Transatlantic Trade and Investment Partnership

Baroness Clark of Kilwinning Excerpts

Tuesday 25th February 2014 Commons Chamber

[Katy Clark (North Ayrshire and Arran) (Lab)]

Will the Minister give way?

[Mr Clarke]

Let me make some progress; otherwise, I will not be able to complete my speech in the appropriate time.

The question of investor-state dispute settlements—ISDS is the acronym—has given rise to fears that the proposed deal is a plot between multinational companies that are seeking to destroy our long-established standards in labour laws, environmental laws and so on. I really do not believe that that is the case. On the other hand, the concerns are being taken seriously. I realise that we have to have substance to my assertion that we are not raising or lowering standards on either side of the Atlantic and we are not usurping the role of legislatures, which is why the Commission has said that it is going to consult. I understand some of the fears that have been expressed, but I do think that people have got the wrong end of the stick and the fears are wholly exaggerated.

[Katy Clark]

rose—

[Mr Clarke]

Let me make my point and go through the argument, and then I will give way. First, let us remember that trade deals do benefit consumers, which is why consumer groups such as Which? are in favour of this trade deal. It is protectionist providers that resist such deals. Quality, choice and the price for consumers are improved where there is a good trade deal, and those with the best products and services tend to win out in trade deals. The ISDS clause is not a novelty; it is not some new threat that has emerged. Such clauses have been put into most trade deals for years and years. I have heard the familiar examples of odd claims that have been made in actions around the world, but these clauses have not had the effect that has been described.

Apparently, there are 3,400 of these clauses inserted in trade deals globally. The EU and its members have 1,400 ISDS clauses in various trade deals, and the UK has 94 ISDS clauses in our existing bilateral treaties. We have twice been challenged under ISDS for standards alleged to break our treaty obligations, but so far no British Government have ever lost a case under ISDS. What we have done is successfully brought claims against other countries; we have had slightly more success there, because the point of an ISDS is to underline the value of the total agreement by making sure that no individual investor or business can be disadvantaged by a Government or union of Governments breaking the obligations they have entered into.

The case was cited of Slovenia—somebody, perhaps the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), said Slovakia—and my understanding is that it was lost when, as a result of local lobbying, that country went back on the deal it had just done to open up its health insurance market. That cannot be done, but no ISDS takes away the right to legislate from a Parliament; an ISDS gives rise only to a quicker and cheaper means of resolving disputes if there is some suggestion that a Government are breaking the agreement. Some say, “No European Union Government or the USA would ever do that”, but one of the big ambitions of those on this side of the Atlantic is to open up the public procurement market in the US. In some states of the US it is open, but in others it is not; some states do not measure up to WTO standards at all. Far be it from me to express the faintest doubts about the approach of politicians in some smaller US states or some EU states, but public procurement sometimes takes on a pork barrel element when the contracts are being placed, as opposed to when the tenders are being issued.

I think there could be some advantage, some reassurance and some pressure against people cheating in public procurement contracts if it is known that there is an ISDS clause. Of course it is quicker and cheaper, and it is arbitration and not litigation, but again the argument of those against ISDS is, “Why don’t you just go to law? There is a perfectly good legal system in the European countries and in the US.” I can say only that the US does have a perfectly good legal system, but it is expensive and it can be extremely long, as one sails through either the state courts or the federal courts trying to resolve a dispute. People have said that the advantages in all this agreement are as much in the area of regulatory coherence —with far more regulatory coherence stopping unnecessary convergence in our recognition of regulatory standards—than they are in tariffs, but small and medium-sized countries are not going to go into these markets if they are taking on the risk of having to go in for expensive litigation against American authorities that are plainly not complying with their terms of the treaty. Similarly, there are states in the EU where American investors would be most reluctant to sail in if they were relying entirely on the fact that they can take to the legal process in some southern European countries to challenge the bona fides of local officials over whether they were complying with the agreement. I will go no further, but the British have always put these clauses in our trade deals and the US normally puts them in its trade deals; 3,400 of them are in place and they have made a reality of free trade where it would otherwise not have happened.

[Mr Clarke]

Obviously, I understand the doubts being expressed, because some extremely respectable lobbies and non-governmental organisations—some consumer groups, some aid lobbies and some sections of the trade union movement—are raising all these fears. I genuinely think that they are mistaken and that their arguments, if they are too successful, will not benefit employees, consumers or anybody else, which is why I am trying to rebut them. Those who have spoken—I do not think anyone would be offended if I described them as somewhat of the left of the broad political spectrum, which does not mean that they are unacceptably or extremely left—are getting the wrong end of the stick. The ordinary man and woman have a great deal to benefit from this TTIP. To make it less effective by excluding an ISDS would not help.

[Katy Clark]

Will the right hon. and learned Gentleman therefore give us an assurance that nothing in this trade agreement would undermine the democratic ability of this House and other parts of Government in these islands to take decisions on the commissioning and organisation of public services—whether those services are in the private or the public sector?

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[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to follow the hon. Member for Richmond Park (Zac Goldsmith). I congratulate members of the all-party group on securing this debate. They have done a huge service to the House in the work that they have done to draw attention to this matter. This treaty could have massive consequences for all of us, many of which are good. However, many concerns have been raised that the Government need to address and to provide a lot more detail on as we move forward.

There is absolutely no doubt that this trade deal potentially has huge significance for all of us. I therefore congratulate the mover of the motion, my right hon. Friend the Member for Wentworth and Dearne (John Healey), on the four tests he set out in relation to which we should consider it. The three points put by my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) go to the heart of many of the concerns that Labour Members have about aspects of the treaty.

A great deal of concern has been expressed about multinationals, particularly their ability to use investor-state dispute settlement procedures where the nation’s regulatory framework is deemed to be a barrier to free trade. There is a huge amount of concern that this treaty could be yet another device that is used to thwart the wishes of Parliaments, as democratically elected bodies, to make decisions, particularly in relation to public services. We have heard a number of references to the health sector, which, in England in particular, is very politically contentious at the moment because of this Government’s attempts to open the health service up to enable private providers, many of which may well be US multinationals, to enter the sector. However, the concerns raised about these provisions in relation to the health service are equally valid in relation to many other aspects of the services and utilities on which the public rely, whether they are currently in the public sector or the private sector.

We have to recognise that this treaty will simply be a piece of international legislation that sits alongside a range of other legal obligations that we have in place. I am very aware of that because in North Ayrshire and Arran the Scottish Government have spent many millions —indeed, tens of millions—of pounds in restructuring the ferry services that serve my constituency so that CalMac, a publicly owned body in Scotland, could take part in a tendering exercise that some private organisations also took part in. At the end of that procedure, we ended up with exactly the same ferries providing exactly the same services between the ports in my constituency. That example is relevant because of the European procurement regulations.

Many of the concerns raised today could already be seen as problems when it comes to decisions being made by democratically elected bodies about public services. Genuine concerns are being raised about the ability to use public procurement to achieve social and environmental outcomes, and about whether the provisions of this partnership treaty could restrict the ability of Governments —whether they are the UK Government, the Scottish Government, the Assemblies or local authorities—to make decisions about not just health, but other sectors, including transport.

Will it be possible for local authorities to retain provisions relating to public transport and public ownership? Will it be possible to bring public transport back into public ownership, if that is what democratic bodies decide to do? That is why the CalMac issue is relevant. Many of the restrictions may already be in place because of our pre-existing commitments, but this Government owe this House and, indeed, the British public the highest levels of transparency.

The British public do not want to be told by multinationals how we should organise our country. We have fought for democracy and we want those bodies for which we have fought and which exist to protect the individual and our communities to have the democratic ability to make decisions. I say to the Minister that that goes to the heart of many of the concerns being raised by Opposition Members about whether we are signing up to something that, while it may result in huge benefits for this country, may have a lot of devil in its detail and may cause huge problems and restrict the democratic ability of this House and, indeed, the British people to make decisions about how we want to organise our society. I hope the Minister will provide assurances that the treaty will not do any of those things, that it will have positive consequences and that the concerns raised are not justified in any way.

--- Later in debate ---

[Guto Bebb]

I could not agree more. It is a shame that my hon. Friend the Member for Richmond Park (Zac Goldsmith) is no longer in his place. On the regulatory burden in relation not to the food industry but to the automobile sector, which would undoubtedly benefit from a TTIP agreement, Jaguar Land Rover—a huge investor in our manufacturing base—has highlighted the regulations on airbags. It has to insert different panels and dashboards in its vehicles for the American market, because airbags in America have to work on the basis of people not wearing a seatbelt, while those in the European Union do so on the basis of people wearing a seatbelt. That leads to extra cost, and it is a disincentive for trade. We could certainly benefit consumers by dealing with such regulations, which seem to have no purpose whatever, except to add cost and possibly to create extra employment for health and safety experts on either side of the Atlantic.

Another scare story that I should mention is the one about these agreements bringing no advantage to consumers. Anybody who has listened to Which? would be hard pressed to conclude that no consumer would benefit from such a trade agreement. When people argue that consumers will not benefit from free trade, there is something important to bear in mind: I find it very odd that the very people who make that argument do so by sending me e-mails from iPads manufactured in China or from Samsung telephones manufactured in Korea. They are quite willing to use the advantages of free trade to communicate their concerns about free trade, which puts them in a very odd position.

Another key issue about which I am seriously concerned is how the national health service is again being used as a political football in this debate. I want to state on the record that nobody can outflank me in supporting the concept of a health service free at the point of use for those in need. Somebody whose family has needed the support of the health service, as mine has, would never not support the concept of a free health service. However, the mere concept that American companies accessing the health sector in the United Kingdom is somehow different from European ones doing so is very odd.

I simply do not get another of the arguments in relation to people being so concerned about the involvement of private companies in our health service. Ever since the instigation of the NHS in 1948, the most respected part of the health service has been the traditional GP surgery. That is a robust private sector initiative within the health service. The issue is not about whether doctors make a profit because of their work, but about whether they offer patients a good service. I would be very comfortable with American companies delivering medical services, provided that those services are of a very high standard, are in tune with United Kingdom regulations and, more importantly, are delivering good patient care. Surely that is the issue. It is a pedantic view that any private involvement is simply wrong. We need to challenge that view. We need to be honest about the way in which the private sector adds value to the health service. We should reject the use of the health service to attack the TTIP.

[Katy Clark]

Will the hon. Gentleman give way?

[Guto Bebb]

I have to conclude my remarks, because I have only two minutes left.

We have talked about investor-state dispute settlement. The United Kingdom has been signing such agreements for an extremely long time and some 94 agreements are in place. As yet, not a single challenge has been made on the basis of public policy and not a single case has been lost by the United Kingdom. I genuinely believe that this matter is being used by those who are lobbying against a trade treaty to make people feel opposed to it.

I have some sympathy with the argument that if such scaremongering is a danger to the treaty, we should ask ourselves whether we can compromise on that issue. We must acknowledge that the US and the EU have well-established, mature legal systems. I say that not because I agree with the arguments that are being made, but because I want to ensure that as few obstacles as possible get in the way of the treaty, which I genuinely believe would make a significant difference to our economic performance.

I have talked about food. It is crucial to my constituency that we have access to other markets. Farmers in the Conwy valley believe that they could export more than £30 million-worth of Welsh lamb to the US. The deal is therefore extremely important.

The key point is that any treaty must take into account the needs not just of large corporations, but of small businesses. Economic recovery in Wales is dependent on small businesses and this treaty must work for them as well.