Free Trade Agreement Negotiations: Australia
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Lord Purvis of Tweed (LD)
My Lords, I thank the Minister for his letter of 18 June with a copy of the agreement in principle and an explainer. He is very good at keeping the Front Benches informed in the House, which is appreciated.
These Benches that I speak for want more free, fair and open trade, for the UK to export more and for UK consumers to have a wider choice of higher-standard goods at globally competitive prices. We want trade deals to reflect growth in UK export potential, but we want them strategically used for wider social, climate, human rights, labour and environmental standards. We do not want them to be an opportunity for the UK to miss, to provide market access for other countries without commensurate or better gains for us.
The desperation of this Government to have any deal, no matter what, is noted among our trading partners, and they take advantage. A bad deal is better than no deal, it seems. On the much-heralded £15 billion Japan deal, £13 billion was for Japan and £2 billion for the UK. On this deal and the agreement in principle, UK exports to Australia will go up over 15 years by £500 million, the Government say, while Australian exports to the UK will go up by £700 million. That is about three royal yachts. The telling point on market access was in the bullet point that
“both sides formalise their agreement on splits of TRQs at the WTO and Australia withdraws its objections to the UK’s goods schedule.”
That was the giveaway. Australia has got exactly what it wants. It has withdrawn its objections at the WTO—objections which, I remind the House, this Government said had no foundation. It turns out that our negotiation had rather weak foundations. I co-chaired, with the Nigerian Trade Minister, a commission of inquiry looking at areas where we can expand Commonwealth trade. Why is there no reference to the Commonwealth in this agreement?
However, let me quote positively from the website of the Australian Department of Foreign Affairs and Trade:
“an ambitious and comprehensive FTA will assist with post-pandemic economic recovery by providing new opportunities in a highly significant market for Australian goods and services. It will provide Australian exporters with a competitive edge and more choices about where they do business. Australian consumers and companies stand to benefit through greater choice in goods and services at lower prices.”
That is the headline of the Australian Government of the agreement with the European Union, now in its 11th round. The Australian Government go on to say:
“We want an FTA with the EU to set the benchmark for what can be achieved between like-minded partners.”
The narratives for the EU and the UK are remarkably similar. The UK scoping exercise for this, an ambitious and comprehensive FTA for Australia, said that it would bring GDP growth ranging from 0.01% and 0.02% over 15 years. The EU scoping exercise in 2018 said that
“an ambitious and comprehensive FTA will bring about GDP growth ranging from 0.01% to 0.02% over 15 years.”
Why has a Brexit agreement no greater benefit than we would have had anyway? On goods, we are expecting an increase in exports of up to 7.4%, which is of course positive. In the Government’s own document, Australia is looking for exports to the UK to increase up to 83.2%. Why is there such a difference? It is estimated for the EU scoping exercise that EU exports to Australia could go up under their agreement by one-third. Why are UK exports up by 3.6% and European exports up by 36%?
On legal services, the Minister said to me on Tuesday that:
“It will contain provisions on legal services, as we have heard, but it will not confer the automatic ability for Australian lawyers to practise law in the UK.”—[Official Report, 22/6/21; col. 163.]
The fourth bullet point of the agreement in principle mentions:
“Legal services provisions which will both guarantee that UK and Australian lawyers can advise clients and provide arbitration, mediation and conciliation services in the other country’s territory using their original qualifications”.
I regret to say this, but I believe that the Minister misled the House. I hope that he has an opportunity to correct that at the Dispatch Box today.
Can the Minister explain why in the agreement there will be a chapter on mobility, which could well be positive, about companies sponsoring
“visas committed in the FTA without first having to prove that a national of the country in question could not be hired to do the job, through the reciprocal removal of economic needs”?
Is this now a direct repudiation of the points system that the Home Office has put in place, and, which will be the case—the UK Home Office points system for Australia or this trade agreement? On goods, during the trade negotiations the Government’s press release in November said that the Government had a suite of tools including tariffs, tariff quotas and safeguards to ensure that British farmers, with their high standards, were not unfairly undercut in any trade deal. However, the NFU said that it was not consulted, and none of these methods seems to have been used.
We know that, according to Food Standards Australia New Zealand—FSANZ—around 40% of cattle are given hormone treatment, but the quotas for imports are currently for accredited hormone-free cattle. There is no differential quota guarantee in this outline agreement; will it be in the final agreement? Neonicotinoids are used on Australian crops—cotton, canola, cereals and sunflowers—but their use in the United Kingdom is banned. What guarantees are there that we will not import goods for which illegal pesticides have been used as part of their production? What guarantees are there that we will not import sows that have been reared in sow stalls, which have been banned in the UK since 1999? What guarantees are there that pigs raised by intensive farming methods and chickens reared in battery cages, which we have banned, will not be imported?
Finally, it is of course a fallacy to suggest that, if we are critical of this agreement, we are critical of free trade. We are critical of the Government’s ability to negotiate good trade agreements. If imported goods are cheaper, the Government say that they will safeguard against undercutting—but that is not in this agreement. Workers with skills having to get a visa because of economic need is not mentioned in this agreement. The continuing protection against hormones and pesticides that Defra has indicated is also not in this agreement. Who is in charge of our agriculture, immigration and economic policy?
The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
My Lords, it is a constant disappointment to me that Opposition Front Benchers find it difficult ever to say any nice things about trade agreements. Of course, the whole purpose of our striking them is to benefit British businesses and consumers. This deal with Australia eliminates tariffs on all UK goods, making it cheaper to sell products like Scottish whisky and cars to Australia, and supporting industries that employ 3.5 million people in the UK. It would be nice to hear some recognition of such positive impacts when we debate these agreements.
For our consumers, this means lower prices and better choice, and that includes iconic favourites such as Aussie wine, which I would not be surprised at all to learn that the two Front-Bench spokesmen enjoy from time to time. I recognise that the noble Lord, Lord Grantchester, has great expertise in farming matters, but I should make it clear that this deal will not undercut UK farmers unfairly or compromise our high standards. Indeed, we believe that it will open up opportunities in fast-growing markets such as CPTPP countries. It would be nice to hear some recognition of the fact that our farmers, who are among the best in the world, will be able to take advantage of these agreements.
I say categorically that, throughout the negotiations, we have listened closely to the concerns of farmers and other stakeholders, which is why we have agreed 15 years of capped tariff-free imports from Australia. This means that Australian farmers will only have the same access as EU farmers 15 years after the agreement comes into force.
Of course, so far, this agreement is only at the “in principle” stage, and the House will have an opportunity to scrutinise it fully. Some of the questions asked by noble Lords will be more easily dealt with once we have commenced that formal scrutiny. Let me explain for a moment what I mean by that. The agreement in principle signifies only that the main elements of the deal have been negotiated; both countries will now work together to continue to translate the agreement into legal text. Parliament will have full opportunity to scrutinise this agreement: the FTA treaty will be presented to it after signature, alongside an independently scrutinised impact assessment. I know how carefully the noble Lord, Lord Purvis, always reads those, and I am sure that he will find answers to his questions when that impact assessment is published.
Of course, the House will then have the benefit, for the first time, of advice from the Trade and Agriculture Commission, which we have debated many times in this House. Some of the really important points made by the noble Lord, Lord Grantchester, will no doubt be dealt with in that report. Once the Agriculture Act’s Section 42 report and the TAC’s advice have been laid in Parliament, there will then be a further chance to scrutinise these matters, so that will be the time to come back to some of these detailed points.
Turning to some of the specific points that have been raised, the noble Lord, Lord Grantchester, asked where we are with the very good report from the Trade and Agriculture Commission. It is still being carefully analysed, and I am sure the Secretary of State will make her views on it known to Parliament in due course.
I would like to deal specifically with the accusation the noble Lord, Lord Purvis of Tweed, made about my misleading the House. I categorically refute that suggestion, and I will explain why I am so categoric about that. This agreement allows lawyers from both sides to practise not domestic law, either in the UK or Australia, but foreign or international law in certain limited areas such as giving advice, arbitration or conciliation. These are not regulated matters, so it will be possible for an Australian lawyer to open an office in Edinburgh and put a sign on the door saying that he is an Australian lawyer, but from that office he will be able to offer advice on foreign and international law, on arbitration in relation to those matters, and to comment on Australian law. Having given that explanation, I would be grateful if the noble Lord felt able to withdraw his very serious allegation that I misled the House from this Dispatch Box.
I believe that this is a positive agreement. It is the first that we have negotiated from scratch since leaving the European Union, and it shows what we are capable of as a sovereign trading area. I believe that it will lead to a whole succession of broader and even better agreements going forward.
The Deputy Speaker (Baroness Pitkeathley) (Lab)
My Lords, we now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.
Lord Robathan (Con)
My Lords, I declare an interest as the owner of a livestock farm in the Midlands. Before I ask my substantive question, I note something that the noble Lord, Lord Purvis, said. I think that sow stalls are still permitted in the European Union; could my noble friend clarify that?
I congratulate my noble friend, and all those in government involved in this, on an excellent start to an FTA that will be to the mutual benefit of the people of the United Kingdom and the people of Australia. Does he appreciate that, whatever carping he may hear in this House against free trade agreements, many here do not want the FTAs to succeed because they want to prove Brexit wrong? We heard that from the Labour Benches. They want to prove that Brexit was a terrible mistake, while the people of the United Kingdom will rejoice at the increased prosperity that this free trade agreement and others will bring them.
Lord Grimstone of Boscobel (Con)
My noble friend is quite right: Australian animal welfare standards are in fact higher than those in many other countries around the world, and in some cases higher than those in the EU. My noble friend has given one example. Others include the practice of castrating chickens and the production of foie gras, which are banned in Australia on welfare grounds, as they are in the UK; however, they continue to be permitted in the EU. Australia is marked five out of five—the highest possible mark—in the World Organisation for Animal Health performance survey.
Lord Curry of Kirkharle (CB) [V]
My Lords, I welcome the opportunity to debate this FTA. Let me say something nice: I congratulate the Government on having negotiated this deal very speedily. Incidentally, I want this and other FTAs that will follow to succeed. I have two questions for the Minister. When the TAC, the Trade and Agriculture Commission, is eventually established and able to scrutinise the agreement, and when Parliament has a chance to debate it, will it be possible to amend the agreement if genuine concerns exist, or is it a fait accompli? Secondly, do this agreement and others that will follow put our free trade agreement with the European Union at risk?
Lord Grimstone of Boscobel (Con)
My Lords, I think the House is well aware of the scrutiny processes that these agreements go through. The process culminates in the CRaG process, in which the other place has the ability to vote against these agreements, so there will be scrutiny there. That provides a real bulwark. I do not know the answer to the question about the European Union, and if I may I will write to the noble Lord about that.
Lord Udny-Lister (Con)
My Lords, when I worked in No. 10 and was involved in the Brexit debate, I was told on many occasions by Members of this House and the other place from all political parties that Britain would never be able to negotiate any free trade agreements and did not have the capability—it was just folly—so I am really pleased today to be able to congratulate the Minister on getting this deal done, especially as the EU is still struggling with its deal. I am also delighted that he has not listened to the protectionist voices from various parts of our community.
Can the Minister please confirm to me that although the priority is the CPTPP, he will give equal priority to some of the others, particularly the GCC? In this, I declare my interests as the co-chairman of the UAE-UK Business Council, where tariffs are not the key issue. The key issue is the same as with Australia: professional qualifications, access to markets and generally the removal of red tape—all the things he has managed to deliver with the Australian deal.
Lord Grimstone of Boscobel (Con)
My Lords, it is a great pleasure to answer my first question from my friend and noble friend Lord Udny-Lister from this Dispatch Box. He is right: we are making extraordinary progress on negotiating these free trade agreements, and the free trade agreements we hope to strike not just with the Trans-Pacific Partnership but with the GCC, Canada, Mexico, India and a number of other countries around the world are designed entirely to benefit the British consumer. I welcome his support for that.
Lord Liddle (Lab)
My Lords, now that we are out of the EU, I welcome trade deals we do with the rest of the world, though I have concerns about the agricultural dimension of this. I have great respect for the Minister as a highly intelligent and objective man. If he reads the Statement delivered in the other place, does he not agree that it is hyperbolic and propagandist? It is hyperbolic in the sense that it talks about “huge benefits”. Most economists estimate the benefit to UK GDP of this agreement to be about 0.2%. It is propagandist in that it talks about how we are no longer
“hiding behind the same protectionist walls that we had in the EU”.—[Official Report, Commons, 17/6/21; col. 453.]
He must recognise that in the new Pacific world to which we attach so much importance, Germany—a member of the EU allegedly held back by those “protectionist walls”—is able to export two or three times as much as we do at present.
Lord Grimstone of Boscobel (Con)
My Lords, I first thank the noble Lord for his kind comments. It is the case that politics sometimes enter into these matters in the other House. Maybe that is not a surprise, given the importance of these agreements. I hope the noble Lord agrees that when I comment on these matters in this House or in front of our very well-run IAC, I try to give my answers in a measured and constructive way.
Lord Foster of Bath (LD)
My Lords, I think I welcome the Minister’s comment that the House will have the opportunity to fully scrutinise the text of the agreement, which will be presented after signature, but given the limited parliamentary oversight arrangements in both Houses, will he commit to presenting the document immediately after signature so that the committees have sufficient time to review the agreement before it is formally laid under the CRaG arrangements?
Lord Grimstone of Boscobel (Con)
My Lords, I can certainly confirm that the House will be given sufficient time to scrutinise these agreements, not just because that is right in its own instance but because our International Agreements Committee will want to scrutinise them. Importantly, the new, independent Trade and Agriculture Commission will need time to scrutinise this agreement properly. The sequence of events will be that the agreement will be laid in this House after signing, these other matters of scrutiny will then proceed, and only when that is completed will the agreement be brought back to the House formally to take its chance under the CRaG procedures.
Lord Lansley (Con) [V]
My Lords, this agreement could offer an opportunity for many smaller UK businesses to get into the Australian market. The economic impact and benefit for the United Kingdom could be much more if we can gear up our businesses to take those opportunities. The time to do that is now, even if the final FTA takes some time. Can my noble friend say what initiatives the Government are taking to work with businesses to achieve this?
Lord Grimstone of Boscobel (Con)
My Lords, my noble friend is absolutely right. A point I have made previously from this Dispatch Box is that it is not the signing of these agreements that is important but the operationalising of them afterwards, to the benefit of British businesses and consumers. Interestingly, we already have 13,400 UK SMEs—that includes micro-enterprises and sole traders—exporting goods to Australia. I completely agree with my noble friend that we have to mobilise our efforts to explain the advantage of this agreement to them. Chambers of commerce and intermediaries will have a valuable role to play. With our friends in Australia, we certainly intend to make the information on how to trade clear and easily accessible. There will be a dedicated website and a search database, but most importantly we will be out and about informing British businesses and customers of the advantages of the agreement.
Lord Carrington (CB) [V]
My Lords, I declare my farming interests as set out in the register. As a carrot—forgive the pun—to win farmers’ support for this agreement, the Government have indicated investment in and funding of technology to improve productivity through ELMS. Can the Minister inform us of the status of the promised comprehensive cross-government strategy to improve productivity and competitiveness and, secondly, the promise to provide adjustment assistance for farming in the changing market conditions resulting from the new FTA?
Lord Grimstone of Boscobel (Con)
The noble Lord, Lord Carrington, asks two important questions. If I may, I will consult my ministerial colleagues in Defra and write to him on these matters, so that I can give him a full answer.
Lord Inglewood (Non-Afl) [V]
My Lords, I declare my agricultural interests in the register. In particular, I am a livestock farmer, but I have no fears about competing with Australian imports on price. However, does the Minister not agree that if agricultural imports from Australia—or from anywhere else, for that matter—are not subject to the equivalent welfare, phytosanitary and husbandry standards and so on that apply to domestic production, that gives foreign producers financial advantage over domestic producers in the UK market, and that this is unfair competition for UK producers? Further, does he not agree that arguments to the contrary echo the thought processes of those who supported the abolition of slavery but at the same time supported the slave trade?
Lord Grimstone of Boscobel (Con)
My Lords, I am happy to confirm to my noble friend that there will be absolutely no diminution of the controls that we apply to imported agricultural produce. As he will know, our phytosanitary regime is very strong. I sometimes hear scare stories from noble Lords that, for example, hormone beef will be allowed into this country as a result of this agreement. I can put people’s minds completely at rest on this: we will be maintaining our strict animal health standards and our own animal welfare standards.
Lord Hannan of Kingsclere (Con)
My Lords, how extraordinary that there should be this opposition to a trade deal with Australia—a country with which we enjoyed the closest commercial relations before the artificial diversion of our trade by the phased imposition of European tariffs and non-tariff barriers in the 1970s. It is a country to which we could hardly be closer in language, law, accountancy systems and interoperable regulations. Does my noble friend the Minister find it odd that in this debate Australian trade is attacked on the contradictory grounds that the deal will wipe out our agriculture while making little difference? Does he detect behind those questions the real problem, which is nostalgia for EU membership? We heard it in almost every intervention from the Benches opposite—a few desultory remarks about Australia and then a prolonged complaint about Brexit. Does he share my surprise that people who spent the referendum brandishing their internationalist credentials have, on this issue, now descended into mercantilism, protectionism, nostalgia and fear?
Lord Grimstone of Boscobel (Con)
My noble friend makes an important point. If someone came to listen to these proceedings for the first time, they would think we were debating an agreement with a hostile country—a country with which we had perhaps had a long period of enmity. This agreement, and the agreements that we are hoping to strike with New Zealand, Canada, India and elsewhere, are with our Commonwealth friends. I detect that nostalgia for the EU on the other Benches. I just wish I could also detect a nostalgia for the Commonwealth and dealing with those countries that have stood by us for many years.
Baroness Bennett of Manor Castle (GP)
My Lords, this is a short description of Australian farming:
“The introduction of a distinctly European agriculture in 1788 had a vast and extreme impact on the flora and fauna of Australia, with land-clearing, invasive species and foreign crop and livestock breeds degrading soil, water and vital ecosystem functions. Decades of continued land clearing and overgrazing coupled with industrialised farming methods have culminated into considerable challenges”.
In that context, does the Minister believe that, as chair of COP and, we hope, a responsible international actor, we should be encouraging more trade, particularly in beef and sheepmeat production, with Australia in those products, given their ecological and environmental climate damage? He referred to the impact assessment. Will it include a calculation of the carbon and ecological impacts of the trade deal?
Lord Grimstone of Boscobel (Con)
The noble Baroness always speaks with authority on these matters and I always listen to her carefully. I am happy to reassure her that trade does not have to come at the expense of the environment. Those two matters are not incompatible. I am pleased to report to noble Lords that we have worked with Australia to secure provisions on a wide range of environmental areas in this agreement, including preventing pollution from shipping and co-operating on addressing marine litter, including plastics and microplastics. We have committed to an environment chapter that will go above precedent, and both parties have confirmed commitments under multilateral environmental agreements, including the Paris Agreement. Noble Lords will see that in detail when the full agreement is available and the impact assessment will, of course, cover these matters. I hope that the noble Baroness will feel able to welcome that environmental chapter when she is able to see it in full.
Lord Balfe (Con)
My Lords, the Statement refers to what the world will be like in 2030, 2040 and 2050. One reality is that China will play a much more significant part and that the Pacific area needs defenders of democracy. This agreement must be welcomed and we should seek agreements with democratic countries in the region and on joining the Trans-Pacific Partnership. Can the Minister assure us that the Government will redouble their efforts to get those agreements?
Lord Grimstone of Boscobel (Con)
I am very happy to give my noble friend a full assurance on those matters. As noble Lords will be aware, we applied to the Trans-Pacific Partnership as to whether we could commence negotiations. It was pleasing that, as a multilateral group, it came back very quickly. Those negotiations are now commencing and I look forward to bringing their results before the House in due course, and when I do so it will absolutely meet the point that my noble friend is asking about. We will see that it is yet another agreement reinforcing British interests and benefiting British businesses and consumers.
Baroness McIntosh of Pickering (Con)
I congratulate my noble friend on negotiating this agreement but, before we get too carried away, our existing trade with Australia is 0.5% of our total trade and the increase will be 0.02%. He said that high standards of food production that farmers and consumers in this country are delighted to support will not be compromised. However, the Government are going further in their pledge to this country to impose even higher standards, yet we are going to accept beef produced in Australia, which travels much greater distances, which must surely increase its carbon footprint while not meeting our high animal welfare standards. Will he accommodate the request from the outgoing chair of the Trade and Agriculture Commission that any trade agreement be presented to the incoming commission well before signature and at the earliest possible opportunity?
Lord Grimstone of Boscobel (Con)
I thank my noble friend for that. I indeed looked into the question of food miles before this debate. I was pleased and slightly surprised to find that Australian farming methods are less carbon-intensive than ours in certain instances. As that is the case—it is, of course, subject to further analysis—it will more than compensate for the food miles point that my noble friend raises. As I said, there will be full time for this agreement to be scrutinised by our new Trade and Agriculture Commission.
The Deputy Speaker (Baroness Pitkeathley) (Lab)
My Lords, with apologies to the noble Baroness, Lady Ritchie, we have reached the time limit of 20 minutes. We now move to our next business.