Tuesday 27th April 2021

(6 months ago)

Grand Committee

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Department for International Trade

Motion to Take Note

Moved by

Lord Purvis of Tweed Portrait Lord Purvis of Tweed
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That the Grand Committee takes note of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Republic of Turkey, laid before the House on 24 February.

Relevant documents: 8th Report from the International Agreements Committee (special attention drawn to the agreement)

Lord Purvis of Tweed Portrait Lord Purvis of Tweed (LD)
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My Lords, it is a pleasure to move this take-note Motion on the UK-Turkey trade agreement, and in so doing I thank the Members who will participate in today’s debate. I note the breadth of experience that they bring on trade issues. I am also grateful to the committee for its report. The International Agreements Committee is one of the most valuable in the House at the moment, and it is serving a great role in drawing to our attention issues that we should debate. It is my pleasure to move this debate in accordance with the committee’s recommendation that we take note of the agreement.

I am also grateful to the Minister for keeping to his word in emailing me and keeping me informed of developments in his department, and I am grateful to his office, and to the noble Lord, Lord Ashton, and the Government Whips’ Office for facilitating the debate in such good time. I am not used to that happening, and it will not go to my head—I reassure the Minister that I will not expect the Government to allow debate on any Motion within a week.

The agreement is now ratified. It was agreed on 29 December, so businesses did not have sight of it before it was operational two days later. This continuity agreement is unlike others in that it is temporary and the parties are committed to review it no later than two years after it enters into force—effectively 18 months from now—with the aim for an enhanced agreement covering services, agricultural goods, investment, subsidies, labour, sustainable development and climate. Given that the average time that it took the Government to make continuity agreements was over two years, it would be helpful to know what timescale they are working to for a full permanent agreement with Turkey.

The agreement also covers goods. Turkey is a relatively small but important trading partner with us. ONS data published on 13 April shows that, in 2020, we exported £4.8 billion of goods to Turkey, down from £5.4 billion in 2019, and imported £8.2 billion, down from £9 billion. In 2020, trading goods with Turkey represented 1.75% of all goods trade for the UK. As the Committee can see from the figures, we operate a considerable trade deficit with Turkey, so the motivation for the agreement was from Turkey and thus leverage was with us. We chose not to use that leverage.

Our trading relationship with Turkey is unique, owing to its membership since 1996 of a partial customs union with us, which reduced barriers to trade. That has now ended and those barriers have been re-erected. Therefore, downgrading to a lesser FTA arrangement has meant businesses now needing to adjust to higher import and export administration costs, more bureaucracy, slower port of entry and exit procedures, and complex rules of origin requirements.

This latter point, which the committee picked up specifically, is of great significance given the categories of imports and exports and the fact that the largest elements—vehicles, machinery and engineering—are all part of complex supply chains with EU manufacturers. The fact that we have only a temporary allowance on rules of origin, because of our failure to secure this in the TCA, will mean that there is a stage 2 level of greater burden coming with our trade with Turkey in the permanent relationships.

There is a great line in paragraph 2 of the Government’s parliamentary report:

“It is in no one’s interests to disrupt existing trade flows.”

I agree. This was also highlighted in paragraph 10 of the committee’s report, quoting from the parliamentary report:

“HM Government has worked closely with Turkey to ensure that customs processes are as simple, clear, and predictable as possible, and that any changes do not affect current trade flows.”

They demonstrably have. The ONS data released on 13 April has the latest figures showing the disruption. UK imports of goods from Turkey fell 27% from December 2020 to January 2021, down from 967 million to 714 million, and they fell further in February. Exports in the same period fell 8%, before picking up again in February, and this is on top of the year-on-year falls I cited earlier. For Turkey, we have a double- stage downgrading of free trade. The committee’s recommendation in paragraph 6 for wide consultation is very important.

The Government, in their response, said that they would consult stakeholders, but if it is simply stakeholders, that is limited. They also said that they would consult in a similar approach to the US proposed trade agreement. That had a wide consultation open to the public; I even went on to it and submitted a response. Will the Minister clarify what level of consultation there will be for the permanent trade agreement, with not just trade stakeholders to be included, but all those with an interest in the wider aspects? This is to be a comprehensive trade agreement, so as wide a consultation as possible will be necessary. I also fully endorse the recommendation in paragraph 16 of the report calling for a full impact assessment. We need to know which of the effects that we have witnessed are likely to be temporary effects, and which are systemic, because of the new barriers in perpetuity. That needs to inform differing policy responses.

The two major areas, as the committee pointed out, are short-term disruptions and long-term increased barriers. I am afraid that the Minister completely ignored that recommendation in his letter to the committee, so if he can respond to it today it would be helpful. Given the evidence that the committee received from manufacturers and those in supply chains, the Government owe the committee a response.

Given that businesses that have traded with the EU can access some form of support package and lending to tackle the Government’s new barriers with EU trade, these are the same kinds of barriers that businesses will now see for trade with Turkey, so will businesses be able to access those trade support areas too—for example, the SME Brexit Support Fund? That is contracted out to PricewaterhouseCoopers. I emailed three weeks ago, on its online inquiry form, asking for details of the fund, how PwC was being paid and how it was being administered. I have received no reply. I hope that businesses are faring better at getting a response from PwC than I have. I would be grateful if the Minister would write to me to say how much the Government are paying it for the administration of this fund.

Critically for this debate, are this scheme and the others open to businesses which trade with Turkey and which have new barriers as a direct result of the TCA with the EU? Also, there is continuing guidance now being issued to businesses exporting to the EU. Will there be the same guidance to businesses exporting to Turkey? For example, HMRC outlined, in an email to me and all others who have registered for its updates, on 1 April:

“When exporting goods from a roll-on roll-off port or any other listed locations, you, or the person submitting your customs declaration, must submit your declaration as ‘arrived’. The declaration must be submitted as ‘arrived’ in order to finalise the declaration process before your goods reach border locations, where customs controls are being staged in. If the declaration isn’t ‘arrived’,

customs

“will not recognise that the goods have left the country.”

I have to admit that I thought this was HMRC’s April fool’s joke but it seems as if, unbelievably, if we are exporting now to the EU, we have to declare that the goods have arrived before they have left the country. Can the Minister confirm that? Is the same approach being taken for goods exported to Turkey?

Another area where the Government need to provide more information is on rules of origin. The committee has picked this up and has done us a service for analysing it carefully. The system for pan-Euro-Mediterranean cumulation of origin allows for the application of diagonal cumulation between the EU, EFTA states, Turkey, the countries that signed the Barcelona declaration, the western Balkans and the Faroe Islands. That free trade measure has now been ended for UK trade. The committee is right in paragraph 22 to call for comprehensive and detailed guidance on any new arrangements, but what is the impact assessment on trade with the other countries with which we can no longer have diagonal cumulation with the EU?

I mentioned the trade deficit that we currently have with Turkey. We operate a wide trade deficit with many other countries too, and there will of course be some areas where a deficit is not a major worry, such as in certain areas where the UK does not or cannot produce. In other areas, however, it is a concern. The answer is not in protection measures, but in securing better terms for UK exporters to market access in those countries, often through them levelling up on standards. So far in the Japan agreement, worth £15 billion, the Government say that only £2 billion of that is widening UK market access to Japan, while £13 billion is for Japanese access. The Minister replied that it was good for the UK because it allows for cheaper imports; this is in line with what was repeated by Liz Truss on Sunday when she was asked to comment on the Australian trade deficit as well.

Free trade in the 21st century should be fair trade, too. When it comes to the UK negotiating FTAs, we should do it for the benefit of UK exporters and consumers. If not, what was the point of Brexit? So far, the agreements reached by this Government will see competitive trade advantage decline as deficits grow. As an example of this agreement’s lack of using leverage, we are abolishing in it the long-standing entry-price system, designed to prevent seasonal low-cost fruit and vegetables below an agreed floor price from flooding the UK market, rendering domestic soft fruit and vegetable producers uncompetitive. Given that we have sought to have higher standards of seasonal agricultural workers’ conditions than, say, Turkey, this is important. What was the response by the soft fruit producers in Scotland and across the UK to this? Also, the EPS allows for a competitive playing field to the least developed countries, which already benefited from preferential access. What was the Government’s modelling for the impact on this? The Government have failed in this and other areas in seeking reciprocity on competitiveness. On subsidy control and others, we see Turkey having an advantage, and are yet to see what the Government are signalling to the benefit of UK exporters.

Finally, on human rights, last week the noble Lord, Lord Ahmad, said that we had values-based trade. The Minister has repeatedly said that trade is not at the cost of human rights. The Government have promised draft human rights clauses on trade and human rights approaches. If any agreement requires this, it is the permanent Turkey agreement. If the Minister can respond to these points and others that will be raised in this debate, I will be most grateful.

Lord Goldsmith Portrait Lord Goldsmith (Lab)
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My Lords, I congratulate the noble Lord, Lord Purvis of Tweed, on obtaining this debate; I thank him for it because I speak as chair of the International Agreements Committee. In that capacity, I thank him also for the kind remarks he made about the committee’s work. We are very fortunate with the quality of our members, who are engaged and knowledgeable, and the quality of our staff. It is therefore important that these debates take place; I am glad that this is taking place, although three minutes is hardly adequate for other members of the committee to be able to respond to this debate.

Turkey is the United Kingdom’s 19th-largest trading partner, accounting for 1.3% of total UK trade. It represents a valuable market, especially for goods, and it was therefore important to conclude an agreement to preserve the maximum access for UK exporters and manufacturers. I accept that, because of Turkey’s close relationship and alignment with the EU, the rollover process was complex. I would have liked to be able to congratulate the Government wholeheartedly on delivering such a complex agreement in time, but there are deficiencies, to which the noble Lord, Lord Purvis, has already referred.

The committee reported the agreement for the special attention of the House because it considered it politically important, and because it is significantly different from the precursor EU-Turkey agreements so as to warrant debate.

Our pre-Brexit trading relationship with Turkey was governed in part by the EU-Turkey customs union. That had to be transformed into a free trade agreement —by definition and, unavoidably, that means less favourable trading terms than under a customs union. For example, there are now new rules of origin and paperwork requirements for traders. Fellow members of the committee will cover that issue and others in more detail. Although in converting the customs union to a free trade agreement the EU arrangements have been preserved as far as possible, areas that one would usually expect to see covered in a modern, comprehensive trade agreement have been excluded: services; trade in agricultural goods; investment; sustainable development. Again, colleagues will reflect on these omissions.

Two key omissions that I want to focus on are human rights and workers’ rights. Although they did not feature in the underlying EU agreements, the Government had an opportunity to push for their inclusion when negotiating the new agreement and, as the noble Lord, Lord Purvis of Tweed, has said, the negotiating advantage lay with us—we had the leverage. Their absence, therefore, appears at odds with the Trade Secretary’s vision of “values-driven free trade”. In its latest World Report, Human Rights Watch provided a damning assessment of Turkey’s continued attacks on human rights and the rule of law. Thousands of people in Turkey face arrest or worse for daring to criticise the President or the Government, with terrorism widely used as a pretext to restrict the rights of Turkish citizens. The Joint Committee on Human Rights has also previously highlighted child labour, refugee labour and hostility towards trade union membership as issues of concern.

The Minister has previously said that

“trade does not have to come at the expense of human rights”.—[Official Report, 23/3/21; col. 752]

Well, I shall ask him the first of three questions. What reassurances can he give that these matters will be pursued in the negotiations for an expanded UK-Turkey agreement, which are due to begin within two years? We welcome plans for an expanded agreement and the Government’s commitment to undertake a public consultation to inform future proposals, but my second question is: can the Minister also confirm that the Government plan to publish their negotiating objectives for the expanded UK-Turkey agreement and that, should the International Agreements Committee call for a debate on these objectives, such a request would be met? Finally, what plans do the Government have to extend their commitments to facilitating parliamentary scrutiny of negotiating objectives to all agreements that are subject to renegotiation?

Lord Hannan of Kingsclere Portrait Lord Hannan of Kingsclere (Con)
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My Lords, I congratulate the noble Lord, Lord Purvis of Tweed, on bringing this important Motion before us. His argument that Turkey was the demandeur because we run a trade deficit with it strikes me as one that was answered by his countryman Adam Smith 245 years ago in that little phrase,

“Consumption is the sole end and purpose of all production”.

What is the benefit of having a trade surplus? It is not as though you can keep silos filled with extra stuff. Cheaper imports are a terrific way of raising living standards for all of us, especially for people on low incomes. Exports are the stuff you want to get rid of to pay for those cheaper imports. Understanding that point, now 245 years old, seems to me the way to get to a world where we are lifting restrictions and allowing people to prosper.

Equally, trade is a remarkably poor instrument of foreign policy. Let us all accept that there are at least questions to answer when it comes to human rights in Turkey. Any kind of generalised sanctions—and I would call refusing to have an FTA the weakest form of trade sanction—are almost always counterproductive. They create a siege mentality. They hurt the wrong people—ordinary folk in the other country and in your own—while driving support to the regime of which you disapprove. There are sanctions that you can take, but generalised trade sanctions almost always fail for the same reason that they kept Castro in power in Cuba: they create a sense of people needing to rally to the authorities.

Let me make a final point on Turkey’s relationship with the customs union, which, as noble Lords have said, came to an end with this FTA. It is important to understand quite how disadvantageous Turkey’s position within the customs union was. Turkey was obliged to follow all EU concessions in talks with third countries. When the EU did a trade deal with Japan or South Korea, Turkey was required to match all the concessions, but there was no reciprocal obligation on Japan or South Korea or whoever to make the concessions vis-à-vis Turkey that they were making vis- à-vis the EU.

That position was negotiated transitionally. It was supposed to be a step to full membership. It was acceptable—indeed, it made very good sense—in those terms. However, it makes very little sense as a permanent situation for Turkey. We have huge opportunities to do what both Trade Ministers—our own and her Turkish counterpart—said when this deal was negotiated at the beginning of this year remains our ambition: to have a much deeper, more ambitious and more comprehensive commercial relationship with Turkey.

It seems pretty clear that Turkey’s EU ambitions are over; that is clear whether you talk to people in Brussels or in Ankara. I suspect that Turkey will therefore look to change the terms of its trade relationships with the European Union because, once they cease to be transitional, they become deeply unattractive. Britain should have no qualms about seeking the closest trading relationship possible with a country that for a long time guarded NATO’s flank against the horror of Bolshevism and to which we may one day look to guard our flank against religious extremism.

Earl of Sandwich Portrait The Earl of Sandwich (CB) [V]
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My Lords, the noble and learned Lord, Lord Goldsmith, the noble Lord, Lord Purvis, and the IAC itself have already pointed out flaws in this agreement: no assessment of the effects on business of a transition from the customs union; no subsidies chapter; and the need to review TBTs and rules of origin.

I shall focus briefly on the absence of human rights. Turkey has a historic role in Europe; some even still see her as a potential member of the EU following the long tradition begun by Atatürk. More recently, President Erdoğan’s repressive Government have made that impossible because of their flagrant abuse of human rights and imprisonment of opposition leaders, activists, journalists and others.

The TUC has called for a suspension of the trade deal and our own IAC has received written evidence from trade unions. According to Unite:

“Over 160,000 judges, teachers, police, and civil servants have been suspended or dismissed, together with about 77,000 formally arrested.”

These figures may be out of date because a lot of prisoners have been released due to the pandemic but the European Commission’s Turkey 2020 Report came down heavily on Ankara, saying that there had been “serious backsliding” on the rule of law and fundamental rights. It mentioned the “deterioration of democracy”, the exclusion of civil society and new problems with refugees. That report may have prompted the recent promises from President Erdoğan to write a new constitution, apparently turning over yet another new leaf. We on the committee were also concerned to hear that Turkey has withdrawn from the Council of Europe convention on violence against women, signed in Istanbul; this issue came up again in our debates on the Domestic Abuse Bill.

Despite all this, human rights and workers’ rights are unspecified in this agreement for some reason, which must be a bad mistake. Our committee report was too polite to insist on a more specific reference; we simply asked the Government to make greater use of the review clause to update the agreement and introduce a full section on human rights.

There seems to be no argument for treating Turkey any differently from other countries with which we have new trade deals—on this, I part company with the previous speaker—and I hope that the Minister will agree that this is a lacuna. Therefore, as the noble and learned Lord, Lord Goldsmith, said, we look forward to hearing exactly what the Government’s negotiating objectives are in the new agreement.

Lord Morris of Aberavon Portrait Lord Morris of Aberavon (Lab) [V]
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My Lords, it is good for the democratic process that the International Agreements Committee, of which I am a member, scrutinises treaties and that we should have a timely debate today, which I welcome.

I suggest that there are at least three templates that we should develop for the foreseeable future: first, that the Government publish their negotiating objectives quite clearly; secondly, that there should be explicit advice that the Government have raised human rights and workers’ rights, as already mentioned—as the noble Earl, Lord Sandwich, said, we urge the Government to use the review clause in the agreement to introduce human rights and workers’ rights provisions; thirdly, that in the absence of successfully achieving our negotiating objectives and where we have to fall back on WTO terms in all our treaties, it should be tabulated, and we should have a running score on what we are falling back on.

On the first issue, we were concerned at the lack of an explicit confirmation that the Government would publish their negotiating position. Since then, we have received information in the terms already referred to, and I am concerned about the words of the reply. I am not quite sure what to make of the assurance received that:

“The Government will be able to comment in due course on how the publication of negotiating objectives will be handled in the case of our existing FTA with Turkey.”

It sounds more like Mandarin than English to me. Perhaps the Minister will give me a translation.

Secondly, on human rights and workers’ rights provisions, we have made our position quite clear, as other noble Lords have done already. I fear that these issues are sometimes approached with a tick-box mentality, bowing to them, as I suspect one does, when world leaders meet but getting very little in return. The TUC expressed great concern last year that Turkey was ranked among the 10 worst countries for workers’ rights according to the International Trade Union Confederation. I need not go further than what we have heard in this debate; I certainly assert in the same way.

Over the past few months, we have developed a good relationship with the Government as regards the devolved Assemblies. I am anxious to ensure that that is pursued and followed up, because it is important not only that they are consulted but that we are informed when they have concerns. This is now coming through loud and clear. It is vital that Belfast, Cardiff and Edinburgh are all consulted as part of the economic development of this country. I am certainly hawkish on this matter, for which I make no apology, having been one of the architects of Welsh devolution. With those few words, I indicate my agreement with the committee’s report.

Baroness Healy of Primrose Hill Portrait The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
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I call the next speaker, the noble Lord, Lord Kerr of Kinlochard. Lord Kerr? No? As the noble Lord, Lord Oates, has withdrawn, I shall call the next speaker, the noble Lord, Lord Lansley, and perhaps we can return to the noble Lord, Lord Kerr.

Lord Lansley Portrait Lord Lansley (Con)
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My Lords, I join in thanking the noble Lord, Lord Purvis of Tweed, for securing this debate and for the way in which he introduced it. I also thank our chair, the noble and learned Lord, Lord Goldsmith, for his introduction to the report, albeit necessarily brief.

I want to complement it by talking about just one issue, that of subsidies, which I hope will illustrate what we are keen to see happen in the year or two ahead. Obviously, the rollover agreement does not carry forward the EU state aid regime, since we are departing from that, but it puts nothing in its place. That is not entirely surprising, not least because the EU-Turkey report from October 2020 says at page 58:

“Legislation to implement the State Aid Law, originally scheduled to be passed by September 2011, has still not been adopted”,

adding that there is no state aid inventory in Turkey. It notes that the administrative mechanism for the state aid legislation has been abolished, and that government support for certain priority investments, including a national automobile factory, is going ahead under the 11th development plan, including 400 product groups in strategic sectors where, as the European Commission’s report says,

“The amount of state aid granted for this investment is not disclosed, contrary to the commitments under the EU-Turkey Customs Union.”

So putting in place a state aid or subsidies agreement with Turkey at present does not work for the EU and it would not work for us.

However, that does not mean that we should not clearly put it in our negotiating objectives. It would not suffice for us to leave it in a WTO subsidy format because, as we know, the WTO format leads only to complaints by countries and is essentially retrospective, and damage must first have been established before the point at which any subsidy can be challenged. By contrast, the UK-Japan agreement, in articles 12.5 and 12.6, has specific provisions about sharing of notifications and the ability for each party to seek further information and to engage in consultation. That, of course, can mean, if necessary—I hope it will not be necessary too often —a complaint at the WTO that a subsidy is contrary to its provisions or some mitigating measures being taken by agreement.

At the moment, I think that we as a committee and the All-Party Parliamentary Group for Trade and Export Promotion—its chair is to speak next; I am a vice-chair—are very interested in moving from continuity agreements to full free trade agreements and seeing what those objectives will look like for a free trade agreement in the future. In this particular instance, I am keen to see something like the Japan agreement reflected into our negotiating objectives with Turkey.

Viscount Waverley Portrait Viscount Waverley (CB)
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My Lords, it is a pleasure to follow the noble Lord, Lord Lansley, and to contribute to the debate of the noble Lord, Lord Purvis.

It has always seemed to me that the debate on Turkey is split into two intractable camps. I have noted carefully the remarks of those critical of Turkey but consider that the noble Lord, Lord Hannan, struck the right note. If one had to draw up a priority list of countries around the world with which we should ally for multiple strategic reasons, Turkey would without question be in the champions’ league. Having done the rounds in Ankara, it is clear to me that Turkey is a country that looks equally favourably towards the UK. Simply put, the UK needs Turkey for multiple reasons as we embark on a world journey, with Istanbul being one of the geostrategic hubs ranking alongside London, Dubai, Mumbai, Singapore or São Paulo.

Turkey commands influence beyond its frontiers. We always have regard to our values, but some detractors might cite one kind of challenge or another, some of which we have been hearing about this afternoon. However, this agreement allows interest from both sides to get this show on the road, from which values and understanding will emanate. Sir Dominick Chilcott, our ambassador in Ankara, sums it up well in his briefing. I hope he will forgive me for quoting it:

“What influence we will have will best be done through contact and dialogue. Boycotting Turkey or imposing sanctions is unlikely to be productive and risks alienating a country that is a NATO ally and an indispensable partner in the fight against terrorism, organised crime and illegal migration.”

For all the above reasons I am opening a regional hub for Eurasia for a global project covering 224 countries. The rapprochement between the UAE and Bahrain with Israel, combined with the President’s improved overtures towards Israel, make for a more harmonious region at large and is certainly helpful.

As to the question “Why Turkey?”, the country has a population of 83 million, a highly educated population at large and a huge pool of skilled and low-cost labour with production diversification potential. It is a central corridor of the silk road, with an exchange rates advantage. It has NATO’s second largest military and a burgeoning defence technology sector, and it has borders with many of our front-line issues—Syria, Iraq, Iran, Armenia, Azerbaijan, Georgia and the Balkans, with Russia and Ukraine across the Black Sea.

In conclusion, there can be no greater anticipation and mystique than, having traversed the continent, to be pulling into Istanbul station on the Orient Express, taking in the first sight of the Bosporus, visiting the Blue Mosque and Hagia Sophia, putting a toe-hold into Asia and being enchanted by the swirling dervishes after an excellent dinner. I wish this FTA well.

Lord Kerr of Kinlochard Portrait Lord Kerr of Kinlochard (CB) [V]
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I wanted to raise three points and one more general one. First, British goods exporters are now at a disadvantage compared to their EU competitors because we are outside the 1996 EU-Turkey customs union and hence European rules of origin cumulation. I understand that; what I do not understand is why in this agreement, unlike the original 1963 EU-Turkey association agreement, there is nothing on services. The balance of trade in goods heavily favours Turkey, and that is likely to worsen. Could we not have got something in exchange on services? Could the Minister say whether we tried and, if so, why we failed?

Secondly, the agreement contains nothing on human rights, as other noble Lords have mentioned. During our debates on the Trade Bill, the Minister assured us that human rights would be at the heart of trade policy. President Erdoğan’s Turkey, flouting ECHR calls for the release of civil society leaders, is surely a paradigm case, or at least should be. So why the lacuna in the agreement? Did we try to fill it? If so, why did we cave in?

Thirdly, I predict that the Minister will remind us that an enhanced agreement is to be negotiated and the gaps in this one can be filled then—but is that plausible? Precedent is a powerful weapon in negotiation. Passes once sold are not easily recaptured. Moreover, have not we missed the moment of maximum leverage? Precisely because the balance is in the Turks’ favour, they will have been anxious that we should not revert to WTO terms, bringing in new UK tariffs on their goods. Our hand was stronger in 2020 than it will be when negotiations restart. How come we missed the boat?

That brings me to my more general point. When roll- over agreements do not duplicate previous arrangements, they seem on the whole to make them slightly worse. The Mexico agreement is another which leaves UK exporters less competitive than their EU rivals will be. Did the department, in its rush to prove that it can negotiate agreements, sacrifice quality for quantity and content for quantum? Did we put ourselves under time pressure, and are there lessons to be learned from that—for example, for our negotiation with Australia? Are not we again risking seeming overly eager? I look forward to the Minister’s replies.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Con)
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I, too, congratulate the noble Lord, Lord Purvis of Tweed, on securing the debate before us today. I echo the concerns expressed by the chair of the International Agreements Committee on Turkey’s human rights record. What was particularly embarrassing was the blatant flouting of women’s rights by the recent treatment of the EU President on her recent visit there, which does not show Turkey in the best light.

I focus my remarks on the asymmetry of the deal that has been reached in this albeit temporary free trade agreement with Turkey. That is against the backdrop of seeing the latest food and drink exports to the EU—our largest exports sector—suffering a fall of 76% in January and down nearly 41% in February. I struggle, against the detail of the agreement before us today, to see the advantages of these rollover and so-called enhanced agreements. Perhaps I am missing something, so I should be very grateful if the Minister could point out the particular advantages of the deal before us. Obviously, it is a matter of regret to me, working so closely with the farming community, that agricultural goods have not been included, and I urge my noble friend to give us a date when they will.

I have a couple of specific questions relating to paragraphs 27 and 28 of the excellent report of the International Agreements Committee, about the fact that the UK-Turkey agreement reverts to World Trade Organization arrangements for addressing technical barriers to trade, which is apparently a

“consequence of Turkey’s alignment with the EU and the lack of mutual recognition of conformity assessments in the UK-EU”

trade agreement. The committee heard that this

“will result in significant costs for some UK businesses trading with Turkey and that it will affect supply chains.”

I ask my noble friend: is that the case and can he put a figure on those costs or any disruption to the supply chain? I imagine that it is not as severe as that with the existing European Union, but it behoves an answer. I also ask: what specific progress has been made given that the committee concluded that

“Continued cooperation between the UK and the EU on technical barriers to trade is … critical for the UK-Turkey trade relationship”?

Lord Foster of Bath Portrait Lord Foster of Bath (LD)
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My Lords, I, too, serve on the committee and pay tribute to our excellent chairman. I also thank the Minister for his constructive engagement with the committee and my noble friend for securing this debate.

As we have heard, this is a rather modest FTA, which is explained only in part by Turkey’s continued customs union with the EU. The limited negotiating objectives rather suggest that the Government wanted a quick deal rather than a quality one and, frankly, nothing that the noble Lord, Lord Hannan, and the noble Viscount, Lord Waverley, said changes the fact that, given the strong hand we had, it is surprising that, rather than waiting two years before negotiating a more comprehensive deal, we did not seek more in this deal.

After all, the deal is vital for Turkey—its most important since the 1995 customs union with the EU, it says. They export more to us than we do to them. Without a deal, tariffs on exports to the UK would have cost Turkish losses of £1.7 billion, so it is disappointing that we did not seek to include more in the deal. After all, we are a service economy, yet trade in services is not covered, nor is investment, public procurement, digital trade and much else. As we have heard, Turkey has a poor record on human rights, yet, despite the Government’s vision of a values-driven free trade and the Minister’s claims that trade does not have to come at the expense of human rights, they are not covered. Given Turkey’s equally poor record on workers’ rights, it is disappointing that they too are excluded.

I very much hope that in the Minister’s response, as others have requested, he will say how all those issues will be discussed in the forthcoming discussions on an enhanced agreement, but there are a number of remaining questions. The committee sought an assessment of the additional cost of the FTA to UK businesses. While acknowledging that the administration costs of new customs paperwork, such as declarations of origin, could have “substantive impacts” on trade in goods, the Minister has still not provided any estimate, so I hope he does today. As with other agreements, the committee is anxious to compare the situation pre and post Brexit.

The Government are also confident that the impact on supply chains will be minimal, yet they describe the ending of the cumulation of content from other PEM signatories as “a notable difference”. Can the Minister tell us how a notable difference has only a minimal impact on supply chains?

On tariff rate quotas, which were resized and calculated on historic usage, can the Minister explain whether the new TRQs contain sufficient headroom to support UK businesses which seek to expand trade with Turkey? The noble Lord, Lord Lansley, discussed subsidy and state aid in detail, so I ask one simple question. We know that, under the deal, any disputes will now have to be referred to the WTO. Can the Minister explain how that will be done when there is no requirement for the parties even to notify each other of subsidies that have been granted?

Finally, picking up the point made by the noble Baroness, Lady McIntosh, I hope that the Minister will also update us on the current review of technical barriers to trade.

Lord Janvrin Portrait Lord Janvrin (CB) [V]
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My Lords, I too thank the noble Lord, Lord Purvis, for introducing this debate. It is timely, given that the Turkish free trade agreement was ratified by both sides and came into force last week. I draw the Committee’s attention to my relevant interests in the register as the Prime Minister’s trade envoy to Turkey. I certainly join other noble Lords in welcoming this most useful report from the International Agreements Committee, which draws attention to some important points. I look forward to the Minister’s comments on those.

I want to use my limited time to make one simple plea. I urge the Minister to continue to make a follow-on, more comprehensive Turkish FTA a high priority in his department’s very full trade policy agenda. I do this for three obvious reasons. The first is to help British business. British companies engaged in the Turkish market certainly need the more stable trading environment and level playing field that a trade agreement can bring. They are in this market because they see Turkey as a strong long-term opportunity despite short-term headwinds, including, as we have heard, concern about the rule of law and human rights. I echo the remarks of the noble Viscount, Lord Waverley: those companies see an entrepreneurial trading nation of more than 80 million people, half of whom are under the age of 31, with a high standard of education, excellent technical skills and an economy that has in the recent past shown itself capable of economic growth rates of more than 5%.

My second reason also echoes points made by other noble Lords. The UK’s interest in moving to a more comprehensive deal is strongly reciprocated by those on the Turkish side. They will undoubtedly be tough negotiators, but we are Turkey’s second-largest export market. Also, the Turkish Government and certainly Turkish business recognise the potential for deepening the trading relationship, not only in areas such as services and agriculture but in more innovative sectors such as cleaner energy, tech and data science. So we continue to have leverage.

My third, more general point is that, if we are to make a success of global Britain, surely Turkey is the kind of country with which we need to engage more closely and openly. Certainly there are these headwinds around, but we are long-standing NATO allies with shared concerns about terrorism, migration, regional instability, organised crime and many other issues. An open, innovative, comprehensive free trade agreement with Turkey will be an essential part of this important wider relationship.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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My Lords, I thank the noble Lord, Lord Purvis of Tweed, for introducing this debate. Turkey is our 19th-biggest trading partner, with the total trade volume amounting to £18.7 billion in 2019. The Government stated that they intended

“to ensure that customs processes are as simple, clear, and predictable as possible”.

Does my noble friend the Minister agree that this is most encouraging? However, notwithstanding these additional customs checks, Turkish exports to the UK increased by nearly 13% in the first quarter. The benefits of trade derive from imports as well as exports, as my noble friend Lord Hannan of Kingsclere explained so well.

I congratulate the International Agreements Committee on its report, which drew the UK-Turkey agreement to the special attention of the House because it is politically important and because, although its overarching objective is to maintain provisions in the precursor EU-Turkey agreements, it differs from them in certain important respects. It introduces rules of origin requirements on industrial goods traded between the UK and Turkey. It also omits certain technical barriers to trade and aspects of competition policy. Some provisions of the agreement rely on the EU-UK trade and co-operation agreement and are subject to review after the TCA formally enters into force. The agreement does not cover services, which account for only 19% of the UK’s trade with Turkey, but it is good news that a review intended to enhance the agreement is set to start within two years. Does my noble friend the Minister agree that services trade and subsidy notifications similar to those in the Japan CEPA might be useful enhancements?

It is welcome that the Government have issued guidance to assist firms exporting to and importing from Turkey but the new rules of origin declarations, particularly against the background that Turkey is not allowing one single declaration for multiple shipments but is requiring separate declarations for each shipment, create difficulties. Credit is due to my right honourable friend the Secretary of State, my noble friend the Minister and their team for sorting out such a large number of continuity free trade agreements during December, including this complex deal with Turkey, which is, I understand, the fifth-biggest trade deal that we have negotiated since Brexit.

Turkey is also an important partner for geostrategic, security and other reasons beyond trade, as was pointed out by the noble Viscount, Lord Waverley. I look forward to hearing other noble Lords’ contributions and the Minister’s winding-up.

Lord Hannay of Chiswick Portrait Lord Hannay of Chiswick (CB) [V]
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My Lords, it is good that we have an opportunity to debate this trade agreement because that fulfils a commitment given by the Minister as the Trade Bill passed through this House, and more particularly because this agreement is a seriously disturbing one. I note, incidentally, that it was not the object of the surge of hyperbole from the Secretary of State for International Trade which usually greets the conclusion of an agreement; this is not surprising when you look at the content.

Why so? Many recent trade agreements fall into the category that I would describe as running to stand still: they just roll over the trade access which the UK already had as an EU member state. But this agreement does not clear even that low bar. The new requirements for rules of origin checks and the absence of cumulation provisions with other countries in the region will in fact leave British exporters to Turkey worse off than they were when we were inside the EU-Turkey customs union, and therefore at a competitive disadvantage to EU exporters to Turkey with which they were previously on a level playing field. Will the Minister confirm that that is in fact the case and say where the UK will be left if and when the negotiations between the EU and Turkey to strengthen and possibly expand their customs union, which are, I understand, likely to begin soon, lead to agreement?

The other equally if not more disturbing feature is the absence of any provisions covering human rights. Did we seek such provisions? There can be few countries in the world with which we are currently seeking to conclude a preferential trade agreement in which some provisions on human rights are more necessary. I recall the Minister’s eloquence about such provisions in trade agreements when we debated the Trade Bill. Here is a country which is locking up journalists, members of parliament and academics, all with scant or no due process, and we have no locus for raising these matters. Will the Minister at least give an assurance that human rights issues will be raised when the two-year review of this agreement falls due, and that the UK will press in those negotiations for this lacuna to be filled?

As a final thought, I hope that the noble Lord, Lord Hannan, will send a copy of his contribution to this debate to President Trump in Mar-a-Lago. It is fortunate, perhaps, that Mr Trump has had his Twitter account cut off because the response might be a little startling.

Lord Moynihan Portrait Lord Moynihan (Con) [V]
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My Lords, I thank the noble Lord, Lord Purvis, for securing this debate. I echo those who have welcomed this first-stage agreement, set in the context of the wider political ramifications. Turkey is an important and valued trading partner for this country, a member of NATO and politically and strategically critical to our interests. Her territories span the great divides of the world: to the north, the states once tied to the former Soviet Union; to the east, the volatile areas of the Middle East; to the south, the occasionally turbulent north African countries; and to the west, Europe. Our bilateral relationship is long-standing and important in this context, for, as the noble Viscount, Lord Waverley, has said, it is in both our and Turkey’s national interests to continue to encourage stability and prosperity through trade.

One reason this initial agreement is so important is that it can bind our aspirations closer to Turkey, with immeasurable consequences for Cyprus, NATO, Europe and peace in the eastern Mediterranean. So, the context of this welcome agreement is important as we debate its merits and wider ramifications, fully recognising, as others have, the importance of our negotiating ability to fill the gaps identified today in the follow-on agreement. Freed from EU constraints, we have a remarkable opportunity to improve this critical partnership. As suggested by Ayhan Zeytinoğlu, the chair of the Economic Development Foundation, it is possible that Ankara and London could develop a special relationship in the post-Brexit period, using the free trade agreement and the more comprehensive trade and economic ties built on this deal as its backbone.

While we recognise the potential for enhanced political relationships, this FTA should be praised for entrenching co-operation in key areas of mutual interest, including the automotive sector, engineering and white goods, while recognising that there is much more to be done. Deeper economic co-operation can now be pursued, and this should not be regarded lightly in the negotiations to come, for the UK ranks second among Turkey’s export partners. However, this FTA is unfinished business. It signals the start of a new relationship and a new negotiation. Opportunities now exist for working closely together, blending, for example, the strengths of the UK’s expertise in the fields of investment and finance and Turkey’s agricultural, manufacturing and textile industries. There will be opportunities for mutual co-operation, which should be grasped and strongly supported by the Government.

As the noble Lord, Lord Foster, alluded to, it was no passing platitude for President Erdoğan to welcome this deal as the most important trade deal since its 1995 customs union with the EU. The opportunity now exists to pursue closer economic and political ties while being frank and open about our differences. Turkey has gained an important and influential bilateral friend where, as fellow members of NATO, we can work with greater freedom and energy to build stronger Mediterranean, African, Caucasian and Middle Eastern policies than ever before. I congratulate the Government on this initial step.

Lord Bilimoria Portrait Lord Bilimoria (CB) [V]
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My Lords, the UK and Turkey are both close neighbours of the EU. This will be an important economic relationship in the years ahead for both our countries. We are both members of NATO, as we have heard. The continuity agreement was a huge relief for many sectors just before the transition period ended. A wide range of manufacturers were naturally nervous, from textiles to automotives. For example, auto manufacturers would have faced a 10% tariff, so full credit goes to the Department for International Trade for getting the agreement secured in time. The continuity programme has been a success, with the vast majority of the EU FTAs rolled over. We now need to plan and look ahead, and the CBI, of which I am president, sees potential to increase investment flows and strike a modern agreement to include digital and services trade. Global trade and investment will be critical for our economic recovery. The Government’s ambition to open doors for UK companies globally, particularly in services, where we have huge advantages, is important. Does the Minister agree?

In my role as CBI president, I have been pleased to work with its Turkish counterpart, TÜSİAD. Together, our organisations will support the Governments in the talks that are continuing to ensure business interests are maximised. I thank the noble Lord, Lord Purvis, for securing this debate. As we have heard before, Turkey is the UK’s 19th largest trading partner—so, top 20—with 1.3% of the UK’s total trade. In 2019, trade in goods and services between our two countries was worth almost £19 billion. To put that in context, it is similar to Canada, with around £20 billion, Australia, with around £20 billion, and India, with around £24 billion. Almost 8,000 UK businesses exported goods to Turkey in 2019, so this agreement ensures that we can continue to import under preferential tariffs compared with no agreement. This supports importers of textiles, where the annual increase in estimated duties would have been around £102 million under WTO terms. Tariffs applied to UK imports of washing machines and televisions will remain at 0%, compared to up to 2% and 14% respectively under WTO terms.

It is vital that the UK-Turkey supply chains are protected for automotive manufacturers. For example, car parts for Ford are imported from the UK into Turkey to be assembled into Transit vehicles, and one-third of those vehicles are then re-exported back to the UK. In under two years, we have now reached agreements with 62 countries and the European Union. That is almost £900 billion of UK trade. I give full credit to the Department for International Trade. The Government’s ambition is to secure free trade agreements with countries that cover 80% of UK trade within three years. This is ambitious, but it is possible. Australia, for example, has 70% of its trade covered by free trade agreements.

In conclusion, Andy Burwell, director for international trade and investment at the CBI, said:

“This agreement will maintain bilateral trade worth over £18 billion … Businesses and government must now look to growth, creating the trading relationships which will build a competitive, dynamic and progressive future economy.”

Lord Lennie Portrait Lord Lennie (Lab) [V]
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My Lords, I join the chorus of approval of and appreciation for the International Agreements Committee for its excellent report on the UK-Turkey trade agreement. I thank the noble Lord, Lord Purvis, for securing today’s debate. The parliamentary scrutiny of such agreements is crucial and an important part of what has come to be known as the Grimstone rule, the current rule by which we are able to scrutinise trade agreements, as agreed during the passage of the Trade Bill. As the Minister said in February, the Grimstone rule includes the commitment for the Government to,

“facilitate requests, including those from the relevant Select Committees, for debate on the agreements.”—[Official Report, 23/2/21; col. 724.]

I therefore thank the Minister and the Government Whips for demonstrating how quickly a debate can be organised.

Just as scrutiny is necessary, clarity about how quickly debates can be arranged is also necessary. This would allow Ministers to inform partners and businesses of accurate timelines for ratification and allow them to plan accordingly. Parliament is just doing its job today, and it is in the Government’s power to improve the Grimstone rule to clear up any uncertainties.

Turning to the detail of the agreement, we believe that it is very important from the economic point of view. As we heard from my noble and learned friend Lord Goldsmith and the noble Viscount, Lord Trenchard, Turkey is our 19th largest trading partner. In 2019, trade in goods and services between Turkey and the UK was worth £1.87 billion. It is welcome that the agreement will allow the key imports and exports to continue. However, the committee states:

“It is therefore not a comprehensive free trade agreement: it does not cover services trade, investment, substantive public procurement provisions, or digital trade.”

Moreover, we do not know its full economic impact, like many of the new continuity agreements or even the UK-EU FTA. Why do Ministers have an aversion to publishing economic impact assessments of agreements that they negotiate?

The UK-Turkey trade agreement does not roll over the EU-Turkey customs union, but introduces new rules of origin requirements, as we heard. These changes have certainly been felt by business. SMMT has said that automotive businesses have reported significant challenges since the agreement was provisionally applied and faced additional burdens related to origin certificates. The IAC asked the Government to provide an impact assessment of additional costs on UK businesses as a result of these changes. In response, the Government have said:

“if traders fulfil the Rules of Origin requirements, then the tariffs they are charged will stay the same as previously. The very few exceptions where there are minor changes to tariffs … will have minimal impact on trade flows.”

What are these exceptions? What trade flows in which sectors could be affected? When will updated business guidance on rules of origin be published?

The other notable differences are in human rights and workers’ rights, as we have heard. The agreement does not include provisions on human rights or workers’ rights, with the Explanatory Memorandum stating that the agreement

“covers trade in goods only”.

I remind the Minister that the International Trade Union Confederation has named Turkey as one of the world’s top 10 worst countries for workers. The International Agreements Committee’s report said:

“We regret the absence of any reference to human rights and workers’ rights in the Agreement and call on the Government to explain how it proposes to uphold its vision of ‘values-driven free trade’ in respect of the UK-Turkey relationship.”

We share that concern. What is becoming abundantly clear from the Government’s approach is that they have sought to do the bare minimum to replicate the human rights requirements in existing EU trade agreements.

This all raises the obvious question of whether the Government still believe in the principle that the UK has supported and which has been adhered to by the EU since 2009—that all trade agreements should contain as an essential element a human rights clause. The Minister told the House during the passage of the Trade Bill that trade does not have to come at the expense of human rights. So what happened here?

As the IAC noted,

“the UK-Turkey Agreement is not intended to be permanent”

and the Government aim to develop an “enhanced” agreement following a review within two years. As part of this, why will not the Minister accept the committee’s recommendation for the Government to hold an early public consultation?

Since the agreement was negotiated, the Government have published their integrated review, which outlines how they want to work with Turkey going forward, stating that it should be a partnership on a

“focused set of interests where we can find common cause, such as values, free trade and a commitment to transatlanticism.”

Values and trade are to be considered equally when the Government look to improve the economically important agreement for businesses and workers alike—and there is significant room for improvement.

Lord Grimstone of Boscobel Portrait The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
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My Lords, I am pleased to be here today to discuss the UK-Turkey free trade agreement and respond to this debate. I very much welcome the fact that the business managers found time for this debate today, and I hope that it illustrates to noble Lords our commitment to parliamentary scrutiny of free trade agreements.

As ever, I thank noble Lords for their contributions, which were, as always, erudite and perceptive, and I extend my thanks to the noble Lord, Lord Purvis of Tweed, for tabling today’s Motion. I also thank the noble and learned Lord, Lord Goldsmith, and the International Agreements Committee not just for their work in general but for drawing special attention to the UK-Turkey FTA. It would be remiss of me not to make a point of thanking the noble Lord, Lord Janvrin, for his contributions today, because of his work, which we value very much, as the Prime Minister’s trade envoy to Turkey, for which we are very grateful.

Noble Lords have raised a number of detailed questions, and I suspect that I shall not have time to deal with them all. Those I am unable to answer during this short debate I shall of course deal with by writing to noble Lords and placing a copy of the letter in the Library.

The UK-Turkey free trade agreement plays a vital role in providing continuity of effect of our trading arrangements as far as is possible and, through doing so, helping to benefit a range of sectors. It is gratifying that this agreement is already having a tangible impact. For instance, Ford has said that the UK-Turkey FTA is “extremely significant” for its business, following the very good news that engines for a new Transit van model will be built at the Dagenham plant and exported for vehicle assembly in Turkey. Of course, it is business such as that which is at the essence of why we have trade agreements.

Ratification of the agreement has now been completed by the UK and Turkey, and the agreement entered into force on 20 April 2021, thereby ending uncertainty for business. A new rules of origin protocol was implemented in domestic regulation on 14 April—I completely understand that some noble Lords may not have been completely familiar with that. It will bring the agreement in line with the rules of origin under the UK-EU TCA, which will help to streamline the operation and implementation of the FTA. In answer to noble Lords’ concerns, which I completely understand, I hope that these new rules of origin address the teething issues experienced by some businesses during provisional application of the FTA.

I can confirm for the noble Lord, Lord Lennie, that updated and detailed guidance for business on the new rules of origin protocol has been issued on GOV.UK. I am confident and hopeful that this extensive guidance and the FTA as a whole will serve small and medium-sized enterprises and large businesses alike.

In answer to the points made by my noble friend Lord Lansley and others, I note that subsidies could not be adopted in our FTA with Turkey under our continuity mandate as this would have required the UK to continue to follow EU state aid rules after Brexit. This would not have been consistent with the UK’s policy direction in leaving the EU, and would limit our ability to set our own rules. As I will touch on further in a moment—I hope that this answers the question from my noble friend Lord Lansley—we have the opportunity to agree more bespoke terms on subsidies with Turkey in due course. In the meantime, as has been noted, subsidy issues between the UK and Turkey are governed by the WTO Agreement on Subsidies and Countervailing Measures, providing obligations to notify goods-related subsidies. Of course, it is important that countries respond to their obligations under these rules.

With the news that the European Parliament will be voting on the UK-EU TCA today, and in answer to my noble friend Lady McIntosh, the Government look forward to commencing a review of the “Technical Barriers to Trade” chapter of the UK-Turkey FTA. It was agreed with our Turkish friends that this review will occur within three months of entry into force of the UK-EU agreement, as per the agreement text.

As we have heard, the UK-Turkey FTA includes a broad review clause that commits both parties to commencing, within two years of entry into force, a review of the agreement with a view to modernising and expanding it. This is highly important because, of course, the agreement that we rolled over to form this present agreement was a customs union agreement. As such, it dealt only with goods, which is why it does not have in it the wide range of topics that we would expect to find in a comprehensive FTA and why our negotiators did not cover this area. It would have been impractical to do so under our mandate.

This is why it is important that, as per the review clause—I hope that this answers a number of noble Lords’ fears—the UK and Turkey have committed to considering trade in agricultural goods, trade in services, investment, subsidies, sustainable development, the environment, climate change, labour, anti-corruption, the digital economy, small and medium-sized enterprises and intellectual property as part of the review. I am pleased to say that this is not an exhaustive list and absolutely does not preclude other areas being discussed.

Perhaps I may make a special reference to climate change in the review clause. I suggest that noble Lords note that the preamble of the UK-Turkey FTA recognises the importance of urgent action to protect the environment and combat climate change and its impacts, and the role of trade in pursuing those objectives.

It would be premature for me at this stage to predict the ultimate scope or outcome of negotiations on the comprehensive agreement, but I assure noble Lords that my department will at the appropriate time, as we have done before and as we have committed to do again, undertake wide stakeholder engagement to ensure that views are properly gathered and represented. Of course, I will make sure that noble Lords have a full opportunity to participate in that.

The Government will at the appropriate time make it clear how the publication of negotiation objectives will be handled in the case of enhancing our existing FTA with Turkey. I am happy to reassure the noble and learned Lord, Lord Goldsmith, that the Government will keep Parliament and, most importantly, the IAC updated on these developments. I look forward to discussing with him nearer the time how the appropriate scrutiny and transparency will be maintained in respect of this agreement. I can also confirm that we will of course engage with the devolved Administrations, as we always do, throughout this process on areas of devolved interest. Naturally, once negotiations are concluded, the usual scrutiny and ratification process will be followed. It would not surprise me if we were here again in a couple of years’ time redebating the new agreement.

As a final point of reflection, a number of noble Lords have raised the important matter of human rights and labour rights. Given the huge importance that we mutually attach to these issues, I am happy to deal with them now.

As noble Lords have heard me say many times before—but there is no harm in reiterating it—the UK has long supported the promotion of our values globally. The Government are clear—and I make it clear again today—that more trade does not have to come at the expense of human rights. It is not a binary choice.

Our experience is that political freedom and the rule of law are vital underpinnings for prosperity and stability, and that, by having strong economic relationships with partners, we are able to have open discussions on a range of issues, including—I stress this—human rights and labour rights. On this basis, these matters will remain an important issue in our relationship with Turkey and we will continue to raise human rights and labour rights where necessary with the Turkish Government at a senior level.

It should be noted that EU-Turkey trade arrangements, as underpinned by the 1963 association agreement between the EU and Turkey, did not contain human rights clauses. As I explained previously, it was essentially a customs union matter, so there were no human rights clauses to carry over into a UK-Turkey FTA at this stage. I should make it absolutely clear that this should in no way be taken as an indication that we do not take extremely seriously the question of human rights.

In conclusion, the UK-Turkey free trade agreement provides continuity of our trade arrangements with Turkey post Brexit so far as is possible at this stage. I believe that we have achieved a successful outcome that has been welcomed by business. Most importantly, we have secured a strong commitment from Turkey to engage before the end of next year in a further enhancement of the agreement which, I am happy to re-emphasise, the Government will consult further on in due course.

I assure the noble Lord, Lord Kerr, that it is always substance, not the clock, that determines our trade negotiation strategy.

I thank all noble Lords for their contributions to this important debate. As I said at the beginning, I will of course write to noble Lords, including the noble Lord, Lord Purvis, on some of the detailed points that were raised. I look forward to engaging with noble Lords on UK-Turkey trade relationships in the future.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed (LD)
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My Lords, I am grateful for the Minister’s final comment. He always honours his commitment to follow up things in writing, and I am sure that the noble and learned Lord, Lord Goldsmith, and his committee will reflect on his closing remarks.

I wish to reflect briefly on two points made in the debate. First, of course, it was a delight to have the noble Lord, Lord Hannan, reference Adam Smith in a trade debate. I think that Adam Smith totally nailed it on consumption—I am a free trader—but he was weak on diagonal rules of origin cumulation, regulatory equivalence and supply chain standards, which is the realm of trade in which we now have to operate. Of course Smith said that

“Consumption is the sole end and purpose of all production”,

but not all production is fairly competitive in terms of subsidy control—as the noble Lord, Lord Lansley, referred to—labour rights, environmental standards and supply chain human rights approaches, which have all been addressed in contributions throughout the debate. I live in the Scottish Borders and have close links with the textile industry there. We know that approximately 60% of workers in the garments industry in Turkey are unregistered. We wish to see improvements in the production of Turkish garments so that our consumers can make informed choices.

Even if the purpose of the FTA is to seek continuity, my noble friend Lord Foster and other noble Lords indicated that we wish to see further improvements. It is right to ask what the Government’s intentions are for supporting UK exporters as well as UK consumers. If we are to have a fair approach on subsidy control, as the noble Lord, Lord Lansley, indicated, it is of great importance that we have more information from the Government. It is of interest to me that, under the United Kingdom Internal Market Act, there are now greater strictures on subsidy notification and control for a business in Scotland selling to a consumer in England than there is for a Turkish business selling to a consumer in England. That cannot be sustainable if we have a trade policy that is looking for subsidy control to be equitable internally and externally.

It was not entirely convincing for the Minister to say that the Government had a limited mandate for some of these decisions. The Government set their own mandate, which was different from the one that they had for the discussions with Japan, so I think it was valid to highlight how the Japan agreement included elements which are not in the Turkey agreement.

Those two points having been made, and given the Minister’s commitment that he will come back to address some of the other points, I close by mentioning the valid request made by the noble and learned Lord, Lord Goldsmith. I welcome the Government’s intention to publish negotiating objectives and that they will have a discussion with the committee about parliamentary scrutiny of those. I think that there is great interest not only in the House but among the public about our trading relationship with Turkey, and I hope that, if the committee calls for a debate on those mandates, we will have a full debate in the House on what should be a good deal for the UK and for Turkey. The Minister is right on that point: we will be returning to this topic.

Motion agreed.

Baroness Healy of Primrose Hill Portrait The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
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The Grand Committee stands adjourned until 4.05 pm. I remind Members to sanitise their desks and chairs before leaving the Room.

Sitting suspended.