has been made of the impact of this on our favoured and treasured foods?

As pointed out by my noble friend Lord Whitty, trade unions have criticised the imbalance between the rights afforded to transnational corporations under CETA and those extending to workers. All the liberalisation commitments in CETA are binding, backed up by the double enforcement mechanisms of state-state dispute settlement and the new investment court system, which allows investors to bring their own claims against the host nation. Yet the chapter relating to labour standards in CETA is one of the weakest in all the recent EU free trade agreements, with far less exacting provisions than in previous agreements such as with Korea, Colombia or Peru. Further, as has been said, there is no enforcement mechanism to hold the parties to the minimal provisions on labour standards that exist in CETA. Instead, CETA provides for a “panel of experts” to be convened to investigate any allegations that one or other of the parties has failed to live up to their obligations under the labour chapter. All we get from that is a report on what has happened, with the parties then invited to respond. There are no trade sanctions or financial penalties—nothing; it is simply reporting.

In case there was any doubt, labour rights are excluded from the scope of the investor-state dispute settlement mechanism. In the event of any adverse reports, the parties are merely invited to,

“endeavour … to identify appropriate measures or, if appropriate, to decide upon a mutually satisfactory action plan”—

a most ineffectual form of words available for negotiators to include in a trade agreement. This is not satisfactory.

Unlike in some other EU trade agreements, there is no reference in CETA to human rights clauses and no ability to suspend the agreement in the case of a human rights violation by either side. Worse still, the human rights clause covered by the parallel agreement signed by the EU and Canada at the same time is less strong than many other human rights provisions in EU trade agreements. This seems a worrying point for any future negotiations. Clearly, what is done is done and there is little that we can do about it, but if this represents the template for future discussions, I give notice that we will not be satisfied.

Turning back to the economic assessment, a very full impact assessment has been provided on CETA, and I am grateful to the department for having worked on that, but the analysis is short on any comparison across all EU member states. As far as I can see, the best report published on that says that the UK will experience a small but significant decrease in both exports and trade balance as a result of CETA, with about 10,000 workers losing their jobs in the UK. The study also projects a decline in wages and a further widening of social inequalities in the UK. Will the Minister comment on that? Does it not send a bit of a shadow across these proposals, particularly as countries such as France, Germany and Italy will actually see an increase in their exports as a result of CETA?

CETA is remarkable in its disregard for the interests of small and medium-sized enterprises. At least the abandoned TTIP between the EU and the USA contained a dedicated chapter outlining what measures the EU and the USA would introduce for SMEs, but there are 2,255 pages of CETA text—I have not read them all but I have read most of them—and I could not find a single commitment furthering the interest of SMEs. This is a serious issue and I would be grateful for comment from the Minister.

On the environment, we know that the agreement will lead to an increase in the most harmful greenhouse gases, such as methane, nitrous oxide and CO₂, because of increased shipping of goods across the Atlantic. The increased investment in Canada’s tar sands and mining industries arising from CETA will surely pose a particularly serious threat to environmental sustainability. I would be grateful if the noble Baroness would comment on that.

Finally, on the investor-state dispute system, the official initial assessment on CETA, carried out for the European Commission at the start of the negotiations, included a strong recommendation against including any ISDS mechanism in CETA, for the very good reason that foreign investors should have confidence in the existing domestic judicial systems of Europe and Canada to obtain redress for any of the torts that they might suffer. However, instead of accepting this recommendation the Commission has pressed for a new investment court system to be included in CETA that would provide for foreign investors to sue host nations. In the instrument issued at the same time, the EU and Canada gave notice of their intention to expand this system still further into a permanent structure available to foreign investors in the form of a multilateral investment court.

Is the Minister aware that more than 100 academic lawyers around Europe issued a strongly worded statement in October warning that the inclusion of such powers in CETA would undermine not only the rule of law but the democratic principles on which the nation state is founded? A group of Canadian lawyers with direct experience of ISDS published a letter in October 2016 drawing particular attention to,

“the undermining of democratic regulation, the special privileging of foreign investors, the lack of judicial independence and procedural fairness in the adjudicative process, and the lack of respect for domestic courts and domestic institutions”.

Going back to the original point, given the maturity of the respective legal systems in our two countries, and the close links between the UK and Canadian law, why do the Government support an ICS system in CETA? The Minister will also be aware that the UK has been subject to investor-state challenges in the past and has had to disburse significant legal costs even when cases have not been lost. Fighting these cases is costly and can clearly have a chilling effect on public policy decisions. Have the Government made any assessment of the costs that are likely to be involved in that?

When we were in government we were pro-trade and pro-investment. We remain that way today and we are in favour of trade agreements with our allies and trading partners that protect jobs and economic development while protecting rights and standards. I think that CETA contravenes these principles. What we are looking for is an agreement that will protect and promote skilled jobs, human rights, workers’ rights based on internationally recognised standards; that will preserve and enhance existing social, health and environmental regulations and the right of Governments to regulate in their public’s interests; that upholds the principle of equality before the law, rejecting any privileged status accorded to foreign investors by way of special courts; that safeguards the provision of public services in the public interest and ensures no legislative restriction on public sector ownership or renationalisation; that allows national and local government bodies, when making procurement decisions, to take into account democratically determined public policy objectives; and that engages with civil society, is fully transparent and subject to full parliamentary scrutiny.

CETA in its present form contravenes all these principles on all fronts. If, as the Minister says, the Government wish to base a future UK-Canada trade agreement on CETA, the Trade Bill, if it remains in its current form, will give them the power to do so without proper parliamentary scrutiny. I give notice that this is a red line for us and we will seek to change the Bill if it is not amended before it arrives in your Lordships’ House.

16:00

[Baroness Fairhead]

I thank noble Lords for their contributions today in what has been an interesting debate on CETA. They have talked about the benefits of CETA and free trade agreements. I recognise the concerns, which I shall come on to, but I am happy to hear the enthusiasm about there being shares for free trade based on rules, with some of the requirements to uphold standards that the noble Lords, Lord Fox and Lord Stevenson, focused on. I will touch on as many of these points as I can in the moments that I have.

The numbers that I have on our current trade and investment are that our exports are £9 billion and our imports are £7.5 billion. From my information, we have a slight deficit of £265 million on the goods side but a trade surplus of £1.9 billion on our services side. I am also happy to say that CETA includes services but possibly not as many as we had hoped at the beginning of the process. However, there are new opportunities in areas such as telecoms, finance, professional and environmental services. It will also allow UK firms to bid for a much broader range of Canadian public services, once Canada decides to open them up for such bids. Except of course for the public services, we will try to ensure that CETA guarantees the existing services’ liberalisation. There are some ways of helping SMEs, particularly on the processes. There are rapid ways of processing below €6,000. There is also a certification where you just have to put your name forward, and HMRC has pre-certified around 12,000 of those.

I turn to the future trading relationship with Canada. As I said, we will begin to transition CETA into a UK deal once the UK has left the EU, following a clear commitment. We believe that is important because it will prevent the cliff edge and, while we remain in the EU, we will continue to support the ambitious trade agenda of the EU. This provision was undertaken within that agenda, so it will ensure that during the implementation period we retain full access to CETA and other EU FTAs. An independent trade policy will allow us to be more ambitious, particularly in services.

I believe it was the noble Lord, Lord Fox, who asked me what would happen if the treaty was not ratified by all member states. I apologise; it was the noble Lord, Lord Stevenson. We expect ratification to take a number of years. We have noted Italy’s current position and will seek to ensure that everybody ratifies it. As it is currently provisionally applied, that will continue and we will be able to transition on that basis. It does not require such ratification for us to ratify it ourselves and transition that deal.

A number of noble Lords discussed ICS. Let me be clear that neither ICS nor any other investors’ dispute resolution can force the privatisation of public services. We alone retain the right to regulate. None of these tribunals can overturn Parliament or laws, as has sometimes been claimed. If I may deal with ICS first, there was a question about whether we are in front of the ECJ tomorrow. The answer I have is that we are not on that issue. However, we are aware of the concerns that some parties have with the proposed ICS. We believe in investor protection only where they are treated unfairly or with discrimination. ICS is part of this CETA but in looking at the future, we will look at a number of options of which ICS is one. There are others, which we will bring forward to the House. To be clear, the practical details of ICS have not currently been fully worked through by the Commission but it has committed to consult fully when that has happened.

The noble Lord, Lord Stevenson, and my noble friend Lady McIntosh asked about the scrutiny process. There is an impact assessment that we have made public, and I will write to noble Lords to give them exact details of how to access it. We are working to make sure that in future the process of negotiating and implementing new trade deals is transparent, efficient and effective because we want a legislative framework that will enable future trade agreements to move quickly from agreement to ratification while supporting due processes for full parliamentary scrutiny. We are currently considering the legislative framework, but Parliament will have a crucial role to play in the scrutiny and ratification of future trade agreements and deals. The Government will bring forward those proposals in due course.

The EU has high labour and environmental standards. They are not affected by CETA, and we sign up to them with CETA. The agreements provide that member states should not reduce their standards to encourage trade and investment. I think that is important. We are determined not to compromise food safety or the environment or to reduce labour standards in pursuit of trade agreements. We will be rolling over all the current agreements when we transition CETA into a direct UK-Canada deal. The noble Lord, Lord Whitty, made a serious point about enforcement. We are looking at ways to improve compliance and enforcement. That remains something we are actively working on.

On the economic benefit figures, I referred noble Lords to the impact assessment. We have looked at impacts in a number of sectors. The total benefit to the UK is expected to be more than £730 million. The sectors that are likely to benefit the most are motor services and financial services. We see increases of £280 million and £70 million respectively. Detailed work has been done, so I would not like to believe it does not exist.

The noble Lord, Lord Stevenson, referred to geographical indicators. We expect CETA to be positive for UK agriculture. We have been in consultation and were in consultation when the geographical indicators were discussed. We think CETA is positive. It gives access to a market of 35 million people. The protected food names scheme remains in place in the EU. It is true that no UK GIs were included in CETA. That was because there was a process within the EU that it had to reach a certain hurdle. We consulted widely with groups and none of them at the time went above the hurdle that was eventually decided upon by the Commission. However, there is a mechanism to add new GIs in future, which I think will be actively pursued by a number of states. I know that a number of people have raised the question of Scotch whisky outside this House. It is not included because it is already protected. It has been formally registered in Canada since 1998, and it is also protected by the EU-Canada wine and spirits agreement.

I have tried to answer as many of noble Lords’ questions as I could in the time available. I recognise their concerns; we are working on a number of them and developing our strategy for the future. I realise that their concerns are heartfelt, and we will be working with noble Lords on that. However, I believe that this is a good deal for UK businesses—SMEs as well as larger businesses—and for consumers, and in our national interest to ratify this agreement.

I thank noble Lords for our debate today and hope that they will feel able to support the ratification and the positive signs that it will send to our future trading partners. I commend the order.

Motion agreed.