Trade Bill

Baroness Neville-Rolfe Excerpts

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

[Lord Fox (LD)]

My Lords, I thank the noble Lords, Lord Stevenson and Lord Lansley, for bringing this issue to your Lordships’ House. We support greatly the spirit on these Benches. The noble Lord, Lord Lansley, used a contemporary example of rice. In another life a long time ago, I worked in the sugar industry for seven years. Of course, sugar is wrapped into this so deep that it is still embedded in there. On his point about the transition from us being part of a European scheme to going into a wholly United Kingdom scheme, I know that the pressure on that commodity alone would be huge, given the past relationships and previous problems that some sugar-producing countries have had within the European regime. That is just one commodity. His point is clear: that this is not a simple issue but one that requires a great deal of thought, but that thought must be had and is worth having. We support this process and will involve ourselves if necessary in how this gets taken forward. Clearly, we want to be part of a future regime that has these objectives, but the means with which to produce that are not necessarily as simple as they might look on first appearance.

[Baroness Neville-Rolfe (Con)]

With the GSP, the key thing is who benefits. In the past, some quite surprising people have benefited who perhaps do not benefit any longer, such as Mexico, Chile, South Korea and so on, which are now very rich countries. India was in there for a long time. It is important who is on the list.

I have some sympathy with the points made by my noble friend Lord Lansley. If we leave the EU, I believe that we should have more choice in which countries we help with tariff preferences. We should be able to take a more independent view, with an eye to our own history—for example, of the Commonwealth—and not necessarily just copy out the EU list. Obviously it depends on where we finally end up in our relationship with the EU, and I do not want to go into that, but if we end up having a certain amount of independence, that should apply to GSPs. I am not sure that this amendment should be in the Bill, but it is very good that we are taking this opportunity to talk about this useful vehicle for helpful the poorest developing countries that we all want to see develop.

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[Lord Bates]

I am grateful for the noble Lord’s question. His precise point is that we are aiming to replicate what currently exists, so we would take across the current applicable rules of origin into what we would be laying in secondary legislation before we leave the European Union. Once we have left—without a deal or, we hope, after an implementation period—we could devise our own scheme during that implementation period and be aware of the EU’s thinking. I know from serving on the Foreign Affairs Council that it has done some tremendous development work, particular with the post-Cotonou negotiations, as to how we fit. The current plan is that what is presently the case will initially also be the case for these countries.

[Baroness Neville-Rolfe]

Before my noble friend sits down, could he give me some reassurance about the wealthier countries on the list? Have they actually come off the list or is it our plan to make sure that the benefit of tariff-free trade is given to those who are worse off?

[Lord Bates]

Yes, and my noble friend Lord Lansley touched on this point. He talked about the treatment of different countries. We work from a World Bank list and an OECD DAC list of the least developed countries. As countries graduate—which is a normal procedure—they need to move to other agreements as well.

Trade Bill

Baroness Neville-Rolfe Excerpts

Committee: 1st sitting (Hansarad): House of Lords
Monday 21st January 2019 Lords Chamber

I genuinely appreciate noble Lords’ concerns but hope that this House has found the Government’s response to each of the amendments reassuring. Clause 1 is about ensuring continuity, and ensuring that UK businesses enjoy the same opportunities in future as they do now. That is something that I believe the whole House supports, and I ask the noble Lord to withdraw the amendment.

[Baroness Neville-Rolfe (Con)]

My noble friend helpfully explained how the implementation of the Agreement on Government Procurement would work and referred us to a website with useful detail. She said that where there was accession by another party, there would not be anything major. The whole idea of the provision was continuity, so you would be implementing things that had already happened. I have a simple question—I apologise that I am not expert in this area. The Government say that they are negotiating with a whole list of countries, including Albania and Australia, for example. If they were suddenly to accede to the GPA, which sounds quite positive—because it would mean more trade between countries in public services and in other sorts of procurement—would that then simply be added in, or would it be done in some other legislation? That is not quite continuity. It is very sensible to use an existing system, but I am keen to understand whether we are agreeing to that today or whether it would be done somewhere else. I apologise if my noble friend has already clarified that.

[Baroness Fairhead]

I thank my noble friend for the question. My understanding is that it puts us in the same position as we are today. When parties want to withdraw from or join the GPA, a process is gone through with the EU in which they demonstrate their intention and present their schedules to the WTO. Each member then decides whether they are prepared to accept that new addition or withdrawal. That is the process that we would go through. If that should happen, the Bill gives a power to implement under SIs. Parliament would be able to decide whether new members could join or leave.

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[Lord Risby (Con)]

My Lords, as one of the Prime Minister’s trade envoys and as a long-standing deputy chairman of the Small Business Bureau, I support the amendment put forward by my noble friend Lord Lansley. I salute my noble friend Lord Livingston’s efforts, who helped to transform our external commercial activities.

Highlighting the importance of the small business sector is key to what the department is now doing. That is a huge cultural change because, although our small and medium-sized businesses sector is vibrant, it has not been brought into the loop of trade promotion. Huge effort is being undertaken there. I mention that because, earlier in the debate, there was an implication of inaction in the department. I have seen for myself how utterly untrue that is. For example, you can see on the website how small and medium-sized businesses are being offered communication skills and efforts are being made to encourage them; a sophisticated system is being put into effect.

My noble friend talked about strategy. Simply, there has been something of an oversight as far as the sector is concerned, particularly in terms of trade promotion. What is happening now is definitely a considerable change. The amendment highlights the importance of the sector for the future of this country and its future dynamic economic activity, which I hope will happen post Brexit, and offers a framework for participation in procurement. I hope that the Minister will give some sort of encouragement or indication of whether this is at the forefront of her thinking and that of the department when she replies to the debate because I believe that an important message was relayed by my noble friend in his remarks.

[Baroness Neville-Rolfe]

My Lords, I am a huge supporter of the small business sector and its growth. Indeed, some of the issues raised in Amendment 4, moved by the noble Lord, Lord Stevenson, are also important. However, like other noble Lords, I am not sure that they should be written into the Bill. I want to take this opportunity to ask the Minister a question, which she may prefer to answer in writing. Essentially, I want to pick up on the points about the importance of small businesses made by my noble friend Lord Livingston —who, as has been said, did so much as Trade Minister—and my noble friend Lord Risby.

My noble friend Lord Lansley is right that some countries try to discriminate in the procurement process in various ways. He rightly quoted the US Small Business Act. What can we do about that in policy terms? In particular, can we improve the process facing SMEs trying to win contracts either internationally or here in the UK? From my own experience, including a period serving on the Efficiency Board in the Cabinet Office, bidding rules are complex and vastly expensive—as a result, it is said, of European Union laws and requirements. Is work in hand to simplify our rules as we leave the EU to help SMEs win a bigger share of procurement, as I think we would all like?

[Lord Davies of Stamford]

My Lords, I have been listening to the debate with great interest, but I am worried that the House may be making a technical mistake that could have wider implications. With the best intentions in mind, many noble Lords have spoken in favour of the suggestion to place quotas on companies to do with the beneficiaries of public procurement for the portion of the contract supplied by small businesses. It has been said that the small business share in defence procurement is much lower than it ought to be. The House should be very careful about that. It is probably not possible to increase that greatly; I speak as a former Defence Procurement Minister, as the House will know. If we send our young men and women into battle, we must give them the very best equipment money can buy. There can be no compromise on that. In my view, we cannot under any circumstances accept something second-best when the best is available.

Defence equipment generally involves a great deal of research and development; the products are often high-tech, modern and unique, designed to our specifications and not for anybody else, so there are not the economies of scale that are generated with substantial sales. That is a problem because most of the big defence contractors have an overwhelmingly large share in this country’s defence business. When I was the Defence Procurement Minister, the five big defence procurement suppliers included BAE Systems, Thales, Lockheed Martin—which is American, of course—and Boeing. They are large companies, some of which are supplied with components and parts by small businesses, to a considerable degree. However, some of them are not and, in practice, it is impossible to force them to do that.

We must buy the best, which is often very expensive. We cannot place such conditions on its procurement. Let me give an example. Of course, we spent billions of pounds buying the F-35, which is a wonderful aircraft. We buy it from Lockheed Martin; it is built and assembled in Fort Worth in northern Texas, close to Dallas. I have been there many times. The British share in its procurement project is considerable: about 15% is produced by BAE Systems, but that is not a very large company. One would have to look at the extent to which BAE Systems procures from small businesses. In the United States, to some extent—but, again, to a limited degree—Lockheed Martin buys goods, equipment, services or software from small companies, but they are American small companies, so they do not help us to reach that particular kind of quota.

In some cases, like the Boeing contract for the Chinook helicopter—I once placed an order for 24 of them, so that was a very substantial contract—again the suppliers are largely American. It is not possible to insert British suppliers into the chain because they do not produce what is required for that particular aircraft. It was designed in America according to specifications set down by the American Department of Defense. I do not want to go into too much detail on this; rather, I want to give the Committee an indication that it might be worth thinking carefully about these matters before defence procurement is automatically considered as being part of the desirable targets for increasing the share of the market for small businesses. I fear that almost certainly the only sensible solution would be to leave defence out of this altogether. I started off by mentioning the fact that life and death issues are involved, and we should not be imposing any additional constraints on our defence procurement.

Trade Bill

Baroness Neville-Rolfe Excerpts

Monday 21st January 2019 Lords Chamber

I hope that when the Minister sums up the debate she will give a formal commitment and agree to write into the Bill those verbal agreements that have been made by the Secretaries of State for Defra and International Trade. Amendments 9, 13 and 14, grouped with Amendments 25 and 26, go to the heart of ensuring that the food safety, food hygiene, environmental standards and welfare we currently enjoy will continue once we have left the European Union.

[Baroness Neville-Rolfe (Con)]

My Lords, I will speak to Amendment 10. I am grateful to the noble Lord, Lord Purvis of Tweed, for his explanation. I say to the noble Baroness, Lady Jones of Moulsecoomb, that we know from history that trade is good for Britain and for other countries, including developing countries. I am nervous about writing too much into the Bill, as I will explain.

Noble Lords will recall from Second Reading that I very much support the Bill. Whether we have a satisfactory agreement or, less welcome, a no-deal Brexit, we need to write existing trade agreements into UK law. My noble friend the Minister has explained that all the necessary measures have not been included in previous Brexit legislation. This House rightly tries to support the orderly conduct of government and we have a duty to do so, whatever our views on Brexit. That must include preparing our statute book, either for 29 March or a later date, following a delay to Article 50 or a transition period. It would be irresponsible not to make preparations. Indeed, a lot of these measures should already be agreed, with commencement dates to be slotted in later.

I tabled this probing amendment, which is in effect an alternative to Amendment 8, tabled by the noble Lord, Lord Purvis of Tweed, for two reasons. We should avoid lumbering the Bill with detailed requirements that could put in question some existing trade agreements, might encourage costly legal challenge to agreements drawing on the criteria, and might fetter our ability to negotiate sensibly with third countries, either as we move from being a member of the European Union to being a third country or during future trade negotiations.

I recognise from discussion today that new FTAs will be the subject of future legislation, so I oppose Amendment 8 overall, although my amendment derives from it. However, there is one aspect of it with which I have some sympathy: the provision that specifies that agreements should not restrict the Government’s ability to determine whether public services are carried out by the private or the public sector. The reason is that, as a Business Minister, I was peripherally involved in the EU negotiations on TTIP and we—both the UK and the EU Commission—made a mistake by not making it clear right at the beginning that the draft did not require us to limit the NHS’s ability to keep health administration and procurement in the public sector; nor, indeed, did we have it in mind to use the agreement for that purpose. The understandable emotion around the NHS and confusion on that point led to widespread opposition to TTIP and made it impossible to conclude anything ahead of the 2016 US election. I support outsourcing—I draw attention again to my entry in the register of interests—but some operations are better kept within the public sector. At any rate, the Government of the day should have choice in that matter.

I hope that the Minister will be able to reassure me that we will not fall into the TTIP trap again, and will support my amendment or, if it is not appropriate, explain that she understands the thrust of the point I am trying to make.

[Baroness Young of Old Scone (Lab)]

My Lords, I support the sentiments behind most of the amendments in the group, although perhaps not the exact wording. My focus is on environmental standards, their vital nature and why they are at risk under the current government proposals.

When we discussed Amendment 4, I made the point that it is much easier to be ambitious about standards if you are part of a pack, part of a group—which we were, we were one of the 28. When we are working on our own in a more isolated position negotiating bilateral agreements, even if they are allegedly rollover bilateral agreements, it is less easy to be robust and ambitious.

Environmental standards are vital in transitioning continuity agreements, but the other point, which has already been made, is that whatever we do in the continuity agreements is a harbinger, a signal, of how we want to handle negotiations on new deals, including deals with countries such as the USA and Brazil, where we know that big environmental issues will arise, particularly in agricultural trade deals. Agricultural standards impact not only on food standards and safety and animal welfare but on the environment. We do not want the chlorinated chicken debate replicated in individual trade deals for the future.

We need the Government to use the Bill to guarantee that all free trade agreements ensure, for example, that food imports meet the UK’s environmental, food safety and animal welfare regulatory standards. That should be the case in all negotiating mandates as well as in the subsequent agreements that flow from them. Import into the UK outside a free trade agreement is much trickier, but it is still vital that the Government set out very soon that they propose to use current World Trade Organization rules to maintain standards.

I will speak briefly to Amendment 15, the non-regression proposal from the noble Baroness, Lady Jones. International trade agreements have the potential to undermine or weaken essential standards, as we know from the TTIP negotiations, which have already been mentioned. Non-regression commitments are common in existing trade agreements, and a meaningful commitment to non-regression provides a useful safety net. All international trade agreements implemented pursuant to the Trade Bill should incorporate that principle. Indeed, we need to go further. We need to widen their scope and strengthen their enforceability if they are to help deliver the Government’s promises to improve the state of the environment.

The Minister will say that we should be reassured that the Bill is only about continuity—I am rapidly coming to hate the word “continuity”—and that we are carrying across, not renegotiating conditions, but nothing in the Bill assures that. The Government have said tonight that only changes essential to ensuring continuity will be considered, but we know that when this was debated in the other place, the question was raised as to whether other Governments will want to agree deals with us without substantive changes. Indeed, Michel Barnier said a year ago that,

“partners around the world may have their own views”.

The message to the Government there is that it takes two to tango and although we do not want to renegotiate any conditions, there may be strong pressures to do so in the rollover process. Government needs to give a signal that we are absolutely clear about not negotiating any weakened standards.

The test of the Government’s mettle in all this will be how quickly we can get as many agreements as possible under our belt, both rollover and new, to demonstrate that they understand what Brexit is all about and are making real progress in trade. Although I hesitate to ascribe to the Government any dirty tactics, the reality is that, when push comes to shove, environmental standards will get the boot. We have had umpteen assurances from the Government that they are highly committed to maintaining all sorts of standards, including on the environment. The Command Paper, Preparing for our Future UK Trade Policy, said:

“The Government is fully committed to ensuring the maintenance of high standards of consumer, worker and environmental protection in trade agreements”.


Michael Gove, the Secretary of State, said:

“Let me try and state in letters that are as big or as bold or as clear as possible: we won’t be signing trade deals that mean British producers are undercut on animal welfare or environmental standards”.


The Prime Minister has made that point; indeed, today’s Statement reinforced how important environmental standards are and that they would not be compromised by the Brexit process. If we have all these assurances from government, I invite the Minister to say, “Since that’s what we really want to happen, we are going to enshrine it in this Bill”.

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[Baroness Fairhead]

I would refer to the Comprehensive Economic and Trade Agreement with Canada, for example. Nothing in CETA prevents the UK regulating in the pursuit of legitimate public policy objectives, such as in relation to the NHS, whose protection is of the utmost importance for this Government. We will continue to ensure that decisions about public services are made by UK Governments, not our trade partners. Moreover, rather than negatively impacting the public sector, our trade continuity programme will safeguard jobs and support our public services.

[Baroness Neville-Rolfe]

I completely understand what my noble friend the Minister says about the United States. That is for the future, not for today. Before we get to Report, it would be helpful to be clear about whether there are provisions in the other agreements that we are rolling over that might have a deleterious effect on this choice that we want British Governments to be able to make on whether to put a procurement project into the public sector or the private sector. I suspect that the answer is that there is not a problem at all, but it would be good to have that clarified.

[Baroness Fairhead]

I can clarify that the UK’s public health sector is protected by specific exceptions and reservations in all EU trade agreements. As we leave the EU, the UK will continue to ensure that those rigorous protections are included. My noble friend Lady Neville-Rolfe alluded to this when referring to the mistakes that were made in TTIP. The noble Lords, Lord Fox and Lord Grantchester, also talked about the importance of making sure that those specific exemptions and reservations continue, which they will.

Trade Bill

Baroness Neville-Rolfe Excerpts

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

[Baroness Neville-Rolfe (Con)]

My Lords, it is a great privilege to follow my noble friend, who has been a friend for nearly 20 years. We worked together on the charity she founded, now called Action Against Abduction. I know that all noble Lords will join me in extending to my noble friend Lady Meyer a very warm welcome, and thank her for her fascinating and emotional personal story.

The great strength of her contribution today has been to show her achievements nationally and internationally, especially in the area of children and families, for which she was duly honoured by Her Majesty the Queen. She brings experience, knowledge and good sense to your Lordships’ House, and we very much look forward to her next contribution. She has an energy, vibrancy and charm that will warm the whole House.

I start my contribution to today’s debate by referring to my interests in the register and by congratulating my noble friend Lady Fairhead on her opening speech. I liked her clear summary of the powers in the Bill and of the work already in hand. I will add a historical perspective. Trade is the linchpin of prosperity. It is a fascinating subject, from the trading of obsidian and flint during the stone age to the Hanseatic League, an alliance of trading cities in northern Europe—a precursor of the EU—running a trade monopoly between the 13th and 17th centuries.

Trade is disproportionately important economically, as we have heard. For example, there was a great trade collapse after the last financial crisis between the third quarter of 2008 and the second quarter of 2009. World GDP dropped by 1% and world trade by an amazing 10%. So, in view of the enduring importance of trade to the UK, the Government are right to want to prepare for a vibrant international trading future in the post-Brexit world.

I support the Bill and its speedy passage. It rightly seeks to provide continuity in our trade and investment relationships with third countries. It replicates the effect of existing EU preferential trade agreements and makes us a member of the government procurement agreement on our own account. The Bill passed by this House last week will deal with tariffs and customs matters, but this Bill will allow us to implement our non-tariff obligations. It does not look forward to new free trade agreements since, as the Secretary of State for International Trade helpfully made clear in his Statement on 16 July in another place, these will now be the subject of new primary legislation. This Bill is concerned with existing agreements, making it less contentious and very urgent as we need these to continue on Brexit day, transition or no transition.

I will touch on a few issues. I am known for my interest in impact assessments and I studied the one issued on this Bill as long ago as 11 September last year. The bad thing about it is that, understandably, it gives no figures on the impact on business, either static or dynamic, of future continued FTAs or procurement arrangements. The good thing about it is that it sets out a list of the existing third-country agreements that the UK will seek to continue. My noble friend Lord Lilley touched on these in his very perceptive speech.

What I found most interesting was that from this group, in 2015 Switzerland, the Iceland, Lichtenstein and Norway group, Canada, Turkey and Korea were our top five trading partners among those with FTAs. When I worked at Tesco I had something to do with the agreement with Korea. When it was being negotiated, the Korean Government were very helpful with my company’s problems as an overseas investor. Keen to conclude the FTA, they shied away from discrimination against our business and that of others in a similar position. But, once the EU-Korea agreement was signed, our problems returned in spades. Indeed, Tesco has since sold the business to help restore its balance sheet. But, given the vibrancy of that business—called Homeplus in Korea—its contribution to the whole group on innovation and digital, and, looking at it the other way, the substantial amount of capital it received from us to build a leading Korean retailer, this seems very sad. The lesson for today is the importance of looking beyond the here and now of a trade agreement to what happens afterwards and the need for good remedies and dispute resolution.

That brings me on to an area of the Trade Bill that I am interested in exploring—the Trade Remedies Authority. As my little example shows, the quality of this aspect of trade arrangements is very important. The EU’s comparable body has some of the very best career officials, as I saw when I was a Business Minister in the EU Council. So we need a highly professional team looking after the UK’s trade interests in the new world. I have to admit that I am somewhat doubtful about having a new authority separate from the trade department, partly because of the stringent financial controls on pay imposed on such bodies. However, that has been decided and we cannot delay the Bill.

The proposed body is of a very special type. Different considerations apply to it than apply to most, superficially comparable, bodies. In this case, having everyone inside the tent would not be a good idea. In particular, I would be very much against including stakeholders, whether from producing industries, trade unions or devolved Administrations, as members or non-executives of the new authority.

I was glad that the Commons voted against this concept. The investigation process should be run by people who are independent-minded and able to stand up to the various interests who will want to influence the outcome of something as a delicate as a trade dispute. I am also pleased that the Government are planning to move some of the experienced staff that they have developed or recruited for the Department of Trade into the new authority.

Another area that is very important and on which I have had representations from the retail sector is how VAT will operate post Brexit and the sums involved. While it is strictly a tax issue and not for this House, I hope that the Minister will agree to find time to answer questions on this.

Finally, in response to the noble Lords, Lord Grantchester, Lord Fox and Lord Hain, perhaps I may offer a wider, fundamental observation. I voted remain in the referendum, because, on balance, I thought then that continued membership of the EU was the better option. However, it does not follow that, when we leave, people of my persuasion should consider the best outcome to be to remain as close as possible to the EU, via membership of the single market, customs union or whatever. Past support for remain implies no such conclusion.

We need to review the matter from first principles, covering such considerations as why the UK would profit from membership of an organisation whose rules are set by others. My point is simple: remainers who now advocate the closest possible ties with the EU need to argue their case and not assume that all who once agreed with them must accept the truth of their current proposition. Of course, if we stay in the customs union or the EEA, the powers in this Bill and the new authority will go largely unused, bringing home the extent to which that outcome would limit our influence on trade.