Draft EU-Canada Trade Agreement Order
(6 years, 4 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
14:26 - The House divided: - Ayes: 315 / Noes: 36 - Question accordingly agreed to.
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I beg to move,
That the draft European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018, which was laid before this House on 21 May, be approved.
I am delighted that we have the opportunity once again to debate the comprehensive economic and trade agreement between the EU and Canada, known as CETA, and that this is taking place on the Floor of this House. This follows on from the thorough and constructive debate last year and the overwhelming support shown by the full House in a subsequent deferred Division. I note that a majority of those on the Labour Benches who voted in that Division chose rightly to vote in favour of the agreement, and I hope they will continue to do so, because this debate comes at a crucial point in world trade, with the potentially destructive rise in protectionist sentiments.
Free trade is the means by which we have collectively taken millions of people out of abject poverty in the last generation, and we must not put that progress into reverse. We should also realise that trade is not an end in itself, but a means to widen shared prosperity. That prosperity underpins social cohesion and, in turn, political stability. That political stability, in turn, is the building block of our collective security. To interrupt the flow of prosperity is to risk creating a torrent of instability. We have an opportunity today to reaffirm Britain’s commitment to the principles of free trade and the application of an international rules-based system.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the Secretary of State accept that after exit day, we will be bound by these treaties with Canada and hopefully Japan, but that there is no legal obligation for Canada and Japan to honour their obligations to us, because we will be out of the EU? That is the big problem with leaving the customs union.
Dr Fox
We already have had substantial bilateral discussions with Canada, and it agrees with the United Kingdom that CETA should form the basis of a bilateral agreement between the UK and Canada as we leave. However, we will have greater leeway to look at what additional elements we might want to include when we are no longer tied to the European Union.
Dr Fox
I will make some progress.
This Government are clear that CETA is a good deal for Europe and a good deal for the United Kingdom. Our total trade with Canada already stood at £16.5 billion last year, up 6.4% on the previous year, with a services surplus of £1.9 billion. CETA will improve on this already strong economic partnership. It is an agreement that will potentially boost our GDP by hundreds of millions of pounds a year. It will bring down trade costs, boost trade and investment, promote jobs and growth and increase our ability to access Canadian goods, services and procurement markets, benefiting a wide range of UK businesses and consumers. More trade and more growth result in more money for the Treasury, with benefits for our publicly funded services. CETA is a comprehensive and ambitious agreement— the most comprehensive agreement between the EU and an advanced partner economy that has come into force so far.
Jeremy Quin (Horsham) (Con)
My right hon. Friend referred to the benefits that may flow to Canada, the UK and the EU, but there is a broader point to be made today about the benefits of free trade to the whole world. I hope that the House—hopefully united, and with Opposition Members hopefully united as well—can send the signal that free trade is a good thing for the world economy and that it is free trade that brings people out of poverty on a global basis.
Dr Fox
I think that something we share across the House is the belief that we would prefer people to be able to trade their way sustainably out of poverty rather than having to depend on aid budgets, and, of course, free trade is one of the key ways of ensuring that that happens. My hon. Friend is right: it is important that we send a signal, and I hope we can add to the signal that we sent last time that it is not possible to believe in the concept of free trade while not agreeing with any of the specific agreements that make free trade happen. It is important that we have consistency throughout.
Angus Brendan MacNeil
I am picking up the clear message that it is the view of the Brexiteer UK Government that the European Union has negotiated a very good trade deal. Is that correct?
Dr Fox
We think it is the most advanced and ambitious trade deal that the EU has produced so far. That is not to say that it could not have been more ambitious in some areas, such as services. There is, of course, room for improvement in the future.
Canada is an important strategic partner too. As one of the “Five Eyes”, and as a member of NATO, the Commonwealth, the G7 and the G20, we have bonds that go far beyond just our trading relationship.
As Members will know, CETA was provisionally applied in September last year, removing 98% of the tariffs previously faced by UK businesses at the Canadian border, and UK firms are already benefiting. 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 with the reductions in tariff and non-tariff barriers. We are also seeing new UK exporters to Canada, including Seedlip, which produces the world’s first distilled non-alcoholic spirit. Under CETA, Seedlip does not have to pay the 11% pre-CETA tariffs on its product.
Moordale Foods, which entered the Canadian market in March 2017 with assistance from the Department, was helped by CETA duty elimination. Pre-CETA, its range of products would have been subject to duties of 12.5%. Its prices in Canada are now closer than ever to its current domestic UK price, and its products can now be found in key Canadian gourmet food outlets, including the flagship Saks Fifth Avenue food hall in Toronto. That is an example of trade in action, and of how it will help the United Kingdom to earn more abroad and provide more jobs in the UK.
Chris Bryant
The Secretary of State has suggested that when we leave the European Union, there will be things that he will wish to secure from a new trade deal that the UK will sign with Canada, in addition to what this trade deal leaves us. Can he list three things that he would like to see in that new deal?
Dr Fox
As we will be in negotiation with Canada, I will not enter into that, but, as I have said, there are areas in which the final agreement was not sufficiently ambitious, such as services, and also issues related to data movement. There are areas in which the United Kingdom will have greater freedom when we are outside the European Union.
Kevin Hollinrake (Thirsk and Malton) (Con)
My right hon. Friend may be interested to know that while Wensleydale Creamery, which is just outside my constituency and makes fantastic cheese, is already trading with Canada, the agreement is bound to help it to increase that trade. He has identified the benefits of free trade very clearly, but does he accept that we also need fair trade, so that the standards—the non-tariff barriers to which he has referred—are the same on both sides of the trade agreement, and businesses are treated fairly?
Dr Fox
That is a good point. The debate tends to revolve around tariffs rather than non-tariff barriers, which are often the biggest impediments to trade. However, as has been pointed out by Members on both sides of the House, since 2010 an increasing number of non-tariff barriers have been applied by the G20 countries. It is not acceptable for the richest countries in the world to say, “We have done very well out of free trade,” and then to pull up the drawbridge behind them. If we ourselves have benefited from free trade, it is our moral duty to ensure that generations after us, both at home and internationally, benefit from it as well.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The Secretary of State is making a compelling case for supporting the trade deal, and there is a great deal of cross-party support for it, but will he confirm for the record how long it took to agree the deal with Canada, and how long it will take him to ensure that we have the same deal, or something better, once we have left the EU?
Dr Fox
As I have already said, and as we have already agreed with Canada, the existing agreement will form the basis for the bilateral agreement that we will have with Canada when we leave the European Union. If we enact the Trade Bill—which Labour voted against last time—we will have no friction as we leave the EU, because this agreement will continue. However, that does not close down the possibility of our being able to improve on it in the future.
Several hon. Members rose—
John Redwood (Wokingham) (Con)
I am glad that the Secretary of State is now stressing to Labour Members, who do not seem to understand it, that the deal that the EU has done novates to us as well as to the rest of the EU. The EU that signed the agreement will not be in existence once we have left, so there is an equal opportunity for it to novate to us. There is no reason why it will not novate to us, and I am sure that my right hon. Friend will be able to improve on it subsequently.
Dr Fox
I have said twice that we have already had discussions with Canada to see how we can build on the agreement that we will inherit as we leave the European Union. It is not a question of choosing one or the other. The agreement will already be there for us—assuming, that is, that the House of Commons passes the trade legislation which is necessary to give our businesses, our communities and our workers the certainty of continuity as we leave the European Union.
Several hon. Members rose—
Dr Fox
I will make some progress.
In parallel with the trade benefits to which I referred, investment in the UK from Canada continues to grow. In 2016, Canada had £18.6 billion invested in the UK and we had £21.1 billion invested in Canada.
As I have said, ratifying CETA is also an important step towards our future trading relationship with Canada as we prepare to take advantage of the opportunities offered by our exit from the European Union. During the Prime Minister’s visit to Canada in September last year, both she and Prime Minister Trudeau reiterated their intention to seek to “transition” CETA swiftly and seamlessly into a UK-Canada deal once the UK has left the EU, and formally announced the establishment of a working group to ensure that the transition was as seamless as possible. Officials from our two countries have already begun to meet to discuss that transition. It is important that, as a first step, we prevent a “cliff edge” for British and Canadian businesses.
Of course, while we remain in the EU we continue to support its 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 free trade, to seek global trade liberalisation wherever we can, and to support the rules-based international trading system to deliver mutually beneficial outcomes. That is a key part of the Government’s vision of delivering a prosperous and truly global Britain as we leave the European Union—
Sir William Cash
I congratulate my right hon. Friend not only on what he has said today—which is completely correct—but on the fact that the repeal Act to which Her Majesty has just assented reinforces the point that we will now be able to make our own international trade deals under that Act. I congratulate my right hon. Friend and the Government on that achievement.
Dr Fox
I am grateful to my hon. Friend. Of course, our ability to take full advantage of what we have already agreed depends on our passing both the Trade Bill and the customs Bill in this House. If we are unable to do so, we will be unable to provide that continuity for businesses and workers in the United Kingdom, which would be hugely to their disadvantage. I hope that the Opposition will think again about their vote against the Trade Bill on Second Reading, and will give it the fair wind that it deserves during its subsequent stages.
It is important for the UK that CETA is ratified successfully by all EU member states, because ratification by all member states is required for the treaty to enter fully into force. This will give Canadian and EU businesses greater certainty that the agreement will continue into the future.
Areas that were not provisionally applied include a large part of the chapter on investment, including the new investment court system, about which there has been extensive discussion 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 for claims, high ethical standards for arbitrators and increased transparency of tribunal hearings.
I also want to be clear that investment protection provisions protect investors from discriminatory or unfair treatment by a state. This includes protection of UK institutional investors—for example, pension funds—where we have a duty to ensure that individual investments are protected. We have over 90 such agreements in place with other countries. There has never been a successful investor-state dispute settlement claim brought against the United Kingdom, nor has the threat of potential claims affected any Government’s legislative programme.
Tom Brake (Carshalton and Wallington) (LD)
Will the Secretary of State confirm that any investment court system is in fact a pooling of sovereignty? He will be aware that Canada and the EU have agreed that they want to transform the investment court system into something more open, transparent and global. Will he confirm that the UK Government will also undertake to do that after Brexit?
Dr Fox
I have set out what I believe are the principles, but the mechanism may well be different. The Commission has not yet finished its work on the technical detail of the ICS. We have reservations about the ICS as a system, but, as I have set out, we believe that there needs to be protection for investors. What we cannot do as a country is say that our investors should be protected overseas when they make investments of UK money, but a reciprocal agreement should not be in place for others. We have to ensure that this is fair and equitable, and that is what we seek to do. I have to say to the right hon. Gentleman in all candour that I am not terribly attracted by the ICS, but we want to see the detail that the European Commission comes to and, when we leave the European Union, we will want to discuss with Canada what we think, on a bilateral basis, the best disputes resolution system might be.
It is also important to note that the customary international right to regulate has been re-emphasised in this agreement. Moreover, the agreement explicitly provides that member states should not reduce their labour or environmental standards to encourage trade and investment, ensuring that our high standards are not affected by this agreement. Let me say that nothing in CETA prevents the UK from regulating in the pursuit of legitimate public policy objectives.
Such objectives include the national health service. This 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 free trade agreements, including CETA. Neither will anything in CETA prevent future Governments from taking back into public ownership—should they be crazy enough to do so—any services currently run by the private sector. The legal text makes this clear, if Labour Members would like to read it, although I have to say that the fear of nationalisation is the No. 1 issue that potential investors currently give for thinking twice about the UK as a foreign direct investment destination.
In fact, robust protections in CETA are covered in a number of related articles and reservations in the text. A key article is article 9.2, in chapter 9 on cross-border trade in services, which excludes services supplied in the exercise of governmental authority from measures affecting trade in services. In addition, in annex II on reservations applicable in the European Union, the UK has gone beyond the EU-wide reservations and has included additional national reservations for doctors, privately funded ambulances and residential health facilities, and the majority of privately funded social services. The UK Government will continue to ensure that decisions about public services are made by the United Kingdom, not by our trade partners. This is a fundamental principle of our current and future trade policy.
Mr Philip Hollobone (Kettering) (Con)
Given these extensive labour and public sector protections, which I congratulate my right hon. Friend on negotiating, could this EU-Canada agreement not serve as a template for a UK-EU trade agreement on our exit?
Dr Fox
As the Prime Minister has made clear, we hope, given we are starting from the position of complete regulatory and legal identity with the European Union and given the size of our trade with the European Union—not least the fact that the European Union has a surplus in goods with the United Kingdom of almost £100 billion—that we would be able to negotiate an even more liberal agreement than CETA. That is of course a decision not just for the United Kingdom Government, but for the other 27 Governments, who need to look not to political ideology, but to the economic wellbeing of their own citizens.
Let me say something 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 Parliament in due course.
I would like to provide further reassurance to the House about the Government’s ongoing commitment to openness and transparency. Indeed, we have scheduled a debate on the Floor of the House on the EU-Japan economic partnership agreement, which the Minister for Trade Policy—it is a pleasure to welcome my hon. Friend the Member for Meon Valley (George Hollingbery) to his position on the Front Bench—will be leading straight after this debate. This is already over and above the engagement required for EU-only trade agreements.
Angus Brendan MacNeil
Should the right hon. Gentleman be talking not only about “Parliament”, but about “Parliaments”? Last week, the International Trade Committee took evidence from John Weekes, the former Canadian ambassador to the World Trade Organisation. He was also Canada’s chief negotiator for the North American free trade agreement, and an adviser to the Canadian Government and Parliament on CETA. One of the things he was asked was whether the central Government in Canada were tempted to make a power grab, or to deal with the provinces as they stand. He said that it added a degree of complexity, but that it made for a better deal at the end to respect the provinces of Canada, rather than deal with this centrally. Should the UK Government not ape that, and should the Secretary of State talk not just about Parliament, but about Parliaments? If we reach that stage when Scotland is still in the UK, we will need such respect.
Dr Fox
I have considerable sympathy with the hon. Gentleman, although trade is a reserved power for this Parliament. We have to accept as a country that, in an age of increased consumer awareness of trade, the public will want a genuine consultation about any future agreements that the Government reach. That requires us to avoid some of the pitfalls that occurred with the Transatlantic Trade and Investment Partnership, when the public felt that they had not been consulted during the process and were asked to take it or leave it.
It is therefore incumbent on Governments to devise mechanisms by which there is the fullest possible consultation not only with Parliament, devolved bodies and English regions, but with civil society. The Government will set out our proposals on that in the near future. I would add that I am grateful to the Select Committee for its thoughtful work on this area, because I think there will be quite strong consensus across the House about the mechanisms of consultation, even if we do not agree with the outcomes of such consultations.
I welcome this opportunity to make the case for CETA to Parliament, and to provide an opportunity, as the Government have done on previous EU free trade agreements, for full scrutiny of this important agreement. 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 achieved in CETA for UK businesses and consumers, and lay a foundation for an even stronger relationship in the future. Canada is a progressive, dependable and honest trading partner which is committed, as we are, to the World Trade Organisation and the international rules-based system. This is an important time, internationally, to show our commitment to a free trading Commonwealth, G7 and NATO ally. I commend this order to the House.
Barry Gardiner (Brent North) (Lab)
I am grateful for the opportunity to speak in this important debate on the Floor of the House at last. The order will specify CETA as an EU treaty for the purposes of the European Communities Act 1972. It is important to recognise that, unfortunate though it may be, the agreement itself cannot be changed at this stage by anything we might say this afternoon.
We want a comprehensive and mutually beneficial trade agreement with Canada. We want to boost fair and open trade with our closest allies and neighbours. Of course we do. We share a common language, unique cultural and economic bonds, the same parliamentary model and a common legal tradition, and we count Canada among our closest, oldest and most trusted allies.
In 2016, our exports to Canada amounted to some £8.3 billion—our seventh-largest non-European export market. In turn, we are Canada’s third most important export market. Our appetite for Canadian goods means that Canada runs a trade surplus with us of some $6.8 billion according to 2017 figures. We are Canada’s most important European trading partner. The vast majority of Canada’s European-bound goods move through our ports. We are the second-biggest recipient of Canadian investment. Similarly, we are the second-biggest foreign direct investor into Canada. More than an estimated 700 British firms have an established presence in Canada and some 1,100 UK firms are owned or controlled by Canadian interests.
In matters of trade, the UK and Canada face similar issues. Boeing’s efforts to have punitive tariffs levied on Bombardier C Series aircraft threaten thousands of jobs both in Canada and here, where the company’s Northern Ireland plant engineers and manufactures wings for those aircraft. We both face the spurious and illegal tariffs imposed by President Trump on our steel and aluminium exports under the false pretence of national security.
Do we want a trade deal with Canada? Of course we do. Only by working together can we and Canada address and resolve American protectionism and make a concerted effort on the world stage to enforce the rules-based system that underpins international trade. Only by working together can we push for a serious response to global overcapacity issues.
Barry Gardiner
I will give way to my right hon. Friend in a moment if he is patient—I am sure he will be.
Yes, a Labour Government would very much welcome a trade deal with Canada built on the commercial and diplomatic ties that bind our two countries; a deal that seeks to further elevate our shared standards, rights and protections; and a deal that would lead to increased economic prosperity and jobs. The EU-Canada comprehensive economic and trade agreement is not such an agreement.
John Spellar
I thank my hon. Friend for giving way. Given the considerable links and advantages of our relationship with Canada, if we cannot do a deal with Canada, which country can we do a deal with?
Barry Gardiner
The presumption in my right hon. Friend’s question is entirely wrong. The presumption is that we cannot do a trade deal with Canada, but of course we can. We want to do a trade deal with Canada, but he will recognise that we did not want the TTIP deal with the United States even though the United States perhaps has a claim above Canada’s to be our closest ally on the international stage. The question is not who but what. Of course we can do a deal, but it must be the right deal for British business and jobs.
Andrew Percy (Brigg and Goole) (Con)
I spend a lot of time in Canada as our trade envoy. What would the hon. Gentleman’s message be to those British companies I meet in Canada that tell me how the provisional application of CETA is helping to boost their trade in that country and open up procurement—there are $20 billion-worth of opportunities in the city of Toronto alone. He wishes to cut that off to British businesses by rejecting this deal, so what is his message to them when they are already benefiting and helping to support jobs in the United Kingdom?
Barry Gardiner
As I think I have already made clear to the House, we want those jobs and procurement opportunities, but we want them on the right terms.
Barry Gardiner
I will of course answer the right hon. Gentleman’s question—I will come to it later in my speech. Like my right hon. Friend the Member for Warley (John Spellar), the Secretary of State will just have to be patient a little longer.
The CETA deal has been marred by controversy. Hundreds of thousands of people have taken to the streets across Europe in protest. The deal was largely conducted in secrecy and with minimal consultation. It threatens the essential ability of Governments to legislate in the public interest. That is why it is so essential that Parliament has finally been afforded the opportunity to debate the agreement on the Floor of the House.
I pay tribute to the work of the European Scrutiny Committee under the chairmanship of the hon. Member for Stone (Sir William Cash), who is no longer in his place. In this respect, the Committee made repeated attempts over the past two years to ensure that Parliament was given just such a chance. The debate has been pending since the Committee granted a scrutiny waiver to the Secretary of State in October 2016.
Catherine McKinnell
Going back to the earlier discussion, if the position is not to support the Canada trade deal, will my hon. Friend explain what the procedure is for negotiating a new trade deal with Canada, given the complexity of leaving the EU?
Barry Gardiner
I do not know whether my hon. Friend heard the Secretary of State’s remarks. He has made it clear that negotiations are under way. The constitutional position is that all current agreements with third-party countries that we have through the EU will have to be rolled over as new agreements. They will be legally distinct. In that respect, they must all be renegotiated.
Several hon. Members rose—
Barry Gardiner
I see a lot of Members standing. I am happy to give way later in my remarks but I want to make progress now.
The debate has been pending since the European Scrutiny Committee granted a scrutiny waiver to the Secretary of State in October 2016 to proceed with signing the agreement in order to bring the trade elements, but not the investment elements, into provisional application. That waiver was on the express condition that there was prior debate on the Floor of the House. That debate did not take place.
It is unusual to bring a statutory instrument to the Floor of the House rather than to a Delegated Legislation Committee. The Government are pretending to have afforded the House the opportunity to properly debate and scrutinise a controversial agreement and one of the most extensive that the country has entered into—the Secretary of State has admitted as much. However, at this stage it is all too late. The agreement is signed and cannot be renegotiated.
On 5 July 2016, the European Commission published its proposals for the signature and provisional application of CETA. On 7 September 2016, the European Scrutiny Committee recommended an urgent debate on the Floor of the House, noting the significant political and legal importance of the agreement. On 6 October 2016, the Minister sought clearance from the Committee to sign the agreement without having such a debate. On 12 October 2016, the Committee granted the Government a conditional scrutiny waiver, allowing them to proceed with signing the agreement only after a debate on the Floor of the House—the Committee directed the Government to ensure such a debate. [Interruption.] I hear the Secretary of State muttering from a sedentary position, “Process, process, process,” but process is how the House ensures proper transparency and scrutiny.
On 17 October 2016, the Secretary of State advised the Committee that it was his intention to override scrutiny and proceed not only with the signature of the agreement but with its provisional application, despite the controversy attached to it and despite the fact that the House had been given no opportunity to scrutinise or debate it.
Barry Gardiner
No.
On 18 October 2016, the Government confirmed their support for signature, provisional application and conclusion of CETA. Overriding scrutiny, Mr Speaker, is no minor matter. The Committee rightly called an emergency evidence session demanding that the Secretary of State account for his decision to override the Committee’s scrutiny reserve and to proceed with provisional application. The Secretary of State had the audacity to tell the Committee:
“I very much believe in the democratic process and the importance of transparency and, as the Committee knows, I have long been one of those Members who has been very much supportive of the scrutiny process and I’m sorry that the timescales meant that it was not possible to have a debate before decisions needed to be made on CETA.”
He went on to tell the Committee that this was
“down to the parliamentary calendar and the timescales set for us. However, I therefore reinforce my commitment to the Committee today to hold such a debate and I’m very happy to have that debate on the Floor of the House. Our officials are already working with business managers to identify a date most likely, we understand, in November.”
That, for the avoidance of doubt, was November 2016.
So, November comes around and, having had no indication of a debate being forthcoming, the Committee published its summary of that urgent evidence session and noted:
“We consider such a debate to be urgent and ask that it be scheduled before 13 December”.
[Interruption.] I know the Secretary of State does not like this, because it brings up all the ways in which he has sought to avoid transparency and scrutiny in this place.
By 30 November, the Secretary of State failed to secure a debate in the timeframe he himself had suggested to the Committee. On 7 December, the Committee repeated the need for a debate and called for it to take place before mid-January 2017, recognising that the Secretary of State would not be bringing forth a debate by the earlier stipulated deadline of 13 December.
It was farcical. The Secretary of State had absolutely made it farcical, but it got worse. My office submitted a freedom of information request on 15 December requesting details of the correspondence between the Department and business managers regarding scheduling a debate on CETA since 1 December 2016. It may come as no surprise that the Department failed to respond within the suggested timeframe. However, a response was forthcoming by 25 January. Staggeringly, it admits in its response that the first attempt to bring forward a debate on CETA was not in July 2016, as one might expect, and not even in September when the House returned after summer recess. It was an email sent from an undisclosed official to the Government Chief Whip’s office on 25 October at 1.57 pm, just 24 hours prior to the Secretary of State’s scheduled appearance before the Select Committee.
For the avoidance of doubt, I want to reassure the House that the Secretary of State did not misspeak. He did not mislead the Committee in any way when he told the hon. Member for Stone that
“our officials are already working with business managers to identify a date”.
They had been: for a whole 24 hours and 33 minutes. If it should be that prior to being summoned to give evidence to the European Scrutiny Committee on why the Government had blatantly ignored the Committee’s limited and conditional waiver and the condition that a debate take place, the Secretary of State had instructed his officials to come up with a cover, at least the literal interpretation of his words was strictly accurate. More troubling is his apology to the Committee implying that there had been efforts to find time to schedule a debate, saying,
“I am sorry that the timescales meant that it was not possible to have a debate before decisions needed to be made on CETA in the Council.”
Jeremy Quin
I am most grateful to the hon. Gentleman for giving way. For someone who seems so keen to have had a debate on this particular treaty, he seems very, very wary about actually getting on to the substance of the issue we are here to discuss. The only point on which I have heard him say he disagrees with what is laid before the House is some wording about it impinging on national Parliaments to regulate their own affairs. What bit of the treaty does he disagree with? Is it chapter 23, which ensures that we protect employment rights? Is it chapter 24, which ensures that we protect environmental rights? Or is it the legal text that provides protections for our NHS? What is it that he disagrees with?
Barry Gardiner
I am grateful to the hon. Gentleman for pressing me on to the substantive part of the debate, but he will understand that the way in which international treaties progress through this House, the way in which they are scrutinised and the transparency with which that is done are matters of real importance. The reason why is that the substance of these treaties needs to be agreed in terms of a mandate. It then needs to be ensured that the scrutiny that applies is available to Members of this House at all stages. That is what in this situation entirely failed to happen.
The Secretary of State said:
“I am sorry that the timescales meant that it was not possible to have a debate before decisions needed to be made on CETA in the Council. This was down to the parliamentary calendar and the timescale set for us.”
“Not possible”? How did he know? He never bothered to ask. Why would the Government so determinedly pursue such a tack? The Secretary of State told us why when he admitted to the Committee in October 2016 that the
“UK could not be seen to block the agreement as it would send a negative signal to Canada.”
In a meeting between the Secretary of State and his Canadian counterpart that took place on 16 July, we are told by the then Canadian Trade Minister, Chrystia Freeland, that
“when I asked him if I could count on his and Britain’s continued support for CETA, he told me Britain would not just be supporting CETA, Britain would be pushing for CETA at the EU table.”
Heaven forfend that Parliament might have had a say in such a deal now that the Secretary of State had given his gentleman’s agreement to Canada!
There are two key issues that Members need to consider today. One is the issue of substance, and we will come on to the reservations on that score that exist throughout Europe, not just on the Opposition Benches, where they are currently being debated in constitutional courts and campaigned on by colleagues in the trade union movement. Incidentally, they were fully set out in Labour’s general election manifesto last year. The second issue is process. Why have the Government repeatedly attempted to avoid proper scrutiny of the agreement? The reality of today’s debate is that it is nothing more than a masquerading exercise designed to give the illusion of scrutiny when there has in fact been so little. We are now too late in the process and can do nothing to alter its course.
Angus Brendan MacNeil
I think many people watching will want to be clear, given the fragile and febrile nature of their politics in the UK at the moment, on what position the hon. Gentleman would adopt on CETA if he was to find himself International Trade Secretary in a few months’ time.
Barry Gardiner
If we were out of the European Union, we would then be negotiating a new trade agreement with Canada and we would ensure that all—[Interruption.] Much that is in CETA is to be welcomed, as was outlined by the hon. Member for Brigg and Goole (Andrew Percy) who intervened on me earlier. Much of it is to be welcomed, but there are aspects of the trade agreement that the hon. Gentleman will recognise, and all of Europe recognises, as simply unacceptable.
Other Parliaments have, of course, had the opportunity to properly register their views on this agreement and perhaps this illustrates why the Secretary of State has been so concerned about allowing the House to have its say. In the Committee stage of the Trade Bill, I set out how a Labour Government would ensure full and proper consultation with key stakeholders—businesses, unions, civil society and the devolved Administrations—in advance of entering into negotiations on trade talks. My party believes that Parliament should have a vote to approve such mandates. That was why we tabled amendments to the Bill in respect of the same, but the Government voted down every single amendment we put forward.
Barry Gardiner
I will come on to our position in due course.
The European Commission hailed CETA, calling it
“the most ambitious trade agreement between countries ever undertaken.”
However, unlike other deals currently being progressed by the European Commission, it is a mixed agreement—trade and investment.
The investment provisions of CETA touch on matters of national competence and, as such, the agreement must be ratified at the national level and the regional level where appropriate. The European Commission and respective national Governments have sought to circumvent this process by provisionally applying CETA since 21 September last year, but the deal has not been ratified and is therefore not yet fully enforceable. To understand why, we need to look at the Wallonian Parliament in Belgium, which refused to ratify the agreement over concerns about investment aspects of it and, in particular, the investor-state dispute settlement mechanism, now known under this agreement as the investment court system. This is where process meets substance. Belgium has referred the matter to the European Court of Justice to seek a ruling on whether the investment court system is even compatible with EU law.
Caroline Lucas (Brighton, Pavilion) (Green)
The hon. Gentleman is making a powerful case about a very flawed process. Following public pressure, the provisions in CETA for an investment court system are still only marginally better than the original investor-state dispute settlement system. Does he share my concern that this still amounts to a parallel justice system for large corporations that could render the UK vulnerable to lawsuits, such as that brought by Veolia against Egypt for introducing a minimum wage?
Barry Gardiner
I absolutely share the hon. Lady’s concern. That is one reason why it was part of the Labour party’s manifesto at the last election that we would not approve trade agreements that had these mechanisms in them.
Sir Desmond Swayne (New Forest West) (Con)
On a point of order, Madam Deputy Speaker. There is some pressure on time. The hon. Gentleman has been at it for over 20 minutes and we still do not know where he stands. Is it in order for him to keep the House in such suspense?
Madam Deputy Speaker (Dame Rosie Winterton)
It is quite in order for the hon. Member for Brent North (Barry Gardiner) to be making his opening remarks. I am sure he is not going to be too much longer; there are a lot of people waiting to speak.
Barry Gardiner
I would give way to a Labour colleague.
Just last week, the incoming Italian Government signalled that they too would refuse to ratify CETA when the new Agriculture Minister indicated that the lack of protections for Italian food producers presented a serious threat to the sector, calling the deal wrong and risky. France, Germany and the Netherlands have not ratified the agreement, and the Dutch Government are waiting on the ECJ ruling before determining how to proceed. In Germany, the issue is being heard in a case before its domestic constitutional courts to determine whether the investment court system is even compatible with the German constitution.
Vicky Ford (Chelmsford) (Con)
The hon. Gentleman is making a very good point but, if CETA is such a terrible deal, why did so many Labour Members of the European Parliament vote for it, including their lead spokesman on the issue, who had full transparency on the deal as it was negotiated?
Barry Gardiner
The hon. Lady makes a false premise. Many parts of this deal would be welcomed, but there are essential parts of it that cannot be welcomed and which would stop us, therefore, being able to ratify it in the way she suggests.
The ISDS mechanisms give superior legal rights only to foreign investors to raise disputes against our Government to petition for compensation when their profits, or even their potential profits, are impacted by legislative or public policy decisions. This effectively allows companies to sue Governments when they are legislating in the public interest; for example, by introducing plain packaging for cigarettes, national insurance, minimum wages or even banning fracking. These provisions have become increasingly commonplace in new-generation trade agreements and this is what has resulted in such widespread international public outcry against deals such as the Transatlantic Trade and Investment Partnership, the Trans-Pacific Partnership and CETA.
The proliferation of investor-state dispute settlements can encourage treaty shopping, whereby investors restructure their activities to establish in countries where they may benefit from ISDS mechanisms, should they seek to effect policy change or petition for compensation. While the Government have previously argued that the UK has only ever been subject to four such dispute cases, and that the UK never lost such a case, it begs the question: why does the Secretary of State feel that this mechanism needs to be incorporated in a deal with a country such as Canada?
Barry Gardiner
I will give way to my hon. Friend in just a second.
The Secretary of State spoke about the need to give investors protection and security and he has boasted many times in the past 12 months about the record number of FDI deals that he has been able to achieve. Unaccountably, he failed to report that those deals, though record in number, showed a 92% drop in value. Today’s figures also reveal a drop in the number of deals, and the number of jobs saved by such investments is down by 54% year on year, according to his website.
Indeed, many Canadian companies have used investor-state dispute provisions in trade agreements to challenge foreign Governments, whether it has been the closing down of mines in El Salvador following a moratorium to protect unpolluted drinking water, or the Obama Administration’s decision to suspend the Keystone pipeline over concerns about potential damage to the environment. The very threat of facing such a case, even when the chance of winning is in the Government’s favour, can clearly act as a deterrent to Governments from pursuing actions in the public interest—a regulatory chilling effect. This may well have been President Trump’s view when he reversed his predecessor’s decision and greenlighted the Keystone pipeline, thus avoiding costly legal action and the chance of a substantial payout.
Having watched cases taken against the Uruguayan and Australian Governments by the tobacco giant, Philip Morris, many countries are cautious about introducing plain packaging in tobacco product laws. It is not just European Governments who have expressed concerns about ISDS.
Angus Brendan MacNeil
I am slightly puzzled by the hon. Gentleman. At the moment, there is talk about the provisional application of CETA. What situation would he want with CETA? I know that he has reservations—if I have reservations about a car I am going to buy, I do not buy it. He has reservations about CETA, so would he not apply CETA? Would he provisionally apply it? What would his position on CETA be if he were the Secretary of State for International Trade and President of the Board of Trade in a few months’ time?
Barry Gardiner
I did answer that question earlier following an intervention. There are many aspects of this trade agreement that we would welcome and would wish to pursue, but we cannot—[Interruption.]
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Will the hon. Gentleman face the Chair? We cannot hear otherwise.
Barry Gardiner
I apologise, Madam Deputy Speaker. There are many aspects of the deal that we would welcome, but there are elements of it that are absolutely unsustainable and constitute red lines. South Africa, India and New Zealand have all stated their opposition to ISDS procedures, and New Zealand has gone so far as to sign side letters with five counter-signatories to the Trans-Pacific Partnership disapplying the ISDS provisions included in that agreement. The current impasse in the renegotiation of the North American free trade agreement hinges on US demands to drop ISDS provisions from the revised agreement, the rationale being that their respective domestic court systems are perfectly capable of adequately settling any disputes. Indeed, if our courts are sufficient for British companies, why should they not be considered so for foreign investors, too? The United Kingdom has long been considered a safe legal system, and a significant proportion of global trade is governed by legal—
Andrew Percy
On a point of order, Madam Deputy Speaker. The shadow Secretary of State has now spoken for longer than the Secretary of State. Many Back Benchers are waiting to get in on this important debate. Is he still in order?
Madam Deputy Speaker (Dame Rosie Winterton)
The hon. Member for Brent North is still in order, but I point out that a lot of speakers want to come in. I am sure that he will bring his remarks to an end very shortly.
Barry Gardiner
Thank you, Madam Deputy Speaker. Indeed—I will respect your decision and, in that regard, I hope that nobody else will seek to intervene as I conclude my remarks.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. It is important that the hon. Member for Brent North is heard with politeness, because I know that he wants to bring his remarks to an end fairly quickly. I think we should give him the chance to get on and do that.
Barry Gardiner
Over the past few years, the Government have entirely failed to explain why British taxpayers should be on the hook for ordinary commercial risks faced by foreign investors. If a company has concerns about the stability of the regulatory environment, it should factor that into its investment decision. Recognising the flaws in the arbitration model, the European Commission and Canada have moved to a courts-based system, but the Secretary of State covered that, so I will not dwell on it.
A Labour Government would not seek ISDS provisions in future trade agreements, but the threat to the Government’s capacity to deliver in the public interest is not confined to the use of ISDS mechanisms. Modern trade agreements such as CETA and the EU-Japan economic partnership have been negotiated using the negative list approach for the scheduling of services liberalisation commitments. Under this approach, all service sectors not explicitly exempted from liberalisation are included. The use of this method marks a significant departure from the use of the positive list in all earlier EU trade agreements, where only those service sectors listed are subject to the rules and disciplines of the agreement. It is considered a particular threat to public services, as it may prove impossible to shield them from liberalisation effectively once they have been committed to an international trade treaty.
This means that any emergent sector in the future will automatically be subject to liberalisation even where there might be a clear need for Government intervention. We cannot predict what those will be prior to their emergence, but that is the very point of using a negative list—to reduce the capacity of the Government to regulate in the future. Collectively, these measures only benefit big businesses and curtail the rights of Governments to act in the best interests of their peoples. That is why there has been so much resistance and uproar from civil society organisations and trade unions alike.
It is ironic that, just as we are told we need to leave the EU to regain control of our laws and how they are interpreted in the courts, Parliament’s ability to legislate in the public interest is being curtailed by negative lists and regulatory chill and by the establishment of a supranational courts system where foreign businesses are given superior rights to our own domestic companies and can tell our Government what they can and cannot do if they are not to sue us for taking sensible public policy decisions to protect the public against new and emerging dangers.
Similar concerns extend to the labour rights provisions of CETA. One study forecast that 10,000 jobs could be lost as a direct consequence of CETA. The threat to European jobs—[Interruption.]
Madam Deputy Speaker
Order. I must insist that the hon. Gentleman be heard out. I am sure he will bring his remarks to a close in the next minute.
Sir Nicholas Soames (Mid Sussex) (Con)
On a point of order, Madam Deputy Speaker. You may believe that the hon. Gentleman is drawing his remarks to a close, but I can see his notes. Is it not completely against convention and the good manners that are conducive to proper parliamentary debate for the hon. Gentleman to so abuse the conventions of the House?
Madam Deputy Speaker
I have to say that raising endless points of order during a short debate is not conducive to moving things along. That said, I am sure that the hon. Member for Brent North, within the next minute, will bring his remarks to a close.
Barry Gardiner
The real abuse is the way the Secretary of State has ignored all the waivers he has been given by the European Scrutiny Committee and all the assurances he gave that he would try to secure this debate on the Floor of the House before it became meaningless. The real abuse is the way he has conducted this whole saga over the past two years.
A Labour Government would have demanded better protections for jobs and workers’ rights. The Government’s failure to seek protections for British workers is matched by their failure to seek protections for British businesses.
Owen Smith
I am extremely grateful to my hon. Friend for giving way, and I am sure that the whole House is enjoying his exhaustive speech as much as me, particularly his looking through the parliamentary entrails of this issue. For clarity, is his position and that of our party now that we believe we could strike a better deal than the EU27 as a standalone nation after Brexit?
Barry Gardiner
Indeed I do. We actually said so in our manifesto. We made that clear in the manifesto that both my hon. Friend and I stood on and with which we went to the voters of this country, and he was elected on it just as I was. I propose to stand by it; I am not sure if he does.
For all these reasons, the Opposition cannot support the Government’s motion.
Dr Fox
On a point of order, Madam Deputy Speaker. I hesitate to raise this point of order, but in response—or non-response—to a series of interventions, the shadow Secretary of State promised the House that before he sat down he would make it clear whether he believed the Labour party would vote to ratify the agreement or lay a negative motion, which is procedurally very important under the CRAG procedure. Why did we not get an answer?
Madam Deputy Speaker
That is a matter of debate, not a point of order. I am sure that the shadow Secretary of State would intervene if he felt so inclined.
Several hon. Members rose—
Madam Deputy Speaker
Order. With so many people wanting to speak, I must impose an immediate four-minute time limit on Back-Bench speeches.
Greg Hands (Chelsea and Fulham) (Con)
I rise to speak very much in favour of ratifying this agreement, and I welcome the opportunity to support my right hon. Friend the Secretary of State for International Trade and President of the Board of Trade, and to record my thanks to him for doing so much good work in the last two years to establish the Department for International Trade. I also thank the superb officials at the Department, who have worked tirelessly to get our independent trade policy up and running and heading in a successful direction. I also congratulate my successor as Minister for Trade Policy, my hon. Friend the Member for Meon Valley (George Hollingbery), who I think will be leading the next debate. I welcome him to his position and wish him every good fortune in his important role, in which he has a lot coming up in the next couple of weeks.
I want to reflect on the extraordinary contribution by the shadow Secretary of State. It was an abuse of procedure to speak for 35 minutes in a 90-minute statutory instrument debate and to leave others, who actually want to speak about the content of the agreement and its implications, with just four minutes each. I listened to his explanation of what happened, or did not happen, in 2016, and I thought it not really in his interests, as we could also go back to his position in 2016 and 2017, when I think he said that staying in the customs union, which I believe is now his party’s policy, would be a disaster for the country. I should have thought he was the last person to want to draw attention to what people said two years ago.
Most importantly, we heard the shadow Secretary of State speak for 35 minutes but never got a straight answer as to what his position on the agreement actually is. I think he said he would like to renegotiate it. Now, not only would that have implications for an agreement that is already in place—the provisions have been in place since September—but is he also saying he would renegotiate all the other 40-plus EU agreements, rather than seek their transition into UK agreements? [Interruption.] I think he is saying from a sedentary position that he would like to renegotiate the whole lot.
Greg Hands
I will not take any interventions because there is no time.
I want to say three things. First, CETA itself, on its own merits, is a very good deal. It could be worth as much as £1.3 billion per annum to the UK economy. It removes all tariffs on industrial products and wines and spirits, and eliminates customs duties on ciders, wines and spirits. On the investment provisions, we must remember, as the Secretary of State laid out, that the UK is the fourth-largest source of investment into Canada and the UK is the second most popular destination for Canadian investment. It is also important for the EU’s trade agenda, as it will be the first EU trade agreement to be ratified since that with South Korea some six years ago. The UK is supportive of the EU’s trade agenda, partly because we believe in breaking down barriers ourselves, and partly because the UK will seek to maintain the substance of these agreements as we go forward after Brexit.
Last time around on CETA the official Opposition split three ways. We look forward to seeing what the official position of the Opposition is and what the practical position is of their various MPs.
Stewart Hosie (Dundee East) (SNP)
I will be as brief as possible to allow as many others in as possible. [Interruption.] I may take slightly longer than four minutes, but I will be as brief as possible.
The Secretary of State said we should take this opportunity to reaffirm our commitment to the principles of free trade. I think we should take any opportunity to reaffirm principles in support of free and fair trade, but we are not engaged in a general debate on trade; we are engaged in a debate on a specific trade agreement—one which is incredibly important to the whole of the UK, and indeed for Scotland because of our history and record of trade with Canada.
I welcome what the Secretary of State said in response to my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), the Chair of the Select Committee—that he was sympathetic to finding other ways to engage and consult with the devolved Administrations, and indeed wider society. That is very important, particularly for Scotland, because we are a trading nation. Indeed, the most recent stats—year-end, quarter 1 of 2018—showed that Scotland’s international exports were growing at the fastest rate of any UK nation: a 12% increase over the year, compared with 8% for the UK—6.5% for England and as low as 5% growth for Northern Ireland. Scotland saw some phenomenal increases in trade—a 48% rise in exports with the Netherlands—and the Secretary of State laid out the trade increase between the UK and Canada.
So we would normally want to be able to support free and fair trade agreements that support and encourage trade, GDP growth, productivity growth and jobs. But trade agreements need to be properly scrutinised and debated, and to contain necessary protections to ensure that our vital public services are protected now and into the future, and there are two aspects of this CETA treaty that we must take issue with and probe. There has not been time to scrutinise it properly, and one might argue that that is now par for the course for this Government, not least in the way that they treat this Parliament. Indeed, in October 2016, the Secretary of State had to apologise to the European Scrutiny Committee after failing to make time for a debate on CETA before the decision was made in the Council by the UK Government to support it, and since then, although there have been outings in Committee, Westminster Hall and oral questions, there has been nothing substantive on the Floor of the House. It is also a disgrace that the Scottish Parliament has not been given any formal role in the negotiation process, particularly when we saw the input of the Canadian provinces and sub-state Parliaments in the EU.
Despite this lack of scrutiny, however, the UK is subject to all the rights and obligations arising from CETA while it remains in the EU, it will be bound by its obligations during the transitional period, and the UK Government’s aim is to roll over the EU trade agreements into an equivalent UK third-party agreement post the Brexit transition. It is therefore all the more important that there is proper scrutiny both in this House and the devolved Parliaments and Assemblies.
We also have concerns that CETA fails to properly secure key protections for Scottish, and UK, public services. According to a note prepared for the European Parliament—the Secretary of State alluded to this today—public services are excluded from CETA, including health, education and other social services. But the counter-argument notes that negotiators have used the so-called negative list approach, which means that all services are open to market liberalisation unless a specific and accurate reservation is entered, at the outset. That can, of course, lead to the creeping liberalisation of public services, as negotiators have failed to include sufficiently watertight exclusions.
I am conscious that time is short, so I will end with two quotes. I heard very clearly what the Secretary of State had to say about protections, but Friends of the Earth has said—I am grateful to the Library for this—that the CETA proposals,
“offer no significant improvement to the dangerous”
investor-state dispute resolution agreement
“and should fool no-one”,
and that the new or renamed
“Investment Court System is nothing but private arbitration under another name”.
The Corporate Europe Observatory and others summed up their objections in this regard by saying that
“it would empower thousands of companies to circumvent national legal systems and sue governments in parallel tribunals if laws and regulations undercut their ability to make money.”
The very fact that those strongly worded critiques exist and run counter to what the Secretary of State says tells me and my party that there is not sufficient clarity or certainty that the protection for our public services is fully and properly in place in this agreement.
Andrew Percy (Brigg and Goole) (Con)
It is a pleasure to speak in support of this excellent trade deal between the EU and Canada, and in so doing I want to pick the shadow Secretary of State up on a number of points that he made in his interesting—and somewhat bizarre at times—comments. I like him personally—he is a jolly decent chap—but I am afraid his position on this is completely and utterly incoherent. The idea that he would oppose this deal while also trying to negotiate a new UK-Canada trade deal effectively puts him in the same boat as President Trump, in that he would immediately, by rejecting this deal, presumably reimpose the tariffs that have gone as part of the initial application of CETA. My question to him is: what would he say to British producers? I am thinking of companies like Isle of Harris Gin, whose launch I attended in Toronto in October, and which very successfully got into the Liquor Control Board of Ontario, the second biggest purchaser of alcohol—
Andrew Percy
I am not going to give way, as time is very limited. I know that concerns the hon. Gentleman’s constituency, but he has intervened a number of times.
The hon. Member for Brent North (Barry Gardiner) would impose tariffs in such areas immediately, damaging British interests now. Moreover, he fails to understand the position of the Canadian Government. Their position is that CETA will be the basis of the future UK-Canada trade deal. That is the position not only of Prime Minister Trudeau but of the Canadian Opposition leader Andrew Scheer, who was here and met the Secretary of State only a few months ago. So the hon. Gentleman would rip up a deal that the Canadian side in good faith wants to use as the basis of a trade deal. I am afraid the hon. Gentleman’s position is total nonsense and would be hugely damaging to those British producers who are already benefiting from the initial application of these provisions.
I also want to say something about the current environment in Canada based on what I find when I make my visits out there and also welcome Canadians here. There is massive support for this agreement in Canada, which leads into huge support for a seamless transition into a UK-Canada trade deal, because Canada recognises that, particularly in terms of public procurement, there are specific skills that this country has that are needed to make good on some of Canada’s infrastructure investment plans. In my earlier intervention I mentioned that there are £20 billion-worth of infrastructure contracts up for grabs in the greater Toronto area alone. This treaty makes it much easier for British companies to gain access to them. So the opportunities for UK companies in Canada are huge under this agreement.
On where we should go in the future, the Secretary of State rightly said that this is a good deal but we can do better, although this must of course be the basis of a future UK-Canada deal. There are two areas in particular where we should be more ambitious. First, services is a hugely important area of our economy, and we have a great deal in common with Canada in terms of services, but there are barriers at present that are not dealt with as part of the agreement, and which we would wish to see improved in a future deal. Similarly, CETA does some good things on labour mobility, but there is more that we can and should look to do with Canada in the future on the ability of companies to move people between the two economies.
Finally, I welcome the Secretary of State’s commitment to working with the devolved Administrations here. That is important. We must also recognise in our future negotiations with Canada the important role that Canadian provinces will play. I met with the Quebec negotiator Pierre Marc Johnson in Montreal just a few weeks ago. There is big support in the provinces for a UK-Canada deal, but we must engage with them at an early stage to ensure that remains the case.
John Spellar (Warley) (Lab)
I declare an interest as the chair of the all-party parliamentary group on transatlantic trade. Also, like many of my constituents and many colleagues here, I have family in Canada. I will shorten what I was going to say about our strong links to Canada, but I want to stress our shared history, culture and institutions, both national and international. Also, we have heard about Canada’s Liberal Government, whose Prime Minister, Justin Trudeau, has been trashed by Team Trump. So, what’s not to like?
The question we have to ask is: if not Canada, who? We will obviously be discussing trade relations with the EU, but that will not be an easy discussion and it will take some time. Obviously, in the future we will rightly have to do a trade deal with the United States, but at the moment, given that it is pulling back from TTIP and NAFTA, and that it has shut down discussions on the TPP, and with the tariff wars extending, this is not the best environment in which to have those discussions.
Discussions with China will need to focus on addressing China’s trade-distorting practices, which are a threat to the multilateral system, as was said recently in a statement from the European Trade Union Confederation and the American Federation of Labour and Congress of Industrial Organisations in the United States. We shall be discussing Japan in a few minutes, but it too is a mature democracy and very effective trading partner. It is a big investor in the UK, and a country with which we ought to be doing a trade deal as part of the world trading order. So I say again: if not Canada, who? I suppose we could do a trade deal with Venezuela, but it might not meet the human rights hurdle any time soon.
What have the underlying problems been? I can give the House two examples. First, my hon. Friend the Member for Brent North (Barry Gardiner) drew our attention to the investor-state dispute settlement provisions, which have caused great concern, but he conceded that over several decades, and with nearly 100 agreements containing ISDS provisions, there have been four cases against the United Kingdom and we lost none of them. Such arrangements are worth looking at, between two trading blocs with mature legal systems, but we seem to be making a mountain out of a molehill.
Secondly, the underlying problem with CETA is that it was seen as the son of TTIP, the transatlantic trade deal to which opposition built up over a period of time—having initially had considerable support in, for example, the progressive areas of the trade union movement—particularly on the basis of anti-Americanism. My hon. Friend mentioned public concern from civil society, by which I think he meant non-governmental organisations. Any study will show the way in which this has been orchestrated, particularly by the Rosa Luxemburg Foundation, the foundation of the German left party, Die Linke, which grew out of the old East German Communist party.
In conclusion, this agreement is certainly to be welcomed, in order to strengthen the bonds between our two great nations and peoples.
James Cleverly (Braintree) (Con)
I apologise in advance if my speech is rather chopped up. Unfortunately, due to the huge discourtesy that the shadow Front-Bench spokesman displayed to the House, I shall have to heavily curtail the points that I wished to make. In a paper that I co-wrote with Tim Hewish entitled “Reconnecting with the Commonwealth: the UK’s free trade opportunities”, I made the point that because of our shared history, our common language, our basis in common law, our shared recognition of professional standards and our shared attitude towards human rights and standards in general, a trade agreement with Canada should be one of this country’s priorities, post-Brexit. I am therefore pleased to hear from both sides of the Atlantic that CETA will be the foundation stone for a UK-Canada trade agreement, post-Brexit, and it is appropriate and welcome that this House should be debating this issue today.
The hon. Member for Swansea West (Geraint Davies) suggested earlier from a sedentary position that the UK was a minnow. I think that that was the word he used. Well, I have news for him. In 2016, this particular minnow had exports combined to a value of £8.3 billion—up by £2.1 billion on the preceding decade. In 2016-17, there were 72 foreign direct investment projects from Canada to the UK, accounting for something in the region of 1,700 jobs.
James Cleverly
I am not giving way. We have so little time.
CETA is the first major trade agreement signed by the EU since the one with South Korea in 2011. It is therefore entirely appropriate to welcome its arrival. This morning, I had breakfast with Stephen Harper, the former Prime Minister of Canada. He reinforced the point made by Canada’s current Prime Minister, who has said that a UK-Canada trade agreement would allow a larger and—this is a Canadianism rather than a British turn of phrase—“more impactful” trade relationship than the current EU agreement. Just this week, we have heard reports that Italy is now expressing concerns about the ratification of CETA.
This debate provides us with an opportunity to welcome CETA and the work that our own Department for International Trade, led by my right hon. Friend the Secretary of State for International Trade and President of the Board of Trade, has done to forge relationships between the UK and Canada, and more widely. Most importantly, it gives us the opportunity to be vocal and passionate proponents of free trade and the good work that it does. We must not be tempted by the siren song of protectionism. We remember from Greek mythology what happened to those who were seduced by the song of the sirens: they sailed on to the rocks and their ships were dashed to pieces. They floundered and drowned. We must not let that happen to us. We must embrace free trade and we must welcome the CETA agreement.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
We on the International Trade Committee took time to hear evidence on the Canada trade deal. In hisnear-40-minute speech from the Front Bench today, my hon. Friend the Member for Brent North (Barry Gardiner) covered a number of important points about parliamentary scrutiny, but I am not entirely clear what those on my Front Bench are going to do if this issue comes to a vote. I shall therefore make my own mind up, based on the debate that we are having. From what I can see, CETA is quite a decent trade deal. As my right hon. Friend the Member for Warley (John Spellar) said, Canada is a liberal, open economy with which we have a great affinity.
A number of improvements have been made to the agreement along the way as part of the negotiations. The old ISDS has gone, and there is a new, more transparent and open arrangement for settling disputes. By the way, trade deals tend to need some sort of mechanism for settling disputes. Most importantly, CETA is already provisionally in force. So, if for some reason the House were to kick it out today, and possibly prevent the European Union as a whole from ratifying the treaty, we would go from a position in which we currently enjoy zero tariffs to one in which tariffs would again be imposed on a whole basket of goods. For example, the UK currently enjoys zero tariffs on clothing and textiles, but they would have to go back up to 16%. The tariffs on vehicles and machinery would go back up to 9.5%, those on medical devices would go back up to 8% and those on chemicals would go back up to 6.5%. We have to look responsibly at the options before the House today.
At this time in particular, when we are talking about Brexit and when our access to our largest markets across the European Union, 40% of our trade, is in a somewhat precarious situation—I do not want to open that particular debate up more widely just now—to start putting question marks over the non-EU trade deals, 30% of our trade, does not seem very sensible. As we are potentially at the brink of a worldwide trade war, with Trump and the Americans’ ridiculous approach of irrational tariffs on a whole series of goods, this is not the time for us to step away from free and fair trade arrangements.
All I would say to my colleagues on the Front Bench is to be very careful about slipping into an oppositionalist rut on these issues. If we want to be a Government in waiting, we sometimes have to weigh things in the balance and take a responsible view about the prosperity of our economy, because from that prosperity comes the revenues we need for our public services, our health service, our schools, and all those local council services. There is danger in flirting with anti-trade populism. Yes, we must harness globalisation, but we must not resist it entirely. There is a sensible mainstream, dare I say it centre-ground approach to being rational and sensible about trade deals. Yes, make the points about parliamentary scrutiny, but at the end of the day we have to take the long view, which is that free and fair trade benefits us all.
Iain Stewart (Milton Keynes South) (Con)
I shall keep my remarks very brief to allow others in.
On issues such as this, I like to ask what the opportunity cost is of not proceeding. It is very easy to find reasons not to do something; perhaps as a country, we do that too often. If we were to take the advice of the hon. Member for Brent North (Barry Gardiner), go down the contortions of his suggested route and not ratify this treaty, what opportunities will be lost? What investments will not be made, what deals would not be done and what jobs will not be created? We already have strong links between Canada and the United Kingdom. There is a huge appetite among Canadian investors to invest in the critical national infrastructure projects we want delivered in this country. They might be imperilled if we do not ratify this agreement. This is a good deal, paving the way for an even better post-Brexit bilateral deal. Let us get on with it.
Emma Little Pengelly (Belfast South) (DUP)
I want to speak briefly to put on record my support and that of the Democratic Unionist party for the motion and the proposed route forward. Ensuring a strong British economy necessitates a continued and growing role for the United Kingdom in international trade. Northern Ireland already plays a strong part in the overall UK trading picture, but we too want to improve and enhance what we do. We in Northern Ireland want to play a key role and a full part in global Britain—or, may I suggest, a global UK agenda? Northern Ireland already has strong links with Canada, including strong business connections. We want to protect and build on that: more investment, more jobs, and more and enhanced trading relationships. That is why I welcome CETA and today’s proposals.
As been indicated, this measure has already been provisionally implemented and it is entirely logical for us to agree with it today. As this rolls on with UK-EU third-party transitional arrangements, we can address the issues and people’s concerns as well as enhance the opportunities that it might present.
Helen Whately (Faversham and Mid Kent) (Con)
Britain should and must be a champion of free trade. Free trade, the great driver of prosperity, is in the interests of our constituents and has taken 1 billion people out of poverty around the world. Now more than ever, when protectionism is rearing its head—in fact, when it is being trumpeted in parts of the world—we should send a message to the world that we will not follow that lead but will be champions of free trade.
I am afraid that the shadow Secretary of State did not send that message. He said that he would support this—“but”. The substance of that “but” was based on his airtime. I think that it was mostly to do with the process and that he did not like the fact that he had not been invited to the party—perhaps that he had not had his chance to pass the parcel around. I would say that he is better than that. He should take a step back, as I know some of his colleagues are. Some Members sitting behind him are for free trade. They are for British businesses. They are for British consumers. They are not looking to fuel scaremongering fires, as he did. They recognise that this deal will not water down labour rights; on the contrary, it protects them. It will not water down environmental protections; on the contrary, it protects them. It will not be harmful to public services, as it protects them, too. Those risks do not exist, so the order is in the interest of our constituents and we should support it.
Madam Deputy Speaker (Dame Rosie Winterton)
I call Geraint Davies. You have 45 seconds.
Geraint Davies (Swansea West) (Lab/Co-op)
What these trade deals show is that we are stronger in team EU, negotiating big deals, than alone. What will happen is that those on both sides of the House will say that they will do their own deal afterwards in different ways. We will be in a weaker position and subject to all sorts of problems. Finally, on the court system, the EU and Canada are both mature democracies, judiciaries and economies. We do not need an investor court system; the investors are already protected. Things could be improved, but there is a lot in CETA and we need to keep trading.
The Minister for Europe and the Americas (Sir Alan Duncan)
On a point of order, Madam Deputy Speaker. I just wanted to come to the House at the earliest opportunity to correct something I stated in oral questions that was factually inaccurate. In response to a question on Turkey, I said that in her call with President Erdoğan yesterday my right hon. Friend the Prime Minister had specifically raised the issue of the Organisation for Security and Co-operation in Europe monitoring mission. I have since learned that this was not mentioned in the way I described, and I wish to correct the record and apologise for inadvertently misinforming the House.
Madam Deputy Speaker (Dame Rosie Winterton)
I thank the Minister for giving me notice of his point of order and for correcting the record. I am sure the House will appreciate that he has done so at the earliest opportunity.