Bilateral Free Trade Agreements

Lord Hannay of Chiswick Excerpts

Tuesday 20th December 2022 Lords Chamber

[Lord Johnson of Lainston (Con)]

I greatly thank the noble Lord for that point. We are all aware of the importance of resilience in our supply chains, particularly when it comes to nations around the world that may not share our values and interests. As for Europe, I refer him to the comment I just made about the export support service and the additional work and funding we are putting in to help our exporters export to Europe.

[Lord Hannay of Chiswick (CB)]

My Lords, in an earlier answer, the Minister said that the Government have eased trade to the European Union with several measures. Could he share a list of them with the House now?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that question. Clearly, it is not designed to put me on the spot to reel off a list of measures from the top of my head. It would be much more useful for us to have a full debate on this matter and for me to respond to the House with a written answer to that question.

Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation

Lord Hannay of Chiswick Excerpts

Wednesday 1st May 2019 Lords Chamber

Referring very briefly to the Constitution Committee’s recent report on parliamentary scrutiny of treaties, it points the way forward. The proposal to establish a treaty committee is welcome. It may be that a Joint Committee is appropriate, but the priorities of the two Houses often differ, and I would support the idea of a House of Lords committee on this. The Government’s commitment to provide more information to Parliament at the beginning of the process for making free trade agreements is very welcome, as is the commitment to provide Select Committees with sensitive information about free trade agreements on a confidential basis. I assume that there will be an opportunity to debate the Constitution Committee’s report in due course, but in the meantime I hope that the Minister can help us on the questions I have asked about whether this is a holding operation, whether progress is being made on the 17 outstanding sectors, how thoroughly amendments made to Joint Committee decisions will be able to be scrutinised by Parliament and what the implications are of no services agreement and no mutual recognition of qualifications.

[Lord Hannay of Chiswick (CB)]

My Lords, unlike many previous speakers in this debate, I am not a member of the sub-committee chaired by the noble Lord, Lord Whitty, although I do strongly agree with and support his Motion to Regret. I should declare an interest. My noble friend Lord Kerr of Kinlochard referred to the good will we generated when the east Europeans, Cyprus and Malta came into the Community. We also generated quite a lot of good will in 1972, when I was a member of the team that negotiated the first free trade area agreement between Switzerland and the European Union. We were on our way in then, not trying to get out of the door, so no doubt there was even more good will around.

Like almost every speaker in this debate so far, I think that it has demonstrated how totally inadequate the procedures we are applying to this agreement are for parliamentary scrutiny of trade policy in the future. It will be of great benefit to us all, including the Minister, I hope, to have noted how toothless and useless this process is—other than to employ us all on an early summer afternoon in debating the matter—because there is absolutely no leverage here whatever. We can pass a Motion to Regret or we can reject the whole agreement, the first of which would be sensible and the second of which would be silly. However, what we cannot do is to influence the debate in any way.

Here I take up a point made by the noble Lord, Lord Robathan, who is not in his place, when he said that Parliament cannot be a negotiator of a trade agreement. Of course he is right, but that is not what is at issue. What is at issue, as it was when the Trade Bill was discussed at huge length in this House, is whether some process could be put in place by which Parliament could have a say in the basis for the negotiation before it began, could be briefed constantly during that negotiation and could have a reasonable opportunity to influence the outcome. The Minister will know of the amendment passed by this House, which went to the other place six or eight weeks ago. It has been some time now and I would be grateful if, when she winds up at the end of this debate, she can tell us how the Government’s thinking is coming along on that matter because it will be rather important to know that. We may of course never see that legislation again, in which case it might be a waste of time, but that crucial point has been brought out by this debate.

The other point which has come out clearly is the lack of coverage of services, which really is crucial. The figure quoted most often is that 80% of our economy now consists of services; a very large amount of that consists of internationally traded services. In the absence of any coverage of them here or, far more importantly, in the political declaration agreed between the Government and the European Union—not yet and perhaps never to be approved by Parliament—the provisions for services are either absent or totally vestigial. That is an astonishing situation. It is often said, quite wrongly, that the European Union has not got very far on freeing up trade in services. That is complete rubbish; it has got a rather long way in so doing and has a long way further to go. We have been beneficiaries of the first part of that and we need to be part of the second because it is crucial to our future prosperity.

The noble Earl, Lord Kinnoull, spoke about the insurance industry. That is just one example but there are any number of others. Whether we talk about road transport, air transport, professional services, the legal profession, banking or the creative industries, there are huge areas of our economy which are simply not covered. I wonder why that is the case. Why is nothing said about this? Enough has probably been said about this agreement to enable all of us to realise that it is not a thing of great beauty. I suppose the best thing I could hope for is that it never enters into force.

[Lord Wigley (PC)]

My Lords, as a member of the sub-committee chaired so well by the noble Lord, Lord Whitty, I am glad of the opportunity to pay tribute to him for his work as chair and to the work of the staff of the committee. A tremendous amount of work goes on and we, as a Chamber, are indebted to all the chairs who undertake such long and often painstaking work, over long hours, to ensure that the proper scrutiny goes on and that the work of the committees is effective.

In many ways, what we have before us today is a test vehicle, because many other treaties will follow and some of the points that have been made already, which I shall not repeat in detail, need to be dealt with now to ensure that we move things forward effectively. This matter is of interest to us all, whichever side we take on Brexit; we have to get the system to work whatever the settlement may be. I am very committed to the European Union, but I have to accept that it is important that we get things to work properly, whether fairly soon, after 31 October or whenever.

One question that clearly arises is our capacity to handle all these changes and all the discussions and investigations that have to go on—the capacity within Parliament on an elected level in the House of Commons and in our Chamber here, but also within the Civil Service. Do the Government have the capacity to handle things to the timescale within which they will have to be undertaken? Getting it wrong has a material effect on people involved in manufacturing, in trade and in services, so we have to get it right. It is better to get it right a little later than to be rushing in and getting it wrong soon.

The noble Lord, Lord Purvis, referred to getting the devolved Administrations involved. That does not mean just sending an email down the road to them and saying, “This is happening. Send your reply within three weeks and we await to hear that”; it means engaging with them and making sure that there is proper buy-in at that level. We need a harmonious approach so that some of the problems that may be seen from the devolved Administrations’ perspective are dealt with at the right time and do not trip us up later.

I stress again the question of differentiation between goods and services. I always thought that this was an artificial differentiation. It is even more so now, because we cannot just draw a line between them. We need a system that works not just for now but as things move forward. As what we have regarded as services in the past become an integral part of the goods that we may be dealing with, we have to ensure that our treaties are robust enough for those circumstances.

Will the Minister give some commitment as to whether the Government can deal with the trade implications of a no-deal scenario on 31 October? God help us that it does not come to that but if it does, can we realistically deal with it in a way that is fair and reasonable for all those diverse interests in our economy who depend on the answer?

Trade Bill

Lord Hannay of Chiswick Excerpts

Report: 1st sitting: House of Lords
Wednesday 6th March 2019 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, like the noble Lord, Lord Stevenson, we welcome the Minister’s comments from the Dispatch Box. This is an occasion when parliamentary persistence has proved effective. We started this process when the Government had indicated that the Bill would be about only the existing continuity agreements and we made a very strong case, across all parts of the House, that it should also signal a direction of travel which, in many respects, would create precedent. It is on that basis that we on these Benches welcome the Command Paper that the Minister has published and her willingness to engage with and meet opposition parties and Members from across the House.

One reason this has been so important is that it has been a consistent practice of this Government, in relation to continuity trade agreements or starting discussions with countries about future trading relationships, to delude themselves that it will be easy, then deny that there is a problem when it is highlighted that they are difficult. Then they demur when frustrated officials leak information that allows us to glean the reality from the media. Then, unfortunately, on occasions, they deflect the problem, saying that is not their problem or responsibility; it is other countries that are not lifting the burden, or the European Union that is not being forthcoming with its position on a future relationship. We want to be in a position where we can put all that behind us and move on to a platform where we have much greater clarity as to what the trading relationships, and the role of Parliament and the devolved Administrations in their oversight and approval, will be. I welcome the Command Paper as the start of that.

To quote the noble Baroness, Lady Manzoor, from Question Time, this can be only the start of the process, and this is the platform on which we will seek to build. This is not the end. In that spirit, I hope the Government will be very favourable to Amendment 12 later today to ensure that that platform can be built on in the most constructive manner. On that basis, I look forward to hearing the Minister’s comments.

[Lord Hannay of Chiswick (CB)]

My Lords, as one of those who supported the amendment of the noble Baroness, Lady Smith, I thank the Minister for her efforts in the meantime and for the publication of the Command Paper, which is a useful production and provides greater clarity on the Government’s intentions.

I shall make two small points. First, this legislation really matters. It could be—I hope it will not be—that within three weeks we will have left the European Union without a deal, in which case the Bill, by then perhaps an Act, will be the basis for Britain’s future independent trade policy. So we need to get it right. On the issue of parliamentary oversight, mandating and scrutiny, the Bill currently before your Lordships’ House on Report contains not one word added in that respect to the version we saw in Committee. The problem is the Government’s unwillingness to put in the Bill the provisions described in the Command Paper. That is at the heart of the debate we will have on Amendment 12.

[Baroness Fairhead]

My Lords, with the indulgence of the House I should like to welcome the start of Report. A number of points were made on the preceding Motion, but I believe that they will be picked up in our discussions on further amendments over the course of the day.

I have listened carefully to the thoughtful contributions that this House has made on the Bill so far—not just in our debates, but in meetings I have had with a great number of noble Lords over the past few weeks. I look forward to continuing to benefit from the experience, expertise and knowledge of your Lordships, and the continuation of the constructive dialogue we have had so far.

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[Lord Hannay of Chiswick]

My Lords, this amendment is in the names of the noble Lords, Lord Stevenson and Lord Purvis, and my own. I do not wish to appear disobliging towards the Command Paper the Government tabled last week and to which the Minister referred this afternoon before we started Report. It contains some useful material but unfortunately it falls short of providing a proper role for Parliament in three important respects, and thus fails to bring this Parliament anywhere close to the degree of mandating, oversight and approval that will prevail in some of the main trade partners with whom we will, in the future, be negotiating if and when we become responsible for a new, independent trade policy—most significantly, of course, the European Union and the United States.

The first defect is the Government’s refusal to put any of these provisions that they referred to in the Command Paper into the Bill. The degree of mandating and oversight will remain entirely in the Government’s gift on every occasion in which we set out to negotiate a major free trade agreement. Their willingness to give Parliament a say is clearly absent when one considers the consultation the Government have been holding on proposed agreements with the United States, Australia and New Zealand. No doubt having a public consultation, which they are engaged in at the moment, is entirely valuable and appropriate, but there has been no involvement at all by either House of Parliament in that consultation. That, surely, is a sad defect.

A second defect is that there is no provision at all in the Command Paper for mandating ahead of, and oversight during, the negotiations for parliamentary bodies—the word “mandate” never appears at all. The EU will be seeking a mandate from the European Parliament before negotiating with us and the European Parliament will no doubt have oversight throughout the negotiations. In the US, the Administration have just tabled their proposals for an agreement with us and these will undoubtedly be subject to detailed scrutiny and consideration by both Houses of Congress. Why should this Parliament not receive the same provisions and opportunities?

The third defect lies in the process of parliamentary approval for any agreement once the negotiations have been successfully concluded. The CRaG procedure, which is the Government’s preference, provides only for a negative procedure, which I suggest is inadequate for the very complex and sensitive issues that free trade agreements now entail. It is a much weaker instrument than the affirmative procedure proposed in this amendment. I hope that the Government will reflect carefully on how to remedy those three major defects. Without such remedies, the Bill clearly falls short of what is required in a period when trade negotiations have, quite rightly, become the object of careful parliamentary scrutiny and approval all across the world at every stage. Why should this Parliament be left on the sidelines?

[Lord Purvis of Tweed]

My Lords, I am very grateful to the noble Lords, Lord Hannay and Lord Stevenson, for working collectively to condense a number of amendments in Committee into one composite amendment. It captures the two broad areas that were left outstanding in the Government’s Command Paper, the presentation of which I and others welcomed. The first area explores how the Government see the prerogative power of the Executive taken forward in a new, more complex world. The second concerns the devolved Administrations. Both areas are deficient in the Command Paper, as has been said already.

To illustrate the first point, I was born in 1974, when there were four regional trade agreements in the world. In 1992, there were 24 and in 2019 there are 471. That shows the massive growth in breadth and complexity of trade agreements that have been notified with the WTO. Nine been notified to the WTO during the tortuous process of our consideration of this Bill, which shows how trade moves fast but also widely and with growing complexity. Therefore, reverting, in effect, back to a consideration of the prerogative power before our membership of the EU is not really sufficient. It is why the International Chamber of Commerce, in a meeting I chaired, was so disappointed with the British Government seeking,

“to address the issue of 21st-century trade with 19th-century constitutional practices”.

This amendment seeks to address this fundamentally.

There is no direct replication of the relationship between the Commission, the Council and the European Parliament. The European Parliament has formally notified and engaged from the start of a trade negotiation 12 times. We are seeking to maintain this as the same form of platform of relationship, and if there is no direct read-across from what we have at the moment we will seek to use that as an opportunity to enhance the role of Parliament, rather than enhance the role of the Executive. That is why the first element seeks a role for Parliament in supporting the mandate or the negotiating objectives. The Government may say they have an issue with the word “mandate”: we are just taking the word of the Prime Minister when she sought and secured, “the mandate I need” when it came to negotiations with the European Union recently. When that passed the House of Commons she said she was,

“armed with a fresh mandate”.

This is the Prime Minister’s language and if the Government are opposed to it, they need to explain why the Prime Minister’s language is wrong.

On the second area, we have changed the use of the prerogative power over recent years. Canada still deploys troops without parliamentary approval—we do not. We have moved to fixed-term Parliaments. We have changed, adopted and modernised the prerogative power and that is why it is appropriate that Parliament has a role in setting the negotiating objectives and mandate and also has a vote on the final ratification.

My final point concerns consultation with the devolved Administrations. This formal statutory underpinning of consultation was sorely lacking in the Command Paper. It is welcome that there will be a process through the concordat, that there will be a forum and that there will be ongoing discussions with Ministers, but just to give the current example of the Faroe Islands trade agreement, the draft text was not shared and the level of consultation with devolved Ministers was not appropriate. We seek to address those two areas in this amendment, with consultation with the devolved Administrations, an updating and a more appropriate role for Parliament. I hope that the Government will see this in the spirit in which it was tabled—that we wish to build on the Command Paper and improve it—and that they will accept it.

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[Baroness Fairhead]

My Lords, I thank the noble Lords, Lord Stevenson of Balmacara, Lord Purvis of Tweed and Lord Hannay of Chiswick, for tabling Amendments 12 and 35. They seek to ensure that Parliament has a significant role in free trade agreements and impose obligations on the Government and a scrutiny committee in relation to mandate-setting, transparency and approval of free trade agreements.

I fully understand the desire of noble Lords right across the House to ensure that there is strong and effective scrutiny of future trade agreements. It is an objective that the Government share. We have listened carefully to the views put forward in both Houses on this topic and last week published comprehensive proposals for enhanced scrutiny of future trade agreements in a Command Paper. This included confirmation that we would publish our outline approach to negotiations, including our objectives, accompanied by detailed economic analysis.

We further committed to publishing progress reports after each negotiating round and an annual trade report across all live negotiations. This draws on best practice internationally and will ensure a high degree of public transparency around our negotiations. In terms of Parliament’s role, we committed that we would work closely with a committee, or one in each House, to ensure that it could effectively scrutinise negotiations from start to finish, as well as setting out opportunities for scrutiny of FTAs throughout negotiations.

It is to this role that Amendments 12 and 35 apply. I will address these amendments and our proposal in this area in more detail. Amendment 12 would disapply CRaG to trade agreements and instead require that the agreement secured the approval of both Houses prior to being ratified, as well as requiring the approval of both Houses for negotiating mandates. Without wishing to revisit ground that was covered during Committee, it is worth reiterating that such a proposal goes to fundamental constitutional principles that underline the negotiation of international treaties. The negotiation and making of treaties, including international trade agreements, is a function of the Executive. This rule is not only the result of centuries of constitutional practice but also serves an important function. It enables the UK to speak clearly, with a single voice, as a unitary actor under international law. It ensures that partners know our views and are able to have faith that our position, as presented formally in negotiations, is the position of the United Kingdom.

Regarding the setting of mandates, we have considered international practice, and it is telling that there was none among those we considered in which the legislature had this role. That includes the EU, Canada, Australia and New Zealand. The noble Lord, Lord Bilimoria, referred to the United States. It is true that the United States legislature is different from ours. Congress does not vote on a mandate for each agreement but delegates authority for brokering trade agreements through a trade promotion authority. This includes setting out overall objectives for trade negotiations and legislation but not specifically for individual deals. The trade promotion authority then enables an expedited process for the consideration of trade deals whereby Congress has 30 days to consider the mandate for an individual country negotiation and can call hearings on them with the United States representative. They are therefore consulted in relation to the specific mandate for each country and during negotiations, as we plan to consult Parliament.

The noble Lord, Lord Hannay, said that there had been no consultation with Parliament, but there was a debate on 21 February to consult the Commons on four new free trade agreements we are considering. As he will understand, we are unable to negotiate right now while we are members of the EU. We will ensure that Parliament has the opportunity to scrutinise the outline approach to negotiations, and those would usually go to general debate in each House.

[Lord Hannay of Chiswick]

I am most grateful to the Minister for that clarification. I think I heard her say that there will now be an opportunity to consider the objectives the Government are pursuing in their negotiations—when they are able to conduct them—with Australia, New Zealand and the United States. That is very helpful, but she seems to be making rather heavy weather about the word “mandate”. She gave us a very lengthy exposition of the royal prerogative, which is something that is behind us but is now exercised, of course, by the Government. Could she not possibly think a little more carefully about ways in which this objective could be achieved? She has said already, I think, that the Government intend to set out their objectives in the negotiation. Why can they not say that they would seek the view of both Houses of Parliament on their objectives, which would be a mandate for the negotiations? That is all that is being suggested.

[Baroness Fairhead]

My Lords, the chosen words of the Government are “outline approach”. On the noble Lord’s point, the ability to have objectives in that outline approach and the ability for both Houses to debate and scrutinise those objectives is the key part of what we are discussing here. I agree with my noble friends Lord Hailsham and Lord Lansley, who talked about the critical issue here, which is consideration and discussion. That is absolutely what this Command Paper proposes—in the initial stage of the outline approach, to particularly scrutinise those objectives.

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[Lord Hannay of Chiswick]

I just want to correct the noble Viscount. We have been a member of the customs union with the European Community since 1972—rather more than 20 years.

[Viscount Trenchard]

I do not disagree with the noble Lord—but the point I was making is that in the period since 1998 goods exports to the EU have grown by only 0.2% per year, or 3.7% over those 20 years, reaching £164 billion in 2017. However, the UK’s goods exports to countries outside the EU customs union have grown in the same period by 3.3% a year—over 60% in total—to £175 billion. So the customs union has not been quite as marvellous for this country as noble Lords opposite suggest. I very much hope that the Government will stick to their policy of leaving on a basis whereby we will have our own independent trade policy, which will enable us to do more trade and enter into trade agreements with the economically faster-growing parts of the world.

Trade Bill

Lord Hannay of Chiswick Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Lords Chamber

[Baroness Fairhead]

My Lords, I thank the noble Lords, Lord Stevenson and Lord Purvis, for tabling Amendments 32 and 52. I note the noble Lord’s statement that we should not focus too much on specific wording. I am very taken by the suggestion of my noble friends Lady Cooper and Lady Neville-Rolfe that simplicity is a good approach, but I would welcome any conversations about specific wording.

As the House is aware, we are seeking continuity as far as the existing EU trade agreements are concerned. This means the existing impact assessments of the existing trade agreements that the EU is in will continue to be relevant. They have already enabled Members of both Houses, as well as the public, to consider the impact to the UK. There is an impact assessment, for example, of the EU’s free trade agreement with South Korea. It is online, and it has been available since February 2010, alongside many others that are also available online.

As for a broader evaluation of policy, the Government also undertake evaluations of the impact of their policies as a matter of course. In addition, I am happy to confirm that we are developing proposals for how monitoring and evaluation can best be conducted when the UK takes responsibility for our own trade policy. I would be happy to meet noble Lords to reflect their views, and I take to heart my noble friend Lady Neville-Rolfe’s suggestion of a contemporary approach.

Further, the Government have already committed, through Clauses 3 and 5 of the Trade Bill, to lay in Parliament a series of reports explaining our approach to delivering continuity in each of our existing trade agreements. They will also explain, if any, significant changes to and the economic impact on the new UK bilateral agreement when compared to the existing impact assessment. We believe that this is proportionate and better suits this unique programme, which seeks to preserve existing benefits rather than establish new ones. In the earlier debate before Committee, we made a firm commitment to bring forward proposals on our future trading relationships. We have been clear: we will ensure that Parliament plays an appropriate role when the UK has its own independent trade policy.

I am not trying to avoid the questions of my noble friend Lord Lilley and the noble Lord, Lord Bilimoria, about future parliamentary scrutiny. On the Floor of the House, I have been clear that we will bring forward proposals because we understand fully how critical proper parliamentary scrutiny is. I have stated, and am happy to restate, that I am open to suggestions. We are looking at the suggestions of the ITC in the other place and waiting for input from the Constitution Committee. This issue will be covered in much more detail by my noble friend Lord Younger in the debate on the next group of amendments, so with the leave of noble Lords I will leave that to him.

On Amendment 60, tabled by the noble Lord, Lord Purvis, the Government have met their commitment to provide Parliament with a robust and extensive analysis of the long-term economic impact of our future trading relationship with the EU. As I understand it—we can discuss this if I am incorrect—the amendment asks for a short-term analysis. However, as the Chancellor said in his letter in reply to the Treasury Committee, the cross-government group is not suited to provide analysis of short-term impacts. Within their statutory mandates, the Bank of England and the OBR produce short to medium-term forecasts for the UK economy. The Bank of England has already provided the Treasury Committee with its analysis of short-term impacts and the OBR will continue to update its forecast in line with its mandate.

The amendment also asks for the economic impacts of the backstop to be modelled but, as the Chancellor made clear, the backstop is an insurance policy that neither side wishes to use and, if triggered, would be explicitly temporary. Furthermore, there is not yet sufficient specificity on detailed arrangements for modelling purposes. This would be a matter for further discussions through the joint committee; without such detail, the Government would not be able to model its impacts meaningfully. Ahead of further discussions on those arrangements, Ministers have a responsibility not to release information that could reveal or imply potential negotiating positions.

[Lord Hannay of Chiswick (CB)]

I am sorry, but the Minister has rather shocked me by saying that she will not handle the next amendment. It is probably the most important amendment we will discuss, concerning negotiation mandates and so on. The Minister gave an answer on the Government’s thinking that her noble friend will, I am afraid, find inadequate if he repeats it. I assume she is aware that this House has said that the Report stage will not proceed until the Government have tabled amendments on this matter. Can she confirm that that is the Government’s understanding?

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[Lord Stevenson of Balmacara]

My Lords, in moving Amendment 33 I will introduce some of the discussion topics raised by the other amendments in this area. I look forward to the response from the noble Viscount, Lord Younger, who is standing in on this issue. The subject of the amendment is, as previously described by the noble Lord, Lord Hannay, a key—probably the most important—part of the Bill. I take his advice and am happy to try to man up and make sure that I establish the case in the sorts of terms he would like to see. We have also had contributions from the noble Lords, Lord Lilley and Lord Bilimoria, and the noble Baroness, Lady Kramer, which have set out some of the scene, so I do not think we need to go right down to the very basics of it. I would like to focus on some of the principles that are important in trying to assess this issue.

We are talking here about how Parliament and wider civil society get engaged with a process that we in this country have not really had much direct involvement with since 1972 because the function we are talking about—trade—has been a sole competence of the EU. Yes, there have been occasions when issues have come back but, as we heard in earlier discussions, they have not been very detailed and there has not been proper scrutiny. I think there is a general feeling that the procedures set out in the CRaG Act 2010 do not now satisfy those with an interest in this area.

I have eight principles that I think should inform our discussion. These are: how do the Government intend to ensure that formal consultation with external stakeholders, in advance of any negotiation mandate being drawn up, is exercised? How do the Government intend to ensure proper transparency of trade negotiations and negotiating mandates, and what role will Parliament play in that process? How do the Government intend to ensure maximum transparency in advance of those consultations? Obviously, they are constrained to some extent by issues that would be regarded as necessary to be taken under some level of secrecy if they involved security or other issues, but how will that transparency happen? In particular, how will the Government prepare proper impact assessments and make these available to inform the debate?

There is a general question about reviewing reporting on trade agreements after a specified time period, but also in relation to progress—we touched on this earlier, but it is part of a principle that we need to build in from the beginning. How do the Government intend to ensure that parliamentarians are able to access the negotiating texts? Without knowledge of the texts, very little scrutiny can take place. Some texts will be very sensitive, but nevertheless it is important that there is a mechanism under which they can be reviewed and discussed.

What will be the formal process or procedure for the ratification of trade agreements? The current arrangements under CRaG are not satisfactory. What will be the formal procedures for changes that need to be brought forward—not new trade agreements but how, particularly in light of the need for broader discussion and debate, we amend and change agreements found to be deficient, unfair or working badly in relation to any aspect of our economy or our part of the country?

Those are the issues the amendment seeks to open up. Again, it is gold-plated—I accept that—but it is important that we see the full range and depth of the issues raised and I hope to have a good debate around that. I beg to move.

[Lord Hannay of Chiswick]

I support Amendment 33, about which a great deal was said in the debate on the previous amendment, although some of the contributions more properly belonged to the discussion of this amendment. I have no hesitation whatever in suggesting that this is probably the single most important article in this legislation—except that it is not there, of course, at the moment, but it needs to be there.

Why is it so important? It is because until now the British Parliament has had no clear role in giving mandates or setting out the broad lines under which the Government should negotiate trade agreements, nor has it had any proper system for oversight of them. Possibly that did not matter in the far distant days before we joined the European Union, but it certainly matters now when free trade and other trade deals are, as the Government have said again and again, at the heart of their Brexit strategy. Britain’s ability to negotiate on its own on trade is at the heart of the Government’s pleading to back their deal.

This is really urgent now because the Government have made it urgent by refusing to take no deal off the table. If they took no deal off the table, as the Spelman amendment passed by the House of Commons did last night, we would have time to look at this. However, if no deal remains on the table—and the Prime Minister has said that it does—we have to realise that the Bill we are now discussing may be operational in 60 days’ time on 30 March this year. As currently drafted, the Bill says nothing about approving mandates before the Government can negotiate on trade with a particular country. That is a lacuna which cannot be left unfilled.

When he replies, I would like the noble Viscount the Minister to repeat what the noble Baroness the Minister said: that the Government will table amendments before Report and explain how they believe that Parliament’s authority should be established in the context of an independent trade policy. I agree that it may not be needed on 30 March and we would be mad to leave without a deal on 29 March. But the Government have decided to go on saying that we may and therefore we had better be prepared. I hope the noble Viscount will deal with that point as soon as he starts his response.

The substantive issue at stake relates to the provisions—or lack of them—for parliamentary mandating and oversight of all negotiations with third countries once we are able to conduct them on our own. They are important because without them, if the Bill remains as it is currently drafted, together with the provisions for the approval of international agreements, the only say that Parliament will have will be after the Government have conducted and concluded negotiations and then put before Parliament an up or down, yes or no agreement to what is in them. That is what we call in this House, when we are talking about statutory instruments, the nuclear option. It would be absurd if we went into the conduct of an independent trade policy with nothing for Parliament except the nuclear option. What does the nuclear option mean if it is ever deployed? It means that the Government would in good faith have negotiated with a third country—reached agreement with it, settled all the tariff details and the non-tariff barriers—and then the deal gets rejected. How much negotiating credibility would we have left after that? Zero.

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[Viscount Younger of Leckie (Con)]

My Lords, forgive me for stretching the definition of repetition, but before I address the amendments in detail I would like to underline the fact that the Bill concerns continuity for our existing EU free trade agreements as we leave the European Union. I mention that without wishing to revisit the emphasis that we placed on the word “continuity” on Monday last week. Scrutiny of new free trade agreements is not part of the Bill, nor is scrutiny of our future relationship with the EU.

[Lord Hannay of Chiswick]

I really plead with the noble Viscount not to say that again. We all know that if, through inadvertence or incompetence, the Government take us over the cliff on 29 March, this Bill—by then, presumably, an Act—will be the only instrument we have to guide our trade policy. Therefore, will he please stop saying that it is only about continuity and admit, as his noble friend Lady Fairhead did when replying to an earlier amendment, that it is meant to be capable of providing for both eventualities? Will it provide not only for the eventuality in which it is a continuity measure that lasts for the transitional period—what is sometimes laughingly called the implementation phase, in which nothing is implemented—but for circumstances in which we have to operate an independent trade policy on 30 March 2019?

[Viscount Younger of Leckie]

I had only just started, and I stand by my words, because I was about to go on to say that, none the less, I understand the desire of noble Lords, including the noble Lord, Lord Hannay, to debate these issues today—and that is what we have just done. I also appreciate the desire to understand how the Government intend to fulfil our commitments to transparency on and scrutiny of future FTAs as we exit the EU.

The amendments on future FTAs pursue many aims, which the Government understand. To be helpful to the House, during my remarks I will give as much information as I can on progress and process on FTAs. I will also answer the question raised earlier by the noble Lord, Lord Hannay—but not just yet—and will agree with the remarks made by my noble friend Lady Fairhead.

Amendments 33 and 99, which the noble Lord, Lord Stevenson, spoke to, seek to ensure that Parliament has a significant role in free trade agreements via the creation of a new Joint Committee. Amendments 71 to 74, which the noble Lord, Lord Purvis, spoke to, seek to achieve similar outcomes through imposing obligations on the Government in relation to mandate-setting, transparency and scrutiny before signature. I will address those amendments together.

First, I shall give a little context. Brexit does not change the fundamental constitutional principles that underpin the negotiation of international treaties. The making of treaties, including international trade agreements, is a function of the Executive. At the same time, it has long been held—and this Government continue to hold—that Parliament should have the opportunity to scrutinise treaties effectively. In 2010, the Constitutional Reform and Governance Act confirmed, after a process of consultation, the respective roles of the Government and Parliament in treaty-making. The Government will continue to support and facilitate parliamentary scrutiny of treaties under CRaG.

The noble Lord, Lord Purvis, asked about the Israeli trade agreement. There is agreement in principle on an FTA, but subject to—

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[Viscount Younger of Leckie]

I am listening to the noble Lord. I do not know the details of that negotiation, but I will take that back and reflect on it. There may have been some very good reasons why the information was not forthcoming, but I will reflect on that and write to the noble Lord with some information.

[Lord Hannay of Chiswick]

I am very grateful to the noble Viscount for some of the remarks he made about what the Government are likely to do before Report in tabling their own amendments on the negotiating process. That was helpful and it will be good to look forward to that. However, in everything he said, I am afraid I detect an unwillingness to give Parliament a role at a time when it would really help. Everything he said involves decorating the final stage—the approval of an agreement already negotiated—with all sorts of wonderful bells and whistles. We all know that then you have only the nuclear option. You have concluded the negotiations and, if Parliament objects, you cannot amend the text that has been negotiated with the third country. If it objects, it can reject the agreement and that will be very damaging for the national interest and the relationship with that country.

I listened very carefully to the noble Viscount. At one stage, he claimed that the Government would negotiate on trade as the Executive and under their right to do so. That is just the problem. The word “mandate” did not come into a single thing he said. All I can say—politely, I hope—is that when the Government table their amendments, the word “mandate” had better be there. If it is not, I think they will get badly stuck. It is not magic. The mandates under which the European Union negotiates are quite general; they are not specific about this or that tariff, but they are very helpful in setting the parameters under which the negotiations are conducted. I believe the Government would benefit from that, so please think a little about the word “mandate”.

[Viscount Younger of Leckie]

Again, I listen carefully to what the noble Lord says. The best way to answer him is to say that I will indeed feed back his views. They are somewhat negative—somewhat too negative, I would argue. I have spent a lot of time spelling out the details of processes and procedures, as far as I can. Before I give way to the noble Viscount, I also mention that the noble Lord, Lord Hannay, said that we were going to table amendments on Report. I want to make it absolutely clear that I have pledged to come forward with proposals before Report. I give way to the noble Viscount.

Trade Bill

Lord Hannay of Chiswick Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 23rd January 2019 Lords Chamber

[Baroness Fairhead]

I say to the noble Lord that we are actively working and engaging with them. It is for them to decide. They have discussed with us what they currently believe. Some they are actively working through, some the third countries and bodies do not choose to make public—to us or anyone else. That is what I am trying to explain. I do not want this House to be in any doubt or to give the sense that we were just asking them and walking away. We are actively engaging with all the parties I referred to.

I now turn to Amendments 19 and 97. I will take those together, as they both—

[Lord Hannay of Chiswick (CB)]

Before the noble Baroness goes on to the next amendment, could she answer a question that I asked in the preliminary debate? In the event of us leaving without a deal, what tariff rates will the United Kingdom apply on 30 March to countries with which the European Union has a preferential trading agreement? That agreement will have lapsed as a result of our departure, so we will not be able to keep those tariffs at zero, as they are at now. The MFN rules of the World Trade Organization will say that we are not in a free trade area, a customs union or a preferential agreement with those countries. Have you told these countries what tariffs we are going to apply, and if so, could you tell us?

[Viscount Hailsham (Con)]

“I will write to the noble Lord”?

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[Baroness Fairhead]

My Lords, what I can say is that all the countries we have spoken to have agreed with the principle of continuity. Therefore, one could expect that if they agree with the principle of continuity, they would see that that was a key part of making sure that their businesses and UK businesses—their people and our people—are protected.

Amendments 19 and 97 both concern the publication of a trade agreement progress register, so I will take them together. As agreed in the other place, the Government have already committed to lay reports in Parliament to explain any changes made to continuity agreements. These reports are intended to aid Members of both Houses to understand our continuity agreements. It is critical—as the previous discussion has just highlighted—that we do not delay the ratification of the agreements and unintentionally create a cliff edge for our businesses through a process addition. There will simply not be time, particularly with no deal, to create a detailed progress register in advance of bringing the majority of provisions in the Trade Bill into effect. That would be the effect of Amendment 97. As I stressed, we want to keep Parliament informed. Although we are committed to transparency and clarity in what I have laid out regarding our process reports, we are also mindful that we need to deliver the programme to time, and this additional reporting requirement risks delaying it.

Our Clause 3 reports are proportionate and will provide Parliament the transparency it requires. I take fully the comments made by the noble Lord, Lord Purvis, about the number of agreements—FTAs, EPAs, MRAs and association agreements. I have also laid out to the Committee some of the more technical aspects that we will cover, such as what happens with tariff rate quotas and rules of origin. I believe we will discuss those later today. Extensive work has been undertaken to ensure the continuity of our agreements for more than two years. We are engaged with our international partners to deliver this in the event of no deal. We have been working to deliver successor bilateral agreements with third countries and treaty partners, which in the event of no deal we would seek to bring into force from exit day or as soon as possible thereafter. Progress has been encouraging. Ministers and officials are engaging regularly with those partner countries to support and complete the work. As I said in the previous discussion, all have supported the principle of rolling over, because it is in their mutual interest.

I reiterate that we are aiming not to have any significant changes. As such, we believe there is little benefit in having a report analysing our continued participation in the EU FTAs. The vast majority of the elements are already being implemented, and our businesses are already benefiting.

The amendment in the name of the noble Lord, Lord Purvis, would require us to provide detailed progress on private Government-to-Government discussions. To provide such updates would create a considerable handling risk with our partner countries. As the noble Lord will appreciate, there are commercial sensitivities, and regulations and procedures in third countries, and we would not be able to commit to providing those updates without first seeking the agreement of the relevant partner countries. Again, this could end only in slowing down the negotiations. We believe these amendments are inappropriate and I ask the noble Lord to withdraw Amendment 18.

[Lord Hannay of Chiswick]

Is the Minister familiar with the practice in the European Parliament which currently applies? The committees of the European Parliament are briefed in detail about negotiations being conducted by the Commission. During the negotiations, how do you think they overcome these insuperable problems which the Government seem to see about doing that here? Nobody is saying that it has to be done on the Floor in a plenary session of this Parliament, but surely there has to be some way in which the Government account to a committee, as they go along, as to how negotiations are going. That is what happens in the European Parliament.

[Baroness Fairhead]

My Lords, I know the European process in outline; I cannot say that I understand it in the depth that the noble Lord, Lord Hannay, does, given his experience in that area. I want to differentiate between the continuity agreements and future trade agreements. Because we are talking about rolling over existing agreements, we expect to replicate the effects as closely as we can, so as not to disrupt trading patterns, so this is a different type of progress report. The noble Lord makes an important and valid point about the scrutiny of future trade agreements and we will discuss that later in the debate.

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[Lord Hannay of Chiswick]

My Lords, I will not go into the matter of the definite or the indefinite article, which I think is getting a little abstruse. The right reverend Prelate asked why there was a focus on the words “customs union”. It is because that is one of the two ways under Article 24 of the World Trade Organization’s rules—a free trade area, or a customs union covering substantially all the trade—which permits a member of the WTO in good standing to derogate from the most favoured nation provisions. It is as simple as that. All that waffle in the political declaration, which had to be put in because “customs union” would have frightened too many horses, is quite meaningless. “Customs union” is totally meaningful.

[The Lord Bishop of Chester]

Could I check with the noble Lord: is he agreeing with me that the political declaration actually describes what might equally be described as a customs union?

[Lord Hannay of Chiswick]

That question should perhaps be addressed to the Prime Minster, who might find some difficulty answering it because it would cause such ructions on the Back Benches of her own party. I do not think it is a question for me: I would have no problem putting “customs union” in. That is why I am standing here now, suggesting that this legislation should contain that phrase. If we leave the EU—if—on 29 March or at a later date, then the option of staying in a customs union is a compelling one, and it ought to figure in this legislation.

Why? First, because that option preserves, to the greatest extent possible, the frictionless trade—or something pretty close to it—which was originally the Government’s objective, but has not figured a great deal in government statements because it is not consistent with what the Government are now trying to do. There would be no rules of origin procedures, no VAT checks, no tariff or other problems which would arise. Investors in this country found this enormously attractive when they saw us as a gateway to the rest of Europe. I fear they will not see us as terribly attractive when we cease to be a gateway, with these friction-causing factors.

Secondly, I do not think that a customs union would solve the backstop, because the regulatory issues are extremely important there, but—as other noble Lords have said—it would make a substantial contribution towards resolving that problem even if it does not totally remove it. Thirdly, it would be likely to ensure us access to the EU’s already hugely substantial amount of preferential trade agreements—both free trade agreements and, in the case of Turkey, a customs union—in a way that would probably be much better than anything we could negotiate separately. The EU not only has this huge panoply of free trade agreements and a customs union with Turkey, but is negotiating now with Australia, New Zealand, Brazil, Argentina and Mercosur, and there are reasonably recent agreements with South Korea and Japan. The one with Japan has not yet been brought into force. The one with South Korea has, I think, brought a quadrupling of our exports to that market. We would get all these advantages if we were in a customs union, without having to do anything about it at all.

What is there not to like about joining a customs union? The noble Lord, Lord Patten of Barnes, quite rightly referred to the problems that might arise and the difficulties we would have negotiating new trade agreements with an independent trade policy. Those are very real, as those who have cited the size of these agreements have demonstrated rather clearly. But what do we have to show for all the rhetoric about the brilliant future that lies ahead of us from Dr Fox’s rather considerable travels, taking him this week to Davos, which is not noticeably a place for negotiating trade deals? Still, no doubt it is quite pleasant to be there. This idea that an independent trade policy is an instant answer to all our problems is simply a mirage that will float before our eyes for years ahead as we trudge through these extremely complex negotiations.

Who are the biggest fish in that pool? There is the United States. President Trump has already said that if we go ahead with the Prime Minister’s deal, which of course the House of Commons did not seem terribly inclined to do, he does not think that there would be much to negotiate with us about anyway. Do we really think China will be more interested in negotiating concessions to get access to our market than it would to get access to the much larger European Union market? India has been pointed out. That will put the whole issue of visas and access for people from India to this country on the table in the negotiations. That will drive another great coach and horses through that very odd immigration White Paper, which we will discuss in about half an hour’s time.

I really do not think that the objections to having a customs union stack up very well. The amendment should be given serious consideration and should figure in the Bill when we send it back to the Commons.

[Baroness Neville-Rolfe (Con)]

My Lords, I am not convinced of the merit of this amendment. Actually, I have taken comfort from the words of the noble Lord, Lord Purvis of Tweed, on the detailed arguments. I know from my experience of operating in Turkey—both with retail outlets and as a source of agricultural, clothing and electronic goods for shops in other member states and in the UK—that it is not an entirely happy situation to be in a customs union and not in the European Union or a single market.

Turkey was at the time keen to get into the European Union properly, partly because of the problems that the arrangements caused. It is very frustrating not to have influence over the tariffs and rules at the border of your country. Essentially, you are a rule-taker, as the noble Lord, Lord Purvis of Tweed, acknowledged. I also recall the lorry delays that he mentioned—so not very frictionless. My recollection is that the rules on the common external tariff also restricted Turkey’s ability to renegotiate independent trade agreements with third countries. That is something that the noble Lord, Lord Hannay, acknowledged. If we go down the road proposed in the amendment, we could be caught up in the EU system of protectionism—which, sadly, I expect to increase without the UK at the table.

On a brighter note, I was glad to see this afternoon that Dr Fox, the International Trade Secretary, had agreed in principle to a UK-Israel agreement—so he has been busy in Switzerland. Rather than going down the road of the amendment, I would prefer one last push to negotiate a good deal with the EU. There is more to do, but we should keep trying, especially on the backstop. Some parts of the Government have clearly not given up, as we heard in the EU Committee today from the Secretary of State, Steve Barclay, which is why, of course, I am afraid I missed some of today’s proceedings.

Trade Bill

Lord Hannay of Chiswick Excerpts

Committee: 1st sitting (Hansarad): House of Lords
Monday 21st January 2019 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, I support the amendment and point out, as have others, that this Bill is being brought forward in a totally different context from when it was debated and passed in the Commons last summer, and at Second Reading here in September. At that time, it was envisaged and presented by the Government as a minor technical measure which would complement an EU withdrawal deal and political declaration, and provide a 21-month transition to fill the gaps that are currently there and which prevent it being fully equipped to provide for an independent trade policy for a UK outside the EU. Those gaps remain and they are highly relevant given the Government’s unwillingness to rule out a no-deal exit on 29 March and the consequent need to operate an independent trade policy from that date.

For example, we do not even know—and more importantly, our businesses do not know—what tariff rates we would apply to imports from the EU and preferential trade partners of the EU on 30 March in the event of no deal. No satisfactory indication has been given of how parliamentary oversight of trade policy will operate in these circumstances. Currently, the situation is clear: the EU Commission can conduct exploratory talks with third countries but it can negotiate with them only when it has received a mandate from the Council; that is, the member states. That gives a measure of democratic control. What will we do to replace that? There is a complete absence of indication. It would be really poor if we went into a period like that without any parliamentary oversight at all; that is hardly a policy that could be called “taking back control” for this Parliament. Surely this gap needs to be filled before the Bill becomes law.

I believe it is being argued that this is unprecedented, as the noble Lord, Lord Newby, said. Perhaps it is, but we are dealing with an unprecedented situation, and unprecedented situations call for unprecedented solutions. Is the amendment unreasonable? I do not think so. It does not place any impediment at all on the completion of Committee, which should proceed precisely as planned. It gives the Government about a month to fill in those gaps in the Bill before Report begins. What is unreasonable about that? I hope the Government will accept the amendment, which I do not think stands in the way of this measure arriving on the statute book in time.

[Baroness Taylor of Bolton (Lab)]

My Lords, I do not want to follow the two previous speakers by talking about what happens, deal or no deal, but I will say a word about the difficulties facing the House on this Bill and on other legislation before us. My noble friend mentioned the Constitution Committee, which issued a report on the Trade Bill in October last year. We did so because we wanted to get ahead of the game by advising the House on our approach to that Bill, as we had done on the EU withdrawal Bill in a way that I think was constructive for the whole House and, ultimately, helpful to the Government because our constructive criticisms meant that the Bill was more fit for purpose when it left this House.

We did that early because we knew of the weight of legislation that would come before us. We have tried to get the Government to give us more information on what legislation we will face and asked to see some things in draft, which we would have been willing to see in confidence. The House will have to face other legislation. We are already seeing arguments about the number of SIs and the difficulty of giving them proper scrutiny in the time available. Time is running out. The Constitution Committee—and, I think, the House as a whole—wants to be helpful in making sure that any necessary legislation is actually fit for purpose and will do what is expected of it, but also so that we as parliamentarians can fulfil our role and responsibility to give proper scrutiny.

I ask the Chief Whip and the Leader of the House to reconsider their approach to giving information to the House about what our future work programme will be. It will be extremely difficult to consider as we should all the legislation that will be before us, whatever the outcome of discussions in another place. I have been a member of the usual channels, albeit in the other House. I know that there are indicative timetables on all occasions—maybe more than one in this instance. If the House is to function properly and fulfil all its obligations, it needs greater information to come through the usual channels about what our programme will be and what responsibilities we will face to get the necessary legislation fit for purpose, and to allow us to fulfil our responsibilities.

Trade Bill

Lord Hannay of Chiswick Excerpts

2nd reading (Hansard): House of Lords
Tuesday 11th September 2018 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Lansley. It is good news that he is back playing an active role in our debates. I say that all the more so because I agree with a large amount of what he just said, but that is not the only reason. The only point I make on what he said is that I think a link with the CPTPP—the Pacific grouping—is of great importance, but it is much more likely to be achieved by the European Union in a more successful way. That is why I support the idea that we should stay within a customs union and negotiate with that objective.

A great deal of the Bill is highly technical and process-driven. The Minister made an excellent effort to persuade us that that was all that it was about, which is not the case, but those aspects require careful scrutiny, and perhaps amendment in Committee and on Report. I intend to focus my remarks today on the broad political thrust of the Bill, which is the imperative view of the Government that this country must have an independent trade policy outside the EU and its customs union—within which this House voted to remain, I recall, as others have done, by a three-figure majority when the issue was discussed in another context.

The contention of those who supported Brexit in the referendum campaign—it since remains the Government’s view—is that an independent trade policy is absolutely vital and that it will be good news for the United Kingdom. Outside the EU and its customs union, Britain, they say, will emerge on to the sunlit uplands of a free trading world, freed of the shackles of the EU’s trade policy with prosperity assured. Negotiating trade deals around the world would be easy as pie—that is what the Secretary of State for International Trade told us, although his assurances were slightly undermined by the fact that he has never negotiated a trade agreement. If only that picture were true the Government would have a case, but it is not. It is, frankly, false.

First, take the EU’s trade policy. It is, of course, not perfect and it has some protectionist features which need to be changed. That is what the EU was attempting to do in the Doha multilateral trade negotiations and in the TTIP negotiations with the US; the EU was not responsible for the failure of either. When the EU was founded, it did have a pretty protectionist trade policy but, over the decades, that policy has been progressively liberalised, not least by the leadership of a whole succession of British Trade Policy Commissioners: Lord Soames, for whom I worked, Lord Brittan, the noble Lord, Lord Mandelson, and the noble Baroness, Lady Ashton. Britain, as a member state, was at the forefront of that liberalisation campaign with great success. Now, the results of that campaign, in the form of the European Union’s trade policy, are being denigrated, belittled and cast off. Nor is the EU and its trade policy in any way the only important point. After all, we export only about one-third of the amount that Germany does to China. That is not because we are shackled by the EU but because we are not quite as competitive as the Germans. That will not be solved by leaving the EU or by negotiating separate trade agreements.

There is then the still-growing network of bilateral trade deals that are an integral part of the EU’s trade policy and its customs union: most recently the agreement with Japan, but also those with South Korea—where our exports have hugely increased since that agreement came into effect—Turkey, Chile, Colombia, Mexico, the 50 or so African, Caribbean and Pacific associates, and the countries of eastern Europe, the Mediterranean and the Caucasus. There are negotiations now under way with Mercosur, which hopefully will lead to a successful conclusion, and with Australia and New Zealand. Are we going to do better than those deals that are being handed to us on a plate? Will we do more for developing countries than the EU’s “Anything but Arms” policy? I rather doubt it.

How about those sunlit uplands? Well, the sun is not shining up there any more, as President Trump rampages through the international trade commitments that the United States has, mistakenly believing that trade wars are easy to win and that trade between nations needs to be bilaterally balanced. This is the very antithesis of this Government’s trade policy, yet the US seems to be the jewel in the crown when it comes to our negotiating independently. Some hope.

Then there is China, which has negotiated free trade deals such as the one it did with Switzerland, which gave China tariff free access to the Swiss market straightaway and told the Swiss that, with a bit of luck, in 20 years’ time they might get something like that.

[Lord Lilley]

The noble Lord said in 20 years’ time. Actually, the Swiss deal with China reduces tariffs by two percentage points a year. The high tariffs are 18%, so in nine years they will all be gone. They are already half way through. Where are we, in our membership of the European Union, in the process of getting free trade with China?

[Lord Hannay of Chiswick]

That remains to be seen, of course. If we were in a customs union, I have no doubt that the issue of freeing up trade between the European Union and China would become a very important point—and, since the Chinese are now being sucked into a trade war with the United States, they might take a rather different view of a free trade agreement with the European Union than they have in the past. I do not know. All I can say is that they are more likely to do so if what they are offered is access to a 500 million single market, with the UK in a customs union with it, rather than what they have at the moment.

Then what will we say to India and Brazil, for example, which undoubtedly will raise with us issues about the visa burden on their students, businessmen and researchers? It is obviously desirable that we should have agreements with Australia and New Zealand, but what will that mean for our producers of sheepmeat and beef, who are already at risk of being struck by the loss of their continental European markets if all does not go well with our negotiations with the EU. What will we say to that?

One day, I hope, when President Trump’s memorial library is being constructed—there will not be many books in it, I imagine—the world will resume the search for multilateral and plurilateral trade agreements to remove tariffs and non-tariff barriers to trade. What role will we play in such negotiations as an independent actor with our own trade policy? I can give noble Lords a clue: a very modest one, is the honest answer. I was a very junior member of the negotiating team in the Kennedy round, which was the last occasion on which the UK operated independently before it joined the European Communities. We were in a much stronger position then than we are now. Our share of world trade was much greater and we had a stronger economy on the whole compared with other people. However, even then, in the 1960s, the deals were cut between the US, Japan and the European Community. In future, it will be between the US, China, the European Union, Japan and India. Of course, we will be there on the margins, our eye glued to the keyhole, saying, “Me, too”, when they reach an agreement, but our role will be that of a watcher and not, as we are at the moment, an actor. So the case for an independent trade policy does not stack up. It is a chimera and a mirage, doomed to disappoint.

Of course, if we were to remain in the customs union, we would need to raise some quite important issues with the EU to ensure that we had a proper consultative role in shaping its trade policy and that any trade deals negotiated by the EU applied fully to all members of the customs union, including the UK, and did not require separate negotiation. But how can we find out whether these possibilities are even faintly viable if we are not ready to ask for them to be put on the table and to discuss what the reaction of the other side would be? Since this would greatly help the problems of Northern Ireland, I suspect that it would be pretty positive.

The other day, I heard a representative of one of the think tanks that supports Brexit and an independent trade policy, the IEA, say, quite clearly, that an independent trade policy is “the only prize” remaining from Brexit. But is it a prize? I very much doubt it.

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[Baroness Fairhead]

I am happy to follow that up with the noble Baroness. If I misspoke, I apologise, but I will happily meet with her and follow up afterwards.

I have tried my best in going over 20 minutes to address as many points as I can. I appreciate that there are a number of questions that I have not been able to cover and I undertake to write to noble Lords in detail ahead of Committee.

[Lord Hannay of Chiswick]

I thank the Minister for allowing me to speak before she sits down. It is very helpful. Could she clarify the point on Northern Ireland and the interrelationship of WTO rules? If there is no deal—and I accept that that is not the Government’s first choice—then, under WTO rules, we will have no alternative but to place tariffs on imports from the south to the north at the border if we do not want to have zero tariffs to the whole world. Is that the case?

[Baroness Fairhead]

If there is no deal, that would be correct. Clearly there are other options for what to do with tariffs, but that is a correct statement in the limited definition that the noble Lord gave.

Of course, I am happy to meet with any of your Lordships to discuss these matters further and I look forward to the opportunity for more detailed discussions in Committee. A cliff edge in our trading arrangement is in no one’s interest—that is something on which I think we can all agree. The Trade Bill takes a sensible, responsible, reasonable step to prevent this. It places continuity at the heart of our approach, to the benefit of customers, consumers, business and individuals across the UK. I beg to move.

United States Tariffs: Steel and Aluminium

Lord Hannay of Chiswick Excerpts

Tuesday 13th March 2018 Lords Chamber

[Baroness Fairhead]

It is difficult to argue that one way or the other. I know that the UK has specific national security relationships with the US. We have had a long and enduring relationship on defence, strategy and economic growth, and therefore we have a significant position on our own. I cannot calibrate the difference but I know that we are part of the EU, and on this matter we will be working alongside the EU and following the duty of sincere co-operation.

[Lord Hannay of Chiswick (CB)]

Does the Minister accept my view that it is very welcome that the Government are taking such a forthright attitude towards these measures taken by the United States—measures which seem to have no foundation whatever in the rules-based World Trade Organization order under which we have all lived so profitably for the last 70 years? Will she say quite unequivocally that we support all Cecilia Malmström’s efforts to get an exemption both for products and for the European Union as a whole, and that our support for her efforts is unequivocal? When the Secretary of State goes to Washington later this week, will he make it clear that we are supporting Cecilia Malmström’s efforts on our behalf? If the Minister will forgive me for correcting her, it is not only a question of sincere co-operation; we are part of a common commercial policy, and that means working to get an exemption for the whole European Union.

Finally, taking retaliatory measures is obviously extremely unpalatable, and taking a dispute settlement to the World Trade Organization is not something that we would have wished for. We are faced with a President of the United States who seems to think that trade wars are a good thing, but he had better learn some time that they are not.

[Baroness Fairhead]

I thank the noble Lord, Lord Hannay, for his remarks. We are engaging with the Trade Commissioner, Cecilia Malmström, and the Secretary of State will be acting on behalf of the UK but as part of the EU. We are working to stop this happening—job one will be to stop this happening; job 2 will be to get exemptions where we can—and the Secretary of State will be speaking on behalf of the EU and UK industry. I would welcome help from anyone in the industry and the unions who has an interest in this because there is a real issue here. We need to make sure that the benefits of free trade are fully realised, as we have seen in this country. A rules-based international system has lifted 1 billion people out of poverty and we do not want to set our face against that. The Secretary of State will be speaking to Cecilia Malmström later today ahead of his visit and he will feed back after his visit, so we are connected.

Brexit: World Trade Organization Rules

Lord Hannay of Chiswick Excerpts

Monday 19th December 2016 Lords Chamber

[Lord Price]

My Lords, we are very clear on the position. We are clear that, while we are a member of the EU, we cannot negotiate or sign free trade agreements but we can have exploratory discussions, which we are having at the moment. Once we leave, we will be free to negotiate and sign free trade agreements for the United Kingdom.

[Lord Hannay of Chiswick (CB)]

When considering the question asked by the noble Lord, Lord Pearson of Rannoch, does the Minister recognise that it is not Governments who pay tariffs when they are imposed but manufacturers and consumers, and that British consumers will either pay tariffs or have to pay higher prices for products if the very unacceptable and unwelcome situation were to arise in which WTO rules had to be applied by default?

[Lord Price]

My Lords, the Government have set out their position: we do not wish to apply tariffs; we wish to be a free trading nation, and that is what we will work towards. We will try to ensure continuity of approach for our businesses, for the EU and for third-party countries. That is what we are trying to achieve right now.