16:10 - The House divided: - Ayes: 317 / Noes: 1 - Question accordingly agreed to.
16:24 - The House divided: - Ayes: 288 / Noes: 182 - Question accordingly agreed to.
The Minister for Trade Policy (George Hollingbery)
I beg to move,
That this House takes note of European Union Document No. 7959/18 and Addenda 1 to 11, Proposal for a Council Decision on the signing, on behalf of the European Union, of the Economic Partnership Agreement between the European Union and Japan; and European Union Document No. 7960/18 and Addenda 1 to 11, Proposal for a Council Decision on the conclusion of the Economic Partnership Agreement between the European Union and Japan; and welcomes the proposed signature and conclusion of the agreement.
I am delighted to be here today to debate the EU-Japan economic partnership agreement, although I confess it feels slightly peculiar to be standing here and speaking to the House after three years of silence. The agreement is broad and ambitious, offering excellent opportunities to the UK. The Government have long supported the EPA, and I welcome the opportunity today to set this out in my new role. However, let me first take a moment to thank my predecessor, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), for all his works as the Minister for Trade Policy and indeed for his kinds words in the previous debate. He did an excellent job in promoting UK businesses around the world and shaping our future independent trade policy—I very much recognise that I have large shoes to fill.
John Spellar (Warley) (Lab)
Will the Minister just give us a list of his achievements?
George Hollingbery
I am not entirely sure whether the right hon. Gentleman is talking about my achievements or those of my right hon. Friend. [Interruption.] The establishment, in conjunction with the Secretary of State, of a brand new Department for International Trade and preparing ourselves for Brexit is evidence in itself—I could list a great many things.
The Government have an overarching commitment to free trade—
Geraint Davies (Swansea West) (Lab/Co-op)
With all due respect to his predecessor, does the Minister accept that there has been no firming up of deals with third countries that we are assured will continue? Furthermore, South Korea, Chile and Australia have already said that they want to renegotiate their deals, so we have been left in a state of uncertainty and without any deals.
George Hollingbery
The fact is that the previous Minister was engaged, as was I, in a great many lines of negotiation with countries that have agreement with the EU. Progress is being made and will continue to be made under this Administration.
The Government have an overarching commitment to free trade, which is a fantastic and progressive means of stimulating economic growth, creating jobs and providing greater consumer choice. The UK has been, and will continue to be, a leading voice in support of free trade globally. We will continue to support the EU’s ambitious trade agenda while we remain an EU member state. As I have just illustrated, this includes some 40 trade agreements, including the EPA with Japan, which we are talking about today. Ongoing UK support for these agreements, including in respect of signature and conclusion of the Japan agreement in July, will send a positive message about our commitment to global free trade, now and as we prepare to leave the EU.
Sir Desmond Swayne (New Forest West) (Con)
Japan has thrived on globalisation and remains one of the most dominant economies in the world. Notwithstanding an ageing population, it has done so without a reliance on large-scale immigration. There is a lesson there, is there not?
George Hollingbery
I think it would be unwise of me to stray into the areas governed by the Home Office, but I will say that in some of the items agreed in this deal, among which is the transferability of labour across borders, Britain’s right to regulate its immigration processes is clearly protected. I should leave that there.
We will continue to support the EU’s ambitious trade agenda while we remain an EU member state. This includes some 40 trade agreements, including the EPA with Japan. Ongoing UK support for these agreements—I recognise that I am repeating myself and I apologise to the House—will send a positive message about our commitment to global free trade, now and as we prepare to leave the EU.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Will the Minister give way?
Catherine McKinnell
The north-east is home to 50 Japanese firms, including Nissan and Hitachi, and has a long history of doing business with Japan, with many thousands of good jobs in my region relying on Japanese investment. Does the Minister share serious concerns about the future of that relationship, given warnings by the Japanese ambassador that firms could seek to move that investment and thousands of jobs elsewhere as a result of the UK leaving the single market and the customs union?
George Hollingbery
I thank the hon. Lady for her intervention, but I should point out that there have been a number of large-scale investments by Japanese companies in the UK. Toyota, Nissan and Honda have all recently made large-scale investments. Furthermore, the trade deal that has been negotiated includes increasing access for supply chain elements to the automotive market into Japan in a way in which it has not hitherto been accessible. We should always remember that there are small businesses that will have access to the market that did not realistically have that access before.
Hon. Members will have seen from the Government’s detailed and comprehensive impact assessment that the EPA is estimated to be worth up to £3 billion to UK GDP annually in the long run. UK imports are due to grow by up to £8.4 billion per year in the long run, which reflects reduced input costs for British businesses, which in turn are expected to lower prices for consumers. UK exports will increase by up to £5.4 billion, with the largest gains in the chemicals and automotive sectors.
Geraint Davies
Does the Minister accept that when we technically exit in March there will be no legal obligation for Japan to keep us in this trade agreement, and that after the transition period we certainly will not be in it? There is every risk we will be out in the cold. That just shows we are better negotiating as part of team EU.
George Hollingbery
Clearly, all sorts of scenarios are possible, but the hon. Gentleman will also know that a piece of legislation is coming to this House shortly that lays the framework to ensure that we can continue those arrangements. As I have already said, efforts are ongoing across the piece to go around those 40 organisations and 70 countries with which we already have agreements such that we can continue them after exit.
Wera Hobhouse (Bath) (LD)
Has the Minister tried to find out whether those countries we want to continue to have trade agreements with will want to continue them in the way we want them to do? It seems that there is a good opportunity for these countries to come back wanting much better terms for themselves.
George Hollingbery
The hon. Lady will know that I have had a relatively short time in this post and I have not visited any of those countries she mentions, but a great many efforts have been made. The Secretary of State will attest to the fact that we have visited all of them and they have all demonstrated a willingness to continue the arrangements that we currently have.
Sir Oliver Heald (North East Hertfordshire) (Con)
I welcome my hon. Friend to his new duties. Does he agree that given the scale of Japanese investment in this country, and the fact that Japan likes doing trade with us and we like doing trade with it, it is unthinkable that it would not want to reach a trade agreement with us?
George Hollingbery
Evidently, that is the case, because we are here today discussing exactly that, and there can be no reason to think that that position would not continue beyond Brexit.
Sir William Cash (Stone) (Con)
As Chairman of the European Scrutiny Committee, which recommended that this issue be debated on the Floor of the House, I thank the Government very much on the Committee’s behalf for agreeing to that. It demonstrates that this House of Commons does debate and, if necessary, vote on matters not behind closed doors and with full transcripts. We operate not in the way that the European Union functions but in the proper, traditional Westminster manner, with full transparency. For that reason, I congratulate the Government on holding this debate.
George Hollingbery
My hon. Friend is plainly right: we have debated this matter and are giving it further scrutiny today.
George Hollingbery
I have already taken up nine minutes of the House’s time, so if the hon. Gentleman will allow me, I shall make a little progress.
The treatment of UK services suppliers will be fairer as a result of the EPA and comparable to that of Japanese suppliers. That is good news for UK priority sectors such as finance, postal, telecommunications and maritime.
The national health service, which was discussed considerably as part of the heated debate—as were, indeed, public services generally—is a national treasure. I know all too well the importance that fellow Members and, indeed, the population of the United Kingdom place on the need to safeguard the NHS for generations to come. I share that view and wish to be clear with the House that the delivery of public health services is safeguarded in the trade-in-services aspects of all EU free trade agreements, including the EU-Japan EPA. For the avoidance of doubt, for the UK that incontrovertibly includes the NHS in this agreement.
Although investment protection is not featured in the agreement, investment liberalisation provisions will help to improve market access for British companies. Right hon. and hon. Members should note that the EU and Japan will continue to engage to negotiate a stand-alone investment protection agreement.
For the first time in an EU trade agreement, there is a dedicated chapter on corporate governance, which sees the EU and Japan reaffirm their commitment to the OECD principles on corporate governance. The UK played a key role in agreeing those principles at the 2015 G20 summit. The House should be clear that the inclusion of corporate governance provisions in the EPA does not unduly limit the UK’s ability to act further in this area at national or international level.
The agreement explicitly refers to our commitment to labour rights and environmental standards, and neither party will seek to reduce such thresholds to boost trade.
Angus Brendan MacNeil
I welcome the Minister to his new position and wish the right hon. Member for Chelsea and Fulham (Greg Hands) well for the future.
This is the second time today that we have heard the UK Brexiteer Government welcome the European Union’s trade agreements; it seems that when ideology is put to one side and practicality comes in, the EU does not seem to be at all as bad. Currently, what really concerns the Japanese is the relationship that the UK will have with the European Union, because 40% of Japan’s investments in the EU are currently in the United Kingdom. That has led to considerable nervousness in Japan. As well as this agreement, will the Minister be cognisant of that fact?
George Hollingbery
I take the hon. Gentleman’s point, but I must say that I do not think it is widely relevant to the matter before us. Suffice it to say that the UK Government clearly share concerns that we should have a good and friction-free relationship with the European Union after we have left.
George Hollingbery
Not for now.
The EU’s principled long-term ban on the import of whale products will not be lifted by the agreement, and the UK and the EU remain strongly committed to the international convention on trade in endangered species and the work of the International Whaling Commission.
The UK has a wealth of experience in producing the finest foods and drinks across all corners of the country. The agreement secures the protection of Scotch whisky, Scottish farmed salmon, Irish whiskey, Irish cream, west country farmhouse cheddar and both white and blue Stilton. I am proud that those products are safeguarded by the EPA.
Vicky Ford (Chelmsford) (Con)
I congratulate the Minister on his new role. He is making a strong case for this excellent EU-Japan deal, and we should embrace it. Does he agree that the UK-EU partnership that we will be looking for should be even deeper and better, especially in areas such as digital, services and common standards to facilitate our trade?
George Hollingbery
My hon. Friend is absolutely right: we should seek to do the widest, deepest and most ambitious trade deal that we possibly can.
In the light of the European Court of Justice opinion on competence in the EU-Singapore FTA of May 2017, which helped to clarify the scope of the common commercial policy, the Japan EPA is to be concluded as an EU-only agreement. That means that it will fully enter into force once Japan has ratified it, should the European Council and the European Parliament support its conclusion. I am aware of the implications of this approach on the role of Parliament in the scrutiny and conclusion of the EPA, and of EU-only trade agreements going forward, because it means that ratification by Parliament is not required for an agreement to enter fully into force. I am also acutely aware of Parliament’s interest in the Government’s approach to the scrutiny of future UK trade deals and trade policy. That is one reason why I welcome the opportunity to debate the EU-Japan EPA today, as it rightly ensures that Parliament has the fullest opportunity to scrutinise the agreement, under the current EU scrutiny structure. I am pleased to be able to go beyond what is simply required ahead of signature, in line with the Government’s commitment to transparency.
Owen Smith
I, too, warmly congratulate the Minister on his new appointment. He is making an excellent speech in which he is making a powerful case for the EU-Japan trade deal. I completely concur with the remarks of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) about Japanese trade’s importance to our economy. Will the Minister concede that he can offer no guarantee that post Brexit we will have as good a trade deal with Japan, once we are a stand-alone trading nation?
George Hollingbery
All I can say is that the Government are extremely ambitious in what we want to achieve. We are seeking to achieve that trade deal post Brexit and hope very much that we will. Furthermore, we are pursuing that same opportunity with all the other current signatories to deals across the European Union.
Darren Jones (Bristol North West) (Lab)
I declare my interest on the register and wish the Minister well in his new role. I note that the agreement between Japan and the European Union on the free flow of data has been separated from the free trade agreement. Will the Minister give the House a commitment that we will have the opportunity both to debate the data trade agreement that the EU and Japan wish to negotiate and to explore the opportunities and risks for the UK as part of the Brexit process?
George Hollingbery
It was not possible in putting together this agreement to reach the agreement that we wished for on data. The discussion between the two countries on that is still ongoing, and I have no doubt that the matter will come back to the House in due course.
My Department will continue to work with the European scrutiny Committees to identify appropriate ways to ensure the thorough scrutiny of similar EU-only free trade agreements while the UK remains a member state. The Government are considering the legislative framework for future trade agreements, but they are committed to ensuring that Parliament will have a crucial role to play in the scrutiny and ratification of the UK’s future trade deals when we bring forward proposals in due course.
The EU and UK agreed at the European Council in March that international agreements to which the UK is party by virtue of its EU membership—including, at the time of exit, the EU-Japan EPA—should continue to apply to the UK during the implementation period. Text to that effect was agreed in the draft withdrawal agreement. We continue to advance our dialogue with the Japanese Government on the shape of our future bilateral trade and investment relationship, which will come into effect after the implementation period, and I look forward to making progress as we continue to foster our post-Brexit relationship with the Japanese.
Mr Philip Hollobone (Kettering) (Con)
I congratulate the Minister on his speech and his appointment. On his point about the trade arrangements rolling over to the post-Brexit period, will he remind the House that we were told by the Opposition that that would never be possible—that we would never be able to agree that with the European Union and it absolutely would not happen? But of course the Prime Minister has delivered that.
George Hollingbery
Indeed, my hon. Friend is plainly right.
As Members will know, in August 2017, the Prime Minister and the Japanese Prime Minister, Shinzo Abe, agreed to
“work quickly to establish a new economic partnership between Japan and the UK based on the final terms of the EPA”
as the UK leaves the EU. The UK-Japan trade and investment working group, established last year by the Japan-UK joint declaration on prosperity co-operation, is tasked to deliver on that commitment, and it met for the first time in May.
Laura Smith (Crewe and Nantwich) (Lab)
Does the Minister accept that the investor-state dispute settlement has been excluded from the deal because of the widespread public outcry against it? Will he assure the House that his Government will not seek to include ISDS in any future deal with Japan?
George Hollingbery
As the hon. Lady will know, this is not part of the current agreement because, at this stage, there was not agreement between the two parties on how it should work—it is not because it could and would not work because neither party would agree to it. Therefore, I cannot give her the assurance that she is seeking.
To conclude, the EU-Japan EPA is an excellent agreement for the UK that will benefit UK exporters, importers and consumers. During the implementation period, the United Kingdom will seek to retain access to EU free trade agreements while gaining the right to negotiate, sign and ratify new trade agreements. Japan’s commitment to establish a new bilateral economic partnership with the UK based on the final terms of the EPA is clear.
Colleagues can rest assured that the UK will continue to be a strong advocate of free trade globally, and a defender of the multilateral rules-based system. The Government are committed to a truly global Britain as we leave the EU, where we seize the opportunity to engage with partners around the world in the shared pursuit of prosperity and security. As to future scrutiny arrangements, the Government are clear that Parliament will have a crucial role to play in the scrutiny and ratification of the UK’s future trade deals, and proposals on this will come forward in due course.
The EU-Japan EPA has a positive role to play for the UK, the wider EU and global free trade in general. I look forward to the UK demonstrating our support for the agreement when Council adopts decisions on conclusion and signature, and I urge hon. Members to support the Government’s motion to that effect today.
Barry Gardiner
I am grateful to the hon. Gentleman on two counts—first for showing us precisely what we are talking about. I know that he will have read the full EPA assessment, as I have done. I am equally grateful to him for raising the issue of the balance of trade surplus and deficit that we currently run. I am just about to come to that point, so I hope that he can hold off with his remarks.
It is perhaps most damning to quote from the impact assessment document itself, which states:
“Figures presented here reflect the long run impacts per annum and should be treated as a magnitude of change and not a forecast…It is important to note the results below are not based on the final EU-Japan EPA text and are therefore subject to a degree of uncertainty…Estimates are produced against a baseline of 2008 and reflect a world in which the Doha trade round and EU-Korea FTA are un-concluded.”
So there we have it. The baseline is 10 years out of date and fails to take account not only of the EU-South Korea FTA, which has been applied ever since July 2011 —seven years ago—but of the terms of the final agreement text that it is supposed to be assessing.
The European Scrutiny Committee was absolutely right to demand in its report
“a clear breakdown of how different UK sectors and stakeholders are expected to win or lose from the agreement.”
All the independent projections made of the EU-Japan deal calculated that the gains accruing to Japanese firms would be far higher than those seen by European businesses. All the forecasts spoke of major increases in Japanese exports, and the potential loss of jobs and businesses in Europe as a result. The Government assessment has at least picked up on these forecasts, recognising that the UK’s balance of trade with Japan will take a serious hit when this agreement comes into force. Voting to approve this motion will allow the Government to rush ahead and sign a deal that the Government’s own figures show will result in a decline in our trade balance with Japan of between £2.2 billion and £2.9 billion, so the hon. Member for Stone, who chairs the European Scrutiny Committee and asked for the impact assessment to be published, will now see that the effect of this deal is, in fact, to increase our problems in terms of our balance of payments with Japan.
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I will try again. Am I now to assume that the official position of the Labour party is not to ratify the Japan EPA?
Barry Gardiner
Note how keen the Secretary of State is to deflect the House from the fact that his own impact assessment says that, in signing the deal, this country will be between £2.2 billion and £2.8 billion worse off.
Barry Gardiner
Yes; and, ultimately, if the Secretary of State is patient and listens, it will become clear—
Barry Gardiner
Goodness me! The Secretary of State is getting really exercised from a sedentary position; he is starting to be abusive. Let us be clear what has aggravated him so much. It is that I have read his impact assessment, and his own assessment of this deal says that this country will be £2.2 billion to £2.8 billion worse off.