CPTPP (International Agreements Committee Report)

Lord Gold Excerpts

Tuesday 1st February 2022 Grand Committee

[Lord Gold (Con)]

My Lords, first I join those noble Lords who support the Government’s plan to seek entry into the CPTPP. As the Government state, it will

“put the UK at the heart of a dynamic group of countries”

as global economic growth centres on the Pacific region. The Government claim that accession could see 99.9% of UK exports being eligible for tariff-free trade with its members and will “facilitate services trade.”

While I welcome the boost that joining the CPTPP is predicted to give to our export market, in this speech I want to focus on services, especially financial and professional, which the Government claim will be boosted by our accession. DIT figures show that from 2014 to 2016 financial services provided the largest exports from the UK to CPTPP members, primarily to Japan, accounting for 28% of service exports to member countries. So we already have a strong foothold, which we should be well placed to strengthen.

I am sure that I do not have to remind my noble friend the Minister, formerly chairman of Barclays Bank, how important the City of London and financial services are to the wealth of this country. I do not wish to open up old wounds, but the risk that Brexit posed to the financial services industry—not answered by the 2020 EU-UK trade and co-operation agreement, in my view—remains real, even though our worst fears prior to Brexit thankfully do not appear yet to have materialised and hopefully will not. Just as the Government contemplate in their Brexit freedom Bill how we might take steps to benefit from Brexit, hopefully boosting the strength of the City of London and financial services, I trust that in negotiating our proposed entry into the CPTPP, the Government will ensure that this sector is not left behind, as the opportunities are great.

Of course, in joining we would be acceding to a treaty already approved by 11 member countries, so our scope for change is somewhat limited. In their response to the IAC’s report on UK accession, the Government stated that in 2020 UK service suppliers exported £25.1 billion worth of services to member countries and that our joining will provide

“benefit from modern rules which ensure non-discriminatory treatment and increase security, protection and transparency.”

It is the case that treaty members must abide by non-discriminatory obligations so must not treat financial institutions or investments from another member country less favourably than similar domestic investors. If we join, we benefit from that. Treaty members are also barred from imposing restrictions or conditions on suppliers from another member, such as limits on the number of subsidiaries or nationality requirements for senior management. However, the Government do not provide a specific negotiating objective for UK financial services.

In its evidence to the IAC, the Law Society stated that the aims of UK legal professionals are

“unlikely to be realised via CPTPP”.

The London Market Group, which represents the insurance industry, told the committee that

“there is nothing specific that we will get from this agreement”.

The evidence the IAC received was, as the noble Baroness, Lady Hayter, said, universally supportive of membership and anticipated potential economic benefits for the future, but not for now.

So how are we to maximise our gain from joining CPTPP? One way is through the negotiation of side letters, a subject already raised by the chair of the IAC, the noble Baroness, Lady Hayter, and my noble friend Lord Lansley. Leaving aside issues of legal enforcement and whether each member country must agree the side letter in order to be bound by it, unless we enter into bilateral agreements with each member—we have already entered into a number of agreements, with, I think, seven of the member countries—side letters seem to be the only way, pre-entry, to improve the terms of the treaty. It is imperative therefore that the Government take every step they can to negotiate side letters or bilateral treaties that assist our services sector. Accordingly, will the Minister confirm that every attempt will be made in the forthcoming negotiations to agree with each member country side letters or bilateral agreements that boost our ability to compete and enhance our financial services and professional skills in the CPTPP world? Can he also give us now an idea of what we will specifically be seeking in our negotiations? I realise that he will not want to say anything that might prejudice the negotiations, but I am not asking him to tell us what we might give up in our discussions, only what our starting position might be.

Assuming that our application to join is successful, we then have a great opportunity to influence the way in which the financial services industry can operate. TheCityUK noted in its evidence to the IAC:

“Most barriers to trade in FRPS”—


or financial and related professional services—

“are regulatory and require regulatory co-operation to resolve them.”

Being a member of this “club” enables us to work with other members to liberalise regulation which is holding us back.

An example is the recognition of professional qualifications, the failure of which, at present, prevents professional services firms fully operating and expanding in member countries. In their negotiating objectives, the Government state that “further liberalisation” could be achieved through the recognition of professional qualifications, but the agreement does not provide for this. Each country member is to

“encourage its relevant bodies to establish dialogues with the relevant bodies of other Parties, with a view to recognising professional qualifications, and facilitating licensing or registration procedures”.

In closing, I ask the Minister to confirm that on our joining the CPTPP every possible step will be taken to liberalise regulations that hold us back and to further the recognition of professional qualifications.

Comprehensive Economic Partnership (EUC Report)

Lord Gold Excerpts

Thursday 26th November 2020 Grand Committee

[Lord Gold (Con) [V]]

I too congratulate the noble Lord, Lord Darroch of Kew, on his insightful maiden speech and welcome him to the House. I am sure that, when we return to normal business, we will all want to hear his reflections on the soon-to-be-ending Trump White House.

The Government are to be commended for securing a new economic partnership with Japan in what has been an extremely short timespan when compared with normal trade negotiations. The achievement is particularly notable, as this is the first time that the UK has had to negotiate a trade treaty in some 40 years. When asked by the EU International Agreements Sub-Committee to identify the most significant feature of this agreement, one witness stated that it was in securing the agreement itself, in that by concluding an agreement we have avoided a trade impasse from 31 December and avoided being at a competitive disadvantage with EU exporters, which would have been particularly damaging.

Although the Government’s aim in their negotiations was to create an agreement as ambitious, high-standard and mutually beneficial as the EU-Japan economic partnership agreement, enhanced in areas of mutual interest, the reality is that this is a rollover of the EPA with certain additional features. As some have said, it is a rollover or continuity-plus agreement. This in itself is to be commended.

In acknowledging this achievement, however, there was no need to oversell what had been achieved, which, as other noble Lords have pointed out, the Government have to some extent done. As the report acknowledges, the agreement provides valuable continuity for businesses, consumers and other stakeholders and it avoids a return to WTO trading terms. Those negotiating our post-Brexit arrangements with the EU should please take note.

However, as other noble Lords have stated, the agreement is not perfect. For example, with regard to tariff-rate quotas for agriculture and food exports to Japan, the EU is given priority and the UK can only use the remaining headroom if there is any. Importers will not know until some time after purchase whether the imported items attract duty. Indeed, they may even have to pay the duty in advance or give security without knowing whether duty is payable. These factors may well be a disincentive to purchasing British products.

Nevertheless, the add-on features to the Japan agreement may prove significant, particularly in financial services and in relation to digital and e-commerce. The agreement also offers a potential extension of geographical indications for unique British products from seven to potentially over 70, although whether this can be fully achieved is at present somewhat speculative and may take some time.

In its work, the sub-committee, of which I have had the honour of being part, has learned a great deal, both on the way in which scrutiny of treaties might be undertaken and on how the process of negotiation might be improved. The Government have established a series of new trade advisory groups, which will identify business needs and set out what they seek in their aims for the negotiation. For true benefit to be gained from these advisory groups, it is necessary that they are kept informed and that there is an open dialogue with the relevant group so that those negotiating the treaty are aware of any worrying concerns and can hopefully cover these in the negotiation. Once the text is drafted, it may be too late to make changes.

The CRaG procedure provides a tight timetable for scrutiny of new treaties. By briefing the sub-committee in both public and private sessions and by providing confidential access to documents, the department has enabled the committee to undertake its work far more efficiently than would otherwise have been the case. I hope that the department has itself benefited from timely feedback from the sub-committee as the negotiations have continued and that this will be a regular feature as further treaties are negotiated.