Free Trade Agreement: Iceland, Liechtenstein and Norway

Earl of Kinnoull Excerpts

Thursday 14th October 2021 Lords Chamber

Moved by

[The Earl of Kinnoull]

To move that this House takes note of the Free Trade Agreement between Iceland, the Principality of Liechtenstein and the Kingdom of Norway and the United Kingdom of Great Britain and Northern Ireland, laid before the House on 16 July.

Relevant document: 3rd Report from the European Affairs Committee (special attention drawn to the instrument).

[The Earl of Kinnoull (CB)]

My Lords, this debate is held pursuant to the provisions in Section 20 of the Constitutional Reform and Governance Act 2010. On 16 July, the Government laid before Parliament the free trade agreement between Iceland, Liechtenstein and Norway and the UK. Following discussions between the International Agreements Committee and ours, it was agreed that, exceptionally, the European Affairs Committee would conduct the scrutiny and prepare a report; this was as the European Affairs Committee is charged with considering the UK’s relationship with both the EU and the EEA, given their close economic relationship. The report has been prepared in exactly the same format as that successfully developed in recent times by the International Agreements Committee. I warmly congratulate the committee staff involved in its preparation, particularly the lead author, Chris Johnson.

My remarks will focus on two areas: first, the agreement itself, and, secondly, the scrutiny process for this free trade agreement and free trade agreements in general. The UK became a beneficiary of the EEA agreement on 1 January 1994 as a member state of the EU. In seeking to preserve the benefits of that agreement, the parties, namely Iceland, Liechtenstein, Norway and the UK, entered into two earlier international agreements. The first, in 2019, sought to preserve matters in a UK/EU no-deal situation. That has, of course, now run off. The second, in December 2020, aimed similarly to preserve tariff-free trade in goods after the UK’s automatic exit from the EEA at the end of the transition period. This second agreement was explicitly temporary, and the Government stated at the time that negotiations towards a more permanent agreement had begun in the summer of 2020 and were due to be completed in 2021. This objective has now been met via the new free trade agreement.

Importantly, as we point out in our report, this new free trade agreement goes further than the previous agreements in at least two significant ways: first, with the removal of some tariffs in the fisheries sector, as we detail in paragraph 35 of our report, and, secondly, as it also includes provisions on trade in services. We very much welcome this and note that, while the overall provisions remain more restrictive than was the case when we were a member state of the EU, they go further than the comparable ones in the EU-UK Trade and Cooperation Agreement, as the Law Society also commented.

Nevertheless, the committee welcomes the Government’s successful negotiation of this important agreement and the speed with which it was negotiated, covering a trading relationship valued at over £27 billion, most of which is with Norway. Imports of Norwegian goods are particularly important for Yorkshire and Humber, for instance, where they make up 13.2% of all goods imports, and for my native Scotland, where the figure is 10.4%. Unlike all the other trade agreements concluded by the Government so far, this is not a rollover agreement; it contains substantially new provisions, as I have just observed. Indeed, our report concludes that it should really be seen as the UK’s first new, post-Brexit free trade agreement.

At the same time, however, it is important not to overlook that a key objective of the FTA is to preserve the trading relationship that was there when the UK was a member of the EEA. As such, the free trade agreement is, in part at least, an exercise in damage limitation: it seeks to avoid new barriers to trade, rather than to remove existing barriers. Thus, its impact in terms of increased trade is likely to be modest and incremental, both in goods and services.

Separately, as the report points out, the interaction between the free trade agreement and the protocol on Ireland/Northern Ireland is complicated. We are surprised that no reference is made to this issue in the materials published by the Government alongside the agreement. We highlight this issue in paragraph 21 of our report. Could the Minister give us comfort that, in due course, the Government will provide business with suitable guidance in this important area?

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord. That was the first intervention I have ever had at this Dispatch Box, so it was a pleasure that, perhaps unsurprisingly, it came from the noble Lord, Lord Purvis. I quite accept the importance of the point that he raises. You cannot get all that you ask for, of course, when you negotiate these agreements. The agreement is as it is, but, if I can provide more information on the background to the noble Lord, I will of course do that and copy it to other noble Lords.

In conclusion, I again thank all noble Lords for their many insightful contributions to this important debate. I have resisted giving a running commentary on our total trade policy in this debate—we would be here for a lot longer if I were to do that—but, of course, I am always very happy to answer noble Lords’ questions on that. I look forward to continuing to engage—

[The Earl of Kinnoull (CB)]

I am very sorry to be the second person ever to intervene on the noble Lord—and, of course, I am going to speak after him. But could he address the concordat point that has been raised?

[Lord Grimstone of Boscobel (Con)]

Perhaps the noble Earl could remind me what the concordat point was.

[The Earl of Kinnoull (CB)]

Certainly—there is a recommendation in the latest report from the International Agreements Committee that a concordat be entered into. The International Trade Committee in the House of Commons has written in support of that. So there is considerable support for it in Parliament, and it would be very interesting, as the noble Lord is here, to hear the Government’s current thinking.

[Lord Grimstone of Boscobel (Con)]

I thank the noble Earl. My memory flooded back as soon as he started to explain that. I thought that the report from the IAC was very good, as a marking of progress over the last year. It has made recommendations, which we are studying closely, and we will of course respond to the IAC on that in the normal way within the agreed timeframe.

Coming back to this debate, I look forward to continuing to engage with noble Lords on trade relationships between the UK, Norway, Ireland and Liechtenstein in the future.

[The Earl of Kinnoull (CB)]

I thank the Minister, who is unbelievably courteous and was as courteous as ever when still answering emails from me at 9.20 pm last night. I think he realises that the whole House is very grateful for his engagement. I add my thanks to my many colleagues who have spoken in this interesting debate, unfortunately held late on a Thursday—a time when not so many of our colleagues were going to be here. I will not go through what everyone said—I would certainly never do that—but I have written down three things that I thought worthy of reflection.

The first is the chimera nature of this free trade agreement, which on the one hand is new and on the other is old. There is an element of a chimera nature, but I hope the Minister will reflect on the fact that the scrutiny processes in this House are well developed. The International Agreements Committee, which was born out of the European Union Committee earlier this year, is a highly professional organisation that wants to do good, not harm. Rebalancing, as I put it, between Parliament and the Executive is necessary, so I hope that if a similar agreement came along it might fall on the other side of the fence and that there would be some engagement.

In fact—this is my second point—as the Minister went through the good news about the devolved Administrations, I very nearly got up and said, “Can we have that as well?”, because they are getting a heck of a lot more engagement and discussion of these things than our own International Agreements Committee. That is another thing that the Minister might like to reflect on. I know he is deeply interested in scrutiny, and getting that balance right is very important. It is indeed a balance, and there could be too much. Reflecting on that would be good.

The final point—it seems to be the final point every time I get up in debates such as this—is Northern Ireland, of course. The Minister generously said there would be business guidance. There was no timetable on that, but I very much hope that guidance will come along pretty quickly. At the moment, if I were trying to import raw salmon into Northern Ireland, I am not sure what I would do, because it is the beneficiary of now being tariff free in the UK but not in the EU. Who knows what would happen to a piece of raw salmon when it arrived in Belfast? That needs urgent attention. There are quite a lot of other things to do with Northern Ireland that we raise in the report and that I hope would be coped with at the same time.

Motion agreed.