Comprehensive and Progressive Trans-Pacific Partnership (IAC Report)

Baroness Hayter of Kentish Town Excerpts

Tuesday 19th March 2024 Lords Chamber

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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.

--- Later in debate ---

[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.

Motion agreed.