EU-Canada Comprehensive Economic and Trade Agreement
Debate between Barry Gardiner and Geraint Davies(7 years, 4 months ago)
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Geraint Davies
Thank you, Sir Edward.
The view of the European Scrutiny Committee is that in the light of the unfortunate lack of scrutiny, all members of the Committee should find it in their heart and mind to add the words in the amendment to the motion so that we can all come together and agree it. The Government might say, “Sorry, we don’t want more scrutiny; we want to take control, but we want to take it in the corner without other people having any involvement”, but I am afraid that I will certainly not vote for a motion that does not require extra scrutiny, given that the Secretary of State has given a solemn undertaking to provide it.
I will give some of the reasons for further scrutiny given the concerns about CETA, particularly when the ICS is introduced to it. The key debate in Europe has been about why we need the ICS, and the answer that has been given is that it is to protect investors. However, we must ask how investors are protected at the moment. Are they adequately protected? The answer is that they are. In Europe they are protected by county courts, national courts and national law, European law and the European Court of Human Rights. In Canada there are provincial courts, appeal courts and the Supreme Court. The United States has a similar legal system. It is not surprising that our long-established systems of public law, contract law and commercial law balance the interests of the investor against the wider public interest.
That is particularly important in examples such as the balance of investor and environmental interest in fracking. Or perhaps an investor such as a fizzy drinks manufacturer might come along and the Government might say, as the right hon. Member for Tatton (Mr Osborne) did, “Actually, we’re about bit worried about diabetes and obesity; 45% of sugar consumption by teenagers is from fizzy drinks, so we’ll put a tax on them.” If that went to court, the court could say, “We’ve got to balance the public interest with investor interest”. However, an arbitration court is all about the interest of the investor and whether a particular law has had an impact on the future profitability of a legitimate investor. In the narrow case in Mexico that I mentioned, of course the court, using that narrow definition of investor interest, ruled that the tax had reduced the investor’s sales and profitability, and the public had to pay the price. That is outrageous, and we should not just nod that sort of thing through.
We have systems of law that protect both the investors and the public. The precursor to the ICS—the so-called investor-state dispute settlement—was introduced in 1957 in an agreement between Germany and Pakistan, because the Germans thought that there was some risk to their investment. I do not have anything against arbitration courts per se if they are about, for instance, European countries investing in high-risk countries with undeveloped judiciaries and unstable political environments. That means that investors can take necessary risk and the arbitration court can take a view on unreasonable sequestration.
That is not what we are talking about here. We are talking about mature economies, judiciaries and democracies that already trade enormous amounts of goods and services. The great advantage of CETA is that it will pave the way for the regulation and harmonisation of standards—there are concerns about standards, incidentally, but I will come to that in a moment. The opportunity is something like 0.5% of GDP, so it is not overwhelming. Most of the problems are about tariffs, but the big problem has been about the ICS. I know that the Minister says we have set that to one side, but it will be a problem downstream. Issues such as this are fundamental to democracy, the rule of law and human rights, so we will need a proper debate. If the ICS comes in downstream and intimidates Governments into not introducing laws to protect their citizens, it will be a major problem for democracy itself. That is why there has been such a big debate among the 47 countries of the Council of Europe, above and beyond the European Union.
Barry Gardiner
I am listening carefully to my hon. Friend’s points and I agree with a great deal of what he says. Does he consider that there is an irony in the fact that we are leaving the European Union in order to come out from supranational institutions that can override national Parliaments and courts, yet at the very same moment we appear to be signing up to an agreement that will give us a supranational court that sits over us?
Geraint Davies
More than an irony—a tragedy. The view of some, apparently, is that we should move out of the orbit of the European Court of Human Rights, which supports the fundamental values of human rights, democracy and the rule of law, and into the orbit of arbitration courts whose basic remit relates to the interests of the investor, as opposed to the wider interests of the environment. If the Minister has looked at the detail of the chapters of CETA, he will have observed that the investor chapter is armed with arbitration courts that trump national and international law, but that there are no such teeth in the environment chapter, for instance. There is no enforceability of the Paris agreement that we have all signed up to in order to save the planet. Nor, for that matter, is there any enforceability of labour rights.
We need a debate, because ICS is down the road—I accept that it has not yet come in and we can do the other bits first, but there is a concern that that is an unnecessary and dangerous prospect. I do not want to run through hundreds of cases, but there was a famous case in which Obama said to TransCanada, “We don’t want this sand oil pipeline coming in from Canada to the US, because it is a breach of the Paris agreement.” As I understand it, the case has now been dropped because Donald Trump has taken over the presidency, but TransCanada was going to sue the US for $15 billion. My hon. Friend the Member for Brent North mentioned ratcheting and reassurances about health services; there was a case in which Slovakia attempted to renationalise part of its health service and was penalised in court with fines. Hon. Members may remember that at the last election the Labour party stood up and said that it wanted to freeze energy prices; one may or may not like that idea, but Argentina was sued for $1 billion under ISDS by energy companies from America and Europe for doing exactly that. Philip Morris, famously, has been pursuing a case against Australia and Uruguay to stop plain tobacco packaging, which was introduced to reduce deaths from cancer.
The problem with these courts is that they are secret, they have a narrow remit, they are run by commercial lawyers, they are inconsistent in outcomes and they do not normally have appeals. Under the new ICS they will have appeals, but they will not adopt the doctrine of precedent, so one court’s verdict may not inform the next court. The Council of Europe, which I mentioned earlier, has therefore said, “Hold on—we are very concerned about the investment court system, but if and when it does come in, it should be subject, as a minimum, to a number of constraints. In accordance with the European Court of Human Rights, there should be one-year opt-outs with six-year investor protection, and there should be actual damages rather than the fantasy projections of profit that have been sued for.”
I have already mentioned the problems with secrecy and lack of accountability. The Secretary of State seemed to think that it was marvellous that we should be able to go into a library on our own and have a look at the CETA documents, without taking photocopies. Obviously, no one can really understand what they are looking at and gain a meaningful view in the amount of time they are given. It seems to have been a bit of a joke, to put it mildly.
There are other issues that the Minister may want to respond to. There is widespread concern about European standards, for example, in relation to genetically modified food and other food standards, so can he give us any assurances that we will not be slipping to the lowest common denominator in health and equality standards? There are concerns that the precautionary principle, which has been a principle of EU law, has not in fact been instilled into CETA.
People are also concerned that there is a move away from openness in clinical trials. As Members may be aware, the clinical trials directive requires pharmaceutical companies to go public with the outcomes of their clinical trials. As I understand it, CETA will give private companies the right to withhold the outcomes of clinical trials. For example, if a company such as the one that manufactured thalidomide found that half the trials for a certain drug were negative and half were positive, it could publish only the half that were positive. What does the Minister have to say about that? What about the issues relating to trade secrets in CETA? He may think that these are minor points, but I want some reassurance.
I am trying to make the case that, given that there are so many issues, we need a proper debate. Parliamentarians are concerned. When we look at VW fixing emissions, for example, we see that there are new opportunities in CETA for trade secrets. If an employee blows the whistle because they discover that their company is harming public health, for example with diesel emissions, or a drug that harms babies—whatever it is—they can be punished by the company. These are issues of concern that require clarity and debate.
There are concerns about labour rights and whether there will be an assurance that International Labour Organisation conventions will be fulfilled. There are concerns about level playing fields and whether procurement will be equal and apposite. There are concerns about winners and losers, which the European Scrutiny Committee has also debated. We are told that there will be an overall GDP gain of something like 0.5%, but which sectors will win and which will lose? Will small companies lose out? The Prime Minister has already said that she will back certain winners, so perhaps motor manufacturers will get a good deal, but there is some fear that Welsh lamb producers could face a 40% tariff after Brexit. We also have the concern, raised by my hon. Friend the Member for Brent North, about geographical indicators. Welsh lamb was not a geographical indicator originally, so in theory someone could sell in Britain lamb that had been produced in Canada and call it Welsh lamb. That is a real problem.
Barry Gardiner
The hon. Gentleman is right that all Members of the House have the right to attend the Committee, but he will have noticed that this one and only opportunity for them to do so was deliberately timetabled at the same time that the European Union (Notification of Withdrawal) Bill is being considered in Committee on the Floor of the House. I do not believe that is a coincidence. I do not believe that is a mistake. I believe that it is part of a deliberate attempt to stop proper scrutiny. The hon. Gentleman talks about scrutiny and about moving this debate on to substantive issues within CETA, but the debate on the motion and amendment is precisely about whether this matter should go to the Floor of the House. That is why the process is important. We need to see that proper process has been kept, and sadly it has not.
Geraint Davies
Does my hon. Friend agree that in the three and a half months that the Government have had to hold the debate, this is probably the best time for them to have it in terms of hiding bad news under the noise of the Brexit debate? This is clearly pre-planned to stop proper scrutiny, public debate and media coverage.
Barry Gardiner
I wholeheartedly agree. We must now move forward. The Government said that it was of the utmost importance to have the debate on the Floor of the House, yet we find ourselves 68 days later with a debate up in Committee Room 10.
The European Scrutiny Committee issued the Government with a waiver, to allow them to sign CETA at the Council of Ministers. The Committee made it clear that the waiver did not extend to the provisional application or conclusion of CETA. The Secretary of State chose to disregard the Committee. We have heard from the Minister today the reason why: because it was bundled. It is important that we hear from him whether the UK made any objection or moved any procedural motion during the Council of Ministers to unbundle it, so that the Secretary of State could observe the protocols that he had undertaken to the Committee.
I can only concur with the Chairman of the European Scrutiny Committee, who said that it was a “serious” breach when the Secretary of State failed to honour the waiver he had been given. That stands in stark contrast to the many statements made by the Government in recent days to assure us of their commitment to respecting parliamentary scrutiny and accountability.
In the same vein, there has been a marked failure to present CETA for consultation before the devolved Administrations, despite the fact that their Departments are all listed in the annex of entities covered by the public procurement rules of CETA and are thus exposed to CETA’s strictures on central and sub-central Government entities alike. I call on the Government to remedy that failure as a matter of urgency, before initiating the process for ratification of CETA in the House. I hope that the Minister feels that he can give an undertaking on at least that level.
With regard to process, the Government failed to meet their own successive promises to bring CETA forward for a full debate on the Floor of the House. The Secretary of State was, at best, disingenuous in the statements made to the Chairman of the European Scrutiny Committee. He explicitly broke the waiver that the Committee had given to him, when he approved both the provisional application and the conclusion of CETA, and his Department has failed to engage with and consult the devolved Administrations in respect of an agreement that has specific application to them. Those are serious procedural failures that show a disregard for the proper scrutiny of Parliament, and they provide, in themselves, a compelling case for the Committee now to insist that the Government bring that full debate to the Commons. However, there are substantive reasons as well as procedural ones and, in many respects, they are more compelling.
I turn, therefore, to the content of CETA. It will be a surprise to the Committee to learn that the Government have not commissioned any research on what the impact of CETA might be on the UK economy. That should be a matter of concern, because the Government have repeatedly claimed, as the Minister did in his opening remarks, that CETA will bring up to £1.3 billion extra to the UK economy. Let me straightaway say that I would be the first to cheer if that were a credible prospect, but the Government admitted in their explanatory memorandum of July 2016 that it simply took a projection of overall gains to the EU and divided it by the UK’s share of EU GDP to come up with that figure. That is back-of-an-envelope calculation. It has to qualify as one of the crudest and least credible methodologies ever adopted to project the impact of a major trade agreement.
Only one study to date has disaggregated the prospective impacts of CETA on individual EU member states, and it concluded that countries such as France, Germany and Italy would indeed see an increase in their exports as a result of CETA. However, the study is clear that the UK would experience a decrease in both its exports and its balance of trade. At a time when the UK balance of trade is already under so much pressure, the very possibility that we might suffer a loss of exports should give us pause for proper scrutiny. At the very least, a proper impact assessment of how the agreement will specifically affect the UK needs to be conducted. That further underlines the need for the promised debate on the Floor of the House.
Members will also be surprised to learn that the Government have failed to list in annex 20 to the agreement a single one of the dozens of great British food products that qualify for protected geographical status. The UK is the only major EU member state that failed to secure such protection in CETA for its food businesses. The “Geographical Indications” annex of CETA is page after page of products listed for protection by France, Germany, Italy, Greece, Spain, Romania, Austria, Hungary and the rest, but there is not a single one from the UK. There is no protection for Scotch beef, Scotch lamb, Scottish farmed salmon, Welsh beef, Welsh lamb, Cornish pasties, west country farmhouse cheddar, blue Stilton, or white for that matter. More than 50 other British products that should qualify for protected geographical status are simply not protected. How can the Secretary of State have failed to protect a single one of our products under CETA? No wonder he does not want the matter to be discussed on the Floor of the House of Commons.
CETA is also remarkable in its complete disregard for the interests of small and medium-sized enterprises. Even TTIP contained a dedicated chapter outlining the support measures that the EU and the USA would introduce for SMEs. By contrast, in all the 2,255 pages of CETA there is not one single commitment to further the export interests of SMEs.
In recent times, we have heard much talk of the Government’s commitment to parliamentary sovereignty. The Prime Minister has declared that leaving the EU will allow Britain to be a fully independent, sovereign country once again, no longer subject to
“supranational institutions that can override national parliaments and courts.”
Likewise, the Secretary of State for International Trade has given us his vision of
“Britain as an independent sovereign nation, with a parliament beholden to no one”.
Yet, if we look at last week’s White Paper, it spelled things out very clearly. It has an annex about CETA—it creates a framework of supranational institutions that are precisely designed to override national Parliaments and courts. Along with the CETA Joint Committee, which will have binding powers over sovereign Parliaments in future, CETA includes the investment court system, the latest form of the ISDS mechanism, to allow foreign investors to sue host Governments over public policy measures that undermine their profits. Under CETA, a foreign company will have the right to bypass the domestic courts and avail itself of its own privileged commercial judicial system to challenge any regulatory reforms that run counter to its “legitimate expectations” as a profit-making enterprise, claiming vast sums in compensation even when Parliament has approved the reforms.
We in the Labour party are opposed to any system that grants foreign investors private justice in their own private courts. As noted in the charter for progressive trade deals that we adopted last year, we uphold the basic principle of equality before the law, which requires foreign investors to abide by the same rules as everyone else, in the same judicial system as everyone else. Foreign investors can have full confidence in the British legal systems to obtain redress where their interests have been unfairly harmed, and the British people can have confidence that the courts will then balance the competing interests of foreign companies and the public good when making their judgments. A company, however, does not even have to win its case in the investor court system to undermine UK sovereignty. The very threat of a legal challenge and the scale of both costs and potential damages can make Governments back away from regulation that would be in the public interest, and can exert its own regulatory chill on Government plans for new legislation. It was a legal technicality that prevented Philip Morris from obtaining billions of dollars of compensation that it sought in its case against Australia’s law on plain packaging for cigarettes. That did not stop other countries backing away from introducing similar measures for fear of being hit with their own claims.
EU Referendum: Energy and Environment
Debate between Barry Gardiner and Geraint Davies(7 years, 11 months ago)
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Barry Gardiner
I always try to look at the motion in front of me on the Order Paper and make a judgment on it when I see what it says. I have done so for the past 19 and a half years, and I suspect I shall probably do it for the next few years as well.
Even the Government-dominated Select Committee has warned that what it calls the “hiatus” in project developments could threaten the UK’s ability to meet its energy and climate security targets, so when the Department’s own figures show the need for £100 billion of investment by 2020 to make our electricity infrastructure fit for purpose, the Secretary of State really does have to explain where she believes that investment is going to come from, given that investor confidence in her Department is at an all-time low.
Before the Secretary of State does so, however, perhaps she will confirm whether she instructed her Department not to prepare in any way for a leave vote, as the Prime Minister apparently directed. If that is so, can she explain why, because that is what business leaders out there are asking? It seems incomprehensible to them that the Prime Minister took such a gigantic risk with their future—a risk that will increase their cost of capital and the cost of energy to bill payers, both corporate and domestic alike—yet made absolutely no preparations for what might happen when that risk went the wrong way.
The IIGCC—Institutional Investors Group on Climate Change—a group of institutional investors representing over €13 trillion in assets, said in the aftermath of the vote to leave that it had brought
“considerable uncertainty and market turmoil.”
That only goes to prove that the art of litotes is not yet dead!
Geraint Davies (Swansea West) (Lab/Co-op)
In the light of that dramatic uncertainty, does my hon. Friend agree that one thing the Government should do is to give a cast-iron guarantee that they will honour, post-Brexit, the environmental standards and undertakings that we have made in the EU to date?
Barry Gardiner
My hon. Friend, who takes a consistent and committed interest in these matters, is absolutely correct, and the precise intention of this motion is to flush out those issues and ensure that the Government do precisely as he says.
In the aftermath of the leave vote, the Government’s own external adviser has stated that a future for the Hinkley C nuclear power station is now “extremely unlikely”. Vattenfall has said it is now reassessing the risk of working in the UK, which could jeopardise its plans for a £5.5 billion wind farm off the east coast of England, while Siemens has announced that it is putting a freeze on its future—not its current—clean energy investments in Hull as a result of what it called the “increased uncertainty” from the leave vote.
I must say that for all the talk from the Minister of State, Department of Energy and Climate Change, the hon. Member for South Northamptonshire (Andrea Leadsom), about the “sunlit uplands” of the post-Brexit world, there is really no use in the Secretary of State trying to pretend that she thinks the vote is anything but a disaster when she herself is on record quoting the analysis of Vivid Economics warning that the result of an exclusion from the EU’s internal energy market could cost the UK up to £500 million a year by the early 2020s. The stock response of the right hon. Lady that Labour Members should not “talk Britain down” will simply not serve, given that these quotations come from her own advisers, industry leaders and, indeed, her!
Bloomberg New Energy Finance was not scaremongering when it said of the upcoming Brexit negotiations that they were
“likely to cause project investors and banks to hesitate about committing new capital, and could cause a drop in renewable energy asset values”.
That was an authoritative, independent commentator telling the unvarnished truth.