Trade Agreements

Baroness McIntosh of Pickering Excerpts

Thursday 14th February 2019 Lords Chamber

[Baroness Fairhead]

My Lords, I can only repeat the Statement from my right honourable friend the Secretary of State for International Trade. The update will be given shortly—as he said, in the coming week.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am most grateful to have the opportunity to raise what was debated in the other place yesterday. The noble Lord, Lord Stevenson, asked about tariffs. What will the mechanism be for setting the tariffs? Will a statutory instrument be brought before both Houses to set them?

On a different matter, I am personally very enthusiastic about the Faroes and would like to put down a marker about that. I am probably one of the few people to have visited the Faroe Islands. I am slightly concerned that the Faroes account for 0% of our trade when we have £60 million of exports and £229 million of imports.

[Baroness Fairhead]

My Lords, in terms of tariff-setting, there are the powers under the Taxation (Cross-border Trade) Bill. With regard to the Faroe Islands, I think that the figure of 0% has been rounded. We are talking about the total amount of trade to the UK but I agree with my noble friend that the trade agreement with the Faroe Islands, as well as many other smaller trade agreements, is vital.

Trade Bill

Baroness McIntosh of Pickering Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Lords Chamber

[Lord Lansley (Con)]

My Lords, if I may add something to this group of amendments, first, I say well done to the noble Lord, Lord McNicol. He passed the first test: one of the Opposition’s central jobs is to know which subjects should be raised in Committee and make sure that they are raised. He has done us a service by doing exactly that.

Turning to these two amendments, neither is practical as drafted, but we can probably leave that to one side and focus on what we want to achieve on rules of origin. The first reason it is not mentioned in detail in this Bill is that Section 17 of the Taxation (Cross-border Trade) Act effectively puts the rules of origin requirements into law. They are the same, as far as I can see, as would apply generically to rules of origin under the revised Kyoto convention. The country of origin must be identified as that country or territory in which the last substantial process took place. But that does not really answer the point.

This is where we come to the existing international trade agreements that we might roll over. They will have been constructed on the basis that any processing that took place in the United Kingdom was processing within the European Union. We cannot assume that, when these international agreements are rolled over—whenever that will be, but a couple of years from now, I hope—products originating in the United Kingdom will be defined as including processing inside the European Union. We will have become a third-party country. That is unless, in the form that they rolled over, the countries with which these agreements have been made, and with which we enter into our future agreement, accept that origination should be cumulated between us and the European Union.

If I am asking a question of my noble friend the Minister it is: can we look to cumulation between the United Kingdom and the European Union as being a feature of the rollover agreements, such that, from the business point of view, what they have understood to be the situation prior to exit day becomes the situation after exit day? That is essentially what we are looking for.

Declaring an interest, 28 years ago I was deputy director-general of the British Chambers of Commerce. That movement was and is responsible for the issuing of certificates of origin, so it understands this rather well. Of course, that applies outside the European Union at the moment. If we are in a customs union, all those problems go away, but we had that debate on day two of Committee.

If we must deal with this issue, I say to my noble friend that I hope the Government’s discussions with the British Chambers of Commerce have been productive. I know that two years ago, the movement said that, given the nature of international supply chains, ensuring that a “Made in Britain” badge can continue to be displayed proudly on products originating in this country will require us to re-enter some complex definitions of the relationship between international supply chains and origination in the United Kingdom. It also said that it was happy to work with government to look at how that might be achieved in future. I hope that this will come forward in our discussions on Report to demonstrate that the Government have an idea of what future trade agreements might say about origination to ensure that the “Made in Britain” scheme is not frustrated in circumstances where we think of a product as British.

[Baroness McIntosh of Pickering (Con)]

My Lords, I add my congratulations to the noble Lord, Lord McNicol, on taking his place and on his performance today. Given his history, I am sure that negotiating procedures in your Lordships’ House will be less turbulent than in other places where he has worked. I thank both him and the noble Lord, Lord Purvis, for giving us the opportunity to, in my case, put questions to the Minister and probe the issue.

In particular, what will be the position in the interim period of our leaving the European Union? My noble friend the Minister pointed out in our debate— on Monday, I think—that there would be a period for these agreements, having been initialled, to be signed and approved by the relevant Parliaments. My understanding is that if we leave under World Trade Organization rules, agreements in this interim period will be on the basis of non-discrimination. So, if we, as a third country—my noble friend Lord Lansley correctly identified that we would be—chose to extend agreements to current European Union members and said, as many noble Lords have suggested, that we wished to impose zero tariffs, those agreements would have to be extended on a reciprocal, non-discriminatory basis. Is my understanding correct? In an interim period of what might be one or two years before such agreements are rolled over, whatever our preference, whatever we offered to our existing European partners would have to be offered to every other country with which we wished to trade, on the basis of non-discrimination. I do not think we have grasped that point. Obviously, it would be helpful to understand the implications for our trading arrangements.

There is deep concern among the farming community that tariffs imposed could be as high as 40% for certain products and 60% for lamb, at a time when we are exporting more meat than we ever have, historically. That would hit our producers particularly hard. It is causing real hardship in the hills because many of our farmers do not know whether to produce lamb; the supply of lamb to the home market could dry up. We would therefore import more lamb, beef and pork at a time when we should be increasing our exports there. I simply want to take this opportunity to seek answers to those queries from my noble friend.

[Baroness Kramer (LD)]

My Lords, I have questions that arise from the previous speeches which I hope the Minister will be able to help me with. Perhaps I may say to the noble Baroness, Lady McIntosh, that I am sure she recognises that, while in a no-deal scenario, for example, we could make the decision that we would reduce our tariffs to zero, she is absolutely right that we could not make them zero only for the European Union; that would also have to be done for everyone else under WTO rules, but there is no requirement for us to be treated in a reciprocal way. In fact, we would be very unlikely to be treated in a reciprocal way, because if the European Union was to look at us and say, “We will be reciprocal and offer zero tariffs to the UK”, it would then be required under its various trade agreements to offer a whole raft of countries across the globe zero tariffs, thus convoluting its entire trading system. There is an imbalance in that argument which sometimes does not quite get heard.

I cannot think of a worse situation for our farmers than finding that they have high tariffs on their exports but no tariffs to protect them from imports flowing in. Some people have said that that is ideal because it means that food costs would fall, but they would do so at the cost of wrecking, frankly, a swathe of one of our much-loved industries.

I want to pick up on rules of origin in a slightly different way, and I will refer to the point that the noble Lord, Lord Lansley, has been making. When the Minister was kind enough to invite us around the table to ask questions ahead of Second Reading, I did try to press on some issues around rules of origin. As I understand it, for these rollover agreements, the UK would turn to the country with which it wishes to keep the trade agreement and say, “We would like you to treat goods made in the European Union as British content in the way you do now, in order for us to have zero tariffs when we export the goods”. I shall take a simple example, “When we export this car, we would like you to treat the European content in it basically as local content for the purposes of a zero tariff”. The officials were quite clear that the UK could do that unilaterally and that we would not need the permission of the European Union.

I then raised this with a number of people outside this environment who said, “You must be joking. Which country is going to infuriate the European Union by allowing its goods to be treated as local content for the UK unless there is some form of balancing agreement with the European Union on this issue?” In other words, the thought that you can cut the European Union out of this discussion and simply do it on a bilateral basis is incredibly fanciful. For most countries, keeping a good trading relationship with the European Union is, frankly, far more significant than having a trading relationship and rolling over the existing deals with the UK. The European Union is going to have to be engaged in some way or allow itself tacitly to be used in this way.

The Government are currently negotiating these deals, and we understand that they are currently in the process of establishing the rollover agreements. Can they tell us whether they have an understanding with the European Union that will indeed permit EU content to be treated as local content for the purposes of these trade deals, or will they be having some stern discussions with the various countries with whom we wish to have these ongoing continuity bilateral arrangements? It would be very interesting to know.

My understanding is that when South Korea was first approached about treating EU content as local content for goods whose final point of export is the UK, its answer was, “That is interesting and we think that it would be a fair thing to do, but of course we would expect goods originating in China and forming part of the content of South Korean goods to be given the same kind of benefit. We think that there is an opportunity to make sure that there is an equal playing field in this area, because negotiating with the UK is not the same as negotiating with the EU. We are now in different circumstances”. I wonder how many countries aside from South Korea which are involved in these rollover agreements have come back to the UK—I can see that Israel would not because it is not particularly in that situation—saying that they wish to have the new flexibility that we are requesting reflected in a change in the flexibility that they are being offered. It would be helpful if the Government could let us know if that is happening.

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[Baroness Byford (Con)]

My Lords, I declare my family’s farming interests. I have read and reread the amendment of the noble Lord, Lord Grantchester. I have a couple of queries, so I have to ask whether he and my noble friend the Minister can help me.

My worry is this: the amendment would surely tie the UK Government to whatever the rate is at that moment and not look towards the future. There is no timeframe or limit on this, as far as I can see. My concern is whether this means that the negotiation would not allow for the improvement of the UK’s share in a particular agricultural tariff-rate quota. As a result, would the amendment close the door to meaningful discussions of recent changes to the UK share of a particular quota?

I heard what the noble Lord, Lord Grantchester, said. He is a great ambassador of long standing for standards and equality, and on fair trading for agricultural goods in general; I hope I am as well. He is quite right to raise the whole question of fair trade and the standards that are set for our producers. When we first discussed this last Monday—I think; I lose track of where we are at—we talked in great depth about the expectations of a product, how it is produced and the responsibilities and standards set.

I do not think I need to ask the Government to pay exceptional attention to the needs of the agricultural industry, but the noble Lord raises a very important point regarding sheep farmers in particular. Sheepmeat is not eaten as much in this country as it used to be, but it is exported widely. Trade with Europe is very important and I hope there will be trade beyond Europe, but I wondered whether he could explain the way the amendment is written, because I have apprehensions about it. Will my noble friend the Minister be able to explain? Maybe she does not share my slight concerns but I felt they were worth raising. The thrust of the amendment is right but I am not sure that the wording is.

[Baroness McIntosh of Pickering]

I congratulate the noble Lord, Lord Grantchester—on what I think might be his birthday—on moving the amendment. I repeat my concerns relating to the earlier group of amendments, not just for the hill farmers of Wales but for the hill farmers of the north of England, including North Yorkshire, County Durham and Northumbria, and Scotland, as well as other parts of the United Kingdom. The noble Lord raised his concerns in an interesting way but I have to echo my noble friend Lady Byford’s concerns, which she so ably addressed. It would be helpful for the Minister to explain whether our understanding is correct and what the relationship is between this amendment and the earlier tariffs we discussed, and whether, if we were to introduce the zero-rate tariff, this would equally be of concern with this amendment.

[Lord Whitty (Lab)]

My Lords, I would like to put in a brief word here. The noble Baroness, Lady Byford, will recall that, towards the end of the time when she and I were crossing swords on agricultural policy, the issue of agricultural trade multilaterally fell down in the Doha round precisely on this issue of tariff-rate quotas. The amendment of my noble friend Lord Grantchester—who was also present on those occasions—is a probing amendment to see how we are going to deal with the situation for imports.

Our exports, to which the noble Baronesses, Lady Byford and Lady McIntosh, referred, are also vitally important, but we need to have a line from the Government in relation to the existing tariff quotas for European imports with a number of our trading partners. It is not necessarily in the interests of those trading partners to preserve what is de facto the UK share of imports from them to the whole of the EU. Some of them are fly enough to actually notice that their bargaining position in relation to the UK on its own might be slightly greater than their bargaining position in relation to the EU as a whole. It is therefore not entirely surprising that, in these existing potential rollover treaties, there might be some attempt to change the amount of imports that the tariff quota allows into the UK. That itself, of course, is potentially a danger to our domestic production in many of these areas. However, assuming that it will be an easy task simply to roll over all of these existing EU-wide treaties is one of the features of the Government’s complacency.

Of course, the issue becomes even more important when rather bigger agricultural producers might actually be approached by us, or approach us, for a free trade agreement down the line, when their interests will undoubtedly be to press for very high import quotas— from Brazil, America or Australia—in any potential free trade agreement that we are seeking to make primarily on behalf of our manufacturing and service sectors. It might well be something on which we need to put down a marker now.

The Government might have some difficulty with the wording of my noble friend’s amendment, but we need to know what their position is on this. Otherwise, we will be presented with a whole series of treaties that incorporate the existing division, which might not be to our benefit and, more importantly, will set a precedent for how we are going to deal with future treaties and agricultural trade within that context.

Brexit: EU Free Trade Agreements

Baroness McIntosh of Pickering Excerpts

Thursday 24th January 2019 Lords Chamber

[Baroness Fairhead]

To clarify, I said in the debate that it was for those third countries to determine what their processes are. Some are not public knowledge. I did not say that we did not know. With regard to the WTO rules, it is true that we have submitted our schedules and they have not been certified. However, countries can operate on an uncertified schedule. The EU currently operates on an uncertified schedule. In terms of more information about the process, I said in the debate that I would reflect on the clear desire from this House for more information. I have taken that back to my department.

[Baroness McIntosh of Pickering (Con)]

My Lords, will my noble friend respond to the question put both yesterday and this morning by the noble Lord, Lord Stevenson, on what the tariffs will actually be, so that we can have a level of certainty going out from Parliament to businesses that are directly concerned? Can she elaborate a little more on the process? For example, yesterday she mentioned the process of signing the agreement with Switzerland. When will that free trade agreement come into effect? How long will the processes of the respective parliaments take, both in Switzerland and here?

[Baroness Fairhead]

On any tariff rates, I repeat that this Government are clear in their aim to have a deal and an implementation period. There is of course a chance of no deal. There will come a time when we know the exact basis on which we are to leave. When that moment is clearer, the DIT will come forward with its day-one tariff schedules. I say again that we hope that that does not happen because we will have a deal. I can confirm that the Switzerland agreement has been initialled; it is expected to be signed very shortly. As my noble friend will know, the continuity agreement will wait until we have left the EU, because it is at that time that it becomes relevant.

Trade Bill

Baroness McIntosh of Pickering Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 23rd January 2019 Lords Chamber

[Lord Lea of Crondall (Lab)]

My Lords, a couple of the points made in the short debate on this amendment have been very wide and not actually to do with the amendment as such. Perhaps I may add a corrective: we discussed the mergers of railway companies, nuclear power companies and so on earlier today. The fact is that we look at one Chinese company against not one European company but sometimes more than one. Regarding the comment about the EEA, I am sure that the EEA will evolve while recognising that we often need one European company. It could be dressed up as something to do with either the nature of policy on mergers, competition and monopolies or with state aid policy. I put down that cautionary note because, when people say that this amendment does not do those jobs, it is clearly not intended to. However, many such wider commercial questions will have to be faced up to in the future.

[Baroness McIntosh of Pickering (Con)]

My Lords, following the comments of the noble Lord, Lord Stevenson, in moving this amendment, I would like to put a specific question to the Minister. In doing so, I declare that I am a member of the all-party parliamentary group on racing and have enjoyed the occasional day at the races as a result.

For 18 years, I represented a number of racehorse owners, trainers and stable lads and lasses in North Yorkshire, where racing is extremely important. My specific question relates not just to Amendment 16 but to Amendment 48, and looks ahead to the tripartite agreement on the movement of horses. I know that my noble friend the Minister is keen to talk in terms of continuity so, in those terms, what is the specific status of the tripartite agreement as of 30 March? Will it be rolled over automatically if there is no deal, or will it become part of a separate free trade agreement?

On the comments made by the noble Lord, Lord Stevenson, state aid was deemed to be almost a barrier to the form of instrument used in replacing the racehorse levy which, as your Lordships will know, is the means by which most of racing is financed. The levy puts it on a sound financial footing, but it was prayed in aid that it would be deemed state aid. However, as the noble Lord said, that was specifically excluded for a similar levy that has been allowed in France, which is pertinent to the debate on this amendment. What is good for the goose has to be good for the gander, so if the French racing industry was allowed to be supported then we should be allowed to continue to support the British racing industry. This goes to the heart of the tripartite agreement, so what is the status of state aid, as raised by the noble Lord, Lord Stevenson? What is the position of the tripartite agreement going forward from 29 March this year?

Trade Bill

Baroness McIntosh of Pickering Excerpts

Monday 21st January 2019 Lords Chamber

[Baroness Henig (Lab)]

My Lords, I shall speak to Amendment 13. The purpose of my amendment is extremely clear: to seek to maintain our present high standards of UK agricultural products. At the same time, however, I support other amendments in this group regarding animal health, hygiene and welfare standards and wider environmental concerns. I regard this issue as extremely important not just for the present round of trade treaty rollover negotiations, which of course it is, but as a signal for the future. I felt that the remarks by the noble Lord, Lord Kerr of Kinlochard, were very pertinent to this point. I want to make it very clear to both present and future trade negotiating partners that we in the UK intend to maintain our present high standards in a number of areas such as agricultural products and food standards.

I too am grateful to the Minister for meeting me last week. She made it clear that her priority was to get these current trade deals finalised with as much speed as possible—yes, the word “continuity” was mentioned—and said there was a necessity for flexibility in the negotiations. I understand all that. The problem, as we have heard today, is that not all the parties to these negotiations may just agree to roll these deals over; they may want to look at some things again. I want to signal to the Government as strongly as possible how important we feel our present high standards to be.

Ministers apparently agree with me, because on a number of occasions they have been asked about our present high food standards and they all say that they have no intention of departing from them and intend to stick to them. If that is the case, then surely we have no problem in writing that in the Bill. What is the problem? If we all agree that these high standards are essential, then I do not understand why they cannot be in the Bill. I understand that my inadequate attempts to formulate the appropriate proposal may be the problem. I would then say to the Government, “Fine. You can see what I and other people are after. Take that sentiment away and put it in whatever form meets your requirements”. I cannot understand how they can just ignore this important issue. If Ministers share my views on high standards, there must be a way of encapsulating this in the Bill in some form. I am very flexible; I do not mind how it appears in the Bill, but I really feel that it should be there.

Food standards and the negotiations about them are going to be a major issue not just for these rollover trade deals but for the future. We keep hearing talk about the possibility of us joining the Pacific trade group. I think there was a meeting with people from New Zealand or Australia only today and we hear again about this possibility. But that would inevitably mean moving away from EU standards and our current high standards for food and agricultural products. Therefore, every time we hear these sorts of discussions about joining this group, we are alarmed; we want to know, if that is the case, will we then lower our standards? We cannot have it all ways. We also know how American agribusinesses are hungrily eyeing British markets. We know perfectly well that they want to flood our country with cheap chlorinated chickens and other food that does not meet our present high standards. Therefore, I believe we have to make it clear from the outset that we will not agree to this.

The Government should be left in no doubt whatever about the strength of feeling across the country on this issue. I ask them to make it clear in negotiations taking place now and in the future that food standards will not be lowered in any way. I strongly believe that everybody in this country will want this to be acknowledged. That is why I have tabled this amendment.

[Baroness McIntosh of Pickering (Con)]

My Lords, I rise to speak to Amendment 14 and I join in supporting Amendment 13 and much of the sentiment behind Amendments 9, 25 and 26. I thank my noble friend the Minister for the meeting I had with her. I entirely support the comments of the noble Baroness, Lady Henig, as to why it is important to have these points in the Bill. If you look at the gross value added of agriculture, it contributes over 10% to the economy of the Yorkshire and Humber region alone. Exports of food and drink from the UK are worth £16.4 billion per annum.

I would like to say a word about marketing. The noble Baroness, Lady Henig, raised a very important point here, which I discussed in the private meeting I had with the Minister. Our exports to China, for example, have grown by over 60% because the agricultural attaché in Beijing is paid 90% by the industry levy and 10% by the Government. If we are doing so well there, surely we should heed the requests from the NFU, farm organisations and the food and drinks industry to have similar specialists in other key markets. The sooner we do that, the better. I am half-Danish and it is a source of some surprise to me that Denmark exports a higher share of its food to countries such as China than we do. It is a country of 6.5 million; we are a country of 60 million. We have a lot of catching up to do, but we are clearly on the right track with the agricultural attaché.

In supporting the theme of the amendments tabled by the noble Baroness, Lady Jones, I would like to put two questions to the Minister before we return to this on Report. First, if the Government are not prepared to put this in the Bill, what commitment can my noble friend the Minister give the Committee this evening that in any free trade agreement the Government conclude with overseas trading partners, all food imported to the UK will be produced to food safety, animal welfare and environmental protection standards which are at least the equivalent of those currently required by producers in the UK? Secondly, can my noble friend explain how the Government intend to set out, in clear and unambiguous terms, how they propose to ensure that food imports into the UK will adhere to our environmental and welfare standards, in the context of WTO obligations? I will not repeat the examples that have been given, but over 20 or 30 years and under different Governments—many noble Lords have served as Ministers for Agriculture—we have increased the cost of food produced in this country, at the consumer’s will, to have the highest environmental, welfare, food safety and hygiene standards. Those cannot now be swept aside in this bid to have cheap food. We have to pay the cost of producing that food.

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[Baroness Fairhead]

I thank my noble friend Lady Byford for saying those words. This is a Bill, and the whole purpose of it going through will be that it gets scrutinised. These concerns and changes will be raised, and it will go through in the usual way. I am happy to write to the noble Baroness, Lady Kramer, about where we are on the Bill but, like all legislation, when it is going through that is the right time to challenge it, and that Bill will be challenged in the same way as I would expect others to be.

The Secretary of State for Environment, Food and Rural Affairs said last year:

“I have been very clear that Brexit will not lead to a lowering of our high food, animal welfare and environmental standards. This will remain at the heart of our approach as we negotiate both with the EU and with new trading partners around the world”.

[Baroness McIntosh of Pickering]

The whole point of this group of amendments is to have that commitment written into the Bill. Does the Minister agree to do that? Otherwise I think we might revisit this issue on Report.

[Baroness Fairhead]

The view of the Government is that it is very clear under the withdrawal Act, as well as under our existing international commitments, that we do not need to add them in because it will happen as a result of the withdrawal Act and would therefore be an unnecessary addition. We have made it clear on animal sentience, for example, that we will continue to maintain and enhance our reputation and ensure that any necessary change required to UK law is made in a rigorous, comprehensive way to ensure that animal sentience is recognised after we leave the UK.

Clause 2, as I keep stressing, is to enable the continuity of the existing relationships. It is to ensure that we can continue the effect of the existing EU third-country agreements that the UK already participates in as an EU member.

Trade Bill

Baroness McIntosh of Pickering Excerpts

2nd reading (Hansard): House of Lords
Tuesday 11th September 2018 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to follow the noble Baroness. I refer to my interests in the register, particularly the work I do with the Dispensing Doctors’ Association. I welcome the Minister to her ministerial position. I also add my congratulations to my noble friend Lady Meyer on her excellent speech and welcome her to the House. Like her, I have a mother born outside of the United Kingdom—my mother came from Denmark. I warn my noble friend the Minister that I will be focusing on a number of issues where I think Denmark is doing particularly well.

The Trade Bill is appropriate, as Britain is a trading nation. We are liberal and outward-looking and the UK has benefited from our membership of the European Union since 1973. Through our membership of the EU, as the Minister said earlier, we benefit from wider trade agreements and, most recently, from economic partnership agreements with third countries. The Trade Bill is to be welcomed as putting arrangements in place for our leaving the EU and becoming, effectively, a third country. However, the provisions of the Bill before us today relate to internal aspects only, rolling over the provisions of existing free trade agreements into our law. As the noble Lord, Lord Browne of Ladyton, mentioned, there is an external aspect where the agreement of a third country needs to be sought on the subject of a free trade agreement—or possibly of the EU if it is a mixed agreement. I urge the Minister to continue to keep the House informed in regard to these matters.

We must also have regard to the sheer timescale of negotiating and concluding even the simplest of free trade agreements. As we leave, we are giving up access to 440 million remaining consumers in the EU, as well as access to an additional 47 countries through the EU free trade agreements, so there are dangers in over-emphasising the opportunities of these new trading relationships.

I welcome the commitment in Clause 6 to continuing to participate in the European medicines regulatory network, but questions remain over the free movement of medicines, medical devices and UK participation in European clinical trials, as referred to by the noble Lord, Lord Kakkar. The EU has been our most important trading partner and clearly has other benefits, such as close cultural ties and geographic proximity, so the costs of trading with our EU partners are clearly substantially lower than if we were to trade with, say, the US, Japan, Korea, Australia and New Zealand, as well as such trade being more sustainable and less damaging to the environment.

The challenges of seeking new trading arrangements must be clearly understood. There is the possibility of protectionism and, as the noble Baroness, Lady Jones, referred to, hormone-produced beef and chlorine-rinsed chicken, as well as food insecurity and potential disruptions in the event of a trade dispute. The size of these new markets and their distance from us means that they will not easily fill the void left by our previous trade with our existing EU partners.

Under World Trade Organization terms, the most challenging aspect is the rules of origin, as a number of noble Lords have mentioned. I take the example of the humble sausage. The contents of each sausage will, more likely than not, emanate from more than one country, with a multiplicity of ingredients in each. Every individual product would have to be identified and its source confirmed before a nomenclature and potential tariff could be agreed. However, as with all aspects of trade, it is often the potential non-tariff barriers that cause the greatest threats.

There are concerns over the regulatory powers set out in the Bill. I would prefer that as a general rule no power to make policy decisions should be vested in the Government without proper parliamentary scrutiny being in place. I would go further and propose that Parliament be given the formal power to approve trade agreements, as well as the power to approve the UK’s negotiating position and the final text of each agreement.

Farmers have had to meet the highest possible standards of food safety, animal health and hygiene in producing our food, and they have been proud to do so. It would be singularly inappropriate for deals to be sought with countries such as the US, Argentina and Brazil that do not meet the criteria that our farmers currently have to meet. Most producers, whether of food, farming or manufactured goods, welcome the broad thrust of the Chequers plan and, in particular, the fact that there will be an acceptance of a common rulebook to ensure a smooth transition as we exit on 29 March next year so that our goods will still be accepted into the EU. Anything less would be a travesty. Producers and consumers alike need to know that there will be continuity of supply, as well as high standards of production, in what has become a very sophisticated integrated supply chain between us and our existing EU partners.

I should like to take Denmark as an example. With a population of only 6 million, it punches way above its weight in exporting its foodstuffs. Largely through the work of industry and a particularly strong co-operative movement, with some limited government support, Denmark has a strong export showing to China and other far-flung places of meat, dairy and other food products, even while remaining a full member of the EU. I am mindful of the fact that our main export, above all—this will delight the noble Lord, Lord Browne of Ladyton—is whisky. Britain recently appointed an agricultural attaché to China, since when our agricultural exports have been boosted to the benefit of companies such as Karro, whose food plant was formerly the Malton bacon factory in North Yorkshire, which now proudly exports to China pigs’ trotters and other pig parts for which there is no home market.

Our agricultural attaché is financed mostly by industry, with only a modest contribution from the Government. This is a model shown to have brought results and should be rolled out in other countries too. The Food and Drink Federation calls for in-market specialists in priority markets, identified—in addition to China—as the USA, India, Japan and the UAE. Figures provided by the Food and Drink Federation show how UK food and drink exports have played catch-up with our EU partners, with our exports to China increasing by 94% between 2015 and 2017, due no doubt to the work of the agricultural attaché as well as the strong growth of the Chinese consumer market.

Danish exports of food and drink to China in 2017 were still substantially greater than ours, as were their exports to Japan. Growth of UK food and drink sales to Japan, at 10%, lags behind growth of food and drink exports from Ireland, Spain and Germany, as well as from Denmark. So there is clearly great potential for future growth in exports for the food, drink and farming sectors. We did not, however, have to leave the European Union to achieve it.

The Agriculture and Horticulture Development Board levies a statutory fund of about £60 million each year from farmers, growers and others. It is currently under review and needs to build on its role in promoting exports. I hope that this will be cautiously considered, so as not to damage our growing export market. The Minister may not be aware that there is growing concern over the position of organic farmers post Brexit, when their niche market may be lost because they will have to renegotiate recognition and certification from scratch.

The trade remedies and dispute resolution mechanisms raise questions about problems arising from the relationship between this Bill and the customs Bill. One issue of which the Minister may be aware relates to bricks and ceramics, which face potentially unfair competition from unsustainable sources in developing countries, and reduced exports—with an effect on domestic production—arising from the recent Trump tariffs and the retaliatory measures from China.

In conclusion, whatever happens with the process of this Bill we must beware of cutting our producers off from their main existing export markets in the EU. The potential impact of no deal could be catastrophic for farming and the food and drink industry. I am firmly of the view that the Chequers paper sets us on a direction of travel that could take us to a safe haven, such as the EEA or EFTA, by forging a bespoke customs union with them, while carrying on with negotiations and keeping our longer-term trading options open. I hope the House will give the Bill a fair wind.

European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018

Baroness McIntosh of Pickering Excerpts

Monday 25th June 2018 Lords Chamber

For the same reason that this was raised in the deal between the EU and the United States in TTIP, the two Governments have to address the issue very clearly before we give our approval to what is being proposed today. I hope that the noble Baroness can say some more about that because while it is clear that the EU and Canada—and, indeed, Britain and Canada if it ends up being a bilateral treaty—have very high standards, that will not necessarily be the case in other treaties which the Government seem intent on pursuing after the end of the transition period when we will be seeking to make free trade agreements with countries whose standards of environmental protection, worker protection and consumer protection are disturbingly lower. While I would not wish to hold up agreement to this treaty, if it is the template, I do not think that it is fully adequate and we need to do some more thinking before we move on to the next stage of our trading arrangements with the rest of the world.

[Baroness McIntosh of Pickering (Con)]

My Lords, following on from the remarks of the noble Lord, Lord Whitty, which essentially I support, obviously it is a matter of regret that, if I understand it correctly, the agreement does not include services. That is a major omission. Also, on the Canada-US border, which I realise is not covered by discussions today, there is already tension, in particular over the flow of food and agri-food goods. This was raised at the G7 summit.

My noble friend said—I welcome this most warmly—that there will be proper scrutiny of the agreement. I wonder whether she will be in a position to share with the House this afternoon what form that scrutiny will take, and perhaps give a commitment that scrutiny will take place while the House is sitting—because I gather some procedures are being considered by the Procedure Committee that will allow some of the regulations flowing from the EU withdrawal Bill to be considered while the House is in recess. I do not know about other noble Lords, but it concerns me greatly that we were promised proper scrutiny and have given vast powers to the Executive to bring in regulations. My understanding was that all the regulations and statutory instruments would be considered while the House was sitting—and we have the September sitting, when we could give instruments close consideration.

My noble friend also said that no case in the investment sector against the UK had yet been successfully prosecuted. When we had the little debate last Thursday on the G7 summit, I pressed my noble friend on what the dispute settlement would be—this is in the White Paper—in relation to the free trade agreement that we seek with our current EU partners, and indeed other free trade agreements that might be agreed. In the context of concerns raised, certainly by the Belgian Government, this obviously is a source of concern that may have greater credence the closer we come to reaching an agreement with the EU, or indeed more broadly.

I take some comfort from the reassurance that my noble friend has given the House this afternoon that public services will remain a matter for the UK Government. Perhaps she could give a bit more substance to that commitment, because a lot of scare stories were going around at the time the TTIP agreement was being discussed, and it would be most unfortunate if, in the context of the CETA agreement, such scare stories were to persist.

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Whitty, was right to highlight consumer and voter concerns about such matters—but I should point out that there are also business concerns about the Government’s stature in the trading environment. It is not just the content but the body language that goes with it. At the weekend we saw some appalling body language from senior Ministers about business and some of our most important exporters, so it is good that we can ameliorate that at least in some way with some positive body language here. It is good for us to be discussing this. Perhaps it is churlish of me to point out that the reason why we are discussing it is that we are in the EU, which has worked hard to deliver this treaty.

It is also heartening that we are discussing something that fits within the WTO legislative procedure rather than—sadly, and increasingly—within a worldview that is moving outside the WTO. So it ticks a number of multilateral boxes. As we have heard, Canada is of course an important current trading partner, and one that we hope to make larger. So CETA and its ratification are to be welcomed. It is a good arrangement and, clearly, as the Minister pointed out, the Canadians have made it clear that this is a framework by which a transition in the event of Brexit can be moved into a bilateral agreement between ourselves and Canada.

As the noble Baroness who spoke before me pointed out, it is clear that this does not include services—that is my understanding. I see that the Minister is shaking her head. Perhaps she might indicate which services are in and which are out. My sense is that very few are in. What would be the attitude towards a bilateral agreement on services between our two countries?

The Minister also pointed out that a working party to transition this has already been set up. Perhaps she could give us some sense of how long “swiftly and seamlessly” really means in terms of moving from one to the other. She used some examples; quite a lot of them were agricultural and food products. Clearly, Canada has a very strong agricultural industry. I would be interested to know what impact analysis has been done of the relative flows in both directions of agricultural and food products between our two countries. The Minister talked about growing trade—I think she used the phrase “hundreds of millions” in extra trade. What kinds of targets do the Government have for increasing the flow between the two countries?

It is all good—except the context in which CETA could be transitioned between our two countries really does depend on the nature of the arrangement we have with the European Union. Canada has already made that clear and has expressed unhappiness on, for example, the division of quotas and other such issues. Perhaps the Minister can tell us how these kinds of things feed in to our negotiations with the European Union.

The investment court system—ICS—has already come up. The Minister mentioned it, as did both the previous speakers. This is clearly an area that has raised people’s concerns. There is a perception that large multinationals will have an advantage in such a system. It is easy to understand that perception because this will be a complex and expensive process. How can the Government allay the fears of smaller traders and individuals that this will not be a charter for the larger, deeper-pocketed companies to play the system? Can the Government confirm that the ICS will be rolled over into any bilateral agreement should CETA be transitioned post Brexit?

Finally, the major exports between the two countries are in the engineering sphere, specifically nuclear reactors, boilers, machinery, vehicles and aircraft. I note that all these sectors could suffer severely under Brexit; for example, due to border friction, the restriction of movement of people, and exiting Euratom. There will be pressure on those businesses, so what assurances can the Minister give them? I note the particular importance in the aircraft industry of the Anglo-Canadian relationship at Bombardier in Belfast. Again, what assurances can the Minister give the workers there?

It is good that, instead of attacks on business by the Foreign Secretary or the Health Secretary, we are having a positive debate about business. CETA adds a long-term view to things, in respect of which business is desperately looking for stability. Within the context of those questions, we welcome this statutory instrument.

G7 Summit and Future Trade Relations

Baroness McIntosh of Pickering Excerpts

Thursday 21st June 2018 Lords Chamber

Asked by

[Baroness McIntosh of Pickering]

To ask Her Majesty’s Government what assessment they have made of the implications for the United Kingdom’s future trade relations of the failure to reach an agreement at the G7 Summit in Canada.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to have secured this topical debate today and I look forward to hearing noble Lords’ contributions. Perhaps I may take this opportunity to welcome the Minister to her place and say how appropriate it is, on the longest day and the summer solstice, that in responding to the debate she represents the department known as the “department of sunshine”.

The G7 summit earlier this month, hosted by Canada and held in Quebec, aimed to promote the rules-based international order to advance free and fair global trade, promising talks leading to more trade between the subscribing nations. Why does the G7 matter? In my view, it matters precisely because it bridges trade relations between the EU and world trade through the World Trade Organization. In looking at the implications for our future trade relations in this debate, we must ponder the reasons for the failure to reach agreement in Canada.

The background to the June G7 summit was the latest UK trade figures in April 2018 showing a widening of the total UK trade deficit to £9.7 billion in the last quarter for which figures are available. This change was due mainly to falling exports in both goods and services. Exports of goods fell by £3.1 billion due to falls mainly in exports of machinery, pharmaceuticals and aircraft, while exports in services fell by £2.5 billion. I find the figures surprising given that the pound is at a low level. In this situation one would have expected exports to have risen. Given the fact that we are negotiating our exit from the European Union, it is perhaps not surprising that our trade deficit in goods with the EU has grown while that with non-EU countries has improved.

Looking at the backdrop to these figures and the failure to reach agreement at the G7 summit, I conclude that trade relations pose the greatest threat to the global order. In a post-Brexit world, we in the UK are seeking to negotiate our own trade deals, with the Government aiming initially to strike a good trade deal with the EU and subsequently with America, India, Australia and so on. Success will depend on all players playing by the rules but, following Donald Trump’s behaviour at the summit and subsequently introducing tariffs on trade, respect for these rules is now in doubt.

I am delighted to say that Yorkshire seems to have bucked the trend. Trade figures show that the region outperformed the national average in the first three months of 2018, with an increase in both the amount of goods that Yorkshire exports and the number of companies exporting. In terms of food and farming, Yorkshire is well placed to compete with other regions of the UK and internationally. Exports to China from Yorkshire are growing, helped in particular by the sale of pigs’ trotters and other parts to China where they are considered delicacies.

Without doubt, the EU is the UK’s most important market for food and drink exports, followed by the US and China. It generated £13.3 billion of the total food and drink exports in 2017, which accounts for 60% of the total. The EU has 36 preferential trade agreements with more than 60 countries, representing 15% of all UK-traded goods, not just food and drink. Many Commonwealth countries have economic partnership agreements with the EU, giving preferential access for their goods to what will be a market of 440 million consumers after Brexit. The application of the EU’s standard rules of origin on the day after Brexit would be hugely damaging to UK-EU trade. Will my noble friend the Minister give the House a commitment today that the Government intend to negotiate specifically that this could not possibly happen?

In terms of the share of national exports as a percentage of world exports, China, excluding Hong Kong, led in 2016, followed by the EU, then the United States. As a major trading nation, the UK should welcome every opportunity to improve its international trading relations, so it was a disappointment that the June G7 summit was divisive and inconclusive. The attempt by President Trump to persuade the G7 partners to readmit Russia, following on from the decision to impose US tariffs on steel and aluminium, poisoned the atmosphere of the talks, which were then doomed to fail. Russia was admitted to the G7 in 1997 and removed in 2014, following the annexation of the Crimea. We should remember that in August 2014, Russia announced a ban on imports covering a wide range of agri-food and drink products from the EU, the US, Canada, Australia, Norway, Ukraine and other countries. In the year following the ban’s implementation, UK food and drink exports to Russia fell by 52%. EU food and drink exports to Russia fell by 53%. US threats to impose tariffs on EU and Chinese exports to the US look set to raise the temperature in international trade talks further still, with consequent retaliatory measures. Rising trade tensions globally do not augur well for trade; nor do the signs of the world index in stock markets across the globe falling, as we saw this week. Signs of slower economic growth can only be increased by the prospect of a trade war between the US, the EU and China.

How can we best navigate these choppy waters in international trade? How do we replace the existing market of 505 million consumers on our doorstep with alternatives? There appears to be no simple answer. Current international tensions highlight the dangers of leaving a trading bloc of 505 million consumers, of which we have been an intrinsic part since 1973. This debate provides the Minister with an opportunity to share on their behalf the Government’s priorities for future trade talks, mindful of the importance of talks to the food, drink and other manufacturing sectors.

I conclude with a small number of questions for my noble friend the Minister. The World Trade Organization’s existing trade dispute settlement mechanism currently dictates that the EU Commission manages trade disputes on behalf of the UK and other member states. Can the Minister assure the House that by the time we leave the EU on 29 March 2019, the Government will be in a position to defend any trade disputes brought against the UK? Can she share with the House what the dispute resolution mechanism will be, as was envisaged—we would know—in the White Paper at the end of last year?

Finally, what is the current progress of the recent EU dispute brought before the World Trade Organization, relating to the US tariffs on steel and aluminium imports? As a general rule, what is the average length of time for such a dispute to be resolved? No matter how difficult we might think our relations and negotiations with the EU have been, I think the Minister will confirm that future negotiations on trade matters with the World Trade Organization could be 10 times worse.