Tuesday 15th December 2020
(3 years, 11 months ago)
Lords ChamberTrade Bill 2019-21 View all Trade Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 128-R-I Marshalled list for Report - (2 Dec 2020)
13:33 - Division conducted remotely on Amendment 12 - Ayes: 274 / Noes: 209 - Amendment 12 agreed.
17:35 - Division conducted remotely on Amendment 15 - Ayes: 265 / Noes: 269 - Amendment 15 disagreed.
The Deputy Speaker (Lord Brougham and Vaux) (Con)
I will call Members to speak in the order listed in the Annexe to Today’s List. Interventions during speeches or “before the noble Lord sits down” are not permitted and uncalled speakers will not be heard.
Other than the mover of an amendment or the Minister, Members may speak only once on each group. Short questions of elucidation after the Minister’s response are permitted but discouraged; a Member wishing to ask such a question, including Members in the Chamber, must email the clerk.
The groupings are binding and it is not possible to de-group an amendment for separate debate. A participant who wishes to press an amendment other than the lead amendment in a group to a Division must give notice, either in the debate or by emailing the clerk.
Leave should be given to withdraw amendments. When putting the Question, I will collect voices in the Chamber only. If a Member taking part remotely wants their voice accounted for if the Question is put, they must make this clear when speaking on the group.
Amendment 12
Lord Lansley
“Ratification of international trade agreements and treaties
(1) The Constitutional Reform and Governance Act 2010 is amended as follows.(2) In section 20 (treaties to be laid before Parliament before ratification), after subsection (1)(b) insert—“(ba) where the treaty is an international trade agreement as defined in the Trade Act 2020— (i) a Minister of the Crown has published an analysis of the requirement for the treaty to be implemented through changes to domestic legislation, and(ii) where changes to domestic legislation would be required as described in the analysis under sub-paragraph (i), the necessary legislation has been laid in the form of a statutory instrument or the necessary primary legislation has been enacted,”.(3) In section 21 (extension of 21 sitting day period), after subsection (2) insert—“(2A) Where a relevant Committee of either House of Parliament has recommended that a treaty constituting an international trade agreement as defined by the Trade Act 2020 should be debated in that House, the Minister of the Crown must ensure that the period does not expire before that debate has taken place.””Member’s explanatory statement
This new Clause amends the Constitutional Reform and Governance Act 2010 to require analysis of the domestic legislation needed to implement a trade agreement to be laid with the Treaty; that the legislation should be enacted or laid before ratification; and that the Minister must allow a debate on the Agreement if sought by a Committee in either House.
Lord Lansley (Con)
My Lords, Amendment 12, in my name and that of the noble and learned Lord, Lord Goldsmith, was debated along with Amendment 6 on day one. It relates to the parliamentary scrutiny process for international treaty agreements under CRaG. In view of the support it received in the course of that debate, I wish to test the opinion of the House and beg to move Amendment 12.
The Deputy Speaker (Lord Brougham and Vaux) (Con)
We now come to the group consisting of Amendment 13. I remind noble Lords that Members, other than the mover and the Minister, may speak only once and short questions of elucidation are discouraged. Anyone willing to press this amendment to a Division must make this clear in the debate.
Amendment 13
“Mobility framework with the European Union
For the purposes of facilitating the continuation of trade with the European Union, the Secretary of State must take all necessary steps to secure a mobility framework with the European Union that enables all UK and EU citizens to exercise the same reciprocal rights to work, for the purpose of the provision of trade in services.”Member’s explanatory statement
The new Clause places an obligation on the Secretary of State to take all necessary steps to secure a mobility framework with the European Union.
Lord Fox (LD)
My Lords, the amendment is in my name and I thank other Peers who have put their names to it. It would insert a new clause that places an obligation on the Secretary of State
“to take all necessary steps to secure a mobility framework with the European Union”.
For some time, there was an assumption that any free trade agreement with the EU would include a chapter on mobility and mutual recognition of qualifications. It is clear that even if there is an FTA, no such provision would emerge by 31 December. Therefore, the amendment is a way in which to address the need for the Government to think again and focus on this issue, whether it is through the FTA or in some other way.
At Second Reading, the Minister—the noble Lord, Lord Grimstone—said that his aim was to maximise economic benefit. As I said in Committee, it is surprising, given the Secretary of State’s acknowledgement of the importance of services to trade, that Her Majesty’s Government are so blind to what they are doing by cutting off or making much more difficult the essential movement of people. In truth, the need for mobility has already been recognised in other deals. Indeed, other trade deals have mobility frameworks such as those agreed with Japan, which was presumably put there by the Japanese to facilitate the support of their manufacturing industry and financial sector, and with Switzerland, to allow the free movement of certain financial industry functions. However, in this context, movement between the UK and the EU is much more important in terms of meeting the Minister’s aims of maximising the economy.
As the noble Viscount, the Minister, knows, the UK services industry accounted for over 40% of the UK’s exports to the EU in 2018. As well as the acknowledged financial and banking industries, those exports include legal, accounting, advertising, research and development, architectural and other professional and technical services. Then there are all the creative, musical and artistic areas that involve people who have been moving seamlessly through Europe, adding not just to the cultural richness of our relationship with Europe but to the financial performance of the UK. From January, these sorts of movements will either not be possible or be extremely difficult.
In her speech in Committee to a similar amendment, the noble Baroness, Lady Bull, set out clearly the five modes of services traded across borders. I recommend that the Minister rereads her speech if he can. One of the modes that she raised was fly-in, fly-out. Every month, according to industry, around 10,000 people move between UK and EU manufacturing, more than the Government’s estimate of 53,000 per year. As the Minister will appreciate, they include engineers, technicians and the like, who are providing the services that keep manufacturing going. In return, EU people come the other way.
Let me give an example. I am using the Germany-to-the-UK version and I declare my interest as a vice- president of the German-British Forum. Let us say a German company sells machinery to British industry—as many of them have, to a great extent. That could include the transport, power supply or car industries. In many cases, both the installation of and ongoing technical support for that machinery comes from technicians who come from Germany. They are not necessarily German, but they come from Germany, sometimes at very short notice. If something goes wrong, as of today, a technical team of people who are specialists in particular pieces of equipment, which are often wide-ranging, will fly in. The number of people sent and the individuals in question depend on their availability and the other contracts that the company has.
As it stands, the current immigration policy for tier 5 temporary workers does not appear to cater for this sort of situation, which requires a reliable approach as individuals generally cannot be named in advance and the length and frequency of the stint that they perform when they are in this country are unknown. This is a real issue that has not been borne in mind. I understand that we are talking about the Trade Bill but trade involves the free movement of people to make things happen and make things flow.
Cross-border work is further hampered by the absence of mutual recognition of qualifications. In Committee in September, during the debate on a similar amendment, the Minister—the noble Viscount, Lord Younger of Leckie—said that negotiations with the EU were opening on this matter. That seemed late then, 90 days before the end of the transition period. It would be helpful if the Minister could update us on how those negotiations are going, what sort of mutual recognition regime we can expect on 1 January and, if there is no agreement, what the contingency plan is, so that we can make sure that the valuable skills of the people from the European Union working in this country are recognised and the valuable livelihoods of British people are still alive and kicking.
We are about to plunge into high unemployment; the figures show that unemployment is a very serious developing issue. However, the people being cut off are the sort of people who can to help to grow the UK out of this unprecedented situation. This sort of immigration policy and the lack of a mobility framework sends a message to would-be entrepreneurs from across Europe—people who tended to flock to the United Kingdom because they saw it as a great place, where they were welcome and could work to the advantage of everybody in the country. It is not just about them; it is also about the movement of the people who are not necessarily well paid but form their teams.
This amendment proposes a new clause that places an obligation on the Secretary of State to take all necessary steps to secure a mobility framework with the European Union. Trade is increasingly about people and this Trade Bill ignores this. This amendment requires the UK to negotiate that mobility framework. To fail to do this is to invite the law firms, architectural practices and many other service industries to set up offices that were in this country in the rest of Europe. To fail to do this is surrendering jobs and the considerable tax take they bring to other countries. It is cutting off cultural interchange and opting to make manufacturing in this country harder and less attractive. In short, the process we are entering is disrupting the human supply chain which keeps this country running and growing. I beg to move.
The Earl of Clancarty (CB)
My Lords, I am grateful to the noble Lord, Lord Fox, to be able to support this amendment. We do not yet know whether we will get a deal with the EU or what exactly the deal will look like if we do. What we can say is that a no-deal on services will be a no-deal for the country, irrespective of whether we get a deal. The Government and the media have consistently underestimated the importance of service industries, both to this country and as part of our trade with Europe. Service industries are 80% of our GDP, a statistic we have repeated many times in this House. Our services trade with Europe makes up 51% of our services exports. As it stands, Europe is a hugely important market for services—the most important. Due to the significance of geography to service industries, it is one that is frankly irreplaceable.
Services have not been ignored in all quarters. In an interview with the Observer on 1 November before stepping down as director-general of the CBI, Carolyn Fairbairn said that her “really big disappointment”—her exact words—was the lack of help for services in the potential deal. The recent report by the EU Services Sub-Committee, The Future UK-EU Relationship on Professional and Business Services, raises similar concerns —not least those shown by the creative industries. The amendment moved by the noble Lord, Lord Fox, does not specify what the precise nature of the mobility framework should look like. The so-called mobility arrangement that Liz Truss has just signed with Switzerland agrees 90 days’ visa-free work a year. If this a sign of what is to come for EU countries, it will still not be enough on its own for much of the sector—which demands longer stays and ease of movement between European countries. This will be—
Baroness Scott of Bybrook (Con)
I am very sorry, but we have a technical problem and nobody else can hear at all. I suggest we adjourn for 15 minutes.
The Earl of Clancarty (CB)
My Lords, in the Chamber at least: take two.
I am grateful to the noble Lord, Lord Fox, for tabling this amendment, which I support. We do not yet know whether we are going to get a deal with the EU or what exactly the deal will look like if we do. What we can say is that a no deal on services will be a no deal for the country, irrespective of whether or not we get a deal. The Government and the media have consistently underestimated the importance of service industries both to this country and as part of our trade with Europe. Services are 80% of our GDP, a statistic we have repeated many times in this House. Our services trade with Europe makes up 51% of our services exports. As it stands, Europe is a hugely important market for services—the most important. Because of the significance of geography to service industries, it is one that is frankly irreplaceable.
Services have not been ignored in all quarters. In an interview with the Observer on November 1 before stepping down as director-general of the CBI, Carolyn Fairbairn said that her “really big disappointment” was the lack of help for services in the potential deal. The recent report by the EU Services Sub-Committee, The Future UK-EU Relationship on Professional and Business Services, raises similar concerns—not least those shown by the creative industries. The amendment moved by the noble Lord, Lord Fox, does not specify precisely what the mobility framework should look like. The so-called mobility arrangement that Liz Truss has just signed with Switzerland agrees 90 days’ visa-free work a year. If this a sign of what is to come for EU countries, it will still not be enough on its own for much of the sector—which demands longer stays and ease of movement between European countries. This will be particularly so for the performing arts, IT and the holiday industry, for instance. Can the Minister supply more details of this arrangement and how it will affect those industries?
In the meantime, it is no wonder that potential clients across many sectors in Europe are now advertising for those who have European passports, while those with only British passports are expressly excluded in such advertisements. This is now the norm, as clients and so much of the sector see British workers as too much trouble and red tape if they are not to be allowed the necessary physical mobility these industries demand. If this is to be the case it will be a tragedy for our service industries. The bare fact is that without a meaningful mobility framework many will lose their livelihoods and others significant job opportunities.
There are allied concerns, some of which the noble Lord, Lord Fox, referred to. It is essential that there is a data adequacy agreement and mutual recognition of professional qualifications. For many, there are concerns about costs. According to the Incorporated Society of Musicians, in normal times over 20% of British musicians travel to Europe at least 11 times a year. The ISM has also calculated that in a worst-case scenario, musicians who carry instruments abroad may incur additional costs of £1,000 a year. Like many who work in services, most musicians are self-employed. Such costs would need to be borne personally, which for many may prove simply too prohibitive.
The creative industries are hugely important financially, and in terms of cultural exchange and soft power. Coming on top of the effect of Covid, all of this will be threatened without a mobility framework in Europe. Moreover, these industries, along with the rest of the services sector, are as much in the dark about a potential deal now, with 16 days to go, as they were four years ago. As I said in Committee, many in the sector are crying out that even now they lack real guidance.
The Government and the Opposition will note that the amendment from the noble Lord, Lord Fox, cuts to the heart of things and is a more focused version of the one he moved in Committee. Purely and simply, it asks for a mobility framework on services. At the same time, manufacturing will also be affected without such a framework because of the importance of servitisation —including maintenance and repair of goods—to those industries, and to which the noble Lord, Lord Fox, referred.
We know that deals that would have allowed better access to the single market will have been offered to the UK. We have also heard what the former Australian Prime Minister, Malcolm Turnbull, had to say on an Australian-style deal on WTO terms, with
“a lot of friction in the system in terms of services”—
surely an understatement. It is essential that a framework for services between the UK and the EU is put in place.
Baroness Bull (CB)
My Lords, it is a pleasure to follow the noble Earl, Lord Clancarty. I pay tribute to him for his tireless advocacy on behalf of the creative industries, particularly the music sector. As he pointed out, the amendment does not seek to recreate the past, as was suggested in response to a similar amendment in Committee. It seeks very specifically to secure the continued success of UK services, and in doing so to preserve the employment the sector provides, the economic contribution it generates and, as the noble Lord, Lord Fox, outlined, its potential to contribute to this country’s recovery from the pandemic.
The UK is predominantly a services economy, with services contributing around 80% of economic activity in 2019 and providing jobs for 85% of the UK workforce. It is not a coincidence that the primary destination for UK services exports is the EU’s single market. One of the best-established empirical results in international economics is that bilateral trade decreases with distance. The closer the country, the easier it is to get feet on the ground. Aside from services provided remotely, all modes of service require this physical presence. Thus, there is an inextricable link between mobility and service success.
British in Europe, an organisation representing the 1.2 million British people living in other European countries, gave extensive evidence in June to the Select Committee on the Future Relationship with the European Union on the extent of the problems British citizens will face if they are denied appropriate mobility in Europe. To date, these concerns have been largely ignored, but they are proving to be well founded, with anecdotal evidence emerging of UK passport holders already missing out in exactly the ways anticipated even before the end of the transition year, with employers reluctant to hire UK citizens, job offers withdrawn, and, in one recent widely publicised example, British passport holders excluded from the casting call for the role of a British prince in a new film due to “new Brexit rules”.
Contractors working across multiple European countries face even more complex issues in being obliged to comply with multiple different formalities to gain a temporary right to continue working as a provider of cross-border services. Without a framework in place, British service providers will face exactly this patchwork quilt of unilateral solutions and immigration rules in the different EU countries to which their work takes them. Big companies that have the resources to tailor and adapt will probably survive, but individuals, freelancers and owners of small businesses will once again be the ones to suffer.
These small businesses are also likely to be hit hardest by any failure to secure an adequacy decision with the EU. A recent report from the New Economics Foundation and UCL estimated that SMEs are each likely to have to find between £3,000 and £10,000 to cover additional costs of compliance if they want to continue to transfer data from the EU to the UK, with the aggregate cost to UK businesses in the region of £1.6 billion. This is money that could certainly be better spent, especially as UK business recovers from the pandemic.
Even before Covid, the impact of leaving the EU without a mobility framework to replace the current one threatened the sustainability and the success of UK services. We know that Covid has had a devastating effect on those parts of the sector that rely on human gatherings: hospitality; air travel; the creative industries; arts and entertainment. In the creative industries alone, Labour Force Survey data from the ONS reveals job losses of 55,000, a 30% decline since March and significantly higher-than-average numbers of people leaving creative employment. This is clear evidence of the scale of the crisis in a sector which has, over recent years, contributed over £111 billion annually in GVA.
The absence of a mobility framework will not just put at even greater risk these elements of UK services that are already on their knees but risk also those which have been better able to weather the Covid storm—IT, financial and legal services—because of the barriers that it will impose on the continuation of trade. The UK service sector is one which can claim to be world-leading, and I am still at a loss as to understand why it has received so little attention throughout the Brexit negotiations. That is why I support this amendment, and in doing so, once again ask the Government to do everything that they can to secure an appropriate mobility framework with the EU. This will protect not only the jobs of four in every five UK citizens but the crucial contributions that services make to our economy and, through that, to communities up and down the country.
Baroness Noakes (Con)
It is a pleasure to follow the noble Baroness, Lady Bull, but when I read Amendment 13 I thought that she and the noble Lord, Lord Fox, had temporarily forgotten that the Government were elected on a promise to get Brexit done, and that a part of that promise was to take back control of our borders. That means controlling who comes into our country. My right honourable friend the Home Secretary has made fantastic progress in reorienting our approach on this. I know that some noble Lords still cling to a faint hope that, even though we have left the EU, we can carry on much as before, and at the heart of this amendment is that very notion. Whatever noble Lords who support the amendment have said, at the heart of what they are trying to achieve is something akin to the status quo.
In the negotiations, which have been so tortuous, it has not been difficult to miss that mobility has simply not been on the table. Indeed, the provision of services that is the target for the amendment is not a significant part of the negotiations. These are facts. Do noble Lords think that, at this late stage, the UK should go back to the EU and say that negotiations should start all over again and build in a mobility framework? That cannot be more than a pipe dream. It might be realised in due course, but noble Lords must accept the reality that there will be no special arrangements in the near term. We must learn to live the new normal of the UK being outside the EU, with all that this entails. Some service providers, notably financial services, have already adapted their business models; others will have to follow. Noble Lords may not like change and may wish to cling to the past, but we have moved on, and this amendment belongs in another era.
Baroness McIntosh of Pickering (Con)
My Lords, with all the respect and affection which I hold for my noble friend Lady Noakes, I must disagree with her most strongly. I hope that, when summing up this debate, the Minister will set out the facts as they are. We passed a statutory instrument looking especially at the free movement of lawyers, and we have undertaken in this country to grant access to lawyers of the European Union and EEA to come and practise on the same terms going forward as are currently available. I realise that, as it is a different department, the Minister may not have the answers at his fingertips, but I would welcome a written response, to get the facts as they are. What update can the Minister give today on the basis that we have allowed incoming professionals?
I am particularly interested in lawyers, but I accept that the noble Baroness, Lady Bull, and the noble Earl, Lord Clancarty, are looking at the overall picture, which is that 51% of all services that we export go to the European Union. That is an inescapable fact. Have we now progressed? Do we now have a situation in which those such as myself, some 30 or 40 years ago, will be able to go over on an ongoing basis—allowing those European and EEA lawyers to practise here, establish themselves and set up a freedom to provide a service as an attorney, lawyer or advocate—on the basis of reciprocity, so that mutual recognition is a two-way process? Is that now the case? Has that been agreed with our European partners? I believe that the generosity of spirit must be reciprocated by them.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a great pleasure to follow the noble Baroness, Lady McIntosh of Pickering, and to see her acknowledging, as she often does, the benefits and opportunities that freedom of movement gave to her life, and to see her seeking to preserve at least some of those for young people in the future. It is also a great pleasure to speak after the noble Baroness, Lady Bull, and the noble Earl, Lord Clancarty, such champions in your Lordships’ House of the creative industries. We have heard a great deal of powerful testimony about the economic importance of those creative industries. I will take a second to focus on the importance to the quality of life for all of us and the way in which cultural exchange enriches all our lives. The loss of that will make us much poorer in the most fundamental terms, rather than just focusing on the economic ones.
I thank the noble Lord, Lord Fox, for tabling this amendment and all noble Lords who backed it. I urge that this be put to a vote, and very much hope that those on the Labour Front Bench find themselves able to support that vote, for the opportunities and freedoms which have already been outlined.
Picking up on the points made by the noble Baroness, Lady Noakes, I am not sure, given that we now have a deal along the lines of what has been outlined here with Switzerland, how this can be labelled a “pipe dream”, given that it has already been achieved with one small part of Europe. The Government obviously do not think that it is a problem with taking back control to have that agreement with Switzerland. We know that Switzerland is particularly famous for its banking and financial sector, but one would hope that was not the only sector that the Government are focused on and wish to see this kind of freedom of movement in.
The Government’s statement on that Switzerland mobility agreement says that
“UK suppliers will be able to do business in Switzerland as they do now. There will be no economic interest tests, no work permits and no lengthy processing times…This offer will be open to businesses of all sizes, including the self-employed.”
What are the Government trying to achieve in the coming few days? What is the aim for next year? What is the aim for the future?
I also note that it would appear that we have lost a chance of involvement in Erasmus+. This is built on the kinds of relationships that the noble Baroness, Lady McIntosh of Pickering, referred to, with internships, interchange studies and apprenticeships. They set up the relationships that then create the opportunity to deliver these services for British businesses. How do the Government plan to ensure that those relationships are built in the future, so that the opportunities remain for British businesses and creative people to have those interchanges?
Lord Wigley (PC) [V]
My Lords, I shall speak in support of Amendment 13, so eloquently moved by the noble Lord, Lord Fox, despite the technical difficulties. I follow the noble Baroness, Lady Bennett, with great pleasure. It is good to see her back in the Chamber. I agreed with everything she said. I also welcome the comments of the noble Baronesses, Lady McIntosh and Lady Bull.
The amendment touches on a matter that is now assuming immensely greater interest among the people of these islands, as the harsh possibility of a no-deal Brexit dawns on them. People are awakening to the reality that their right to move to work in EU countries might now be limited as a direct result of the 2016 vote, notwithstanding the multitude of platitudes expressed by Brexiteers during that referendum.
Perhaps I may refer to one particular group in the service sector, and, in doing so, I draw attention to my registered interests. I highlight the need for those in the performing arts sector to have unrestricted free movement across the countries of our continent. The noble Earl, Lord Clancarty, has already very effectively addressed this dimension, which is so close to his heart. Such freedom of movement is absolutely basic to the cultural services they provide. Many of them, particularly those who are self-employed, have been devastated by the Covid lockdown, and restrictions on their movement once the Covid threats ease would be a second body blow that they just could not endure.
The Government claim that they support the securing of mutuality for the creative sector between the UK and the countries within the European Union. When the Minister responds, will he clarify where they stand on the Creative Europe programme? It is so important for the devolved nations in developing their existing links and helping them maximise their contribution to the UK’s soft-power objectives.
Other people are expressing horror at the fact that they will not be able to take their pet dogs with them when they travel to and forth in our continent without pre-arranged veterinary certificates. Lo and behold, we do not have the number of vets required to handle such cases, as so many of them originate from the European Union and have been given the impression, rightly or wrongly, that they are no longer welcome here. With a proportion of them now opting to go home and very few new vets coming to the UK given the Brexit uncertainty, the whole of the animal sector faces a crisis. Apparently, there have been a significant number of qualified vets among refugees seeking a home in Britain. It would be very helpful if the Government could fast-track them to enable them to help us out in the plight that faces us.
The harsh, cold reality of a no-deal Brexit is now staring us in the face. There is something ironically, cruelly appropriate that the free movement of people—one of the original attractions of having our continent reunited after two disastrous wars during the first half of the 20th century—is now one of the first potential casualties of Britain’s retreat into offshore isolation, hiding behind an array of gunboats to secure our place in the world. Presumably, that is the new normal to which the noble Baroness, Lady Noakes, referred. And is it not cruel that we—the generation who have enjoyed freedom of travel for work, education and leisure purposes—are the ones taking that great boon of unhindered travel away from our children and grandchildren? We should be thoroughly ashamed of ourselves, and I can only shudder at how history will judge us.
I fully support the amendment, although I do not pretend for one moment that it will somehow begin to put right all the negative impact of Brexit in its worst, ugly guise that now stares us in the face. I say no more.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, it is a pleasure to follow the noble Lord, Lord Wigley. I agree with every word that he said, and he said it most eloquently.
I want to speak in support of the amendment moved by the noble Lord, Lord Fox. I have to say that very carefully because it is getting more and more confusing. We have the noble Lord, Lord Fox, the noble Baroness, Lady Fookes, the noble Lord, Lord Faulks, me—Lord Foulkes—and now there is another Fox here, although I think of the noble Lord as the friendly fox. I am sure I am giving nothing away when I say that.
These days, sadly, the Brexiteers comprise almost the whole of the Cabinet. It seems to be the only requirement to be a member of the Cabinet—not to have ability but just to have campaigned for Brexit. It is certainly not ability—that is very obvious. Also, this place is becoming increasingly packed with Brexiteers, who, sadly, inhabit both sides of the House.
I am what they all call a “remoaner”. I ask the noble Baroness, Lady Noakes, whether “remoaner” is the right term. Well, I make no apologies for continuing to be a remainer—and I will continue to be one. Over the last 40 years we have had not just mobility for trade and reciprocal rights to work but free healthcare as we have travelled throughout Europe. We have had the right of abode, which we will now get for a measly 90 days. That will thwart some of the people on the other side of the House with two homes. We have had the right to study and many more reciprocal rights. I say to the noble Baroness, Lady Noakes, and others that that is sharing sovereignty, not surrendering it. Sharing sovereignty does not mean surrendering it.
I want to take this opportunity to say just one thing: that those of us who have valued, and continue to value, those rights should not be intimidated in any way by the Brexiteers. After all, they went on and on for decades until they got their referendum, which, sadly, they won. It is our right to continue to advocate the case for European co-operation. Incidentally, we should also not be put off by the faint-hearted in our own parties.
Those of us who believe in the European ideal—the European single market, a customs union, European co-operation generally, and working with our closest allies and neighbours—should keep on saying that. We should reaffirm our commitment and determination to return to membership at the first possible opportunity. After all, as others have, rightly, said, the current fiasco over Brexit makes it even more imperative that we should look at that option.
Bankers, those working in insurance and people in many other businesses are moving from the United Kingdom to the continent of Europe. That is one of the ironies of it, and some of them of course are Brexiteers. Jacob Rees-Mogg in the other place is making huge amounts of money out of investments in Ireland and not in the United Kingdom, and Jim Ratcliffe of INEOS, one of the leading Brexiteers, is moving production of the new Grenadier vehicle to the continent of Europe. That is not patriotism; it is despicable, and it should be criticised by people opposite who aver that they believe in the United Kingdom.
So let us reaffirm our belief and not be intimated by the Brexiteers, and let us start now. I remember the referendum when we reaffirmed our commitment to the European Union. I fought very hard for that and we have enjoyed the last 40 years. I hope that I will be around for the next referendum—I might just be if it comes sooner rather than later—to make sure that we return to the European Union, taking our rightful place as part of the united Europe that, sensibly, we have been, and ought to remain, part of.
Viscount Trenchard (Con)
My Lords, it is always a pleasure to follow the noble Lord, Lord Foulkes, although I regret to say that I do not agree with a single word he said. The noble Lord, Lord Fox, is right in his belief that continuation of trade with the European Union requires a reasonable degree of free movement so that companies may dispatch their people, often at short notice, to engage with customers and potential customers for their services.
In Committee, my noble friend Lord Younger said the Government were seeking to agree mobility arrangements with the EU as are
“normally contained in the services part of a trade agreement”.—[Official Report, 13/10/20; col. 981]
Will my noble friend confirm that this is still the situation? Obviously we cannot continue unfettered free movement of people as we have had with EU countries, but we need to offer reasonable short-term entry permissions to EU citizens and to those of our other trade partners.
It is good that the UK-Japan EPA contains a mobility framework permitting UK companies to transfer their employees to live and work in Japan for up to five years. It also permits visa-free travel for short-term business visitors for up to three months in every six months. I regret that the EU has, as far as I know, offered short-term business visitors only up to a three-month stay in a 12-month period, which is rather less generous than the three-month stay in a six-month period which we have offered it.
I am a member of the EU Services Sub-Committee; we wrote in our report on professional and business services—referred to by the noble Earl, Lord Clancarty—that businesses need clarity on what is allowed while on business trips and how long they can stay. As the City of London Corporation explained in its evidence to the committee, the UK economy relies on the ongoing supply of international talent. The Government need to ensure that this supply continues into 2021 and beyond.
I regret that I cannot support this amendment because it seeks to compel the Government to introduce a mobility framework that would enable all UK and EU citizens to exercise the same reciprocal rights to work for the purpose of trade in services. I am not clear whether the noble Lord is talking about the same rights as have hitherto existed to travel within the single market or if he is simply seeking reciprocal rights on a third-country basis for the UK and the EU, which, as of now, I think the EU has not placed on the table.
As my noble friend Lady Noakes reminded your Lordships, we have left the EU. Some observers think that the EU will continue to use regulatory measures to try to enforce repatriation of capital markets’ business and other financial markets to the eurozone. That would be Europe’s loss and would be resisted by European borrowers in the international markets, particularly as Europe’s share of global markets continues to shrink. It is more important that the UK adopts business mobility rules which guarantee its openness to the world. This will help our services industries retain the world-leading position they hold today. If the EU declines a reciprocal mobility framework, that will be its loss more than ours. I cannot support this amendment.
Lord Cormack (Con) [V]
My Lords, unlike my noble friend, I can support this amendment. I was delighted that the noble Lord, Lord Foulkes, said that sharing sovereignty is not the same as sacrificing it. I feel deeply frustrated this afternoon for all manner of reasons. It is the first time since July that I have taken part in a debate without being in the Chamber; the frustrations of this afternoon, which have meant that I have to speak to your Lordships over the telephone, fill me with admiration for those who make that possible— we are all very much in their debt—but underline the unsatisfactory nature of our current Parliament. The sooner we can all be in the Chamber, the better. I certainly intend, God willing, to be back in the Chamber immediately we return from the Christmas recess, although we do not know when that will be.
The noble Lord, Lord Fox, talked about the importance of movement. Several members of my family, including both my sons, are in service industries of one sort or another. Movement between the UK and the EU is essential to our prosperity as a nation. It beggars belief that the Government should be jeopardising that prosperity when we are in the deepest recession in 300 years. I cannot for the life of me understand why, when Covid struck, we did not press the pause button on our negotiations with our friends and allies—and they are both. Every nation in Europe is convulsed by Covid. It is the priority on every national leader’s agenda. For us to be coming down to the wire merely because of the mystical significance of 31 December is incomprehensible. Deadline politics is very rarely sensible or wise politics.
Those whose mobility is being frustrated are the very people on whom we will depend for our future: the innovative, the creative, those in the financial services and many others. The prospect of our leaving on 31 December without a deal—the Prime Minister tells us that is the most likely prospect—is a very harsh one. It makes me ashamed of my party and ashamed for my country. I just hope that, in this season of good will, some common sense and charity will prevail and a deal will be struck before or after 31 December, so that we can maintain proper convivial relations with our friends and allies in the European Union.
Of course we are out of the EU. I may regret that, but I do not think it practical that we can go back in, certainly not for very many years. We must make this work. We will make it work not by posturing but with true conviviality and a recognition that compromise is essential for progress in almost all walks of life. I am sorry not to be with noble Lords this afternoon. I cannot get back soon enough.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, it is a pleasure to follow the noble Lord, Lord Cormack, who often dominates our proceedings from his position on the Conservative Benches—even when he is not physically present, he still has a lot to contribute. He put his finger on a number of important points in this short debate on the mobility sector.
The noble Baroness, Lady Noakes, as she is often wont to do, accused everyone who spoke in support of this amendment of trying to relive the Brexit debate. I hope that, when she reads the debate properly in Hansard and reflects on what has been said in response to her already, she will realise that that is way off course. My noble friend Lord Foulkes put it in his traditional bullish way, but he had a point. We are looking to a future that is not the same as the past, but a future with a significant disjuncture—the leaving of the EU—and this is here so that we can think again about how our future economic prosperity can be lodged in the things that make Britain a very successful economy, when we get it all right.
In introducing the amendment, the noble Lord, Lord Fox, made a number of key points in support of his argument. The best was about how this suggestion for mobility must sit in the context of our services industries, which he and others pointed out are the majority part of our economy. He also said—it is very important to bear this in mind—that most trade in physical goods these days has a services component. We have heard examples in recent debates about Rolls-Royce; although it supplies bits of parts and elements for aircraft and other machinery, it mainly makes its money from the service contracts accompanying them. The key to delivering that is flexibility so that, as the noble Lord, Lord Fox, put it, people are happy with the product they buy. There are cultural and social benefits as well.
The noble Earl, Lord Clancarty, and the noble Baroness, Lady Bull, made very powerful arguments in support of our creative economy. I liked the phrase used by the noble Baroness, Lady Bull—the “human-gathering industries”. It is the first time I have heard that, but it may be more common in other debates and discussions. Our ability to create economic activity around the interaction of people clearly depends on people being able to move around and join together. Hospitality and other service industries rely on that, and it is very important that we get that right; it is what we do best in this country. We make most of the money that keeps our services going through that, and we must make sure that we have the right circumstances for it.
The narrow point about the cultural industries was, of course, made strongly by the noble Earl, Lord Clancarty. He has a long and distinguished record of saying important things about the creative industries in your Lordships’ House, and we should listen to him. It is a key sector of our economy and, of course, it depends on people travelling to perform or create in a way that is not true of many other traditional industries, but that is no reason to discriminate against it—indeed, we should do the opposite.
The old system we used to operate under, successfully, for many years has gone. We have to think about the new one, and we should not erect barriers to that. I am sure that the Minister will deal in detail with the points made when he responds, but will he answer a particular question that I have? It is noticeable that the free trade agreements being negotiated by his department, such as the recently signed Japanese agreement, often have a mobility component. Can he confirm that that is likely to be a feature of many of the free trade agreements going forward and, if so, in what way will that assist the noble Lord, Lord Fox, and those who have supported him in this debate?
Viscount Younger of Leckie (Con)
My Lords, I start by giving my sincere thanks on behalf of the House to the technical staff for—how should I put it?—rebooting the House successfully. We remain indebted to them for their essential, continuing support.
Turning to Amendment 13, tabled by the noble Lord, Lord Fox, as I outlined in Committee, the Government have made it clear that our priority is to ensure that we restore our economic and political independence on 1 January 2021, as my noble friend Lady Noakes iterated. The rather depressing “new normal” that the noble Lord, Lord Wigley, outlined plays no part in our vision. I say to the noble Lord, Lord Foulkes—I think I have pronounced his name correctly—that we do need to move away from talking about Brexiteers and remainers. As the noble Lord, Lord Stevenson, said himself, we should look forward, because we want a relationship with the EU which is based on friendly co-operation between sovereign equals and centred on free trade.
We know that it is important for businesses to be able to send their employees to deliver services on a temporary basis. This was reflected in the debate in Committee, where several noble Lords noted the importance of these arrangements for service industries, which are a crucial part of the UK economy, as the noble Earl, Lord Clancarty, emphasised. I would like to pick up on his remarks, as well as those of the noble Baroness, Lady Bull. They are both absolutely right: there is a lot of talk, correctly, about the creative industries and, in particular, the importance of orchestras going on tour. This includes EU orchestras coming to the UK and touring here, and, equally, UK orchestras touring around the EU. It is very important indeed that that should continue, as well as in respect of touring companies. As I said in Committee, we are open to negotiating on the EU reciprocal arrangements that would and should allow this to happen, building on the provisions that are standard in trade agreements. By the way, this should include allowing lawyers practising both in the UK and the EU to have reciprocal arrangements, an issue raised by my noble friend Lady McIntosh.
A reciprocal agreement based on best precedent will mean that, on a short-term basis, UK citizens will be able to undertake some business activities in the EU without a work permit. This would also apply to EU citizens making business visits to the UK. Task Force Europe, led by Lord Frost, is negotiating the precise details, including the range of activities, the documentation needed and the time limit. I was interested in the good example given by the noble Lord, Lord Fox, of German technicians needing to come to the UK, often urgently, to undertake work over here. I suspect that this may come from his experience in the aerospace industry. As he will know, the commitments on mode 4, which sets out the terms under which businesspersons can move between trading partners, are a feature of every free trade agreement that covers services.
Lord Fox (LD)
My Lords, I thank your Lordships for a good debate, and I thank the noble Earl, Lord Clancarty, for giving his speech twice. In the main, your Lordships spoke in favour of the amendment. Indeed, I even heard the noble Viscount, Lord Trenchard, say “The noble Lord, Lord Fox, is right”—words I had never expected to hear on this planet.
I am fascinated by the “take back control” defence because, first, it defines control as slamming the door. It does not define control as having the confidence to negotiate mutual relationships that will create opportunities for people. It is a very narrow definition of control—almost, frankly, paranoia. If indeed that was the Government’s definition, would they have negotiated the sort of deal with Switzerland that we just heard about? Would the Japanese deal have been negotiated?
It seems to me that the Government are not adhering to the definition of “take back control” of the noble Baroness, Lady Noakes; for that we should be grateful. However, it seems that the baggage that comes with negotiating a similar deal with the European Union is harder to overcome. I think I heard the Minister make some slightly positive noises about future opportunities to create mutually recognised structures to move people around. Frankly, the point of this amendment was to move us in that direction.
The noble Baroness, Lady Bennett, was keen for a vote. Unfortunately, that enthusiasm is not shared by everybody on this side of the House—at least, not on these Benches. For that reason, as well as our having spent quite a lot of time waiting for the House to be rebooted, I beg leave to withdraw the amendment.
The Deputy Speaker (Lord Brougham and Vaux) (Con)
My Lords, we now come to come to the group beginning with Amendment 14. I remind noble Lords that Members other than the mover and the Minister may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this amendment or anything else in the group to a Division should make that clear in the debate.
Amendment 14
Lord Oates
“Conditions for trade agreements: climate change obligations
(1) The United Kingdom may only become a signatory to an international trade agreement if the conditions in subsections (3) and (4) are satisfied.(2) The Secretary of State may not lay a copy of an international trade agreement before Parliament under section 20(1) of the Constitutional Reform and Governance Act 2010 unless the conditions in subsections (3) and (4) are satisfied.(3) The condition under this subsection is that a Minister of the Crown has made a statement to Parliament that the agreement is compliant with— (a) the Climate Change Act 2008 as amended by the Climate Change Act 2008 (2050 Target Amendment) Order 2019 (S.I. 2019/1056); and(b) the United Kingdom’s international obligations to tackle climate change, including but not limited to, the agreement adopted under the United Nations Framework Convention on Climate Change in Paris on 12 December 2015.(4) The condition under this subsection is that—(a) a Minister of the Crown has made a statement to Parliament confirming that the agreement will not give rise to a net increase in greenhouse gas emissions; or(b) a Minister of the Crown has laid before Parliament a detailed schedule of measures to mitigate in full any net increase in greenhouse gas emissions arising from the agreement.”Member’s explanatory statement
The new Clause ensures that trade agreements cannot be signed or approved if they are not consistent with the UK’s climate change obligations or if the Secretary of State has not made statements to Parliament confirming that the agreement will not increase greenhouse gas emissions.
Lord Oates (LD)
My Lords, Amendment 14 is in my name and those of my noble friend Lord Purvis, the noble Baroness, Lady Boycott, and the noble Lord, Lord Hain. The amendment sets out the conditions that must be met before a trade deal may be signed or laid before Parliament. Its objective is to ensure that trade agreements that the United Kingdom enters into comply with our domestic and international climate change obligations and do not lead to an increase in greenhouse gas emissions.
Proposed new subsection (3) of the amendment would require that, prior to signing a free trade agreement or laying it before Parliament, a Minister of the Crown would have to make a Statement to Parliament, confirming that the agreement is compliant with the United Kingdom’s domestic obligations under the Climate Change Act 2008. as amended by the Climate Change Act 2008 (2050 Target Amendment) Order 2019, and that it is compliant with our international obligations, including, but not limited to, the Paris Agreement on climate change.
Proposed new subsection (4) would require a Minister to make a Statement to Parliament, confirming that the agreement will not give rise to an increase in greenhouse gas emissions, or, if the Minister is not able to do so, to lay before Parliament a detailed schedule of measures to mitigate in full against any increase in greenhouse gas emissions arising from that agreement.
Mitigating any increase in emissions is the absolute minimum standard we should expect; wherever possible, we should be using trade deals to secure reductions in emissions. Some are sceptical that trade agreements can be used in this way; they believe either that increased trade must inevitably result in additional emissions and we just have to live with that, or that trade in itself is a bad thing that should be curtailed. As a spokesperson on climate change for the Liberal Democrats—a liberal green party that believes in the importance of trade—I reject both arguments. Just as trade has increased collective prosperity over centuries and seen millions lifted out of poverty around the world, the opportunity now exists to use our trade policy to play an important role in tackling climate change. However, we have to be willing to take that opportunity, and to make the climate and ecological emergency that we face central to our trade policy thinking.
Sadly, at present, we are not doing so. At best, we are tipping our hat in that general direction and then passing by on the other side of the road as far as matters of trade are concerned. For example, the Government’s impact assessment for the recently concluded Japan rollover deal suggests that the agreement will add 0.28% to domestic greenhouse gas emissions, and that it could increase fossil fuel consumption by the same percentage. The impact assessment does not indicate the impact on Japanese domestic emissions, although one might conclude that the increase will be significantly higher, given that the estimated benefits from the agreement are worth £15 billion, £13 billion of which accrue to Japan and just £2 billion to the United Kingdom. The assessment is also unclear on whether trade-related maritime emissions will increase due to the agreement; at present global freight shipping accounts for at least 3% of global greenhouse gas emissions.
Whatever the actual figures, any increase in greenhouse gas emissions cannot be acceptable at a time when the world is already on course to see increases in global temperatures at a level that the International Panel on Climate Change warns us will lead to “catastrophic consequences” for our planet. We cannot just shrug off trade-related increases in emissions, whatever their size, and say, “Oh well, it’s an inevitable result of a trade agreement—nothing we can do about that”. If that were really the case, I might join those in your Lordships’ House who have a less positive view of trade, but it is not the case. If we choose to, we can work with our trading partners, and with the World Trade Organization, to ensure that trade agreements become an opportunity to tackle climate change, rather than vehicles that compound it.
In the first place, we should prioritise trade and trade agreements with countries that share a commitment to, and a sense of urgency about, tackling climate change. We cannot continue with an approach that celebrates our effectiveness in reducing carbon emissions in the UK when, in truth, we are simply offshoring them through trade that sucks in manufactured goods from high-carbon economies. We need to think carefully about how we approach our new trading relationships to ensure that they do not further exacerbate this trend, which is counterproductive to our climate objectives and damaging to our domestic industry because of the absence of—to coin a phrase—a level playing field. For example, there is much enthusiasm in government circles about the idea of the United Kingdom acceding to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, but have we really thought about what it will mean to be in a trade partnership with countries such as Australia, Vietnam and Malaysia, which remain heavily focused on coal-fired power generation and continue to invest in new coal-generation capacity? How would such a partnership be compatible with our climate goals? There is no point purporting to be committed to tackling the climate emergency if we continue to take decisions that will further fuel it. Equally, we should be clear that we will not pursue a trade agreement with the United States so long as the current US Congress’s fast-track Trade Promotion Authority is in place. As noble Lords may be aware, it includes as one of its objectives
“to ensure that trade agreements do not establish obligations for the United States regarding greenhouse gas emissions”.
Using our trade policy, by contrast, to prioritise agreements with low-carbon economies and support the decarbonisation of high-carbon economies could give an important lead to the world, not only in reducing trade-related emissions but in driving wider change in high-carbon economies.
Secondly, once we prioritise the countries we wish to enter into trade deals with, we need the trade agreements themselves to have climate and the environment at their heart. That does not mean a few warm words accompanied by passing references to the international agreements that the parties are already signed up to. It means dedicated chapters setting out concrete new actions agreed to by both parties. These will obviously vary from agreement to agreement, but they could include preferential treatment of environmental goods, removal of non-tariff barriers to trade and environmental services and technologies, agreements to phase out fossil-fuel subsidies, commitments on decarbonising merchant fleets, concordats on joint approaches to environmental trade measures at the WTO, et cetera. We should also be joining countries such as New Zealand and Norway, which, with others, have been pioneering an Agreement on Climate Change, Trade and Sustainability.
Whatever the precise measures, the key point will be to ensure that we have an ambitious negotiating agenda and to signal clearly to potential FTA partners that deals will not be concluded unless tackling climate change is at their heart. Sadly, the Government have demonstrated no such determination in their approach to date. In introducing the Bill in the other place, the Secretary of State did not refer to climate change once, and there is precious little evidence that the Government have even fully considered the opportunities offered by trade agreements to leverage action on climate change, let alone taken them.
Baroness Boycott (CB)
My Lords, I am very happy to follow the noble Lord, Lord Oates, and to support the amendment in his name along with the noble Lords, Lord Purvis of Tweed and Lord Hain, as well as supporting the amendment in the name of the noble Baroness, Lady Bennett of Manor Castle. Both amendments seek to safeguard our environment and are completely consistent with all our international agreements under the Paris Agreement, which turned five at the weekend.
Trade is so much bigger than just imports and exports. It is arguably how we leave our mark on other countries. However, it is not something that most of us think about day to day. Trade deals are not usually rushed through. Many take absolutely years to happen and a lot of thought goes into them. They also last a very long time.
Having high standards is something we should be proud of, and the huge opportunity before us to trade on our own terms means that we must seize this moment to say no to other countries: “We will not trade with you if you are damaging the natural environment and worsening the effects of climate change”. We are at a junction now where it is not enough simply to partake in these practices at home—something we do well. We need to make sure that we are not indirectly causing them to happen abroad. People often use the phrase: “Evil succeeds when good men”—I would say women—“do nothing”. If we fail now to put these provisions in the Bill, we are as good as doing nothing in the face of all that we know.
I am proud that this country has led and continues to lead the way in decarbonisation. Some of this has been market-led. But 12 years ago we passed a Climate Change Act, and between 2012 and 2017 emissions from energy halved. That is not a coincidence; one logically followed another. Because this was legislated, successive Governments—we are on the fifth since it was passed—have absolutely had to pay attention to the process of decarbonisation. While it has not always been the number one priority, it has been absolutely impossible to ignore. To misquote Benjamin Franklin: “There are three certainties in our life: death, taxes, and now carbon budgets.” The comparison I am trying to draw is that when we have foresight of an issue and put it into legislation, we get the rewards. That is what we must do with our trade policy. We are literally writing the book on blank paper. It would be incredibly remiss of us to miss out this crucial chapter.
At previous stages, Ministers have mused on the importance of halting climate change, but why are they reluctant to put it in the Bill in case there are “unintended consequences”? I argue that the unintended consequences of not placing this in the Bill will be far greater. David Attenborough said to this very House in January, in the Royal Gallery next door, that we are at a tipping point and that “once we pass it, it will be impossible to come back from”. I do not think we have actually reached it yet but, as a responsible global leader, we need to say out loud and clearly, “We will not trade with you if you do not protect the environment.” I worry that without one of these amendments, and given the competing priorities the Government have about so many things, as we are hearing this afternoon, these considerations could end up falling by the wayside. The only way for the Minister to ensure that this remains a priority is to put it in the Bill.
These amendments are fundamentally useful, as they will ensure that whoever is negotiating a free trade agreement will have to stop and think about the impact it has on climate change and, in the case of Amendment 14, find a mutually beneficial way which produces fewer emissions or ensure that in some way they are offset. This could be a key moment when we stand up and say that from now on the UK will not enter anything that increases global emissions. To reach net zero we need to cut our current emissions as well as not making any more.
I understand that Ministers are reluctant to allow certain amendments as they think it would cause a lot of work in the departments, and I understand that a popular Minister may not remain popular for very long if his staff have to do this. However, in the case of Amendment 14, the work will already have been done. I welcome the Written Statement that the Minister’s colleague in the other place laid last Monday, which said that
“the Government will publish an independently verified impact assessment which will cover the economic and environmental impacts of the deal.”—[Official Report, Commons, 7/12/20; col. 22WS.]
While I am not sure whether that is the full net-zero assessment I asked the Minister about in July, I recognise that this is progress and I thank him and his colleagues for making this happen. My point is that environment includes climate change and biodiversity. If I understand it correctly, the assessment should cover the work needed for Amendment 14 and for the greater part of Amendment 21. By putting this in the Bill we can give it the permanence that a ministerial Statement, however well meant, absolutely cannot. I do not doubt the Minister’s sincerity or that he takes the issue seriously, but I worry that this conversation will have to be had every single time we have a reshuffle or a change of Government.
I have tried to show that when something is put in legislation it creates certainty and unlocks investments. This will not be a hindrance. The summit we hosted on Saturday shows the direction the world is going in. We have said that we will no longer invest in fossil-fuel projects abroad. Low carbon is our future, and the countries that are not on board risk being left out in the cold—or, indeed, in the increasingly hot world.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Boycott, and her powerful speech, which clearly outlined why one of these amendments should be on the face of the Bill. Ministerial commitments are just words which apply only to that person in post. I thank the noble Lord, Lord Oates, for outlining Amendment 14, for which I express my support, but I will speak to Amendment 21 in my name, and I thank the noble Baroness, Lady Boycott, for her support for it.
Given that the noble Lord, Lord Oates, has already outlined Amendment 14 so clearly, I will briefly reflect on the practical reality of it. A radio talk-show host was talking to me and complaining that “Everyone talks green now.” She got a little upset when she saw that I was smiling when she said that. As I said to her, although talk is great, there is a lot of truth in that statement, as it is only hot air until we have delivery and commitment. It is clear that the Government are making these commitments; as the chair of COP 26 they are taking their place at the forefront of the world’s talk on these things. It is therefore hard to see why they would have any objection to either amendment. Amendment 14 in particular is on the climate emergency, on which the Government claim world leadership, and surely that leadership should be reflected in every Bill that goes through your Lordships’ House.
I will focus mostly on Amendment 21. The noble Baroness, Lady Boycott, has already started on this point but I will go back to the words of the Minister, the noble Lord, Lord Goldsmith of Richmond Park, who on our first day of debate on these amendments answered an Oral Question from the noble Lord, Lord Randall of Uxbridge. The Minister said:
“The key principle of the convention on biological diversity is that biodiversity should be mainstreamed”,—[Official Report, 7/12/20; col. 950.]
which means “present in everything you do and everything that is done”. Biodiversity on its own does not entirely cover every environmental aspect we are looking at—there is obviously the COP next year on biodiversity, matching up with the COP on the climate. There are many other issues to raise, from soil health to plastics, but those are two good places to start.
I admit to your Lordships that Amendment 21 is rather long, so I will not go through it all in great detail. I will refer just to some of the key points. It is about
“the maintenance of the United Kingdom’s levels of statutory protection in relation to … human, animal or plant life or health … animal welfare, and … the environment.”
It is about
“achieving net zero carbon emissions by 2050”,
and the
“goals and targets contained in an Environmental Improvement Plan, including the 25 Year Environment Plan”.
It is about the United Nations’ sustainable development goals. What is notable about all those things is that I am not setting out some wonderful Green Party targets for a transformed world. They are all things that I am sure the Government would tell your Lordships they have enthusiastically embraced and signed up to. This is about the Government living up to their own commitments and legal responsibilities.
We know—and your Lordships’ House has played its part in ensuring—that when the Government skated up to dodging their international legal responsibilities in other Bills, they were then pushed away from doing it. That has done real damage to the UK’s international reputation, so putting an amendment such as this into the Bill would go some way towards restoring the UK’s international reputation.
I have one more point to reflect on, because it has been a long afternoon and may be a longer evening. At the moment, in the midst of a global pandemic, there is of course a huge focus on public health. Amendment 21 refers to public health, but it is not that public health and the environment are two separate things. We can have a healthy society, and have our people being healthy, only if they live in a healthy environment. These amendments are closely linked and essential to restoring the public health and well-being of the people of Britain, not just the environment as a separate category.
Baroness Hayman (CB) [V]
My Lords, I declare my interest as a co-chair of Peers for the Planet. I express my gratitude to the noble Lord, Lord Oates, and the noble Baroness, Lady Bennett, for tabling these amendments and for the way in which they introduced them, and for the speech of my noble friend Lady Boycott in favour of them.
I welcome the opportunity to contribute to the debate about how climate change obligations and aspirations can be integrated into the UK’s trade agreements going forward. As has been stated, if the Bill remains silent on these issues we could risk offshoring our environmental impact, increasing emissions and undermining UK producers by allowing goods produced to lower environmental standards to be imported into the UK. But by being clear about our commitments on climate change in the Bill, we can do more than simply preventing harm.
In the last two weeks, we have heard a great deal about building back better and greener. The Government have published their Ten Point Plan for a Green Industrial Revolution. The Committee on Climate Change’s report on the path to net zero has set out a detailed plan to take us to 2050. The energy White Paper was published this week, as was the report of the Economic Affairs Committee of your Lordships’ House on post-Covid economic recovery. All these reports point to the opportunity and the urgent need for that green industrial revolution, and for it to be on a global scale. The need to ensure our future economic well-being and the need to address the climate crisis are not in conflict or extraneous to trade policy.
Lord Sheikh (Con) [V]
My Lords, I support both amendments in this grouping. Amendments 14 and 21 are important because they are about aligning our climate and environmental targets with our trade agreements. I spoke on these issues in Committee and reinforce the point that these amendments would enable us to be an effective environmental leader. I commend the Government for their increasing attention and leadership on environmental issues, which will not just protect our health but drive our economic growth. This has been shown in the recent spending review and 10-point plan.
These are positive amendments, which will help us to have a proper green industrial revolution. In the late 18th century, the Industrial Revolution began in the United Kingdom and by the 1830s, it had spread to Europe and the United States. I hope that the green industrial revolution can do the same and that the UK can become a true leader in green growth. In Committee, my noble friend the Minister said that this Government have done a huge amount to protect and improve the environment. I completely agree that they have done so. However, this should not mean that we sit on our laurels. Amendments 14 and 21 will help drive our green agenda forward.
Amendment 14 would mean that future trade agreements cannot be signed or approved if they are inconsistent with our climate change obligations. This includes being compliant with the Climate Change Act 2008, and our international obligation to tackle climate change under the UN Framework Convention on Climate Change.
This amendment will help us reach these emissions targets by making sure that we have considered the impact of trade agreements on the climate. For example, subsection (4) states that a Minister would have to make a statement on any agreement
“confirming that the agreement will not give rise to a net increase in greenhouse gas emissions.”
By doing so, we are sending a message that not only do we take emissions seriously but that we are helping to reduce our environmental impact. I welcome subsection (4)(b), which means that if a trade agreement leads to increased net emissions, detailed mitigation measures must be laid before Parliament. So, if we are at risk of emitting too much, we have the chance to put it right, not just for the benefit of our targets but for our own health and well-being. Given that the UK was one of the first major economies to set a net-zero goal, Amendment 14 means that we can properly commit to achieving this target and be a true leader in the run-up to our COP 26 presidency.
At the virtual Climate Ambition Summit 2020 last weekend, the United Nations Secretary-General asked nations to make their promise of a net-zero world a reality. During the summit, the Prime Minister announced the UK’s ambitious targets to cut emissions by at least 68% by 2030, and this is the first time we have put forward our national climate plan separately from the European Union. Furthermore, in its sixth carbon budget report, released last week, the Committee on Climate Change said we need early action and key policy building blocks to reach net zero by 2050. This Trade Bill gives us a chance to do that and to shape our own trade policy. Amendment 14 allows us to be explicit about where we stand on slowing down the rate of climate change and should be supported.
The risk to the environment from poor trade policies is significant, but trade can play an important role in reducing our environmental impact. This is also something the Government said in their 25-year environment plan: environmental sustainability should be at the very heart of global production and trade. Amendment 21 means that future international trade agreements can be ratified and implemented only if their provisions are consistent with the achievement of our environmental and climate change commitments. Again, this is a positive amendment that will help us do what we set out to do and not hinder us. I am glad that subsection (5) outlines a range of commitments and agreements that are relevant to this amendment, including those to protect biodiversity and natural capital and to improve environmental quality, which has a direct impact on our quality of life. This is not limited to this list, so any new or updated commitments will also be relevant.
Amendment 21 requires that reports be made to Parliament. The first is
“a report that explains whether, or to what extent, the provisions of that international trade agreement … are consistent with”
achieving our environmental or climate change commitments and maintaining the protections outlined in subsection (3)(b). A trade agreement is eligible for signature or ratification only once a report has been laid before Parliament. This is very important in protecting our health and environment by making sure that sustainability is not an afterthought. The amendment also requires that a report be made to Parliament within 12 months of ratifying an agreement or making regulations assessing its impact on our commitments. This shows we are committed to being green leaders and are taking our impact on the environment seriously. Furthermore, these reports will incentivise deals and stimulate greater collaboration; for instance, on developing green technologies.
We have great potential in advancing offshore wind, driving the growth of the hydrogen sector and accelerating the shift to zero-emission vehicles. Amendment 21 would enable us to grow the market for low-carbon goods and provide a level playing field for British businesses, because our industries will not be undermined by foreign industries that do not meet our standards. Now we are leaving the European Union, we should of course control our own green agenda, but we need to ensure that our trade agreements support us in doing so. As a businessman, I can see that supporting Amendments 14 and 21 is a sensible business decision and the Aldersgate Group, which represents many major businesses, has also shown its support. The Committee on Climate Change has shown that by 2030, the market for low-carbon goods will be worth more than £1 trillion a year. More and more frequently, consumers in the UK are considering the environmental impact of their purchases. Is it not time to make this a key part of our trade agreements? Together, Amendments 14 and 21 can strengthen our economic competitiveness and truly make us a global leader in the environmental field.
I know that the Government have said they are committed to protecting the environment and mitigating climate change, but I say again that these amendments will allow them to do so. I think that these are fair amendments and I hope that the Minister will consider supporting them.
Baroness McIntosh of Pickering (Con)
My Lords, to pursue the analogy made by the noble Baroness, Lady Hayman, earlier, that a nod is as good as a wink, I shall nudge my noble friend a little further as to whether these amendments, the contents of which I support in principle, are actually required.
I understand that sustainable development and protection and preservation of the environment are already fundamental goals of the World Trade Organization; they are enshrined in the Marrakesh agreement that established the World Trade Organization and they complement the World Trade Organization’s objective to reduce trade barriers and eliminate discriminatory treatment in international trade relations. So, while there may be no specific agreement dealing with the environment—and therefore, I understand, with climate change—under WTO rules, members can adopt trade-related measures aimed at protecting the environment, provided a number of conditions to avoid the misuse of such measures for protectionist ends are fulfilled. That is something that I welcome.
If, in the course of negotiating future free trade agreements, rather than rollover free trade agreements, this is something that other parties raise, would the Government look favourably upon it? We see that President Macron of France made a statement today, offering a referendum on climate change so that climate change will actually become part of the French constitution. This is something that seems to be happening among many of our erstwhile partners, so while I can see the thinking behind Amendment 14 on climate change obligations and Amendment 21 on environmental obligations, if this is already covered by the World Trade Organization itself, and protocols thereunder, is this needed, or is it implicit in what the Government’s approach to free trade agreements will be?
The Earl of Sandwich (CB) [V]
My Lords, there are very few doubters about climate change left in Parliament. I salute the efforts of the Government to reach the targets originally set out in Paris five years ago, but we all need to keep up the pressure. In Glasgow next year we will know whether the world as a whole has a chance of meeting the targets. The indications are that it will not unless considerable efforts are made by the USA, India and some countries in Europe which still depend on fossil fuels.
I was encouraged to hear about the forthcoming agreement with India, a country with which we will undoubtedly work well and closely on climate change. I support this amendment, which has been ably moved by the noble Lord, Lord Oates. It derives from my discussions about the recent UK-Japan agreement. I felt that the DIT was merely repeating the mantras of climate change. The EM said all the right things, but they are not in the agreement and nowhere are the parties committed to actual change. Indeed, the DIT has since admitted that the Japan agreement actually means that more greenhouse gases will arise from more economic activity. I had intended to say that in the debate on the agreement, but I was not able to take part in it.
It would have been good to see more practical examples, more encouragement of alternative energy sources such as electric vehicles, which were specifically requested in the evidence from the North East England Chamber of Commerce, as the Minister will remember, on behalf of car manufacturers in the area who will stand to benefit from this directly. The industry needs some encouragement. Does the Minister accept that there needs to be a lot more engagement on this issue in future agreements?
I spoke in Committee about new opportunities that are coming up in New Zealand and beyond, in the Trans-Pacific Partnership. The Prime Minister is now sounding much more serious about climate change—inshallah—and that new enthusiasm should be reflected in all our trade agreements.
Finally, I was cheered to listen to the noble Lord, Lord Foulkes, in his usual form on the previous amendment. He knows that, at this time, I am very sympathetic.
Lord Curry of Kirkharle (CB) [V]
My Lords, I will be brief. I shall speak to Amendment 14 in the name of the noble Lord, Lord Oates. It is a privilege to follow the noble Earl, Lord Sandwich, whose knowledge and experience is so impressive on these matters.
The issue of climate change is dominating our lives. It is already, quite rightly, impacting on the way we live, and will do so increasingly. The Government have set ambitious targets, as has already been mentioned, to reduce carbon emissions by banning the sale of new petrol and diesel vehicles by 2030 and to achieve net zero emissions nationally by 2050. In the farming sector, the NFU has set a net zero target by 2040. These are challenging targets, but it is my impression that the farming sector, businesses generally and the wider public are now willing to try to rise to the challenge and find solutions in order to adapt and thus reduce our carbon footprint.
It would be bizarre indeed if, having committed to meet these targets, we completely ignored the carbon impact of imported products. Meeting the climate change targets will not be achieved without significant investment and added costs on the part of businesses and disruption to our lives generally. It would be inconsistent to place domestic industries in an uncompetitive position by importing products that are not subject to the same ambitions. Not only could that negate progress, it could lead to the undermining of innovation and investment, which would be to the detriment of the UK economy.
If we do not accept this principle, the Government risk being accused of delivering conflicting messages: a commitment to the climate change agenda and taking a leading role in COP 26 on the one hand and being willing to undermine the progress of our domestic industries by allowing the import of products that are not produced to the same ambitious standards on the other. I hope that the Minister will consider this important amendment.
The Earl of Caithness (Con)
My Lords, I support these two amendments. There is an overlap between them and the next ones tabled in the name of the noble Lord, Lord Purvis of Tweed. As my noble friend on the Front Bench will remember, I highlighted the environment as one of the key areas in which ISDS could cause problems for the United Kingdom. I will say a little more about that in the debate on the next amendment.
Suffice to say on this amendment that we must realise that the trade deals we are making now will have a huge impact on each and every one of us. They are much more complicated than they were in the past. Some 80% of our fruit comes from Europe, along with 50% of our vegetables. If we do not have a sensible trade agreement with Europe which takes that into account, it will cause increased problems for the Prime Minister’s campaign against obesity and the problems that the poorest in our country are already suffering with malnutrition and poor-quality food. It is well known that obesity rates increased in both Canada and Mexico after signing free trade agreements with the United States of America because the nutritional quality of food was lower than before. These free trade agreements are going to impact on us in all sorts of ways.
I am reminded that when we discussed this Bill on the first day of Report, my noble friend Lord Grimstone said that public health considerations would be excluded by the Trade and Agriculture Commission, although reports about them would be taken into account. Perhaps I may therefore press my noble friend: who or which institution is going to provide those reports on public health? We do not know. Public Health England is about to die a death. Which organisation will produce those reports? That is important. The reason I raise this is because the words “human” or “public” health are included in the proposed new clause in subsection (3)(b) of Amendment 21.
The other important area when it comes to health is the traffic light system that we put on packages to notify people about the nutritional quality of food. We all know that the United States of America hates the idea of a traffic light system and thoroughly disagrees with it. However, if we are trying to improve the quality of the food that we eat and get rid of some of the dependency that we have on processed foodstuffs, the traffic light system, which is currently the subject of further discussion, will play a hugely important part in that. This was part of the discussion and recommendations made by the Food, Poverty, Health and Environment Committee, whose report we have yet to debate. However, if we do not get things like this right, we will pay a huge price, and it is for that reason that I support these amendments.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, first, I thank the noble Earl, Lord Sandwich, for supporting what I said on the earlier amendment. It encourages me greatly, because the campaign for our rejoining the European Union is gaining momentum day by day.
Returning to this amendment, like the noble Baroness, Lady Hayman, I am also a member of Peers for the Planet, an excellent organisation, involving Peers from all parties, for raising awareness about the dangers of climate change. Indeed, it was the noble Baroness who recruited me to that organisation, and I agree with absolutely every word that she said and have very little to add.
Just to underline what the noble Baroness, Lady Hayman, said, I add just one thing, in relation to the United States of America. It will now be much easier to have a trade deal with the United States that incorporates these requirements. The election of President-elect Biden—and we can all, I hope, rejoice in the fact that he has now been confirmed as the President-elect—is a great step forward in that regard. He has pledged that one of his first actions in office will be to rejoin the Paris climate change agreement, and the United States could therefore formally be a member of that agreement before the beginning of March 2021. His transition website suggests an aspiration for net zero by 2050, which is a great improvement even on what President Obama agreed. President-elect Biden has named former Secretary of State John Kerry as his special envoy for climate change, with a seat on the National Security Council. That is very important, because it underlines the fact that climate change is also a national security issue.
I look forward to being around, if not in, Glasgow next November and welcoming to Scotland and the United Kingdom delegates from all countries from around the world in the COP 26. I say “welcome to Scotland”—I know that the Minister will agree with me wholeheartedly on that. We hope, expect and believe that it will remain part of the United Kingdom for many years to come.
Lord Mann (Non-Afl)
My Lords, these amendments are like that Christmas nightmare, whereby you anticipate a guest bringing—or perhaps this year sending through—a case of high-quality Yorkshire ales because they promised the Christmas booze, but what is in fact delivered is a small bar of chocolate liqueur.
I hear that even the chocolate liqueurs will not be put to the vote today. It is a shame that that opportunity has been missed, and I obviously share the blame for not tabling a stronger amendment, because the green case for Brexit is absolute. I appreciate that those will not be welcome words here in remain central. However, the case was put here, and in the other place, repeatedly—for example, of the car industry, and Toyota cars. A single part would cross the channel 25 times that way and 25 times back—50 journeys per car part. That was put as a case for why we should stay in the European Union, even when the people had voted to leave.
It struck me both before and after the referendum that the green case on manufacturing was absolute. The future winners competitively would be those countries that reconfigured their industry and services not to be global in terms of absolute requirements but to be localised. I have always shared Schumacher’s philosophy that small is beautiful. The worst entity for big and bold is beautiful was the European Union, with its entire structure dictated by trade across large borders. Now, as we leave, Parliament is obsessing again about trade agreements.
I want to see the new industries and technologies developed in this country. I want to see food and manufacturing parts not transposed over many borders and thousands of miles, because the planet cannot sustain that, as is self-evident, but localised supply chains and investment, and decisions by this place that facilitate that change—along with an energy policy not reliant on Russian gas and, thankfully, no longer reliant on Chinese coal. I look forward to celebrating that. I can see two of the last six coal power stations from my house. One has now shut down and I look forward to the second going. That is what these amendments should be about.
We got derided for saying “British jobs for British workers”. Perhaps the slogan should have been “Green jobs for a green economy”, with local markets and supply chains. Nevertheless, even with the little chocolate liqueur of greenness on offer, should there be boldness from the Liberal Democrats in putting the amendment to a vote, they will have my vote.
Viscount Trenchard (Con)
My Lords, I understand the arguments in support of these amendments, but I do not believe that it is in our interests to seek unduly to restrict the list of countries with which we may choose to enter into trade agreements. The more that we interact with and trade with less developed countries—those least able to comply with the climate obligations that we have undertaken—the more we will assist them to raise their populations out of poverty and become prosperous. It is only by becoming prosperous that they will be free to accord the same importance to emission reductions as we are able to do. Furthermore, how on earth can a Minister of the Crown make a statement to Parliament confirming that any agreement will not give rise to a net increase in greenhouse gas emissions? The expectations of the noble Lord, Lord Oates, and the co-signatories to the amendment are surely unrealistic.
Amendment 14 would be counterproductive and could limit the volume of trade with many developing countries, which would negatively impact their ability to introduce climate policies similar to our own. Amendment 21 is unnecessary and possibly counter- productive. We have rolled over continuity agreements with 59 countries, and none has eroded our domestic standards on the environment, food safety or animal welfare. I have not heard any noble Lord cite an example of a domestic standard that has been undermined or an international agreement not adhered to. In the case of food safety standards, it is for the Food Standards Agency to ensure that all food imports comply with the UK’s high food safety standards and consumers are protected from unsafe food. Decisions on those standards are a matter for the UK and are made separately from any trade agreements. We are a world leader in environmental protection, animal welfare and food safety. Could my noble friend confirm that the Government are committed to maintaining those positions and that he agrees that these amendments are unnecessary and inappropriate?
Lord Stevenson of Balmacara (Lab) [V]
My Lords, this has been a very good debate, and we have ranged far and wide across the issues raised originally by the noble Lord, Lord Oates, and picked up later by the noble Baronesses, Lady Boycott and Lady Bennett, with their amendment. The noble Lord, Lord Oates, makes good points about future trade agreements needing to tie us to the net-zero carbon and other environmental standards that we have and points out the need for consistency of government policy across all the areas involved, not least trade, to achieve that. We need to think very carefully about how our new trading agreements, which the Government are very keen to see signed, and which we support, will use the climate change focus as they move forward.
When the Minister responds, he will undoubtedly say that we have very high standards and will never negotiate them away, but he must admit that the Agriculture Act 2020 has a non-regression clause covering environmental issues. So we look to him to reassure us that our standards are high and will not be diminished, but also to say why he is not prepared to see these broader issues, such as the environment and others, included in the Bill, because that seems to be how the Government are thinking with this policy.
Other noble Lords who have spoken in the debate have argued that we should do more than simply respect our own standards in the trade agreements and deals that we want to do. The noble Baroness, Lady Boycott, was very strong on the need to live up to our role as a leading advocate of decarbonisation and to lead the way for others. Again, her argument was that putting that in the Bill would be key, since it would show the world not only that we have the arguments and are practising what we preach but that we have a proselytising role to play in relation to the wider world.
It was good to hear the noble Earl, Lord Sandwich, and the noble Lord, Lord Curry, supporting points that have been made in this debate—particularly the view of the noble Earl that there are very few doubters left in Parliament. He may be wrong about that; I think there are one or two scurrying around. He also points out that the department has a bit more to do before it is walking the walk. We should think about that. He made a good point about the recent agreement with Japan and the lack of alternative energy proposals within it. The noble Lord, Lord Curry, also made a good point about how not just farmers, whom he mentioned, but the wider public want the Government to reach further on this to find zero-carbon targets in all that they do—and that of course applies to imports.
I look forward to hearing the noble Lord’s response. He will understand that we think we will come back to this, perhaps not in the form of this amendment but on other related issues about non-regression of standards, as we progress through the Bill.
Viscount Younger of Leckie (Con)
My Lords, Amendment 14 in the names of the noble Lords, Lord Oates and Lord Purvis, alongside the noble Baroness, Lady Boycott, seeks to prevent the Government from signing international trade agreements or laying an international trade agreement under CRaG, unless they confirm to Parliament that the agreements are compliant with domestic and international environmental obligations.
I assure noble Lords that we remain firmly committed to upholding high environmental standards. We understand and share the public’s concern about protecting our natural environment. Having been lucky enough to visit both Antarctica and the high Arctic in the last five years, I can relate to the remarks of the noble Baroness, Lady Boycott, who cited Sir David Attenborough’s deep concerns about our planet. She is right and he is right. I have seen climate change for myself and it is real.
I take great pride in stating again that none of the 28 agreements signed with 57 countries has diluted standards in environmental protections. We have voluntarily published parliamentary reports for your Lordships’ reference, alongside every continuity agreement, which provide evidence of our commitment to environmental protection and sustainability. To be helpful to the noble Lord, Lord Curry, over 130 hours of debate on the Bill and its 2017-19 predecessor, no Peer or Member of the other place has been able to identify a single example of any of our continuity agreements undermining our domestic or international environmental obligations. I do not believe that any example was provided in this debate either. My noble friend Lord Trenchard made this point in a powerful speech, and I believe he is right.
The Government have been very clear that any future trade agreements must uphold high standards in the protection of the environment. We will not compromise on this. I remind your Lordships that the EU (Withdrawal) Act already provides legislative underpinning by transferring the EU’s rigorous standards on environmental protection and sustainability on to the UK statute book in full. Our high regulatory standards are not dependent on EU membership.
The remarks of my noble friends Lady McIntosh and Lord Trenchard hinted at our approach. We are using trade policy to promote the clean growth and climate change objectives of Her Majesty’s Government, helping to deliver the full economic benefit of the UK’s shift to a low-carbon economy. The energy White Paper, published just this week, underlines our ambition in this space, and your Lordships will be aware that a Statement will be repeated in the House tomorrow on this very subject.
The UK has often been a leader in the development of environmental standards, and we go significantly further than our trading partners. The UK was the first country in the world to introduce legally binding greenhouse gas emission-reduction targets through the Climate Change Act 2008. We were also the first major economy in the world to set a legally binding target to achieve net-zero greenhouse gas emissions across the economy by 2050. In our outline approaches to free trade agreements with the US, Japan, New Zealand and Australia, we have committed to securing provisions that will help trade in low-carbon goods and services, supporting R&D and innovation in sectors such as offshore wind. My noble friend Lord Sheikh cited the importance of this sector in his remarks.
The UK is already a global leader in offshore wind, with the largest installed capacity in the world. The UK aims to produce enough offshore wind to power every home, quadrupling how much we produce to 40 gigawatts by 2030. The UK could also establish a first-mover opportunity to develop advanced operations and maintenance services in wind farm decommissioning, which could become a £53 billion market by 2050.
Additionally, as many noble Lords are already aware, on 18 November, the Prime Minister—who by the way is taking a lead—set out his 10-point plan for a green industrial revolution. Covering clean energy, transport, nature and innovative technologies, the Prime Minister’s blueprint will allow the UK to forge ahead with eradicating its contribution to climate change by 2050. All of this will come in the year that the UK chairs the COP 26 summit in Glasgow, as the noble Baroness, Lady Bennett, mentioned.
These are not the actions of a Government intent on reducing environmental standards—far from it. This is one of the most ambitious climate agendas in the world. I wholly disagree with the noble Lord, Lord Oates, who said that we just offer warm words on climate change and no action plans. He could not be further from the truth on this. I was particularly pleased to see that the former Vice-President Al Gore, either today or yesterday, praised the UK’s leadership in banning the sale of petrol and diesel vehicles by 2030.
I remind your Lordships that we are seeking only to replicate EU trade agreements to which we already enjoy access. If this amendment applied to our continuity programme, it would result in up to 40 ministerial Statements, all of which would be nearly identical, confirming that we are replicating the status quo.
Amendment 21 is in the names of the noble Baronesses, Lady Bennett and Lady Boycott. As I have explained, our continuity agreements, the implementation of which is provided for by the Bill, are fully aligned with environmental obligations such as the UN sustainable development goals and the Paris climate change conference, and will remain so, as the Bill seeks to replicate existing EU agreements. It is indeed good news that President-elect Biden has iterated his support for the Paris Agreement, as the noble Lord, Lord Foulkes, remarked.
ClientEarth, the Trade Justice Movement, the NFU, the CBI and others all agree with the objectives of this work. As set out in the 25-year environment plan, our ambition is to be the first generation to leave the natural environment in a better state than we found it. As I reassured your Lordships not long ago, our continuity agreements are in full compliance with every other international convention named in the amendment, whether it was passed at the UN level or through other multilateral fora.
This amendment would also require the publication of an environmental report for every continuity agreement that we signed, and then additional update reports to be tabled every 12 months. This would result in over 100 reports over the lifespan of this Parliament, for a set of continuity agreements that simply replicate existing FTAs to which we are already a party. Surely noble Lords will agree that this is neither necessary nor proportionate. I listened carefully to the remarks of the noble Baroness, Lady Hayman, but I will have to write to my noble friend Lord Caithness, who asked questions about what the reports were, where they were coming from and whether they would report on health and the environment. I pledge to do that.
We already publish a parliamentary report alongside each agreement laid under CRaG, setting out our approach to delivering continuity, and will continue to do so for all remaining continuity agreements that we sign. These reports confirm our replication of sustainability chapters in EU agreements.
The Government have always been clear that we are wholly committed to the preservation and improvement of the environment. The continuity agreements we have signed thus far maintain our commitment to vigorously defending and upholding environmental standards. As such, I ask the noble Lord and noble Baroness not to press their amendments.
Lord Oates (LD)
My Lords, I thank all noble Lords who have taken part in this important debate for their contributions, and I thank the Minister for his response. He said that no evidence had been offered that the Government had ever not met their obligations, but the Government’s own impact assessment of the recent trade agreement with Japan, for example, says that this will lead to a rise—albeit a small one—in greenhouse gas emissions. That does not seem to me to be the way we should be using trade: we need to use it to bring down emissions. He also said that it was unfair to say the Government did not have action plans. The noble Lord, Lord Callanan, admitted to me following a question from the noble Baroness, Lady Boycott, a few weeks ago that the Government did not have a credible short-term action plan and that, according to Hansard, one would be forthcoming soon. So I am not sure about the Minister’s point on that.
The Minister did not address the important point made by the noble Baroness, Lady Hayman. She was referring, I think, to Section 42 of the agriculture Act under which the Government are required to report that measures in an FTA are consistent with the maintenance of levels of statutory protection in relation to a number of issues, one of which is the environment. Could the Minister please tell us definitively—or he can write to us—whether, as the noble Baroness, Lady Hayman, asked, that covers climate change, because that is important?
It will not be a surprise to hear that I do not really agree with a word that the noble Lord, Lord Mann, said. As I set out in my opening remarks, I believe in free trade—that it has brought many benefits and raised many people in the world out of poverty. I do not take the protectionist approach that he does, but I share his regret that he did not table his own amendments and I look forward to seeing them at future points in the Bill.
As the noble Baroness, Lady Boycott, said, we led the world with the Climate Change Act and we could lead the world again as the champions of free, fair and green trade. As she said, words and targets may be positive—I do not decry for a moment that we have set these very positive targets—but as long as they are just targets, they are just words. What we need now is action across the piece, including on trade. I beg leave to withdraw the amendment.
The Deputy Speaker (Baroness Pitkeathley) (Lab)
We now come to the group beginning with Amendment 15. I remind noble Lords that Members other than the mover and the Minister may speak only once, and that short questions of elucidation are discouraged. Anyone wishing to press this, or anything else in this group to a Division, must make that clear in the debate.
Amendment 15
Baroness Kramer
“Investor-state dispute settlement
(1) The United Kingdom may only become a signatory to an international trade agreement if the conditions in subsections (3), (4) and (5) are satisfied.(2) The Secretary of State may not lay a copy of an international trade agreement before Parliament under section 20(1) of the Constitutional Reform and Governance Act 2010 unless the conditions in subsections (3), (4) and (5) are satisfied.(3) The condition under this subsection is that an international trade agreement must include a commitment by all parties to the agreement to pursue with other trading partners the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes.(4) The condition under this subsection is that legal proceedings brought against the United Kingdom under investment protection provisions included in an international trade agreement must be heard by the courts and tribunals system of the United Kingdom.(5) The condition under this subsection is that the provision in subsection (4) ends for any international trade agreement when a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes is established under that trade agreement.”Member’s explanatory statement
This new Clause would ensure that there is a commitment by all parties to a trade agreement to pursue the establishment of a multilateral investment process to adjudicate on investor disputes.
Baroness Kramer (LD) [V]
My Lords, I will speak to Amendment 15 in my name and that of my noble friend Lord Purvis of Tweed. It is in essence very similar to Amendment 19 in the name of the noble Lord, Lord Stevenson of Balmacara. Great minds, as it were, think alike. I should give notice that, given the breadth of the agreement, I am minded to press the matter to a Division, unless the Minister concedes.
If anyone thinks for a moment that dispute resolution in a trade deal is a minor issue, I would point them to the impasse in the UK-EU trade negotiations. A trade dispute resolution goes to the very heart of any trading relationship, and that sits behind these two amendments. Traditionally, disputes under a trade agreement have been adjudicated through arbitration schemes—which are generally labelled investor-state dispute settlement, or ISDS—rather than a court system. To say that this has become problematic is an understatement. Decisions have a history of being inconsistent, they award compensation that can undermine domestic law, they typically act in secret, and they cannot be appealed.
ISDS arrangements are no longer fit for purpose. They have led to public suspicion and, frankly, hindered the drive to increase global trade; they were a major reason for the collapse of the TTIP negotiations. For this reason, during its time in the EU, the UK was instrumental in pushing for the replacement of ISDS with a multilateral investment tribunal and appellate mechanism—the appellate part being very important—thereby removing any suspicion of bias and providing for appeal. The EU has been clear, even with the UK’s departure, that it intends to pursue this change, and it has been introduced in a number of its revised and latest trade agreements, notably, but not exclusively, with Canada.
I would argue, and I think many others were arguing, that the UK needs to remain at the forefront of this change. I am afraid that I am unclear whether the terms that the EU has agreed with Canada over dispute resolution have been replicated in our trade deal with Canada. Perhaps the Minister will enlighten me. The EU-Canada deal gives us a template. It will appoint 15 judges to hear cases on a rotational basis: five from the EU, five from Canada and five from among third-country nationals—in other words, neutrals. The rules ensure transparency of proceedings and clear standards of investor protection. But they also limit the grounds on which an investor can challenge a decision made by a state. For example, a challenge cannot be made simply on the grounds that profits are affected.
Amendment 15 would ensure that in all future trade agreements, the UK agrees with its trading partners at least on the principle of moving to such a mechanism for dispute resolution—it would be even better if it actually achieved it, but at least the principle is agreed. Amendment 15 also ensures that in the interim, until the new system is in place, the UK does not depend on arbitration systems to resolve trade disputes but is heard in the courts and tribunals of the UK. Amendment 19 follows a similar path of logic.
Effectively, these amendments stop the abuses associated with ISDS. I suspect that future speeches will provide some significant illustrations of the problems that have occurred. These amendments provide an incentive and create an opportunity to achieve the goal of a multilateral tribunal system. For that reason, I beg to move.
Lord Lansley (Con)
I am very pleased to follow the noble Baroness, Lady Kramer. We are grateful to her and to the noble Lords, Lord Purvis and Lord Stevenson of Balmacara, for raising this important issue. Since we touched on these issues in Committee, events have moved on a bit, which allows us to further explore the Government’s approach. I do not support the amendments, but they create a very good opportunity for the Government to tell us more about their approach to investor-state dispute settlement in the negotiation of international trade agreements.
I say to the noble Baroness, Lady Kramer, just to put Canada in context, that the Government did lay the Canada-UK agreement last Thursday, which I have had a chance to look at. What it effectively does, across a wide range of chapters, is incorporate the EU-Canada partnership agreement. But in this respect, on investor protection, it says that this is not to come into force. It says there will be a period of time during which the United Kingdom and Canada will review what their investor protection arrangement should look like, and, if they agree within something like a three-year period, they will replace what is in the current EU-Canada agreement.
Although the noble Baroness, Lady Kramer, said that the EU-Canada agreement is a model, it is not the model she is looking for in her amendment. The tribunal is a bilateral investor protection arrangement, with judicial members from the two parties plus independent members, but it is not multilateral. What it does say, in Article 8.29, is that both parties agree—and here the words are reflected in her amendment—
“to pursue with other trading partners the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes.”
Clearly, Canada has done that; it has put into the United Kingdom-Canada rollover agreement the opportunity to consider a multilateral investment court system. But we are not signed up to one, and we will have to see what the Government’s approach will be. The EU and Canada have not actually brought this into force—it has not been ratified—so we have not seen anything final.
Having a multilateral investment court system depends on the consent of parties around the world, and they have not signed up to it. The New Zealand and Australia Governments resisted ISDS in the context of the CPTPP, or TPP 11 as they call it. That makes it difficult for us, in New Zealand and Australia agreements, to invite them to do more than they have already done. On the other hand, Japan has remained consistently supportive of ISDS provisions, and that, I suspect, is probably a simple reason why the EU-Japan comprehensive economic partnership agreement does not have an investment chapter.
I am afraid that the conditions for an amendment to the Bill that sets such a prescriptive approach to international trade agreements on investor protection do not exist. With too many of our leading partners—including, for example, Japan—we would have no agreement that would allow us to sign an agreement if this provision had been in statute. That is especially true where the United States is concerned. Japan does not have a difficulty with ISDS, not least because it has not been a respondent country to a claim. As it happens, only on five occasions have Japanese companies pursued ISDS claims against other countries. When we come to discuss this with the United States, the difficulties are legion because, when I last looked, the United States had 190 claims against other countries and ISDS procedures reported to UNCTAD and was the respondent to 17 claims. It not only adheres to ISDS provisions but uses them a lot. Therefore, it may be difficult to persuade the United States to adopt a multilateral investment court system. The other difficulty is that it would prevent us from pursuing our bilateral investment treaties in the way we have. We may want to continue with that, and assuredly we will. We have over 100 of them, and I do not think we want to let them go, until and unless there is a multilateral investment court system in place.
It would be interesting to know from my noble friend the Minister if the Government have a plan to pursue a multilateral investment court system, as has been the EU’s approach in its negotiations. If so, I would agree, but that does not mean we should have a prescriptive measure in statute that means we cannot agree an international trade agreement with another country, except in the circumstances in which this is incorporated, not only for us but for the other parties. It is an interesting opportunity, but I fear I cannot support Amendment 15.
Baroness Bennett of Manor Castle (GP)
My Lords, I offer my support to Amendment 19 in the name of the noble Lord, Lord Stevenson of Balmacara. I regret that we have not yet heard his explanation for it, but I look forward to that. Like the noble Lord, Lord Lansley, I also speak in opposition to Amendment 15 in the name of the noble Baroness, Lady Kramer, although for somewhat different reasons. I regret we are not being joined in this debate by the noble Lord, Lord Hendy, who gave an excellent outline of the problems with ISDS in Committee, and I urge noble Lords who have not caught up with that to go back to it, because it is an excellent explanation from an expert viewpoint.
The Earl of Caithness (Con)
My Lords, my memory goes back to Committee and the powerful speech of the noble Lord, Lord Hendy, who set out the arguments against ISDS extremely well. There was a lot of powerful argument there. But I am also grateful for the intervention of my noble friend Lord Lansley, who always manages to sow those little seeds of doubt as to whether we are going in the right direction. Notwithstanding those seeds of doubt, I believe we are going in the right direction with these amendments, on the simple basis that ISDS permits any investor in this country to sue the UK Government for anything that might harm their profits in any way.
Therefore, I have one particular question on this matter for my noble friend Lord Grimstone. I believe I am right in saying that, since 1986, we have had an ISDS agreement with China. If that is the case, are the UK Government not widely exposed on the Huawei case? In relation to banning Huawei from operating in this country, there is no clause within the agreement, as I understand it, that says that we can ban a company from operating for national security purposes—so is not the UK hopelessly exposed? As a result of that, should not all our bilateral agreements be rethought, as suggested by my noble friend Lord, Lansley, because there is this loophole?
My second question to my noble friend concerns the Government’s eagerness to join the Trans-Pacific Partnership. As my noble friend will be aware, New Zealand is seeking an exemption from the ISDS. In our negotiations to join this organisation, will we also seek an exemption from ISDS, and if not, why not? If New Zealand has set a precedent, it would be only logical for us to follow because that must be the right way forward.
Baroness Chakrabarti (Lab) [V]
My Lords, it is a pleasure briefly to follow those who have already spoken on this group, and I support Amendment 19 in particular. I am no expert in international trade law, but I rest assured that my noble friend Lord Hendy will speak very shortly.
Briefly, my concerns about ISDS are that the mechanism overrides the supremacy of Parliament—including your Lordships’ House and the other place—overrides the domestic rule of law, discriminates on grounds of nationality in favour of foreign investment corporations and prioritises the profits of investor corporations over people and the planet, as we heard from the noble Baroness, Lady Bennett of Manor Castle. Therefore, I see the mechanism as a fundamental challenge to the rule of law, both domestically and internationally, and not what taking back control is about in the minds of most people in the United Kingdom and further afield, I suggest.
My one question to the noble Baroness, Lady Kramer, who spoke so clearly about her own concerns, is: will the multilateral tribunal that she anticipates really be capable of addressing those fundamental concerns about prioritising corporations over the wider public interest—climate catastrophe, human rights and so on? Will it be capable of designing something that is not the wolf in sheep’s clothing that the noble Baroness, Lady Bennett, described? With those concerns firmly on the table, I support Amendment 19.
Baroness McIntosh of Pickering (Con)
My Lords, the authors and mover of these two amendments have done the House a great service. I welcome my noble friend the Minister to his place for the first of these debates that he will be summing up this afternoon. This is a very vexatious area in trade disputes, and it has been very much at the fore of this critical stage of an agreement on free trade with our EU partners— I know that is not the subject of this afternoon’s debate. It is worrying that, at this late stage, we are still arguing—and have been for two years, since the European Union (Withdrawal) Act was passed—about what the dispute resolution mechanism will be.
I will make a general point: it is extremely important at this stage that we know what the dispute resolution mechanisms will be. I place on record my acceptance as less than satisfactory of the arrangements of the World Trade Organization. I think it fair to say that the current position of the United States in this regard is less than clear. As I understand it, in his time, President Obama made moves to remove the US from the general World Trade Organization dispute resolution mechanism scheme—the next stage after disputes have been raised. It is by no means clear, and I have not yet heard—I may have missed it—what the incoming Biden Administration will do in this regard.
My noble friend Lord Caithness mentioned the Huawei decision, and, obviously, we are also caught, as I understand it, in the Boeing situation, with infringement tariffs being whacked on us for the Airbus scenario—and, latterly, we have come forward, seeking to do the same to Boeing, for similar infringements of the World Trade Organization arrangements there. As such, I am very uneasy that, in the current state of the Bill, I do not see any reference to what the dispute resolution mechanism will be in the agreements that fall under this—unless I have missed it—so I would like confirmation of what that resolution mechanism will be.
I welcome that the noble Baroness, Lady Kramer, said that the UK has been at the forefront of setting this in the EU-Canada arrangement—but then my noble friend Lord Lansley said that those arrangements have never been brought into effect in relation to the EU. This is a very grey area, and it is vital that, before the Bill leaves Parliament, we know what the dispute resolution mechanism in this regard will be. Mindful of the lengthy debate that we had in Committee, I seek further clarification at this stage, using these two amendments as an opportunity to probe in this regard.
Lord Hendy (Lab) [V]
My Lords, I am grateful to the noble Baroness, Lady Kramer, and my noble friend Lord Stevenson, for moving and speaking to Amendments 15 and 19, respectively. They significantly improve, but do not eliminate, ISDS. On that basis, I support them, since my assessment is that the elimination of ISDS is not currently politically feasible.
We now know a lot about ISDS, which is relatively common in international trade agreements. We know how objectionable it is and the chilling effect it can have. It is objectionable because it overrides the supremacy of Parliament, defeats the rule of domestic law—a concept familiar to all of us after recent debates—and discriminates on grounds of nationality. Far from taking back control and asserting British sovereignty, the current catchwords of government, ISDS surrenders both.
A couple of years ago, a petition against the inclusion of ISDS in the then-proposed EU-US trade deal, TTIP, attracted 3 million signatures—500,000 of them in the UK. The legitimacy of ISDS in EU agreements is now doubted by the Court of Justice of the European Union as well as by EU citizens. In Slovak Republic v Achmea, the court held that ISDS in the Netherlands-Slovakia trade agreement
“has an adverse effect on the autonomy of EU law”
and is therefore incompatible with it. By like reasoning, ISDS in UK trade deals will adversely impact the autonomy of UK law.
ISDS is a mechanism whereby a corporation of one state party to the international trade agreement can bring a claim for compensation against the other state. It sounds fair, but it is not fair. ISDS claims bypass the courts of both state parties, and bypass the laws of both states. ISDS is a special privilege accorded only to foreign corporations, for use, in the case of the UK, against a democratic sovereign Government. ISDS is a right to claim compensation against the host state in which the corporation has made its investment—a right denied to the corporations and citizens of that state. That point is important and goes beyond the insult to sovereignty.
ISDS offends against the rule of law because a right and remedy against a host state is given to one class of putative claimant—foreign investment corporations—and denied to all the citizens, companies, co-operatives, trade unions and other organisations in the host state. ISDS offends against the rule of law, whereby that right and remedy is exempt from the courts and the legal system of the host country. It offends the principle of non-discrimination because that right and remedy is only available to non-nationals of the host state.
Baroness Jones of Moulsecoomb (GP) [V]
My Lords, one of the things that has often been frustrating in your Lordships’ House in the seven years that I have been here is that we talk about incredibly important things, yet often our language is so obtuse and complex that, although we understand what we are talking about, other people outside do not. Therefore, a lot of these important issues do not get the sort of publicity that they ought to.
Following the noble Lord, Lord Hendy, is a mixed blessing. He gave a devastating outline of exactly why ISDS should not be any part of trade negotiations. At the same time, he has reduced my speech to ashes because that was exactly what I was going to argue. I honestly do not understand how any member of the Conservative Party can support the concept of not just countries but other corporations having any rights over our country. The mechanisms of ISDS are far worse than any charge that could be brought against the EU courts system. I do not understand how the Government think that it ISDS is reasonable.
The rule of law and the right to legal remedy are both important and are best served not by shady arbitration but openness and transparency and our legal court proceedings. The Minister should argue to everyone in his department that ISDS should not be any part of our trade negotiations. Your Lordships should now make it clear that we will reject any treaty that contains ISDS. The Government have made all sorts of promises about reclaiming sovereignty, but how on earth can they claim with straight faces that ISDS is an appropriate mechanism to put in any trade Bill.
While I have the Floor, I should like to say that the Minister in the previous group said something about the Bill being a useful mechanism for fighting climate change. The noble Viscount, Lord Trenchard, mentioned lifting other countries out of poverty through trade. Perhaps he could do something about that in Britain and start lifting out of poverty the millions of people who are on, below or close to the poverty line. There must be some mechanism that this Government could use. In any case, the whole concept of ISDS should be thrown out as fast as possible.
Lord Purvis of Tweed (LD)
My Lords, my noble friend Lady Kramer moved this amendment very ably and indicated that, because of the cross-party support and the degree of consistency with Amendment 19, she would be minded to test the opinion of the House. So I will be brief, because I suspect that the only service I could bring would be to undermine her arguments if I speak at length.
I want to pick up on one point. I agree with others that the noble Lord, Lord Lansley, provides us with a service to make sure that we are as on the ball as we can be with regard to making our case. My noble friend’s point about Canada is illustrative in trying to find out what the Government’s intention is for the long term for the replacement of ISDS.
We already know two things. The Minister said at Second Reading:
“ISDS is a subject which often causes excitement … I confirm that ISDS tribunals can never overrule the sovereignty of Parliament … There has never been a successful ISDS claim against the United Kingdom, but our investors operating overseas have often benefited from these agreements”.—[Official Report, 8/9/20; col. 749.]
He gave the impression that the Government’s position is that they are, at the very least, relaxed about ISDS being in agreements, and that they would not seek to move to a multilateral system as a replacement for ISDS.
The second thing we know is that, since 2008, after the European Council made the decision for the EU policy to move beyond ISDS, it has systematically sought to include provisions in agreements going forward; those can include changes to the ISDS mechanism and having a different form of tribunal process. Further, as the EU-Canada joint statement with the signing of CETA said:
“The EU and Canada commit to join efforts with other trading partners to set up a permanent multilateral investment court with a standing appellate mechanism.”
The issue then is: what was in CETA? We know that the changes to CETA included a right to regulate by both parties—the European Union and Canada—across all levels of government, regardless of investment protection; that there would be a clear break from an ad hoc arbitration system and a move to a permanent and institutionalised dispute settlement tribunal; and that members of the tribunal would no longer be appointed by the investor or the state but would instead be appointed in advance in a neutral manner.
My noble friend asked what the Government’s position is regarding the UK replacement for CETA; this is illustrative of where the Government are, going forward. Inevitably, the Minister was not able to share that information in Committee but, as the noble Lord, Lord Lansley, indicated, we have now seen the text of the agreement. It is very interesting. As has been referred to, page 103 of 109 lifted our hopes against the noble Lord’s fear that we would not be in a position to move to a multilateral system. It states:
“Therefore, the TCA represents an important and radical change in investment rules and dispute resolution. It lays the basis for a multilateral effort to develop further this new approach to investment dispute resolution into a Multilateral Investment Court. The United Kingdom and Canada will work expeditiously towards the creation of the Multilateral Investment Court. It should be set up once a minimum critical mass of participants is established, and immediately replace bilateral systems such as the one in TCA, and be fully open to accession by any country that subscribes to the principles underlying the Court.”
That was reassuring from our point of view and it gave a signal, but there is a sting in the tail: this is subject to a comprehensive review within three months. If the noble Lord, Lord Lansley, is correct—he often is—the Government will have acceded to what Canada wanted but are holding their position. They are holding their position for this review so that they are not in a position where, effectively, they will have their sovereignty restricted because they know that, in entering into the CPTPP or any agreement with America, their partners will not be in favour of moving to a multilateral system.
Perhaps this is just like some of the other discussions taking place now. There is what the Northern Ireland announcement called a grace period. There is a grace period for the agreement for moving to a multilateral system, as in our amendment, but the Government are trying to triangulate. The Government need to be clear, because this cannot go on for much longer. The amendment moved so ably by my noble friend Lady Kramer is an opportunity for the Government to be clear. This is such an important issue, which is why we want to press the amendment: to get clarity from the Government.
At this stage, if the Minister can respond clearly on Canada, that would be a reassurance, but it does not negate the issue. The noble Lord, Lord Lansley, made the point that this amendment is perhaps unnecessary; the text of the UK-Canada agreement and the review means that this amendment is even more necessary to replicate in this Bill what the Government indicated in the UK-Japan agreement.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, this has been a good debate on an important issue. We have heard some very expert contributions from all sides of the House set out the scene clearly. In responding to the debate, I will also speak to Amendment 19 in my name, which I am pleased has some support from the noble Lords who spoke before me.
The issue that distinguishes my amendment from those in the names of the noble Baronesses, Lady Kramer and Lady Boycott, and the noble Lord, Lord Purvis, is—if I can use an inelegant term—the fact that I was trying to provide in the amendment a little wiggle room for the Government on ISDS. I mean that in the sense of offering the Minister and the Secretary of State, when a proposal for an ISDS mechanism comes forward within a trade agreement, the chance to argue the case in Parliament and get support for it, should that be necessary in his or her judgment in relation to the particular case concerned. However, today’s debate has polarised the views of those who are concerned about ISDS. Probably the right thing to do is to signal at this stage that I support the amendment moved by the noble Baroness, Lady Kramer, and we would be prepared to follow her into the Lobbies if she wished to test the opinion of the House.
The reasons for that are easily summed up; we can look to the cases drawn up by my noble friend Lord Hendy, the points made by the noble Earl, Lord Caithness, and the concerns expressed by the noble Lord, Lord Lansley. For a moment, I thought that he was going to turn into a serial rebel with his victory earlier on in our debates this afternoon; I also thought that he might wish also to move against his own Government on this issue, but he was able to draw a line and point out both the transgressions that were being perpetrated within the Government and the opportunity for a rethink, in his terms, in the light of the schemes before us.
As the noble Lord, Lord Purvis, concluded, we probably need to draw a line in the sand and explain why we do not believe that ISDS is the model that the Government should be thinking about going forward. It may well be that the multilateral tribune approach is not yet right. There may also be a better case to be made for the use of our own courts; after all, we have an experienced and expert judiciary and a lot of court experience in these matters. If we are doing trade deals with countries that also have mature legal systems, it is hard to see why an ISDS scheme needs to be there unless, as my noble friend Lord Hendy said, this is part of some overall scheme of preferential treatment for those who have investment to spare but find the risks too great and need the assurances of an ISDS system to back up their support.
We live in different times. I do not know whether the old arguments will work, but I do know that what we see before us with ISDS is not right. It is no longer fit for purpose— it must change. We should start that progress by supporting the amendment moved by the noble Baroness, Lady Kramer.
The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
My Lords, I turn to Amendment 15, in the names of the noble Baroness, Lady Kramer, and the noble Lord, Lord Purvis, and Amendment 19, in the name of the noble Lord, Lord Stevenson. These proposed new clauses concern the approach taken to investment protection and the settlement of investment disputes where these provisions are included in free trade agreements. I will try to restrict my comments to points germane to these amendments.
The UK has included these provisions in more than 90 bilateral investment treaties, which have been crucial for our overseas investors. The UK is one of the most open countries for investments. That is because one of the great attractions for foreign investment is the fair and independent legal system underpinning domestic and foreign investment. We look to use investment provisions in trade agreements to guarantee equivalent levels of legal certainty for our businesses expanding overseas. These businesses make sizeable investments and incur significant risks. It is therefore vital that they can operate in a free and fair environment with a means of independent redress where treaty commitments have been breached.
In response to points made by the noble Lord, Lord Hendy, and the noble Baroness, Lady Jones of Moulsecoomb—not that I expect I will cause noble Lords to change their minds, sadly—many major British companies tell me that the existence of ISDS in certain overseas countries is absolutely germane to their decision to invest in that country. I recognise that noble Lords are concerned that these interests are correctly balanced in our free trade agreements with the Government’s right to regulate in the public interest. That is an objective I share. I was grateful to my noble friend Lord Lansley for answering the noble Baroness, Lady Kramer, on Canada in such depth and with such erudition—in words I could not hope to better.
Amendment 15 would permit the UK to sign a trade agreement only if it commits all parties to pursue the establishment of a multilateral investment tribunal system and an appellate mechanism for the settlement of investment disputes. It would also require all such disputes against the UK to be heard by UK domestic courts until such a system is in place. Your Lordships will no doubt be aware that not all trade agreements include investment protection and dispute settlement. It would not be appropriate to require all trade agreements to include a commitment to pursue a multilateral investment tribunal system or for disputes to be heard in UK domestic courts. In the absence of such a system, including this requirement would only hinder the progress of UK trade policy.
The UK is fully engaged in negotiations at the UN Commission on International Trade Law on the options to reform investor-state dispute settlement and the possibility of establishing a multilateral investment court —MIC. I confirm to the noble Lord, Lord Purvis, that the process of triangulation continues, and we have not yet come to a conclusion on the most appropriate way forward. Binding the hands of both the UK and our treaty partners before negotiations are concluded may not be in either their or the UK’s best interests, especially, as my noble friend Lord Lansley noted, some of our major trading partners are against the concept of the MIC. My noble friend Lord Caithness asked about ISDS and China. I confirm, perhaps surprisingly, that we have had a bilateral investment treaty with China since 1986. However, perhaps to the relief of noble Lords, there has never been a case brought against the UK under that treaty—nor do I expect there to be.
As for the requirement for UK courts to hear investment disputes, depending on the circumstances foreign investors in the UK will already have a means to legal redress against the Government without resorting to ISDS. It is likely that if we impose a requirement for disputes to be handled only by national courts, this will need to be agreed on a reciprocal basis with treaty partners. This would then require disputes brought by UK investors against a host state to be heard in their national courts, undermining the access to independent ad hoc arbitration for UK investors which has successfully supported UK investors worldwide for the past 40 years. I have no doubt that our major investing companies would oppose this.
ISDS in its current form is valuable for UK businesses investing overseas. This in turn benefits UK citizens as their shareholders. Conversely, the UK has never been a respondent in an investment dispute before a tribunal that has gone against it. The UK’s existing stock of bilateral investment treaties all contain ad hoc arbitration as the form of dispute settlement. Arbitration is a widely used means of resolving disputes between parties, including under international and domestic law.
Amendment 19 would similarly require the UK to pursue the establishment of a multilateral investment tribunal system and appellate mechanism. It would also result in the UK being unable to implement trade agreements containing ISDS unless the subject matter of a claim is something under which UK domestic law offers redress to UK persons. It would require the Government to approve a mandate for a free trade agreement containing ISDS provisions through regulations of both Houses of Parliament.
I will start with the redress available to investors under domestic law. The amendment overlooks the fact that, depending on circumstances, foreign investors in the UK already have the means to seek legal redress against the UK Government through domestic law, without resorting to ISDS. I humbly suggest that is one reason cases have never been brought against the UK under ISDS. As I mentioned, UK courts are regarded internationally as reliable and independent. It is worth reiterating that this is one reason the UK has never been a respondent in an ISDS case.
The amendment requires that the Government approve the inclusion of ISDS provisions through both Houses of Parliament. The Government have already committed to publishing their negotiating objectives, along with an initial impact assessment and a response to any public consultations, before entering negotiations. I humbly suggest that noble Lords know well that, as required under the CRaG procedure, the Government will lay the final treaty text alongside an explanatory memorandum before both Houses for 21 sitting days. This House has the power to prevent ratification should the ISDS provisions in the proposed treaty not be to the satisfaction of noble Lords. The House of Commons can do so indefinitely.
On the point raised by my noble friend Lady McIntosh about dispute resolution in any EU agreement, I am afraid that, like me, noble Lords will have to wait and see. I hope this reassures noble Lords and, on that basis, I ask for the amendment to be withdrawn.
Baroness Kramer (LD) [V]
I thank everybody for a superb debate. The noble Lord, Lord Hendy, as always, put the case so powerfully. I thank my noble friend Lord Purvis for following up on the Canada agreement, and the noble Lord, Lord Stevenson, for his recognition that Amendments 15 and 19 are essentially the same. He was a little kinder, providing a little wiggle room for ISDS, under very limited circumstances, in his amendment, but I think he has become convinced that even that degree of wiggle room is probably best removed. I very much appreciate how supportive he has been.
I say to the noble Baroness, Lady Bennett, that we all have so many amendments to read that she may have missed the fact that, other than that little extra leeway for ISDS in Amendment 19, Amendments 15 and 19 take exactly the same tack and frequently use the same language—we derived our language from the same source. If she wants to look herself, if she looks at new subsection (5) in Amendment 19, she will see that the language on the international trade agreement in Amendment 19 is essentially identical to that in Amendment 15. Both amendments look, in the interim, to use the UK courts system.
I say to the noble Lord, Lansley, that I think he actually made a very powerful argument for passing this amendment. He pointed out that, in negotiations with the United States, it will be exceedingly difficult for the UK to object to ISDS language unless it is provided with some weapons, and this amendment is such a weapon. If Parliament makes it clear that it will require commitments to move to a multilateral agreement, that is a position on which the UK can take a stand. Without the amendment, we will face ISDS language in the US trade agreement, if that is ever concluded.
I was a banker in the United States for many years. It is a very litigious country, and I am also well aware that the clients that I dealt with, which were large multi- nationals, viewed ISDS as a weapon. That is often not the attitude in the UK or many other countries across the globe. Just as, internally in the United States, the law is frequently used to add advantage for a company against its competition, ISDS is regarded as a tool to gain advantage over domestic companies in other countries, and it is used effectively by very well-resourced legal departments. We would really regret signing a trade agreement with the United States that could not contain the traditional format of an ISDS arrangement.
The noble Baroness, Lady McIntosh, and, I think, the noble Lord, Lord Lansley, cast doubt on the new arrangements in the EU-Canada deal. I suggested that it provided a template, and my noble friend Lord Purvis was kind enough to expand on that issue and explain that what starts out as a bilateral arrangement is expandable into a multilateral arrangement, which strikes me as a very positive and sensible way to go. It is not yet in place, but that is because the complexities of putting a new system in place are not minimal. A big hurdle was passed in April this year when the ECJ ruled that the multilateral court process anticipated in the CETA agreement was in keeping with EU law. I understand that the first judges will be appointed sometime early next year. That is moving ahead, but it is not an instant process—indeed, the agreement itself anticipated a temporary arrangement while the new scheme was more fully developed.
I think this is a key issue. We really need to put down a marker that ISDS is simply unacceptable. The multilateral court system is one that we have supported and promoted and it very much fits with the UK’s traditions. This is our opportunity to affirm that and ensure that our negotiators have that tool in hand when they step into trade negotiations. For that reason, I will, if I may, divide the House.
The Deputy Speaker (Baroness Morris of Bolton) (Con)
My Lords, we now come to the group beginning with Amendment 16. I remind noble Lords that Members, other than the mover and the Minister, may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this or anything else in this group to a Division must make that clear in debate.
Amendment 16
Lord Purvis of Tweed
“Prohibition of tied aid in trade and procurement
(1) The United Kingdom may only become a signatory to an international trade agreement with a Least Developed Country or a Lower Middle Income Country and Territory if the conditions in subsection (3) are satisfied.(2) The Secretary of State may not lay a copy of an international trade agreement with a Least Developed Country or a Lower Middle Income Country and Territory before Parliament under section 20(1) of the Constitutional Reform and Governance Act 2010 unless the conditions in subsection (3) are satisfied.(3) The conditions are –(a) the United Kingdom commits in the agreement to complying with the Recommendation on Untying Official Development Assistance as adopted by the OECD Development Assistance Committee (DAC) on 25 April 2001, and as amended;(b) no provision of the agreement is subject to a condition restricting the state the United Kingdom has made the agreement with from receiving aid other than those as agreed under the principles of the Recommendation; and(c) the United Kingdom, so far as reasonably practicable, has committed that there will be no significant impediment in the purchasing process of goods or services from the United Kingdom which would have the effect of a narrower restriction than that on the states from which goods or services will be purchased by the United Kingdom using aid.(4) If the conditions in subsection (3) are not included in an international trade agreement made before this Act comes into effect, no regulations can be made under section 2(1) to implement the agreement.(5) The Secretary of State must include in the annual report required under section 1 of the International Development (Reporting and Transparency) Act 2006 (annual reports: general) a statement on how the UK has met its commitments under subsection (3).(6) The Secretary of State may not make regulations under section 1 which are inconsistent with the OECD DAC Good Procurement Practices for Official Development Assistance.(7) The requirements relating to trade and aid on the Secretary of State in this section are in addition to the duties as required in the International Development Act 2002, the International Development (Reporting and Transparency) Act 2006, the International Development (Gender Equality) Act 2014, and the International Development (Official Development Assistance Target) Act 2015.(8) In this section, the definition of aid includes support for—(a) balance of payments and structural adjustment support;(b) debt forgiveness;(c) sector and multi- sector programme assistance;(d) investment project aid;(e) import and commodity support;(f) commercial services contracts; and (g) overseas development assistance to Non-Governmental Organisations for procurement related activities.”
Lord Purvis of Tweed (LD)
My Lords, in moving Amendment 16 I will speak to Amendment 25. Before I do so, it would be churlish of me not to congratulate the Minister on a victory on Report. I half expected him to move to adjourn and quit while he was ahead.
I tabled these amendments with a degree of regret. They should be unnecessary, but I am grateful to noble Lords who indicated that they would participate in this group, including my noble friends Lady Sheehan and Lord Bruce. Amendment 16 would put on a statutory footing a prohibition on tied aid, and Amendment 25 seeks to prevent economic disruption for some of the least-developed countries should the UK fail to agree continuity agreements at the end of December.
I mention regret because one of the reasons for tabling Amendment 16 was to respond to some statements that the Chancellor and the Foreign Secretary made recently on what I believe is a shameful decision to breach the UK’s obligations under the 2015 overseas development target Act to meet its commitment to spend 0.7% of GNI on overseas development assistance. When that announcement was made, the Foreign Secretary also highlighted certain forthcoming reforms to assistance away from the legislative basis in the 2002 Act, under what is potentially a repeal of the 2015 Act.
My regret was also about the fact that we should not need to try to put into legislation commitments that Ministers have made. I am pleased that the noble Baroness, Lady Noakes, is following me because she has repeatedly made that argument. I think that we have a genuine disagreement on this—while not necessarily in principle then certainly in balance. We sometimes take Ministers’ statements, accept their word and believe their intentions, and that does not necessarily have to be reflected in legislation. But there are also times when we wish to restrict a Government, regardless of any individual incumbent Minister or position and regardless of which party forms the Treasury Bench in the Government.
However, commitments on ODA and on our trading relationships with the least developed countries have been made repeatedly this year in the teeth of the Covid crisis, both previously and more recently. The Minister for Africa, James Duddridge, said in June that it is the law for us to meet 0.7% and we—meaning the UK—will obey the law. In July, the Foreign Secretary said that we remain committed to 0.7%, and in September the noble Lord, Lord Ahmad, said to the global NGO community in Geneva that we reaffirm our commitment. However, we now know that the Government no longer take that position.
The UK has adopted a convention and approach regarding tied aid since the OECD Development Assistance Committee introduced the principles against tied aid in the early 2000s. A number of commitments are reflected in the amendment and I do not need to rehearse them—I hope that the amendment speaks for itself regarding the obligations that we feel the Government should be bound by. I am sure that my noble friends will give egregious examples of assistance which should have been directed towards the most vulnerable and the poorest in the world having been used to advance British commercial interests—indeed, tying the assistance to those commercial interests.
The UK has been, and still is, a leader in that approach. We represent the top tier within the OECD for not having tied aid. Repeatedly and consistently, more than 90% of our overseas aid is not tied in any way, shape or form, and indeed the remainder comes within a degree of justifiability, which the OECD DAC already allows for.
So that begs the question: why would we seek to put into legislation the commitments that we have made and honoured? I repeat that it is because, unfortunately, we have seen commitments given by this Government but not necessarily adhered to. I hope the Minister can reassure the House that there is an absolute commitment that the UK will not renege on any of the OECD standards on tied aid and that we will maintain our high standing. It would be a very retrograde step if, while cutting our overseas aid around the world by a third over the next year, we also attached conditionality to the remainder for commercial interests. I hope that the Minister can be categorical on this.
I give the Minister notice that for me, this is a very strong issue. We know that the Bill will come back to us in the first week of January, so I am aware that if I seek the opinion of the House on Amendment 25, it will be after the 31 December break point. On the issue that the amendment seeks to raise—the Minister knows that I sought to speak to him about it—I hope that the Government can be persuaded to act at this eleventh hour to avoid unnecessary, possibly devastating impacts on exporters from Ghana and Cameroon in particular. We have tried to frame the amendment so that it captures both. Regardless of the exact drafting of the amendment, I hope that the Minister can understand its thrust.
In Committee—I think in a debate that the noble Lord, Lord Lansley, and I took part in on the global scheme of preferences—concern was expressed about Kenya, Ghana and Cameroon in particular. An agreement in principle with Kenya, although problematic with its regional partners, has been made and I welcome that, but the concerns about Ghana and Cameroon remain. I am aware of certain developments since I tabled the amendment. We were looking at the very bleak situation of Ghana and Cameroon trading on the previous basis and then on a potentially worse set of tariff procedures than under the EPA relationship.
With regard to Ghana, I understand that the UK has now agreed to use a regional text as a basis for negotiations. I understand that that had not been the case prior to very recent developments. Therefore, the current focus on looking at a holding mechanism between the UK and Ghana that will allow for a regional trade framework to be put in place could well be the means of moving away from the precipice of 31 December. The aim for agreement by the end of this year will, I think, be encouraged by most Members of the House, but of course we will have to see the detail, particularly regarding the liberalisation commitments in Ghana, which had been a concern. Therefore, I hope that the Minister can make it clear that there will not be a cliff edge for Ghana.
Turning to Cameroon, I understand that on the outstanding rules of origin issues, there have been holding arrangements for four months rather than three, to allow for a resolution of final issues—perhaps similar to the compromise recently reached for Northern Ireland. Can the Minister confirm my understanding of that?
Therefore, it looks as though there has been progress, but I want to close by giving one brief example of why this issue is important, not only for those working within fair and open trade in Ghana and Cameroon but for British consumers. On a recent visit to my nearest Sainsbury’s in Kelso in the Scottish Borders, I looked at the fruit department and saw bananas from Ghana. Thursday of this week will be the deadline for exporters of bananas from Ghana. Shipments of bananas and pineapples have been processed and are ready to be shipped from Tema to the United Kingdom. Those exporters do not know the value of that cargo because they do not know what the tariff and border arrangements are for the following week. The deadline for them is Thursday of this week, so it is very important for the Minister to give a strong reassurance on that. Tuna exports have now ceased. They are cargoed and at Tema port, and there is also uncertainty regarding those exports.
At the very least, if any British consumers wish to buy fair trade bananas from their supermarkets or fruit and vegetable stores, or indeed fresh tuna, they might, through the example I have given, become aware of the dual consequence of a lack of government assurance. If the Minister is able to provide reassurance today, that will give exporters a degree of confidence. They will be able to proceed on the basis of the Minister’s commitments and then provide that information to customers in the UK so that there is no disruption. I hope that the Minister is able to provide that information. I beg to move.
Baroness Noakes (Con)
My Lords, I shall focus my very brief remarks on Amendment 16 in this group—mainly because, when I saw Amendment 25, I had no idea what it was about. I have now heard what the noble Lord has said and I am sure that my noble friend the Minister will respond in due course. When I looked at Amendment 16, I really could not see what kind of problem it was trying to solve; not only is it unnecessary for a statute to repeat commitments that have been made but the environment for aid is now governed by the 2002 Act, which is pretty clear about where aid can and cannot be given.
The noble Lord, Lord Purvis of Tweed, may have concerns about what the Foreign Secretary may or may not have said, but for something to change the law may have to change and the noble Lord would have plenty of opportunity to engage with that issue as and when such a change was made. The noble Lord was good enough to say that the UK has an extremely good record on tied aid and has had so for a very long time; this is not a new commitment needing to be made. I repeat what I always say: it is unnecessary to put in legislation things that noble Lords are worried about—things that might be changed in the future or commitments that might not be kept up. However, if the noble Lord is merely tabling a probing amendment, looking for my noble friend the Minister to reiterate where the Government currently stand on tied aid, obviously there is no real issue. Apart from that, I just say to the noble Lord that the amendment is pretty unnecessary.
Baroness Sheehan (LD) [V]
My Lords, I will say a few short words about Amendment 16, which may enlighten the noble Baroness, Lady Noakes, as to why I think it is very important. I am grateful to my noble friend Lord Purvis of Tweed for putting it down.
The Pergau dam scandal of the early 1990s offers a timely reminder of how badly things can go wrong when tied aid becomes, as it did then, a regular feature of the aid budget—so much so that, in 1997, the UK’s aid budget was removed from the Foreign Secretary’s remit and placed with a newly formed Department for International Development. Maybe old habits die hard as this was followed in fairly short order by the International Development Act 2002, which tightly defined development assistance as two things: furthering sustainable development and improving the welfare of people in developing countries. It was designed to be pro-poor and, in effect, to ensure no more tied aid.
However, that and other Acts of Parliament on international development now have a sword of Damocles hanging over them. My noble friend Lord Purvis has outlined in quite a lot of detail the conflicting statements that we have heard with respect to the 0.7% target, which, as we now know, is to be reduced to 0.5%. He has therefore quite sensibly covered every eventuality in his Amendment 16 by invoking the OECD Development Assistance Committee’s recommendation on untying official development assistance. I hope the Minister will add his assurances to those of the Foreign Secretary and tell us that the bad old days of tied aid are indeed over. Trust is a hard-won commodity, and it is running in very short supply with this Government. I ask the Minister, whose word I have no reason to mistrust, to ensure that assurances given at the Dispatch Box are followed through.
Turning to Amendment 25, to which I have added my name, the Government’s early commitments post Brexit to protect current trading relationships with poorer countries, keep prices in check and help build our future trading partners are not turning out to be quite as reliable as we would have hoped, as with many other government commitments post Brexit. It now looks as though the world’s poorest countries will instead face additional challenges post Brexit. Quite a lot are being overcome, but not all.
Amendment 25 is necessary to ensure that developing countries do not lose market access or share, either because time has run out to agree continuity deals or because other arrangements have run into difficulties. Including some of those countries which could face higher tariffs in the list of least developed countries, as per proposed new subsection (2), would offer some protection.
My noble friend Lord Purvis has explained some of the issues surrounding our difficulties in agreeing a trading arrangement with Ghana. I hope the Minister will agree that insisting on a historic stepping-stone deal was unrealistic. As my noble friend said, Ghana asked that the existing ECOWAS EPA with the EU be used as a basis; I am delighted to learn from my noble friend that it will form the basis of ongoing negotiations. To have insisted that the stepping-stone agreement should form the basis of agreements going forward with Ghana was to disregard the fact that it is now a member of ECOWAS—the Economic Community of West African States—and as such has notified that agreement under the WTO. That would break international agreements, which I hope the Minister would agree is not a good look.
Ghana could have signed our agreement for the enhanced framework as a way out of the scheme but, as my noble friend Lord Purvis explained, it was presented with some difficulties in doing so because bananas are not included in the enhanced framework scheme. I hope this issue can be resolved so that other countries are not caught in the same trap. Had Ghana signed up to the enhanced framework scheme, about 30% of the bananas we eat in the UK, which come from Ghana, could not have got here. That would be a real shame, because a large proportion of them are Fairtrade; the Fairtrade Foundation has had great success in getting better working conditions and fairer deals for poorer farmers and the workers and communities that rely on them. I do not need to remind the Minister that the Fairtrade movement enjoys wide support in the UK. Proposed new subsection (3) is designed to overcome this difficulty for Ghana and other developing countries caught in a similar conundrum.
Time is tight, so I will move straight to the end. The regional economic unions in Africa—east, south, north and west—are now all pretty well established and the African Continental Free Trade Area, which represents a market of 1.2 billion people with a combined GDP of $1.3 trillion, opens on 1 January 2021. This October, just a few weeks ago, talks took place between the EU and the African Union on a modern relationship between the two trading blocs. What plans do we have for a modern trading arrangement with the African Union?
Baroness McIntosh of Pickering (Con)
My Lords, in connection to Amendments 16 and 25, I really would prefer to go down the continuity agreement route than to adopt these two. It is my understanding that the UK has reached—I think the noble Lord, Lord Purvis, said this in moving Amendment 16—a rollover agreement with Kenya. Indeed, it was signed this month, less than a week ago, which I welcome. I know that we had a long debate in Committee about the asymmetry of many of the free trade agreements, but I do not know if that applies in this case. It would be my strong preference that we press the Government to continue their good work in reaching agreements, with the rollover economic partnership free trade agreements.
My question to the Minister is therefore very simple: could he say where we are in reaching agreement with Ghana—which reached an EPA with the EU relatively recently, in 2016—and Cameroon, which reached an EPA with the EU in 2014? Rather than at this stage lumbering the Government with even more add-ons, as set out in Amendments 16 and 25, it would be my preference to carry on the work that they have achieved with the Kenya rollover agreement. I urge my noble friend the Minister to continue to complete the agreements with Ghana and Cameroon.
My noble friend said earlier—it was not his exact phrase—that it takes two to tango. It takes two to complete these agreements, and if any specific obstacles have been raised with any specific products relating to the rollover agreements we currently enjoy, through our membership of the EU, with Ghana and Cameroon, it would be very helpful to know what they are this afternoon.
Baroness Bennett of Manor Castle (GP)
My Lords, I rise briefly to speak in favour of Amendment 16 in the name of the noble Lord, Lord Purvis of Tweed, and Amendment 25, in the name of the noble Lord, Lord Purvis, and the noble Baroness, Lady Sheehan.
I want to reflect on the context in which we are having this debate: a double blow has come forward in terms of our international aid budget. Someone came to me on Twitter and said, “I’m really confused, because it seems like our GDP is going down, so our aid is going down anyway, so why are we also cutting the percentage of aid?” I had to say, “No, you’re absolutely right, this is a double blow.” We have often given very effective help to some of the poorest people in the world, so it is important that we do whatever we can to make sure that aid is directed in the right kind of way.
The second, contextual, point I want to reflect on is why these countries are in the least developed and lower middle-income categorisations. If you go down the road to the Foreign Office, up to Liverpool or across to Bristol, you will see the colonial legacy of lots of the wealth of these countries, which was sucked out in the past. That legacy continues to have extremely deleterious effects. There is also the impact of multi- national companies—very often corrupt—today, which hold down the essential development of many least developed and lower middle-income countries. I note what the noble Baroness, Lady Sheehan, said too about the history of how DfID came to be split from the Foreign Office, and the concerns that have to be expressed about that reunion.
In those contexts, it is really important to do whatever we can in your Lordships’ House to defend, to hold the line and to keep whatever we have now. We will have the fight about the aid budget percentage when it comes along, but let us do what we can now in the Trade Bill.
Lord Lansley (Con)
My Lords, I am very glad to follow the noble Baroness, Lady Bennett of Manor Castle, and to speak to these two amendments.
May I first say a word about Amendment 25? As the noble Lord, Lord Purvis of Tweed, said in introducing it, we had an interesting debate in Committee on the trade preference scheme—our unilateral preference scheme —and, indeed, I might say to my noble friend the Minister, an even more useful subsequent round table, although we were virtual, about the structure of the trade preference scheme when it comes.
As far as I can see, Amendment 25’s objectives should be able to be encompassed within the trade preference scheme using the Taxation (Cross-border Trade) Act 2018, and the regulations under its Section 10. I just want to see those regulations and have an opportunity for us to talk about them to check that they achieve that objective.
The Earl of Sandwich (CB) [V]
My Lords, as we have heard more than once, the Government are already committed to providing untied aid under the DAC agreement from nearly 20 years ago. However, to answer the points made just now by the noble Lord, Lord Lansley, and the noble Baroness, Lady Noakes: the Government have become a little ambiguous on aid legislation in relation to the 0.7% target. The noble Lord, Lord Purvis, is quite right to raise the issue at this stage. There is little doubt that the merger of DfID into the FCDO will have an impact on the integrity of our aid programme. It is now a stated policy that aid has become an instrument of diplomacy, and so why not of trade?
When it comes to fair trade, there can be little confusion, but with large infrastructure projects, there is a distinct motive to involve British traders and investors, even if that is not in the best interests of the poor. As the noble Baroness, Lady Sheehan, said, the names of Pergau and Narmada come to mind. The CDC will have to tread carefully from now on if it is to meet its declared target of poverty reduction.
Sustainable development goal 17 on trade was discussed earlier in Committee. It is one of the most intriguing development goals because it is both helpful and obstructive. That is because liberalisation opens up trade but it can also bring greater wealth to a minority and lead to the exploitation of poorer countries. The purpose of the SDG is to reinforce the longer-term concept of sustainable development. In more practical terms, apart from any trading concessions available, this means working closely in partnership with the country with which you are trading to ensure that the arrangement is fair. The noble Lord, Lord Purvis, has given us examples of unfair trade.
There are many examples of the enforcement of our own standards in developing countries, such as in food or textiles, to meet the demands of our importers and consumers. The Minister himself mentioned the negative effects on poor countries that can arise from overly high standards. Supply chains are now revealing more overt examples of trafficking and exploitation, perhaps indirectly, by corporations. What protection will there be for those countries after we leave the Cotonou agreement which protects many African, Caribbean and Pacific countries? The noble Lord, Lord Lansley, knows all about this. He has already taken us into the detail of GSP, GSP+ and the EBA—all of the things that are available to the least developed countries. This is not for today, but as we withdraw from the EU, especially now, I hope that we will come to on to these questions as well.
Lord Bruce of Bennachie (LD) [V]
I wish to speak briefly in support of these amendments. It is bad enough that the UK has cut its aid budget by potentially £30 billion over this Parliament without legitimate or honest reasons, but just as the Government are giving a boost to the better-off to eat out at home, and possibly accelerating the spread of Covid-19 in the process—while being reluctant to extend the provision of free school meals to poorer children—so they have prioritised boosting defence spending by 0.2% of GNI and cutting aid to the poorest people in the world by precisely 0.2% of GNI.
These amendments rightly probe the Government’s real intentions on aid and seeking to hold to the high standards of the past 20 years. I think that many of us are not as sanguine as the noble Lord, Lord Lansley, about the intentions of the Government. They are unclear and on the basis of betrayed promises made over a matter of weeks, so we need some answers. I am pleased to follow the noble Earl, Lord Sandwich, who has been consistent in his campaign to ensure that sustainable development will deliver for the poor and that the Government should explain their policy clearly.
Put simply, UK development assistance has been untied and we have all agreed to that. Moreover, it has been poverty-focused. The former Prime Minister, David Cameron, co-chaired the UN’s high-level panel on the sustainable development goals. It set the objective of ending absolute poverty and leaving no one behind. The UK’s contribution to achieving that will now be substantially reduced. These amendments seek to ensure that UK aid will still prioritise poverty reduction and not be used as a lever to extract concessions from poorer developing countries for the UK’s mercantile or political advantage.
With a few exceptions, such as delivering emergency aid into conflict zones, the UK’s engagement in developing countries is with the consent of the Governments of those countries. This gives scope for dialogue about good governance and agreement to work together to build capacity to manage programmes. It allows for honest discussion about problems of corruption, so it is not as if there is no engagement. It is not simply spending on a poverty programme without any government-to-government contact. That is what constitutes soft power. Contrary to what critics assert, aid programmes have contributed to the substantial reduction in poverty over recent decades. The challenge now is to sustain that progress in a post-pandemic world. I cannot think of a worse time for what has become one of the world’s leading aid countries to give such a public declaration of its intention not to be the lead contributor to solving that problem.
We all know that prior to the International Development Act, as has been quoted by other speakers in this debate, our aid budget was misused to secure contracts for British companies, not always on the best terms or for the best purpose of benefiting the recipient countries. We surely do not want to return to those bad old days. The noble Lord, Lord Lansley, says that the Government have no intention of doing so, but the Government had no intention of cutting aid or of rolling DfID into the Foreign Office. Frankly, I say to the noble Lord, Lord Lansley: we cannot trust any of this Government’s assurances on aid.
Whatever kind of Brexit emerges from these tedious negotiations, this Brexit Government will want to parade a succession of trade deals. The more important and powerful the partner with which we are negotiating, the harder it will be to secure agreement and the more likely it is that the UK will make concessions that are greater than those made when we benefited from the negotiating strength of the European Union. In that situation, the temptation to pressurise economically weaker and poorer countries could intensify accordingly.
The term “aid for trade” is open to a range of interpretations. In a proper development context, it should mean helping a country achieve standards that enable it to compete successfully in export markets. It should not mean securing concessions or trade-offs in exchange for details of access to the UK market, such as, “We will buy your flowers if you support us with your vote on the Security Council or the General Assembly, or if you buy our expensive digital equipment or services.” If it were as blatant as that, it would contravene the DAC rules and the Government would struggle to achieve even 0.5%.
Alternatives could be offering aid in return for mining concessions or arms sales. If our aid is being cut, it is more important than ever that it goes unconditionally to help alleviate poverty and promote sustainable livelihoods, and enables countries to meet the challenges of pro-poor development: to end poverty and leave no one behind. To date, the UK has been leading the way on untying aid. It will be a sad confirmation of a new self-serving foreign policy if the next few years see a dramatic reduction in not only the amount of aid that we deliver but the quality and direction of the aid that we give.
The question is simple: is the overriding purpose and impact of the UK’s official development assistance directed at poverty reduction and sustainability, or is it directly to further the foreign policy interests of a country reverting to British exceptionalism?
The Deputy Speaker (Baroness Pitkeathley) (Lab)
The noble and learned Lord, Lord Morris of Aberavon, is not speaking, so we move now to the noble Lord, Lord Stevenson of Balmacara.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, this has been a good debate at a more detailed level than we were perhaps expecting at this stage of our considerations on the Bill. It is none the less important for that.
I took Amendment 16, moved by the noble Lord, Lord Purvis, to be a probing amendment in a sense. It is trying to tease out the different strands of activity among the issues arising from sustainable development goals about trade, particularly with disadvantaged countries, and government policy in relation to it. That is linked to the reduction in funds available for future development work in this area.
We are going to return to this on many areas over the years, I suspect; the impact that this cut will have on our available resources to support and ensure development in countries that need it will be a feature of our debates in future. However, it is not capable of being sorted at this stage by a single amendment. What we need is a clear statement from the Government on their policy, and I hope that the Minister will be able to give that.
The other amendment in this group follows on, as has been explained, from quite a good discussion in Committee and a subsequent meeting organised by the Minister, of which I had a readout, because I was not able to attend myself. It raises interesting issues, and the noble Lord, Lord Lansley, may be right that there is no issue here, because the Government are not going to do what they might be seen to be accused of in the terms of the amendment. On the other hand, there are doubts about how the whole EU structure for resolving how aid is given, and in what form it is given—in direct support and in ensuring that the impact of any support does not affect the ability of those countries involved to be able to trade their way out of their own difficulties—will be resolved. It needs to be resolved properly before we can say that we have a proper trade policy. I look forward to the Minister’s response.
Lord Grimstone of Boscobel (Con)
My Lords, I thank the noble Lord, Lord Purvis, for raising the important issues of trade and international development. I am well aware of his deep commitment to this topic, and I admire the integrity with which he pursues it. I am pleased to say that the Government share his commitment to supporting international trade, prosperity and poverty reduction, and I am happy to explain the Government’s policy on this topic.
The Government have a proud history of providing official development assistance in such a way as to achieve maximum impact on reducing poverty in developing countries, including through helping to build their capability to trade. The International Development Act 2002 requires that overseas development assistance is provided only for the purposes of furthering sustainable development of a country outside the UK or for improving the welfare of the population of such a country. I unequivocally assure all noble Lords who have raised the point that the Government are committed to providing international aid untied to commercial conditions. That ensures that international aid spending is procured through open competition to achieve best value for money. The UK’s approach in this area is published in the 2015 UK aid strategy and further set out in the UK Official Development Assistance: Value for Money Guidance. The Foreign Secretary reaffirmed this commitment in the other place on 26 November. Through these provisions, the Government’s approach to international aid is wholly consistent with both sets of OECD guidelines on official development assistance to which this amendment refers. I am happy to give the noble Lord, Lord Purvis, and other noble Lords a categoric reassurance that we have no plans or intent to change that.
I turn to Amendment 25. The Government, of course, share the desire of the noble Lord, Lord Purvis, to support trade with developing countries. We have engaged wholeheartedly with our developing country partners to secure economic partnership agreements that provide continuity of their market access. As has already been noted by noble Lords, I am pleased to inform the House that Kenya and the Ivory Coast have recently agreed economic partnership agreements with the UK, which will provide long-term certainty of their duty-free market access and provide a framework to develop our trade relationships in future.
We began discussing an economic partnership agreement with Ghana no less than three years ago, and we encourage Ghana to conclude those discussions to maintain our existing trade arrangements, including its duty-free access. I ask noble Lords to join me in that encouragement: we want to conclude an agreement with Ghana, and I give it that message loudly and clearly. On Cameroon, we are committed to securing an EPA. Further discussions continued as recently as last week and, again, I encourage that country to reach an agreement with us as soon as possible.
Further, I clarify that the Government’s long-stated policy is to replicate the effects of the EU’s generalised scheme of preferences, or GSP, and then in due course to go beyond it. This arrangement supports trade with around 70 developing countries; it increases global prosperity and reduces poverty while providing access to cheaper products for UK consumers. The most appropriate way in which to ensure continuity of this vital trade arrangement is to replicate the existing trade preference scheme, which is already known to be compatible with WTO rules, and regulations to create the GSP will be laid in Parliament shortly.
I absolutely took the point made by my noble friend Lord Lansley about the optimum arrangements for the future, and I will ensure that his comments are passed on. Transitioning the existing EPAs is absolutely not the limit of the Government’s ambition in the area, and in the future we will look at how we can improve on these structures. Regarding proposed new subsection (2) in Amendment 25, introducing any changes to the eligibility criteria of the UK GSP at this point creates risk and uncertainty for the remaining 70 countries of the UK GSP, which I am sure noble Lords wish to avoid.
Regarding proposed new subsection (3), which proposes removing the tariffs on bananas for countries in the UK GSP’s enhanced framework, I urge caution. Although this could provide a way to maintain Ghana’s duty-free access to bananas, it would also extend this preferential access to the other countries in the enhanced framework. Some of them are already competitive banana producers and could increase their exports of bananas to the UK at the expense of existing banana producers, many of which are Commonwealth partners in the Caribbean. Such a proposal cannot be rushed. It must be based on careful analysis. For that reason, it cannot be accepted now.
I hope that your Lordships agree that there is a balance to be struck. While of course I share the concerns of the noble Lord, Lord Purvis, about the impact of a potential loss of duty-free access for Ghana if the worst comes to the worst, this amendment to the UK’s generalised scheme of preferences could have negative consequence on other countries’ trade relationships with the UK. I reassure noble Lords that if Ghana does not agree an EPA—I sincerely hope that it will—it will still receive tariff reductions on two-thirds of its product lines through the general framework of the UK GSP. Ghana can also apply for the enhanced framework of the UK GSP, which provides further trade preferences.
I am genuinely grateful to the noble Lord, Lord Purvis, for raising these important issues. I hope that I have clarified for him and other noble Lords who have spoken the wider consequences of the amendment. I also hope that I have reassured him and other noble Lords on the Government’s policy to not tie overseas development assistance to procurement or trade from the UK, in line with international guidelines. I hope therefore that noble Lords agree that this amendment is unnecessary, and that the noble Lord agrees to withdraw it and not bring it forward on the later occasion.
Lord Purvis of Tweed (LD)
My Lords, I am grateful to noble Lords who have participated in this short debate, which has focused on longer-term issues rather than more immediate ones. I am very grateful for the Minister’s response, his kind remarks, and the courtesy with which he carries out his work. My noble friend Lord Bruce and the noble Earl, Lord Sandwich, addressed very clearly the point made by the noble Lord, Lord Lansley, and to some extent, that of the noble Baroness, Lady Noakes. I took the 2015 Act through this House on behalf of my then right honourable friend Michael Moore in the House of Commons. I refer to the subsequent Conservative Party manifesto, its 2017 and 2019 manifestos, and what has been said by every Conservative Minister from the passing of that commitment until three weeks ago. The noble Lord, Lord Lansley, asked whether the amendment was going to prevent the Government doing something that he said they were not going to do. Well, every statement from Ministers and three manifesto commitments has been breached.
Therefore, I hope that noble colleagues will forgive me for laying down a marker to indicate that the connection between trade and development is real. It may be that if, as the noble Baroness, Lady Noakes, has indicated, the Government bring forward repeal or significant amendments to the 2015 Act or, indeed, the 2002 Act, we will consider it then. I hope, of course, that they do not.
The noble Lord, Lord Lansley, made the point about blurring the lines, perhaps, between development priorities and trade priorities. He asked specifically about the drafting of the amendment. It is a fair question. I tried to blend the categories in the list at Part 3 of Schedule 3 to the Taxation (Cross-border Trade) Act 2018, which defines the countries that we will have, with what a trade agreement amendment would be—because as we know, the tied aid goes beyond trade agreements—but, of course, there are elements to be debated going forward. I hope we will not need to debate these. I think that the noble Baroness, Lady Noakes, is right. I hope that what the Government say about having no plans for change will be right. I believe that the Minister has a very high degree of integrity and I am very grateful for the explicit and categorical assurances, and therefore I shall not press Amendment 16.
On the most immediate point, I am grateful for the Minister’s response. I was hoping that he might be in a position to confirm the movement that I understand has been made, because while I freely admit that my amendment is only one option—the noble Baroness, Lady McIntosh, indicated other options and the Minister has indicated certain other areas; we might need to approach this in a different way—the principle is the same. Agreements have not been made. I hope that they will be, but if they are not within a week’s time, assurances need to be made for goods that are in port now, ready to come to the UK from some of the least developed countries in the world. I am glad that the Minister has given reassurance, and I hope very much that we will not need to come back to this after January, because this is now a real, live test that needs to be resolved so that the people paying the price for the end of the transition period are not the people working in some of the least developed countries in the world. However, I beg leave to withdraw the amendment.
The Deputy Speaker (Baroness Pitkeathley) (Lab)
My Lords, the next business on the Order Paper is the repeat of a Statement on Covid-19.
Viscount Younger of Leckie (Con)
My Lords, therefore, with the leave the House, I beg to move that the repeat of the Statement on Covid-19 be postponed until after consideration of the United Kingdom Internal Market Bill.