UK-US Trade Deal Negotiating Objectives

Lord Fox Excerpts

Monday 2nd March 2020 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I first apologise for not being present at the very start of proceedings on this Statement. Unfortunately, my printer got stuck and I had to wait until I was able to clear it with technical help. I therefore missed the opening sentence, but I had been given a copy of the Statement and had read it before.

We support an ambitious trade agreement that unlocks economic growth, creates new jobs and elevates rights and standards. I thank the Minister for repeating the Statement following the publication of today’s negotiating mandate for the Government’s flagship trade agreement with the USA. Of course, some 20% of our current trade is already with the USA. It is our second-biggest market and we have enjoyed decades of two-way trade with no underlying trade agreement. So, while I welcome the publication today, I wonder whether it was quite necessary to do it in the way it has been done and to carry the tone it does.

The Statement says that an “ambitious” free trade agreement with the US could result in

“a £15.3 billion increase in bilateral trade and a £3.4 billion lift to the economy.”

These are substantial figures. However, can the Minister confirm that this is over a 15-year period? These results will be slow to come and indeed, given the length of time, are not very substantial on their own. Can he also confirm that, at the end of that time, the British economy would be only 0.16% larger by 2035? This hardly compares well with the loss in trade of some 5% of GDP—some argue it could be worse—if we fail to complete an ambitious free trade agreement with the EU.

Secondly, the Secretary of State has said positive things about the NHS and the price of medicines, and that there will be no compromise on environmental protection, animal welfare and food standards. However, the Government have so far failed to enshrine this in primary legislation. There is an amendment to the Trade Bill that left your Lordships’ House in a previous Session that would do it. Why do they continue to prevaricate on this point?

There is a lot in the Statement about tariffs and quotas, which are important, but there are already very low tariffs between the UK and the US. The main problem is regulation. To take food as an example, the US position is generally that its food is just as good as European food and our standards are just protectionism. The problem is that American food is not the same, by any standards. Farming in the US is mostly on a large, industrial scale, and the animals are kept in conditions so poor that they get ill or do not thrive unless they are also fed a lot of antibiotics and steroids, not to mention hormones that maximise growth. We, on the other hand, through the EU have a farm-to-fork policy that regulates conditions throughout the life cycle. So what you dunk a chicken in before it is presented for sale is really shorthand for a wider question of how that animal has lived. How are the Government going to square that circle?

In the same field, will the Government reaffirm their commitment to international labour standards and rights and require the US to sign up to the ILO conventions, which it has so far failed to do.

Thirdly, what is most striking about the document is that it seems to ignore the US negotiating position, although there was a mention of that in the Statement. The language of the US document is highly aggressive, demanding concessions but offering little in return. For example, it says:

“The United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities for trade and investment with the UK.”


That does not sound like a very open-ended commitment to work with the UK. The framework for negotiating the UK-US trade deal is centred around reducing tariffs and non-tariff barriers but only in ways that benefit the US. For example, we read that one of the negotiating objectives of the US is to

“Secure comprehensive duty-free market access for U.S. industrial goods and strengthen disciplines to address non-tariff barriers that constrain U.S. exports.”


I am a bit perplexed why the document published today does not confirm that the UK has properly analysed the US position and will have the necessary tools to negotiate round these difficult operations that are in print.

Finally, we accept that there has been wide public consultation, but this Statement does not constitute adequate parliamentary engagement on this process. We await the return of the Trade Bill, which left this House with a proposed structure for engagement with Parliament and its committees. Can the Minister tell us how the Government intend to enable effective scrutiny of this and future trade agreements?

[Lord Fox (LD)]

My Lords, I too thank the Minister for repeating the Statement given in the other place. As the noble Lord, Lord Stevenson, said, we are building on substantial trade with the United States, which receives some 20% of our exports and is our largest international market after the European Union. To be clear, business achieved those substantial numbers while the United Kingdom was still in the European Union. Leaving the European Union is not a prerequisite for doing business with other countries and regimes.

That said, the process of negotiation is now under way, so what light does the Statement throw up? First, could the Minister acknowledge that, with respect to services, our largest sector, it is often the states rather than the federal Government which hold sway? So there are severe limitations on any FTA going forward, because it is difficult to cover the services sector, which is very important for the United Kingdom.

Data appears a number of times in the Statement and plays a big role in the supporting documents. The Government say they are going to

“rewrite the rules of the game on digital trade”.

First, can the Minister confirm that this will mean the UK moving away from GDPR, as clearly that is important? In the Statement, the Minister also talks about including provisions to

“facilitate the free flow of data and prevent unjustified data localisation requirements”.

It would be interesting to know, either today or in a Written Statement, what “unjustified data localisation requirements” this refers to? This is a real issue. For example, is the Minister happy that UK users of Google are having their data moved from the EU domain into the United States’ domain, where there is no accountability from the EU, which until very recently provided democratic accountability for UK users. Does the Minister think that, in moving the data, Google is expecting to make more money from people’s lives or less?

On democratic accountability, as the noble Lord, Lord Stevenson, pointed out, there is considerable uncertainty. Congress, on the other hand, will get the job of approving this deal in the United States, as will the European Parliament in the event of an EU deal being struck. The Statement says that

“the Government will continue to engage collaboratively”,

but following the decision to shelve, or otherwise, the Trade Bill, Parliament has no formal role. Can the Minister explain what collaborative engagement actually means? There is a strong danger that every MP will be held accountable as time goes forward for the effects of trade deals, without having had any say over what the deal was. Perhaps MPs on all Benches will be considering that.

Furthermore, during negotiations—and I have heard this said in this House by those who have participated in negotiations—it is very handy for the US negotiators to have the get-out clause, “Well, I would agree with you on this, but Congress will not let me do it. My hands are tied.” UK negotiators will have no such constraints.

The absence of regulatory alignment, which is clearly something that the EU negotiations will continue go forward with, will ensure that no meaningful deal can be struck with the European Union. In reports, the Secretary of State and others have made it clear that Her Majesty’s Government are prepared to walk away from negotiations with the European Union in 2021. Does the Minister agree that, in this context, given the conflicting nature of regulatory alignment, an FTA deal with the EU is mutually exclusive with one with the United States? We could have a deal with the United States but at the expense of a meaningful FTA with the EU, or perhaps vice versa. I am interested to know the Government’s view on Boris Johnson’s “Cake and eat it” strategy. Can the Minister explain how that works in terms of regulatory alignment?

And what is this for? As the noble Lord, Lord Stevenson, said, in about 15 years we will have advanced our GDP by less than 0.2%—a quantum that pales into insignificance with the benefits that we were receiving due to our relationship with the European Union. This Statement fails: it fails to prioritise the livelihoods of people and their businesses over an ideological approach to trade and trade policy.

[Viscount Younger of Leckie]

I thank both noble Lords for their points. I thank the noble Lord, Lord Stevenson, for his broad support for this Statement; perhaps the noble Lord, Lord Fox, did not quite fall into that category.

The first point the noble Lord, Lord Stevenson, raised was about the point I made concerning the total value of trade between the UK and the US, which will soar—as I had said—by £15.3 billion, adding £1.8 billion to wages across the country. It is true that is over a 15-year period, as he asked me.

The noble Lord spoke about environmental protection. I know this is an issue which is important for many of your Lordships in this House and has come up in previous debates. In all our trade agreements, we will not compromise on our high standards of food safety and animal welfare. The Government will stand firm in trade negotiations to ensure that any future trade deals live up to the values of farmers and consumers across the UK. The UK is proud of its world-leading food, health and animal welfare standards. I say again: we will not lower our standards as we negotiate new trade deals.

The noble Lord, Lord Stevenson, mentioned the ILO and the link to labour standards, and alluded to the conventions as part of the negotiations. He will know that we have very high labour standards in this country, and we want to uphold those. That will be a red line in our approach to these discussions, as it is with the EU.

The noble Lord also alluded to the US position and said that some of the information coming out was—to use his word—on the “aggressive” side. It is entirely to be expected that the US would lay out its stall. We have known its position, which is a very good thing, and will be taking what it has to say very seriously.

On scrutiny, primarily parliamentary scrutiny, this falls in line with what the Government wish to do to keep the nation in touch. The noble Lords, Lord Fox and Lord Stevenson, will know of the strategic trade advisory group, or STAG, and the expert trade advisory groups, or ETAGs. We are consulting these groups on a regular basis. The STAG’s principal purpose is for the Government to engage with stakeholders on trade policy matters. On parliamentary engagement, we have pledged to keep Parliament—both the Commons and this place—up to date as we see fit on the timing and how we are approaching the negotiations.

I should also mention, very importantly, the devolved Administrations. In the Moses Room the other day, I mentioned the forums. We have had our first forum engaging with the devolved Administrations. That is another important facet.

The noble Lord, Lord Fox, raised the issue of services, which is indeed a very important sector for the UK; it is our largest sector. The point was made that negotiations were, on occasion, perhaps more applicable with the states rather than at a federal level. Negotiations are primarily with the US Fed—if I may put it that way. As negotiations continue, there will be more of a focus on the states. I reassure the noble Lord that these negotiations are at a high level, with the federal Government.

I cannot comment on data and moving away from the GDPR. I stick by what I said earlier: data protection is incredibly important in this country. The noble Lord, Lord Fox, mentioned unjustified data requirements. It should be part of the negotiations between the UK and the US to make absolutely sure that our standards and protections are not lowered; that includes Google, which the noble Lord mentioned.

On our approach to negotiations, we have said, and continue to say, that we are prepared to walk away from negotiations if we feel that that is right. However, we approach them in a good spirit. That has been the case in the working groups, which have been operating for quite some time—at least two years.

The noble Lord raised regulatory alignment. That will come up as part of our negotiations with the EU and our negotiations with the US. I hope that that covers most of the questions.