Comprehensive and Progressive Trans-Pacific Partnership (IAC Report)
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Baroness Hayter of Kentish Town
That this House takes note of the Report from the International Agreements Committee Scrutiny of international agreements: UK accession to the Comprehensive and Progressive Trans-Pacific Partnership (6th Report, HL Paper 70).
Baroness Hayter of Kentish Town (Lab)
My Lords, although no longer a member, I chaired the International Agreements Committee for the start of its work on the accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, before handing back the hard work and the drafting to my noble and learned friend Lord Goldsmith. I am moving the Motion on his behalf as he is unable to stay for the duration of the debate, although he is here now and, I trust, will be here for much of it. He did the hard work.
I am delighted that we will hear shortly from a number of past and present members of the committee: the noble Lords, Lord Fox, Lord Howell of Guildford, Lord Kerr of Kinlochard, Lord Lansley, Lord Marland and Lord Udny-Lister.
The UK’s entrance into the Indo-Pacific free trade agreement is important both for the partnership—as we are the first member to join the founding 11 and will be the second largest, after Japan—and for the UK, as the Government claim this as a flagship of their post-Brexit policy. For the 11, our accession renders it a global, rather than regional, agreement, and it will then represent 15% of global GDP. For the UK, the CPTPP might be more than simply a trade agreement as it is part of the Government’s strategy to deepen our engagement with the Indo-Pacific region. The report before your Lordships considers its importance in this light.
I will highlight two themes in the report. The first is the value of the trade bloc for British businesses, and how the Government can help the utilisation of the agreement. The second is the strategic implications of CPTPP membership for the UK’s engagement in the region.
On the first point, the economic value of CPTPP membership is likely to be modest. The impact assessment and the OBR suggest a 0.04% to 0.08% boost to GDP over 15 years, partly as we already have free trade agreements with nine of the 11 countries. While the Government claim that these low figures fail to capture the rapid growth in the region or future expansion of membership, the committee found it difficult to quantify that, while any expansion of the membership remains somewhat speculative.
The CPTPP affords market access to Brunei and Malaysia, with some limited export opportunities in agri-food and certainly greater legal certainty for services. Its rules of origin provisions could offer opportunities for manufacturers to develop and integrate supply chains into their business models and expand into new and growing markets. However, the evidence we received is that these rules of origin are very difficult to cut through and that there are insufficient measures to help businesses to take advantage of any new opportunities. Indeed, it is possible that, without additional help, only those businesses already exporting to the region will be able to take advantage of any such openings.
It is therefore vital that the Government provide effective ongoing support, particularly for SMEs. A key recommendation is for a new task force to run for two to three years, focusing on regional roadshows. I look forward to the Minister’s response to that suggestion, especially as we heard that the Government’s online guidance about CPTPP and trade agreements is inadequate and hard to find or navigate, with GOV.UK described as “woeful”, “almost impossible to use” and in need of “a complete overhaul”. We heard that businesses often turn to other countries’ websites for advice and information; that is surely unacceptable. Ministers must improve online guidance if any trade agreement is to be worth more than the paper it is written on.
The CPTPP is also about imports, particularly agriculture and food. The NFU welcomed the fact that farmers have been shielded from CPTPP imports in most vulnerable areas—an improvement on the deals with Australia and New Zealand—but has
“serious concerns about the cumulative impact of trade deals on British food production, especially … beef, poultry and pork”.
That is a reminder to consider the cumulative effects of successive deals on farmers and food production, not just the impact of each individual deal.
The Government have assured us that the UK’s right to regulate to protect human, animal and plant life is secure under the CPTPP. However, some academics remain concerned about the threat to our precautionary approach to sanitary and phytosanitary, or SPS, regulation. The precautionary principle permits regulation to protect the environment where there is a plausible risk of serious or irreversible damage, even in the absence of complete scientific proof. The CPTPP’s dispute settlement mechanism, as it affects the environment, means that future SPS measures might be challenged via the state-to-state dispute mechanism. The committee therefore asks Ministers to set out how they intend to address these challenges to our regulatory approach. I look forward to the Minister’s response to that.
I turn to the second consideration, the strategic value of joining the CPTPP. It has been something of a challenge to judge this in the continued absence of a cross-government foreign, defence and diplomatic vision into which a sustainable, long-term trade policy might fit. The committee therefore reiterates its call—we hope with a better response this time—for the Government to publish an overall trade strategy with clearly defined objectives. Such a framework would surely help to clarify and guide the Government’s priorities by spelling out their objectives for trade, but it would also facilitate parliamentary scrutiny of the Government’s aims as set against their achievements.
In assessing CPTPP membership, witnesses to the committee made three arguments in support of it. First, while wars in Ukraine and the Middle East, and the risk of reduced US commitment to NATO, create new uncertainties closer to home, CPTPP membership, given the Indo-Pacific’s geopolitical significance, sends an important political signal about the UK’s commitment to that region. The committee views engagement with the Indo-Pacific as positive. However, there is a lack of detail as to how the Government intend to utilise our membership as the trade strand of their so-called Indo-Pacific tilt. Ministers should spell out how they expect membership to contribute to their strategic aims in the region.
Your Lordships’ House does not need reminding that the international landscape for trade is rapidly changing and increasingly uncertain, which brings me to the second argument: that the CPTPP provides membership of a group of like-minded countries committed to free and open trade, high regulatory standards and adherence to the rule of law, together with the ability for member countries to align their standards and governance to promote fair and free trade. The committee agrees that the CPTPP can be seen as a rallying point for a rules-based liberal order, but this objective might be limited in an increasingly protectionist world. We should not forget that the CPTPP’s primary function is to liberalise trade among its members, rather than act as a political or strategic forum, so while we acknowledge value in using the CPTPP to engage with partners in the Indo-Pacific, we should be wary of overstating that potential.
Thirdly, the CPTPP could act as an incubator for new trading initiatives, particularly in emerging sectors such as digital and environmental trade, where the UK has a valuable opportunity to contribute. This possibility is particularly attractive as we grapple with a struggling WTO. We thus welcome this but acknowledge that plurilateral agreements cannot replace co-operation at the multilateral level. In the words of one witness, the WTO is
“really important. We need to keep trying … there is no real substitute”.
Innovation within the CPTPP should be viewed as complementary to, rather than a replacement for, multilateral efforts.
Accession is nevertheless welcome, and it will be important for the UK to take full advantage of its new seat at the CPTPP table. The committee considered potential avenues for UK input to the partnership’s future development and welcomed the invitation, prior to our full accession, for the UK to contribute to the first general review, which is taking place this year. It is aimed at consolidating the trade text and considering how to update and enhance it.
The report in front of your Lordships welcomes the stakeholder consultation and calls on the Government to publish their own priorities, both for this current review and for their longer-term future priorities for CPTPP development, hopefully prioritising areas of UK strength such as innovation in climate and trade in environmental goods and services, together with digital and other services. The House will not be surprised by my—and, in this case, the committee’s—regret at the absence of a consumer chapter, so we hope that its future inclusion could secure consumer protection within the agreement.
The partnership aspires to be a “living agreement”, although in the absence of a standing secretariat the rotating chair carries a heavy burden in marshalling the group. The UK should therefore respond favourably to any move towards a standing—although lean, I hope —secretariat.
There has been much debate on the possible future expansion of the CPTPP, with a number of countries already having applied to join, including China, Costa Rica, Ecuador, Taiwan, Ukraine and Uruguay, with other countries likely to follow suit. The process for any applicant is, first, for the country to demonstrate adherence to the required regulatory standards and a track record of adhering to the letter and spirit of existing international trade commitments. The second part of the process is for all current members to agree the new accession—a high bar, as our own application demonstrated. The IAC would welcome any country that meets these rigorous tests of entry, although, given the evidence received, it is unlikely that China will meet the necessary requirements any time soon.
The committee welcomed the Minister’s commitment that any new joiner would be subject to CRaG, but it calls on the Government to ensure that new accession processes go through the same consultation and impact evaluation as with any FTA partner—I see the Minister nodding. I note that, in the Commons at this very moment, they are trying to get such an amendment to the Bill currently going through. More seriously, it is vital that the Government start complying with the spirit, not just the wording, of CRaG.
Thanks to our Chief Whip, we are having this debate in this House, but the reality is that only the Commons has the power to delay ratification. We learned last week that the Leader of the Commons has denied that House the ability to debate or vote on the accession treaty within the CRaG period, making a mockery of the legislative power included in the 2010 Act. I note that the overwhelming vote of this House on 22 January—that the Rwanda treaty should not be ratified until all the promised safeguards are in place—has, to date, received no response from the Government, as required under the Act.
In addition to CRaG, there are other demands on the Government to ensure that successful trade deals will benefit the whole of the United Kingdom, including all its countries and regions. We acknowledge the improved consultation with the devolved Administrations, and we call on the Government to continue to share information and engage with them in a timely and transparent manner.
In summary, the committee welcomes the UK’s accession to the CPTPP and looks forward to the Government’s efforts to support businesses and consolidate their strategy to maximise the opportunities arising out of our new membership. I beg to move.
Lord Lansley (Con)
My Lords, I am glad to have the opportunity to express our thanks to the committee, its chair and its former chair for the work in preparing this report. I am glad we have the opportunity to debate it now, in good time in relation to the CRaG process. Noble Lords will recall that, in previous discussions on trade Bills, we secured what we regarded as agreement from the Government that, where any committee makes a report for debate in either Chamber, it should be facilitated before the conclusion of the CRaG process and moving to ratification.
That said, I do not want to understate the degree of scrutiny that has been given to our accession to the CPTPP. When I was a member of the committee some time ago, we looked in detail at the mandate for the negotiations, and we looked at the issues arising from the treaty, because of course we were looking at an existing treaty and could consider what the implications of the provisions of the CPTPP might be, were we to accede to them. The Government responded very positively to some of the points we made at that time, not least on behalf of the witnesses we received. In addition, we have had the opportunity to debate the Bill, in so far as legislation was required. I do not want to understate the scrutiny of this House, which has been nothing other than thorough, demonstrating the importance that should be attached to the continuing work of the International Agreements Committee and the scrutiny we give treaties in this place.
It is really important to recognise that this is an accession, not a negotiation. Occasionally, some of the witnesses’ evidence submissions to the committee and some of the wider CPTPP debate suggested that it was open to us to negotiate an agreement as we are doing with other countries on a bilateral basis to conclude an FTA. This is an accession, and I will come back to that in a moment.
Investor-state dispute settlement is a very good example of this. I remind the House of my registered interest as the UK co-chair of the UK-Japan 21st Century Group. Japan was a very early supporter of our accession to the CPTPP, and we should not underestimate the significance of that in our being able to be the first to join this regional plurilateral grouping. Some expressed the view that we could join the CPTPP but that we do not like investor-state dispute settlement. I am not quite sure why we do not like it; some do not because they think we will be challenged, although we never have been. As outward investment and our reliance on foreign direct investment is unusually important to this country, we should be in favour of giving investors confidence. I am therefore in favour of our agreeing to appropriate ISDS provisions. Had we tried to join the CPTPP while having side letters with everybody, and tried to exempt ourselves from all the effects of ISDS, including with Japan, we would not have been able to accede. Let us not get into arguments that pretend that we could have had a negotiation that we could not have had.
I want to talk about one main element from the latter part of the general themes that the noble Baroness, Lady Hayter, talked about: the strategic context—not the Indo-Pacific tilt but the question of whether the Government should have a trade policy White Paper and a trade strategy document. When we as a committee asked for one over a year ago, we were right to do so, but it is now late in the Parliament to do that. However, anyone who wants to—not least from these Benches—can look at the Government’s activity in trade policy and deduce what we are trying to achieve. I think one would make a very positive deduction, not least from the fact that we wanted to join the CPTPP in the first place. It was very easy for people to say, “What has that to do with us? We’re not a Pacific country and we weren’t involved in the negotiations that led to the CPTPP, so why would we want to join it?” The short answer is because our trade policy is to support a rules-based system that obtains at high standards and is a broad-ranging and flexible, but also progressive, system of agreement for trade.
At the time that it was negotiated, the CPTPP was cutting edge in terms of digital trade and was quite forward in terms of services trade. A number of years have gone by, and there is now scope in the 2024 general review to remedy that. When they started this process, the Government were demonstrating their commitment to trade liberalisation, open trade, a rules-based trading system and not simply to bilateral agreements but to plurilateral agreements that would bring others into a broader world trading system. In the years to come, CPTPP may well demonstrate itself in that way as by no means confined to the Pacific Rim. We are leading the way, and I hope there will be others that follow. Let us not discount completely —happily, sometimes things change, and they do not always change in the wrong direction—that there might be the day when the United States once again thinks about joining a plurilateral, open trading system in ways that it has not done in the recent past. When it does so, the fact that two of its leading strategic allies, the United Kingdom and Japan, are in the CPTPP and were involved in the early stages of negotiating the agreement may give it greater confidence that this would be the proper step for the United States to take, if it really wants to rejoin a rules-based trading system, and greater confidence on how to go about it.
The only other point that I want to make is that I agree with the noble Baroness and the committee report—I think it is in paragraphs 74 to 76—that the CPTPP is not an alternative to the WTO, but in the recent WTO ministerial conference we have seen that plurilateral agreements in that context have made some progress, on things like the regulation of services, investment facilitation and so on. However, the WTO was not able to get agreement on things like food security and fisheries, or, sadly, on dispute settlement. I do not think that we can rely upon the WTO to make the progress that we need. If we are not careful, in the absence of WTO agreements, everything will be done by way of bilateral agreements, which lead one into a more mercantilist system, whereas what we want is an open, plurilateral trading system.
From my point of view, that means that things like the CPTPP and other plurilateral agreements—which are not just regional but may, as we can see, develop in relation to services, investment facilitation or, very importantly, trade in environmental goods—are all ways in which we can promote a wider, positive, open trading system. If we do not do that, protectionism will increase, and in so far as people are not simply protectionist, they will be mercantilist, expecting—as President Trump was wont to do and China is wont to do—that they can negotiate the outcome of trade, rather than create a system which enables the outcome of trade to be the result of markets and competition. That is what we are looking for, and that is why we are looking for an open trading system.
In that context, our accession to the CPTPP is a wholly positive step. I do not think that we should in the slightest diminish it by reference to some of the current statistics about what the prospective economic impact might look like. By the time we have made changes in terms of digital and services trade, and by the time one takes into account the confidence that is given to investors, the beneficial impacts resulting from our membership of the CPTPP will be considerably in excess of what has presently been predicted. I very much support it, but I am also very grateful to and support the committee in the report that it has given us.
Lord Anderson of Swansea (Lab)
My Lords, I congratulate my noble friend Lady Hayter on her helpful introduction to the debate on the report. I differ from the noble Lord, Lord Lansley, only in that he was a member of the committee, heard the evidence and is now contributing to the debate; I was not a member of the committee at the time and did not hear the evidence and therefore have to rely largely on the helpful report which the committee has produced. I will therefore be somewhat brief.
I accept that the accession is welcome and, more importantly, has potential for growth in directions that are relevant to our own interests, both in relation to the internal developments within the agreement—as insiders, we can now make contributions in a way that we could not if we were not members—and because of the possibility of new members coming to join. China and Taiwan have been mentioned, but both, for different reasons, are unlikely to join. It is uncertain how many other countries will join. Indeed, if there were a large number of members, the agreement would be approximate to the now failing WTO. Although both previous speakers said that the WTO is important, there is clearly a deadlock, not least because of the Trump policy on appeals and so on. As insiders, this is important, but we join having to accept the existing rules—rules over which we have had no part in drafting. It would therefore be unwise for us to throw our weight around at the beginning, although we are the second-most important economy in the group.
The context is clear. The accession is possible because we are now outside the European Union. Obviously, within the European Union, our weight in trade negotiations would have been substantially enhanced. Yet such bilateral or plurilateral agreements should be put in perspective: the best trade agreement that we had was inside the European Union. Any other deals, such as with Australia or this current deal, are, in essence, damage limitation: doing the best that we can outside the European Union. The European Union remains the UK’s primary trading partner and the largest single export market for our services. The European Union provides a basis for an improved service sector among member states and within the single market. I was present at a recent Brand Finance conference, where John Major, as a principal speaker, said how much he favoured joining the single market.
It is a temptation for the Government—as the Minister said yesterday at Question Time—to hype the importance of such deals, and although we welcome the accession, the report is careful to avoid such exaggeration. The report summary says:
“Despite projections that CPTPP will bring limited economic benefits to the UK in the medium to long-term, the accession of the UK could be of strategic importance, especially in shaping the future development of CPTPP and geopolitical influence in the region. However, the effective implementation of CPTPP is key to maximising any potential benefits and building capacity for the future”.
I emphasise the words “could” and “potential”. We already have free trade agreements with nine existing members, although I accept that it is important that Brunei and Malaysia are now within the fold. Therefore, it means that the opportunity for growth is somewhat constrained, and two witnesses described the benefits as “marginal”. The Society of Motor Manufacturers and Traders, for example, stated that the
“potential benefits … should not be overstated”,
and we should generally be alert to the fact that the agreement is only a small part of UK trade. Yesterday I mentioned the Government’s estimate of 0.08% of GDP over the relevant period and the 0.04% estimate of another relevant group.
My second point is that there needs to be a new focus on services in our trade policy, particularly as, from 2021, services have overtaken goods as a share of UK exports. In 2023 services accounted for 54.3% of the total UK exports of £859.2 billion. These figures do not include services provided through our commercial presence in third countries. Our strength is in the service sector and yet the current agreement offers little, if any, liberalisation of services and no effective enforcement mechanism. We can only hope that, as insiders, we can help over time to move the agreement to have a more robust policy on the service sector. In the Government’s judgment, what prospects are there of helping to move the agreement more to the service sector? Have there already been any soundings in that direction?
My final point, already made in part by my noble friend, relates to the devolved Administrations. The Government have acknowledged the failure of consultation in this respect. The committee calls for information to be shared in a timely and transparent manner in and outside the relevant areas of devolved competence. I note that in the Australia deal, which the noble Lord, Lord Lansley, mentioned, Welsh farmers suffered substantially over Welsh lamb. I hope that the lesson of listening more to the concerns of the devolved Administrations has been learned. We should not sacrifice their interests on the altar of greater deals. The information-sharing protocol, which was made early last year, indicates that the Government have learned some of the lessons. But we should watch this space to see whether there are any real improvements. We must understand that the devolution settlement is now only 25 years old. There needs to be a total culture change in Whitehall to consult on and listen to the interests of the devolved Administrations. The Government have acknowledged that this was not the case in respect of this agreement. Let us hope that the lessons have now been fully learned.
Lord Purvis of Tweed (LD)
My Lords, I declare that I co-chair the All-Party Parliamentary Group on Trade out of Poverty. I thank the Minister for the advanced information through correspondence regarding the treaty. He is unfailingly accessible, as is his office; I appreciate that. He and I are enthusiastic free traders. He has a skill of finding greater enthusiasm for certain agreements than I do, but nevertheless we are both free traders. He must have erred in some other policy areas for him to be on those Benches and not these. Nevertheless, we share an ambition for the growth of UK exports and trade.
I also thank the noble Baroness, Lady Hayter, and the committee for their work. The IAC report is another excellent publication, building on its first report, as the noble Lord, Lord Lansley, indicated. It is especially important given that not only has the House of Commons not been debating the CPTPP but it no longer has a committee that specifically looks at international trade policy—so the service that this committee does for this House is even more important. The report’s opening probably gave the most succinct post-Brexit summary I have ever read. It said that
“it remains to be seen whether the Government’s intended trade and geopolitical benefits will materialise”.
We are still waiting with anticipation.
We understand from the Government that this component of that ambition will amount to a contribution to the UK’s GDP of between £1.8 billion and £2 billion a year after the 15th year—0.08% of GDP, as the noble Lord, Lord Anderson, said. The noble Lord, Lord Lansley, believes that will be the floor, not the ceiling, of the ambition. Sophisticated modelling by the civil servants takes all the optimism into consideration, but optimism bias is not unique to policy areas other than trade. There has always been a trade agreement that we hoped would do better than the one we were replacing. We also know that the OBR has suggested a lower figure, equating the likely growth to 0.04% of GDP.
The Financial Times humorously said that if the impact of the CPTPP was described in decibel terms, it would be the equivalent of
“a cat sneezing three rooms away”.
Now, it seems as if next door’s cat has the sniffles. Nevertheless, any growth is welcome, given the state of the UK economy. As the committee says, the Government have indicated that it is not just about economic growth. Indeed, that might not even be the primary aim. It is about greater integration with those economies. This is news to many of the nine countries with which we already have an FTA with the purpose of integrating our economy with theirs. What extra integration will the agreement to which we have acceded allow us? It may well be there.
I want to put into context what the level of growth activity would be after the 15th year. The £1.8 billion for the British economy is the equivalent of five and a half days’ trade with Holland. When we put up barriers to our nearest trading neighbours, we do much greater harm than any anticipated long-term benefit we gain from agreements such as this. The noble Lord, Lord Lansley, said that we can perhaps deduce the direction of travel from the Government’s activity. In the foreign affairs debate, the noble Lord, Lord Cameron, said we should never confuse activity with action. Therefore, we have to see not what the Government’s good intentions are but what their resulting actions realise.
In February the Sussex University trade observatory highlighted that
“the UK’s trade in goods with the world has underperformed compared to other comparable countries over the last few years”.
This anticipated growth with the rest of the world, other than the EU, is eluding us so far. Nevertheless, it may come about.
This is where the narrative starts to be challenged. Later in the debate, I suspect we will hear about how we need to be part of the fastest-growing part of the world’s trading economy within the Indo-Pacific area and how this agreement will allow the UK the increased growth benefit that those countries have seen. But the growth in the economies of the countries we are joining in the CPTPP has been almost exclusively because of the growth of the Chinese economy. Strip out the growth of China’s economy and its trade with Vietnam, Malaysia and the other countries in the CPTPP, and the figures look very different. In fact, their growth looks almost static. Now, with the slower growth in the Chinese economy, we will see what that level of trajectory looks like. Are we putting a lot of tariff-free eggs in this CPTPP basket when we are being very shoogly with our European Union neighbours?
This also has to be seen in the context in which the UK, more than any other European country, is now dependent on goods imports from China. The House has heard me say time and again that we have a trade deficit in goods with China of £40 billion. Germany has a trade surplus.
What also frequently goes unnoticed is that the world’s largest trading deal is not the CPTPP but the Regional Comprehensive Economic Partnership of 15 Asia-Pacific countries, including China, Australia and New Zealand. That represents 30.5% of global GDP, compared with the US-Mexico-Canada agreement at 28% and the EU at 18%. The RCEP’s growth is estimated to be far beyond that of any other agreement that we are acceding to. As much as this is a strategic debate about trade with the CPTPP, it is actually about the UK’s relations with China. The Government have said that this is an Indo-Pacific tilt towards those countries as an alternative to China. But there have been many rounds of negotiation between China, Japan and South Korea for an FTA between those countries. Whatever we do with our trade in the Indo-Pacific, we will be impacting on our relationship with China. We support an industrial and trade strategy because what our trading relationship with China will look like needs to be clear.
Finally, where we have seen bureaucracy, costs and paperwork added is in our trading relationship with the European Union. Yes, we will see a marginal, minimal decrease in bureaucracy with CPTPP countries, but we are seeing it actively increase for our nearest trading bloc—£100,000 of extra costs per typical UK business. That far outweighs even the most optimistic benefits mentioned by the noble Lord, Lord Lansley, that we would see for UK businesses in the CPTPP.
However, as I have said to the Minister, when we tilt towards one area, we are tilting away from another. Our trading partners in the Caribbean in CARIFORUM and in Africa in the African Continental Free Trade Area are seeing and hearing mixed messages from the UK. Therefore, I have called out the Government, time and again. For example, when we have signed an FTA with a Commonwealth country, not a single one has had a Commonwealth chapter for trade facilitation for the Commonwealth, allowed for under the WTO, which I have called for.
There may be one further final aspect. I close with a question to the Minister. It is likely, as the noble Baroness, Lady Hayter, said, that our relationship with China will come into more context if it wishes to join and accede. But we have a friendly, free, democratic nation within the region, Taiwan, with which we can see the expansion of UK trade. I have been on a number of occasions. It is a reliable and trusted trading partner which has demonstrated that it can be a stable, democratic and rule of law-based country. I hope that the Minister will agree with me that it is time for a UK Cabinet Minister—a Cabinet Trade Minister—to visit Taipei, sending very clear signals. If we are seeking to tilt to the region and sending signals that it is not towards China, then a Cabinet-level official visiting Taipei would probably be the strongest signal of all.
Lord Marland (Con)
My Lords, I declare an interest as a member of the International Agreements Committee, chaired magnificently by the noble and learned Lord, Lord Goldsmith. I like to big him up because it is good to be kind to the headmaster. You never know, you might catch the selector’s eye every now and then. I am grateful to the noble Baroness, Lady Hayter of Kentish Town, for—
Lord Marland (Con)
—giving us the opportunity to have this debate. Yes, she is absolutely marvellous. This could be a Morecambe and Wise show in a minute if my noble friend Lord Vaizey does not shut up—and I know who is wise.
I was interested that the noble Lord, Lord Gardiner, said to us earlier that brevity is to everyone’s advantage. Therefore, I shall try to be brief and let the report itself do the talking. It has been incredibly well constructed by the team and has had a lot of the committee’s time. I am delighted to see so many members and former members here.
I congratulate the Government on this treaty—it is a good step forward. I pay tribute particularly, if he is listening, to the Minister, the noble Lord, Lord Johnson, who travels the world with huge energy. I often find myself following in his wake as I go round in my role as chairman of the Commonwealth Enterprise and Investment Council. I pay tribute to him because he has been the driving force behind this great treaty.
However, let us not kid ourselves—this is not the greatest agreement that has ever been signed. The noble Baroness made the remark that it is a very small amount of balance of trades to affect the United Kingdom. Therefore, we should not get too overexcited. But it is a starting place, and the real prize is, of course, services and financial services, as the noble Lord, Lord Anderson, mentioned. This is the key to the prosperity of this country and will be the real prize for businesses in this country. I want to know what steps the Minister will take to opening up those doors, because that becomes transformative.
It is also a great treaty because there is no doubt that the alignment of free trading nations is incredibly good for diplomatic relations and cordial relationships, and therefore a terrific building block.
There is always some embarrassment for the UK Government about taking the lead on things, but this is a golden opportunity to take a lead and become a key member of this trans-Pacific partnership. I am clear that that is what the other countries want—in the UK being embraced into this arrangement, their desire is to have the UK taking a forefront lead. This will be important, as was referenced earlier, with the inclusion of potential new members, and with the desire of China to become a member—which will have to be scrutinised incredibly carefully. I therefore urge the Government and my noble friend the Minister to tell us in what way the UK Government are going to take the lead. This is an opportunity, a post-Brexit opportunity bar none, if we can take it.
Finally, noble Lords would not expect me to not mention the Commonwealth. Two-thirds of the countries that have signed up to this agreement are Commonwealth countries. Why has the Foreign and Commonwealth Office not taken the initiative and used this as a spring- board for a Commonwealth trade arrangement? That is the second prize that this Government, in a post-Brexit era, should take.
I thank the Minister for everything he has done in achieving what we have done so far.
Lord Kerr of Kinlochard (CB)
It is a great pleasure to follow the noble Lord, Lord Marland. I shall be slightly less concise, but I bear the earlier discussion in mind.
On my tombstone will be the words: “He was an inaugural member of the International Agreements Committee”. No more need be said: it is the peak of my career. I was lucky enough to be on that sub-committee of the EU Committee which preceded and then became it, under the inventive chairmanship of the noble and learned Lord, Lord Goldsmith, and then the skilful Socratic reasoning of the noble Baroness, Lady Hayter. From the word go, I thought it was a good idea that we should accede to what I am going to call the Pacific partnership treaty—because I do not believe that any sane human being can say “CPTPP”.
Our work in the IAC on the treaty was helped hugely by the constructive approach taken by successive Ministers: the noble Lord, Lord Grimstone, who is not in his place today, now a poacher, then a gamekeeper; and the noble Lord, Lord Johnson, who was extremely forthcoming to the committee. I am glad that the committee has produced such a positive report. It is much more supportive than we were able to be about some of the Government’s bilateral trade agreements earlier on.
It is easier to be supportive because the Government did not oversell the deal, and they did tend to oversell some of the previous simple rollover deals. Back then, of course, we had a Trade Secretary and a Prime Minister who were determined to declare total victories—black-and-white, total triumphs. The Trade Secretary pronounced it a “disgrace” that we sell so little cheese to countries where cheese is not eaten, and the Prime Minister proudly proclaimed that his trade treaty with the European Union contained “no non-tariff barriers”. I cannot recall any trade treaty that does contain non- tariff barriers. Most good trade treaties remove or limit them; his ignored them and so legitimised them and introduced them, as the noble Lord, Lord Purvis, has explained.
In the case of the Pacific partnership, on the other hand, I recall no photo ops, no soundbites. We were spared the obvious soundbites about the merits of selling Bovril to Borneo, and the economic benefits were not exaggerated. The OBR says they are perhaps rather less than the Government had previously suggested, but the Government were putting the figure at under 0.1% of GDP, and the various upside possibilities that the noble Lord, Lord Lansley, mentioned had been taken into account in their calculations.
The deal was not oversold; it was sold on the potential of the partnership to develop. That was quite right, and I believe the partnership will develop. The digital economy deal between Chile, New Zealand and Singapore is a harbinger and a signpost. I hope that is the way it will develop, and I commend the call on the Government, in paragraph 118 of the IAC’s report,
“to set out and publish its priorities”
for this year’s quinquennial review of the partnership.
The Canadians, who are leading on the review, want to see a deepening of the deal, particularly in the area of digital trade. I hope we will row in behind them and help them on that. I also attach importance to the various recommendations to make British business better aware of the new opportunities the partnership opens and how to access them. The task force is a good idea; the roadshow is a good idea; the website clearly needs reform. Other than for command economies, trade treaties only enable: the greater part of their job is making sure that the opportunities for actual and potential exporters are used, and our Government need to do better. Explaining the partnership’s complex rules of origin has hardly begun.
With the indulgence of the House, I would like to offer one more general point—a coda to my time on the IAC, drawing on my experience of it. It serves the House well within the confines imposed on it by the CRaG Act, but I very much hope that the next Government, of whatever political complexion, will be readier than this one have been to look again at these constraints. When CRaG was passed, no one foresaw Brexit. Trade agreements back then were negotiated for us by the European Commission’s experts, most of them British, and overseen by the Council in Brussels and the European Parliament in Strasbourg. It was all very transparent. So the EU Committee, when I served on it, looking at trade agreements, was far better informed back then, pre-Brexit, than the IAC is now.
Brexit meant that Whitehall took back control but Westminster was shut out. Although my past was in Whitehall, I believe that the reduction in Westminster’s scrutiny is actually bad for Whitehall and for the country. Let me explain.
The principal reason why the EU drives harder trade bargains than we do—the contrast between our deal with Australia and its was striking—is that it is holding the keys to a larger market so it can extract greater concessions for handing over the keys. The EU is also more practised, but we may be getting better. It sounds as if we have been more resolute with the Canadians and Mexicans, whose agricultural exporters pricked up their ears at seeing how the Australians and New Zealanders had taken us to the cleaners. Wiser counsels have prevailed on India; I was concerned by the Johnson press for an agreement—any agreement—soon.
However, I believe that the Commission’s hand on trade negotiations is greatly strengthened by the effective scrutiny of its work that the Council in Brussels and the Parliament in Strasbourg hold. American negotiators can and do point to their separation of powers, and congressional oversight and veto rights. When American negotiators reject a proposed concession or a trade-off, they can and do say, “Sorry, Congress wouldn’t wear it. It wouldn’t fly on the Hill”. EU negotiators can and frequently do play the same card. Ours cannot because the world knows that, in London, parliamentary oversight is pro forma and perfunctory. Trade policy in London is a black box and Parliament is put in the picture about treaties only once it is too late to change them.
It is different in Ottawa, Canberra and Wellington, so our weakness is not a function of a parliamentary system; in other parliamentary systems there is far closer scrutiny than we are allowed here. When the IAC tried to find out what was happening in the negotiation with New Zealand, our principal source was the New Zealand Government’s website, which gave a very full account of each negotiating round. In London, the Minister—the noble Lord, Lord Grimstone—was allowed to send us a regular letter saying that there had been a round, a chapter had been opened, a chapter had been closed and there would be another round. He was allowed to give agendas and dates, but not information on substance, issues or trade-offs. There was nothing remotely useful, although it was all available on the New Zealand government website and so available to the committee. This is all a great pity, because greater transparency elsewhere means greater public understanding elsewhere. It means that exporters elsewhere are better prepared for new opportunities when they arise as a consequence of trade deals.
Reform of the CRaG Act, allowing for a real parliamentary role in approving mandates, following negotiations and ratifying trade treaties, would produce better outcomes for the United Kingdom. It is not a zero-sum game, with Westminster’s gain meaning Whitehall’s loss. It honestly is not; it would be a win-win. The IAC does its best for House and country, but I am quite sure that it would be better for everyone if the Government could be more grown-up and trust the country to be more grown-up about trade. We still need a clear trade strategy to be agreed and published. Here I disagree with the noble Lord, Lord Lansley. Grown-up countries do this: the Americans do it, the EU does it, France and Germany do it. Most countries publish their trade strategy, promulgate it, defend it and act on it. We should do so too. Real parliamentary association with the negotiating process would be in everybody’s interest.
Since I have disagreed with him on one point, I end by saying that I disagree with the noble Lord, Lord Lansley, on another. I am afraid I cannot share his optimism about the possibility that a Trump Administration would look again at participation in the Pacific partnership treaty. I am afraid that that ship has definitively sailed.
Viscount Trenchard (Con)
My Lords, it is a great pleasure to follow the noble Lord, Lord Kerr of Kinlochard, from whose speeches I always have much to learn. I congratulate the noble Baroness, Lady Hayter of Kentish Town, on securing this timely debate today. I declare my interests as an adviser to several Japanese companies, and to some British companies in connection with their businesses in the Indo-Pacific region, as stated in the register.
It is very good that your Lordships’ House has an opportunity to debate a report within one month of publication—very much earlier than has been the rule in recent years. I congratulate the members of the International Agreements Committee on producing what I think is, in the main, a fair and balanced report. I note that it “broadly” welcomes the UK’s accession to the CPTPP; this implies to me that there are areas in which it has reservations.
Are the members of the committee not, on balance, a little less enthusiastic about the significance and the future economic potential of the UK’s accession to the CPTPP than they should be, and is there not at least some evidence that supports that? The report’s summary suggests that accession to the CPTPP will have only
“limited economic benefits to the UK in the medium to long-term”,
and that
“it remains to be seen whether the Government’s intended trade and geopolitical benefits will materialise”.
Professor David Collins, of City, University of London, correctly recognised that, in the longer term, the economic benefits of the CPTPP are likely to be significant, as the world’s economic activity shifts towards the Asia-Pacific region. The trend growth rate for the GDP of the 11 members is around 2%, roughly double the 1% by which the EU economies are expected to grow. The CPTPP accounts for roughly 15% of global GDP, around the same as the EU today.
The noble Lord, Lord Purvis of Tweed, made the case that the RCEP is a more important agreement than the CPTPP. I am not sure he is right there, because it is much shallower. He also said that the CPTPP’s growth was much greater than the EU’s only because of trade with China, but he then said that UK trade with China was massively significant, so he rather contradicted his point.
The committee’s members acknowledged the “potential advantage” of the partnership as part of a British
“‘tilt’ to the Indo-Pacific”,
and
“think there is some, albeit limited, value in CPTPP membership providing access to a forum for members committed to a free, open trade order”.
I think they might have been a bit more enthusiastic about this enormously important and highly significant development. The geopolitical significance of the UK’s accession is already enormous, both for the UK and the CPTPP itself. For the UK, it shows our strong commitment to the Indo-Pacific region, reinforcing the AUKUS pact, the continuing importance of the Five Eyes intelligence pact and the reciprocal access agreement with Japan. For the partnership itself, the UK’s accession goes some way to replacing the intended participation of the United States, and makes the perception of the bloc a bit more global.
Since President Trump turned against US membership, Japan has been strongly encouraging the UK to join, a point which may not be sufficiently appreciated in this country. My noble friend Lord Lansley also drew your Lordships’ attention to this point in his impressive speech. Our Japanese friends recognise that six of the 11 members of the CPTPP are Commonwealth countries —now, with the UK, that is seven out of 12. There has been an active group within the Japanese Government’s Cabinet Office working on the CPTPP for more than six years. It recognises that the UK could become, with Japan, the de facto joint leaders of the partnership and that the UK’s contribution to the way the partnership operates, and to its rules and methods, would be highly valuable. It has also played an invaluable role behind the scenes, in encouraging the other members of the CPTPP to welcome UK accession and in helping us overcome the small number of reservations about our accession that appeared in a few members of the partnership.
Having lived and worked in Japan for 11 years, and with continued parliamentary and business involvement in that country ever since I returned to the UK, I am very pleased that UK accession to the CPTPP has made an important contribution to our excellent relationship with Japan. Indeed, together with our growing bilateral collaboration in defence and security, exemplified by the trilateral GCAP programme with Italy, it can be said that we have entered the age of the second Anglo-Japanese alliance.
More specifically, the report identifies some issues with the rules of origin provisions provided by the CPTPP. I understand that these are working well in some areas, such as the seafood sector, but could my noble friend the Minister comment on how they are working for the automotive sector?
Paragraph 28 of the report celebrates the fact that there is a
“good balance between new market access for food exporters and access to the UK market”.
Are the Government doing enough to encourage farmers to exploit opportunities in those sectors where they have an advantage?
It is interesting that the report suggests at paragraph 29 that the UK can retain its current precautionary approach to SPS controls, consistent with CPTPP rules. Is that the case even where our current standards, inherited from the EU, do not comply with WTO rules? Is it not the case that we may have given too much weight to the precautionary principle as an EU member? Where the evidence suggests that there are no significant risks to human health, does not accession to the CPTPP provide us with an opportunity to permit, in certain circumstances and with appropriate safeguards, the introduction of hormone-fed beef, chlorine-washed chicken and some GM crops, which could significantly lower food costs for hard-pressed consumers? I think that our membership of the CPTPP gives us a good platform on which to work with like-minded partners to restore the reputation and influence of the WTO.
The members of the committee struck me as being a bit sceptical about the significance of our role in the CPTPP and its contribution to the achievement of the Government’s strategic aims in the region. In paragraph 72, the report asks for more detail on this. From my interactions with contacts in Japan, Australia and South Korea, which I hope may soon become an accession candidate, I believe it is already very clear how significant it is, and I hope my noble friend will set out his view on this in his winding-up speech.
Finally, I welcome the proposal that, following the current general review, the Government should set out their priorities in the context of a longer-term plan for the development of the CPTPP. Does my noble friend think this should include a small standing secretariat to assist businesses in maximising the trade benefits offered by the UK’s membership? I look forward to hearing from other noble Lords and to my noble friend’s response to the debate.
Baroness Bennett of Manor Castle (GP)
My Lords, I will return in some detail to food safety and food standards, referred to by noble Viscount, Lord Trenchard, but I point out now that it is the standards of production that give rise to the need for the chlorine-washing of chicken. The dreadful US food safety standards, which are the main issue, are surely not something we want to import into the UK.
Like other noble Lords, I begin by thanking the noble Baroness, Lady Hayter, for her clear introduction, and the committee for a comprehensive report. It expresses many of the concerns I have about the trans-Pacific partnership—I will use that phrase, rather than the acronym—although I would express them in much stronger terms than the committee has. However, we know that our committees operate on a consensus basis.
Much of what I might have said about it making much more sense to trade with our neighbours has been said already by the noble Lord, Lord Purvis, so I will not repeat that. I will cite one economics textbook, which notes that the negative correlation between geographic distance and bilateral trade volumes is considered to be one of the most robust findings in economics. I do not often quote mainstream economics, but there is some obvious common sense there. I hope that the cat belonging to the neighbours of the noble Lord, Lord Purvis of Tweed, gets better soon. It is a very useful metaphor. I also agree with what the noble Lord said about a visit to Taiwan. That was a very useful comment.
With the trans-Pacific partnership, we are talking about decisions that have significant implications for climate action and inaction, environmental standards, human rights, labour rights, international development, food standards—as has already been referred to—animal welfare and public health. One of the areas that has rightly received the most attention has been the conclusion of the deal with Malaysia on palm oil. This is a major issue for environmental standards and indigenous rights in Malaysia, and—as your Lordships’ House knows, given that we are increasingly debating the issue of ultra-processed food—for public health in the UK. It could be very difficult for some of the rising, innovative UK producers of alternative oilseed crops to compete against palm oil produced from felled rain forests under very dubious labour conditions. The Minister may say, “Oh, but it is all going to be sustainable”, but I am afraid that the registration standards simply do not stack up for much of Malaysian palm oil.
I would also like to receive a direct response from the Minister, either now or in writing, about pesticides that are banned in the UK but are used across the trans-Pacific partnership. What are the Government doing to ensure that products that are treated with those pesticides are not brought into the UK? Disagreeing again with the noble Viscount, Lord Trenchard, on the precautionary principle, the EU is bringing in stronger and stronger rules because it did not apply the precautionary principle. More and more research is showing more and more dangers, particularly from pesticides and other chemicals in use. The EU is getting far ahead of us in terms of banning chemicals. We are trailing far behind. There is a real risk that we will become a dumping ground for products that cannot be sold in the EU under tightened regulations. What are the Government doing to ensure that that does not happen?
I very much agree with the comments made by the noble Lord, Lord Kerr of Kinlochard, about the UK’s democratic deficit—the giant democratic deficit—with regard to trade deals, as the committee’s report also makes clear. All we have today is a take-note Motion: the definition of not doing anything, which is exactly what we are doing now. All we can do is express concerns, with no substantive impact.
I disagree with the noble Lord, Lord Lansley, as I have many times before and probably will again, on the issue of ISDS. There is substantial evidence that, in some cases, it forces governments to reverse measures taken for the public good; it also has a chilling effect on democratic decision-making for the public good. According to the most recent figures I have from the UN Conference on Trade and Development, 175 cases have been brought on environmental issues under the ISDS procedure, half of which were under the energy charter treaty. I praise the Government for their direction of travel on that treaty. That is indeed progress, so I can say “Well done”—but that still leaves the other half of the cases. There is no doubt about the impact of reducing government action, but also the adverse effects on the UK’s agri-food sector, which I shall come to.
I turn to some specific recent issues that mostly relate to the Australian trade deal, but which tie in, of course, with the trans-Pacific partnership as well. The Government have promised that no hormone-treated Canadian beef will come in under this partnership. I would be interested to hear the latest on what the Government are doing on that.
It is interesting to look at some recent developments with Australian beef. Farmers Weekly recently reported the first attempt under the new deal to export British beef to Australia. It was stopped by Australian trade regulations. For the avoidance of doubt, as a Green, I am not at all in any favour of us producing beef here and shipping it to Australia, or Australia producing beef there and shipping it here. None the less, there is a profound inequality between Australian farmers and British farmers in the trade arena.
There is also, of course, a profound imbalance in production costs and systems between Australian beef and British beef. I do not know if the Minister is aware of this, but a recent article published in Animal Production Science, a CSIRO Publishing journal, looks at greenhouse gas emissions. It makes a well defended case, published in a peer-reviewed journal, that is quite astonishing when you think about it: there are 10 million more head of cattle in Australia than official counts provide for. Interestingly, the head of the Australian Bureau of Statistics said that the official figures were never designed to measure the total cattle population, and that it is clear that that is a much lower estimate. That is worth noting. I have regularly tried to explain to your Lordships’ House how different Australian production standards are. Perhaps the following sentence, which is a direct quote from Rob Walter, ABS head of agricultural statistics, will help:
“Some of those properties in northern Australia are the size of small European countries. For them to know how many cattle they have … can be very difficult”.
I invite noble Lords to think about a local small farmer they know with a few head of cattle on 100 or 200 acres, to contrast those two production systems and imagine what it is like when they try to compete against each other.
I will wrap up by agreeing with the noble Lord, Lord Lansley, that it is probably too late for this Government to produce a trade policy. It would not be a very meaningful piece of paper to produce at this point. But this issue very much needs to be part of the debate in the run-up to our next general election. We need to think about what kind of trade we want—what volumes of trade will benefit our food security, our environmental security and all of our futures.
I was at the meeting of the All-Party Parliamentary Group for Fairtrade this morning. This year is the 30th anniversary of the fair trade movement. It has made some limited progress, but we still have profound inequality in global trade. Global trade is still not providing us with food security in this age of shocks, and we need to think about the level of trade that is useful to us—trade that is for the public good, rather than a simple maximisation of private profit that comes with a cost to us all.
Baroness Lawlor (Con)
My Lords, I thank the noble Baroness, Lady Hayter, and the committee for holding the inquiry. I thank the noble and learned Lord, Lord Goldsmith, and the committee for getting this report to us today, and I congratulate them on that. I am grateful for the stimulating analysis that it gives. I will restrict myself today to commenting on its rather tentative approach to the benefits of the CPTPP, particularly in paragraphs 12, 49 and 79. There is a reference to the “limited economic gains” in current projections, in paragraph 12; to the benefits of the services provisions perhaps being “more limited” than suggested, in paragraph 49; and to the CPTPP representing only
“a small part of UK trade as a whole”,
in paragraph 79.
I am also grateful for the even more cautious approach of noble Lords on the Benches opposite towards the potential benefits of the CPTPP; the reservations of the noble Lord, Lord Anderson; and the warnings from the noble Lord, Lord Purvis of Tweed, with whom on many matters I agree about the importance of free trade globally, and I have very much welcomed his interventions on other Bills.
We are in uncharted territory so it does not surprise me that there is no definitive map of post-CPTPP benefits for us, or indeed the other parties, as a result of our joining. Though not normally an optimist, I understand why some of the committee’s witnesses, and indeed members, are more tentative in assessing the benefits of the trade agreement, which has not yet come into force for our country. However, in my view, there are good reasons to be not just mildly optimistic but enthusiastic. I am perhaps more so than my noble friend Lord Lansley, with whose analysis on every point I found myself in agreement. I also agree, from conversations that I have had with other parties, that it is, if not likely, at least possible that, not immediately but in the future, the US will once again become a member of this trading partnership.
As my noble friend Lord Trenchard has mentioned, the CPTPP will represent a growing share of global GDP. Today it accounts for around 12% of global GDP, covering 11 countries. The UK will be the 12th, bringing the expected share of global GDP to 15%. By comparison, the US accounts for around 15%, as does the EU, but their shares are declining, whereas those of this region are growing. The projected proportions by 2050 are estimated at 25% for the CPTPP and 10% for the EU.
There are other reasons beyond the economic to be particularly welcoming to this protocol of accession and CPTPP membership. As other noble Lords have noted, it brings us into the Asia-Pacific region to trade under our own laws. In this trading partnership, we accept base arrangements on conformity assessment, rules of origin, performance rights and GIs. Indeed, I am delighted that the UK’s enabling measure, introduced in this House, is now on Report in the Commons. This is, in the best sense, a post-Brexit trade agreement that has been developed to take advantage of our freedoms. We are no longer bound by the EU legal arrangements and trading system. That is a different sort of law. I disagree with the noble Lord, Lord Anderson, particularly because EU law is not suited to the way in which UK trade and entrepreneurship have developed over centuries.
Our commercial law is an enabling law—a free law. I know that many noble Lords will disagree but let us look at the successes of the City of London from the 17th and 18th centuries onwards. The City overtook Amsterdam as the main trading centre for financial services, and then Paris in the 18th century, to be rivalled only by New York. We must put much of that success down to its ability to attract entrepreneurs and businesspeople setting up in coffee shops, which is where Lloyd’s of London started. They were doing trade across the world and coming to London to have their deals recognised and executed under our law, which was reliable and non-political. It also had the advantage of the reforms initiated by Lord Mansfield, who may be better known to noble Lords as the person who led the abolition of slavery.
There are very good reasons for being delighted that we can trade under our own laws and bring those laws to the rest of the world—indeed, to countries which may want to embrace common-law arrangements for trading. That in itself would be a very good reason to welcome the CPTPP.
Apart from that, if we look at the arrangements for services, the report notes in paragraph 49 that
“the benefits may be more limited than the Government has suggested … in particular the lack of … mutual recognition of professional qualifications”.
Here I welcome paragraph 47, where the evidence of witnesses is summarised as indicating that the CPTPP will bring greater certainty for services and legal protection:
“Witnesses noted that financial, legal and professional services would … benefit from ‘an extra layer of legal protection … a degree of regulatory harmonisation’ and digital … provisions ensuring the flow of data. There were also advantages from the ‘no less favourable treatment’ rule … [which] provides additional certainty and protection”.
My noble friend Lord Trenchard referred to some work by Professor David Collins, who holds the chair of international economic law at City University. Professor Collins has drawn attention to the more comprehensive coverage for digital services and data flows in the CPTPP than in the UK’s existing FTAs that are currently in force with its members. He draws a particular example of the CPTPP’s restrictions on data localisation, which could become more important should countries begin imposing these requirements, but he also points to the most noteworthy benefits being those which relate to the movement of professionals. This arrangement offers greater legal certainty on temporary entry routes for UK businesspeople conducting “fly in, fly out” commercial activities, transfers to branches or subsidiaries, and supplying services as part of contracts or as self- employed entrepreneurs. The schedules of specific commitments in this field are broader than under GATS and cover more categories of personnel.
I conclude by welcoming the report, which has stimulated a very interesting debate in your Lordships’ House. I am very grateful to the noble Baroness, Lady Hayter. I am delighted that we can keep our own laws, trade on our own terms, and promote free markets, competition and the ties that come with trading. Yes, we have bilateral arrangements with most of the existing parties, but I point out to the committee that that is not to say that these cannot be bettered under the new CPTPP. These are baseline rollover FTAs that we have inherited from the EU, but this is the next phase of trade. As noble Lords have noted, this is a dynamic, forward-looking trade treaty and for us to join it and help to shape it in the years to come is not only great for this country but will be great for other developing economies.
Lord Udny-Lister (Con)
My Lords, like every other speaker, I welcome this debate and thank the noble Baroness, Lady Hayter, and the chair of the International Agreements Committee, the noble and learned Lord, Lord Goldsmith, for enabling it. I also thank them for enabling us to talk about the importance of the CPTPP and the way in which it will deliver for the entire United Kingdom, including all the devolved authorities.
I want to address specifically the geographical context of the UK’s accession and the future role of the CPTPP, as well as how to ensure that British business is fully engaged with it. Before doing so, I draw attention to my declaration in the register of interests, particularly my work for the bank, HSBC.
On the geographical situation at play, I do not think I need to remind anyone in this Chamber that we live in the most uncertain of times—times in which the security of the UK, the values we stand for, and the peace more generally are constantly threatened and eroded. We must therefore always be conscious of the fact that trade is a powerful tool at our disposal, not only for holding back rogue states but for enabling us to play an active role in the geographical landscape of the future. It is right to point out, as did the noble Lord, Lord Lansley, that we are now at a stage where world free trade is under attack like it has never been before. Therefore, organisations such as the CPTPP help to ensure that free trade continues to be at the forefront.
We have entered the CPTPP from a position of strength. As the report before your Lordships’ House explains, the UK is now the second-largest economy within the CPTPP after Japan, and the sixth-largest economy globally. This provides us with an unprecedented opportunity to shape the future of the trading alliance. Therefore, as we contemplate the expansion of the CPTPP, it is of vital importance to the UK that we play a significant role in confronting the future challenges of the trading bloc and standing up for the values that we protected and promoted in our accession last year.
As I have said in the House before, the CPTPP represents a significant milestone in the UK’s ambitious plan to promote free trade and economic co-operation in the post-Brexit world and the post-Covid landscape that we find ourselves in. It is also an important ingredient in the Indo-Pacific tilt policy of the UK—that has been talked about quite a bit today, but it is always worth reminding ourselves that this group of countries represents large populations, growing economies and growing middle classes. All the ingredients of growth in the 21st century lie within the countries in the CPTPP.
I believe that the CPTPP is a true deliverer and a meaningful benefit to UK trade. We should generally be supportive of allowing other nations to join the bloc and to do so in a way similar to that in which we recently have done. That said, expanding membership of the CPTPP poses unique and complex hurdles and, against the changing geographical landscape, the situation demands that the Government provide careful consideration that allocates greater risk analysis when considering the UK’s support for any nation wishing to join in the future.
That has become even more difficult and complex. The noble Baroness, Lady Hayter, drew our attention to the fact that there is no standing secretariat, as there is in the EU, for example. It is very much left to the rotating chairmanship to lead on these issues, and therefore it is important that the UK thinks carefully about the negotiating team that we already have and that has taken us this far. We should think about whether we continue to keep that negotiating team as a live operational part of DBT, or whether it is just to be disbanded so that, next year, when we start thinking about another country, we have to scrabble around trying to find the right officials to do the work. This is a serious issue to which serious thought has to be given.
A primary challenge and concern is the mechanism that the Government will use to ensure alignment among new members with our existing principles and standards, which we fought for in this agreement. The CPTPP embodies a commitment to high standards in areas such as labour rights, environmental protection, intellectual property rights and market access. Protecting and enhancing these rights is fundamental to the UK’s accession, and I would therefore be keen to understand from my noble friend the Minister how the Government plan to ensure that any potential new member state can demonstrate a genuine commitment to upholding these standards.
I note that several of the countries cited as potential new members would surely be required to undertake significant domestic reforms and adjustments to be able to meet our standards. I therefore seek assurances from the Government that we have in place the necessary resources to ensure that the future accession of any state would never leave the United Kingdom in a situation in which our standards could be inadvertently weakened. The UK could utilise and leverage our not insignificant soft power in helping some of the nations mentioned in the report to undergo the transformative domestic reforms needed to aid their accession to the CPTPP. I hope that the Government actively get engaged in this area. Apart from anything else, there are also enormous commercial opportunities for companies in that space.
As we navigate the complex landscape of international trade, especially at a time when the established world trade order is being actively ignored by some actors, it is important that we uphold the core values that define us as a nation and that our trade policy upholds and safeguards our security interests. We must therefore ensure that the accession of other nations is always considered under the magnifying lens of our values and approached with careful consideration of protecting our national security interest. History has demonstrated that trading blocs such as the CPTPP have a vital role to play in providing stability. In a world which is sadly characterised by shifting power dynamics, regional tensions and emerging security threats, we cannot afford to forget that it is through agreements such as this that we will foster stability.
I am also keen to receive assurances from my noble friend that, when considering potential accession applications of other states in future, this Government stand ready and are sufficiently resourced to ensure that no country will be allowed to join the bloc if it runs the risk of undermining our values. As other nations seek to join, we must make sure that the United Kingdom plays an active and early role in weighing up their compatibility with our stake in the agreement. It is important that any country wishing to join the bloc demonstrates how its participation is fully aligned with our values of individual liberty and respect for human rights. By staying true to these principles, we can ensure that the CPTPP remains a force for good and a testament to the values that we hold dear. These values should be non-negotiable.
Following our accession to the CPTPP, it is not good enough simply to rest on our laurels. We have already heard some of the criticism made by witnesses of the ability to get information. We must work and shape this agreement to meet the demands of the changing world. I put it to noble Lords that, in engaging in the expansion and evolution of the CPTPP, we can assert our influence on shaping the rules and norms governing international trade more widely. It is integral to the protection and safeguarding of our national interests that we not only take up this role but do so quickly.
I turn to UK business. As I and others in your Lordships’ House and the committee have mentioned before, it is imperative that UK SMEs remain fully engaged in the process of shaping our future relations because it is through their active involvement that this relationship will be able to return benefit to the UK. I therefore welcome the update in the report which highlights how the
“Department for Business and Trade has started to engage with business through a number of online initiatives to address these issues”.
However, I concur with the committee’s view that online initiatives alone are not enough and that we have to be proactive and have an in-person approach. On that point, I thank the Minister for his work, because people often underestimate just how important visiting Ministers are for British trade. Unless British Ministers go to those countries, banging the drum and creating opportunity, we will not get the benefits that we so deserve from this. I thank him, because I know that he goes out and does that a lot.
Free trade must be protected and the CPTPP helps us with that. I am sure that, by navigating the challenges ahead, making sure that future partners align with our values and getting out there and showing that we can be a major player in this, we can have an even stronger relationship.
Baroness McIntosh of Pickering (Con)
My Lords, with permission, I will speak in the gap. I congratulate the noble and learned Lord, Lord Goldsmith, and the committee on an excellent and timely report and the noble Baroness, Lady Hayter, on presenting it. I will focus on points made by the noble Baroness and others on the parts relating to sanitary and phytosanitary agreements—or, as I would call them, food safety measures. This follows neatly on from what my noble friend Lord Udny-Lister said.
While I welcome this agreement, it is important to realise that the loss of trade since leaving the European Union will have an ongoing cost to our GDP of 4% per annum. That is the background against which we must judge every free trade agreement that we consider.
I will raise with the Minister the implications of this agreement for farming and food security. Clearly, it is in the interests of the UK to accede to this partnership agreement given the current insecurity to food supplies due to hostilities in Ukraine and the Middle East. The noble Baroness, Lady Hayter, referred to sanitary and phytosanitary arrangements; it is extremely important to say again, as we did when the original international trade arrangements were put in place when we left the European Union, that it is incumbent on our farmers to produce agricultural goods and food to the highest possible levels of animal welfare and food hygiene standards.
There have been recent reports of a pause in the discussions with Canada, which were pulled for reasons which all of us, particularly the farming community, can understand. What is the current position of our relationship with Canada in the context of the CPTPP? I understand that the agreement on our massive exports of cheese to Canada, which is so important to cheese producers in this country, is coming to an end. Can my noble friend outline what will happen when that occurs?
Finally, what is the position on the dispute-resolution mechanism that is available under the agreement? In the circumstances to which my noble friend Lord Udny- Lister referred, where there are differentials between food safety standards in this country, which we are imposing on our producers, and imports from partners under the CPTPP, what can our producers do if there is an eventual conflict? Otherwise, I support this agreement.
Lord Goldsmith (Lab)
My Lords, as this debate has moved rather faster than I anticipated, I beg leave to speak very briefly on one point in the gap. I thank noble Lords who have commented on this report and my noble friend Lady Hayter for introducing it. She raised the interest that Parliament has in treaties—not just trade treaties but all treaties—which I want to underline.
My noble friend made the point, and I entirely agree, that Parliament has limited levers to deal with treaties which the Government have entered into. The CRaG process provides some of those levers but they are limited, and if, for example, the Government do not play ball, they do not work. For example, only the House of Commons has the ability actually to delay the ratification of the treaty, but in order to do that it needs a debate, and to have a debate it needs to have the leave of business managers in the Commons to find the time for that. A debate has been refused in the Commons in relation to the Rwanda treaty, so that is not taking place.
For our own part, we were fortunate to have a debate on Rwanda—and everyone knows what result that reached—but we have not had a response to the resolution from this House during the time that is required. I got a letter from the Home Secretary, plainly written by his officials, who put it in terms that it was my expectation that he would respond to that report by 17 March. It was not my expectation; it is the rule of this House that, when committees make reports, they are responded to by the Government in a certain amount of time. It is unfortunate that that still has not happened. I have written to him again and asked for a response. I do not think there is going to be one; the Rwanda treaty will obviously now be swept up with the Bill.
I believe it is important that Parliament has an interest in treaties, expresses its view and scrutinises those treaties. To do that, it needs to be allowed to use the levers which Parliament itself has created. That is the only point I wanted to make, and I thank the House for listening to me.
Lord Fox (LD)
My Lords, it is a great and unexpected pleasure to follow the noble and learned Lord, Lord Goldsmith, whose points I very much reinforce from these Benches. This has been a great debate, with some excellent speeches. The noble Baroness, Lady Hayter, should once again be congratulated on stepping back up to the plate and giving an excellent summary of the committee’s report.
The noble Viscount, Lord Trenchard, entreated us to be more enthusiastic. Happily, the overall average level of enthusiasm was raised massively by the noble Baroness, Lady Lawlor, which leaves me to be my normal self.
I am a member of this committee, as were several of today’s speakers, so it is not sensible for me to reiterate the entire debate. I will focus on a few points. As we heard, the committee broadly welcomes the accession of the UK to the CPTPP and any additional economic benefits that might result from new market access to Malaysia and Brunei. However, the committee also acknowledges the limited economic gains suggested by current projections, and indeed by the Government’s own impact assessment.
There are opportunities for UK manufacturers, but, equally, member countries that are geographically closer to each other might find it easier to develop those integrated supply chains that the noble Lord, Lord Udny-Lister, hinted at. When I talk to businesses, I certainly find that they absolutely prefer closer customers when making and exporting things. Clearly, when a market is 60 miles away, it is a heck of a lot easier than when it is several thousand miles away.
I have a couple of specific points. I should note that I am vice-chair of the All-Party Parliamentary Motor Group. The noble Viscount, Lord Trenchard, mentioned the automotive industry. The industry has welcomed the side letter signed with Malaysia, which essentially allows for 25% reciprocal regional content for products under a particular heading. That means there is a very high chance that content from these products, particularly engines or batteries, will originate from somewhere else—probably China. This is applicable in both directions between Malaysia and the UK, but it is something that your Lordships and the Government should keep an eye on. I suggest that there are other issues, such as non-tariff issues, around those particular products coming from somewhere outside, including future carbon border regulations and existing issues such as environmental impact and forced labour. A door has been opened and we should police that door quite carefully.
The committee was concerned about Northern Ireland’s direct trade with CPTPP countries, taking the view that it is likely to face restrictions that will not affect the rest of the United Kingdom. Therefore, as a committee, we have requested further information on the Government’s view of what they expect those restrictions to be and ways in which they may be avoided.
The committee welcomes the CPTPP’s provisions on services, while acknowledging that the benefits may be even more limited than the Government have suggested. In particular, it notes the lack of provision on the mutual recognition of professional qualifications, which is a key issue on services, as the noble Baroness, Lady Lawlor, mentioned.
It remains to be seen whether the Government’s intended trade benefits will materialise, and here the noble Lord, Lord Marland, hit the nail on the head. The future development of this treaty will be key to how much benefit the United Kingdom can have. Going forward, we should focus on digital services, professional services, and environmental goods and services, because these are the things from which we can benefit. I too join in asking the Government for their analysis of how committed the other partners are to making these substantive changes to the treaty, and how they will go about driving those changes which would so benefit the upside of this treaty.
The committee welcomes the provisions of the accession protocol which avoid threatening the European Patent Convention. It was very important that this was done; it was good work, and it remains an important part.
It also welcomes the report from the Trade and Agriculture Commission and the joint statement on the environment. These respectively state that UK food and drink rules, as well as environmental protections, do not have to change as a result of CPTPP accession. However, the committee notes the concerns raised by witnesses regarding the UK import of palm oil.
Building on a point made by the noble Baronesses, Lady Hayter and Lady Bennett, I draw attention to the evidence of LSE assistant professor of law, Dr Leonelli, who argued that the CPTPP chapter on sanitary and phytosanitary—SPS—measures could see UK regulators pressured into recognising other countries’ less stringent food safety standards, or other SPS standards, as equivalent to our own. This is a point that has been made. Unlike the UK’s trade arrangements with Australia and New Zealand, the CPTPP’s arrangement does not specify that the final judgment on SPS equivalence rests with the importing party. Instead, further state-to-state dispute settlement does not apply to the SPS chapters with Australia and New Zealand but does apply to the CPTPP. Again, this raises the point about how the Government intend to address the potential risk of equivalence provisions leading to regulatory chill, as we have heard. It would really help our understanding of that to know the Government’s approach to ISDS, which appears to flip and flop depending on which trade deal is being negotiated.
The committee raised the importance of workers’ terms and conditions and called on the Government to monitor closely the employment practices of our CPTPP partners and to be prepared to act should they identify issues. Can the Minister please confirm that this will indeed be done?
How will this best benefit UK plc? Our evidence suggests that the Government do not currently have an adequate plan for promoting CPTPP opportunities. We heard from a number of your Lordships concerns about the extent to which businesses in general and SMEs in particular will take advantage of what the treaty has to offer. The report sets out many recommendations as to how the Minister’s department should go about helping business, especially SMEs, to tap into the potential that there is. I believe that the Minister has taken note of this, and it will be important for him to suggest that he did.
I am very pleased that the Minister is here today. As I have suggested, he sometimes takes the hyperbolic end of the enthusiasm scale, so I entreat him to adopt—which I think he will—a realistic approach to the treaty. Even if UK business is effectively activated and increases its trading with CPTPP partners, the actual economic effect on UK GDP is vanishingly small, as we heard from many, including the noble Baroness, Lady Hayter. We know that the Pacific bloc has been growing quickly and faster than other blocs; I agree with my noble friend Lord Purvis that that is most likely on the back of Chinese growth, so we will see what happens going forward. But we also know that we all expect—as do the Government—to have a very tiny share of that growth. We will have only a tiny proportion of what has already been lost by leaving the EU’s huge single market. It is close to two orders of magnitude smaller: 1% of what we have lost.
In truth, if joining the CPTPP is anything, it could be seen as a statement of intent, rather than an actual deal that creates significant trade. What is that statement? A phrase that has come up on a number of occasions and is laced throughout government comments is “a tilt to the Pacific”. What does that mean? There is little supporting material beyond that soundbite to help us to understand the consequences of that tilt and whether it is beneficial to the United Kingdom. It has been said that there is potential for the CPTPP to be a forum for engagement with partners in the Indo-Pacific—despite its primary function being a free trade agreement with no secretariat and little structure. If that is the case, how will that work? Would not something such as the RCEP be a better version of that?
The integrated review and the integrated review refresh are no help, as they lack any detail on how the Government intend to utilise the CPTPP in a geostrategic manner. Therefore, the committee asks for further detail on how the Government expect membership of the CPTPP to contribute to the delivery of their geopolitical strategic aims for the region. I add: what are those aims? Several of your Lordships, particularly the noble Lord, Lord Udny-Lister, have mentioned the accession of new countries to the group. On the issue of China, to date, Ministers have ducked and dived to avoid answering questions on the Government’s position. At some point soon, it will be time for the Government to spell out their approach to the accession of other countries, including China and Taiwan, which my noble friend mentioned, and to confirm a role for Parliament in any negotiations for new countries to accede to the treaty.
Perhaps one question that the Minister can tackle, without breaching others, is whether it is the department’s understanding that the current applicants may be tackled in any order, irrespective of the order in which they lodged their application to join, or whether there is a first-in, first-considered understanding with partners. For Parliament, the Government should at least offer the same process of consultation that they would for a new, stand-alone FTA partner—that is a CraG-related process.
Overall, as we have heard, the committee reiterates the need for the Government to publish a trade policy that sets out defined priorities in areas of benefit to the UK. The UK needs to have a coherently formulated trade and investment policy that is recognised as an integral part of a wider industrial and trade strategy focused on competitiveness and productivity. That wider policy must shape trade policy, as the two work together.
In conclusion, I return to the phrase, “a tilt to the Pacific”. Fellow members of the committee will recall that I have a problem—quite a big problem—with it. We all know that a tilt—or, indeed, “a pivot”, which is used interchangeably—is a zero-sum game. Any tilt towards something is accompanied by a tilt away from something else. In geostrategy terms, is that really the message that the Government intend to communicate? If it is, and if the CPTPP is indeed a tilt towards the Pacific, can the Minister explain which regions and countries we are tilting away from and why?
Lord McNicol of West Kilbride (Lab)
My Lords, like many others who have spoken, I pay tribute to my noble friend Lady Hayter of Kentish Town and to the International Agreements Committee for its contribution to this debate and its members’ tireless work on this matter and so many others. On these Benches, we support the accession to the CPTPP. I echo the kind words of the noble Lord, Lord Purvis of Tweed, about the energy, the exuberance, the drive and the openness of the Minister, Lord Johnson of Lainston, in these discussions.
In our debates on CPTPP accession over the last year, we have made our concerns clear—at Second Reading, in Committee and on Report—about the threats of ISDS provisions and the need to safeguard our own food standards and environmental protections while also ensuring that other nations comply with international labour laws and other best practices. The committee’s report echoes our opinion on the limited financial impact of the CPTPP, noting that it was “underwhelmed” by the specific trade benefits. As my noble friend Lady Hayter of Kentish Town said, we have sought to ensure that what is, in reality, a modest change in our ability to do trade does not come at the expense of our ability to regulate and maintain our own high standards. I am glad that, throughout our debates, the Minister was able to make several assurances to this House and in Grand Committee. He said in one reply that such amendments were
“unnecessary because we are doing this anyway”
and that he
“would be surprised—that is the language I wish to use—if the evaluation and monitoring reports did not cover information on … ISDS cases”
and other relevant issues. He went on to say that
“an overview of the work of the committees under the agreement to facilitate co-operation and implementation … is particularly relevant when it comes to labour standards, environmental standards, reduction of the risk of deforestation and many other areas”.—[Official Report, 16/1/24; cols. 362-63.]
Those are the Minister’s words, and we will come back to them when we look through the evaluation and monitoring reports and the areas they cover. I sincerely hope that the effects will be positive, as the Minister has repeatedly assured us.
The report raises a number of important issues, a few of which I will reiterate and drill down on. The Federation of Small Businesses rightly makes the point that a significant barrier to the UK taking full advantage of new free trade agreements remains a lack of knowledge and capacity among small and medium-sized enterprises. I echo its and the committee’s recommendation that the department engage a CPTPP taskforce with undertaking a regional roadshow aimed at engaging businesses, demystifying aspects such as rules of origin provisions, and raising awareness of how companies and businesses might take advantage of this new trade deal when it is finally acceded to at the end of this year after the last country accepts us in.
The current system, which effectively requires businesses to seek out information from government, does not do enough in itself to stimulate trade. Although, in his oral evidence to the committee, the Minister said he was “agnostic” about how best to approach cutting through to business, I hope he becomes a believer in the recommendations from the FSB and the committee. Small businesses face far too many barriers to trade. That is why I was glad when the Labour shadow Secretary of State for Business and Trade announced in November that Labour will be working in collaboration with the Federation of Small Businesses, the FSB, as part of a small business export task force to find practical ways in which we can best support SMEs in their desire to access foreign markets.
The noble Lord, Lord Fox, touched on Dr Leonelli of the LSE and I want to echo the concerns she raised giving evidence to the committee on sanitary and phytosanitary controls. She spoke of the possibility that the threat of dispute settlement provisions may lead to our high standards not being enforced due to fears of legal action. This was raised many times both in Committee and on Report. Like the IA committee, I would like to see the Government set out how they intend to address the threat, as the noble Lord, Lord Fox, said, of regulatory chill, where our Government or companies make decisions not to push forward for fear of being challenged by other Governments.
I was glad that the report echoes the point that I and many others have made in the House about ISDS and the threats to the environment, such as deforestation in Malaysia as a result of palm oil production. In particular, it echoes the points on labour standards and the fact that arbitration does not concern itself with breaches of any workers’ rights, but only focuses very narrowly on where a breach has impacted trade and the effect that that had on workers’ rights. That is just wrong. The focus on pure trade over labour standards is something that we on these Benches find deeply unsettling.
The noble Lords, Lord Kerr and Lord Purvis, and the noble and learned Lord, Lord Goldsmith, touched on CRaG. The noble and learned Lord, Lord Goldsmith, specifically talked about the other place not having a Rwanda debate. I understand that, in the Commons, the Secretary of State previously promised a CRaG debate and the Minister of State in the other place promised one in the Bill Committee, but the leader in the Commons has just confirmed that there will be no such debate on the CPTPP. Time, through the managers down the other end, has not been made available. If we are going to properly debate and deal with these issues, time needs to be available, both in this House and in the Commons for the debates to take place.
I also wish to raise concerns made by my colleagues in the other place about the vote on the substantive Motion. At each stage of the debates in this House and in debates on other agreements, there has been a call from across the political Benches—from Cross-Benchers, the Conservatives, Liberal Democrats, Labour and the Greens—for proper substantive debates on trade deals. The words the noble Lord, Lord Kerr, used about scrutiny, being able to shine a light and actually giving the department itself a greater ability to push back in negotiations, are wise words. This is something that we should look to enhance and deal with, rather than leaving—we all understand why the finer details of the negotiations need to take place behind closed doors—the setting of the parameters. Whether this is at the start of the discussions or monitoring them as we follow through the discussions, it should be before we are given a fait accompli, as we have been in so many cases. It is so important.
I will finish by again thanking the IAC and the seven members of the committee who have spoken today, for their time, consideration and hard work in dealing with the points that were raised in Committee and on Report, and for their deliberations and the report. I look forward to the Minister's response.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
I thank all noble Lords for the extraordinary, high-quality debate that we have enjoyed today. I hope people at home are watching this discussion, because it is great proof of the value of this House and its contributions.
Lord Johnson of Lainston (Con)
They are hopefully crowded around their iPads; the noble Lord should know that we have updated from the old-fashioned wireless—which, of course, we have in my household.
I want to say thank you, genuinely, to the noble Baroness, Lady Hayter, and the noble and learned Lord, Lord Goldsmith. I thank the International Agreements Committee for its report. I have a draft set of responses to the report, which will be formulated appropriately and given to the noble Lords as soon as possible. It really was excellent, and I think all the points that the Government have been challenged on are worthy of a response. I am extremely grateful for the mature approach the report took to the value of this trade deal and seeing the optimistic benefits of the CPTPP, within the reasonable framework that we will operate to.
It is possible that noble Lords may hear cheering if they listen carefully, because a few moments ago the Bill was passed in the House of Commons. I am sure we all feel the ripple—the Mexican wave, which is appropriate as it is a CPTPP member—coming down the Corridor to us. Before I go further and answer many noble Lords’ points, I refer Members to my register of interest. I do not believe there are specific conflicts, but I do have interests in CPTPP countries.
I have tried to group the comments made in this important debate and so, if I may, I will go through them. I will try to refer specifically to noble Lords themselves. I will highlight a few individuals, particularly the noble Baroness, Lady Lawlor. I congratulate her for giving a succinct and powerful description of the benefits of free trade, which often we forget. It is right that, in a scrutiny environment such as this House, we look at the problems, issues or challenges that might present themselves with a piece of legislation or a new treaty. To have the truly positive case for free trade made so clearly and powerfully is something that I welcome, and I am very grateful to the noble Baroness for that.
I am very grateful to the noble Viscount, Lord Trenchard, for his words. Again, he has been a passenger on the free trade express over the last year and a half since I have taken this position. I am extremely grateful for his advice and expert opinion on Japan, and the very positive case that Japan makes in terms of our trade relationship with the CPTPP and the associated benefits we have, both through having a trade agreement and an association with it through this process.
I thank the noble Lord, Lord Marland, for his very generous comments about our joint efforts to spread the benefits of UK trade around the world. If anyone has the most air miles on these red Benches, it must be a close competition between the noble Lords, Lord Purvis and Lord Marland. Both noble Lords are doing such important work, whether in spreading democracy and helping complex situations be resolved, or in pushing the Commonwealth. While this is not a debate about the Commonwealth, it is important to note how many countries that make up CPTPP are Commonwealth members. It is absolutely right that we should use this as further leverage to work with our Commonwealth peers. I will certainly take to my colleagues in the Foreign, Commonwealth and Development Office the comments made by the noble Lord, Lord Marland.
I am always grateful to the noble Lord, Lord Kerr, for his comments as to how we can better manage our trade process. If I may, I will just draw his attention, as someone so distinguished and who lauded the EU’s FTA negotiation process, to the fact that I do not think the EU has done a trade deal in my political lifetime. The most recent one was after a culmination of 17 years of negotiation, and the current ones are all live after many years. We have managed to close this deal in an extremely effective time period.
I turn to the process of CRaG which has been well raised by noble Lords. We made a clear commitment under the Grimstone convention that, if there was time, we would have a debate, and this is exactly what we are doing today. My colleagues and I have made ourselves totally and freely available to engage on every issue. Officials have been extremely open in responding to questions and challenges and I am glad to see some of them here today. I am particular aware of issues, such as SPS protection which was raised by the noble Baroness, Lady McIntosh, or agriculture, raised by the noble Lord, Lord McNicol, as well as points made by other speakers on the Front Bench from all parties. I think we have exceeded expectations in the work we have done in order to project that necessary element of debate.
I am not trying to avoid the point, but it is not for me to comment on the activities of the other place. I will leave that to them. It is right to be very comfortable in knowing that any new accession will be equally bound by the CRaG process. This is extremely important. It would be completely unreasonable if that were not the case. The Government have committed to that and I am very comfortable in making a further Front Bench commitment to it.
It is worth touching on some of the sub-issues that have come up in this debate. The noble Lord, Lord Fox, wisely raised SPS measures, and comments were made about ISDS. I believe we had a discussion earlier in this Chamber about the brevity of speeches and the importance of avoiding repetition, but I am going to have to repeat myself, if I may, and test the patience of noble Lords. There is no derogation. It says so in Hansard. It has been in Hansard before. There should be a collected, bound edition of my repeated statements in Hansard about free trade agreements that do not derogate from the security of our sanitary and phytosanitary provisions. It is very important to be comfortable about this. Hormone- injected beef, chlorinated chicken or dangerous pesticides which are banned here are not allowed into the UK on account of the FTA. This is a matter under our own control. It is important that consumers hear this.
When I talk to people about free trade deals, a lot of them worry that, somehow, this will result in a tidal wave of deadly products. The noble Baroness, Lady Bennett, referred to the UK becoming a dumping ground for dangerous products. Any decision to allow so-called dangerous products into the UK is a matter for the UK Border Agency, the food safety authorities and the Government. If that is the case, it has nothing to do with this FTA, which is important in the sense that it changes our position on tariffs and how we trade with each of the different countries. I just want to reassure noble Lords and the public that nothing will change.
Baroness Bennett of Manor Castle (GP)
To respond briefly to the Minister, of course, there is “allowing”, and there is also what checking is being done to make sure that it does not happen anyway. That is the kind of checking I was referring to.
Lord Johnson of Lainston (Con)
I thank the noble Baroness. The checking is a matter for the Food Standards Agency. We have made a number of assertions. It believes that this FTA will not result in additional risk for it. I do not wish to be contentious. I always listen very closely to the noble Baroness’s comment about free trade. We do not share the same views on its benefits. I listened to her very carefully and I noticed that at no point did she mention the principle of the consumer. I am particularly focused on making sure that the consumer benefits from these free trade deals—that they see prices come down and the range of products broaden.
A number of noble Lords, including the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, mentioned the concept of proximity being at the core of trade. For many goods, it is right and in fact efficient to have a proximous concept of trade. I think of the idea of swapping beef herds, in terms of practicality—although I think we sell better beef than the Australians, and certainly more specialist types—so there is a market in that sense. However, if we look at investment, which is an important element of the CPTPP, our two biggest investment partners in terms of growth and current value are the United States and now India. They are clearly not the most proximous countries to the UK, so it is important to understand that, in modern trade, in services, the digital provision of services and financial investment, the world truly is our oyster.
Speaking of investment: the ISDS concern is raised continually. As Investment Minister, I believe that strong investment protections for investors into the UK are at the core of our offering. If, at any point, investors felt that their investment rights would be derogated, it would be much harder for all of us—and whoever stands in my place as Investment Minister—to get the vital money that we need for our infrastructure into this country. These ISDS provisions are enormously beneficial for us. I feel totally safe in offering them to other countries. I do not believe that there is any derogation of our ability to manage our economy, our ambitions for net zero, how we treat our workforce or any other measure. Investing in these CPTPP countries protects our businesses, particularly in countries such as Malaysia where we now have these protections.
That brings me briefly to the services point—
Lord Kerr of Kinlochard (CB)
I entirely agree with the Minister about ISDS. Will he confirm that ISDS will be in any trade deal we sign with India?
Lord Johnson of Lainston (Con)
This is not in my notes. I cannot confirm what will be in our trade deal with India. I stress the importance of protecting our investor base when we invest internationally. It is right that the services principle has been raised. One of the most effective elements of the CPTPP treaty revolves around our agricultural access, where there is a high degree of compatibility between what we produce and what these markets want, as there is with goods. Noble Lords have raised this on a number of occasions. The noble Lord, Lord McNicol, raised the point about the Society of Motor Manufacturers and Traders, which particularly welcomes the relationship with Malaysia, where there is a different tariff approach. The rules of origin will simplify a lot of activity when we come to work with these countries. We do a lot of manufacturing trade with countries such as Japan, Malaysia, Vietnam and other CPTPP countries.
Services are the future. Some 80% of our economy and its growth are structured around services. The services chapters in the CPTPP can go further. This is a living agreement. We will build on the chapters, particularly on digital, that allow us to expand our services access. There are important basic building blocks around professional qualification recognition and plans to develop this effectively, to promote collaboration between professional qualification providers. It promotes collaboration between regulators. It allows for more effective business mobility, which is important. Someone who is posted to Canada on a work contract can take their spouse. There is first-time access and security for business mobility in countries such as Malaysia and Brunei, as well as other opportunities, such as transportation in Chile, and a number of other key points relating to digital provision and preventing data localisation. These all sound quite technical but are very important in firing the starting gun on further discussions.
A number of Peers, including the noble Lords, Lord Purvis, Lord Kerr and Lord Anderson, and the noble Baroness, Lady Hayter, have mentioned that these further discussions are encapsulated around a general review. This is a useful mechanism for us to participate in before we become a full member, as we are doing. This conversation will certainly include how to build on the services offering that is in the CPTPP. We welcome it. Our teams will be fully dedicated to it.
The noble Lords, Lord Kerr and Lord Marland, looked at the secretariat which will help us in these negotiations. I ask noble Lords to forgive me if I have missed any who also made this point. We have 14 full- time personnel who are part of the negotiating team and who now make up the CPTPP unit within the Department for Business and Trade. As I understand it, they are permanent and will not be moved to negotiate another deal. They will stay, I hope, to focus on making sure that we have a close relationship with the CPTPP countries. If a permanent secretariat is developed in the coming years, they would feed into that.
We want this organisation to grow, have deep roots and be strong for the future. I do not know what the plans are relating to the secretariat, but these are always live conversations, and of course we will feed in where appropriate. Once we become a full member, we will be able to put our platform forward with more vigour.
A question which is oft raised is how the department promotes the CPTPP to small businesses. I am very pleased that there is an SME chapter in the CPTPP; it is important, because it helps all economies focus on how they can help small and medium-sized enterprises to make the most of the CPTPP. This is at the core of all the economies that are participating in the treaty.
I am aware of the difficulty in promoting quite a complex treaty principle—there are rules of origin and comparable treaties, as we have treaties with many of these countries already, so it is not necessarily clear sometimes which treaty you should use, and you have to pick which of the two. We have done a great deal of work to ensure that our online access is powerful enough to enable people to make these decisions. We have a unit which specialises in promoting our free trade agenda and the treaties that we have signed up to. It has run a number of workshops. We need to work with the Chambers of Commerce to make sure that we get the message out.
I am totally aware of the need to ensure that this is a success, and I welcome the challenge. Crucially, the department sees it as part of its conceptual and fundamental mission. This Government want to be proud of their post-Brexit vision of Britain. Therefore, it is up to us to ensure that we deliver, by making the necessary noise to get as many businesses involved, both in exporting and in taking advantage of this treaty.
I hope I have covered the majority of the points raised. I am always comfortable coming back to noble Lords and the committee. Again, I congratulate the committee, and the noble and learned Lord, Lord Goldsmith, and the noble Baroness, Lady Hayter, for the work they do and the high degree of collaboration that they have with me.
On the question of our trade policy, people hunt for a matrix or template of what tomorrow holds. Looking back on our accession to the CPTPP, I am reminded that it has been likened to the next-door neighbour’s cat with a cough—I cannot remember quite what the quote was from the noble Lord, Lord Purvis. But I think this is a lion that will roar. Think of the rather extraordinary counterintuitive decision to say that we are going to pivot—that we had a relationship with the European Union and are now going to look for bigger and better relationships around the rest of the world. That is exactly the sort of economic decision that a good businessperson would take. Unquestionably, there is no derogation in the need to have the highest-quality trading relationship with our European neighbours, but where is the future? That is the point.
If you asked any of the next generation coming through—some of them are in this Chamber today—they would say that we should look to Asia and the growing populations. My noble friend Lady Lawlor rightly pointed to the astonishing levels of growth coming from those economies. In this country, for a politician, Cabinet Minister or Prime Minister—the leadership in this great nation of ours—to decide to go for the Pacific in this way and join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is an astounding jump of the mind that I am sure previous senior mandarins of the Foreign and Commonwealth Office must be aghast at—such out-of-the-box thinking.
I am enormously proud to have been party to bringing this legislation through this House and promoting it with all noble Lords in this place. If I can repeat them, the countries are Australia, Brunei, Canada, Chile, Peru, Singapore, New Zealand, Vietnam, Japan, Malaysia and Mexico. We are proud to join that phenomenal cohort. I am excited about the future and very positive about the opportunities that this trade treaty will bring. In my view, it will far outstrip the predictions made by everyone in this House, and even the Government themselves. I am grateful for this opportunity to discuss it.
Baroness Hayter of Kentish Town (Lab)
My Lords, I thank all the speakers. It has been an excellent debate. The Minister referred to people watching it at home—I do not know whether he was referring just to my husband and his wife, but there may be others as well.
There has been in the debate a broad welcome for our membership, whether because it is a post-Brexit use of our freedoms or because of its real potential, particularly in services. Some talked about there being a very positive welcome, and some were wholly enthusiastic—but that has all now been trumped by a roar from the Minister, who calls it “astounding”. We will see. Some others have raised questions and wanted reassurances over ISDS or the need for a secretariat. What is sure is that trade deals are only enablers; they are not engines of growth. Businesses will have to be helped and assisted if they are to make those hopes into a reality. We will look to the Government for their role in that.
The partnership’s very future will be important, including its membership, scope and implementation. Noble Lords talked about the UK helping to shape that development—one of them even said lead that development. Whatever happens, I hope that Parliament can be involved in the direction of travel, including on the question of expansion of membership. As my noble and learned friend Lord Goldsmith said, if the Government do not play ball, even the current CRaG will not work. Some of us want it to go further and be improved, to give Parliament real grip over international agreements.
I cannot mention everyone who has spoken, but I would like to mention the noble Lord, Lord Marland. He urged the House to let the report do the speaking. I thank the committee chair, the members who did the work and the secretariat, led by Rhiannon Williams, and assisted on this by Bruce Sinclair and Sophie Andrews-McCarroll. I think all of us know that, when we get a good report, it is mostly their pens that have done it, rather than our brain power. I thank the House for its attention today and commend the report to the House.