Trade: Trans-Pacific Partnership

Lord Grimstone of Boscobel Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Lord Rose of Monewden]

To ask Her Majesty’s Government what plans they have to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership; and if they have such plans, when they plan to join.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is a government priority and a key part of our trade negotiations programme. We aim to begin formal accession negotiations next year. Any final decision to apply will consider both the progress of bilateral negotiations with CPTPP members and our confidence that we will be able to negotiate accession on terms compatible with the UK’s broader interests and domestic priorities.

[Lord Rose of Monewden (Con) [V]]

I thank the Minister for his Answer. Can he tell the House when he expects CPTPP members Australia, New Zealand and Canada, which are also our Five Eyes partners, to support our membership and sign trade deals with us? Also, I welcome the deal with Japan. There is a chapter on SMEs, an ambition I understand the UK has for all other FTAs negotiated. This will help our innovative small businesses break into new markets, but sadly, the Government’s ambition for our global exports is more disappointing. Germany currently exports 47% of GDP, so why are the UK Government happy to set a low bar of just 35% for our exports?

[Lord Grimstone of Boscobel (Con)]

My noble friend makes very good points. In terms of engagement so far with CPTPP members, the Trade Secretary met with ambassadors and high commissioners to discuss this, had a warm response and recently opened the first meeting between the UK and CPTPP officials to discuss preparations for the UK’s application to join the group. I will take up his point about exports with my colleague the Minister for Exports.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, since the Government are in the process of reneging on the withdrawal agreement that they freely entered into, how can Australia, New Zealand, Canada and the other members of the Trans-Pacific Partnership have faith that this Government will abide by any agreement they make to become a member?

[Lord Grimstone of Boscobel (Con)]

My Lords, the British Government take their responsibilities under agreements very seriously. Sometimes, special circumstances arise where they have to take a view on the matters in the agreement, but I assure the noble Lord that we will adhere strictly to any free trade agreement that we sign.

[Lord Holmes of Richmond (Non-Afl)]

My Lords, what assessment have the Government made of any implications for UK intellectual property rights? What progress have they made in the establishment of a utility trade platform, which would truly enable us to be a 21st-century, global, electronically based trading nation?

[Lord Grimstone of Boscobel (Con)]

My Lords, the UK will ensure that any future accession talks with the CPTPP are consistent with the UK’s interests and the Government’s stated policies and priorities. We will not make changes to our intellectual property regime that are in any way detrimental to ourselves.

[Lord Purvis of Tweed (LD)]

My Lords, we on these Benches are enthusiastic for UK businesses to utilise any expanded opportunities to export to the CPTPP countries in future, but this is the future, and what we face over the next couple of months, according to the DIT website this morning, is the fact that the UK will be trading on a free trade basis with only 8% of all UK trade—the worst record for the UK since the 1930s. Does the Minister agree that that will be disastrous for British exporters in the current economic climate and a very weak basis to look for further opportunities around the world?

[Lord Grimstone of Boscobel (Con)]

My Lords, the Government are very keen to reach agreement with the European Union because of the importance that the noble Lord refers to; we are still working very hard on that. We have plenty of other trading partners around the world. If that agreement is not reached, we will trade on WTO terms with the EU. I think that there will be a bright future for this country in any event.

[Baroness Noakes (Con)]

My Lords, I congratulate the Government on not only obtaining the treaty with Japan but getting Japan’s support for our membership of the Trans-Pacific Partnership. The partnership contains quite significant provisions in relation to state subsidy, competition and investor remedies. Does my noble friend think that these will be insuperable barriers to our membership?

[Lord Grimstone of Boscobel (Con)]

I thank my noble friend for her question. Of course, we will accede to the CPTPP only if we are happy that the arrangements we are acceding to are in the UK’s interest. We are confident that we will be able to reach that position with its members.

[Baroness Falkner of Margravine (CB)]

My Lords, does the noble Lord agree that we face two spheres of internet governance at the moment: one controlled by authoritarian regimes, rife with surveillance; and the other, western, free and accessible to all? Does he therefore agree that, alongside the CPTPP, another priority should be digital FTAs with Japan, Australia and India?

[Lord Grimstone of Boscobel (Con)]

My Lords, in the recent agreement in principle with Japan that we were so pleased to reach, there is an extensive data and digital services chapter that we hope will be a model for our future free trade agreements. The points made by the noble Baroness are important and are always in our mind when we negotiate these agreements.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, can the Minister confirm that the CPTPP contains ISDS clauses? Given that the Secretary of State described this as an

“advanced agreement full of countries committed to the rules of international trade”,

why do the Government believe it necessary to provide secretive ISDS structures when we and the current members are in good standing and have perfectly adequate legal systems?

[Lord Grimstone of Boscobel (Con)]

My Lords, the UK will ensure that any future accession talks with the CPTPP are consistent with our interests and our stated policies and priorities. We are clear that our future investment policy will continue to protect our right to regulate in the public interest and we will ensure that UK investors abroad receive the same high standard of treatment that foreign investors receive in the United Kingdom.

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, there are some incompatibilities between the withdrawal agreement and the principles of the CPTPP, such as protection of traditional names for wine under Article 58.2. Those would require a carve-out. Has an assessment been made of how many carve-outs might be necessary to fit UK law into such areas as food safety and how many could be tolerated by CPTPP members?

[Lord Grimstone of Boscobel (Con)]

My Lords, because we have not entered into negotiations on this agreement yet, it is hard to predict exactly how they will progress, but we are clear that more trade will not compromise our high environmental protection, animal welfare and food standards.

[Viscount Waverley (CB) [V]]

My Lords, picking up on the theme of the noble Lord, Lord Purvis, in wishing otherwise, I would not invest in the Pacific Alliance countries, having listened to a briefing of somewhat negative messaging about that region from our resident ambassadors. Knowing the opportunities that exist, will the Minister sit with his colleagues in government and agree to a sea change in approach that focuses on opportunities for a global Britain, which will need alliances with emerging and frontier markets—of which there are plenty in the Pacific Alliance, which additionally forms a useful springboard for such organisations as Mercosur, for example?

[Lord Grimstone of Boscobel (Con)]

My Lords, the CPTPP is one of the largest free trade areas in the world. It represented 13% of global GDP in 2018, which would increase to more than 16% if the UK were to join. It is one of the world’s premier growth interests and we consider that it is very much in the interests of the United Kingdom to be part of it.

[Baroness McIntosh of Pickering (Con) [V]]

In the event that we are successful and negotiate a deal with the CPTPP, or individually with Australia, New Zealand and Canada, what will be the parliamentary oversight and scrutiny of that agreement? Will the Government follow the procedure set out so effectively by Henry Dimbleby in part one of his national food strategy?

[Lord Grimstone of Boscobel (Con)]

My Lords, I am not familiar with my noble friend’s reference, but I will certainly look that strategy up and consider it in our future efforts in this area.

[The Lord Speaker (Lord Fowler)]

My Lords, all supplementary questions have been asked.

Japan Free Trade Agreement

Lord Grimstone of Boscobel Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, because these Benches want the UK to prosper, we welcome the agreement. However, rather like industry groups, we do so not by hailing it but by sighing a collective sigh of relief that we have secured simple continuity of the benefits we secured as part of the EU. It has come to this—simply securing the trading terms that we had as a member of the EU now that we are out of it was described as “heroic” by a Conservative MP in the Commons on Monday.

It is customary to thank the Government for advance notice of a Statement’s accompanying published documents. However, as referred to, in this case it would have been good to have notice of the text of the agreement—which has yet to be signed—so that we could offer proper scrutiny. In Japan, both Houses of the Diet will need to approve the Cabinet’s decision to endorse the treaty. That is not afforded to our Parliament; we will not have an opportunity to do so. British parliamentarians did with the EU agreement. However, as I said last week on the Trade Bill, the Government seek continuity on most things but not on parliamentary accountability. Can the Government Whips indicate that we will have a substantive debate on this agreement in this House before the Government indicate that they seek ratification?

The Minister gave specific details of the agreement when answering questions on Monday, but we have had no sight of the agreement in order to consider the context and scale of what the Minister said. Like the noble Lord, Lord Stevenson, I welcome what Liz Truss said on Monday in the House of Commons, with regard to a copy being given to the International Trade Committee. I also would like to know whether that will be afforded to our committee, the International Agreements Committee, and when this will be done. Will the text also be made available, as is common in other Parliaments, to Front-Bench spokespeople on a private briefing basis at the same time as it is sent to the committees? What will be the timeframe between it being sent to the committees and a debate in this House?

We have to reserve judgment on the wider benefits the Government claim for the agreement until we have seen them. Over recent months, we have seen the enormous capacity of the Government to oversell and then underdeliver. For example, there was massive fanfare over securing tariff-rate quotas for British agricultural products in this agreement, but then reports suggest that we have actually secured access to any non-utilised quota for EU goods.

With even greater heralding activity, the press release announced:

“New protection for more iconic UK goods … from just seven … to potentially over 70 under our new agreement”.


Understandably, MPs in the Commons lined up to welcome this, but can the Minister confirm that the agreement has no new protections creating GIs, as Japan is under no obligation to expand further its recognition in the future to beyond what we have in the EU deal? Rather, it will simply be able to consider further requests from the EU to a limit of 70.

If it transpires that this spin—which has also described the agreement as “gold standard”—is actually just a commitment to talk about further potential agreements, such as geographical indicators, the Government are building up a huge amount of expectation for very limited benefit. Given the fact that Japanese company Hitachi’s agreement for nuclear power on Anglesey is likely to have a bigger negative economic impact on the United Kingdom than any benefits of this trade agreement, context is all.

On state aid, the Minister referred to a Question I asked on Monday, and he said clearly that this a perpetuation of EU rules which we will be bound by. Can the Minister be clear and tell the House whether it will require domestic state aid legislation to implement this and, if so, will it be a continuation of the EU regime? When will that be brought forward? On tariffs, what will the overall average Japanese import tariff on UK goods be under this agreement, compared to what we have at the moment?

Finally, the Government said that the benefits are likely to yield £15 billion to the UK economy, but they have not given a timeframe. I looked at the Government’s scoping paper, and it said that that source simply stated over “the long term”. The source for that, in the footnote, was internal DIT analysis from 2018. Will the Government publish that? What is the timeframe for that £15 billion—with no caveat—the Government have announced, overselling and underdelivering again? What is the figure? The Government did not quote from that scoping exercise that that figure does not take into consideration the economic impacts of Covid-19, so what is the real likely benefit?

If we are to see the benefits from this agreement, which we wish to, the Government have to be open and transparent. So far, that transparency is lacking. I hope that the Government will be far more open in the coming weeks.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

I thank both noble Lords from the Front Benches opposite for welcoming the agreement. I share their view that this is a good agreement for the United Kingdom.

I will do all I can to answer the questions put to me. First, I can confirm that the IAC—our committee which scrutinises agreements—will be treated on all fours with the ITC, and anything that goes to the ITC will also go to the IAC. The next stage, which is going on at the moment, is that the agreement is being “legally scrubbed”, or put into a good state. When that is done, which will probably be sometime in early October, that agreement in the first instance will be presented in its entirety to the two committees. It will be presented to them in good time for them to report on the agreement at the same time as the whole agreement is laid before your Lordships’ House.

At the same time as we present the agreement, we will present an impact assessment, which will set out the impact of this agreement in various environmental and other matters and, critically, we will publish another assessment which shows where this agreement differs from the previous EU agreement. Therefore, if noble Lords do not mind waiting, when that final package appears in front of the committees, and through the committees to themselves, it will answer the questions that have been asked.

I repeat that we have no desire at all not to be transparent and open with your Lordships’ House. It will be of great benefit to us if these agreements are well understood. They are important in themselves but they will be even more important once our businesses throughout the land understand them and are able to operationalise them to their own benefit.

On some of the specific questions that were raised, I can confirm that there is no ISDS clause in this agreement, so that should not be a matter of concern. Rules of origin are the same as in the previous EU-Japan agreement but with three improvements: our coats, knitwear and biscuits industries have extended rules of origin, so will be able to bring in ingredients from a wider range of places than they could under the previous agreement. Therefore, noble Lords who enjoy their shortbread can be assured that it will now be sold on even better terms into Japan.

The noble Lord, Lord Stevenson, mentioned quotas, which are a very small part of this. Out of £150 million of agricultural trade between the UK and Japan, only £1 million is covered by quotas. As mentioned, our producers will be able to take advantage of the unused quotas in that, and for products such as Stilton cheese, that will certainly be of benefit to its producers.

The state aid references in the agreement are de minimis and the kind of state aid arrangements which we regularly find in agreements of this sort. This in no way creates a new state aid regime for the UK.

The noble Lord, Lord Purvis, mentioned GIs. Japan has agreed that we can put up to 70 further GIs in front of them and the tone of that discussion was very warm. Those GIs will go through a challenge process, but my right honourable friend the Trade Secretary and I are very confident that they, or at least the vast bulk of them, will be approved by the Japanese.

If noble Lords on the Front Benches opposite wish to see any further points of detail covered, I will be happy to deal with them separately. However, if noble Lords do not mind waiting for the next few weeks, until these agreements are out in the open, things will be very clear then, and I hope that will lead to people understanding and further welcoming a very important agreement.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

We now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

[Baroness Bottomley of Nettlestone (Con)]

I enthusiastically congratulate my noble friend the Minister and my right honourable friend the Prime Minister on a successful conclusion to the UK-Japan trade deal. What could be more fitting than the first post-Brexit trade deal being between our two great enterprising and trading global and island nations? Who would be more than delighted than the former Prime Minister Margaret Thatcher, who instructed me 30 years ago as an intimidated junior Minister to “Forget Brussels—Japan should be our friend, ally and close trading partner for the future”? However, does my noble friend agree that it is now for British industry and commerce to take full advantage of this historic deal, showing the world what the best of British can deliver? How will this historic agreement progress the UK’s accession to the CPTPP?

[Lord Grimstone of Boscobel (Con)]

I thank my noble friend for her generous comments. I know that she is a great expert on Japan so it is particularly welcome that those comments came from her. She is of course right that we see this agreement as a gateway to the trans-Pacific partnership. Some 90% of global growth comes from beyond the EU, so both Japan and the wider Pacific region are vital for Britain’s future economy. We have no doubt that the finalisation of this Japan agreement will greatly help in that process, not least because Japan will hold the chair of the trans-Pacific partnership countries next year.

[Lord Bilimoria (CB) [V]]

My Lords, the signing of the UK-Japan trade deal is a breakthrough moment and is welcomed by business across the country. May I build on what the noble Baroness, Lady Bottomley, just said? How will the Government use this trade deal as a launch pad to secure accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership? Given that this deal supposedly has benefits beyond the EU-Japan trade deal, could the Minister tell us how the Government will ensure that British companies, who may not have utilised EU FTAs as well as they could have, capitalise on this deal and ensure that the £15 billion of additional trade is realised?

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for his comments. To answer the second part of his question, there is an obligation on the Department for International Trade to ensure that the benefits of these agreements—in due course, when they are signed and ratified—are well known throughout the UK. For example, the Japan agreement has huge benefits to our SMEs, which are the backbone of our economy. To put it in the nicest way, what would be the point of negotiating these agreements if we did not bring these benefits home to businesses throughout the United Kingdom? A lot is going on with the trans-Pacific partnership accession. Since July 2018, we have engaged with all 11 member countries and recently had a meeting between the Secretary of State and her counterpart in Mexico, attended by all heads of missions of the CPTPP. The tone of the meeting was warm. We are very much encouraged by the members of the CPTPP to pursue our contact with them, and I have no doubt that that contact will in due course lead to an accession request being made to the trans-Pacific partnership.

[Baroness Blackstone (Ind Lab)]

My Lords, does the Minister agree that the trade deal with Japan will boost our GDP by only 0.07%? Will he tell the House how that compares with the economic cost of losing our free trade with the European Union, given that we still seem far from achieving a comprehensive trade agreement with it?

[Lord Grimstone of Boscobel (Con)]

I thank the noble Baroness for that question. Of course, this has a smaller economic benefit than our arrangements with the EU, but I think it is right to gain economic benefit wherever we can. It would seem churlish not to want to pursue a Japan free trade agreement purely because it was smaller than a European free trade agreement. The full benefits of this agreement will be available to the House once the agreement and our impact assessment are published, and I ask the noble Baroness to wait until that happens and, perhaps, consider it then.

[Lord Foster of Bath (LD)]

My Lords, we have been told that in this deal there will be new protections for the UK creative industries and that these protections have gone beyond the EU provisions that tackle online infringement of IP rights such as film and music piracy. The two major asks from the creative industries were that this deal with Japan introduced public performance rights, significantly benefiting the music industry, and a provision such as the one we already have in the UK that allows blocking of websites that provide access to illicit content. Have those two primary objectives been achieved and, if they were not, what confidence can the creative industries have that similar asks will be delivered in future negotiations?

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for his question. I can indeed confirm that there are a number of advantages for the creative industries coming out of this enhanced continuity agreement, and the details of them will become apparent when the agreement and assessment are published in due course.

[Lord St John of Bletso (CB) [V]]

My Lords, in welcoming this trade deal, I am particularly pleased that it removes trade barriers, delivering huge gains for the 8,000 UK SMEs exporting goods and services to Japan. I ask two questions. Overall, does the deal give better UK access than under the EU trade deal that was put into force in February last year? Following the question of the noble Baroness, Lady Blackstone, given Her Majesty’s Government's assessment that the trade deal could add 0.07% to UK GDP, what assessment has the department made of the effect of not agreeing a trade deal with the European Union?

[Lord Grimstone of Boscobel (Con)]

Again, I thank the noble Lord for his comments. There is a specific SME chapter in this agreement. It goes further than the previous EU chapter and the whole intent of that chapter is to make it easier for our SMEs to trade with Japan. Further details will be available on that in due course. I have not seen any assessment in relation to the EU of the sort that he mentioned, and I dare say that it has not been thought necessary because of the overwhelming view in this country that we should leave the European Union, which indeed we did on 1 January this year.

[Viscount Trenchard (Con)]

My Lords, I declare my interests as stated in the register. I am delighted that we have agreed a free trade agreement with Japan and strongly welcome the Statement made in another place by my right honourable friend. As the Secretary of State said, the deal will

“unleash a new era of mutually beneficial economic co-operation with our great friend Japan”.

Against this background, does the Minister agree that it is a great disappointment that Hitachi decided yesterday to change the status of the Horizon nuclear power station project at Wylfa and Oldbury from suspended to cancelled? It is of some comfort that Hitachi has said that it will keep the lines of communication open with government and other key stakeholders regarding future options at both our sites. Can my noble friend confirm that the Government have sent an urgent message to the Government of Japan and Hitachi that they want strongly to work together to find a way of reviving this important project in the interests of all stakeholders?

[Lord Grimstone of Boscobel (Con)]

I thank my noble friend for his comments about the agreement and I am well aware of his great expertise in Japan. As the Minister for Investment, of course it is always a matter of great regret for me if a major company decides not to pursue an investment opportunity in the United Kingdom. My noble friend will realise that nuclear has a huge number of manifestations; these are very large decisions that companies will take. We have maintained contact with Hitachi throughout the process. I believe that this was a decision by the Hitachi board. I have no information in what circumstances it might choose to revisit that decision, but I will say that I have huge admiration for Hitachi. I have spoken to Hitachi at the most senior levels on a number of occasions, and we would always welcome any investment from Hitachi into the United Kingdom.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, I declare my interests as noted in the register, but in particular my membership of the UK board of the UK-Japan 21st Century Group, set up by Prime Minister Thatcher when the noble Baroness, Lady Bottomley, was a Minister. The board met in its annual conference with Japanese colleagues last weekend and warmly welcomed the announcement of the trade deal: in particular the steps towards UK membership of the comprehensive trans-Pacific partnership.

It would also be appropriate today for us to welcome and congratulate Prime Minister Suga on his election yesterday as Prime Minister of Japan. He has a particularly strong commitment to UK-Japan relations and an understanding of the importance of the UK and Japan in maintaining an international rules-based system and that free and fair trade are at the heart of that. Can the Minister confirm that, when we see the details of this agreement and its implementation over the coming months, there will be nothing that will contradict our commitment to those international agreements on climate change and the sustainable development goals that see the UK and Japan committed to not only free trade but fair trade that helps preserve our planet and develop the global economy?

[Lord Grimstone of Boscobel (Con)]

The noble Lord is yet another example of the vast expertise that we have in this House on these matters and, because of his special insights into Japan, I welcome his commendation of this agreement. He is right to say that Japan and the UK have very similar attitudes to these matters: both of us look to a rules-based economy in world trade. I can confirm that the matters to which he referred have been rolled over from the EU agreement. The EU agreement had very strong provisions in relation to sustainability, climate and other matters, and he will see once the agreement is made available to the House that we have preserved the impact of those measures. I join the noble Lord’s congratulations of the new Japanese Prime Minister: I wish him a long and successful period in post.

[Viscount Waverley (CB) [V]]

My Lords, while naturally congratulating the Government on the progress with the Japan FTA, is it recognised that it is not in the interests of business to spend years negotiating free trade agreements for them to fail because one stakeholder group or another does not agree with them? Specifically, is a free trade agreement model for beyond the EU now being adopted by the UK in trade negotiations—with people speaking well of the Singaporean approach, for example? Can the Government demonstrate that they are being receptive to the principle of a UK-wide trade alliance that affords better scrutiny and transparency, building back better, and a trade model that ensures trade works for everyone, given some concern of limited evidence of inclusion?

[Lord Grimstone of Boscobel (Con)]

I thank the noble Viscount for his question. Before I answer it, I first apologise to him for misunderstanding an Oral Question that he asked me the other day. I have written to him correcting my misunderstanding.

The noble Viscount is completely right that one has to build a constituency for these agreements if they are to have the impact that we all desire. For that reason, we conducted a very extensive call for input between September and November last year on it, and published it along with our response in negotiation objectives. We held round tables across the country, and we have also set up various trade advisory groups with expertise drawn from a wide cross-section of the UK to advise us on the negotiations as they persist. The noble Viscount will understand that the lessons and advancements that you gain in one free trade agreement—subject, of course, to the trammels of negotiation—often get rolled forward into future free trade agreements. We believe that we are on the cutting edge of free trade agreements, and we are looking forward to those cutting edges appearing in the new free trade agreements that we intend to negotiate and ratify going forward.

[Lord Howell of Guildford (Con) [V]]

My Lords, I declare my interests as set out in the register and join in the congratulations on the achievement of this agreement in principle, and for which my noble friend the Minister deserves a certain amount of personal credit. I join, too, in the sending of good wishes to the new Japanese Prime Minister, Mr Yoshihide Suga. Could this deal herald an era of increased collaboration with Japan, not just on trade and business but across the whole range of security and defence co-ordination, such as the extension of the Five Eyes alliance in south-east Asia, and here at home on major infrastructure projects in railways, nuclear and other areas—replacing perhaps over-ubiquitous Chinese involvement with a more friendly Japanese presence? I join my noble friend Lord Trenchard in urging a reversal of the Hitachi withdrawal from our nuclear programme, which is a pity. Could steps be taken urgently to reverse that and maintain the programme?

[Lord Grimstone of Boscobel (Con)]

Again, I thank my noble friend for his comments. He makes a very good point. I have always seen the signing of these agreements as having psychological and practical impacts that go far wider than the agreements themselves. The deep interaction that goes on in the negotiations gives rise to much better understanding between Governments. It awakens interest in a whole range of society in the countries being negotiated with. As he does, I see this as a harbinger of even closer relationships with Japan in a whole number of areas, including the important defence and security areas to which he refers.

[Baroness Wheatcroft (Non-Afl) [V]]

My Lords, I was interested to read in the Minister’s recent letter regarding this deal that there would be new protection for the more iconic UK goods such as Cornish pasties. How large does he judge the Japanese appetite for Cornish pasties to be? More importantly, what has the UK given to the Japanese that goes beyond what the EU deal gives? We have heard only of the potential— I stress, potential—upside of this deal. I should like to know what benefits go the other way.

[Lord Grimstone of Boscobel (Con)]

I thank the noble Baroness for that question. In relation to Cornish pasties, I have unwittingly watched television programmes from time to time that show the extraordinary variety of food that they eat in Japan. I am sure that against that background the Cornish pasty would be more than welcomed by Japanese consumers. In terms of the impact of this agreement, compared with the EU agreement, I ask her to await the publication of the agreement and of the report that we will produce setting out the differences in detail.

[Lord Shipley (LD) [V]]

My Lords, the agreement is welcome but, a few days ago, British and European motor manufacturers warned of £100 billion in losses over the next five years if there is no trade deal with the EU. That is on top of an estimated €100 billion cost from the Covid pandemic. Does the Minister understand the implications for our motor industry and for Japanese companies if there is no deal with the EU, and the consequent danger to British jobs that inevitably would follow?

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for that question. We are all aware of the vast amount of trade that we have with the European Union and the impact of that not just on our car industry but on other industries. That is why I am sure that he will join me in hoping that those negotiations reach a sensible conclusion. We believe that we have put pragmatic proposals to the EU, and we are hoping that it will shortly see that and agree an agreement with us.

[Baroness McIntosh of Pickering (Con)]

My Lords, I warmly welcome this agreement. My question is simple. My noble friend stated that we will continue to be bound by the state aid arrangements that currently apply to the EU-Japan agreement. Why will we not agree to be bound by those same rules in our future relationship with the EU? What is so different between that relationship and our relationship with Japan?

[Lord Grimstone of Boscobel (Con)]

I thank my noble friend for her question. Perhaps I may repeat that the state aid provisions found in this free trade agreement are de minimis and in no way compare with what one might call the state aid environment that is the matter under discussion between the UK and the EU. Full details of this will be seen when the agreement is finally published.

Motor Sector: Export Markets

Lord Grimstone of Boscobel Excerpts

Monday 14th September 2020 Lords Chamber

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, the Government engage frequently with all the leading car manufacturers in the UK, including in relation to exports. A cross-section of UK vehicle makers is represented on the new trade advisory group and took part in the first meeting on 31 July to discuss access to those export markets involved in current free trade negotiations.

[Baroness Quin (Lab) [V]]

My Lords, Nissan’s head of operations has said that its Sunderland plant will be unsustainable if there is no deal with the EU and we have to move to WTO terms so damaging for our motor industry. Can the Government give an assurance that there will be a deal guaranteeing a future for Nissan in Sunderland, the UK’s number one car maker?

[Lord Grimstone of Boscobel (Con)]

My Lords, the Government are working very hard to achieve a successful negotiation with the EU which will benefit our manufacturers, but I would draw the attention of the noble Baroness to the Japan FTA which we signed on Friday, to show what can be done. It allows UK auto manufacturers to access lower tariffs and tariffs that will, over a number of years, reduce to zero on a number of auto components such as road wheels, suspensions, systems and clutches. For some specific car parts, including speed indicators, the tariffs will reduce to zero.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, is the Minister aware that there is a problem not only with exports but with imports, where the UK is a manufacturer of leisure vehicles such as caravans and mobile homes? This issue was brought to my attention by a member of my extended family who runs such a business in the Midlands, and I declare that interest. Germany has supported a boom in its leisure vehicle industry, with the reduction of VAT on parts, and as a result it has become increasingly difficult to purchase parts for the UK’s industry, which currently has such potential for expansion. To avoid a serious drop in production and sales, and potentially in UK staycations, will the Minister consider whether such an incentive could be provided in the UK to support a similar rule here?

[Lord Grimstone of Boscobel (Con)]

My Lords, the noble Baroness makes a very good point and I am aware of the great enjoyment that these vehicles give to people throughout the United Kingdom. I do not have the details of those matters, but I will write to the noble Baroness with them.

[Lord Purvis of Tweed (LD)]

My Lords, after everything that the Government have said over recent days and recent years about the need to retain or gain complete autonomy and freedom over state aid rules, would it not be inconceivable that the deal with Japan that the Minister referred to would in effect put into a treaty—which we would have to put into domestic law—the EU regime of restrictions that the Government say they need freedom from in perpetuity? Surely that cannot be the case, so can the Minister reassure all those Brexit supporters in the north-east and elsewhere that the reports in the press about this action by the Government potentially replicating it are surely inaccurate?

[Lord Grimstone of Boscobel (Con)]

My Lords, the UK-Japan agreement contains standard FTA provisions on subsidies. Motor manufacturers, including those in the north-east, and their representative organisation have strongly welcomed the UK-Japan deal. These subsidy chapters in trade agreements help ensure that fair and open competition exists for both parties by working to limit the effects of trade-distortive industrial subsidies. The subsidies chapter in this UK-Japan FTA rolls over the provisions from the EU-Japan EPA.

[Viscount Trenchard (Con) [V]]

My Lords, can my noble friend the Minister tell the House what opportunities there are for UK motor manufacturers to diversify their supply chains so as to widen their sources of parts production to third countries which may be able to supply equivalent high-quality parts at competitive prices? Can he also say whether such opportunities will be only with countries with which we will have entered into FTAs by 31 December 2020, or whether they also include countries with which we expect to trade on WTO terms?

[Lord Grimstone of Boscobel (Con)]

My Lords, my noble friend makes an excellent point. Of course, these supply chains cannot be turned off and on overnight, but I have no doubt that our FTA programme in general is already helping auto manufacturers in this area, and our new Japan EPA has already demonstrated this utility. Our automotive sector deal supports the industry’s ambition to increase the level of UK content by value in domestically built vehicles to 50% by 2022, so we do not have to see these supply chains only located overseas. It is of course a huge benefit to the United Kingdom if they can be located in our country as well.

[Viscount Waverley (CB) [V]]

My Lords, some time back, the Government announced the formation of regional trade commissioners with great fanfare and a road map that would include the preparation of action recommendations. Despite multiple requests through Questions for Written Answer that progress be made available, to date nothing of substance has been forthcoming. What is the status of each of them? What consultations have there been with individual sector providers, and, importantly, when can Parliament finally assess progress as the result of a more transparent process to be established by the Government?

[Lord Grimstone of Boscobel (Con)]

My Lords, the noble Viscount refers to regional trade commissioners. These are senior officials who are in place throughout the world overseeing our investment and export activities overseas. He may be referring to the trade envoys system, which allocates parliamentarians to individual countries to support trade activities in those countries. These trade envoys do very good work and I am pleased to say that we expect to announce a list of new trade envoys very shortly.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, will not the problem here be rules of origin and the target of 50%, which the noble Lord referred to in an earlier response? However, according to the SMMT, the proportion of a car made in the UK is currently less than 25%. Does the noble Lord agree with the SMMT that, if the current UK and EU FTA negotiations fail to deliver rules of origin provisions, there will be a 10% tariff on finished vehicles and trucks and up to a 4% tariff on parts when exporting to the EU, and that this will cost the industry more than $4.5 billion annually? Therefore, is there a plan?

[Lord Grimstone of Boscobel (Con)]

My Lords, of course there is a plan. It is to conclude a successful negotiation with the EU in relation to these matters. That is vital because the automotive sector is extremely important to the UK. The UK exports 80% of vehicles manufactured, which accounts for no less than 14% of UK-manufactured exports.

[Baroness Randerson (LD) [V]]

My Lords, this industry is deeply integrated with the EU and was already suffering because of Brexit. Honda in Swindon and Ford in Bridgend are both casualties, and the decision has been made by Ineos not to build in Merthyr. The pandemic has added more problems. Vehicle manufacturers need zero tariffs and the same regulations as the rest of Europe. Will they get that, and what tariff mitigation measures are the Government putting in place to protect the industry if there is no deal?

[Lord Grimstone of Boscobel (Con)]

My Lords, we know that the automotive industry has concerns about the cost implications of any tariffs, frictions at borders and divergence in regulation following the end of the transition period. These are the very reasons why we want a relationship with the EU based on friendly co-operation between sovereign equals and centred on free trade. Those are the objectives we are working towards.

[Lord Wigley (PC) [V]]

My Lords, the Minister said that new markets cannot be turned on overnight, but existing markets can certainly be lost overnight if there are punitive barriers in the form of high tariffs. What specific help will the Government give car manufacturers such as Toyota in Flintshire if they lose their European markets as a result of the Government’s failure to secure an adequate deal?

[Lord Grimstone of Boscobel (Con)]

Because we recognise the importance of the automotive industry to the UK, we have various schemes in place to help support its transition and development. For example, we have our £1 billion automotive transformation fund, which is helping to develop supply chains and UK alternatives for the large-scale production of electric vehicles in the United Kingdom.

[The Senior Deputy Speaker (Lord McFall of Alcluith)]

My Lords, the time allowed for this Question has elapsed.

Trade Bill

Lord Grimstone of Boscobel Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

Moved by

[Lord Grimstone of Boscobel]

That the Bill be now read a second time.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con) (Maiden Speech)]

My Lords, it is a great honour to open this debate and indeed to address this House for the first time. I realise that many noble Lords will want to contribute to this very important debate, so I will set an example by keeping my opening remarks concise and to the point.

I start by paying tribute to the extraordinary people throughout our country who are tackling the coronavirus outbreak. We owe them all a great debt of gratitude.

I thank all those who have extended me help, advice and friendship since I joined your Lordships’ House—in particular, my two supporters, the noble Baroness, Lady McDonagh, and my noble friend Lord Blackwell. I also give my sincere thanks to the doorkeepers, the Clerk of the Parliaments, parliamentary staff, Black Rod and the police officers, who have all explained the procedures of this House and, more importantly, have sometimes prevented me getting totally lost. I should also give a special thanks to my noble friend and Whip Lord Younger, whose knowledge and support has been invaluable.

Finally, I must thank my partner, my family, my friends and all those who have helped make me what I am today. My faults are entirely of my own making.

I am an ordinary person from an ordinary family, brought up in Croydon and fortunate to have been given a council scholarship to Whitgift School, from whence I went to Merton College, Oxford. As Private Secretary to the noble Lord, Lord Owen, when he was Minister for Health, and later at HM Treasury, where I helped oversee more than 25 privatisations working for my noble friend Lord Lawson of Blaby, I got my first taste of politics.

I then became a banker at Schroders, travelling to around 50 countries exporting the skills of the City. This taught me that globalisation, trade and investment are the best routes to prosperity and peace, and that no matter what our race or creed, or whether we are rich or poor, we are all the same. The only difference is whether we have been given opportunity.

During two decades spent serving on 20 boards of major companies around the world, including chairing two of the UK’s largest financial services institutions, I learned the benefits of good governance, clear thinking and decisiveness. As the first non-military member of a front-line command board when I joined the board of the Royal Air Force’s Strike Command in 1999, and then proudly serving as the lead non-executive for six Defence Secretaries, I gained the utmost respect for our Armed Forces.

I am proud to have been asked to serve this House and our country, and I will do it to the best of my abilities. I thank noble Lords for listening to me and I am mightily relieved that that is my maiden over.

Turning to today’s business, I am honoured to move that this Bill be read a second time. As the Minister for Investment since March, I have had around 250 ministerial engagements, meeting virtually with hundreds of people from companies big and small. I have also held a number of briefings for Members of your Lordships’ House on trade matters, all of which have made me realise the vast experience and knowledge that there is in your Lordships’ House and how much I have to learn.

Above all, it has impressed upon me how the Covid-19 pandemic has impacted businesses at an unprecedented speed and scale. To me, that truly highlights the importance of trade: to keep supply chains open and to ensure that we have all the vital equipment we need. In the longer term, it has shown that building resilience and strengthening the rules-based trading system will be crucial to our recovery. That means maximising the economic benefits of trade and ensuring that all parts of the UK, and companies of every size, benefit from it, especially SMEs, the backbone of British business. It means increasing the diversity of our trade—that is, both imports and exports—and reducing our exposure to future economic shocks. Now that we have left the EU, we have the opportunity to do just that: to determine our rules, defend our national interests, and champion free, fair, rules-based trade globally.

This Bill, like its predecessor, the 2017-19 Trade Bill, is about continuity and certainty—continuity of the existing trade agreements that we had in place through membership of the EU, and the certainty that continuity offers for our businesses and trading partners, plus giving the Government the vital tools that they need to secure our future as an independent trading nation.

I turn to the main elements of the Bill. First, it allows us to implement the UK’s obligations arising from the trade agreements that we are transitioning from the original EU/third country agreement, such as those with South Korea, Chile and Switzerland, thus allowing trade to continue to flow freely with our established partners. The Government have already signed 20 continuity agreements with 48 countries, representing 74% of the trade with countries with which we are seeking continuity. Every single one of these agreements illustrates the Government’s commitment to maintaining our high standards, whether in relation to the environment, animal welfare, workers’ rights or human rights.

My noble friend Lord Lawson of Blaby once wrote:

“The NHS is the closest thing the English … have to a religion.”


I am sure that he meant no offence to the Lords spiritual, but he captured the importance of the NHS to the people of this country, and to this Government. We have been clear: the NHS is not, and never will be, for sale to the private sector, whether overseas or domestic.

I know that a lot of concern has been raised about the trade deals and how they will impact our hard-working farmers. I can reassure your Lordships’ House that this Government are committed to upholding our world-class food safety and animal welfare standards. Food imported into or produced in the UK will always be safe. Chlorinated chicken and hormone-injected beef are not permitted for import into the UK. The independent Food Standards Agency and Food Standards Scotland make sure that all foods comply with our existing standards. I make it absolutely clear that decisions on these standards are separate from trade agreements.

Not only have the Government put farmers and other businesses at the very heart of our negotiations but we have listened to the concerns of Parliament. We have launched the independent Trade and Agriculture Commission with representation from farming unions across the UK that will make policy recommendations to the Government. We have launched an agri-food trade advisory group to provide the Government with strategic insight and expertise throughout our FTA negotiations. I am pleased that its members include the National Sheep Association, the NFU and the International Meat Trade Association, among others. We are committed to a serious examination of what can be done through labelling to promote high standards and high welfare across the UK market. We have also published an agri bounce-back plan that will provide unprecedented help for SMEs and allow them to capitalise on the trade agreements being negotiated with the US, Australia and New Zealand.

I should like to make it clear that this Government and I are committed to transparency around the trade continuity programme. We have published voluntarily, and will continue to do so, parliamentary reports outlining significant differences between the original EU/third country agreements and the new UK/third country agreements. Regulations implementing these agreements are subject to the affirmative resolution procedure. I note that the 21st report from the Delegated Powers and Regulatory Reform Committee made no recommendations on the delegated powers in the Bill.

I recognise that there has been concern that upcoming continuity agreements with countries such as Canada or Singapore will go beyond continuity. Let me reassure noble Lords that this is not our intention. Where we have set out to achieve an enhanced agreement, as in the case of Japan, we have committed to additional scrutiny arrangements that closely mirror those we have put in place for new FTAs.

Secondly, the Bill allows the UK to implement our obligations under the WTO Agreement on Government Procurement, or GPA, once we accede as an independent party. As noble Lords will be aware, the GPA is an agreement seeking to mutually open up government procurement markets among its 20 parties. Acceding to the GPA in our own right will guarantee British businesses continued access to this £1.3 trillion a year market. That is so important. We intend to accede to the GPA on broadly the same terms as our current membership through the EU. I want to be crystal clear: becoming an independent GPA party does not restrict government from deciding how to deliver health services in the best way for the UK.

Thirdly, the Bill establishes the independent Trade Remedies Authority to protect our businesses against injury caused by unfair trading practices, such as dumping or subsidy, or unforeseen surges in imports. The TRA will deliver an independent investigation process that businesses can turn to when others are breaking the rules, and will recommend appropriate measures where necessary.

Finally, the Bill provides for the use of data to enable government to discharge its trade-related functions now that we are no longer members of the EU. It gives HMRC powers to share data with other public bodies to fulfil its trade-related functions, such as in relation to trade disputes. It provides for a data sharing gateway between departments and specified public bodies to safeguard existing trading relationships by helping ensure that trade flows freely across our borders.

Let me also be clear what this Bill is not about. It is not about implementing those FTAs we are seeking with new partners around the world, such as the United States, Australia and New Zealand. The implementation of such agreements will be subject to separate scrutiny arrangements, and, in line with provisions included in the amendment relating to scrutiny passed during debate on the 2017-19 Trade Bill, the Government will publish their negotiation objectives, voluntarily publish impact assessments before and after negotiations, and keep Parliament updated. At the end of negotiations, treaties will be subject to the usual ratification procedures. Parliament will retain, through the CRaG process, the right to block any treaties from being ratified.

FTAs cannot change UK law; as noble Lords know, only Parliament can do that. Parliament will retain the right to reject any domestic implementing legislation necessary for a trade deal. By blocking any legislation, should it be required, Parliament can also block ratification. This is in line with similar systems, such as Canada’s, and goes further than those in countries such as Australia and New Zealand, where parliaments cannot directly block ratification of a trade treaty.

The International Trade Committee in the other place has proposed to the Secretary of State a structure for providing scrutiny. The department is taking this very seriously and we will be working with it, and the International Agreements Sub-Committee, on developing this. I very much welcome this. These committees do an excellent job and I intend to maintain a close relationship with the IAC and its chairman, the noble and learned Lord, Lord Goldsmith; I know that my right honourable friend the Trade Secretary will be doing similarly in the other place. As part of this, we are committed to ensuring that committees are able to scrutinise trade deals on an ongoing basis, and, where possible, we will share information with those committees on a confidential basis.

Nor is the Bill about negotiations with the European Union on our future relationship. That too will be subject to separate scrutiny arrangements. This Bill is solely concerned with ensuring we have the right tools in place to implement obligations from trade agreements with countries that the EU had an agreement with before 31 January.

The unprecedented economic challenge of coronavirus makes the need for this Bill clearer than ever. It will ensure continuity through powers to implement trade agreements with partner countries which previously applied under the EU; it will secure continued access for UK businesses to the vitally important global public procurement market; it will establish an independent body to provide our businesses with the protection they need from unfair trade practices; and it will ensure that we have the necessary data to offer the best possible support for businesses to trade and to help their goods flow seamlessly across our borders.

In conclusion, as we recover from this economic crisis, providing certainty and predictability in our trading arrangements will be vital to securing the interests of businesses and consumers, and to fulfilling this Government’s mission to unleash the potential of, and level up, every region and nation of our United Kingdom. This legislation will provide us with the tools to do precisely this, and I commend the Bill to the House.

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

My Lords, I am extremely grateful for the kind words that have been expressed across the House about my maiden speech and for the warm welcome I have received from your Lordships. I was particularly pleased to hear the noble Lord, Lord McNally, refer to my emollient bedside manner, and the reference to Standard Life from the noble Lord, Lord McConnell. I have been greeted with great courtesy by noble Lord, Lord Stevenson. I feel that I have a very constructive relationship with him, and of course I have known the noble Lord, Lord Grantchester, for more years than he and I would probably care to remember. I always enjoy the noble Lord, Lord Purvis, teasing me about my previous jobs.

I join other noble Lords in congratulating the right reverend Prelate the Bishop of Blackburn. His comments on equality and human rights were pitched very nicely. I am delighted to welcome him to the House and have no doubt that it will benefit from his knowledge and experience.

This is the first piece of legislation that I will be guiding through this House and I look forward to working with noble Lords to deliver a Bill that provides some of the certainty that businesses so desperately need in these unprecedented times.

I am of course following in the footsteps of my noble friend Lady Fairhead, who was in this very same situation in the 2017-19 Session. She undertook that role with calmness, courtesy and expertise. I have heard various references to the constructive way in which she dealt with Peers, and I will try to follow in her footsteps in that regard.

This place has the benefit of being able to hear from many experts, and we have seen that in action today. Being a newcomer, I stand in awe of the knowledge that there is in your Lordships’ House. I am particularly grateful today for the contributions that I heard from my noble friends Lady Neville-Rolfe and Lord Lansley, the noble Baronesses, Lady Henig, Lady Jones of Moulsecoomb and Lady Quin, and the noble Lord, Lord Wigley, among many others. I completely agree with the noble Baroness, Lady Coussins, about the need for language skills, and I endorse her views on that.

As ever, the considerable experience of this House will be invaluable in helping us to put in place an effective independent trade policy now that we have left the EU. I was pleased to hear support for the objectives of the Bill from a number of noble Lords, including my noble friends Lord Astor, Lord Lilley, Lady Hooper, Lord Taylor, Lord Risby, Lady Redfern, Lord Sheikh, Lady Noakes, Lord Trenchard and many others.

This has been a very wide-ranging debate and I will endeavour to respond to as many points as I can. I may not be able to address all of them in the time available, but of course my door is always open and I am happy to follow up individual points and questions from noble Lords.

We intend to join the GPA, as the House has heard, as an independent party on substantially the same terms as we had under EU membership. This approach will support a swift accession at the end of the transition period and preserve UK businesses’ access to procurement opportunities covered by the GPA, which are estimated to be worth £1.3 trillion annually. My noble friend Lord Trenchard spoke convincingly about this.

The noble Baroness, Lady Burt, asked about SMEs in the GPA. Non-discrimination is the core principle of public procurement in the UK, and as such we do not have set-asides for SMEs in international agreements. We have an active policy agenda to facilitate SME participation in public procurement, and we will continue to advance that agenda as we accede to the GPA as an independent state.

A number of noble Lords, including my noble friend Lord Balfe and the noble Lords, Lord Oates and Lord Whitty, have raised concerns during this debate that the Government’s continuity programme will reduce standards. I want again to be quite clear about this: now that we have left the EU, the UK will be the same country that it has always been—dependable, open and fair. The Government have been clear that we have no intention of lowering standards, and we have fulfilled this commitment through our deeds. None of the 20 agreements already signed has reduced standards in any area.

I recognise the strength of feeling that the issue of standards generates among colleagues on all sides of the House. We can see this during the current debates on the Agriculture Bill and we saw it during the debates on the Trade Bill 2017-19. As my right honourable friend the Secretary of State for International Trade and my Defra colleagues have said, this Government will stand firm in trade negotiations. We will always do the right thing by our farmers and aim to secure new opportunities for the industry. This Government will not dilute our high environment protection, animal welfare and food standards. I hope that noble Lords will be reassured that all imports, whether covered by a trade agreement or otherwise, have to comply with the import requirements as provided for under the WTO SPS agreement.

This is a highly regulated space. In the case of food safety, it will be the job of the food standards agencies to ensure that all food imports comply with the UK’s high safety standards and that consumers are protected from unsafe food that does not meet those standards. Decisions on these standards are a matter solely for the UK and are made separately from any trade agreements. It is also important to note that our existing import standards already include a ban on using artificial growth hormones in domestic and imported products. They also prohibit anything other than potable water being used to decontaminate poultry carcasses.

These protections are already enshrined in our domestic statutes and the Government will be upholding them. Any changes to them would require new legislation to be brought before Parliament. Decisions around standards are a matter for Parliament and they cannot and will not be traded away in negotiations. We have been very clear that our high food safety standards will continue to apply to all food imports, and our priority is to ensure trade agreements benefit the whole UK, including consumers, farmers and businesses.

Some peers have also expressed concerns as to whether our continuity agreements will be consistent with specific international environmental obligations. The noble Baronesses, Lady Boycott, Lady Sheehan and Lady Hayman, and the noble Lord, Lord Oates, all talked about the climate emergency. I can confirm that all the EU agreements we are transitioning are fully compliant with all our international obligations, including the 2015 Paris Agreement on climate change. The same is true of human rights and labour rights. I hope this House will acknowledge the UK’s strong history of defending human and labour rights, alongside promoting our values globally. The noble Baroness, Lady Coussins, spoke with passion on this, as did the noble Lord, Lord Hendy, on labour rights.

The noble Lord, Lord Holmes, talked about the benefits we will eventually get from operationalising FTAs. I will dwell on this for moment. It is easy to think that these are just pieces of paper, but their real worth comes when businesses large and small throughout the United Kingdom take advantage of them, hopefully using digital techniques and gaining benefit. That is why we are negotiating FTAs.

I will quickly deal with some of the specific questions raised by noble Lords. The noble Lord, Lord Clement-Jones, asked about intellectual property. As he will know, our intellectual property regime is consistently rated as one of the best in the world. One of our priorities will be to ensure that future trade agreements do not negatively impact on standards in this area and that our regime will promote trade in intellectual property.

My noble friend Lord Astor asked about trade envoys. I pay tribute to the role he has played as the Prime Minister’s trade envoy to Oman. My noble friend asked when a newly appointed trade envoy will be announced. As he and I know, this is a train that has been a long time coming. While I cannot provide an exact date, I assure my noble friend that he will not have to wait very long.

The noble Viscount, Lord Waverley, asked for a quick update on FTA discussions with Turkey. We place a great deal of importance on our trading relationships with Turkey. Bilateral trade was worth over £18.6 billion in the four quarters to the end of June 2020. We want to protect those existing trade flows by replicating the current trading relationships as far as possible. However, Turkey’s unique position of being in a customs union with the EU means that some of our future trading relationships will be influenced by the agreement we have reached with the EU. My trade colleagues are having good, positive discussions with Turkey, and I am convinced that eventually they will reach a favourable outcome.

The noble Lord, Lord Chidgey, asked for an update on the agreements with east and southern African countries. The UK, Southern African Customs Union member states and Mozambique continuity agreement was signed in October 2019 and passed CRaG in February 2020. It has not yet been fully ratified by all third countries that were signatories to the original agreement, but I am pleased to say that HMG in our local posts are working closely with local partners to support full ratification and implementation of this agreement.

My noble friend Lady Hooper asked about the EU-Mercosur agreement. This will not be in force before the end of the transition period, but we will look to discuss our future trade relationship bilaterally and collectively and to develop it further in due course.

The noble Viscount, Lord Trenchard, asked about the CPTPP—the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. I am pleased to say that all its members have now welcomed our interest in accession. We will decide whether and when to formally apply to join in light of these continuing engagements, the process of bilateral negotiations with CPTPP members and our confidence that we will be able to negotiate accession on terms compatible with our broader interests, which is, of course, the only basis on which we would want to join.

The noble Earl, Lord Lindsay, asked for reassurance about the important work that our standards agencies, including UKAS, do. I can confirm that we are very grateful for what they do, and that they will still play a large role in helping us deliver our trade agreements.

A number of noble Lords raised the important question of agriculture, and I totally understand. The Government recognise the importance of ensuring that the views of farmers, producers and consumers are able to inform trade policy. As we have heard during the debate, we have established a Trade and Agriculture Commission, following consultation with the industry, and we have a farming trade advisory group. I reassure the noble Earl, Lord Devon, that the membership of these groups is not secret: you can find it on GOV.UK. We are on the side of farmers, and the establishment of the commission has had overwhelming support from the National Farmers’ Union and many others.

I realise there is a strong concern felt by certain noble Lords on animal welfare. Of course, this is laudable but, as noble Lords will appreciate, it is not within the gift of the UK Government to legislate for overseas countries. Indeed, legislating for higher agricultural production standards could have far-reaching, unintended consequences, which could harm the UK economy and our relationships with countries around the world, particularly our partners in the developing world.

We heard concerns from some noble Lords, including the noble Lords, Lord Balfe and Lord Judd, and the noble Baroness, Lady Blower, about the National Health Service. I reiterate yet again that our position is absolute: the NHS is not, and never will be, for sale to any company, anywhere. It will remain universal and free at the point of need, and no trade agreement will alter that fundamental principle. I noted carefully the points made about health data. I love the expression “mutant algorithms” from the noble Lord, Lord Freyberg, and I will draw his point to the attention of our negotiators.

ISDS is a subject which often causes excitement, and my noble friend Lord Caithness raised the issue during his contribution, as did the noble Lords, Lord Freyberg and Lord Hendy. I confirm that ISDS tribunals can never overrule the sovereignty of Parliament. They cannot overturn or force any changes to law; they can only award compensation if a foreign investor’s rights under an international treaty, to which the UK is party, have been breached. ISDS cannot force the privatisation of public services. There has never been a successful ISDS claim against the United Kingdom, but our investors operating overseas have often benefited from these agreements.

I turn now to the question of parliamentary scrutiny. In relation to the continuity agreements, our objective, as noble Lords know, for transitioning EU third-country trade agreements has been to secure continuity in existing trading relationships. The original EU trade agreements have already been scrutinised, both by the European Parliament, on which the UK sat, and member state legislatures such as our own.

I know that last time a similar Bill was debated, noble Lords did so in the absence of any real-world example of how the continuity programme would work, but we are in a different position now. We have ensured that Parliament has had the opportunity to fully scrutinise all continuity trade agreements, and of the 20 we have signed so far, noble Lords have held three debates on six of them, and not one attracted a Motion to Regret. To clarify a point that the noble Baroness, Lady Tonge, made about the UK-Israel continuity agreement, it went through the CRaG process and concluded that process in March 2019.

Furthermore, to provide additional transparency for our programme, we have voluntarily adopted the proposal put forward during the passage of the Bill in the 2017-19 Session and laid a report alongside each transitioned trade agreement to explain to Parliament our approach to delivering continuity.

[Lord Stevenson of Balmacara (Lab)]

May I make a point that might help the discussion?

[Lord Stevenson of Balmacara (Lab)]

I regret that too.

[Lord Grimstone of Boscobel (Con)]

I will be very happy to discuss that point with the noble Lord afterwards, if it would be of assistance.

Our continuity agreement treaty scrutiny arrangements received praise recently from the House of Lords EU Committee, which, in its recent report Treaty Scrutiny: Working Practices said:

“We encourage other Whitehall departments to follow the lead of the Department for International Trade and make similar commitments to ensure that other important agreements … are scrutinised just as effectively as trade agreements.”


Praise indeed.

Many Peers raised issues in relation to parliamentary scrutiny of future free trade agreements. While, of course, the Trade Bill does not deal with these agreements, I recognise the importance that noble Lords attach to Parliament having proper oversight. As I said when I opened this debate, the implementation of such agreements will be subject to separate scrutiny arrangements. We will be publishing negotiation objectives, voluntarily publishing impact assessments before and after negotiations, keeping Parliament updated on negotiations and, at the end of negotiations, treaties will be subject to the usual ratification processes.

I know that a number of noble Lords do not share my view that the Constitutional Reform and Governance Act provides an effective and robust framework for scrutiny of all treaties that require ratification, but it has worked, it is the arrangement we have, and it is incumbent on all of us to make sure that the information we provide under CRaG is transparent and helpful and allows, in particular, the committees to do their work properly. The UK has scrutiny mechanisms via the CRaG procedure whereby Parliament can see exactly what we have negotiated and can, if it chooses, prevent ratification by voting against the treaty—in the case of the other place, it can do so indefinitely.

I stress that no trade agreement can, of itself, alter our domestic legislation. We will ensure that there will be a report, independent of government, published by the committees at the beginning of the CRaG process, that will assist parliamentarians and the public in understanding the implications of agreements. We have heard a number of comments from noble Lords about devolution. We have listened carefully to the concerns of the devolved Administrations and I am pleased that the Scottish Government have now recommended consent to the Bill. I hope that continued engagement with the Welsh Government and the Northern Ireland Executive will lead to further recommendations for legislative consent to the Bill.

This has been a long debate and a number of extremely valuable points have been raised. With a huge sense of relief, I now turn to my closing remarks, and I imagine that noble Lords are as grateful for that as I am. I know that I have not been able to address all the points raised by your Lordships, but if there are matters that noble Lords would find it helpful to discuss further, I would be only too happy to meet them at any stage. I look forward to the further stages of the Bill and to working in a spirit of partnership and purpose to provide the certainty that businesses and consumers in all four corners of our great nation crave and need in the current circumstances.

Bill read a second time and committed to a Grand Committee.

Russia: Trade

Lord Grimstone of Boscobel Excerpts

Tuesday 28th July 2020 Lords Chamber

[Lord Rooker]

To ask Her Majesty’s Government what is the current balance of trade between the United Kingdom and Russia.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, total trade between the UK and Russia stood at £15.8 billion in the year to March 2020, an increase of £290 million over the same period last year. UK exports to Russia in this period amounted to £5.9 billion, with Russian imports in the same period totalling £9.9 billion.

[Lord Rooker (Lab) [V]]

I thank the Minister for his Answer, but will those figures be improved by the Prime Minister prostituting himself and his office in the interests of getting Russian money through the London laundromat and into Tory party funds?

[Lord Grimstone of Boscobel]

My Lords, let me make it quite clear that money obtained through criminality or corruption is not welcome in the UK. We have long recognised the corrosive risk of dirty money, including from Russia, being laundered in the UK. We continue to bring the full capabilities of law enforcement to bear against serious criminals, corrupt elites and their assets.

[Baroness Rawlings (Con) [V]]

My Lords, it is encouraging that HMG hold that

“trade and investment can be a lever for stabilising relations”

and

“increasing UK prosperity”.

What trade arrangements and investments are being planned and developed with Russia for after 2020? The Prime Minister said that he did not want to become a Sinophobe; does that mean nor a Russophobe either?

[Lord Grimstone of Boscobel]

My Lords, the Department for International Trade team at our embassy in Moscow is working with a pipeline of over 90 Russian companies that have expressed an interest in the UK. This work is taking place this year and will continue in the following year, notwithstanding external factors.

[Lord Kilclooney (CB)]

My Lords, having spent a month travelling between Moscow and St Petersburg, I recognise how important Russia is to the future of Europe, especially with the advance of China. Trade is one way of improving relations between Russia and the United Kingdom. Can the Minister say that real trade, excluding energy products, is increasing between the United Kingdom and Russia? Will he confirm that, as a result of Brexit, Russia will be a priority in our new trade agreements?

[Lord Grimstone of Boscobel]

My Lords, trade between Russia and the UK is broadly stable. Our objectives for Russia are driven by our Russia strategy, which holds that trade and investment can be a lever for stabilising relations, increasing prosperity, supporting deeper ties and binding Russia to the rules-based international order. There are no plans at present to attempt to negotiate a free trade agreement with Russia.

[Lord Foulkes of Cumnock (Lab Co-op) [V]]

My Lords, with respect, the Minister has not answered my noble friend Lord Rooker’s Question. Does he accept that our trade negotiations with Russia are being compromised because of a total of £3.5 million in donations to the Tory party and payments to 14 government Ministers from Russian sources?

[Lord Grimstone of Boscobel]

My Lords, I thought that I had made it clear that there are no trade negotiations going on at the moment with Russia. I resent the assumption that Ministers would in any way be influenced by the matters to which the noble Lord refers.

[Lord Purvis of Tweed (LD)]

There have been strict sanctions on trade with Russia because of the Putin Government’s authoritarian actions and human rights abuses since 2014. Now, as mentioned, China could be added to that category. In April 2018, the Minister told Bloomberg News, regarding China:

“The fact that Xi is prepared to give such strong authoritarian guidance within the context of a market economy is great for companies like mine”.


What assurances can the Minister give that he does not similarly admire the Putin regime and its approach to repression and human rights abuses and that UK trade should not be blind to this?

[Lord Grimstone of Boscobel]

My Lords, the quotation to which the noble Lord refers was a selective quotation picked up by Chinese newspapers from a much longer speech. I hold no candle for any authoritarian regime and I am pleased to confirm that in front of the House.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, Her Majesty’s Government recently confirmed that the attendance and participation of UK companies at the St Petersburg International Economic Forum was entirely a matter for their decision. Can the Minister explain how such unmoderated attendance at SPIEF is compatible with ensuring that we continue sanctions, and compliant trade and investment, with Russia?

--- Later in debate ---

[Lord Grimstone of Boscobel]

My Lords, UK companies are well aware of what aspects of trade are covered by sanctions. I would be most surprised if any of them do not abide by those rules strictly. We believe that trade that is not covered by sanctions can, as I have said before, be a lever for stabilising relationships.

[Lord Balfe (Con) [V]]

I point out to the noble Lords, Lord Foulkes and Lord Rooker, that the last Labour Government were also very keen to get Russian government money into Britain, but the Russians have clearly got their measure now, because they do not give them any money. Trade involves interaction. If we are going to keep Russia onside, we need to remember not only the human rights side of things but the need to promote trade and encourage western values, and we need to encourage people to go to the St Petersburg fair. Can I have the Minister’s assurance that we will pursue an even-handed strategy, as opposed to a prejudiced one, when dealing with Russia?

[Lord Grimstone of Boscobel]

My Lords, we are quite clear that trade does not have to come at the expense of labour, the environment, human rights or sustainable development. We use trade because we want to ensure that economic growth and development and environmental protection can go hand in hand.

[Baroness Falkner of Margravine (Non-Afl) [V]]

My Lords, the Minister will know that financial services are in surplus in our trade with Russia. Does he agree that however desirable that might be, it does not benefit the City of London to be referred to as a laundromat for Russians to wash their dirty money? Will he call together the City institutions to discuss how the measures in the Sanctions and Anti-Money Laundering Act 2018 can be tightened, as clearly the current institutions do not seem to have either sufficient funding or the powers to regulate them?

[Lord Grimstone of Boscobel]

My Lords, as a previous banker, I abhor illicit finance working its way through the City. It benefits nobody, and no respectable City firm would want to touch it. At every opportunity, I will certainly raise the points that have just been made.

[Baroness Smith of Newnham (LD) [V]]

My Lords, the Library’s note to us suggests that of UK services’ trade with Russia in 2019, the fifth largest item in imports and exports was government services. Will the Minister tell us what government services were provided to Russia?

[Lord Grimstone of Boscobel]

My Lords, I am afraid that I do not have the fine print on that with me, so, if I may, I will write to the noble Baroness.

[Baroness McIntosh of Pickering (Con)]

My Lords, can my noble friend explain to the House whether he thinks that the trade deficit with Russia will widen or narrow in the next year? Will he also celebrate with me the fact that the Russian audience for the Russian digital service offered by the BBC World Service is up by 32%, which can only help to boost our trade with Russia?

--- Later in debate ---

[Lord Grimstone of Boscobel]

My Lords, the UK reported a total trade deficit of £4 billion with Russia in the year to March, compared to a figure of £4.6 billion in the previous year. External factors such as Covid-19 may have an impact on the UK’s international trade in 2021, so at this moment it is impossible to forecast. I very much applaud the fact that the voice of the BBC can be heard clearly and loudly by the Russian people.

[The Deputy Speaker (Lord Lexden) (Con)]

My Lords, the time allowed for this Question has elapsed. We now come to the fourth Oral Question.

Trade Agreements

Lord Grimstone of Boscobel Excerpts

Tuesday 14th July 2020 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government whether clauses (1) protecting human rights, and (2) maintaining environmental standards, will be inserted in the trade agreements being negotiated as a result of the United Kingdom’s departure from the European Union.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, protecting human rights and maintaining environmental standards will always be at the front of our minds when negotiating trade agreements. We have a strong history of safeguarding rights and promoting our values globally. Although our approach to negotiations will vary between partners, it will always allow Her Majesty’s Government to have open discussions on these matters and include provisions as appropriate.

[Lord Haskel (Lab) [V]]

The Minister speaks of open discussions, but he does not satisfy the parliamentarian’s concern or explain the Government’s reluctance to involve Parliament in these trade negotiations, particularly with the EU. Your Lordships’ International Agreements Sub-Committee reported last week that even the devolved Administrations had been shut out of these negotiations. So, in spite of his assurances, will the Minister at least confirm that Parliament will have a say in these trade negotiations?

[Lord Grimstone of Boscobel]

My Lords, the report to which the noble Lord referred actually complimented my department for the way that it has interacted with the IAC. Before we commence negotiations, we make available a full pack of information, including an economic assessment and the results of our consultations. At the end of each negotiation, we have committed to follow the criteria and to make sure that the IAC has details of the negotiated treaty in good time to be able to report to the House.

[The Lord Bishop of Birmingham]

My Lords, just this week we have heard reports of poor working conditions and pay in factories in Leicester, but the UK is also heavily reliant on international supply chains. Will the Minister specify what steps the Government are taking to ensure that trade agreements insist that all UK imports are produced by workers with good conditions and dignified pay?

[Lord Grimstone of Boscobel]

My Lords, the right reverend Prelate makes an excellent point. The UK is committed to working with international partners and businesses to tackle modern slavery in global supply chains. It is vital that increased trade is not based on the exploitation and abuse of workers.

[Baroness Warsi (Con) [V]]

My Lords, is my noble friend the Minister aware of the business and human rights policy developed in the Foreign and Commonwealth Office, specifically under the leadership of my noble friend Lord Hague? Will he commit to ensuring that those principles underpin negotiations in relation to future trade discussions to ensure that human rights are an essential part of any trade that happens, either into or out of the United Kingdom?

[Lord Grimstone of Boscobel]

My Lords, we are clear that more trade does not have to come at the expense of our rights and responsibilities. Political freedom and the rule of law are vital underpinnings for both prosperity and stability; we will continue to encourage all states to uphold international rights and obligations during our conduct of trade negotiations.

[Baroness Boycott (CB) [V]]

My Lords, does the Minister agree that all international agreements should undergo a net-zero assessment prior to ratification in Parliament so that we, and the public, understand the full emissions implications of the international trade deals that HMG enter into on our, and all our citizens’, behalf?

[Lord Grimstone of Boscobel]

My Lords, the noble Baroness makes a very good point. Not just for ourselves but for the generations coming after us, we all rightly attach huge importance to these matters. We will make sure that they are taken fully into account in our negotiations.

[Lord Judd (Lab) [V]]

My Lords, my noble friend Lord Haskel’s important Question raises the intended and unintended consequences of trade deals and their implications for the vulnerable, not only in our own society—where the problem is acute enough—but among the poor of the world. Can the Minister give us an assurance that, in the new combined department, those Ministers and officials with specific responsibilities for development and overseas relations will each have a part to play in ensuring that the well-being of the international community, and the vulnerable within it, is safeguarded in any trade deals?

[Lord Grimstone of Boscobel]

My Lords, the noble Lord makes a good point. We work closely with our colleagues in other departments to ensure that those matters are fully taken into account. My belief is that the new changes to the machinery of government will make our voice even more effective in these matters at the country level.

[Lord Purvis of Tweed (LD) [V]]

Rights and standards were a part of the human rights clauses that we insisted were in our trade agreements when we were a member of the EU. We are negotiating with the US, a country which has ratified only two out of the eight core fundamental ILO conventions, whereas we have ratified them all. On climate, the US has refused to include a climate chapter in its negotiations with us. Can the Government allay fears by giving a simple undertaking: that no EU-retained law on human rights, labour standards, climate or environment will be amended or repealed by any trade agreement or partnership agreement?

[Lord Grimstone of Boscobel]

My Lords, the series of trade agreements in effect at the moment—to which we were bound by our membership of the EU—are being rolled over into various continuity agreements. I can confirm that all those continuity agreements will contain within them the appropriate provisions in relation to human rights and environmental standards.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, can my noble friend the Minister explain to us what the role of the trade commission will be and why it is being set up for only six months? How can it achieve anything in such a short time? Will he reassure the House today that no animal product imported into this country will be produced to a lower standard of animal welfare than we expect our farmers in this country to meet?

[Lord Grimstone of Boscobel]

My Lords, our manifesto was clear that in all our trade negotiations we will seek to maintain our high environmental protection, animal welfare and food standards. We have recently announced the setting-up of the Trade and Agriculture Commission to ensure that the strongest possible range of views is made available to us in our policymaking. There is always a trade-off between getting on with things and time taken; in consultation with members of the commission, we felt that six months was the right time to allow for this work so that, in due course, its results can be made available to the House.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, my noble friend Lord Haskel mentioned the recent report of your Lordships’ Sub-Committee on International Agreements. The Minister will be aware that that committee has announced a significant change in practice: in future, it will assess all new trade agreements on their merits and flag up issues that this House might wish to debate prior to ratification. Will the Minister join me in warmly welcoming this long-overdue first step towards proper parliamentary scrutiny of future trade agreements?

[Lord Grimstone of Boscobel]

My Lords, I am a huge champion of transparency and open dialogue in these matters. I believe that we will come to better decisions with such transparency and I welcome the work that the IAC is doing to bring these matters, in due course, before the House.

[Baroness Coussins (CB) [V]]

My Lords, can the Minister ensure that, once we are no longer part of the EU FTA with Peru, Colombia and Ecuador, our continuity agreement and any subsequent bilateral or regional FTAs will include not only a human rights clause, as at present, but the teeth of a review mechanism and sanctions; and that specific reference is made to the rights of indigenous communities before any British-run companies—particularly from the extractive industries —take action which affects the livelihoods and environments of these communities?

[Lord Grimstone of Boscobel]

My Lords, the noble Baroness makes an important point. The UK is a world leader in human rights policy. We were the first country to produce a national action plan for the implementation of UN guiding principles on business and human rights, and we are clear that more trade does not have to come at the expense of our rights and responsibilities.

[The Deputy Speaker (Lord Lexden) (Con)]

My Lords, the time allowed for this Question has now elapsed.

Saudi Arabia: Arms Sales

Lord Grimstone of Boscobel Excerpts

Friday 10th July 2020 Lords Chamber

To ask Her Majesty’s Government whether they will reverse their decision to resume granting export licences for arms sales to Saudi Arabia.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, the short answer to that Question is no. The Government were required by the court judgment to retake their licensing decisions; they have now done so in a way that reflects the judgment. The Government take their export responsibilities seriously and assess all export licences in accordance with strict licensing criteria. We will not issue any export licences where to do so would be inconsistent with these criteria.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, we have a brilliant arms industry in the United Kingdom, and I have no problem with arms sales to other countries, as long as they are properly controlled under the precautionary principle. But the underlying issue raised by the Government’s decision is that they need to decide what kind of global nation they intend the UK to be: a champion of fair and decent values or an apologist for human rights abusers.

Announcing the decision to resume arms sales to Saudi Arabia for use in Yemen on the day after 20 Saudi officials were placed on the FCO sanction list for the killing of Jamal Khashoggi—in part for criticising Saudi conduct in Yemen—is an extraordinary stretch, even for this Government, who seem to pride themselves on holding two or more contradictory positions at the same time. Can the Minister explain how the revised methodology can possibly allow the Government to describe a five-year, Saudi-led assault on Yemen, using British planes, technical support and equipment, which has seen thousands of civilians killed in schools, hospitals, funeral halls and market places, and left some 20 million civilians needing humanitarian assistance just to survive, as a set of “isolated incidents”?

[Lord Grimstone of Boscobel]

First of all, I utterly condemn the reprehensible killing of Mr Khashoggi. The UK and Saudi Arabia have a long-standing bilateral relationship based on a number of pillars, including trade, defence, security, energy and shared concern about regional issues. Saudi Arabia is a major political and economic power in the Middle East, and its position as home to the cities of Makkah and Medina give it unmatched convening power in the Arab world. We regularly raise our human rights concerns with the Saudi authorities, using a range of ministerial and other diplomatic channels.

[Lord Browne of Ladyton (Lab) [V]]

My Lords, I agree with Save the Children that this decision is indefensible. The Government say that they want to be a global force for good but, the very next day, decide that killing and injuring thousands of children does not constitute “a pattern of harm”. Proper scrutiny of this decision requires access to the unique methodology and data that the Secretary of State referred to in her statement. Can the Minister explain the methodology? Will Parliament be given access to it, or will Parliament and the defenceless children of Yemen have to wait until our courts compel its production—as they will?

[Lord Grimstone of Boscobel]

The assessment of whether an incident created a possible breach or serious violation of international humanitarian law is a complex matter. In order to review that, we were required to draw on all available sources of information, including some that were—I am sure noble Lords will understand this—necessarily confidential and sensitive. We are therefore not able to go into the details of individual assessments.

[Baroness Sheehan (LD) [V]]

My Lords, the bombing of weddings, funerals and hospitals in Yemen clearly constitutes a pattern of very bloody violations by Saudi Arabia. For Liz Truss to say that it is okay to resume arms sales because these were “isolated incidents” is tantamount to saying that one can be “a little bit pregnant”. Earlier this week, 20 Saudi nationals close to the Saudi regime were designated under the Magnitsky regulations for the heinous murder of Jamal Khashoggi. How can we be a force for good when we sell arms to a country with a sustained record of human rights abuses?

[Lord Grimstone of Boscobel]

We indeed have assessed that there were a small number of incidents that have been treated, for the purposes of the analysis, as violations of IHL. However, these were isolated incidents that did not display any particular pattern, and our analysis shows that Saudi Arabia has a genuine intent and the capacity to comply with IHL in the specific commitments that it has made.

[Lord Polak (Con) [V]]

My Lords, we are all rightly deeply concerned about the horrendous violence in Yemen, and I am grateful that my noble friend the Minister has just confirmed that he will continue to raise issues of human rights. We should, however, also reflect on the whole map of the region, with destabilisation from Afghanistan to the Mediterranean by the Iranian regime’s support for terrorists and militia. Can my noble friend explain why there was such a long delay in taking this particular decision?

[Lord Grimstone of Boscobel]

I think my noble friend will understand that this is of course a complex matter. It was very important that, this time, we got it right. Developing a revised methodology and applying the enhanced IHL analysis to recorded allegations across the conflict is not a straightforward task. It was vital that the Government got this right first time, with a comprehensive assessment process that was strictly in accordance with the legal approach identified by the Court of Appeal.

[Lord Craig of Radley (CB) [V]]

My Lords, this sensitive issue has been very thoroughly examined. Can the Minister confirm that airborne precision weapons are in the order? Does he agree that, correctly targeted, the inherent accuracy of such weapons makes their use in air attacks less likely to cause unintended collateral damage or, more importantly, large numbers of non-combatant casualties?

[Lord Grimstone of Boscobel]

The noble and gallant Lord makes a good point. As I have said previously, we have examined all the incidents and are satisfied that these were isolated incidents that did not display any particular pattern. Our analysis shows that Saudi Arabia has a genuine intent and the capacity to comply with IHL.

[Lord West of Spithead (Lab) [V]]

My Lords, there are a number of Royal Air Force officers and ex-officers—British ex-pats—in Saudi Arabia in the various programmes involving aircraft. Last year, when this was discussed in the House, it was said that one of the benefits of having them there if we were selling arms was that they could give advice about targeting and so on. Can the Minister say whether any Royal Air Force officers, or indeed ex-pats, are involved at all in the targeting process within Saudi Arabia?

[Lord Grimstone of Boscobel]

I do not believe that they are, but in order to give the noble Lord a completely accurate answer to his question, I will write to him.

[Baroness Smith of Newnham (LD) [V]]

My Lords, your Lordships’ International Relations and Defence Committee, of which I am a member, produced reports on the Middle East in 2017 and Yemen in 2019, in which we raised concerns about the Saudi-led coalition’s misuse of weaponry leading to the loss of civilian life. In particular, we noted that assurances by Saudi-led reviews are not enough and not an adequate way of implementing our obligations of risk-based assessment set out in the Arms Trade Treaty. Does the Minister agree, and will he clarify what assessment has been made, beyond what the Saudis have told the Government?

[Lord Grimstone of Boscobel]

The assessments we make are very much our own assessments, led by specialist people who are expert in these matters. We draw on information from a number of sources, including but not confined to the Saudis, and a whole range of material is considered in coming to our view of what the appropriate assessment of a particular incident should be.

[Baroness Helic (Con) [V]]

My Lords, for five years Yemeni civilians have been killed in attacks on schools, hospitals and marketplaces, mainly by Saudi-led air strikes. The Government have concluded that there were only an isolated number of incidents in which such air strikes violated international human rights law. Will my noble friend tell the House exactly how many air strikes that refers to? If he cannot give an exact figure today, will he undertake to write with that information?

[Lord Grimstone of Boscobel]

As I have said previously, the assessments draw on a number of sources, some of which are necessarily confidential and sensitive. However, I have heard the question clearly and I will write to my noble friend with the information she is seeking.

[Lord Carrington (CB) [V]]

My Lords, I declare my interests in Saudi Arabia as set out in the register. Saudi Arabia is an important ally as well as an important market for UK exporters. However, as far as our exporters are concerned, the real issue at present is not new business but payment. The Saudi Government’s decreased oil income and rising Covid expense is evidenced by seriously late payment. What advice is being given to UK exporters on this market? Will the Minister also comment on Saudi arms import priorities in the current circumstances?

[Lord Grimstone of Boscobel]

The noble Lord raises a matter I am personally very familiar with, having myself experienced as a businessman the Saudis’ propensity not to pay on time. I fear that the only quick advice I can give him, slightly lightheartedly, is persistence with them. I normally find that persistence pays off. More seriously, our embassy in Riyadh is always willing to help British exporters in this situation and to make representations to the appropriate Saudi authorities.

[The Lord Bishop of Carlisle [V]]

My Lords, on the Bishops’ Benches we welcome the unanimous decision by United Nations Security Council to endorse a global ceasefire in the context of the Covid pandemic. Does the Minister accept that, in light of the horrific situation in Yemen, already mentioned several times, the Government’s decision to resume selling arms to Saudi Arabia risks fatally undermining the implementation —[Inaudible.]

[Lord Grimstone of Boscobel]

Both personally and as a Minister I remain deeply concerned about the human rights situation in Yemen. I think it is important that we continue to work with all parties to find a political solution to the conflict. This will help create the conditions for the legitimate Government to improve their capacity to protect human rights. Yemen is a human rights priority country for the UK.

[Lord Judd (Lab) [V]]

My Lords, the Government have gained considerable credit recently for toughening up sanctions and for their willingness to apply those sanctions in the context of human rights abuses. Do the Government understand that real credit will be established—otherwise cynicism, bitterness and dissolution will take its place—only if they apply themselves with equal vigour to the protection of countless ordinary people who are being subjected to suppression and oppression in Saudi Arabia and Yemen?

[Lord Grimstone of Boscobel]

First, I acknowledge the noble Lord’s obvious deeply felt concern about this matter. The UK and Saudi have a long-standing bilateral relationship based on a number of pillars, including trade, defence, security, energy and shared concern about regional issues. Matters are changing in Saudi Arabia. We have seen progress on social reforms under Saudi Vision 2030. For example, the Saudi economy was the most improved for women’s economic opportunities, according to the recent World Bank report, Women, Business and the Law—so things are happening there and I think it is right for us to encourage that process of change in Saudi Arabia.

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

My Lords, I am afraid that the time for this Question has now elapsed. I apologise to the noble Baronesses, Lady Coussins and Lady Warsi, for not being able to call them.

China: Supply Chains

Lord Grimstone of Boscobel Excerpts

Wednesday 1st July 2020 Lords Chamber

[Lord Blencathra]

To ask Her Majesty’s Government what assessment they have made of the report by the Henry Jackson Society Breaking the China Supply Chain: How the ‘Five Eyes’ can Decouple from Strategic Dependency, published on 14 May; what plans they have to conduct an assessment with industry based in the United Kingdom of the supply of goods sourced from China; and what steps they are taking to encourage such goods to be sourced from the United Kingdom.

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, coronavirus has highlighted the importance of access to critical goods. Having a diverse and reliable pool of suppliers is clearly in our interest, whether from a security, sustainability or value-for-money perspective. The Henry Jackson Society report makes a useful contribution as we consider resilience in our supply chains. We are supporting businesses to diversify supply chains by opening new markets through free trade agreements, reducing barriers to exports and maintaining a competitive business environment.

[Lord Blencathra (Con) [V]]

I give a very warm welcome to my noble friend the Minister on his first appearance at the real Dispatch Box. Recent events have shown the extreme danger of depending on vital supplies from foreign powers, even close allies. Since the Chinese Communist regime is now behaving like a hostile state, threatening Taiwan, commandeering islands in the South China Sea, covering up its Wuhan virus failures and terrorising Hong Kong, will my noble friend now step up work with UK companies to urgently reshore those vital 229 strategic goods and services that we currently get from China?

[Lord Grimstone of Boscobel]

The noble Lord makes some strong points. My department is considering import dependency and will continue to analyse imports, including from China, to determine whether the UK is particularly reliant on certain of our trading relationships. Project Defend is looking at our trading relationships with a range of international partners. It will analyse critical supply chains for a range of non-food items in addition to medical supplies. We will continue working to keep trade flowing by reducing tariff and non-tariff barriers and through our programme of FTAs.

[Lord Truscott (Ind Lab) [V]]

My Lords, yesterday, in his neo-Keynesian “spend, spend, spend” speech in Dudley, the Prime Minister said that he was not a Sinophobe but that

“we need to … protect critical infrastructure from hostile vendors”.

Can the Minister tell your Lordships’ House whether this now includes China and, if so, will Her Majesty’s Government let China build new nuclear power stations at Bradwell and Sizewell?

[Lord Grimstone of Boscobel]

My Lords, in general, as an open economy, we welcome foreign trade and investment where it supports UK growth and jobs. We do not accept investment that will compromise our national security. The noble Lord will be aware that the nuclear industry is one of our most highly regulated industries. He can rest assured that we would not accept any involvement from any party that did not meet our strict criteria.

[Lord Bowness (Con) [V]]

I add my congratulations to the Minister. First, the report referred to in my noble friend’s Question mentions the possibility of a free trade zone with the Five Eyes. Has Her Majesty’s Government specifically examined that proposal? Secondly, given the critical importance to China of the belt and road initiative, what approaches have we made to the countries of Asia and the Caucasus to join in putting moral pressure on China over Hong Kong, and about trade possibilities to assist us and those countries in dealing with China?

[Lord Grimstone of Boscobel]

At the moment, we are consulting on various areas where it might be possible to launch a free trade zone, but I am not aware that Five Eyes membership will be a qualification for that. UK engagement with the belt and road initiative is focused on practical steps and collaboration to help ensure that infrastructure investments are delivered in line with recognised standards in four key areas: transparency; environmental impact, including carbon emissions; social standards; and debt sustainability. Such standards lead to good projects, which benefit all parties. With their world-leading experience, British companies have an important role to play in contributing to that effort.

[The Earl of Erroll (CB) [V]]

Does the Minister agree that not much electronic equipment is manufactured in the UK so we will always be strategically dependent on foreign companies? Is not the important thing to ensure interoperability and spread the risk across suppliers in different countries, and to realise that we cannot rely on any country when it comes to security and spying? What we need is end-to-end encryption that works. Should we not also support UK companies to build equipment in the new, innovative 5G space?

[Lord Grimstone of Boscobel]

It is certainly a great priority for us to do that. It falls into the general area where it is very important to secure diversity of supplies for the United Kingdom. The pandemic has taught us many lessons about the importance of diversity of supplies. The noble Earl can rest assured that we are observing and watching this very carefully, including developing with our allies alternative sources of supplies to give us much greater diversity in these matters.

[Lord West of Spithead (Lab) [V]]

My Lords, it is understandable that there have been growing concerns about Chinese state involvement in the UK, which is focused in a number of key areas that could have implications for national security. Not only do the Chinese have a key part of our nuclear infrastructure, telecoms, CCTV network, steel and so on, but they fill courses at UK universities relating to AI, quantum engineering, use of big data and the internet of things. They have poured investment into higher learning in these areas in the UK, and have stolen IP on an industrial scale from our companies. When taken in conjunction with statements by Xi Jinping about the global ambitions of China, it is not surprising that we are worried—we should be. Have the Government made an overall assessment of Chinese involvement in the UK and the level of threat that poses? Who is responsible for compiling this list and what, if any, action we have taken so far?

[Lord Grimstone of Boscobel]

We continue to implement a comprehensive and co-ordinated approach to China, which identifies and pursues UK interests. I have to say that we take a very clear-eyed view of the challenges and risks from China. In many areas, we have a strong and constructive relationship with China but, equally, we are very aware that items may not coincide with our national security. Our approach to China is co-ordinated across government. The FCO is at the heart of the cross-Whitehall strategy approach to China, and the importance of this is shown in that the work is led by the National Security Council and the China National Strategy Implementation Group. We will continue to implement a comprehensive and co-ordinated approach to China that identifies and pursues UK interests in these areas and, of course, engage our like-minded international partners as we do so.

[Lord Campbell of Pittenweem (LD) [V]]

My Lords, to follow up the question from the noble Lord, Lord West, I ask the Minister: given the symbiotic relationship between the Chinese Government and Chinese companies, what level does Chinese investment have to reach in the United Kingdom before it prejudices our national interest?

[Lord Grimstone of Boscobel]

At the moment, trade between China and the UK amounts to around £80 billion a year. It is a very important trading partner for us, but I repeat that we are very clear-eyed about this. We take good care as to where our national interest lies, and we will not hesitate to intervene in any areas where we feel that it is jeopardised.

[Lord Robathan (Con) [V]]

I too welcome my noble friend the Minister to the Dispatch Box. We know that China ignores World Trade Organization rules. He mentioned our attitude towards the belt and road initiative, but should we now see it as a means of spreading Chinese economic power and influence while expecting deference or even subservience over any Chinese misbehaviour? I think particularly of the ban on Australian beef, tariffs and threats of more sanctions against our Five Eyes ally, Australia. Should we not act accordingly on Chinese trade and the BRI?

[Lord Grimstone of Boscobel]

My Lords, I do not think that subservience is a safe way to conduct policy with China. I have a very strong belief that mutual respect is the way forward and, I repeat again, it is mutual respect while having our eyes wide open. We recognise that some countries have had a difficult experience with BRI projects, including regarding debt sustainability, transparency and negative local impacts. We are much engaged in dialogue with China to make sure that all investments of that sort benefit the world rather than just China.

[The Deputy Speaker (Lord Lexden) (Con)]

My Lords, the time allowed for this Question has now elapsed.