Australia Free Trade Agreement
Baroness Hayter of Kentish Town
That this House takes note of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, laid before the House on 15 June.
Relevant document: 4th Report from the International Agreements Committee (special attention drawn to the agreement)
Baroness Hayter of Kentish Town (Lab)
My Lords, I thank and pay tribute to the very recent Trade Minister, the noble Lord, Lord Grimstone, who worked very closely and openly with the committee, not just to facilitate our access to documents and briefings and to answer our many questions, but to negotiate within Whitehall that very welcome exchange of letters on how future trade deals will be handled. Of course, his resignation, rather different from the other 60, except for that of the noble Lord, Lord Greenhalgh, took place on Friday, and was not to get rid of Prime Minister Johnson but was a result of Mr Johnson’s leaving. In the Lords, we always do something a little different.
Having gone through four Ministers when I was dealing with Brexit on the Front Bench, and having now lost a Trade Minister in my new role, I am beginning to take this slightly personally. However, I welcome the noble Viscount, Lord Younger, to the wicket. I hope that he found time during the Wimbledon finals—sorry, Australia—to peruse the 2,000-page document on the Australia deal, and that “team Grimstone” will be there to help him answer our many questions.
This debate is important for three reasons. First, and most obviously, it is the first time that this House has debated a new, post-Brexit trade deal which is not just a rollover from our EU days but is a from-scratch, non-European trade agreement. Secondly, it gives the House a chance to consider the deal within the Government’s wider diplomatic, defence, foreign affairs, environmental and domestic objectives—at least, it would be good to debate it within that context if only the Government had set out a trade policy which went wider and beyond the nebulous “global Britain”, which is simply about more trade. Thirdly, again from it being a novel agreement, and the first since 1973 for which our Government have had responsibility and come to our committee, it gives the House the opportunity to consider whether our ability and our powers to scrutinise negotiating objectives and the resultant deal are sufficient for the task given to us.
Beginning with the first of those points, the actual deal: how do we assess it? The International Agreements Committee welcomes the agreement, especially the provisions facilitating trade in services, including financial and legal services; mobility; digital; consumer protection; and its support for SMEs. In particular, improved mobility for UK professionals seeking to work in Australia, a new framework on mutual recognition of professional qualifications, and the ban on data localisation, are all likely to be beneficial. We note, as the Government acknowledge, that the expectations of increased trade are not enormous—0.08% of GDP by 2035—and only very slight in goods, given that existing Australian tariffs are already very low.
However, the deal has other advantages, not least in helping pave the way for the UK’s potential entrance into the CPTPP. It was right for the Government to prioritise Australia as a segue into that. However, we queried whether the desire for speed reduced the chance of obtaining more from the negotiations, and we highlighted the fears of many in our farming communities, particularly in Wales, Scotland and Northern Ireland, that they may have been sold short, with safeguards for their produce insufficient for the new competition they could face, particularly given the differences in Australian farming practices.
It is true that Australia’s focus on Asia might mean that our farmers will be insulated from competition from this deal, but there is a fear that the unconditional approach to removing agricultural tariffs could set a precedent. If a similar approach with the US, Brazil or Argentina had a cumulative effect, it could be damaging to our farmers and our wider agri-food sector. Although the TAC and the FSA/FSS—food standards and all of that—did not raise any significant worries about food standards and safety, the impact of increased competition on vulnerable farming communities remains of concern.
More time in negotiating might also have enabled our negotiators to obtain more on climate than is in the deal with what is now, of course, the former Australian Government. Given that the new premier and his Government are far more sympathetic to tackling climate change, we have urged Ministers to seek more ambitious moves in this direction through the joint committee set up under the deal. More generally, the desire for a quick result, and with a trusted ally, might have led to Australia’s very clear trade objectives and focus giving them a better deal than perhaps we could have obtained.
I turn to my second point. Given that this is the first deal negotiated from scratch, it provides an insight into the Government’s vision for post-Brexit trade. However, the committee finds it regrettable that the agreement cannot be placed in the context of a published trade policy and thus be understood in relation to other policy priorities, such as on climate, or in line with our diplomatic or defence alignments, or indeed with the Government’s own desire to safeguard their right to regulate for public policy reasons, including the promotion of public health and morals.
Since all trade deals involve trade-offs and compromises, Parliament needs to be able to judge the outcome of any FTA against the Government’s overall objectives, but these need to be set out in an agreed policy with Parliament and made publicly available. We asked Ministers a year ago to set out their ambitions for trade in this new era. Without such a framework, Parliament cannot judge the success or otherwise of a trade agreement. The Government demurred, leaving us scratching our heads as to the extent to which any outcome meets the Government’s wider objectives for their trading partnerships.
This may not matter so much with Australia—it is a friendly nation and a close ally, with which we already have extensive and pretty much free trade—but not all future deals will look like this. Following the invasion of Ukraine, with its impact on global security, food security, supply chains and vulnerabilities, just-in-time processes, our environmental commitments, and the need for strong, resilient relations with friendly states, such an overarching framework is even more urgent. Furthermore, as Russia, perhaps alongside China, has devalued any commitment to a rules-based global order, on trade or anything else, the UK needs to ground its trading and international relations firmly in a trusted, ordered and rules-based environment. That is what we need the Government to spell out.
Our committee is not alone in seeking a proper trade framework. The International Chamber of Commerce says that the UK has an opportunity to design a trade policy that creates an economy that is prosperous, fair and green. It should not be difficult for Ministers to lay out their trade ambitions, acknowledging their wider global objectives. Much is scattered around among various official documents listing the Government’s commitment to universal human rights, the rule of law, fairness and equality as guiding
“all aspects of our international policy, including our approach to trade”
—so they say it sometimes, but not in that framework. Indeed, the DIT’s strategic approach for a deal with Mexico highlights its commitment
“to uphold … high environmental, labour, public health, food safety and animal welfare standards”
and the interests of “consumers, producers, and businesses”.
Given the annunciations emanating from Anne-Marie Trevelyan, why the resistance to publishing the objectives and red lines as a trade policy? Such a benchmark would help us understand how the emerging agreements with individual American states, such as the one with Indiana, and those with India and the Gulf fit into the picture and embed respect for human rights and the environment within them. Without a trade policy against which we can rank any deal, what exactly are we are meant to conclude?
Thirdly and lastly, in this new trading environment is our committee, on behalf of the House, able to scrutinise trade deals effectively? The answer is yes and no. In the case of Australia, the Government gave us three months with those 2,000-odd pages—delivered to me on Boxing Day—to study, take evidence and report, but the Act requires only 21 sitting days. That is impossible for any trade deal. We would like the Minister to give us an assurance that months, rather than days, will be available to us to do the job we have been given.
In addition, we are uncomfortable as to whether the devolved Governments have sufficient input into trade agreements that impinge on their competences. We also lack environmental impact assessments. Indeed, we do not have sufficiently granular impact assessments even to judge the Government’s projected outcomes, let alone to test these against other data or to hear from independent analysts of the likely impacts.
Above all, of course, the Lords can only opine on a deal. Even the Commons can only delay ratification. This is far less traction than the European Parliament, the US Congress or other legislatures have. Yet if parliamentarians are excluded from greater oversight of agreements with major impact on people’s lives, we risk worsening public concerns about trade impacting negatively on some sections of society. If we believe in free and increased trade, as we do, any lack of trust in it cannot be a good thing.
While we welcome the Grimstone rules and the Grimstone commitment to a debate on negotiating objectives, which we saw in action on CPTPP and expect to have with our report on India, that offer came too late for this set of negotiations. We hope to have greater input in future. We are delighted that this first opportunity to report to the House is on a deal with a friendly, reliable ally and that the agreement, with some hiccups, is one we can endorse. I thank our committee and secretariat for the amazing work they have done on this, and the witnesses for their input and insight. I beg to move.
The Duke of Montrose (Con)
My Lords, I offer congratulations to the noble Baroness, Lady Hayter, on securing this debate. I am sure that anybody who has read the report will have something to say about it. I declare my interest as a member of the NFU in Scotland, a former president of the National Sheep Association and a long-term sheep farmer.
The UK-Australia Free Trade Agreement has, inevitably, been a baptism by fire for the Trade and Agriculture Commission. The fact that the International Agreements Committee’s report, including at paragraph 70, states that its findings in a limited number of areas were mainly positive makes one wonder whether it has an adequate remit to do the job that we expect of it. The briefings I have had from several agricultural bodies said quite the opposite. In its call for evidence from the agricultural community, the TAC’s main question was whether the agreement would affect the maintenance of the UK’s regulatory standards in animal or plant health, welfare or environmental protection. From that, it appears that we have is a regulation and agriculture commission and not a Trade and Agriculture Commission. Would my noble friend the Minister not agree that the remit should ensure that greater emphasis is placed on trade for any future reports?
The only reference to agricultural trade that found its way into the report we are debating today is the government estimate that the agreement would lead to a 0.07% drop in gross value added for agriculture, forestry and fishing. Then it mentions that the fall expected in the price of beef and sheep products is up to six times that value. As far as I can see, most sections of the agricultural industry have made their excoriating views known whenever they had a chance. The NFU’s brief sums it up by saying that it is a one-sided deal, with Australians achieving all that they ask for and British farmers sacrificed for political gain.
There are great misgivings at the promise of achieving a zero-tariff regime for this and subsequent trade deals, though presently it will be cushioned by a 16-year lead-in period. Even in our agreement with the EU, where we have a much more level playing field, if we exceed our tariff rate quota for beef, I believe we would be subject to a 20% tariff. Can my noble friend the Minister say whether the most favoured nation rules of the WTO will mean that any agreement hereafter with other countries will be required to follow this pattern, or will zero tariffs be the rule?
The report states that the Trade and Agriculture Commission’s findings were mainly positive. This might be true for the criteria at the level of carcass meat imports we can expect from Australia, but it may not take long before we see producers beginning to press for more of the animal welfare and climate change standards that apply in that part of the world to apply to our production here. I will give two examples. First, our animal health standards are enforced by law. In Australia, at the federal level, they have only non-binding guidelines. In the deal, we have undertaken not to go back on ours, so their animals in fields do not have to be checked every day, whereas we have the cost of doing so. Secondly, in the agricultural community we have been subject to constant reductions in animal transport times and distances, as many noble Lords will know, so that some areas cannot sell their stock unless they break the journey for livestock with an enforced rest period. The RSPCA found that in Australia sheep and cattle are transported for up to 48 hours in hot weather, sometimes without food or water, to mention only two of the anomalies. What hope can my noble friend the Minister offer that the Australians will be anxious to move towards our restrictive practices when they are quite happy with what they have now and the agreement states clearly that they should be under no obligation to do so?
The same thing applies to our regulations and undertakings on environmental issues. When I attended the COP 26 in Glasgow this summer, we were treated to a stream of UK Ministers and under-Ministers telling us that the country was going to be in the forefront in achieving the Paris Agreement, and telling everyone else that they should do so. Yet when we come to conditions for an agreement on investment and services, all that flies out the window and we have an agreement at the level we see in this treaty.
Lord Oates (LD)
My Lords, I declare my interest as a member of the UK hydrogen commission. It is a pleasure to speak in this debate and, as a member of the International Agreements Committee, I pay particular tribute to our chair, the noble Baroness, Lady Hayter, and to our committee clerk Jennifer Martin-Kohlmorgen and her team for producing such an informative report.
I regret that the noble Lord, Lord Grimstone, has stood down from his ministerial post, although, like the noble Baroness, Lady Hayter, I am surprised that it was because Boris Johnson was leaving rather than because he was staying—a decision entirely beyond my comprehension, I have to admit. Nevertheless, the noble Lord was a capable Minister who engaged constructively with our committee, and we will miss him in our deliberations.
I intend to focus most of my remarks on the environment chapter of the Australia FTA but, before I do so, I want to touch briefly on the wider context of the deal and the circumstances in which it was concluded. We are debating this free trade agreement against the backdrop of a catastrophic decline in the UK’s trade performance. Just last month, we learned that the current account deficit stood at a staggering 8.3% of GDP in the first quarter of 2022—the worst figures ever recorded. This has further weakened sterling and added to upward pressures on inflation.
As Howard Dean, the former candidate for the Democratic presidential nomination, once remarked:
“Unfortunately, ‘I told you so,’ is an incredibly unsuccessful campaign slogan”.
Of course, he is correct, yet the Brexiteers in this House and the other place cannot be allowed simply to slip away from the devastating consequences they have inflicted on our country and its economy; nor is it any good for them to try to blame Covid for our woes, because our trade performance is shocking not only in absolute terms, it is even more so in comparative terms. The Government’s own assessment predicts that the UK-Australia FTA will have a positive impact on GDP, as we heard from the noble Baroness, Lady Hayter, of 0.08%. This is a welcome, albeit modest, contribution to our national wealth but it hardly lives up to the deluded imperial nostalgia of the Brexiteers, who seem to think that the old empire was just waiting to fill the trade gap left by Brexit.
The biggest impact of the FTA, as we heard from the noble Duke, the Duke of Montrose, will be found in agriculture, where tariffs will, in effect, be removed altogether, albeit with some emergency brake safeguards. The clear beneficiary of this part of the deal is Australia because it is a major agricultural producer gaining access to a much bigger market, and because UK farmers already had tariff-free access to the Australian market. Of course, all trade deals are trade-offs and, I hope, mutually beneficial ones. But with such a major concession on offer to Australia, it is regrettable that the UK conceded a potentially strong negotiating position by making its desperation for a deal so glaringly evident.
One area where we could and should have insisted on more progress is in relation to the environment chapter. There were certainly positive aspects to this chapter—for example, as the report notes, the RSPCA’s evidence to our committee stated that the language on the conservation of marine ecosystems was particularly good—but, none the less, stakeholders viewed the chapter overall as, at best, a missed opportunity.
Certainly, the contrast between the respective chapters in the New Zealand and Australia FTAs, which is highlighted in our report, is stark, particularly in respect of fossil fuel subsidies, carbon pricing and trade in environmental goods. Notably, the Australia chapter does not include specific reference to the temperature goals of the Paris Agreement, which, it is reported, were taken out on the insistence of the then Australian Government.
Although the UK’s impact assessment finds that UK-based production emissions should remain largely unchanged, our Government do not seem to have taken enough account of the dangers of carbon leakage and the reliance of the Australian power sector on dirty coal. As the noble Baroness, Lady Hayter, has said, we urged the Government in our report to take advantage of the election of the new Australian Government to look at this chapter again.
The evidence we received from a range of stakeholders indicated concerns about the precedents that this FTA could set in future trade agreements with trade partners with low environmental standards, such as the United States and Brazil. The lack of an overall trade policy means that the Government do not seem to be gaming the impacts that concessions to achieve quick-fix FTAs such as this one will have on our future negotiating position. It is hard to imagine the US, for example, agreeing to a future trade deal that had more onerous environmental demands that those agreed with Australia.
In addition, the Government did not take advantage of the opportunity to conclude agreements on green technology and on green energy co-operation. One area we might have looked at is green hydrogen. This is an area where mutually beneficial agreements might have been arrived at, given that the UK is the home to cutting-edge technology—we have in Sheffield ITM Power, which is one of the world’s leading manufacturers of electrolysers used in hydrogen production—and Australia has huge interests in hydrogen production through solar and wind. But these sorts of opportunities seem to have fallen victim to the desire for a quick deal, rather than a comprehensive deal.
Given that the UK’s net zero commitment is a legally binding obligation on our Government, it follows that it must be their central policy objective over the years to 2050. But somebody needs to inform the trade department of this fact, so that environmental objectives are not seen as a “nice to have” but are regarded as central to our trade policy.
As a liberal free trader, I conclude by welcoming this trade agreement, despite its flaws. However, I hope that as this is our first full trade deal post Brexit, the Government will take the time to absorb the negotiating lessons they have learned, and in particular that they will recognise the need in future not to appear such an eager, if not desperate, suitor. I hope that in his reply, the Minister will reflect on which lessons the trade department intends to take on board as a result of these negotiations—the first, as the noble Baroness, Lady Hayter, said, conducted by a British Government since 1973.
I hope the Government will also recognise that improving our trade position will require much more than a flurry of quick-fix trade deals. It requires an overarching policy—as the noble Baroness, Lady Hayter, stressed—that has a strong focus not just on concluding trade agreements but on trade promotion and building the enduring relationships with business and with countries around the world that help sustain and nurture trade and investment. At the moment, too many nations regard us as an unreliable partner, unwilling to enter into real partnerships or engage on equal terms.
Our country and economy are in deep, long-term trouble: productivity is stagnant, GDP growth is anaemic and in the G20, only Russia’s economy is predicted to fare worse than ours. Our trade position has deeply deteriorated. None of this will be fixed by the fantasy economics that most of the Tory leadership candidates seem determined to peddle. Unless we are able to restore our trade position and provide a concerted solution to the structural problem of low productivity, we will find ourselves an ever-poorer and more unhappy country.
Baroness Liddell of Coatdyke (Lab)
My Lords, I draw attention to my entry in the register. I am involved with a number of Australia-facing organisations, not least as a non-executive director of the Australian Chamber Orchestra. Having said that, I do not look at the situation of our trade deal with Australia through rose-tinted spectacles—I will come to that later. I pay tribute to our chair and our previous chair, the noble Lord, Lord Goldsmith, and to the team of civil servants and advisers who have helped with the complexity of this—we are doing these trade deals for the first time in a very long time.
A week is a long time in politics. The shenanigans of the past week affect all of us, and it is not for me on this side of the House to cast aspersions elsewhere, because everyone who is involved in the political process has suffered as a consequence of what has happened over the past few weeks. This spotlight on British politics affects all of us: there are questions about professionalism, integrity and competence. Every one of us now has to show that we live by the Nolan principles and that our partners can deal with us, knowing that we are not just competent but ethical, which is why we have to adopt a serious and informed view of trade deals such as this.
I want to get rid of the hyperbole that has surrounded the publication of this deal. It is historic—okay, it is the first one, so that is fair enough. But, frankly, if a Conservative Government in the United Kingdom cannot not do a deal with a Conservative Government in Australia, no doubt with some Australians who have a right to British citizenship—more of that later—they should give up the ghost.
Hyperbole comes up when we discover how much has been left out of the agreement. Previous speakers’ points on the climate emergency—notably those of the noble Lord, Lord Oates—and the problems with animal welfare brought up by the noble Duke, the Duke of Montrose, are really serious. I agree with much of what the noble Duke said; standards are lower.
I will tell a funny story that my colleagues will know. I made the point that we have limits on how long a beast can travel for. As the noble Duke, the Duke of Montrose, pointed out, a beast can travel for 48 hours in Australia in heat above 40 degrees, which makes today’s weather here seem cool. The response was: Australian cows are tougher than British cows. I thought that that was a joke, and it was perhaps a mistake to laugh at it. It is also extremely interesting that one of the big holes in this deal is climate change. The deal was done with a climate-sceptic Government, but that Government no longer exist: they were voted out to a very large extent because of the position they took on climate change.
Returning to hyperbole, it is important to note that Australia is 10,000 miles away and has a population of about 25 million, so the impact it can have on our economy is limited. My noble friend—and he is a friend—Lord Goodlad has a postcard that shows the United Kingdom as part of one county in New South Wales. It is a huge country with economies of scale, particularly in relation to agriculture, that we cannot even conceive of. I agree with the point made by both the noble Lord, Lord Oates, and our chair that GDP is estimated to go up by 0.08% by 2035. That is £2.3 billion, which the MoD and the Scottish Government could probably spend in a morning. These are not the kinds of sums that we are looking to see coming back to our economy.
Throughout all our hearings, the NFU has been particularly critical of this deal, bearing in mind the economies of scale that Australia can have. The Government claim that UK consumers prefer British products. Well, if you go into a shop and only have a pound to spend because of the cost of living crisis, you are not going to spend it on British products sold at £2; you are going to have to buy what you can afford. This is one of the consequences of the cost of living crisis: people are not able to choose what they want; they must buy what they can afford. The growing cost of living crisis will affect that. The real fear among farming communities is that the Australian deal could undercut the UK industry, especially if Australia is frozen out of Asian markets. That could happen; there is an intense dispute between Australia and China, and a real risk that Asian markets could be opened up. Why did the Government not insist that increased access to the UK market should mean adherence to the core standards that the noble Duke, Lord Montrose, talked about on the environment and animal welfare?
Back to hyperbole again: I am sceptical about the CPTPP—the trans-Pacific partnership. This deal has been done with countries that have agreed to a set of principles not all of which are aligned to what we in Britain would seek to have. Also, it is at the other end of the world, and we are joining it because we left our neighbours. Our neighbours were in a deal to which we contributed, and now we are saying, “We want to sign up to the CPTPP”. I will have to get a whole lot of new evidence that the CPTPP will work for us, and that we will be accepted into it. The deal on acceptance may be completely different from anything we can sign up to.
During the negotiating period, the UK signed up to AUKUS, the nuclear submarine deal. Where will that fit into this deal? The rumours are that the US will get the lion’s share of contracts.
One of the most exciting things that has happened in the past six weeks is that the new Government in Australia are not climate-sceptic. Has contact been made with the new Australian Government to reopen the discussions on climate change, maybe even getting them to commit to limiting the global average temperature increase to 1.5 degrees centigrade? Here, as in Australia, no Government can bind their successor. That is something we should be moving on now, and not at some point far into the future. The Rudd Government signed the Kyoto Protocol within days of being elected in the mid-2000s; why could the Albanese Government not have been asked to reopen the climate change sections that are so absent from the existing deal?
Coal is a driving force in Australia. In the UK, we are establishing a real lead in carbon capture, storage and use. Years ago, development programmes took place in the Latrobe Valley in Victoria. Why is that not included in the deal? Some years ago, a carbon capture and storage international programme was started in Australia, long before the climate-sceptic Morrison Government came on the scene. There are opportunities there for British business, and I should say that I am president of the Carbon Capture and Storage Association here in the UK. We are in a position where we can move into the leadership on carbon capture and storage, and there are many jobs tied up with it.
Noble Lords will be delighted to know that there are some parts of the agreement that I am actually very happy with. I am very happy with the professional services deal, and hope that many new opportunities will open up to British business. We benefit particularly here in London from many Australian professionals, many not needing visas as they have dual nationality, which is very popular in Australia—except in Parliament where only Australian citizens may sit. Frankly, the Home Office has a very busy time before elections while everybody who is a candidate revokes their British citizenship, and a very busy time after elections when those who have not won go and take up their British citizenship again.
That is how close the relationship is and I hope it is something we can build on; it is one area where hyperbole is uncalled for. With Australia we are among friends, as the noble Baroness, Lady Hayter, pointed out. But the flowery language used to justify a trade deal that could have been so much better is uncalled for. Now with a new Government in Australia, it is time to get that deal augmented without resort to hyperbole. It is a deal that we can work on, but the Government need a commitment to look hard at what Britain really needs, not headlines about doing the first trade deal.
Lord Kerr of Kinlochard (CB)
It is a pleasure to follow the noble Baroness, Lady Liddell. She is always trenchant and always expert and was extremely popular in Australia when she was high commissioner there; she is popular at this end too. I follow her part of the way. I certainly follow her in her tribute to the noble Baroness, Lady Hayter, for conducting our debates with such skill and style and, as usual, pinching all the points I was going to make today—although I am sorry to tell the House that I will make them all the same.
I pay tribute to the noble Lord, Lord Grimstone of Boscobel, whose dialogue with us, although it was not always very deep, was carried out with impeccable courtesy at all stages. I also had the feeling that he might know what he was talking about and that he might have liked to tell us a bit more than he was allowed. I hope that he will be back in order that I can test my theory.
If this report is a good one, and I think it is, that owes a great deal to the help that we in the committee had from our clerk, Jennifer Martin-Kohlmorgen, and our policy analyst, Andrea Ninomiya. My thanks to them.
I am less critical of this agreement than most of those who have spoken so far. The key point to make for perspective is that it is no big deal. The Government themselves maintain that its economic effects, although probably positive—trade liberalisation usually is—will be extremely marginal. In my view, it is not a bad deal; liberalising is generally a good thing to do, and there are genuine gains in this agreement for UK exporters of services.
On goods, of course, there is absolutely no doubt that the deal massively favours the Australians, principally because their own tariffs were already very low. It was hailed in Australia as splendidly asymmetrical, and their negotiators were congratulated on achieving the impossible. They believe that the greater market access that they have secured here for their agriculture producers will result in economic gains to them—so they share some of the views that the noble Duke, the Duke of Montrose, put forward. They would argue that the hill farmers in Scotland, Wales and Northern Ireland are right to be concerned about this deal. I think that the hill farmers are right to be surprised about it, because there was no attempt to prepare the ground—it came as a shock to them—but I do not believe that they will be hard hit in the end because, for Australia, the Asian market will always be the principal one for farm products. It is a pretty inexorable rule in trade in goods that trade halves as distance doubles. Overall, this deal is no big deal but no bad deal.
I would hope that the Minister in replying to this debate would be briefed to reply to some of the questions that we raised in our report. The two that I would particularly like to hear an answer to are the questions that we asked in paragraph 34 on data adequacy and in paragraph 42 on investor-state dispute settlement, where the policy of the Government simply is not clear to me. But my concern about the agreement was more about what it did not say than what it did say, and more about the unsatisfactory features of the process that produced it.
I shall make three points, one specific, one general and one purely about process. First, on the environment chapter, of course the noble Baronesses, Lady Hayter and Lady Liddell, and the noble Lord, Lord Oates, are right that the environment chapter is extremely disappointing. I agree with him that the contrast with the New Zealand deal is quite striking. The New Zealanders signed up to work with us on carbon pricing and reduction of fossil fuel emissions, but there is nothing comparable in the deal with Australia. Yet, as has been discussed, in other parts of the agreement we conceded quite a lot to the Australians; they are not necessarily very damaging, but those concessions were seen as considerable in Australia. I do not know what price we got for them, but it certainly does not look as though we got a price in the environment chapter.
I do not understand why we pressed ahead to do the deal with the Morrison Government, who had demonstrated at COP 26 that they did not attach a very high priority at all to reducing carbon emissions; they attached a higher priority to maintaining a massive coal export industry. As the noble Baroness, Lady Liddell, said, the polls showed that the Morrison Government were in trouble and an election was coming up, and the wildfires had caused the Australian public to be more concerned about global warming and emissions reduction. Maybe we did try to extract a price—but why did we give up? Why did we not wait to see whether the polls were correct and the Labor Party were going to come in with a very different approach to environmental policy? I do not know the answer to that; it looks like a mistake, but I hope that the Minister can elucidate.
Of course, it is not possible now to make our concessions in this agreement contingent on Australian action on the environment—the deal is the deal, it is written down and there is nothing we can do about it. One of the oddities of our scrutiny system is that we are allowed to debate it only when we can do nothing about it; still, that is where we are. I echo the noble Baronesses, Lady Hayter and Lady Liddell, and the noble Lord, Lord Oates, in saying that I hope we are, nevertheless, in discussions with the Albanese Government about whether, in addition to this agreement, there can be some new UK-Australian agreement to work together on climate change.
My general point springs directly from that specific one. I do not know—I do not think any of us knows—what view the Government take on linking trade deals to wider non-trade policy objectives. We do not know because the Government have not published a trade strategy or any hierarchy of priorities. We can deduce one or two things. We can deduce from what has been said in other contexts that the Government’s number one priority in trade deals is securing greater access for service exports. I do not disagree with that. We can also deduce from what has been said in other contexts that the Government would not do a trade deal with a country demonstrating egregious contempt for human rights—okay. That is about as far as we can go, I think.
I was puzzled to hear the outgoing Prime Minister saying in April that he wanted a full free trade agreement with India done and dusted by October—with remarkable speed. In other words, there was no question of any linkage with Prime Minister Modi’s policy on Ukraine. The Indian Government refused to criticise the invasion which happened in February or to join in any sanctions, yet our Prime Minister in Delhi in April was saying, “Let’s go steaming ahead and do as wide a free trade deal as we can by October.” I genuinely think that the Government need to tell us to what extent trade policy is to be joined up with foreign policy, environment policy, energy policy, human rights policy or development policy. I think, and I think the general view in this House is, that they need to be mutually supportive. I am a free trader, but I do not think that trade liberalisation can be ring-fenced overriding all else. Napoleon was wrong: we are not just a nation of shopkeepers, but we need to demonstrate that with a strategy that links our trade objectives to wider objectives and sets out a hierarchy of priorities.
My last point is that chapter 8 of this report points out that something is still not quite right in our trade negotiators’ relationship with the devolved Administrations. It is well illustrated by the alarm in Edinburgh, Cardiff and Belfast about the tariff reductions on farm products, which so alarmed the noble Duke, the Duke of Montrose. The Welsh Government told us that
“as the setting of tariffs is a reserved matter, limited information is shared with Devolved Governments and we were unable to have meaningful discussions with UK Government on this issue … This lack of discussion makes it difficult for us to ascertain whether our interests in this area are being protected as negotiations progress.”
That is a very fair point and I think the UK Government owe the Welsh—the Scots say much the same—an answer. The friction with the devolved Governments was clearly not a priority for the outgoing Prime Minister, but I hope it will get more attention from his successor and that the Government will drop the absurd objection, encapsulated in paragraph 147 of our report, where they say that
“sharing information on tariff liberalisation … could jeopardise overall negotiations.”
That is the reverse of the truth; it is not just wrong, it is absurd. It is extremely useful for a negotiator to be able to point out that a proposed concession could cause serious problems back home; it is extremely useful if one wants to reject it and even more useful if one aims to extract a higher price for it. Having an informed instructing constituency back home strengthens one’s negotiating position; it does not weaken it. It also avoids surprises of the kind that clearly struck the hill farming community when the deal with Australia took place.
I believe that the devolved Administrations should have been represented in the negotiating teams that negotiated with Australia, at least on farm products. They should be represented in the teams that negotiate—if such negotiations happen—on agriculture with Canada, Mexico, Uruguay, Brazil and, of course, the United States. These countries—which are much closer—will offer much greater competition to our farmers if tariffs come down. It would also make sense for wider reasons: to heal this running sore in Whitehall’s relationship with Belfast, Cardiff and, particularly, Edinburgh. I am sure that the noble Viscount, Lord Younger, will take this point on board more than most, and I very much hope that he will take it back to Whitehall.
Lord Robathan (Con)
My Lords, it is a great pleasure to follow the noble Lord, Lord Kerr, with whom I used to sit on this committee. We sparred a little; he particularly did not like my suggestion that smoking in the committee should be banned, even when it was on Zoom. But never mind—I think other members of the committee will understand that.
I, like him, am broadly philosophically a free trader—not totally, but broadly philosophically one. I thought I would be the first person speaking in this debate to welcome the free trade agreement but the noble Lord, Lord Oates, welcomed it, albeit with quite a few reservations. I do welcome it, wholeheartedly. The report, which I have read is mostly—this is not meant to be condescending—extremely sensible and raised some very reasonable points.
I was on the committee at the beginning of the investigation. It was extremely well chaired by the noble and learned Lord, Lord Goldsmith, and I regret that he has felt the need to stand down from the House of Lords because of rather controversial issues about declarations. I thought he was a really good chairman and extraordinarily balanced. I am sure the noble Baroness, Lady Hayter of Kentish Town, is similarly balanced and a good chairman, but I have no experience of that.
I shall just explain why I left the committee, which is slightly illustrated by this debate. I left because I was too often the sole voice on the committee who wanted the trade agreements to work. I am afraid that too many on the committee wanted to see post-Brexit trade deals fail because they wanted Brexit to fail. I found this extremely sad because I am interested in the good of this country, not in party-political—or whatever—machinations.
This UK-Australia trade deal is far from perfect—we have heard about a lot of the defects in it—but please show me a free trade agreement that is perfect. When we were in the European Union, the EU agreements were extraordinarily torturous and slow, often reaching no conclusion at all, not least because they were trying to satisfy 26 or 27 members of the EU. They were looking after French farmers, for instance, which is more important in the EU than the benefits of a free trade agreement to consumers and society as a whole.
I am a farmer, as declared in the register of interests, and I know things can be very hard. However, interestingly—I would like my noble friend to confirm this when he sums up—I understand that the current quotas of beef and lamb imported into the UK from the antipodes are not nearly filled, so this free trade agreement will not make things worse. I have to say that some of the arguments being advanced have echoes of the corn law debates.
The common agricultural policy—of which we all have experience in one way or another—is very expensive, extremely disruptive to agricultural communities and, frankly, madness. Surely it is better to be out of that. I would love to hear somebody among those who will speak later defend the common agricultural policy. It has hugely harmed the agricultural sector in so many ways—I agree that perhaps it needed sprucing up, but, nevertheless, it really has.
Climate change has been much mentioned. I have been banging on about climate change and environmental issues since I got into the House of Commons, 30 years ago. When I first mentioned climate change, it was thought to be a rather eccentric obsession; it is not anymore. However, I have to say that the report is somewhat nitpicking on the issue of Australian coal. I agree with the sentiment, but those with nostalgia for our imperial past may not have realised that Australia is a sovereign country now, not one of our colonies, so it is up to Australia to decide what to do. Yes, we can lobby for it, but hold on, how many of us are not wearing something—in my case, it is my socks and shirt—that were not made in China?
Lord Robathan (Con)
Are the noble Lords sure? They should check where their shirts were made—or perhaps they are Jermyn Street only.
China is belching forth fumes from coal-fired power stations, yet we have the belt and road initiative pouring goods into our country from China. We do not very often hear people saying, “Well, we can’t possibly let those in because the Chinese are using so much coal”.
I am going to tell one illustrative story about the committee, which perhaps explains why I left. Tony Abbott seems to have fallen by the wayside, but he was touted as an adviser. At one meeting, this was mentioned, and he was roundly slagged off for not knowing anything and, even worse, for being conservative. I think it was the next week that George Brandis, the high commissioner, came to speak to us. I had done a bit of research and knew that George Brandis had been in his Cabinet, so I asked—innocently, as always— whether he thought that Tony Abbott’s advice could add anything to our free trade agreement. He said, “Tony Abbott? Fantastic guy; absolutely brilliant. He knows so much about trade”. If it is possible on Zoom to see crests falling, I can promise your Lordships that there were a lot of crestfallen faces around.
In summary, I found being on the committee a less than edifying experience. I am sorry about that, because I thought it would be really interesting. However, I think the report is fairly balanced and makes some very good points. It is a pity that there was not greater enthusiasm in the report, or on the committee, for a free trade agreement, however imperfect, because, like the noble Lord, Lord Kerr, I think that free trade benefits everybody. The agreement was reached quickly—perhaps too quickly, indeed—but it was for the benefit of this country and its people, and for the benefit of Australia as well.
Lord Morris of Aberavon (Lab)
My Lords, I will restrain myself from commenting on the published taxation proposals of candidates for the Conservative leadership, save to say that Charles Dickens might have wickedly asserted that there was the smell of an Eatanswill election. I am pleased to tell the House that I am not aware of any personal taxation temptations in this agreement. However, this is an important agreement with Australia—the first trade deal, from scratch, post Brexit.
First, have we prioritised speed of the negotiation at the expense of the UK’s leverage to negotiate a better outcome for the environment? Could we have had some influence on Australia’s use of coal? Have the agreement and the report by the committee on which I served been overtaken by a change of Government in Australia? Will the Government use the joint committee to explore possible changes in the environmental and climate change provisions in the agreement? It is an important issue and the machinery is there, so do they intend to use it?
Secondly, although hitherto the amount of beef inputs to the UK have been small, there is no guarantee that there will not be an upsurge in the future. Are the provisions, criticised by the farming organisations and referred to in a trenchant speech by the noble Duke, the Duke of Montrose, sufficiently robust to deal with what may happen over the next 10 to 15 years? As in the report, I declare my non-financial interests in the occupation and livelihood of many members of my family.
Some Australian commentators have called the agreement a win-win result for Australian agriculture, with some envisaging the prospect of a tenfold increase in beef exports. Proximity and practice have meant that, hitherto, Far Eastern markets have been more attractive to Australia. However, I note a recent 38% decline in beef exports to China for political reasons. Have the Government taken this possibility properly on board? I would not wish, as a former MP and a representative of consumers for 41 years, to be unduly protective, but it is obvious to some that if this agreement is used as a template for an agreement with New Zealand, British agriculture could be adversely affected. It is beyond argument that there is nothing in this agreement for British agriculture, and I am sure that the noble Duke will agree with me on that.
My third point is more specific, on whether the agreement will be used generally for our entry into the CPTPP—the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Will it be the template for general negotiations? Frankly, I am much more concerned about the dangers of a substantial increase in New Zealand lamb inputs, however desirable this might be, to cushion gaps when our lamb is not available. As always, the danger lies in untimely, unregulated excessive imports. In the post-Brexit era, there is a case for a proper agricultural policy on imports which would both ensure the prosperity of British agriculture and take advantage of cheaper imports for the British housewife. I assert that livestock rearing is more important in the devolved nations than in many other parts. I compare the size of the average farming unit in the antipodes with those in this country; the advantage of size and climate should make us wary of uninhibited imports.
I again mention my dissatisfaction expressed in earlier debates with the degree and manner of the Government’s involvement with the devolved Governments—the noble Lord, Lord Kerr, has referred to this already—and repeat my rejection of the Government’s defence for not forwarding the views of those Governments because of the danger of jeopardising the Government’s negotiation with other parties. The committee has therefore been driven to seek the views of the devolved nations directly.
It is not on to operate in this way, when agriculture has been devolved and when any negotiations in this field can have a tremendous effect on the culture of the nations that I am interested in. The Government must start afresh by taking the views of the devolved nations into account. If they maintain the defence that that would jeopardise their negotiating position, could we not be told in confidence, and then the committee could make its proposals known so that the House could take a view? There is no basis whatever for this defensive attitude.
My last point is to welcome the Government’s commitment to produce monitoring reports of the agreement every two years, as well as an evaluation report after five years. I hope the House will consider my reservations about some aspects of this agreement.
Lord Bilimoria (CB)
My Lords, I paid full credit to the Department for International Trade for having rolled over more than 66 EU bilateral free trade agreements in time for the transitional period. As president of the CBI at the time, I was proud to play a role in making that, including the Canada deal, happen. The UK-Australia free trade agreement is the first the UK has negotiated from scratch since leaving the EU and was signed on 16 December here in the UK and, because of the time difference, on 17 December in Australia.
It will always remain to be seen how trade flows will be affected once implementation of an agreement takes place. I am sure the Government will agree that is it is one thing signing a free trade agreement, it is another ensuring that businesses in both countries make full use of them and are aware of all the provisions and improvements in the FTA. What plans do the Government have to communicate those benefits to businesses here in the UK, in particular? Organisations such as the CBI will have a major role to play in that.
I congratulate the noble Baroness, Lady Hayter, and the International Agreements Committee on its report, Scrutiny of International Agreements: UK-Australia Free Trade Agreement. It clearly states:
“Imports from Australia will lead to greater consumer choice, which is welcome. Consumers could also benefit from lower prices for imported goods.”
The Secretary of State, Anne-Marie Trevelyan, has described the agreement as
“historic … setting new global standards in digital and services and creating new work and travel opportunities for Brits and Aussies”.
Of course, it will help create new opportunities for businesses in both the UK and Australia.
For example, it gives guaranteed access to bid for an additional £10 billion-worth of Australian public sector contracts and allows young people—and “young” has been extended from 18 to 35—to work for three years unrestricted in each other’s countries. The New Zealand free trade agreement now also has this provision, which I am delighted to hear. For the first time, UK service suppliers, including architects, researchers, accountants, lawyers and scientists, will have access to visas to work in Australia without being subject to Australia’s changing skilled occupation list. This is more than Australia has ever offered to any other country in a free trade agreement. The big thing about this is that it removes all tariffs, making it cheaper to sell our products, including Scotch whisky, to Australia, and for Australian wines to come over here. So that is a big aspect, and I do not think people appreciate that the UK has traditionally been the second-largest services exporter in the world, so it is very important for us.
This is, in my view, the most comprehensive free trade agreement in the world. It covers many different areas, which I shall go into, including 32 chapters, from trade in goods to trade remedies, rules of origin, trade facilitation, customs procedures, financial services, investment, the environment, trade and gender equality, dispute settlements and an impact assessment—and it has the first-ever dedicated innovation chapter in any free trade agreement in the world, which is fantastic news.
The Government’s impact assessment estimates that this agreement could increase trade between the UK and Australia by more than 50%, representing
“around £10.4 billion in the long run”.
That is fantastic. Of course, this increase
“is driven by reductions in regulatory restrictions to goods and services trade, tariff reductions, income and supply chain effects as the UK economy grows.”
Other speakers have mentioned that the impact on our GDP is relatively modest, at 0.08%.
On the restrictions and concerns around agriculture, there is a 15-year phasing-in period for beef and sheep. Of course, as Anne-Marie Trevelyan said, this is
“only a small fraction of our overall beef imports. Just 0.1% of all Australian beef exports went to the UK last year. Also, it is relatively unlikely that large volumes of beef and sheep will be diverted to the UK from lucrative markets in Asia, which are much closer to Australia”.—[Official Report, Commons, 5/1/22; col. 66.]
It is important that we debate this agreement because it is a forerunner to future agreements. A New Zealand one has just been agreed, an India free trade agreement is being negotiated and other agreements are now being uprated. We are also starting to upgrade some of the 66 bilateral agreements that were rolled over from the EU, such as the one with Mexico, to make them bespoke to us. The CPTPP was also mentioned; I will come to it later.
When it comes to digital and data provisions, as the Lords International Agreements Committee asked, how will the Government
“ensure that UK citizens’ personal data exchanged under the agreement will be protected and offer commitments that digital trade provisions in future trade agreements will not put at risk the UK’s data adequacy decision with the EU”?
Can the Minister address that? The committee’s report also referred to the Trade and Agriculture Commission’s
“finding that the FTA is unlikely to lead to substantive increases of imports into the UK of goods produced to lower standards, including animal welfare standards.”
This will be a concern for many people. The committee recommended:
“The Government should continue to monitor the levels of”
items; for example,
“pesticide residue on imported goods from Australia”.
Do the Government agree?
There is a chapter on small and medium-sized enterprises. The agreement will be advantageous here, but how can we encourage SMEs to export more? At the moment, only 10% of our companies export; of those, only 14% are super-exporters that export more than 10 different products to 10 different countries. Compare that with a country such as Germany, where it is 40%. The export strategy is absolutely vital, and we need to do much more to promote exports.
Going back to my role with the CBI, I personally played a major role in helping this particular free trade agreement at various stages, including helping it get over the line. We worked with not only the DIT on our side but Dan Tehan, the Australian Trade Minister who was the vice-president of the CPTPP accession committee at that time, and, of course, His Excellency George Brandis, the then Australian high commissioner. We have similarly been working with the New Zealand Trade Minister and the New Zealand high commissioner, Bede Corry. This way of working—getting business organisations such as the CBI to help the Government get these deals over the line and bringing stakeholders face to face with both sides—has worked extremely well; I would recommend it for all future negotiations, including the continuing India negotiation.
The noble Baroness, Lady Liddell, expressed some scepticism about the CPTPP. I think that it will be a fantastic thing for Britain. It covers 13% of the world economy; if you include the UK, it is 16%. It gives the UK access to the fast-growing Indo-Pacific region. We will be with allies of ours. We will have huge benefits, including modern digital rules and the elimination of tariffs. Of course, as the impact assessment says, the Australian FTA is a big
“stepping stone to our accession to CPTPP”;
I imagine that the Government would agree with that.
It will allow us to eliminate tariffs on UK exports more quickly—for example, whisky can come down from 165% duty to 0% in Malaysia, and car duty can be reduced to 0% in Canada by 2022—if we complete these negotiations. These are huge benefits to us. We also have the rules of origin, allowing content from all CPTPP countries to be cumulated, so that if goods have at least 70% CPTPP content, they qualify for preferential tariffs. It is great that 70% can come from any combination of CPTPP countries.
What stage are we at now with the CPTPP agreement? Will we gain accession by the end of the year, which was the target? We already have, if we include New Zealand, bilateral agreements with nine of the 11 countries—leaving only Malaysia and Brunei—equating to £110 billion worth of trade with the UK. That is higher than China, which has just under £100 billion. This is one of the largest free trade agreements in the world and key to the success of global Britain. Its members are the fastest-growing economies in the world, with expanding middle classes, an appetite for British goods, products and services, and a respect for brand Britain. For the UK to remain competitive, it must position itself as a trading partner of choice in that region.
On the environmental provisions, the FTA refers to the Paris Agreement but has been criticised for the lack of explicit reference to limiting the global average temperature increase to 1.5 degrees.
Can the Minister provide some clarity on the interaction between the Northern Ireland protocol and the FTA? It appears that exports from Northern Ireland to Australia will benefit from the FTA but that there are complications with goods entering Northern Ireland, including from the UK. This is further complicated by the protocol. Please, will the Government sort out the Northern Ireland protocol? Let us deal with the practicalities. I have visited CBI members on the ground in Northern Ireland. They just want to get on with it and get this protocol resolved using a practical mindset, because once we resolve the protocol, we can work on the biggest trade agreement that we have, which is with our neighbour on our doorstep. Some 45% of our trade is with the European Union, and the trade and co-operation agreement needs to be upgraded in a huge way, which we cannot do unless we sort out the protocol. Similarly, the Horizon project, which was so valuable for research between European universities and British universities, is under threat of being lost unless we sort out the protocol. There is an urgency over there.
The United Kingdom published our first integrated review on 16 March 2021. It talked about a tilt to the Indo-Pacific. Policy Exchange, of which I am proud to be a trustee, was ahead of the game. It produced a report, A Very British Tilt: Towards a New UK Strategy in the Indo-Pacific Region, in November 2020. It is so sad that the foreword of that report was written by the late Shinzo Abe.
Professional services and the recognition of qualifications in the FTA are hugely important, providing a pathway towards a mutual recognition of professional qualifications, which, again, would be very useful for our services exports. On legal services, it provides an agreement allowing UK and Australian lawyers to advise clients. If only we could have this in the India free trade agreement as well. Temporary entry for UK businesspersons is very useful for us, as is youth mobility, which I referred to. The agreement also includes provision on market excess for investors. Digital trade is covered, which is fantastic, as well as digital facilitation, data governance and data protection, technologies in data innovation, and consumer protection. It also has a very strong intellectual property chapter—again, I advise that we have the same in the India deal—and covers procurement, and the areas of beef and sheepmeat that I touched on earlier.
That said, the Government’s impact assessment shows a negative effect of the FTA on agriculture, forestry and fishing, and the semi-processed food sector. Do the Government agree? This is why the FTA is generally regarded with concern by the farming sector. The NFU warned that the agreement could have a significant impact on UK farming, with livestock and sugar particularly affected because of the lower cost of production in Australia compared with the United Kingdom.
Security and trade go hand in hand. Australia is a member of the Quad, along with Japan, the United States and India. I have suggested that the UK should join the Quad, making it Quad Plus, thereby encircling the world. We have AUKUS as well.
The speed of this deal was fantastic—one year, or one and a half years by the time it was signed. India signed deals with the UAE and Australia in under 90 days, but they were much lighter in content. It is very important that we do this thoroughly, and we have done that here.
Finally, trade deals such as this are all very well, but we must continue to be a magnet for inward investment as a country. We cannot do that if we have the highest tax burden in 70 years. That also comes into play. All in all, I am all for the deal and I congratulate the Government on securing it.
Baroness McIntosh of Pickering (Con)
My Lords, I am delighted to follow the noble Lord, Lord Bilimoria. I wonder whether his asking for lower taxes was his pitch to be the next leader of the Conservative Party.
I will start with the noble Lord’s comments about the Northern Ireland protocol. Clearly, it needs to be revised, but I add some words of caution: it is a fundamental part of the UK-EU withdrawal agreement. We need to treat that very sensitively indeed.
I congratulate the noble Baroness, Lady Hayter, and her committee on not just preparing the report but bringing the debate to the House this afternoon. I add my thanks to and pay tribute to my noble friend Lord Grimstone, who was extremely assiduous, charming and generous with his time at every stage of every debate he participated in. I pay a personal tribute to him and wish him well. I am sure we have not seen the last of his interventions as a Minister.
My approach to this free trade agreement is cautious. I highlight the fact that criticisms have been made, notably in the report before us but also by the EFRA Committee next door and others, and the fact that the Trade and Agriculture Commission can examine agreements only once they have been signed, which has been criticised in previous debates. I think we in Parliament would all sign up to the fact that the commission should be able to intensively scrutinise and make recommendations on each agreement before it is signed. I hope that is something the Government might keep under review.
In that regard, these agreements are seen to fall short in content and scrutiny. I add to that my criticism that there appears to be a lack of strategy in negotiating trade agreements, which is illustrated by this agreement in particular. I am grateful that the committee has annexed to the report in its appendix 3 an extract from the UK Government’s strategy for the UK-Australia free trade agreement. The Government published their public negotiating objectives for a free trade agreement with Australia but there does not seem to be an overarching strategy.
I single out the two paragraphs that relate to sanitary and phytosanitary standards. Here, the Government commit to:
“Uphold the UK’s high levels of public, animal, and plant health, including food safety”
and:
“Enhance access for UK agri-food … to the Australian market by seeking commitments to improve the timeliness and transparency of approval processes for UK goods.”
My first question to the Minister is: how can we hold the Government’s feet to the fire on sanitary and phytosanitary standards? It strikes me, and I am not the first to mention this in the debate, that this agreement is yet another asymmetrical deal that benefits the other side, the Australians, much more preferentially than the UK. I am sure the noble Lord, Lord Purvis, will agree because he made the same point when debating other agreements. I also point out that it adds value of only 0.02% to the UK economy, so I really have to hesitate before we congratulate ourselves too warmly in this regard.
The Government were elected, what seems like a long time ago in 2019, on a manifesto that committed to maintaining high standards of production and, in particular, of animal welfare, environmental protection and food hygiene and safety. Not long after that election, the NFU ran a very successful campaign and persuaded 1 million people in this country to sign a petition calling for these standards to be maintained. Yet, as the Great Yorkshire Show starts tomorrow and runs for the rest of this week, the farmers will explain to all, including one of the leading negotiators in Defra, Janet Hughes, who is looking at future farming policy in this country, how vulnerable farmers feel at this time. I entirely endorse the comments of my noble friend the Duke of Montrose in this regard.
It is the hill farmers and the uplands of the north of England that are suffering, as well as other parts of the UK. We have seen rising energy costs, higher fuel prices and an acute shortage of labour, which means that many fruits and vegetables, including salads, will simply not be picked this year. We are about 40% down on the labour we would usually have through seasonal workers. That is partly because the Ukrainians cannot come and help, but we simply have not attracted enough seasonal farm workers this year. I hope that will be put right in the SAWS agreement on seasonal agricultural workers in 2023.
If we do not resolve these issues, particularly as regards suckler cows and spring lambs in the hill farms and uplands of the north of England, and other parts of England and the United Kingdom, we will have the most severe social crisis for generations in our countryside. That is the backdrop against which the Great Yorkshire Show will meet this year. I hope these pleas will not fall on deaf ears in the Government.
I conclude by asking my noble friend the Minister what he feels that the agreement that is the subject of the report this afternoon will offer us, over and above what we would have had in the rollover agreements. What will particularly benefit UK farmers and other industries in this country?
Lord Liddle (Lab)
My Lords, first, I pay tribute to the noble Lord, Lord Grimstone, who was a very good Minister. He always attempted to answer our questions and treat Members of Parliament with seriousness. He approached his job as a Minister with a level of seriousness that some members of the Cabinet would have done well to follow. Secondly, I pay tribute to my noble friend Lady Hayter for producing this very good, balanced report. It is a bit kinder to the agreement than instinctively I am, but it is an important job of scrutiny well done. The only tragedy about parliamentary scrutiny is that we do not have in the British Parliament what exists in the European Parliament: a trade committee that follows and comments on the negotiations by the Commission at every stage. It is not much use having scrutiny only when the whole thing is over, so I hope we will press that point about future scrutiny and continue to press it.
My general view of this is that, as we are outside the EU, we have the ability to conclude our own trade agreements. This is what we should do, as it is in the national interest, but in this agreement—this is the central point I want to make—we are heading for a post-Brexit political economy that I am not particularly enthused about. That is a political economy based not on a European model of high standards underpinning our society, but a model based on Britain becoming Singapore-on-Thames and being part of a deregulated Pacific community, which could have consequences for the British people.
That is my worry about this agreement, but let us first examine its practical content. I am an instinctive free trader, like most of us in the Chamber, I suspect. I have always thought that consumers do well out of cheap goods, and therefore free trade and competition is a good thing. However, when I worked in the Cabinet of my noble friend Lord Mandelson when he was Trade Commissioner, I learned a few things about how others approached trade negotiations. Certainly, in Brussels, I remember asking senior officials questions about this, and they said, “Roger, what you’ve got to do is work out your offensive interests in any trade negotiation. Then you have to work out what you will defend to the last that the other side will want”. I think Britain has interpreted its offensive interests, in a simple way, as being strongly in services liberalisation. I think that is correct; that is where our great competitive strengths are. The question is whether, in order to pursue modest gains in services liberalisation, we are prepared to make large sacrifices—the common external tariff that we used to have with the EU, which to a large extent we have taken on ourselves—and whether we are prepared cut our tariffs. Of course, that policy pursued to its logical conclusion will be pretty ruinous for British agriculture and for large sections of our manufacturing that will have very little protection. Thinking about Britain, as opposed to London and Singapore-on-Thames, we have to ask whether this pursuit of services liberalisation, above everything else, will fit with the levelling-up objectives of our much-lamented Prime Minister.
I tried to find out what academics think about this agreement. There is a UK Trade Policy Observatory at the University of Sussex, and its conclusion based on its modelling is that the deal will boost Australian exports to us six times more than any benefit the other way, to the UK. That is a considered, academic view, and I will give you the numbers. It estimates that
“the UK may see an increase in exports of 0.35%, while Australia’s exports are simulated to increase by 2.2% once the free trade agreement is in force.”
That is why the forecast gain to our GDP of 0.07% is so small. The practical benefits are not that huge, and we ought to bear that in mind.
We have given a lot away, it seems, for not that much in return on services. But it is a modest step and therefore one should not be too critical, I suppose. There are some aspects of it that I really like: it is great that the working visas are to be expanded for people aged under 35, whereas previously they were only for those under 30, and from two to three years. That gives young people a tremendous opportunity to work in another country. I only wish that the TCA with the European Union had a similar agreement. If it had, a lot of the problems that we presently witness in the creative sector, with young people who are touring around Europe and all that, would just disappear. This model of the liberalisation of visas for young people, enabling them to work to pay for their stay in another country, is one that we should try to extend more generally.
Coming on to my reservations, I think the Government see—I should like to know whether the noble Viscount, Lord Younger, agrees with this—the main benefit of this agreement as unlocking the door to our membership of the CPTPP, the Pacific Rim trade agreement. This is the wrong post-Brexit political economy for Britain. It is true that it plays to our economic strengths, which are in services, and that Asia is an area with tremendous potential for growth. But within this economic area, there is very little concern for standards and the predominant view favours deregulation. This is particularly true of environmental standards and, on that point, the deal with Australia is absolutely shocking.
At present we are looking, along with the European Union—this is one area where there is alignment—at whether we should impose a carbon border adjustment mechanism on countries that do not stick to their climate change commitments. This deal with Australia has absolutely nothing to say about that question, yet this is a pretty fundamental point for the future. Our ability to use our economic strength, in Europe and Britain, to force other countries to take their obligations seriously will be important in tackling the climate crisis in future, and I worry that this trans-Pacific thing is an obstacle to that.
I also worry, as a Labour man, about labour standards, about whether trade unions are recognised and about whether there are minimum wages. What standards are there, and are people working in safe and reasonable conditions? If we keep alignment on these questions with Europe, as we were promised by this Government in all the Brexit negotiations, there will be at least some minimum standards. But are those minimum standards to be included in this Pacific agreement? I do not know, and I have doubts.
This seems to fit in with the tilt to the Pacific included in the recent defence review. With the war in Ukraine, however, do we really think that our central security interests are in the Pacific? Is that what people such as my friend the noble Lord, Lord Robathan, over there really think? Surely, our central security interests remain in Europe.
Lord Robathan (Con)
Actually, I agree with the noble Lord, and thank him for asking, but I do not think it is an either/or; I do not think it is binary. The issue with the Pacific is huge, as is the issue with Europe.
Lord Liddle (Lab)
I agree with that as well, but there is also a contradiction about this focus on the Pacific: the reason it is an economically dynamic area is because of the dynamism of China—it is China that drives the Pacific area. If with one hand we are saying we want economically to be a beneficiary of this but with the other hand saying we think there is a major security threat here, I do not know quite where we are going to end up. I just raise that as a question, but it seems to me to be an important one.
I have doubts—I am not saying I rule it out—about whether this Pacific tilt is wise. I worry that any trade agreement we make that does not meet European standards raises issues about trade with the single market in Europe, which is still by far the most central part of our economic interests.
Lord Udny-Lister (Con)
My Lords, I stand, I think, as one of the few to welcome what is a landmark deal. It is an ambitious one and quite an exciting one, because it is the first of the new form of deals that are being struck. It is also a rekindling of our historic and important relationship with Australia through free trade. It is part of our post-Brexit journey. It is also a moment when we can go back to what we used to have with that country and to those relationships which were so brutally terminated when we joined the EU. We have a real chance to develop this further, and I will talk about the CPTPP in a minute. It is all about global Britain and the opportunities that exist.
In speaking, I draw attention to my interests, which are declared in the register, including my work for HSBC bank. I also thank the noble Baroness, Lady Hayter, for getting this debate. There is another thank you I want to make, and that is to the noble Lord, Lord Grimstone. It is very sad that he has given up as the Trade Minister. I am one of the few, probably, in this Chamber who have seen him at work, actually negotiating. He was an impressive operator. It will be very difficult to follow him, and he is going to leave a real gap.
The report before us rightly points to the identification of several risks. However, I want to observe that, in our long and very proud history as an island trading nation, I cannot point to a single moment in time where we entered in good faith into trading arrangements without there being some element of risk. Our task is to scrutinise FTAs that come before Parliament. It should not focus solely, as some Brexit-loathing commentators would have it, on risk alone, for our task is to weigh up risks against the opportunities that will come, and to seek to hold the Government to account on how they unlock these opportunities to the benefit of every part of the United Kingdom.
A lot has been said on the topic of agriculture. Indeed, the National Farmers’ Union, among others, has tried to peddle a myth that this agreement fails to deliver for British farmers and that our standards will somehow be eroded. I put it to your Lordships’ House that such assertions are wrong, as the Government have been successful in achieving significant safeguards for British farmers, namely through the tariff rate quota, the product-specific safeguard and the bilateral safeguard measures.
When it comes to food standards, it is worth noting that the FTA does not create any new permissions for imports from Australia, and that our stringent world-class import requirements and independent food regulations all remain. Perhaps it is for some an inconvenient truth, or it simply goes against the Brexit-bashing narrative to which some have become accustomed, to accept—as we should all proudly accept—that the UK is already globally renowned for our agricultural excellence, animal welfare and food safety standards.
There is nothing in this agreement that farmers should fear. Like those in most other sectors, they would do well to ignore the Brexit doomsayers who will always try to spread fear in the hope of overriding the largest democratic mandate in British history and the sound decision of the British people to seek a new global outlook, free from EU protectionism. I fully concur with the views of the honourable George Brandis, who in an interview with the Financial Times called for farmers to be
“more open to the benefits of trade and international competition”,
and for the
“culture of fear of global trade”
to come to a swift end.
Baroness McIntosh of Pickering (Con)
I am sorry to interrupt, but does my noble friend share my concern that there should be a level playing field, so that any imports into this country from Australia should not be produced with pesticides which are banned in this country or the rest of the EU, and should not be raised to standards which we and British consumers would not accept? If that is the case, I think that he will share my concerns about the agreement as negotiated.
Lord Udny-Lister (Con)
I am afraid that I do not agree with this, because I think that the standards that exist in Australia are not that different from the standards here. I would also suggest that, certainly on animal husbandry, there are many other countries in the world with which people would have a lot more difficulty than they do with Australia—I can think of parts of eastern Europe where probably the standards are well below those which we are currently getting from Australia.
The deal is our gateway for joining the CPTPP. With demand for beef and lamb increasing in the Asian markets, there is an unprecedented opportunity for our farmers to capitalise on what is going to become exports of very high-quality British meats—but of course they are going to have to be of a standard and are going to have to be marketed in the right way.
The deal supports British farmers, protects our standards, advances animal welfare through non-regression clauses, and creates new and incomparable opportunities for our food and drink exporters. Our free trade agreement with Australia will not only unlock over £10 billion-worth of additional bilateral trade but, as the global economy increasingly centres on the high-growth, high-tech Indo-Pacific region, as I mentioned just now, we must remember that our accession to this agreement is an integral component of the United Kingdom’s journey to joining the CPTPP. The importance of this cannot and must not be downplayed, for our accession to the CPTPP will give the UK access to a free trade area encompassing 11 strategically important states, with a combined GDP of some £8.4 trillion.
It is estimated that there are currently 15,000 UK businesses that are already exporting goods and services to Australia. Through breaking down regulation, protecting innovation, enhancing consumer protection and creating new visa pathways, this agreement has the potential to deliver for each and every one of them.
The Government will be tested on how effective they are in supporting UK businesses to make the most of this landmark agreement. I would welcome comment from my noble friend the Minister on what work is being done by the Department for International Trade to ensure that UK businesses are engaged and ready and waiting to unlock the ultimate potential of an FTA.
I further welcome how this agreement will create new opportunities for the UK’s world-class legal profession. It is universally acknowledged that our legal, financial and other professional services are among our greatest exports, and I commend the way in which Her Majesty’s Government have sought to protect and enhance the UK’s interests here, from providing UK law firms with legally guaranteed access to Australian government contracts for legal services to improving the mobility of lawyers in order to enhance their experience by working abroad. I stand encouraged by the way in which the Government have listened to the sector and hope that the support shown for our professional services sector in this agreement will set a precedent for future FTAs.
I am further pleased to note Her Majesty’s Government’s success in achieving their negotiation objective on digital trade across all sectors of the economy. I concur that there is still a lot of work to do in fine-tuning the regulatory framework and putting this into practice on the ground, and thus I would welcome some reassurances from my noble friend that the department are undertaking further work in this area.
The opportunities for this free trade agreement should motivate and excite us, whether you want to see the UK’s high-tech industries of AI and space exploration thrive, are a young person seeking exciting opportunities down under or are simply a consumer—like many of your Lordships, dare I predict?—looking forward to tariff-free wine or Vegemite. To conclude, there is something in this agreement for everyone, and I wish the Government godspeed in making sure that it delivers for everyone and as part of the United Kingdom’s journey towards the CPTPP.
Viscount Waverley (CB)
My Lords, the noble Lord’s observation leads me to two regrettable observations. Trade is one of those nebulous facts of life that requires a greater degree of attention. However, just today, a senior trade writer at the Financial Times asked whether any of the candidates for Conservative Party leader will improve British trade policy—we certainly hope so. Additionally, I was dismayed to receive a message from an exasperated exporter today:
“I have a problem getting any information about the procedure and protocol from DIT on matters relating to my business”.
These issues require urgent attention.
The current limbo presents an opportunity to underpin Parliament’s contribution to governance and generally across the board, not just in relation to FTAs. The committee’s comprehensive report has met with varying degrees of support. Wherever one stands on the content of this FTA—our first negotiated from scratch post Brexit—it has significant implications in key policy areas, including food standards, animal welfare standards, environmental standards and procurement.
The FTA also sets an important precedent for how similar such agreements will be negotiated and ratified under the Government’s future programme. This is important because, as has been pointed out, it also represents the first-out-of-the-blocks forward thinking for the CPTPP discussions. Although we tend to go around this in circles, as delay in ratification is the norm of the day, many conclude that this ratification process is not adequate. Completing agreements with New Zealand, India and the Gulf Cooperation Council in the coming months is the goal, but there has been little opportunity to debate the Government’s original objectives, and we have not received comprehensive negotiation updates.
Parliamentary colleagues in Australia say that their Government will not establish their standing committee on treaties until the end of July, at which point they will embark on a scrutiny process lasting around three months. What is the rationale, therefore, for pushing this through in the UK—in the face of calls to delay across both Houses in Westminster—thus putting pressure on the 21-day CRaG period being used effectively for comprehensive scrutiny in both Houses?
There is still no clarity about whether the Government will grant time for a vote or even a debate on the UK-Australia FTA during CRaG in the other place. What is to be the process by which Parliament can secure a vote on a trade agreement? CRaG suggests that Members in the other place should resolve against ratification to allow further time for scrutiny, but there is no clear precedent for what form this might take. Possibly, we ought to consider delaying ratification and thus be in line with Australia’s timetable, giving a period to consider from Australia’s perspective some of the differing policy issues that have been touched on this afternoon, and to consider those forthcoming in the UK.
Lord Purvis of Tweed (LD)
My Lords, it is a pleasure to follow the noble Viscount, as I frequently do in these debates. I enjoy his contributions, and the debates, and I will touch on his substantive point on the scrutiny period in a moment. Given his comment, combined with that of the noble Lord, Lord Kerr, on these issues, discussing the quality of the horse’s breeding after it has bolted, I am willing—unless the Minister is able to be reassuring—to table a Motion to extend the scrutiny period beyond 20 July. I have done this before and will do so again, because we need to properly discuss these issues in both Houses.
I pay tribute to the committee for its work; I have done so before and I will continue to do so. Its reports are for debate in this House but they also inform it and the public, and they do a great constitutional service. My noble friend Lord Oates and I are literally Liberal free traders, and we therefore welcome the agreement, especially the parts on services, recognition of professional qualifications and the movement of people, which the noble Lord, Lord Liddle, mentioned. In supporting free, fair and open trade, many of our debates are more about non-tariff barriers than tariff barriers. This was particularly the case with Australia, as was mentioned, because its tariffs on UK exports were already low, and the regulatory elements of alignment are therefore very important.
There are questions about services support and facilitation, such as data transfer, where the committee highlighted that there is no data equivalence with Australia. This may cause difficulties for our combined services trade with those with whom we are seeking equivalence agreements. So I hope that the Minister will be able to say whether we expect to take forward in a meaningful way the discussions on data equivalence agreements with Australia to support the reassurance of consumers as well as trade facilitation.
I also enjoyed the debate because there were a couple of areas where there was not total unanimity. The noble Lord, Lord Robathan, was a case in point: I enjoyed his personal resignation statement—obviously, he felt left out—and I agree with him on China. I flippantly said that I do know where the cloth that I wear is from; I was an ambassador for the Scottish College of Textiles in my former constituency, and these are important issues.
The noble Lord raised a point with the noble Lord, Lord Liddle, on where we are geopolitically with our agreement with Australia, and with New Zealand, which we discussed. One of New Zealand’s oldest trade agreements is with China and, at the same time, the UK now has the biggest trade deficit of any country in our nation’s history: we have a trade deficit with China of over £40 billion in goods. This means that we need to debate this open-eyed. I smiled when the noble Lord seemed so envious of the French power to do harm to our farmers that he wanted to bring that back so that we could do harm to our own farmers—
Lord Robathan (Con)
As a farmer, I definitely do not want to do harm to farmers. But I have seen the harm done by the common agricultural policy, which I am sure the noble Lord thinks is marvellous.
Lord Purvis of Tweed (LD)
No, but we did not see output of beef and hill sheepmeat going down 5% and then 3% with any individual agreement, which is what we have seen with the Australia agreement. Perhaps those Brexit-supporting farmers now see the reality that the Government’s own impact assessment says that output will go down 5% and then 3% over 15 years in these sectors. Because I formerly represented a hill-farming constituency, I do not think that this is simply a case of doomsayers; these are genuine issues about the sustainability of our farming industry.
I pay tribute not only to the committee but to the noble Lord, Lord Grimstone, who has resigned from the Government; I enjoyed being his Liberal shadow. I look forward to the seventh Trade Minister whom I will shadow in this place when she or he takes office. I reassure the noble Baroness, Lady Hayter, that it is not her—it is me.
I agree with the overarching twin themes of the committee’s report: first, that this agreement was negotiated in the absence of a wider trade policy—in certain areas, it sits slightly alongside the Government’s export strategy, which I welcomed, but I have not yet seen too much read-across between the two—and, secondly, that the desire to move fast was to secure some boosterism and headlines between our Prime Minster and Australia’s, or, as the press reported at the time, between “BoJo and ScoMo”. We can reflect that neither is in office just months later, so we can question why there was such a rush.
When the noble Lord, Lord Grimstone, introduced the Queen’s Speech debate on trade, he wanted to reassure us that all parts of the UK would benefit from the 0.08% bounty over 15 years of this agreement—or, as the noble Lord, Lord Udny-Lister, said, that there is something in it for everyone. However, when I raised the fact that this had been oversold, I was wafted aside. It appears that it was quite hard for the Government to dismiss the Regulatory Policy Committee, which is tasked with reviewing what the Government say in their impact assessments. It was interesting to note that the Government had to bring forward a second impact assessment after the Regulatory Policy Committee published its initial review. On page 5 of this review, the committee said:
“As originally submitted, the IA was not fit for purpose as the results in the IA were presented in a way that disproportionately emphasised the beneficial impacts with very limited discussion of the risks, disadvantageous impacts, and potential mitigations. In addition, the IA did not adequately describe a range of significant risks and uncertainties associated with the impacts and did not contextualise the estimates sufficiently. The IA suggested a greater degree of certainty and accuracy to the projections than was supported by the underlying evidence and modelling.”
In a way, that neatly sums up how this Government sell their trade policy. Presenting the higher case not “supported by … evidence” means that, when we scrutinise the agreements, they turn out not to be as promised—this seems to be the approach across the Government. I say “the Government”, but it seems as if we have more than one at the moment: there is Liz Truss, the free trade fighter, alongside Anne-Marie Trevelyan, who is breaking WTO rules to have protectionist steel tariffs. Some Ministers on the one hand claim that we are seeing developing standards in nature, biodiversity and animal welfare; I am sure that the noble Viscount, Lord Younger, will say in his speech that this is the case. Other Ministers, apparently in the same Government, are saying the opposite: for example, the Foreign Office Minister the noble Lord, Lord Goldsmith, said yesterday:
“Rishi Sunak has evidently agreed to make Mark Spencer the … DEFRA Sec of State. Mark was the biggest blocker of measures to protect nature, biodiversity, animal welfare. He will be our very own little Bolsonaro. Grim … for nature. But great news for political opponents”.
It would be helpful if the noble Viscount could outline which measures have been blocked by the Treasury because, if a serving Minister says it, we should know about it.
As the noble Lord, Lord Liddle, and others have indicated, this is in the context of now seeing that the evidence has been very clear that our trade with the European Union has declined. This means that the concern raised by some of the witnesses to the committee—that some of the benefits of the Australia agreement might simply be those of displacement, rather than new and additional trade—is very relevant. That even means that the issue that consumers might seek cheaper prices will not necessarily be realised. It also means that the issues raised by some, including the noble Baroness, Lady McIntosh of Pickering, will be relevant for our consideration: that we will not have a level playing field and we would prevent some of our agricultural industry from using certain materials and practices that would be permitted from shipped-in products from Australia—a point raised by the noble Duke, the Duke of Montrose. This is not protectionism; it is realism.
One area which is striking—and especially astonishing given what Liz Truss and every Minister in the department had previously said—is that the UK failed to secure any protection for those goods that have geographical indicators, as the committee indicated. Why? We have heard time after time, during debates on the then Trade Bill and elsewhere, that GIs would be protected, but they are not. This is from Liz Truss, who made her name championing cheese in that famous speech, but has now raised the white cheesecloth on supporting products with geographical indications. We have now fully entered the Wonderland of Alice, because we will be able to protect those products which have geographical indications only should Australia sign an agreement with the European Union, because the European Union would provide the protection—I think the term is “give back control”.
This is a “landmark”, according to the Government’s statement and the noble Lord, Lord Udny-Lister, but my understanding is that landmarks are so called because they are followed. However, from reading the committee’s report, I think it struggled to get clarity from the Government as to whether this will set some form of precedent for other areas. The Government will no doubt say—I have heard them say it previously—that each agreement is negotiated on its merits, et cetera. However, at the same time, we hear the Government saying that this is a gold-standard, “landmark” agreement. This, therefore, raises questions about the impact on diagonal cumulation for developing countries and uncertainty as to that policy; uncertainty to the policy on ISDS, because it was to be reviewed in Canada; and about the situation with Japan. The noble Lord, Lord Grimstone, was a supporter of ISDS; will any new Minister have the same approach?
On the question of standards, which I have raised previously, for genetically modified products or the use of pesticides, is it okay to bring in produce that has been reared using banned products? Will they be approved for our consumers simply because those banned products are at a low level? The Government should be clear about their intentions.
The final point which has been raised—a very relevant one—regards the remaining lack of clarity as to when there will be sufficiently strong guidance for those operating within Northern Ireland.
We support this agreement, but we are not blind to the realities that it will have a negative impact for certain sectors. We certainly think that involving Parliament with less of the boosterism and headline grabbing, and more of the serious work of proper consideration of what trade policy would look like in future, would result in stronger agreements which are less rushed and more sustainable. Ultimately, they will help the British economy, so that it would not be 0.08% but considerably more.
Lord McNicol of West Kilbride (Lab)
My Lords, like nearly all other speakers, I congratulate my noble friend Lady Hayter of Kentish Town and pay tribute to her and her committee on the detailed and balanced report that has been debated this afternoon. I share the overall analysis from the noble Baroness, Lady McIntosh of Pickering, that it is cautious in nature. I think that is fair.
After leaving the European Union it is of course vital that Britain seeks free trade agreements across the world, but there are standards that these agreements must be held to. The deals that we negotiate must benefit UK interests, UK workers and UK businesses. As we have heard, the UK had not negotiated a full free trade agreement from scratch since 1973. I think the noble Lord, Lord Purvis, was very young then.
Lord McNicol of West Kilbride (Lab)
I was four. Negotiating from scratch in itself should not have been an issue, but analysing in detail the Australian agreement raises very real concerns about what has been negotiated and what has not. Parliament has been virtually neutered in the whole process. The Australian agreement was signed in December 2021 and the New Zealand agreement in March 2022. We are now in July with just over one week before Parliament rises. Yes, it has been examined by the International Agreements Committee and the International Trade Committee in the other place but it will then be laid before Parliament similar to any other statutory instrument.
I wonder, as many other noble Lords have this afternoon, whether better parliamentary scrutiny would have led to a better, fairer, greener and more equitable agreement. There is a paradox at the heart of the Australian deal—the Government’s own impact assessment estimates that our farming, forestry and fishing sectors will take a £94 million hit and our semi-processed food industry a £225 million hit. Yet, again by the Government’s own predictions, overall trade will increase by less than 0.1% of GDP by 2035, while there is fear of real damage to some of the UK’s most important sectors.
As many other noble Lords have this afternoon, I worry that the prize of the deal, the prize of the headline, the prize of being first was more important to the Government than the detail of the agreement itself. As my colleague Nick Thomas-Symonds MP said in the Commons:
“Other countries, in future negotiations, will look at what was conceded to the Australian negotiators and take it as a starting point.”—[Official Report, Commons, 5/1/22; col. 67.]
UK exports to Australia as a result of this deal are supposed to rise by 53%, but I see no great basis for that optimism. Few trade deals have ever had that kind of impact, and certainly not those between two countries where there is already a good trading relationship with historically low tariffs. The 53% is also somewhat higher than the original estimate. Can the Minister explain this leap in optimism between the original estimate and the secondary estimates?
As we have heard from the noble Duke, the Duke of Montrose, the noble Baroness, Lady McIntosh of Pickering, and the noble Lord, Lord Liddle, the labour, environment and animal welfare chapters are pretty weak and do not necessarily focus on UK interests. Would the Minister care to elaborate on any specific improvements negotiated which will bring a positive benefit to our labour, environmental or animal welfare standards?
Minette Batters, the NFU president, said:
“The government needs to level with farmers about the commercial reality of this and ditch the soundbites that lost any meaning a long time ago.”
She continued:
“It needs to set out a detailed agri-food export strategy, with complementary policies that will enable UK farmers to compete and adjust.”
Those were some of her more measured words, but she is right.
As always, agreements include carve-outs. How confident is the Minister about the predicted rise in exports given the protections to Australia’s services market? This is in stark contrast to the lack of protection given to the UK food sector in the tariff schedules. Were any of our devolved nations involved in adding to our 12 pages of carve-outs? As I understand it, the Australian states were consulted and state protections included. Were any of the concerns of the UK’s devolved authorities recognised and incorporated into our carve-outs?
I fear that the Australian agricultural corporations will not be held to the same high standards as our farmers. Animal welfare standards have been mentioned a number of times, but what the Government have agreed is a non-regression clause. To be clear, that does not mean that the standards will be the same in both countries. What will actually happen is that meat produced to lower animal welfare standards will get tariff-free access to the UK market. So much for the promise that the Government had no intentions of striking a deal that did not benefit British farmers. Australia’s former negotiator said:
“I don’t think we have ever done as well as this.”
How much engagement did the National Farmers’ Union have after the agreement in principle was published? Was the NFU given the opportunity to raise concerns or make counterproposals? More importantly, was it able to assess the true impact of the FTA before it was finally signed?
The UK granted Australia generous agricultural market access. Why was this not leveraged to press Australia for more ambitious commitments on climate change? As we have heard, there is no reference to the temperature goals which were fundamental to the Paris Agreement, nor to reducing Australia’s reliance on coal, which was addressed in the free trade agreement with New Zealand. As my noble friends Lady Liddell and Lady Hayter have said, we now have a Labor Government in Australia so there is an opportunity to revisit it.
With the energy security Bill making its way through Parliament, this feels like a missed opportunity for the Government to show leadership on the world stage on an issue which is increasingly global, instead of taking an insular approach. Tariff-free access to our UK markets is a prize that Ministers should not give away easily. However, looking at the concessions made by this Government, are we not right to worry? This was a deal the UK Government “were advised” they had to do for the bigger prize of CPTPP accession. I would like to hear the Minister’s views on that.
I return to my opening point, and I cannot put it any better than the noble Lord, Lord Kerr of Kinlochard, with regard to this Australian deal. We are allowed only to debate it; we can do nothing about it.
Viscount Younger of Leckie (Con)
My Lords, I start by acknowledging the opening remarks from the noble Baroness, Lady Hayter, who paid tribute to my noble friend Lord Grimstone of Boscobel, as did other noble Lords, including the noble Lord, Lord Liddle, who made some generous comments about him. I, too, regret that he has decided to step down. He worked very closely with many noble Lords in this House to advance and explain the Government’s free trade agenda, and this was acknowledged in the IAC report that we are debating today. He gathered a number of considerable achievements under his belt while working as the Minister for Investment. Notably, he shepherded the Trade Act on to the statute book, and noble Lords, me included, who took part in the debates on that legislation know that was no mean feat. Beyond his work in Parliament, my noble friend will leave a lasting legacy through his efforts to transform the Government’s approach to investment. The success of the inaugural Global Investment Summit, not to mention the significant sum of overseas investment secured under his tenure, offer no better evidence of his effectiveness in the role.
I suppose that today I come in from extra long leg to bat. I shall be batting but I shall, I hope, be doing some bowling—and, yes, I spent some of the weekend reading through this excellent report. I join other noble Lords in thanking the noble Baroness, Lady Hayter, chair of the IAC, for securing this debate and providing the opportunity to discuss this important subject. I also wish to thank her for the report.
Let me start by saying that I am pleased that the committee has welcomed this FTA today. It is good to have some reasonably positive feedback, including from the noble Lords, Lord Kerr and Lord Oates, and perhaps more effusively from my noble friend Lord Robathan, the noble Lord, Lord Bilimoria, and my noble friend Lord Udny-Lister. I am particularly pleased that the committee has formed the view that the Department for International Trade has conducted scrutiny beyond the statutory commitments set out in the Constitutional Reform and Governance Act. I place on record the positive and constructive engagement that the IAC has had with DIT, culminating in the exchange of letters in May, which pulls all the Government’s transparency and scrutiny commitments into one document.
I shall just address some points made about the devolved Administrations, as raised by the noble Lords, Lord Kerr and Lord McNicol, and the noble and learned Lord, Lord Morris. DIT officials continue to work closely with their colleagues in the devolved Administrations to ensure that their views are considered in the formulation of the UK’s trade policy—I make that opening statement. Our chief negotiators provide regular updates on the progress of negotiations. For example, during the Australian negotiations, our chief negotiator, or their deputy, briefed devolved Administration officials multiple times on all aspects of the programme. That is in addition to sharing draft texts for consultation with the devolved Administrations, regular policy forums at official level and discussions at ministerial level. I am sure I could give some more reassurance on that point.
Lord Morris of Aberavon (Lab)
Does the Minister agree with the statement made a few weeks ago by the noble Lord, Lord Grimstone, that the devolved Administrations are dissatisfied with the manner in which negotiations have been conducted and their involvement?
Viscount Younger of Leckie (Con)
I shall look into it but I do not think that I agree with that point. As I said, I think the devolved Administrations have been kept on board with the negotiations that have been going on—I really do. I certainly would like to reassure noble Lords further on that point.
Lord Kerr of Kinlochard (CB)
I am sure that the devolved Administrations were informed in the sense that they were told that there had been a round and various things had been discussed, but it is clear that the result came as a surprise—that there should be such an asymmetrical deal on farm products. I do not myself believe that it is a disaster, but it certainly came as a surprise. Would the Minister agree that it would be better if the documents that the Government published at the start of a negotiation—the negotiating objectives documents—were a little more specific? They are cast in such broad-brush terms that it is very difficult to deduce from them what a likely outcome might be, so the risk of a surprise is quite high.
Viscount Younger of Leckie (Con)
I would like to park that—I am not going to be drawn into it—but I would like to move on to discuss scrutiny, which is probably along the lines of the noble Lord’s question. This is an important matter, raised by the noble Viscount, Lord Waverley, and the noble Lords, Lord Purvis and Lord McNicol. Again, I hope I can give some reassurance on this.
The Government have made extensive commitments to support robust scrutiny of the new free trade agreements. As the International Agreements Committee acknowledged in its report, we have upheld those commitments. In particular, the Government committed that we would ensure that there would be at least three months for Parliament to scrutinise the agreement and for Select Committees to produce reports before the formal scrutiny period under CRaG. In fact, there was six months of scrutiny time prior to commencing CRaG, and I was very pleased to receive the IAC’s report on 23 June. In addition, we published the advice of the Trade and Agriculture Commission on 13 April, two months before commencing CRaG, and our own Section 42 report on the impact of the agreement on relevant domestic regulatory standards on 6 June. Of course, I am delighted that we are here today taking the opportunity to debate the agreement as part of that scrutiny process. In total, by the end of the CRaG period, the agreement will have been under the scrutiny of Parliament for over seven months and benefited from the formal views of three Select Committees.
Viscount Waverley (CB)
Might the Minister consider the possibility that there could be two new policy decision-making approaches in play here, coincidentally at broadly the same time, with a new Conservative policy circumstance and a new Government in Australia? Is there any possibility that the period being discussed might take into account any policy changes, which should be included in the final draft?
Viscount Younger of Leckie (Con)
The noble Viscount makes a good point, and I shall certainly take that back. I shall make one or two points about the new Australian Government in my remarks.
I should also like to address the point raised by the noble Lord, Lord Purvis, about extending CRaG in this respect—again, I would like to row back on what he was saying. He asked whether we would extend; this of course is a decision not for me but for the Secretary of State for International Trade. However, we are confident that the arrangements that we have put in place for scrutiny are robust. The agreement has been under scrutiny for over six months now and benefited from three very valuable reports from parliamentary Select Committees, including the International Agreements Committee in this House.
Lord Purvis of Tweed (LD)
The Minister will know that the Liaison Committee in the House of Commons has written formally to request an extension of the scrutiny period. Have the Government responded to that, and what is their position with regard to the concern in the Commons that the Secretary of State has not met the committee to respond to the very questions that we have raised in this debate today?
Viscount Younger of Leckie (Con)
I am not able to say whether we have responded, but I shall certainly get back to the noble Lord to find out exactly where we are on that process.
The IAC’s report acknowledged that the Government have upheld their commitments with regards to scrutiny of this agreement. However, I acknowledge the points that the committee made on scrutiny—first, that there is dialogue with committees prior to mandates being set for future agreements and, secondly, that we notify the IAC of all significant amendments to FTAs made after ratification. We are carefully considering the IAC’s report and will, of course, respond in due course. That, I hope, leads me to answer a question raised by the noble Lord, Lord Oates, on lessons learned. He made a very valuable point there.
I move on to the agreement itself. In response to the remarks made by my noble friend Lord Udny-Lister, he is right that this is not only the first FTA negotiated from scratch by the UK Government since leaving the European Union but the first trade deal to be signed by the UK as an independent free-trading nation in nearly half a century. Since the Secretary of State for the Department for International Trade put her signature to the deal in December, she has gone on to sign an FTA with New Zealand and a digital economy agreement with Singapore. This means that we have now secured trade deals with 71 countries, on top of the trade deal with the EU. Together, these countries accounted for £808 billion of UK bilateral trade in 2021. This is an immense success story.
This FTA was negotiated quickly and efficiently, despite the turmoil brought about by Covid. It shows the world what global Britain can do as a truly independent nation. I say to the noble Lord, Lord Oates, that we would not have been able to negotiate this agreement as a member of the European Union. Having left the EU, we are pursuing arguably the most ambitious programme of free trade agreements that this country has ever seen. As we speak, the Department for International Trade is conducting FTA negotiations with India and Canada. Negotiations have also been launched with Mexico and with the Gulf Cooperation Council, a customs bloc of six countries made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Negotiations will soon be under way with Israel too and the department has a packed programme of FTA negotiations coming down the track.
What we have achieved through this agreement, the UK-Australia FTA, is just the beginning. The noble Lord, Lord Bilimoria, described the deal more eloquently than I am able to just now, but this is a world-class deal between two like-minded nations, friends and allies, that will bind us together for years to come. Australia is already an important trading partner for the UK—last year, our trading relationship was worth £14.4 billion—but the ties between our two countries go far deeper than that. It is a relationship forged through a shared history and a common language, a relationship that has an unyielding belief in democracy, liberty and the rule of law.
I shall attempt to answer a point raised by my noble friend Lady McIntosh and the noble Lord, Lord Kerr. I will not be able to answer it in full and I may need to write a letter, but whether we have a trade strategy is a very fair question. We do indeed have a trade strategy and we have communicated it publicly through several publications, such as the integrated review, the plan for growth and strategic cases for each trade partner we are about to enter negotiations with. I probably need to write a letter, but the headlines concern what type of trading nation we want to be, what our aims for UK trade policy are, how we will try to achieve these aims, the connections to the export strategy and the strategic case for FTAs. We believe it is all there but I think I need to put that in writing for the House.
I shall move on to the benefits—which were questioned, by the way, by my noble friend Lady McIntosh. We believe that the FTA we have agreed will ensure that future generations continue to benefit from this relationship in more ways than one. We will be able to work together like never before to tackle existential challenges, such as climate change, health pandemics and threats to global security. This deal will deliver benefits to people, businesses and communities in every corner of the UK, playing a key part in levelling up our country.
Lord Robathan (Con)
I sense a peroration coming, but does my noble friend have the figures for the amount of beef and lamb given as a quota through the European Union, and how much has actually been imported into the UK from the Antipodes?
Viscount Younger of Leckie (Con)
I do indeed and if my noble friend will allow me, I shall come to that. To continue my so-called peroration, the deal will increase trade with Australia by 53% and boost the economy by £2.3 billion. I take note of the rather negative view of the noble Baroness, Lady Liddell, and I will explain what the extra benefits of this deal are. It will enable the 15,900 businesses that already export goods to Australia to sell their products in ever greater quantities, while opening the door for thousands of other businesses to start their exporting journey. This means exciting new opportunities for Scotland’s world-renowned whisky distillers, Wales’s fintech companies and Northern Ireland’s leading medical and pharmaceutical firms, as well as the north-east’s car manufacturers and aerospace companies in the West Midlands.
My noble friend Lord Udny-Lister asked about the reach of this agreement—another good question. I shall just mention SMEs, because this deal will benefit businesses of all shapes and sizes, not least the UK’s SMEs—the backbone of Britain—which comprise more than 99% of all private sector businesses, employing 16.3 million people and generating £2.3 trillion of income.
I come to investment. The deal will unlock further investment potential between our two countries too, with UK investors able to benefit from broader and deeper market access than Australia has ever guaranteed in a previous trade agreement. This will allow us to build on the £37 billion already invested in Australia’s economy in 2020. Of course, there will also be benefits for UK consumers, who will be able to enjoy more of their favourite Australian products, such as Jacob’s Creek and Hardy’s wines or Tim Tam biscuits.
The subject of services was raised, not least by the noble Lord, Lord Liddle. I was pleased to read the comments of the IAC in its report, welcoming the provisions that have been secured. The services sector, as we know, is of huge importance to the UK, and we believe we have negotiated a deal that plays to these strengths. I say to the noble Lord, Lord Liddle, that Australia has gone further than ever before in granting access to its market in several areas, with unprecedented levels of regulatory transparency. UK services from architecture and law to financial services and shipping will be able to compete in Australia on a guaranteed equal footing. This could increase exports of UK services to Australia, which were worth £5.3 billion in 2021.
The “Professional Services and Recognition of Professional Qualifications” chapter will support work towards mutual recognition of professional qualifications. This could lead to professionals such as lawyers, engineers and accountants no longer having to requalify to practice in one another’s countries. On mobility, the noble Lord, Lord Liddle, is right; this is a good part of the agreement, whereby there is a way in which our people can have good movement between one another’s countries. For the first time, UK service suppliers, including architects, scientists, researchers, lawyers and accountants, will have access to visas to work in Australia without being subject to its changing skilled occupation list.
I also acknowledge the point made by the noble Lord, Lord Bilimoria, about innovation. This agreement contains the world’s first dedicated innovation chapter, underlining the important role that innovation will play in the future. We want to take full advantage of this, particularly in terms of technological developments.
On agriculture, which I definitely want to come on to, the committee noted the concerns of the farming community, specifically that the agreement may lead to potential surges in agricultural imports to the UK. I want to provide some reassurance. We have secured a range of measures to safeguard our farmers, including tariff rate quotas for a number of sensitive agricultural products; product-specific safeguards for beef and sheepmeat, which were raised today in the debate; and a general bilateral safeguard mechanism providing a temporary safety net for all products. As the noble Baroness, Lady Hayter, said, we should remember that Australia’s focus is on exporting to lucrative markets in the Asia-Pacific region, and it is relatively unlikely that beef and sheep would be diverted to the UK from Asian markets in very large volumes, although I note the slightly pessimistic view of the noble Baroness, Lady Liddell.
Finally, answering the points made by my noble friend Lord Robathan, our estimates suggest a reduction in gross output of around 3% for beef and 5% for sheepmeat as a result of liberalisation, relative to the baseline. These estimated impacts would be felt gradually over the staging period. It is likely that the increase in imports will primarily displace beef imports from the EU and sheepmeat imports from New Zealand. Further testing suggests that, given the strong consumer preference for UK meat, gross output could fall by as little as 1% in beef and 2% in sheep.
The environment was raised by the noble Lords, Lord Oates and Lord Kerr, and the noble Baroness, Lady Liddell. I note the disappointment expressed but, to come back to noble Lords on this, we have secured the most substantive climate provisions that Australia has ever committed to in an FTA. The deal also recognises our right to regulate to reach net zero and affirms our mutual international environment and climate commitments, including the Paris agreement. There is a lot more I could say about that, but I want to move on and finish—
Lord Purvis of Tweed (LD)
Before the Minister sits down, he has not responded to my question about geographical indicators. There is no protection for Scotch beef or lamb, Welsh lamb, Stilton cheese, Cornish pasties, clotted cream—there is a very long list. There is a side letter to the agreement from Dan Tehan, the Minister, which states categorically that there is no legal protection for any of these protected products. Why?
Viscount Younger of Leckie (Con)
Okay, so that is a series of questions. I am going to agree to write to the noble Lord on that point because time is running out and I want to cover a number of other issues.
When it comes to animal welfare standards, I particularly want to address remarks made by the noble Duke, the Duke of Montrose, and the noble Baroness, Lady Liddell, because I want to quote from the agreement:
“Each Party shall endeavour to ensure that its laws, regulations and policies provide for and encourage high levels of animal welfare protection and shall endeavour to continue to improve their respective levels of animal welfare protection, including through their laws”.
Therefore, I hope that we have given reassurances on animal protection, in not just this debate but others.
On ISDS, in response to the point made by the noble Lord, Lord Kerr, I note the committee’s recommendation that we clarify our position on ISDS and I am happy to confirm that in light of our investment relationship, the UK and Australia decided it was not necessary to include ISDS in this new agreement. What we did do is negotiate a dedicated state-to-state dispute settlement chapter; this is the central pillar of our agreement that will provide an effective method for enforcing commitments made in the deal.
Very quickly on CPTPP, there is a lot I could say about that, but I do believe that this is a historic deal, a very important deal, and will lead into this, as the noble Lord, Lord Bilimoria, has also said. I think I should conclude on that; I feel that there is a letter that the House is due from quite a few questions that have not been answered. I think I should finish, if I may do this, so—
Lord Oates (LD)
On the specific point of the letters, could the Minister give an assurance to the House that all these letters will be received by Members of this House before the end of the scrutiny period?
Viscount Younger of Leckie (Con)
I will guarantee to write a letter—I will write one letter—on the basis of this debate but I cannot guarantee when it will come, if that is the question that the noble Lord is asking; as soon as possible, I will write a letter.
Just to conclude, this is a bold and ambitious FTA that will carry both the UK and Australia forward into a bright new future, and we all look forward to it being brought into force.
Baroness Hayter of Kentish Town (Lab)
I thank the Minister for batting at such late notice, and I thank all speakers—especially the noble Baroness, Lady Liddell, and the noble Lords, Lord Oates, Lord Kerr, Lord Morris and Lord Udny-Lister, who serve on the committee, and indeed the former member, the noble Lord, Lord Robathan. The noble Lord, Lord Purvis, and I are in competition for how many ministerial scalps we have taken but he has not had a member of the committee resigning before the chair took her place for the first time. The noble Lord’s place was, of course, taken by the noble Lord, Lord Astor of Hever, but very sadly he is going to be leaving this House. I take this opportunity to thank both noble Lords for the time they spent on the committee.
I will not try to cover the whole debate; the Minister has tried his best. I think it is true to say that there was broad support for this deal, although the noble Lord, Lord Kerr, said, it is “no big deal”. “It could have been so much better”, said my noble friend Lady Liddell and “cautious” said the noble Baroness, Lady McIntosh, of her approach. The noble Lord, Lord Liddle, was perhaps less kind as he said it is “not that huge” and it gave away a lot for services, I think he said, with not a lot in return. The noble Lord, Lord Purvis, said he supported it but was not blind to its inadequacies, and that sums up what our committee was saying: there are some inadequacies. My noble friend Lord McNicol said the fear was that the price of speed meant that it was at the cost of quality—they may not have been quite his words, but I think that was the spirit of it.
Clearly, agriculture is the big divide. The consumers, as some have said, will benefit—I thought the Minister was scraping the barrel to talk about biscuits as the great “up” that was going to come. But there are undoubtedly worries on the agriculture side about standards and about the impact, as I think the noble Baroness, Lady McIntosh, said, on our communities. Agriculture is not just like any other good; it is about communities, it is about support for a way of life, and it seems to me, and maybe the noble Lord, Lord Kerr, said this, that had the DAs been involved all the way through, greater sensitivity to that might have achieved something that would have led to fewer worries. I think the noble Duke, the Duke of Montrose, basically was asking a very broad question about whether the remit of the TAC was too narrow, and the noble Baroness, Lady McIntosh, asked whether earlier scrutiny would have helped.
The environment was mentioned by a number of speakers: the noble Lords, Lord Oates, Lord Liddle and Lord McNicol, and the noble Baroness, Lady Liddell, along with a number of others, on a range of issues on which more should have been got. My noble friend Lord Morris says that he hopes the new Government will use the context of the joint committee to move further on some of those shortfalls on the environment. As the noble Viscount, Lord Waverley, reminded us, there is not just a new Government over there but we are about to have one over here—let us hope that the combination of those two move forward.
Finally, on the broader issue of scrutiny—to which we are going to have to return as a House, I think—the noble Lord, Lord Kerr, said that we can debate only when we can do nothing about it, and the noble Viscount, Lord Waverley, asked whether even the way we are doing it is sufficient. I think there is something really important about this; it is how trade fits into our security, our defence, our foreign affairs and our development, as well as our domestic agenda. But just looking at trade itself, what is it that this Government want? We just saw a wonderful example of it. We were asked about standards by my noble friend Lord McNicol, and others, but I thought one of the most interesting exchanges was between my noble friend Lord Liddle and, I think, the noble Lord, Lord Udny-Lister, about CPTTP. If this is the push for this particular agreement. and we hear there may be real questions about that Pacific tilt—some very supportive and some asking whether we have really thought about this—surely that is a debate that should take place in this Chamber, but it is also a debate that should take place and be on the record from the point of view of government. It is so important, not just how for trade fits into other things but on whether we have the right focus for trade.
Therefore, although this debate was about the particular deal with Australia and, as I said at the beginning, perhaps it is good that it was with a friendly ally with whom we do much work already, it has raised some very broad issues, both for the Government and for this House. For the moment, I thank everyone who has contributed, and I beg to move.