Lord Purvis of Tweed (LD)
My Lords, I thank the Minister for being approachable and proactive in communicating. I also thank his office for its openness and willingness to engage. I am sure that will continue, so if he could indicate what the timeframe will be with regard to the legal text being ready, and when we expect the treaty ratification process to commence, that would be enormously helpful.
These Benches believe passionately in free, fair, open and sustainable trade, so we welcome any reductions in tariffs for our exporters and moves towards reducing non-tariff barriers in new markets. As the International Agreements Committee and others have remarked, this will be the first agreement the UK enters into in which we will knowingly increase net emissions. What is the update from the Government with regard to the climate component of this accession? The Government do not provide much clear information with regard to emissions.
As the noble Baroness said, the UK already has trade agreements in place with most CPTPP members. This agreement absorbs the new ones that the UK has signed with Japan, Australia and New Zealand. Are there carve- outs in this agreement that we will be able to understand clearly when we receive the text?
With regard to the omissions in the Australia and New Zealand agreements on protecting geographical indicated foods, for those agreements, UK GI foods—some of the most cherished brands and produce in this country—will be protected only if Australia and New Zealand sign an EU trade agreement so we can protect them through the TCA. What is the protection for UK geographical indicated produce?
The Trade Secretary was getting into a bit of a tangle over the issue of modelling and the figures on Monday, so it is worth reminding the House that the Government’s scoping paper stated that the net benefit to the UK over 15 years of accession would be a mere £120 million per year to the UK economy. The trade writer for the FT said that, in decibel terms, this was
“a cat sneezing three rooms away”.
The Trade Secretary then asked us not to use the Government’s own paper regarding the 0.08% potential benefit. So I suspect we will have to await a full impact assessment. When can we expect to see that?
The Trade Secretary said that the CPTPP accession was “the future of … trade”. She correctly highlighted that this was the “fastest-growing” trade area but did not say that it was because of those countries’ trade with China. She also did not say that the pace of EU trade with those countries is now forecast to outpace what the Government’s modelling has said that the UK will benefit from in accession. The Trade Secretary said that this was the future of trade and that the people had voted for this, not the past—in some way indicating that there was a choice to be made; we trade either with Asia or with Europe. That is obviously nonsense.
The Government’s approach paper was pretty clear. It said that if we had maintained EU membership and the existing trajectory, UK trade with CPTPP members was already set to increase by 65% by 2030, or £37 billion. This accession is only adding 0.08%. I would be grateful if the Minister could say why it is opening up so little in additional markets.
The accession was also spun as a tilt away from China. However, we know that most of the countries within that agreement are also part of an agreement with China in the Regional Comprehensive Economic Partnership, which represents 30% of global GDP. Negotiations are in the final stages between China, Japan and South Korea for an FTA. What is the Government’s position on whether they believe that China should accede to CPTPP?
Finally, there is an omission from all the Government’s data. In the scoping paper and the Statement, there is no mention of trade diversion. There has been no consultation with developing countries on what the likely impact of market access will be. There is one line on page 52 of the Government’s scoping paper that says:
“While the impact of the UK’s accession to CPTPP on GDP in developing countries is likely to be negligible, developing countries with a high share of trade with the UK and CPTPP member countries are most likely to be impacted”.
We already know that some exporters from Africa are complaining that they were not consulted and that their produce is going to be harmed by this accession, so perhaps the Government could provide information on trade diversion.
As with the India agreement, I have a considerable fear that some, if not most, of the benefits that we are likely to see will be trade diversion from developing countries with which we are seeking to encourage trade. I hope that the Minister can provide detailed information with regard to those questions.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
I thank the noble Lord, Lord Purvis, and the noble Baroness, Lady Chapman, for their questions and comments. I am only sad that I have to inject an element of enthusiasm into this Chamber for what is one of the greatest trade deals this country has struck in many decades, probably in my short lifetime. We have joined a £9 trillion group and there is no common army, there is no flag, there is no currency; there is only a common group of nations, liberal-minded in their economic outlook, which want to work together for mutual recognition, not for harmonisation. I will quote, if I may, William Seward—Abraham Lincoln’s Secretary of State, if noble Lords are not sure who he was—who said that
“the Pacific Ocean, its shores, its islands, and the vast regions beyond, will become the chief theatre of events in the World’s great Hereafter”.
I am extremely proud of the work that the Secretary of State and our department have done. I thank her, our chief negotiator Crawford Falconer and Graham Zebedee for the incredible number of hours they put in, and the previous Secretaries of State, who embarked upon this post-Brexit vision of Britain, to turn what could be called “Ocean’s 11” into “Ocean’s 12” with our accession, I hope, over the coming year.
I also thank the businesses that have participated, which will see the benefits of being able to export their goods more easily to these key countries, where the rules of origin benefits will be significant in terms of managing supply chains; where business mobility will be written into law; and where there will be protections for our industries and the agricultural community in this country, which will allow them access to markets that previously they were unable to access. These now include our free trade opportunities with Malaysia, where we did not have a comprehensive trade deal. We have the opportunity over the coming year or so as accession takes place to have a full trade deal with this nation that has a GDP of just under $400 billion. Vietnam, one of the countries of the CPTPP, is forecast to grow faster than any other major country on earth, I read today, between now and 2050. I was grateful to the noble Lord, Lord Purvis, for his statistical analysis.
However, this is not just a trade deal of statistics; it is about our focus on the growing economies of the Indo-Pacific region. It is right that this nation, in trying to ensure that we have close and good relationships with the European Union in our tariff-free and quota-free access to that valuable and essential continent of our neighbours, is also exposed to the future growth economies, the populations and the services that we can sell to them over the coming decades. So I congratulate the businesses that participated in this process to drive this forward, and our department that achieved it.
Finally, I thank the countries which supported us. When my Secretary of State gave her Statement to the other place a few days ago, she was watched and admired by the ambassadors, I believe, of Vietnam and Japan—just two of the countries which were so important in propelling us into this important trade group, which will stand as a beacon for liberalisation, free trade and economic growth for decades to come. I am surprised that everyone I have spoken to has congratulated me—not that I did anything, by the way, to accede us to CPTPP apart from providing moral enthusiasm and my work generally as an atom of the department—on Britain being able to join the accession process for CPTPP.
I went round Asia last week—I went to Japan, Australia and Singapore—and we were cheered and had standing ovations solely for the fact that we had recently acceded to the process of joining CPTPP. So I am amazed and saddened that we do not have more delight at this one act. Yes, there are important areas for inquiry and I hope that noble Lords have seen in my work over the Australia and New Zealand trade Bill the seriousness with which I have engaged personally with Members on all sides of the House in making sure that we do scrutinise these agreements. If we do not all get behind them, they will not have the effect of galvanising our exporters to action and making the most of the opportunities presented by these treaties.
I am extremely keen to engage where I can, at every opportunity and with all Members of this House, as we progress towards signature and accession to CPTPP. But I would like a little more enthusiasm and celebration, if possible, for something that, frankly, all Peers have been calling for and we are now starting to deliver—it will genuinely change lives.
I am happy to go through some of the core points raised by the noble Baroness, Lady Chapman, and the noble Lord, Lord Purvis. I am sure they will understand that I will have to come back to them on some of their questions—I think they would want me to be specific and accurate—but they certainly set the tone with some of their points. The important point is that, in this free trade agreement—rather than the customs union that was the old European Union—we do not abrogate any of our standards for imports: standards on pesticides and food remain exactly the same. We control our standards, and it is important for everyone in this House and the country to hear that clearly. Nothing has changed in what we allow to be sold in our shops; that is the whole point of a trade deal, rather than a customs union.
On many occasions I have been asked about countries acceding to the CPTPP in the future, but I will not be drawn on that for the simple reason that we have not even joined yet, so it would be totally inappropriate for me to comment on that. I echo the Secretary of State’s statement on that point earlier this week. But this is a liberal, free markets trading group, and we hope it will act as a beacon for all countries around the world to reform their markets and economies to become liberal, free and open to world trade. I hope that all nations will look at it as a beacon of hope.
Questions about our treaty possibilities with the United States were raised. Again, this came up a few days ago in the other place. We are keen to do a trade deal with the United States—and with most countries in the world—because it is a huge part of the global economy, although it is not in a position to negotiate with us at the moment. So what have we done? That is a rhetorical question—we have signed specific memorandums of understanding with states, and this will enable us to have better links and closer co-operation, particularly for the all-important and growing services, and professional qualification recognition aspects of those services. I believe that my honourable friend, Minister Huddleston, was in Oklahoma this week, signing such an agreement—forgive me if I have got the state wrong, but he is certainly in the US at the moment, signing further MoUs.
It is important to turn to the comments by the noble Lord, Lord Purvis. He likened the economic benefit of this deal to a sneezing cat three rooms away—
Lord Johnson of Lainston (Con)
I am glad that the noble Lord was quoting the FT. I am happy to discuss this further, but it is important that we have an impact assessment of all our FTAs and that we have a proper discussion in this House about the review of trade agreements. So I am comfortable with continuing my personal commitment—or whatever the expression should be—to what we term the “Grimstone principles”, which noble Lords will be aware of. These give adequate time for committees and so on in this House to make sure that they have proper scrutiny. I am comfortable with confirming that, and I hope it is welcomed by the House. I very much look forward to having a full and frank debate on the points to ensure that we have indeed signed up to a deal that this House, this Government and this country support. It will bring benefits to us and the other nations of the CPTPP.
Baroness Hayter of Kentish Town (Lab)
My Lords, the Minister is obviously younger than I thought, because he does not remember the great agreement we signed when we joined the European Union in 1973. But I am delighted that he reinforced that the Grimstone principles will be adhered to and that we will have months, rather than days, to scrutinise this agreement. On behalf of the International Agreements Committee, I thank him for that.
I want to raise the question he mentioned of standards, particularly food standards, which are of enormous importance to consumers. Not only are they important in themselves, but any divergence of them from the rules that we keep for importing or exporting food to and from the European Union would be really difficult for manufacturers and importers. Can the Minister reassure us that nothing in any change to standards will impact either on our consumers or, indeed, on our ability to trade with our near neighbours in the European Union?
Lord Johnson of Lainston (Con)
I am grateful to the noble Baroness for her comments and for her continued support, through the process of scrutiny, of this very important treaty. I look forward to working with her and her committee’s members closely over the coming months. On food standards, it is very important for me to repeat my point that nothing in the CPTPP lowers our food standards. All food and drink products imported into the UK will have to meet the same standards on the day before the CPTPP comes into force as they will the day after. The whole point about this is that we control our borders and the standards of goods and services sold to our consumers.
I too can quote from people who have been observing the situation. In a statement published on the National Farmers’ Union website, its president, Minette Batters, was pleased that the Government
“continues to maintain its commitment to our food safety standards”.
Questions were raised as to whether the CPTPP will lead to exports of food at lower standards, such as hormone-fed beef and chlorinated chicken. No: again, nothing in this treaty lowers our food standards. As I say, the standards we have the day before this treaty comes into force and the day after are exactly the same.
Lord Hannay of Chiswick (CB)
My Lords, the Minister asked for a bit more enthusiasm for the CPTPP. As one who has spoken in debates in this House and in Grand Committee in favour of the agreement that has now been concluded, I do not think I qualify as lacking enthusiasm, but does the Minister not recognise that you get more enthusiasm by quoting figures that are valid, reliable and solid? For example, he quoted trade with Vietnam. That is very valuable indeed, but we have a free trade area agreement with Vietnam already, so can he say what CPTPP membership will add to what we already have? When he talked about trillions of trade in that area, that is of course true, but those are not all benefits to the United Kingdom. Enthusiasm will come if there is solid reason for it.
On China, will he answer two questions? At what point in time does our view on an agreement between the CPTPP and China—and indeed Taiwan; both have applied —become valid? At what point do we have an equal say? Presumably not now, because we are not yet a CPTPP member. Presumably not just when we ratify it—will all members have to ratify it before we have a say in China’s relationship? It would be really helpful to have this; I asked the question in earlier debates and I am sorry to say that his predecessor never wished to reply to it.
Lord Johnson of Lainston (Con)
I am grateful to the noble Lord for raising these points. He asks what the benefits are. As I have stated, the free trade agreement with Malaysia is in itself a worthy goal. We in this Chamber would be delighted—and I as a Minister, and the Department for Business and Trade, would be very comfortable—if all we had was a free trade agreement with Malaysia, where there are tariffs of up to 80% on some of the spirits we export. It is one of the largest consumers of Scotch whisky in Asia.
Secondarily, and more importantly, he mentioned Vietnam. The tariffs we have under our current agreements with Vietnam, on exports of pork, chocolate, engines and medicines, for example, are going to end far more quickly, so there is a speeding up of the process: if we already have a parallel agreement there is, in many instances, a speeding up of our access to those markets. It also highlights the importance of other areas, such as professional qualification recognition, which is so important; how services function; and the very important rules of origin. For all of us who believe in a renewed UK automotive sector, it is exactly these broad rules of origin that will allow us to make a success of this trading region.
The final point, which is often missed because we rightly look at the detail and the statistics, is that there are powerful personal, emotional and philosophical elements to joining this relationship. It gives us great sway over the future of global trade. It makes us relevant in a core area, in terms of our long-term national defence. It brings us closer together with other nations and it acts as a beacon to our exporters in this country—frankly, we could do with more of the companies in this great nation of ours exporting. I look forward to the opportunity this debate brings to give us a truly world view, rather than one that focuses simply on our locality, and put fire in the heart of our nation’s exporters to take our products and services to the rest of the world.
Lord Hannan of Kingsclere (Con)
I congratulate and thank my noble friend the Minister for enlivening this Eeyore-ish mood with some Tigger-ish enthusiasm. The benefits of CPTPP seem to be obvious to the lengthy list of countries which have formally applied for or are mulling membership—a list which includes Thailand, Taiwan, South Korea, the Philippines, Costa Rica, Ecuador, Colombia and Uruguay. Of course, I understand that my noble friend is bound by diplomatic protocol, but will he take this opportunity to express some optimism about the prospect of the United States joining that list? CPTPP was to a large degree negotiated not just by senior members of this Administration but by President Biden himself. American accession to that pact would allow an improvement in the terms of trade between our countries, bound together as we already are by language, law, custom, kinship, habit and history.
Lord Johnson of Lainston (Con)
I am always grateful to my noble friend for his eloquence. He is a very difficult act to follow, even though his question is so true to my heart. I am afraid I will not be drawn into suggesting who should potentially be admitted into the CPTPP because we are not yet members, but as I said, I am delighted that this entire organisation acts as beacon of free trade around the world. We want more countries to see the world through the lens of us and our aligned partners. I very much support, conceptually, many of my noble friend’s comments and I thank him for his support in this House and for continually making sure that the torch of free trade is held high in this place.
Viscount Stansgate (Lab)
My Lords, the Minister complained earlier of having been insufficiently appreciated for this Statement, but I am more than happy to congratulate him for including in his answer the comments of one of Abraham Lincoln’s most distinguished Cabinet members.
I want to ask a brief question about Vietnam which has, in part, been asked already by the noble Lord opposite. The Statement refers to Vietnam particularly with regard to legal and other services. Can the Minister explain in more detail what else the Government are expecting to get out of enhanced arrangements and trade with Vietnam, in addition to the arrangement we already have?
Lord Johnson of Lainston (Con)
I am grateful to the noble Viscount. I was not asking for praise for myself or enthusiasm for my own actions, but enthusiasm for the actions of the Secretary of State, the department and this Government in pursuing this noble free-trade policy, which will ultimately enrich us all and make us safer.
The noble Viscount asks very sensible questions about the specificity of our relationship with Vietnam regarding the CPTPP. As I have said, the CPTPP contains a large number of chapters that will allow us more effectively to achieve market access for our goods, and with greater haste. In my view, that is in itself a very positive point. I have touched on some of the other aspects that apply broadly to the CPTPP, and I am happy to repeat the statistic I was sent this morning, although I cannot guarantee its legitimacy. Maybe I should declare an interest, to some extent: I have personal financial shareholdings in companies that invest in these countries, although I am not involved in them directly, as noble Lords can imagine. Vietnam is forecast to grow faster than any major country on earth between now and 2050. I would have thought any arrangement that allows us access to a market of that dynamic nature must be a positive for this country.
If we consider our long-term security and the importance of diversifying our supply chain and looking at how our supplying countries interact with us, I cannot think of any more powerful ally than Vietnam in this instance. I look forward to visiting that nation and seeing if we can encourage investment from there into the UK.
Lord Hamilton of Epsom (Con)
My Lords, I have an interest to declare, in that my noble friend the Minister is actually my son-in-law. I have been advised that, on that basis, I can call him my noble kinsman. I am not sure that he actually is my noble kinsman but on the other hand, it is rather useful shorthand for declaring my interest when getting up to ask him a question. First, I congratulate my noble kinsman on the role he has played in achieving our signing of this treaty, which is going to make a massive difference. May I ask about the rather minimal increase to trade of 0.08%? I just wonder what assumptions were made when this forecast was produced. Does my noble friend recognise that many recent economic forecasts have applied on the basis of “garbage in, garbage out”?
Lord Johnson of Lainston (Con)
I thank my noble kinsman for his intervention; this is the first time we have spoken in this way. I asked the House of Lords Library whether there were any other pairings of son-in-law and father-in-law, and I have not received a response; maybe the Library was too alarmed by our own prospects. But my noble kinsman raises a good point about the statistical analysis of the value of this trade deal to the UK. I wish to avoid getting drawn into complex statistical discussions in this important but short opening debate, but I am happy to do so in the future, and there will be further impact assessments.
It is difficult to forecast the ramifications of a trade arrangement. In fact, what has been produced is not a forecast; it is a static model. It is not for me to lecture Peers in this House on how that functions but as the name implies, it is a static model rather than a positive forecast of how trade can be increased on account of this deal. All I will say is that New Zealand signed a free trade deal with China, and its model projected $3 billion a year of additional trade activity; I think within five years, it was over $30 billion a year. So it is not simply a question of looking at one static model; we must look at a more effective impact assessment in the future and make our own forecasts. As I say, it is not simply about trade data; it is also about the influence we will have in this region and the philosophical endeavour we embark on to encourage free trade around the world.
Lord Walney (CB)
The Minister has been clear that he is not going to express a view on particular countries joining, but will he at least be clear that the Government will view Taiwan’s application as a valid one not subject to any veto from China?
Lord Johnson of Lainston (Con)
I thank the noble Lord for his point, and I thank all noble Lords who have raised similar questions about countries potentially joining the CPTPP. As he will understand, it would be totally inappropriate for me to comment on that, since we have not even joined. I say again that I encourage all countries that fulfil the liberal free trade obligations and criteria to look to the CPTPP as a beacon of free trade and economic prosperity. However, I would not like to comment at this stage.
Lord Fox (LD)
The Minister has reeled off some really impressive growth figures, and I am sure he would acknowledge that one of the main drivers of that growth is the proximity of many of those countries to China. I would like him to comment on the observation that with or without China’s accession to this treaty, our accession to it subtly changes, whether implicitly or explicitly, our relationship with China. Also, what advice is his department giving to businesses when they are sourcing large proportions of their supply chain in China?
Lord Johnson of Lainston (Con)
I am grateful to the noble Lord, Lord Fox, for his interventions. There may be some confusion; there is not a preclusion of doing business with China now that we are acceding to join the CPTPP. This is an enhanced trade agreement that will allow us, as my namesake Prime Minister said, to have our cake and eat it in the relationships that we can have with all Asian countries. As for the advice we are giving to businesses, the Department for Business and Trade employs many hundreds of people around the world and in this country, as well as many hundreds of export champions, to encourage businesses to export to these countries. There is no length to which we should not go in order to assist our businesses and to signpost them. The very fact that we are having this debate on this important free trade accession will, I hope, raise the salience of exporting, as I have mentioned in earlier comments. I do not necessarily see enough businesses in this country taking the risk, challenge or opportunity of exporting. I hope that, if we raise the salience of exporting, that in itself will help, as people see the opportunities that are presented to them.
Baroness Bennett of Manor Castle (GP)
My Lords, my understanding is that this agreement will lead to the removal of all tariffs on Malaysian palm oil. Can the Minister confirm that and explain how that is compatible with the UK’s COP 26, and indeed COP 15, obligations to reverse forest loss and degradation? Why have the Government not gone towards an approach, as happened with EFTA and Indonesia, where improved market access is tied to sustainability and improved environmental conditions?
Lord Johnson of Lainston (Con)
I am grateful to the noble Baroness for raising that point. It is clearly important to raise palm oil, and I am sure it will come up in later debates. However, I believe—I am happy to write to the noble Baroness to confirm—from memory that sustainable palm oil imports into this country have risen from about 16% in 2010 to nearly 80% now. The reforestation of Malaysia and its pledges to ensure that it runs sustainable palm oil production have been very much wrought into the discussions we have had with it. All members of the CPTPP are parties to the Paris climate accord, and there is an environmental chapter.
In other areas which were covered earlier in this debate by noble Lords, such as animal welfare, we would like to think that we have actually informed the debate, particularly with countries such as New Zealand and Australia. In both those countries, we have now seen whole new swathes of legislation around animal rights that may even bring their standards to a level higher than our own. That is the sort of concept around the engagement of these treaty negotiations that yields common benefit for all.
Baroness Wheatcroft (CB)
My Lords, I share the enthusiasm of the Minister for trying to replace some of the exports lost through Brexit, and I listened to what he said about static targets. However, the Minister for Trade, Kemi Badenoch, said she could not stand the estimate of 0.08% because it was based on “stale” figures from 2014. If that is true, could the Minister explain why his department is using figures that are 10 years old?
Lord Johnson of Lainston (Con)
I am very grateful to the noble Baroness for raising this point. Clearly, there will be a lot of discussion around how to measure, if we can, the benefits of a free trade agreement. As I believe I mentioned—I apologise for not being clear enough—these figures are static modelling figures rather than forecasts, so they rely on significant quantities of historic data. It is often a difficult position to be a government Minister at the Dispatch Box when you are reliant entirely upon government figures which do not necessarily chime with the mood music. However, it is important to look at all the different statistics that will give us the information we need to have a sensible debate. This is not a forecast; this is a static model. The forecast, I believe, will be extremely positive, as will the impact assessments. I reiterate again: the experience of New Zealand in simply one of its trade deals was 10 times greater than any model that it had created. That is the sort of statistical analysis I look forward to seeing.