Trade (Australia and New Zealand) Bill

Lord Johnson of Lainston Excerpts

Committee stage
Monday 23rd January 2023 Lords Chamber

[Lord Lansley (Con)]

Well, obviously, if we were in the course of further discussions through the Joint Committee arrangements on the free trade agreements to modify the agreements so as to reduce the thresholds, I imagine that there would be some benefit to our businesses—but that is not the position we are in at the moment. I certainly do not see that we can arbitrarily and unilaterally impose different thresholds through our legislation. The Minister will have to confirm if I am correct, but I did not understand it to be the case that the WTO general procurement agreement gives us existing access to entities in Australia’s procurement below the federal level. I stand to be corrected if I am wrong about that, and I have no doubt that the Minister will have the briefing to tell me if I am wrong. For those purposes, I just do not agree with Amendment 1 as moved.

[The Minister of State, Department for International Trade (Lord Johnson of Lainston) (Con)]

My Lords, I am delighted to be speaking in what is my first Bill Committee in your Lordships’ House. I start by saying how grateful I am for the engagement that I have had with the noble Lords, Lord Lennie and Lord Purvis, since Second Reading of this important Bill. I am also grateful to them for tabling the amendments in this group. I also thank my noble friend Lord Lansley for those extremely helpful interjections.

As we have heard, this group deals with how the Bill impacts on the UK’s procurement rules, both now and under the Procurement Bill, which is currently awaiting Committee in the other place, once it is enacted. I recognise the concerns raised by noble Lords on protecting UK contracting authorities and the importance of the discussions we are having in this Committee. Having listened to the contributions of noble Lords today, I hope to reassure the House that these amendments are not required. Perhaps I may begin by thanking this House’s International Agreements Committee for its valuable scrutiny of the Australia deal, the report on which stated:

“The Government has been broadly successful in incorporating its objectives on procurement into the agreement and we welcome the procurement chapter.”


On Amendment 1, on general effect, in the name of the noble Lord, Lord Lennie, I reassure the House that these powers cannot make changes beyond what is necessary to implement the procurement chapters of the Australia and New Zealand agreements, while ensuring that the UK procurement system continues to function. I think my noble friend Lord Lansley covered that in his comments. Rather than conferring unnecessary powers on the Government, Clause 1(2) and (3) ensure that, when the regulatory changes are made, they do not have the effect of creating a separate, parallel set of regulations for Australia and New Zealand suppliers alone. This is the concept of conformity.

As a member of the WTO Agreement on Government Procurement—the GPA—the UK, as has been discussed, has a most favoured nation obligation to not discriminate in its treatment of businesses from different parties to the GPA. To meet this obligation, the changes needed to the procurement rules resulting from the Bill need to apply to all GPA parties, as I think we have also discussed. This is laid out in the Explanatory Notes, which, for useful repetition, I restate:

“This will ensure procurement regulations remain uniform and coherent by not imposing different or conflicting procurement procedures on contracting authorities for procurements covered by the FTA, and ensure the UK can implement its obligations in the FTA in a way that is consistent with the UK’s other international procurement obligations.”


The Bill will lead to a wider range of protections for tendering parties and, ultimately, better value and choice for our procuring entities. The changes will make the system simpler, which is something all parties desire.

Turning to Amendment 6 on the equalisation thresholds, I understand the concerns of the noble Lord, Lord Purvis, about these agreements placing additional burdens on suppliers—and, frankly, contractors or contracting parties—by having a different threshold to that in the UK’s procurement regulations. I have great sympathy with his objective. However, I hope to persuade the noble Lord that his amendment is unnecessary and, in doing so, show that the UK can meet its market access commitments in both the Australia and New Zealand free trade agreements and can bring these agreements into force.

Amendment 6 proposes that no regulations can be made in respect of subcentral procurements that are valued above the threshold amount specified for such procurement in the Procurement Bill. The value I have here is 200,000 special drawing rights. By not allowing any regulations to be made for subcentral procurement with a value in excess of the threshold amount, the UK would not be able to give effect to its market access commitments—my noble friend Lord Lansley covered this very successfully—for all subcentral procurement under the UK-Australia FTA, because the threshold for subcentral procurement is 330,000 SDR; or any subcentral procurement under the UK-New Zealand FTA, valued at 200,001 SDR or more.

Having different thresholds—after our discussions, I took this away and investigated it—between parties is commonplace in the GPA, as we have discussed. For example, as I believe I mentioned in the letter sent to the noble Lord, at subcentral level the UK has a threshold of 200,000 special drawing rights, as do New Zealand and Japan, while Canada and Australia have a threshold of 355,000 special drawing rights.

On the question of whether the different threshold values between the UK rules and the FTA present a burden to UK contracting authorities, let me reassure the Committee that, under the current UK procurement rules, the only threshold that contracting authorities need to worry about is the one in the UK rules. That is the core point. This is because the SDR thresholds set out in the FTAs themselves determine the contracts that, in the event of an Australian or New Zealand supplier wanting to challenge a UK procurement procedure, are eligible to be addressed by UK domestic courts. So, effectively, this simply allows the concept of challenge.

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[Lord Purvis of Tweed (LD)]

I am grateful to the Minister for giving that information. I would just like to get this clear in mind. If a local authority in the UK—a combined authority, say, or subnational authority—sets its procurement scheme, operating under the Procurement Bill, at the £213,000 level, which is 200,000 SDRs, it can operate below or above the procurement threshold. Is the Minister saying that an Australian firm can challenge that regional authority on the basis that, under the agreement, for the Australian firm the threshold is higher? Is that understanding correct?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord. I am not 100% clear on the point he is making. Thresholds are set at whatever is negotiated. Any contract above the level of the threshold is protected from discriminating or unfair practices. Any contract below the threshold is not protected in the same way, in terms of challenge in the courts. It would be unusual for any contracting authority to design its tender to make sure it was not allowing an Australian or New Zealand contactor, or indeed any other contractor, to be below the threshold. The point is it does not make any difference to their thresholds.

[Lord Purvis of Tweed (LD)]

I will not pursue the point much further, but as we discussed during the Procurement Bill, one of the points about thresholds is that companies will not know that the procurement exists; they can be exempted as far as the Procurement Bill is concerned—that is the point of the thresholds. So an Australian firm could challenge an entire scheme on the basis that it would not be aware of the procurement that is happening in that area because of the non-reporting requirements below the threshold. I will not pursue the point any further, but I hope that, as a result of any regulations that come out of the Bill or the Bill itself, there will be guidance to businesses on how to operate with procurement. If those areas could be spelt out in guidance, I think that would be quite helpful. I will certainly read the guidance, because I am finding part of it difficult to understand myself.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord. As I say, this does not change the process in any way. It is simply about protection for people bidding for contracts. In terms of advertising for contracts, the UK threshold levels remain the same—whatever they may be, given the various national or subnational governmental entities. That does not change. So for a local council tendering for, say, printing services, it makes no difference to its actions whatsoever. The only thing it does, from an Australian or New Zealand tenderer’s point of view, is that they may decide the threshold for them that affords additional protection to not incur unfair or discriminatory practices. Frankly, I think it is a highly unlikely situation that any contracting authority would try to bend the rules in order to ensure that Australian and New Zealand contractors could be excluded. That simply would not occur, in my mind. It does not require any additional work; it is simply about the challenge on unfair practices in tendering. That is the reason why the thresholds are set, and they reflect the same thresholds that were offered at national and subnational levels in Australia. That is the reason they are set at that level.

I am happy to go into more detail at a later date. Certainly, I am delighted to work with any Members of the Committee on this but, as I say, it is much simpler than it sounds. It is, in some respects, given the efforts prescribed for local authorities and authorities tendering, not relevant from their point of view.

Amendment 19, in the name of the noble Lord, Lord Purvis, addresses concerns around what would happen to any amendments to the Bill that might be passed during scrutiny by noble Lords. The noble Lord, Lord Purvis, raises an interesting point, and I was extremely pleased that my noble friend Lord Lansley explained the position very clearly and takes a strong interest in this—I am very grateful for his interventions. I have enjoyed the intellectual discussion, by the way, and I think this is precisely the sort of matter that this House is purposed to investigate: these are complex issues and we are absolutely right to be discussing them.

I understand the noble Lord’s point that this may appear, on the surface, an unconventional way to legislate; however, we have pointed out the importance of getting these agreements into force, as my noble friend Lord Lansley mentioned. No one in this House would want to delay the benefits conferred on our consumers, business and government by waiting unnecessarily for a later piece of legislation. It would be unfair to our citizens and also, in my view, against the spirit of the FTAs with our sister nations of Australia and New Zealand. Indeed, I met the Australian Agriculture Secretary and the high commissioner last week and they both expressed their keen desire to see this agreement brought into force as soon as possible. I also know that the Labour Front Bench met these individuals, I believe on the same day, to discuss the agreement.

The sense of urgency is also present within industry. I am sure noble Lords will remember the clear and powerful message from the British Chambers of Commerce during the evidence it presented before the other place’s Public Bill Committee:

“Overall, we want to see the agreements ratified as quickly as possible.”—[Official Report, Commons, Trade (Australia and New Zealand) Bill Committee, 12/10/22; col. 8.]


Returning to the core point, and recognising this novel approach, I repeat again the quotation given earlier. My noble friend Lady Neville-Rolfe made an important commitment that, if noble Lords were to amend this Bill, the Government would look to ensure that any necessary changes might be made to the nature of the repeal during the passage of the Procurement Bill in the other place. I personally reiterate this clear commitment today.

I hope I have provided the noble Lords, Lord Lennie and Lord Purvis, with enough reassurance on the Government’s position on these matters, and I therefore ask them not to press these three amendments.

[Lord Purvis of Tweed (LD)]

Before the Minister sits down, I ask for a final point of clarification and then I will shut up on this group. If the Bill passes, does that mean that we have implemented our domestic legislation in order to say to the Australians and the New Zealanders, through a diplomatic note, that we have put in place our domestic legislation so that this agreement can come into force? Or is that at the point when the regulations under the Bill are made? If it is the regulations, then, as I understand it, one of them will depend on what the Scottish Government and the Scottish Parliament will want to do, because there will be a concurrent power. Just for clarification, is it this Bill or the Procurement Bill, whichever the sequencing, or is it the time when the regulations are made?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for his comments. This is one reason why we are pressing ahead with the Bill: it is part of the process that will lead to the agreement coming into force. I will cover this later in Committee, I am sure, but there are other legislative acts that need to be brought into force, to enable the entire agreement to function, at which point we will have the entry into force of the FTA—a moment we are all, frankly, much looking forward to.

[Lord Kerr of Kinlochard (CB)]

Before the noble Lord sits down, can I ask him about his reassurance to the noble Lord, Lord Lennie, on Amendment 1? He said we need not worry about Clause 1(2) because Clause 1(1) can be used only in cases arising from these two trade agreements. I think I follow the Minister’s argument—until I turn to Clause 2. Clause 2 seems extremely permissive and says one can make provision, general or specific, or

“make provision for different purposes or areas”.

Can the Minister expand on his assurance to the noble Lord, Lord Lennie, and assure me that the Bill as a whole, not just Clause 1(2), cannot be used for purposes other than to deal with cases arising as a result of the two free trade agreements?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that intervention. I think I have made my position clear that any concomitant actions following on from this Bill will relate specifically to the matters necessary for bringing it into force. Pursuant powers—this is an important commitment—are very much linked to what we would describe as minor and specific issues. They could relate to changes in government departments’ names, such as the Department for Culture, Media and Sport adding “Digital” to its name. The effective implementation of that in the agreements is relevant in these texts, so it would be confined to errors such as that. I know that we will discuss the concept the noble Lord raised regarding Scotland later in Committee, so I will be delighted to go into more detail on that then.

[Lord Lennie (Lab)]

My Lords, the problem is that the Bill does not say that. That is the point being made by the noble Lord, Lord Kerr. I thank noble Lords who have spoken: the noble Lord, Lord Purvis, on his two amendments and the noble Lord, Lord Lansley, for a lot of helpful clarification. Given any future misuse of power through statutory instruments, our super-affirmative proposal later will no doubt be supported, because that will make the scrutiny of the Bill that much more thorough than is intended as we speak. The Minister said that no powers beyond these FTAs are proposed by the Bill, but it does not say that—it indicates that there may be powers in other places that we need to watch for. However, with that, I beg leave to withdraw my amendment.

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[Lord Johnson of Lainston (Con)]

My Lords, this has continued to be—and I am not just talking about the words we have exchanged today—a very important debate on devolution and the role of the devolved Administrations in our trade agenda. I am grateful for the interventions from the noble Lord, Lord Howell, and the noble and learned Lord, Lord Thomas. They were very helpful in order to clarify the mind and work through some of the rationale behind the situation we are in.

I will make an important point that may help answer some of the questions. We do not operate a federal structure. We have one Government where there are devolved powers to nations, regions and other authorities. Treaty-making and foreign policy is necessarily a national endeavour, benefiting all. It is this coherence of a national structure that gives us negotiating strength and desirability as a single market access point which enables us to pursue our free trade agenda—something which, I believe, this whole House is united behind. All regions benefit from this process, above and beyond their own specific interests; the sum of the parts is greater than the constituent. We should not confuse the actions here, either. Treaty-making is the reserve of the UK Government. Finally, it would be unfair on our treaty partners not to act in good faith in taking forward legislation which implements these agreements by the most efficient means possible.

Amendment 2, in the name of the noble Lord, Lord Lennie, would require public consultation with devolved Administrations and representatives of English regions before making the secondary legislation which implements the UK-Australia and UK-New Zealand FTA procurement chapters under Clause 1. I know the noble Lord also mentioned the impact assessment, which, if it is okay, I will address in the following section.

Your Lordships will be aware that the Minister for Trade Policy chairs the Interministerial Group for Trade, previously known as the Ministerial Forum for Trade. This forum provides an opportunity for discussion on all matters of trade policy, including the implementation of UK free trade agreements. This group, by the way, last met on 9 January, so very recently. It is not the only opportunity for ministerial discussions and there are frequent bilateral meetings between Ministers. In addition to ministerial engagement, discussions with devolved Administrations at official level have totalled hundreds of hours across both the UK-Australia and the UK-New Zealand FTAs. This includes frequent updates by chief negotiators and detailed discussions on draft text. We are aiming to create—and believe we have—free trade agreements that benefit our nation in its entirety, and factoring in the requirements of each nation is at the very core of our work. In the case of procurement chapters, in both the UK-Australia and UK-New Zealand FTAs, we have found common ground between the UK Government and devolved Administrations in our objectives in the negotiations on this matter. I believe the honourable Member Dame Nia Griffith remarked during the Public Bill Committee in the other place:

“On procurement, the Welsh Government go as far as to say that there may be scope for businesses in Wales to take advantage of the provisions included in the UK Government procurement agreement, and that some Welsh interests in procurement were protected during the engagement with the Department for International Trade.”—[Official Report, Commons, Trade (Australia and New Zealand) Bill Committee, 18/10/22; col. 77.]


As we move toward implementing these agreements, there have already been preliminary discussions on the drafting of secondary legislation. This Government will continue conversations with the devolved Administrations as drafting progresses, in keeping with the Bill’s passage. I also remind the House of the commitment we have made never to use the power in Clause 1 without consulting the devolved Administrations first. I restated this commitment at Second Reading, and I assure noble Lords that this is a sincere commitment that His Majesty’s Government will honour.

On consulting the English regions, they do not have the same role in implementing legislation and these agreements as the devolved Administrations. Given our approach, as demonstrated to date, to engagement in all areas and with the industry and other stakeholders, and given our commitment to continue to consult with appropriate authorities on the use of the power in Clause 1, I believe that the amendment is unnecessary. This was also the conclusion when similar amendments were tabled in the other place. I therefore ask the noble Lord to withdraw the amendment.

[Lord Purvis of Tweed (LD)]

Before the Minister sits down, may I ask about the interaction of this Bill and the Procurement Bill and the commitments on consultation? We know that Clauses 1 to 4 of this Bill address devolved areas for Wales and Scotland, and that this Bill introduces the concurrent mechanism. The former Secretary of State, Anne-Marie Trevelyan, said that regulations made under these powers that relate to devolved competencies would not be made concurrently without seeking the consent of the devolved Parliaments or, at the very least, consulting with them. If this Bill is repealed by the Procurement Bill and these elements of the Procurement Bill do not apply to Scotland, what is left of the consultation mechanisms for the devolved Administrations in this Bill? They would be repealed by the Procurement Bill.

[Lord Johnson of Lainston (Con)]

I always thank the noble Lord, Lord Purvis, for his academic approach to these debates, and I am grateful to him for those points. The former Secretary of State was right when she said that we were seeking consent; the Government have sought consent, and we have consulted. Regarding the relationship between this Bill and the Procurement Bill, I am not sure what the relevance of consultation is in relation to Scotland. A number of the actions in this Bill will continue, since they are not being cancelled by the Procurement Bill. I understand that the Procurement Bill will retain the other parts of this legislation. Certainly, we have committed very clearly to making sure we seek consent and consult.

Without prolonging this debate, I think it is essential—I have said this before—that we engage with everyone in this country and all the devolved nations to ensure that we create trade deals that benefit them. I am sure the noble Lord will be aware of and celebrate the opportunities that his own food and drink industry will have under these new agreements. We are reducing tariffs on a great variety of spirits so that industry can sell more at lower prices or use that additional income to market its goods. All the manufacturers I have spoken to were extremely positive about those measures, which will, I am pleased to say, directly benefit Scotland. The intention here is to create powerful free trade agreements that work for the entirety of the United Kingdom. As a result of that, it makes absolute sense—not just in the specific legislative format but in a fundamental negotiating sense—that these are reserved powers for the United Kingdom, and that we have the opportunity to implement them.

[Lord Howell of Guildford (Con)]

I do not want to be academic, but I am still not entirely clear on what basis the consent is being withheld from the Scottish or Welsh Governments, even though I gather that it is not necessary—in the end, it will just go ahead anyway. What can be done to overcome some of the inevitable additional ill feeling that seems to wander generally over the division between reserved and devolved powers, in order to make this Bill sweeter than it will otherwise be? Otherwise, we will just be left with a bad feeling in the air and a sense that things are being steamrollered through because the precise letter of the law of the devolution agreements, devolution law and all the preceding legislation of preceding centuries says so. I am not sure that this is good enough if we are going to build a good relationship in the future between the two nations of England and Scotland, and the Principality as well.

[Lord Johnson of Lainston (Con)]

I thank my noble friend for his comments. Consent is either given or not given. For the reasons why, he must make inquiries of the various Assemblies that have not given their consent and ask them why they are not supporting this free trade agreement, which I think will bring them enormous benefits. We remain committed to the consultation process in all our activities. Frankly, it would probably be impractical not to do so in any event.

[Lord Lennie (Lab)]

My Lords, I am grateful to the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Howell, for their contributions. On the question that the noble Lord, Lord Howell, asked and the Minister tried to answer, the withdrawal of consent is probably a consequence of the lack of consultation—not necessarily the quality of the agreement but the lack of involvement in its development. This amendment is trying to obviate that for the future, so that if there is a formal consultation, it is seen to have taken place, and then an agreement on behalf of the UK is reached and can be properly explored—or not—throughout the UK. However, consent could not then be withheld by Parliament or an Assembly in one of the parts of the UK. That seems to me the main benefit of the amendment, but for now, I will beg leave to withdraw it.

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Finally, I agree very much with the comments from the noble Baroness, Lady McIntosh of Pickering. Rishi Sunak simply cannot get away with making a commitment and, when faced with the mechanisms to deliver on that commitment, ignore it. So clarity from the Government on how this Bill, with this procurement, will support British farmers is fundamental. I hope the Minister can be crystal clear on that when he winds up this group.

[Lord Johnson of Lainston (Con)]

My Lords, I begin with an apology that I did not at the beginning declare or direct noble Lords’ attention to my register of interests. There was a comment at Second Reading, and I hope I have ensured always that I am entirely transparent about my personal holdings, which I do not believe come into conflict with this debate. It is certainly worth ensuring that there is always full transparency, and I welcome any comments or question around that.

This has been a wide-ranging debate, and I thank noble Lords for their valuable contributions, particularly my noble friends Lord Lansley and Lord Howell, for their helpful support, and the noble Lord, Lord Lennie. This has been a broad debate about the free trade agreement between Australia and the UK and New Zealand and the UK. I am happy to cover some of those important points, but I start by taking the noble Lords back to what I said at Second Reading: that this is a Bill about procurement specifically. It seeks to change the UK’s current procurement regulations in a number of ways to implement commitments arising from chapter 16 of the UK-Australia and UK-New Zealand FTAs.

If noble Lords do not mind, I will go through them, because I think it is very relevant and important for this debate: after all, that is what we are debating in these amendments. These changes provide guaranteed legal access to Australian and New Zealand suppliers to the procurement opportunities covered by the FTAs, as we discussed earlier. They streamline the options for local government issuing notices for future procurement opportunities, which I think is current practice in large part and is right, in any event, for our own procurement update. They clarify that contracts of undefined value are in scope of the trade agreements. Again, I think most of us in this House will agree with that; contracting authorities trying to get around making sure they are covered by the procurement chapters by having unspecified contract amounts seems unreasonable, in my view. Having been, in my past, part of a small business tendering for these sorts of contracts, I think it is very important that that is clarified: it is extremely helpful, regardless of any trade agreement we enter into.

The Bill ensures that contracting authorities cannot avoid international commitments by terminating the contract process. This effectively means that if you think you are going to award a contract to a party that you do not like, for whatever reason, that is not according to the law, you can be challenged for that. Again, we would want those privileges afforded to us, and we, as good-government enthusiasts, would not want not to extend those privileges and rights to all contracting parties, frankly.

I think it is important for us to absorb those specific measures: it helps put the rest of these discussions in context. All these measures are logical improvements to our procurement system. They align with the Procurement Bill; they do not create additional work for tendering authorities, in the main; and they ensure that Australian and New Zealand suppliers are protected by our laws of fair play and good governance. They prevent unfair discrimination in contracting, and I believe the whole House approves of their ambition.

I turn to what noble Lords have raised in their amendments. On impact assessments, the Government have already published impact assessments. We have been discussing them. I have them here in my hand: they are weighty documents. These assessments, which were independently scrutinised by the Regulatory Policy Committee and rated as fit for purpose, include: assessments of the potential economic impact on UK GDP; the impacts on the nations and English regions; analysis on sectors of the economy and business, including small and medium-sized enterprises; and additional assessments on consumers, labour markets, environmental impacts and more. I am glad we have done these impact assessments: it has allowed us to have the debate, and we are well aware of the issues these impact assessments raise, which is why we have these debates. It has helped us, in turn, to ensure we negotiate the best possible deal for this country. So we have the impact assessments; they are alongside me now.

Additionally, as I reaffirmed at Second Reading, the Government have committed to undertake monitoring reports, and to an evaluation report within five years of entry into force of the agreements. These evaluation reports will cover a broad range of impacts across the whole agreement and will not be limited to the procurement chapters; it is very important that this is an impact assessment of the entire free trade agreement. To perform an assessment before two years, which I think has been suggested and was covered by the noble Lord, Lord Kerr, would clearly be of little value and would also be costly to the taxpayer. If we are to have impact assessments, they have to have enough time to run so that we can see what the impact is. Clearly, the Government and all of us as individuals are keen to learn what those impacts will be, and I believe that they will be extremely positive for this country. To perform another impact assessment now would simply replicate work we have already done to no effect. It would cost the taxpayer and would delay implementation of our agreements. I think that position is made relatively logically.

The scrutiny arrangements we currently have in place also cover procurement. By way of example, I repeat the eloquent words of the International Agreements Committee of your Lordships’ House, which remarked in its report on our trade deal with New Zealand,

“We welcome the inclusion of a procurement chapter that extends commitments above those provided for under the WTO Government Procurement Agreement.”


I note that some of these amendments—specifically, Amendments 3, 4 and 5 in the name of the noble Lord, Lord Lennie, Amendment 7 in the name of my noble friend Lady McIntosh of Pickering and Amendments 15, 16, 17 and 18 in the name of the noble Lord, Lord Purvis of Tweed, and the noble Baroness, Lady Bakewell of Hardington Mandeville—are seeking further review prior to the regulations being made from the Bill. I will address this point later on in my remarks after setting out what we are doing in the thematic areas raised in this group. I think that is important: it is right to have a debate.

On agriculture and farming, I thank my noble friend Lady McIntosh for tabling Amendment 7. She has illustrated her passion for UK farming over the years and draws on her extensive experience of chairing the Environment, Food and Rural Affairs Committee in the other place. I also thank the noble Lords, Lord Lennie and Lord Purvis, and the noble Baroness, Lady Bakewell, for tabling Amendments 3, 9 and 15, which similarly focus on farmers. I hope that I can provide reassurance to them all as to why these amendments are unnecessary. I also thank the noble Baroness, Lady Humphreys, for her comments on this. Importantly, I encourage all noble Lords to enjoy locally sourced, grass-fed, delicious lamb, as I did last weekend in preparation for this debate.

[Lord Purvis of Tweed (LD)]

Was it from the UK?

[Lord Johnson of Lainston (Con)]

It was locally sourced—that is my focus, but lamb from anywhere in the UK is delicious, as is all our produce.

I reiterate my personal passion for and commitment to this important sector of our economy and the people in our farming and rural communities who work in it. This is one of the most special and unique features of our nation. As someone who grew up on a farm—many of my family are farmers and I spend what time I have, when not here working with noble Lords to promote our free trade agenda, on a farm—I can say that there is no one more sensitive to and aware of the effects of these changes on farmers and their communities. I continue to bang the drum for our agricultural products whenever I travel around the world.

It is important to emphasise that this Government consider agriculture a key part of UK trade policy. We have made this a key focus in designing these deals. British farmers are among the best in the world, and we want to ensure that farmers and producers benefit from the opportunities provided by UK FTAs, while ensuring that appropriate protections are in place for the most sensitive products. This is why we have invested so much in concepts such as farming advocates around the world and why I spend a great deal of my time trying to get investment into agricultural technology developments that will ensure that our farmers are equipped for the future and can profit fully from this work. We are a world leader in agricultural technology and new methods of planting, harvesting and husbandry. We need to repoint this important discussion—I hope to do so in future—to focus on the possibilities for the future as much as to protect the treasure that we already have.

I acknowledge the concerns that noble Lords have raised, most recently at Second Reading, pertaining to the liberalisation of agriculture, in particular that of beef and lamb. The Government have sought to balance the benefits of free trade for UK businesses and consumers with robust protections for our agricultural industry. Within the Australia and New Zealand agreements, the Government have secured a range of measures to safeguard UK farmers, which my noble friend Lady McIntosh and the noble Baroness, Lady Humphreys, wanted me to focus on in particular. I apologise if this is too detailed, but they include tariff rate quotas for a number of sensitive agricultural products, such as cheese and butter as well as beef and sheepmeat, product-specific safeguards for beef and sheepmeat from Australia, and general bilateral safeguard mechanisms that provide a safety net for industry.

The noble Lord, Lord Kerr, raised the very important point of whether this is a template for other free trade agreements. I stress that we look at every free trade agreement on its own merits; it is absolutely right that we should negotiate each one separately. What is in this agreement will not necessarily be replicated in other agreements, but I think that we have been very successful in the way we have structured these deals to provide safeguards and, as I have said in this Chamber before, the flexibility built into these FTAs to enable us to evolve the specifics over time. I hope that the broad concept and structure of how we enter these FTAs will be replicated and continue to be appointed as successfully as possible.

On agreements around agriculture and sensitive industries, we are clearly aware that every trade deal must be negotiated specifically to ensure that we get the best deal for this country. It is very important that we take the right amount of time to execute them. I hope noble Lords will join me in wishing our Secretary of State all speed in coming to sensible conclusions, while always ensuring that the quality of the deal is not sacrificed to try to conform to some arbitrary timeline. We want the best deals for the future, and it is important that they are specific to each country with which we sign treaties.

Within the Australia deal, the first measure—known as the tariff rate quota—lasts for up to 10 years. There was some discussion around this, so I would like to clarify it. Depending on the product, higher tariffs are automatically applied to imports above a certain volume threshold, known as the quota. The second measure—this is for the Australia deal—from years 11 to 15, is known as a product-specific safeguard, which has a broadly similar effect. It allows the UK to apply significant tariffs—for example, 20% for beef and sheepmeat—above a volume threshold. Additionally, on sheepmeat, if volume thresholds under tariff rate quotas in years 1 to 10, or product-specific safeguards in years 11 to 15, for sheepmeat are consistently filled, there will be an automatic reduction of the quota safeguards by 25%. That is very important. If we see a continued excess of imports in those products, we can then reduce the quota allowances to ensure that more pay higher tariffs. That is quite an innovative measure that has been put into these mechanisms.

[Baroness McIntosh of Pickering (Con)]

My Lords, I think this goes to the crux of my amendment. The NFU has specifically requested an answer to why it is time-barred. It is 15 years, as my noble friend said, for beef and lamb, but for sugar it is only eight years and for dairy it is lifted after six years. Have there been time limits in previous agreements? I think probably not, given the EU.

[Lord Johnson of Lainston (Con)]

I thank my noble friend for those comments. I do not know our previous treaty structures—those that were pre-EU were long before I was alive, but I am happy to see whether these have been replicated in other trade agreements. The point is that they are innovative, and they are designed to ensure that we can protect ourselves over a prolonged period of time, which I think is very important. We are not looking at immediate liberalisation in these sensitive areas; we are looking at having complex and well-thought-through mechanisms that protect our agricultural industry while allowing for the gradual liberalisation of our trade.

If I may carry on, it may clarify the answer to my noble friend’s question. The third measure, a general bilateral safeguard mechanism, will provide a temporary safety net for industry if it faces serious injury from increased imports as a result of tariff liberalisation under the FTA. This applies to all products. This protection is available for a product’s tariff liberalisation period plus five years, in order to allow domestic industries time for adjustment.

I hope the Committee is reassured to know that the New Zealand deal includes a range of tools to protect sensitive agricultural sectors in the UK. Tariff liberalisation for sensitive goods—for products such as cheese and butter, as well as beef and sheepmeat—will be staged over time to allow time for adjustment. There are tariff rate quotas on a range of the most sensitive agricultural products. These limit the volume of duty-free imports permitted and, in the case of sheepmeat, will be in place for a total of 15 years. A general bilateral safeguard mechanism, which provides a temporary safety net for industry if it faces serious injury, or threat of serious injury, from increased imports as a result of tariff elimination under the FTA applies to all products.

I raised at Second Reading why we do not expect products from Australia or New Zealand to flood the UK market from the current low levels at which they are imported. I believe the noble Lord, Lord Kerr, also raised this. The fact is that, in kilogram terms, 80% of Australian beef and 70% of Australian sheepmeat exports in 2021 went to markets in Asia and the Pacific. We would expect any increase in imports into the UK to displace other imports, probably those from the European Union, rather than compete with UK farmers. I think this is very important in the sense of where we see these exports going. We can be reassured that the main market for Australia and New Zealand absolutely is, at the moment, Asia. Further, diversifying the potential source of imports will help UK food security.

I point out that New Zealand already has a significant volume of tariff-free access into the UK for sheepmeat, but last year used less than half of that quota. That means that New Zealand could already export more sheepmeat to us, tariff-free, but chooses not to. I think that is something that we should bear in mind. In many instances, the quotas—particularly for sheepmeat in Australia—are not being utilised by a significant margin. That should give us some reassurance.

During this debate, noble Lords—my noble friend Lady McIntosh in particular—have also raised concerns over standards of production in Australia and New Zealand, particularly in relation to animal welfare and the environment. This is a very important point on which I want to reassure noble Lords. We are proud of our standards in the UK, which, importantly, we have retained the right to apply and to regulate in future. The deals do not provide for any new regulatory permissions for imports. All animal products imported into the UK must continue to comply with our existing import requirements—including hormone-treated beef, which was and remains banned in this country.

I am very aware of my noble friend Lady McIntosh’s comments about the Food Standards Agency. I will look into that, but I believe she is implying that there are no checks at our borders for imported meat products, and I would be completely surprised if that was the case. I will certainly look into it, but I am reassured by my officials that we run a coherent inspections regime, and that will not change. It is very important that we feel reassured that we have this regime. In fact, the reports I have read from the Trade and Agriculture Commission have referred specifically to that.

On animal rights and welfare—which is a particularly important issue to me personally—I spoke to Minister Watt, the Australian Minister for Agriculture, last week. In particular, I went to see him to discuss his commitment to this area, which he reiterated to me significantly. He also updated me on the progress of appointing a new inspector-general for animal welfare; I think the noble Baroness, Lady Bakewell, will be pleased to hear that.

The independent Trade and Agriculture Commission —a body my noble friend Lady McIntosh was instrumental in establishing—concluded on this point that the UK-New Zealand and UK-Australia FTAs do not affect the UK’s statutory protections for animal and plant life and health, animal welfare and the environment, and in some areas actually strengthen the UK’s right to regulate. It concluded in relation to the UK-Australia deal specifically that

“the FTA does not require the UK to change its existing levels of statutory protection in relation to animal or plant life or health, animal welfare, and environmental protection.”

I raised these points at Second Reading, and I believe I used that quote then. I hope I have made it very clear that our standards and protections do not change on account of our FTAs with Australia and New Zealand—I ask all noble Lords, please, to hear this. The TAC continued:

“even to the extent that the FTA imposes greater trade liberalisation obligations on the UK, as it does, for example, by reducing customs duties, the UK not only has the same rights as it would under WTO law to maintain and adopt protections in the areas covered by this advice, but in relation to animal welfare and certain environmental issues it has even greater rights than under WTO law.”

I take this opportunity to say that this is not the end of the agreements but the beginning. These deals also establish a forum for the UK to raise concerns, co-operate and share information under the FTA committee structure. This structure spans the whole of the FTAs. For example, the UK-Australia FTA provides for sub-committees covering technical barriers to trade, working groups on animal welfare, dialogues on legal services, and numerous other sub-groups and committees that will allow us, if we feel at any point that these FTAs have issues, to raise this with our trading partners formally or through other mechanisms to ensure that we come to a resolution.

I appreciate that I have gone into some detail—

[Lord Purvis of Tweed (LD)]

I am grateful to the Minister for giving way. Since the noble Lord, Lord Lansley, mentioned the TAC letter to the Secretary of State when it reviewed the agreement, let me quote just one part, because I am having difficulty squaring what the TAC said and what the Minister has just said on environmental aspects of the agreements. The TAC report says that

“we determined that it was likely that products affected by the practice at issue would be imported in increased quantities under the FTA. This was true, for instance, of plant products produced using pesticides and fungicides that are not permitted, or being phased out, in the UK.”

If the Minister is so clear, I do not know how it is possible that we will import under the FTA increased amounts of products which use things we have banned here.

[Lord Johnson of Lainston (Con)]

I always appreciate the noble Lord’s interventions. Hopefully, I will cover this issue as I go through my notes. I will continue to go through these points because they are important, and it is important that noble Lords hear from me the relevance we place on these discussions. This really is the meat, as they say, of the free trade debate, although I do not see that it relates specifically to this Bill. I appreciate that I have gone into a lot of detail, but these are important issues. I am grateful to the noble Lord, Lord Purvis, for his comments and to the noble Baroness, Lady Bakewell, and my noble friend Lady McIntosh for tabling their amendments in the interests of our frankly brilliant farming communities. I hope I have to some extent been able to reassure them that their amendments are not required.

Turning to Amendments 4, 13, 14, 17 and 18 from the noble Lords, Lord Lennie and Lord Purvis, and the noble Baroness, Lady Bakewell, on environmental, social and labour considerations, I want to reassure the House that both the Australia and New Zealand FTAs include comprehensive chapters that cover labour and animal rights and commitments not to derogate from environmental and labour laws, to reaffirm our climate commitments under the Paris Agreement and to strengthen co-operation in a number of areas. The Government are committed to upholding the UK’s high environmental standards, and we will continue to ensure a high level of environmental protection in our trade agreements.

These chapters also include commitments not to derogate from laws, regulations and policies in a manner that weakens or reduces the level of animal welfare protection as an encouragement for trade or investment between the parties. For example, the UK-New Zealand agreement contains the largest list of environmental goods with liberalised tariffs in any trade deal, supporting both countries’ climate and environmental goals through trade policy. I think the noble Lord, Lord Lennie, touched on that—the importance of trying to ensure that we benefit in the area of net-zero in particular. We have that specifically in our treaties. Provisions included under these FTAs went further than both Australia and New Zealand had previously gone before.

I turn to the review of negotiation and Amendment 12 in the name of the noble Lord, Lord Lennie. This would create a duty of the Secretary of State to undertake and publish a review of the lessons learned from negotiating the procurement chapter. I agree that learning the lessons from negotiations is crucial to the UK getting the best outcome from them. Indeed, we already do this, so it is not necessary to create a statutory requirement to undertake such a review. All negotiations are different, as I have said, but my department is committed to learning from each negotiation and applying those lessons directly to its work, both in chapters and across negotiations. DIT has a continuous improvement team dedicated to learning lessons from trade negotiations. I am confident that this approach towards negotiating procurement chapters allows for high-quality chapters that work well for British businesses and consumers. I hope this provides reassurance to the Committee.

On SMEs, which are very relevant and relate to Amendment 16 in the name of the noble Lord, Lord Purvis, I reassure the Committee that the procurement chapters of both agreements include articles on facilitating the participation of SMEs in procurement. Both chapters also include provisions on continuing to co-operate with Australia and New Zealand to facilitate participation of SMEs over the lifetime of the agreements.

We worked very hard to ensure that SMEs were engaged before and during the negotiations. Indeed, Lucy Monks of the FSB gave evidence to the Commons on the engagement the Department for International Trade has carried out with SMEs. Hopefully, what she said is heard:

“The Department for International Trade has been talking to us and other bodies about encouraging opportunities. It is an ongoing process.”


I know the department is extremely keen to see these agreements brought into effect. We are very serious about our ambitions to support SMEs in trade, and we seek a dedicated SME chapter and SME-friendly provisions throughout all our trade agreements, as we have done in these ones. I am grateful to the noble Lord for raising this issue during the passage of the Bill; however, I do not believe his amendment is necessary, given what the Government are doing to support SMEs and appropriately assess the impact of our trade deals on this vital part of our economy.

In concluding, I wish to return to the point on impact assessments being required prior to any regulations being made. In addition to the reasons I gave earlier in relation to what the Government have already done on impact assessments in each area raised, requiring further assessments to be done before regulations can be made would delay the entry into force of these agreements, as I am sure noble Lords will agree. This would delay the point at which UK businesses and consumers could benefit from the advantages of these agreements with Australia and New Zealand—an outcome to which I simply do not believe your Lordships’ House aspires.

We have covered a lot of ground in this debate, but I hope I have been able to demonstrate in each important area the wide range of work and analysis that the Government and other groups independent of government have done and will do to ensure that these specific issues are addressed. I ask noble Lords to withdraw or not press their amendments.

[Lord Lennie (Lab)]

My Lords, that was a long one. We have been here for half an hour listening to the response on what is essentially a fairly simple set of amendments about impact assessments and reviews.

I start with the noble Lord, Lord Lansley, who brought up the behaviour of his right honourable friend George Eustice. I am quite grateful to George Eustice, because he wrote my speech for me when he was critical of this agreement to the degree that he was, but I would say that you are going to get that kind of discipline back into the Tory party only when it becomes a single party. There are at least three Tory parties continuously at war with each other. It seems to me that, as long as that continues, it is good for us but not so good for the Tories. We have been there before ourselves; we are not in that position now, thank goodness. We will see what happens with that one.

The Minister listed the areas where impact assessments have already been undertaken or are no longer necessary, but Labour’s stand is that climate change, the NHS and the regions were missing from that list. It seems to me that the purpose of an impact assessment in a trade agreement is to give a more precise prediction of what is expected in these areas from the agreement, then the reviews measure whether the impact assessment proved to be about right, wide of the mark or different. The Minister said that this does not set a precedent for other agreements, but it does, whether he likes it or not. Everyone will be looking at this agreement, as it is the first one, and will be looking to make predictions about their own position in relation to the UK as we come to trying to make agreements with those countries. The noble Lord, Lord Kerr, is right: the nearer we are to import products, the higher the risk for the UK. It is an obvious statement, but Australia is as far away as we can get. It does, however, have an impact. This agreement has a bigger impact than just the pounds and pence that it will produce for the UK and Australian economies.

With those remarks, I beg leave to withdraw the amendment; we will probably return to this issue at a later stage.

--- Later in debate ---

[Lord Kerr of Kinlochard (CB)]

My Lords, I have considerable sympathy with those who argue that the regulatory procedure is insufficient for looking at these regulations for all the familiar arguments, which I need not go into.

Our role in the House of Lords in relation to the negative procedure is nugatory. I do not think that that is quite right. The matters we are discussing are quite important, so I support Amendment 20. Part of my concern is that I am worried about Clause 2 itself. I have mentioned this before. I would be very grateful if the Minister would construe what Clause 2(1)(a) means. It says that:

“Regulations under section 1 may … make provision for different purposes or areas”.


What does “different” mean? Looking at it, I see that regulations under Section 1 must be provisions to implement the procurement chapters of these two agreements. So what are the “different purposes” mentioned in Clause 2(1)(a)? This is rather permissive drafting. I want to know what “different” means. Could “different” mean going beyond the scope of the procurement chapters in the free trade agreements with Australia and New Zealand? If it does mean that, we are giving the Government a pretty wide power in Clause 2. If it does not mean that, why is it necessary to have the language at all?

[Lord Johnson of Lainston (Con)]

My Lords, I thank all noble Lords for their comments. I am delighted to respond to the thoughtful contributions we have heard—from the noble Lords, Lord Lennie and Lord Kerr, and my noble friend Lady McIntosh—on the issue of scrutiny and how regulations made under the Bill will be made.

Before I focus on the amendments themselves, I would like to draw attention to the beautifully short report published by the Delegated Powers and Regulatory Reform Committee on this Bill, on 11 January. Unlike my previous response, as has been alluded to, it was extremely short. The committee found that there was nothing to note on this Bill’s use of delegated powers. The Government are of course extremely satisfied that the committee is content with the use of the negative procedure in the Bill.

I reiterate that the Bill is required to implement two free trade agreements that Parliament has already scrutinised. The scrutiny process under the Constitutional Reform and Governance Act was completed for the Australia FTA in July 2022 and for New Zealand in December 2022. We engaged extensively with Parliament throughout the negotiation process. For these deals, this included eight public progress reports during talks, including extensive information published at agreement in principle, and 12 sessions with the International Agreements Committee and the Commons International Trade Committee, both in public and in private with Ministers and/or officials, before and after signature. There were nine ministerial Statements—three oral and six written—and eight MP briefings, plus one on the Trade (Australia and New Zealand) Bill.

A programme of statutory instruments has been put in place to implement the agreements to ensure that the UK is not in breach on its entry into force in the following areas: rules of origin and tariffs, intellectual property, government procurement, immigration rules changes, and, for the New Zealand FTA only, technical barriers to trade.

The Government have long acknowledged that, due to their length, complexity and importance, FTAs warrant a bespoke framework of scrutiny, and our full range of commitments is contained within the exchange of letters conducted last year between my predecessor, my noble friend Lord Grimstone, and the International Agreements Committee.

I turn to the specific issues raised by these amendments. It is the Government’s view that the amendments would require disproportionate scrutiny of the regulations to implement what Parliament has already had the opportunity to scrutinise, including through noble Lords’ scrutiny of this Bill. As it may be of interest to noble Lords, I can commit to sharing the draft procurement SIs ahead of Report. They will be in a draft version subject to change, due to consultations, as noble Lords can imagine, legal checks and recognising that the Bill is still undergoing scrutiny by your Lordships’ House. I hope that the noble Lord, Lord Purvis, is satisfied by that.

[Lord Lennie (Lab)]

In all the meetings and information provided in various forms throughout the process—and I accept that there was a lot—was any opportunity given for anyone to say no to any of it?

[Lord Johnson of Lainston (Con)]

This is a consultative process designed to get as much as much input as possible into what is ultimately a negotiated outcome. As a House, we have the opportunity to vote on this Bill alone. I hope that we certainly will decide to support it, so I do not really understand the noble Lord’s point, in the sense of people being able to say yes or no. We are voting on a piece of legislation that is extremely relevant to the execution of our free trade agreements, which is why, if I may be so bold, we have had a wide-ranging debate in this House on the issues behind the free trade agreements specifically relating to this Bill, which, I think we all agree, is particularly specific and without contention. My answer to the noble Lord is that we have had a huge debate and a very high degree of consultation and have followed more than the process laid out for scrutinising free trade agreements in Parliament and nationwide.

The noble Lord, Lord Lennie, will want me to be specific in my response to the amendments, but he will be glad to know that there are significantly fewer pages in my response to this group than in the previous response. There is precedent for the approach the Government have taken. Clause 1 of the Trade Act 2021 was used to implement the UK’s accession to the WTO agreement on government procurement, the GPA, and the regulations made there were subject to the negative procedure, so that is important to note. Parliament had the opportunity to scrutinise the UK’s accession to the GPA through the CRaG process before the subsequent regulations were made. This is the same situation we have here for the Australia and New Zealand free trade agreements. I am very comfortable in confirming that as the ultimate point.

Amendments 10, 21, 22, 24, 26, 28, 29, 31 and 33 relate to the super-affirmative procedure, which I believe the noble Lord, Lord Kerr, raised, and are tabled in the name of the noble Lord, Lord Lennie. This is the process used for statutory instruments when an exceptionally high degree of scrutiny is thought appropriate. An example is remedial orders, which the Government can use to amend Acts of Parliament should the courts find them in breach of the European Convention on Human Rights. That example seems significant, but I respectfully suggest that it is disproportionate to use this process to approve the minor technical changes needed to implement the procurement commitments in the Australia and New Zealand FTAs. It would also represent a significant use of parliamentary time when Parliament has already debated the fundamental issues.

Another important consideration is how the use of the super-affirmative procedure will lead to delays in these agreements entering into force, which I think we have all agreed is not desirable. Parliament has had sight of the Australia and New Zealand agreements for 13 and 11 months respectively. It is right that we take appropriate time to scrutinise these deals properly, but we must now get on with entering these agreements into force to ensure that UK businesses and consumers can benefit from the significant economic advantages as soon as possible. This is also the shared desire, as I stated earlier, of the Labour Governments in Australia and New Zealand.

In terms of modifications, there may be small changes to be made to the procurement chapters—for example, machinery of government changes. It is important to stress that the Government have no intention of making significant changes to these agreements. I have stated this before and do so again. The Government are proud of the Australia and New Zealand FTAs and have no intention of significantly modifying them in structural terms.

The amendments tabled by the noble Lord, Lord Lennie, also deal with the scrutiny of regulations made by devolved Ministers and regulations made by a Minister of the Crown jointly with a devolved authority. The increased level of scrutiny set out in the proposed amendments would be as disproportionate in the devolved legislatures as in the UK Parliament. The reasons I have already given are as applicable to secondary legislation made in Scotland, Wales and Northern Ireland as they are to secondary legislation made in Westminster concerning the specifics of secondary legislation relating to this Bill, such as technical changes relating to machinery of government changes.

--- Later in debate ---

[Baroness McIntosh of Pickering (Con)]

I realise that my noble friend and I did not have the meeting last week that he very kindly invited me to, as I was involved in other legislation. Could he perhaps write to me on the two specific questions I have asked? First, how do the Government expect to fulfil their statutory duty to report on the new obligations under this Bill to maintain protections for human, animal or plant health, animal welfare and the environment? Secondly, how and where will the food be checked: when it is coming into the country, at the borders; or when it is being offered to be eaten?

[Lord Johnson of Lainston (Con)]

I thank my noble friend for those comments, and I will be happy to respond to both questions in writing. She raises the very important point that, to have security and trust in these free trade agreements, we need to know that they are properly policed and monitored. I am completely with her on this, and I hope the reassurances I have already given will be seen as significant and can be passed on to my noble friend in the detail that she requires.

If I may come to a conclusion, I thank noble Lords again for their contributions, but I hope I have demonstrated that these amendments are not necessary, and I hope that I have provided further reassurance to noble Lords today. I therefore ask that the amendments not be pressed.

[Lord Kerr of Kinlochard (CB)]

I still have not heard what “different” means in Clause 2(1)(a). I do not need to know now, but if I do not hear by Report, I shall be tempted to join the noble Baroness, Lady McIntosh, in arguing that Clause 2 should not stand part of the Bill.

[Lord Johnson of Lainston (Con)]

I appreciate the comment made by the noble Lord. I am told that it refers to Clause 1(1)(b), which says,

“otherwise for the purposes of dealing with matters arising out of, or related to, those Chapters.”

I am happy to have a more detailed conversation with the noble Lord about the specifics of the Bill at a later stage. As the noble Baroness mentioned, I have offered to all Members of this House to have one-to-one or group discussions about the agreement, and I have kept my diary open, but the meeting that I was so looking forward to last week was cancelled due to no one attending. I hope the next meeting that I arrange will have a few more people coming, since I look forward to the debate and am happy to be specific about the details.

[Lord Purvis of Tweed (LD)]

I—

[Lord Johnson of Lainston (Con)]

I am going to come to a conclusion and then I will hand back to the noble Lord.

I ask that these amendments not be pressed, and maintain that Clause 2 and Schedule 2 should stand part of the Bill.

[Lord Purvis of Tweed (LD)]

Just before the Minister finally sits down, I wonder whether he might be kind enough to write to the noble Lord, Lord Kerr, and ensure that copies are sent. These powers are a perplexing issue. The Explanatory Notes say they are necessary for consequential elements, but that would be covered by Clause 1(1)(b). The Minister says we need these powers in the long term, but they are repealed by the Procurement Bill as soon as that Bill becomes an Act, because this Bill is superseded. There is no part of this Bill that is protected by the Procurement Bill; this Bill will be repealed entirely. I do not expect him to reply now, but, if he could explain that point in writing in advance of Report, that would be very helpful.

[Lord Johnson of Lainston (Con)]

I appreciate that intervention, and I will certainly do so. I am happy to have further meetings on this issue. I thank the noble Lord for that comment.

[Baroness McIntosh of Pickering (Con)]

I am grateful to all who have spoken and particularly to the Minister for responding.

Perhaps it is the advocate in me, but I have always worked better from a written brief. It would have been helpful for me to have had the meeting with my noble friend to explain my thinking behind the problems that I have with Clause 2 and Schedule 3. It would be helpful if he could reply to me with a copy to the noble Lord, Lord Kerr, and perhaps place a copy in the Library—at which point I will decide whether further action is required on Report. We have had a good debate on these super-affirmative regulations. I know this is something that the Law Society of Scotland has put forward at other stages of other Bills, so it has a lot of support on the right issues in the House.

What my noble friend said about the Delegated Powers Committee is right: there are a number of practitioners in the country who are concerned that the broad and unspecified powers to alter public procurement rules in the Bill should adequately reflect the values of transparency and openness that I know my noble friend is wedded to. With those few remarks, I withdraw my opposition to Clause 2 standing part of the Bill.

Trade (Australia and New Zealand) Bill

Lord Johnson of Lainston Excerpts

2nd reading
Monday 9th January 2023 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the Bill will be now read a second time.

[The Minister of State, Department for International Trade (Lord Johnson of Lainston) (Con)]

My Lords, I draw noble Lords’ attention to my interests. They include an investment in a New Zealand-based asset management company, but what they do not include are the important personal references to my New Zealand and Australian heritage. Like so many in this House, and indeed in this nation, I have relations from both sides of my family in both countries. My ancestors on one side were part of the original Christchurch experiment in New Zealand, and on the other were founder architects and designers of Melbourne in Australia—an early example of the professional recognition chapters that we have included in this agreement.

I thank the International Agreements Committee, chaired by the noble Baroness, Lady Hayter. These conversations have been in depth and, I hope, open, and I welcome further discussion with Members of this House over the coming weeks as we progress through the Bill’s stages. I am sure that some noble Lords were delighted to receive my calls over the weekend as I made further inquiries as to their input into this important debate.

There is no doubt that, although the Bill is of a technical and necessary nature, it underpins the very essence of our post-Brexit vision of Britain. We are often asked for a coherent trade strategy and here it is—a global interconnectedness of trade deals, with this nation at the very heart of these new routes. It means opportunity for our businesses and citizens. It will result in new markets for our goods and services, and new ways to travel and share our cultures. But it also means change. We are aware of this, and we welcome the debate around this vision of our nation, which is now at the very centre of global trade.

The Bill will enable delivery of the UK’s first “from scratch” free trade agreements since leaving the European Union. They are modern and cutting-edge deals, including an astonishing level of innovation and flexibility. They are aligned with our values and well reflect our strategic ambitions, as well as our economic ones. I stress the cutting-edge nature of these FTAs and use this opportunity to congratulate the Department for International Trade and Crawford Falconer on the way they have been designed and negotiated.

It is important to note that these agreements were not built from a standing start. That is very relevant, since much of the discussion has seemed to assume this. We already trade with these countries. However, the agreements build significantly further on our already strong relationships with both Australia and New Zealand. The UK was Australia’s fifth-largest trading partner in 2020. That trade was worth £14 billion in 2021. In 2020, 15,300 businesses, employing 3.4 million people, exported goods and services to Australia. The UK was New Zealand’s fifth-largest trading partner in 2020, our trade being worth £2.4 billion, with 6,700 businesses, employing 1.8 million people, exporting goods to New Zealand. That is what we are already doing, so imagine what we can do if we cement these agreements. We expect annual trade to increase by £10.4 billion between the UK and Australia, and between the UK and New Zealand by £1.7 billion. These are not insignificant sums; they are life-changing. This is just the start, and does not include the other benefits of a closer relationship which these deals signify.

The Bill, considering what it entails, is uncontentious. It provides a power to give effect to our procurement commitments in these agreements, and improves three areas of our existing procurement legislation in the UK, to the benefit of our public services and our companies trading in these partner countries. By the way, this will unlock billions in government contracts in a more secure way than ever before.

The powers in the Bill will be used to amend the current set of procurement rules to provide guaranteed legal access to Australian and New Zealand suppliers to the procurement opportunities covered by the FTAs; to streamline the options for local government issuing notices for future procurement opportunities; and to clarify that contracts of undefined value are in scope of the trade agreements, which basically means that international commitments cannot be avoided by not adding values to contracts. Finally, it contains enhanced safeguards to ensure that contracting authorities cannot avoid international commitments by terminating the contract process where an international supplier is likely to win.

I assure the House that these changes to our current procurement rules all sit in line with the proposals in the Procurement Bill. The Bill, except the sections covering Scotland, will be repealed by the Procurement Bill, which has already undergone extensive scrutiny by this House and is currently before the other place. However, the rationale for the Bill is clear: we want to start taking advantage of these free trade agreements as soon as possible for the sake of our economy, and this Bill will allow that.

That is why the Australia and New Zealand free trade agreements deliver a number of important benefits, which are sometimes overlooked, and I think it is important to address them now. On mobility, we have agreed ambitious business mobility commitments. For the first time, UK service suppliers, including scientists, lawyers and accountants, will be able to apply for temporary work visas without being subject to Australia’s changing skilled occupation list. This is important: it is the furthest Australia has ever gone in an FTA. On trade in services, the deal goes further than Australia has ever gone before in giving UK services companies significant and non-discriminatory access to the Australian market, with unprecedented levels of regulatory transparency.

On trade in goods, the deal eliminates tariffs on 100% of UK exports, making it cheaper and easier to trade physical goods between the UK and Australia; and 98% of the estimated tariff reductions on UK exports will be eliminated as soon as the agreements, with noble Lords’ support and assistance, come into force. UK businesses will see duties of up to 5% immediately eliminated on the export of cars, whisky, motors, clothing and—I hope noble Lords have taken them down—even Christmas decorations.

The deal provides more opportunities for UK firms to trade digitally with Australia. For example, the digital chapter goes beyond existing precedent for both the UK and Australia. It contains the first dedicated innovation chapter and establishes a strategic innovation dialogue which will drive the commercialisation of new technology. This agreement also includes an ambitious environment chapter with Australia which goes beyond previous Australian FTAs. It includes a commitment not to derogate from environmental laws and affirms international environment and climate commitments, including the Paris Agreement. It also includes provisions to deepen co-operation in areas ranging from biodiversity, forests and fisheries to ozone-depleting substances. We have also secured the most substantive climate provisions that Australia has ever committed to in an FTA, with stand-alone climate change articles. What is more, this free trade agreement raises the bar globally by introducing the first ever animal welfare chapter of any trade deal. I consider this extremely important. My noble friend Lord Benyon was asked what world leadership we are providing on the environment and animal welfare, and I have just given probably the most sensational list ever released in this House.

With the New Zealand deal, the mobility chapter will make it easier for senior managers, executives and specialists to move on intra-company transfers. They will be eligible for visas to work for a period of three years, and family members will be able to join them. In relation to trade in services, we have agreed a professional services and recognition of professional qualifications annexe which will encourage regulators of all regulated professions towards recognition. Additionally, we have agreed a sectoral annexe on international maritime transport services—unprecedented for New Zealand—that will benefit UK shipping companies and ships flying the UK flag. On customs and rules of origin, we have committed to implementing single window systems, and the environment chapter breaks new ground for the UK and New Zealand in supporting our shared climate and environment goals, clean growth and the transition to a net-zero economy.

On agriculture, I reassure your Lordships that these deals deliver appropriate protections for the industry, including through tariff rate quotas, protecting UK farmers. These deals present enormous opportunities for our consumers and farmers. The Australian High Commissioner gave me a fascinating statistic the other day: UK firms own more than 10 million hectares of land in Australia. I am told that agricultural land in the UK totals about 20 million hectares, so, Britons are some of the biggest farmers in Australia. She also told me that her statistics show we export more agricultural produce in all its forms to Australia than we import. There are production differences between Australia and New Zealand which, frankly, we wish to take advantage of. We should welcome these expanded markets, as many farmers do. I read an interesting article in Farmers Weekly, which stated that these FTAs will

“help ensure UK products expand into new markets, taking advantage of our complimentary seasons, and increase consistency of supply to these markets, contributing towards targets, such as the NFU’s … ambition to grow food exports by 30% by 2030, to at least £30bn.”

I also welcome the Trade and Agriculture Commission’s work on these deals, which was, in my view, very clear about the protections still afforded us. It said that

“it can be concluded that the FTA does not require the UK to change its existing levels of statutory protection in relation to animal or plant life or health, animal welfare, and environmental protection.”

That is a direct quote from the TAC paper. Importantly, we take these issues very seriously and I will try to ensure that I provide further reassurance at the end of the debate in answer to the points raised by noble Lords.

To return to the Bill, I draw noble Lords’ attention to the fact that a number of statutory instruments will need to be laid, in addition to those that will flow from the Bill, to allow entry into force of the deals. These relate to rules of origin and tariffs, intellectual property and technical barriers to trade, specifically in New Zealand. Technical changes to the Immigration Rules have already been made.

As the procurement chapters of these agreements concern devolved matters, this Bill also confers powers on the devolved Administrations so that they can implement the agreements in areas of their competence. As concurrent powers, they also allow the Government to implement the agreements on a UK-wide basis where it makes practical sense to do so. They are entirely reasonable; they ensure that measures contained herein can be applied to all our procurement processes in a consistent manner. In my view, this is desirable. However, I reiterate the reassurance given at every stage of this Bill’s passage through the other place: the Government are committed to not normally using this Bill’s powers without the consent of the devolved Administrations, and we will never use them without consulting the devolved Administrations first.

We have two ground-breaking deals, both opening up new opportunities for Britain’s world-leading industries; an expected £900 million increase in UK household wages as a result of the deal with Australia; an expected £200 million increase in household wages as a result of the deal with New Zealand; ambitious mobility provisions for UK professionals and young people; two trade deals fit for the 21st century, including the first animal welfare chapter in a free trade agreement; modern digital and data provisions, ready for the economy of the future; as a key part of the vision set out in the integrated review, a tilt to the Indo-Pacific, thus building on existing strong ties, including the Five Eyes partnership and recent AUKUS agreement, to deepen our relationships with key allies in the region; and, finally, two values-based deals, which deepen our relationship with like-minded democracies sharing our beliefs in fairness, free enterprise, high standards and the rule of law.

Our Australia and New Zealand trade deals illustrate modern partnerships, and they reflect what the New Zealand Trade Minister said when the New Zealand Parliament was debating the deal—namely, that the partnership between our countries is

“grounded in common traditions, experiences, and values, strengthened and maintained by deep people-to-people links and made relevant by a close cooperation across the entire spectrum of engagement: economic, health, science, sport, defence and security.”

To further showcase this partnership, I believe the Australian High Commissioner has joined us in the Public Gallery today.

Crucially, these agreements are a central element of our work to build a network of trade alliances with the world’s most dynamic economies. These deals represent another step towards our accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

This is a modern, flexible agreement, representing not an end point or a stop sign but a template for growth and deeper partnerships with two of our closest allies and key strategic partners. Importantly, it contains a series of important mechanisms to ensure that these agreements remain flexible and contemporary, including a joint committee to implement and operate the agreement and further sub-committees on intellectual property, services and investment, sanitary and phytosanitary measures, technical barriers to trade and trade in goods. It also includes side letters and dialogues on implementing protections around geographic origins, financial services regulations, professional qualifications, telecommunications, legal services and, of course, a detailed series of mechanisms to manage our tariff rate quotas. These are highly flexible agreements. They allow us to build on them and make alterations as deemed appropriate.

This Bill represents a historic step towards realising this Government’s vision for a forward-looking, sovereign trade policy that delivers prosperity to our citizens. I have every confidence that noble Lords will recognise these immense opportunities. I beg to move.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank noble Lords for taking part in today’s debate and for the contributions from all sides of the House: it has been absolutely fascinating. I am extremely grateful also that the Australian and New Zealand high commissioners made themselves available to watch part of the debate: I am grateful to them for their support, morally, in the Galleries. I also extend warm gratitude to the IAC and say how much I appreciate its involvement both before this debate and, I very much hope, in the next few weeks, as we go through Committee and Report.

I join the long line of people congratulating my noble friend Lord Swire on his first-class maiden speech. He was certainly a better speaker and politician than he was a soldier, by the sounds of things, and I am very glad to have him behind me, as a result. Both he and the noble Lords, Lord Marland and Lord Howell, raised the Commonwealth. I totally agree with the importance we place on our links with the Commonwealth and the opportunities that our post-Brexit vision brings us in relation to the Commonwealth. I reassure my noble friends that the Government will and are making the most of the Commonwealth within our trade agenda. We have done 33 trade deals with Commonwealth members and we have a newly launched developing countries trading scheme, which I know my noble friend Lord Swire has discussed with me in the past. Total trade in goods and services between the UK and the Commonwealth was £121 billion in 2021, which I am delighted to report is an increase of 12% on 2020.

I will answer some of the questions that have been raised and I will try to do so in as much detail as possible given the time available to me. I think this is a very important debate.

The first point I would like to turn to is the question of why we are presenting this Bill to you today given that, in theory, there is a Procurement Bill that is being debated in the other place that will cancel this Bill. Well, actually, that is not completely true. All the provisions relating to Scotland are not in the Procurement Bill, so if we are to have consistency then we need to have this Bill relating to Scotland to follow through on top of the Procurement Bill, even when the Procurement Bill cancels this Bill—if that does not sound too bizarre.

There is also an important point on timing. The Procurement Bill, rather than this procurement Bill called the Trade (Australia and New Zealand) Bill, will take many months to get on to our statute books. Following that, there will be a further six-month waiting period before the provisions in the Procurement Bill come into effect; that could be a year, or a year and a half, or it could be longer than that. Who would want to stand in the way of this opportunity to allow our traders and our citizens to benefit from this free trade deal when we are able to present to you today a very uncontentious tidying-up Bill around procurement that, as I say, will have to follow through in any event on the Scottish measures? The noble Lords, Lord Kerr and Lord Purvis, my noble friend Lord Lansley and the noble Baroness, Lady Liddell, all covered this point and I hope I have answered the reason for the logic of this Bill and the importance of it.

I will also cover the issues surrounding negative versus affirmative statutory instruments. It is important to point out that, if you read the Bill, you will see that the powers therein are very specific—they are not intended to relate to procurement beyond the Australia and New Zealand trade Bill. The measures that we are considering that will be brought through as negative statutory instruments will be very procedural; they relate to things like the changing of names of government departments, so to assume—forgive my newness to this place and to Parliament in general—that we need to go through an affirmative process would be extremely cumbersome, time-consuming and really not relevant in this at all. As far as I am aware, the majority of the measures in this procurement Bill are effectively all being employed by procuring agents today anyway, so I am sure this brings much needed consistency, but in terms of changes it would not be significant. As a result, to have an impact assessment around this Bill would be unnecessary because the impact is to ensure that we can do our free trade agreement; it is not necessarily on the procurement processes that we are reforming. In fact, all the reforms seem eminently logical, and we should do them even if we were not doing a free trade deal.

I was criticised for my tone. I am sorry if people think I am too optimistic about what free trade agreements can give us, but I am excited by what we have before us. I am excited by our post-Brexit vision of Britain, I am excited about the wealth that we can create for our citizens, I am excited about the opportunities that we are going to have for our businesses, and I am excited about enhancing our cultural, societal and citizenly relations with our sister nations in Australia and New Zealand. So, yes, I am excited, and I am frankly amazed that people are not more excited than me.

Yes, every trade deal has give and take and it does revolve around change; I am aware of that and we should have a debate about it. I think what my noble friends Lord Hannan of Kingsclere, Lord Frost and Lord Udny-Lister, said about what great opportunities these are for us was right. I am a bit frustrated to some extent that we seem to think we are at a standing start with Australia and New Zealand when we are not and that this is the end of the road for our trade deals. We already trade with Australia and New Zealand; this is an improvement or enhancement; this is future-proofing our relationship and building it stronger. If we did not have this agreement, we could not deal with and look at in detail all the issues that people have purported to raise, like animal welfare, agriculture and the environment.

We can provide the leadership through this process that we could not do without it. That is why it is so wonderful. It is everything that noble Lords opposite should want—the opportunity to encourage trade and wealth creation while showing leadership in our values. That is what this free trade agreement does. We talk about the engagement and scrutiny process. I have great sympathy with that. I am in two minds about the level of scrutiny that is useful when negotiating a free trade deal. It is useful for our counterparts to understand what our citizenry feels about certain important issues, and I know that the Australians and New Zealanders—certainly the Australians—are effective in engaging with their industry base.

I was involved as a board director of the DIT in encouraging greater engagement with industry in the negotiating process and, frankly, we could continue to do more. I am not averse to suggestions. This is an iterative process and is the first of many deals, I hope. This is the simplest and most straightforward deal that we could have presented to the House, but we want to learn as much as possible from it. Therefore, while I would not look to change the process around the constitutional review that this House and the other place bring to bear on treaties in a specific and formalised sense, I am aware of and indeed desire greater engagement with business and the body politic. We otherwise end up with what we have today, a debate about any of the potential negatives of the deal, rather than people rejoicing in the huge opportunities that it presents to us.

I am, to some extent, frustrated that not enough businesses have come out to say how much they are going to benefit from these deals when, in fact, they have spoken to me directly about the huge opportunities that there are. I want to try to build a bow-wave around our free trade agenda. I therefore take to heart the views that noble Lords have expressed today about engagement and scrutiny. As I say, while the processes should not change, there could certainly be more forward footedness in engagement. That is a good process, which helps to spread the power of these agreements and makes them more successful.

I should make one important point. We are looking at these free trade agreements in the wrong way—through the wrong end of the telescope. We are used to trade agreements whereby one does a deal—some 1950s steel-type treaty on tariff allowances or whatever, such as allowing certain amounts of steel into the economy over a certain number of years—and that is it; one is stuck. The reason why the Ponsonby rule came into action was that Parliament was concerned that secret deals were being made that we could not get out of and that we did not know anything about.

This is different. There has been a huge degree of scrutiny and discussion around these agreements—and this is not the end but just the beginning. They are structured to enable us to have intensive debate around each section, whereby all the key points that we have been discussing have committee and dialogue structures built into their mechanisms, to allow us to change and evolve these treaties. Scrutiny starts on day one. We will be able to make changes to these treaties if they do not suit us in the way in which they were intended to suit our economy and people. That is important. This is completely different from how conceptual treaties worked in the past. I congratulated the negotiators because flexibilities are built into this process to allow us not to be fearful of the outcomes of the treaties, because we can change them. That is at the core of the Government’s negotiating strategy and is why I am so enthusiastic about these treaties. Not only do they give us so much and allow us to lead the world in our value offerings but they are entirely flexible. If they do not work as we intend—it is hard to forecast everything—they can be altered through mutual agreement. That is enormously powerful.

As to my final point on the impact assessment, we have a review at two and five years and of course I should be delighted to engage further with the House at those points. That is important; we have to assess the impact of these treaties because we want to learn how we can improve them. I very much support that process.

I conclude on the scrutiny point by saying that I am sorry if noble Lords think that I am too optimistic about what these trade deals offer us. However, the reality is that, because of the way in which they have been structured, one has a high degree of scrutiny over the future of these trade deals and the Government have been forward footed in making sure that Parliament was part of the process, as it was always intended to be.

I will cover three other points, one of which is the environment. These FTAs include environment chapters which recognise our right to regulate to meet net zero and reaffirm our commitments to the Paris Agreement. This is very important: at no point and in no area do these FTAs derogate our ability to control our own destiny. In fact, by having the negotiations with Australia, particularly before the Government changed, we were able to bring to bear on them the pressure to accord with our climate change ambitions. That is amazing. If the Greens want change in this area politically, this is a very powerful way of doing it—and we have done it. We were the first major economy to pass a legislative target to reach net zero by 2050. That was done by the Conservative Government, not by any other party. We lead the world in this area, and these trade agreements reflect that. In my view, this is another matter for us to rejoice in.

The deal commits the UK and Australia to work together on climate change; that is very important. In other areas that have come up in the past—not necessarily in this debate—people have raised concerns about deforestation with regards to the FTA. I have mentioned my gratitude to the TAC for the work it has done in this whole process. It reports that, on a net basis, Australia has been reforesting rather than deforesting. Nothing in this agreement stops the Government taking domestic action on our side to deliver on our commitments to meet our climate objectives. I know there is some head shaking opposite me, but I can only go on the facts; I am slightly beholden by that.

There is a view that Australia and New Zealand are far away, which they are. I like the idea that we are starting at the other end of the world and then working backwards. If you look at overall greenhouse gas emissions associated with UK-based production—largely unchanged from the agreement—you will see that there is a possibility of some increase in transport-related emissions associated with increased trade flows, but, according to the TAC, these impacts are likely to be negligible. This idea that we are going to have huge greenhouse emissions on account of transport increases is simply not being predicted. As my noble friend Lord Hannan pointed out, having a New Zealand lamb chop on your plate in the House of Lords restaurant is better for the environment than having one that comes from another part of the UK. Why can we not ask other parties to celebrate where we see environmental benefits from these trade deals? The assumption is that all trade deals are somehow negative for the environment; how can that possibly be the case? As my noble friend Lord Hannan said—I back up his point; it came from a Board of Trade report—the environmental impact of the production of New Zealand lamb is lower than ours in many cases, even if you include transport costs.

My final point is very important: this agreement provides huge opportunities to boost trade in environmental goods which can speed the development and uptake of environmentally friendly production techniques. I think the noble Baroness, Lady Liddell, also raised this. Again, what are we trying to do with Australia and New Zealand? We are trying to sell them our technology on net zero, where we are global leaders, thus generating wealth for this country and improving our environment. If anyone thinks my tone is too rejoicing at the astonishing benefits that, factually, we bring through this agreement, I apologise again.

I am very sensitive to the issue of agriculture, and I do not want there to be any sense of triumphalism about this trade agreement in that sense. The fact is that there is change and people are affected. However, it is important to note, first, that this agreement will have relatively limited negative impacts on certain agricultural sectors of the economy. That really is a fact, and I will go through that in a moment. The positives are also significant. We export more agricultural produce, in its broadest sense, to Australia than we import from it, so the gain is in our favour. We believe that the amount of meats which are competitive for us being imported from Australia into the UK will increase by very small amounts.

As I have repeated, and repeat again, this is not an agreement starting from scratch. We already import New Zealand and Australian meats, and they are not using the quotas that we already have. Yes, we are liberalising our trade, and I think it is right to do that, but the fears that are being created among the body politic and the press are entirely unreasonable and, if I may say so, slightly disingenuous. There is no reason to fear this trade deal. If we did not have it, it would not make any difference in a negative sense on farmers. That is important for people to understand. This is actually an opportunity, because it unlocks—

[Lord Purvis of Tweed (LD)]

Is the Minister saying that the impact assessment is wrong about the 5% and 3% reductions? The Minister has just said at the Dispatch Box that, if this agreement were not in place, there would be no negative impact. However, the impact assessment says that this agreement is bringing a negative impact. Will the Minister commit to revising the impact assessment before we reach Committee, because either he has just misled the House or the impact assessment is wrong? They cannot both be right.

[Lord Johnson of Lainston (Con)]

I am grateful for that point and would be happy to clarify. I will certainly work closely with the noble Lord in Committee.

My point is that Australian imports already operate below the existing quotas. Even if we said that we were not going to have a trade deal with Australia and decided that we did not want to go ahead with a deal that I think will be hugely beneficial, we already have a quota system where the Australians are importing less. If we go to a new arrangement where, over 10 or 15 years, we gradually liberalise our agricultural imports, the very fact that we are increasing that higher level does not necessitate that we are going to put ourselves in a more disadvantaged position. I am not trying to suggest that the impact assessments are not correct. I have been sensitive about that; I said at the beginning that there are impacts and there will be change. We must be sensitive to that. However, I am saying that the claims that we are going to have a significant tsunami of Australian beef coming into the UK simply do not make logical sense when we are already importing less than the quotas imply. It is important to mention that.

We have also touched on another relevant point. There are production differences between Australia and New Zealand; my noble friend Lord Hannan of Kingsclere mentioned this earlier. It is important that we take advantage of that fact. I will not be too much longer but let me quote the TAC, which states that

“different production practices between countries are a function of different climatic, geographical, agronomic, environmental, economic and cultural conditions. Australian cattle and sheep live their lives outdoors, mainly on very large stations, which is different in the UK. It can never be assumed that what is normal in one country needs to be normal in another … Moreover, the international trading system, of which free trade agreements form a part, is predicated upon the understanding that countries should be able to benefit from advantages which they enjoy over their trading partners. Trade law, in principle, prohibits countries from restricting imports of products simply based on how they are made, whether this is by using their more abundant sunshine, land, educational skills or lower labour costs.”

This is important. We are trying to do a trade deal where we have, enjoy and appreciate comparative advantage while at the same time being extremely firm on the controls that we will put in place to make sure that, if there is a significant increase in imports into the UK, we can restrict those imports and ensure that our farmers are protected. Following the 15-year point, we will still have WTO restrictions that we can fall back on.

[Baroness Young of Old Scone (Lab)]

Before the Minister finishes, I hope that he will give way for a microsecond. During my contribution, I asked whether he could let us have some detail of the systems that are in place to keep under surveillance the environmental, animal welfare and other standards on which he is giving us assurances, including how effectively they are operating. Will he agree to do that before we reach Committee?

[Lord Johnson of Lainston (Con)]

I thank the noble Baroness. I am about to go on to that exact chapter in making my final point on standards, which are important. I take this issue to heart.

It is absolutely essential for everyone to realise that nothing has really changed in terms of our standards. In fact, we believe that, in some instances, we have increased our ability to protect ourselves. I want to quote from some of the important chapters in the Trade and Agriculture Commission’s report, if noble Lords will indulge me; I know that my noble friend Lady McIntosh wanted me to touch on these matters as well. The report states:

“Importantly, all of these trade liberalisation obligations are fully covered by general exceptions, taken from WTO law, ensuring that the UK can regulate to protect animal or plant life or health … In addition, the FTA contains several rules in its environment and animal welfare chapters that expand on these rights to regulate, which gives the UK more leeway to override its trade liberalisation obligations—


that goes to the whole friction between these points—

“than it would have under WTO law.”

This is very important. We are ironclad in our ability to control our standards.

The concept of mulesing was raised. The TCA sees an increase in imports of mutton from mulesed sheep as negligible, and the FTA does not restrict the UK’s WTO rights to prohibit imports of products from Australia produced using the practice of mulesing without pain relief. I was told that 90% of all mulesing is done with pain relief. Yes, there are different practices and clearly, mulesing is not relevant in the UK because of flystrike and other conditions, but we have the ability to protect ourselves and we still have the ability to ensure that the food and goods we import conform to our standards.

Also, in terms of animal welfare, these chapters are ground-breaking. It is worth using those words, which are appropriate. We have driven change there, and it reflects our values. New Zealand and Australia have a very strong commitment to raising animal welfare standards. It is also very important to point out that we still have complete control over pesticides and other such matters. Our approval process involves audit and assessment of a country’s system. Products entering the UK must be accompanied by certificates and a percentage are subject to physical checks to ensure that standards are maintained. We have worked very closely with the Food Standards Agency and Food Standards Scotland. This is very important and—

[Baroness McIntosh of Pickering (Con)]

My noble friend will be aware of a briefing from the Food Standards Agency, which is concerned about the increase in what is required of it. He might like to consider that.

On a slightly separate point, my noble friend said that the purpose of the Bill is that the procurement provisions will apply in Scotland. My understanding is that the Scottish Government have withheld consent to the Procurement Bill so I am not quite sure how, constitutionally, we could not be seen to be circumventing the will of the Scottish Government and the Scottish people in this regard.

[Lord Johnson of Lainston (Con)]

I thank my noble friend for both her points, the first of which is heard. The assumption is that these agencies can police our borders. Clearly, if there are different requirements on account of this trade deal—although I cannot see why—certainly, we should look into that. We covered her second point in the debate. These are concurrent powers. We have consulted consistently and continually with all the devolved nations, and we are not requiring a legislative consent Motion to run those concurrent powers.

I thank all noble Lords for their contributions to today’s debate. I reiterate my willingness to meet noble Lords and discuss this Bill further. Those who have spent time with me over the last month know that I am fully available to ensure that this Bill is a success. I am transparent and open to you and want to ensure that we learn in this iterative process to create even more effective trade deals into the future with different economies. This is not a “one size fits all” process. Just because we have an agreement with Australia and New Zealand does not mean that this agreement will be cut and pasted across to another country. Every country and economy is different and should be treated as such.

Underpinning this Bill are two extraordinarily far-sighted trade deals between our sister nations, resulting in an estimated £10 billion increase in trade with Australia and £1.7 billion increase in trade with New Zealand. There have been discussions about how we get to those figures. Professor Minford suggested a £60 billion benefit for trade with Australia; our government forecasts gave us a figure of £10 billion. I am happy to discuss with the noble Lord, Lord Purvis, how to assess these trade deals more accurately. The impact assessment and the look back will help us in that regard.

As I said to my noble friend Lady McIntosh, we have engaged with the devolved Governments at every stage of the process and have also allowed for greater parliamentary scrutiny than is prescribed in statute. We have shone the torch of the Trade and Agriculture Commission on these issues, and we have built two-year and five-year assessment breaks into the agreement. If we decide that we do not like these agreements, we can cancel them within a six-month notice period. These deals demonstrate our values and leadership on standards—that is very important and has come up in the debate today—how we operate with developing nations, labour rights, gender equality, the treatment of animals and the environment. These deals absolutely protect our agriculture industry and our standards in line with our values, while ensuring that we bring essential benefit to our consumers.

These trade agreements are designed to be flexible, with a whole range of structures established to ensure proper dialogue and recourse. As I have said, they are not some post-war steel treaties. They are, thanks to our leadership and position as the new driver of our unique free trade mission, modern, future-proofed concepts which allow our nations to grow together in commerce and trade.

These deals are being made between us and two allied Commonwealth nations, as has also been said, with the same Head of State and with those who died for our values in two world wars. We are their brothers, sisters, fathers, mothers and cousins. We already live and travel and own properties, businesses and farms in each other’s countries.

As came up earlier, our levelling-up agenda plays an important part in how we will work together in the future. I ask Members of the House to talk to some of the firms and people positively affected by these deals. Your Lordships will see the palpable excitement, as I have shown, from chapters such as the ground-breaking one on SMEs welcomed by the FSB. All that is within a consumer protection section that will ensure that our consumers benefit from greater choice and lower prices in our shops.

Contrary to critics’ view, the Government have thought out our trade strategy well. We want to ensure that our free trade agenda is indeed the framework that launches us on the path to give our citizens the choices and power to reach the ends of the earth. We should be proud of the decisions we have recently taken over our trading destiny and focus on creating a new world order, where we sit at the very centre of a series of geostrategic relationships and prosper from this network of trade and investment, shared culture and values, and build the wealth that gives us security and ultimately control over our destinies, which is at the very heart of our free, liberal and democratic-minded nation.

The Government have taken the first major step on our journey. We are proud of the modern and comprehensive deals that we have negotiated, and I look forward to the passage of the Bill through your Lordships’ House.

Bill read a second time.

Moved by

[Lord Johnson of Lainston]

That the Bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee that they consider the Bill in the following order: Clauses 1 and 2, Schedules 1 and 2, Clauses 3 and 4, Title.

Motion agreed.

Bilateral Free Trade Agreements

Lord Johnson of Lainston Excerpts

Tuesday 20th December 2022 Lords Chamber

[Lord Londesborough]

To ask His Majesty’s Government how many bilateral free trade agreements they expect to sign in the next 24 months.

[The Minister of State, Department for International Trade (Lord Johnson of Lainston) (Con)]

I refer noble Lords to my interests in the register. Our free trade agreement programme is being delivered at a pace unprecedented in global history. We are continuing negotiations to join the CPTPP, currently negotiating with India, Canada, Mexico, Israel, the GCC and Greenland and preparing for a new trade deal with Switzerland. We have an ambitious programme, but negotiating comprehensive and ambitious free trade agreements is our priority and we will not sacrifice quality for speed.

[Lord Londesborough (CB)]

I thank the Minister for that, but the truth is that we are well behind the target set in 2019 for free trade deals. Some of these FTAs are now described by the Government themselves as “not very good”. The trade and co-operation agreement with the EU is a case in point. HMRC reports that the number of exporters to Europe fell by 33% last year, with 9,000 out of 27,000 British businesses giving up on exporting to our largest export market. The Prime Minister before last promised us a bonfire of red tape, not a bonfire of exporters. How will the Government address this?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that very important point. The Department for International Trade has worked extremely hard to make sure that we have a global trade web of deals and that we support our European traders. I draw noble Lords’ attention to the export support service, which has had remarkable success in ensuring that some of the glitches and hitches in trade with the European Union have been removed.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I am delighted that the Minister has said that he will not sacrifice quality for pace, which we saw earlier with the potential India deal. Can he reassure the House that this deal will not be done easily just for a signature, but that we will make sure that business and our professionals have access to a fair market with safeguards for those working there?

[Lord Johnson of Lainston (Con)]

I thank the noble Baroness for that point, which was well raised. That is exactly what our negotiating teams are doing. This deal with India will be significant for us. That nation should be the second-largest economy in the world at some point over the next five to 10 years; we want a close relationship with it, but on the right terms. I appreciate her comment.

[Baroness Hooper (Con)]

My Lords, in drawing attention to Latin America, I refer to my interests in the register. I believe that Chile was the first country, if not in the world then certainly in Latin America, to sign up to a new free trade agreement post Brexit. It was basically a rollover agreement. Given that the Government are negotiating a new trade agreement with Mexico, can my noble friend say whether the same is intended for Chile?

[Lord Johnson of Lainston (Con)]

I greatly appreciate my noble friend raising that question—and her debate last night—and encouraging attention on central America. I thank her for the work she does as our trade envoy to those countries. Chile is a very important country for trade with the UK. I am very pleased to say that I attended, along with Minister Rutley, a Chile financial services conference only three days ago. Clearly, we have a number of free trade agreements to enact and an extremely busy schedule. When the opportunity comes for us to expand further on the incredible list I have already presented to the House, I have no doubt that countries such as Chile will be under consideration.

[Lord Purvis of Tweed (LD)]

I have been told for years that human rights will be an integral part of all FTAs, but the Minister told the House last night that this will no longer be the case. The OBR has now confirmed that our economy will be 4% smaller because of the enormous trade barriers with our nearest trading partners. The UK is now dependent on goods from China to the tune of a trade deficit of nearly £40 billion. Is it not in our economic and strategic interests to move away from this trend of dependency on autocracies and non-democratic countries and make it easier to have free trade with free nations, especially in Europe?

[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.

[Baroness Blake of Leeds (Lab)]

My Lords, the Government promised that 80% of international trade would be covered by free trade agreements by the end of this year. However, there is no sign of a trade deal with the United States and, as we have heard, we do not yet know what is happening with India. Does the Minister acknowledge that the economic chaos created by the Government has done huge damage to the UK’s international reputation, making it harder to strike these trade deals and attract inward international investment?

[Lord Johnson of Lainston (Con)]

I thank the noble Baroness. I should point out that it is our leaving the European Union that now allows us to create trade deals. Without that measure, we would not be in a position to create FTAs with some of the largest economies in the world. Without wishing to overexpand on my answer, I foresee this country becoming a global superpower again—

[Noble Lords]

Oh!

[Lord Johnson of Lainston (Con)]

Noble Lords may not wish for this, but I do. We will be able to have trade agreements with India, the GCC, the CPTPP, Switzerland, Greenland, Mexico and Canada, and ultimately, state by state, with the US. This is an extremely powerful policy to allow our professionals to generate wealth and security by working in these states. I applaud the DIT for the work it has been doing on that front.

[Lord Udny-Lister (Con)]

My interests are declared in the register as co-chair of one of the business councils and director of another, both of which are voluntary. Will the Minister confirm that he will not turn these FTAs into Christmas trees covering everything under the sun and, in the process, miss the one thing that matters, which is trade?

[Lord Johnson of Lainston (Con)]

I greatly thank my noble friend for his comment. At no point have the Government not taken human rights very seriously, but we see trade deals as specifically focused on trade. This is exactly what we want to increase the inward investment and exports that my good friends the noble Lords opposite are so keen on.

[Baroness Coussins (CB)]

My Lords, following on from the last question, could the Minister explain why the Government were happy to agree to a human rights clause in all the FTAs to which we were party as an EU member but now seem determined to ditch human rights from the bilateral negotiations?

[Lord Johnson of Lainston (Con)]

I take that question with great sensitivity. It is very important to separate the two concepts. In these FTAs, we have a great focus on labour rights, which are more relevant to the concept of product arbitrage. That is more relevant in looking at the FTAs and the good work we can do to align our values with the sorts of countries that the noble Lord, Lord Purvis, wanted us to do more trade with, rather than those that do not necessarily share our values and are not aligned with our security direction.

[Lord Browne of Ladyton (Lab)]

My Lords, may I ask the Minister what aspect of a free trade agreement with the 56,000 people who live in Greenland will contribute to us being a global superpower?

[Lord Johnson of Lainston (Con)]

Every country has its advantages, as the noble Lord will know if he has read his Ricardo. Greenland is actually one of the greatest exporters in the world of fresh-water prawns, so when he looks forward to his prawn cocktail sandwich in the Lords Dining Room, he will be grateful for the free trade agreements that we have negotiated. I add that the geostrategic importance of FTAs is not to be underestimated. Some smaller countries that fit within our trading ambitions are extremely relevant to us in the alliances we are now creating as the next trading superpower.

[Lord Newby (LD)]

My Lords, in response to the noble Lord, Lord Hannay, the Minister said that it would be unreasonable to expect him to reel off a list of measures which the Government have taken to improve our trade with the EU. Taking the Minister at his word, I am not expecting a list, but could he just satisfy the House to the extent of listing one measure?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank the noble Lord very much, and I hope he did not think I was being facetious. The importance of trade with Europe is paramount in the mind of the Department for International Trade, and on account of that I met with His Majesty’s trade commissioner to Europe this morning to discuss further work that we could do to remove the glitches, hitches and hurdles that confront some of our businesses in the post-Brexit vision of Britain. The export support service, which was started last year with a lot of input from myself and the board of the Department for International Trade, has been hugely successful in assisting traders in their exporting efforts to Europe. We have also recruited additional trade support in Europe and have in-housed our international trade advisers in this country to give more support to people who wish to export to Europe. There is a significant list. We have repointed our efforts at the DIT, we are making substantial headway, and the results have been extremely strong.

Central America: Trade and Investment

Lord Johnson of Lainston Excerpts

Monday 19th December 2022 Lords Chamber

[The Minister of State, Department for International Trade (Lord Johnson of Lainston) (Con)]

My Lords, I am extremely pleased to conclude this short debate highlighting the Government’s work to improve trade and investment relations with central American countries. I am grateful for the comments made by the noble Lord, Lord Purvis, about the number of Secretaries of State that he has been engaged with. I think I am not just the fifth Investment Minister, but the sixth as well in the last few months; I hope that position will last a little bit longer. I sense a great sense of urgency about the opportunities that present themselves, and I am very aware of this. In the light of declaring interests, I refer noble Lords to my register of interests, though I do not believe there are any specific interests that cause conflict in this debate today.

I thank my noble friend Lady Hooper for tabling this debate and putting the spotlight on this unique region, and for her dedication to developing our relations with the region and the wider Latin America. As the Prime Minister’s trade envoy to Panama, Costa Rica and the Dominican Republic, she has done huge work—and I have heard this discussed today—not just in terms of trade but in advancing our quest to grow greater cultural ties and more work for civil society. I thank her profusely for that and I will come on a little bit later to talk about some of the specific work that she has been doing. I would also like to be part of her royal party if ever the occasion so arises.

I should point out that, for the purposes of this debate, when I talk about central America, I am referring to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the Dominican Republic, and as a result of the DIT’s operations and our trade envoys’ portfolios, but I am very happy to have a broader debate. It is extremely important—and I am going to cover Mexico and Brazil in my closing remarks—but, yes, we should talk about Latin America, the whole of Latin America, from Mexico down to the southern tip of Argentina. The opportunities there for this country are significant, and the DIT is very well aware of that.

Central America is home to just over 62 million people, with a combined GDP of $918 billion. This represents a sizeable opportunity for UK businesses, as we have discussed, and increasing numbers of British firms are realising this potential. The UK’s trading relationship with central America was worth around £2 billion last year. I have heard your Lordships’ views on how we can forecast further the expectations for our trade with central America and I am happy to revert back to noble Lords on that, but the long and the short of it is that we expect it to grow significantly.

UK firms also do quite well in central America: businesses operating in fields from pharmaceuticals to food and drink have accomplished significant exporting and investment achievements across the region. I was about to go on to talk about recent great successes, but the question I am being asked is: what are we doing particularly to help promote exports to central America and, to some extent, investment from there into the United Kingdom?

The fact is that the Department for International Trade, which I have the privilege of serving in, is totally committed to improving the UK’s relationship with these vibrant markets, and we work hard to enable our firms to access them. We have over 150 people in LATAC, under the excellent leadership of Jonathan Knott—I think my noble friend Lady Anelay mentioned that she had recently met the deputy HMTC and was very impressed, I am grateful for that and will make sure that this is passed on. We have 16 people in central America and 25 people in Mexico, and our international markets teams based across Latin America and the Caribbean are the first point of contact for UK businesses looking to engage with trade opportunities in the region. They are also available to support businesses where DIT may not have a physical footprint—not every country has DIT coverage, and I am sure that noble Lords are aware that we have to differentiate the markets, as has been discussed—but they are then covered by other countries. We have developed a network of relationships with local chambers of commerce and other partners to help UK businesses. On top of that, we have nearly 400 international trade advisers based in the UK.

There was a discussion from the noble Lord, Lord Mountevans, about the analysis of markets and the opportunities that we can present through that analysis; I would be very grateful to see more of that. I have not seen the report that the noble Lord was discussing, but as a Minister for Investment I would be extremely keen to see that work if he could share that with us.

There was a discussion about the involvement of ambassadors and the diplomatic element involved in promoting our trade. I am very pleased to say that, as I am sure my colleagues will know themselves, the ambassadorial teams in the FCDO are more focused now on trade than they have ever been. At every embassy I have been to, I have been struck—as I am sure the noble Lord, Lord Mountevans, was as a previous Lord Mayor—by the extraordinary level of support that we get. I very much hope that, if any of your Lordships do play a role as trade envoys or visit any of these countries anywhere in the world, you will call upon the ambassadors; they are literally our trade ambassadors as much as they are our diplomatic ambassadors.

A successful trading relationship is a win-win. AstraZeneca is a great example—not only is it exporting to the region, but it has also opened new offices in Costa Rica, representing an investment of $8 million into that country, which will create many jobs in the market. Rapiscan, another great example, provides security scanners for several airports in the region and has recently won a contract in the new Palmerola airport in Honduras. Diageo is a great example of the expansion in Panama, and I was very interested to hear about Buddi, the tagging system for prisoners and also the call system for pensioners; I am sure that many Members of this House will have call to use its services at some point—although, hopefully, the pensioner elderly alarm system rather than the prison tagging system. I know for a fact that we have supported Buddi in the DIT significantly in expanding its sales.

We work with companies of all sizes. I think there was a mention of what we do with SMEs. We are not just helping the multinationals; we really are helping the SMEs. We published a refreshed export strategy in November 2021 which is designed to focus on the barriers faced by SMEs. This is a 12-point plan to support exporters. It includes supporting business to trade with central America in the UK through our innovative Export Academy, a network of over 400 export champions across the country, giving businesses knowledge and confidence to enter new markets thanks to on the ground exports, as well as our “Made in the UK, Sold to the World” marketing campaign. This is very important. SMEs are vital for us.

I have heard a number of comments about culture and the need to encourage people to export in general. I hear that, as does the DIT, and we work hard on that through our various campaigns, but particularly through export champions, who provide invaluable help from one businessperson to another. UKEF, which came up a number of times in this debate, has 24 export finance managers, known as EFMs, based across the UK. These are regional representatives of UKEF, who can act as a local point of contact for exporters and businesses with export potential.

We have dedicated in-market support for buyers in central America. Our LATAC international market team export support service is the region’s universal entry point for UK businesses. Once companies express interest, our teams on the ground can help explain how to enter the markets, highlight potential distributors, partners and customers, and, where feasible, provide direct introductions to help UK firms win and expand their business in the region. This is important. We have a number of people on the ground, and in the UK, who are paid by the taxpayer to help support our businesses to export to central America. I am always keen to hear further advice and suggestions from any Member of this House on how we can do more and how we can do better, but the support is there; it is extremely welcome and the feedback is very good. I am not sure whether or not they can all speak Spanish, but all those I have met do, so I will confirm their language skills to the noble Baroness, Lady Coussins.

I will say a few more words on UKEF. The Government are determined to ensure that no viable UK export fails for lack of finance or insurance. My department’s partners in UK Export Finance are focused on making sure that nothing prevents British businesses accessing global markets, and central America is no exception. In advance of this debate I met the acting CEO and was hugely impressed with the team—some of them have been there for an incredibly long time—and the indication he gave to me was that, at some point in the relatively near future, the new CEO would be announced, although that is not confirmed. What is important is that we have a risk appetite of up to £4 billion in some of these markets, so clearly it is incredibly important.

We are discovering ever more varied ways of supporting businesses. For instance, last August—this is important, and it was mentioned today—we signed an MoU with CABEI, the Central American Bank for Economic Integration, which is the leading regional development bank in central America. This allows UKEF to support business in all CABEI member countries and to work together to identify joint financing opportunities.

The question of why we have not joined CABEI has been raised. I think my noble friend raised that point. It was a decision taken last year by the Foreign Secretary. However, this does not stop the UK working with CABEI. We have a number of positive engagements ongoing with the bank which I cannot comment publicly on, but we are working very closely with companies in order to joint finance with CABEI in the partnership with UKEF. I take a personal interest in this, so I will come back to your Lordships at a later date, and I will do what I can to support this.

As I have already mentioned, we are fortunate to have my noble friend Lady Hooper as the Prime Minister’s trade envoy for Costa Rica, Panama and the Dominican Republic. Her excellent work has succeeded in increasing the profiles of British businesses in central American markets through a programme of visits and engagements, and I thank her for that.

It is important to note other things we are doing. My noble friend works alongside two other trade envoys who champion the wider Latin America region. The Minister for Americas and the Caribbean, Minister Rutley, has invited the UK’s trade envoys to Latin America to discuss their recent visits to the region—tomorrow morning, I believe. He will meet my noble friend Lady Hooper, Mark Menzies and Marco Longhi. No doubt he will reflect on his own visits to Colombia, Panama and the Dominican Republic last month during that meeting. I was very interested to hear the comments on the Dominican Republic and its free zones, and the enormous quantity of mozzarella it imports from us.

I commend noble Lords on their engagement with Canning House, the UK’s leading forum on all cross-cutting Latin American issues, and congratulate the noble Lord, Lord Mountevans, on his work leading that organisation.

I will touch on two other areas that came up. The first is education. We know that Governments across the region are investing heavily in education. We are supporting UK firms with expertise in English language tuition to seize these opportunities; for example, Pearson is working in Costa Rica with local government to develop a programme, “English for Employability”, helping students achieve the necessary skills to become more employable.

The second is clean growth, raised by the noble Earl, Lord Dundee. Countries in central America are acutely aware of the risk posed by climate change and are developing plans to have greener economies. The UK has the potential to become the partner of choice in central America for activity relating to clean growth and, alongside this, we are doing an enormous amount of work on infrastructure, particularly related to clean water supply. In May, the UK signed a memorandum of understanding with Panama on sustainable growth, looking at areas such as marine pollution, energy transition and water management. I thank my noble friend Lady Hooper again for her involvement in getting the MoU signed, in her capacity as the PM’s trade envoy.

I also mention something that I think the noble Lord, Lord Mountevans, would like to be involved in: the annual Latin America and the Caribbean UK roadshow, which will be returning in March 2023. The teams will be visiting London, Belfast and Bristol to share the commercial opportunities for UK businesses across the region, including in central America and the Dominican Republic. Going back to my point about how we get more companies to export, I ask your Lordships to act as champions, to sing from the rooftops the opportunities that we have as exporters to this region.

We successfully secured trade agreements for central American countries through our continuity programme, which was discussed during the debate, the UK-central America association agreement. We have also signed the CARIFORUM economic partnership agreement, which includes the Dominican Republic. Both provide important continuity and certainty for businesses by maintaining the UK’s access to preferential tariffs and facilitating access to businesses from the region in the UK. I am pleased that the FCDO will host the first central American association council, inviting Ministers to the UK, and that DIT will host the first ministerial joint council, under the CARIFORUM economic partnership agreement. A huge amount is being done in these international fora.

There are two more countries to focus on. Mexico was raised by the noble Baroness, Lady Coussins. We are now in round two of our FTAs. It is very important that we do not rush to a false conclusion. My esteemed Secretary of State, Kemi Badenoch, has already said very clearly that we do not need to set artificial deadlines. As far as I am aware, the entire firing of the negotiating team has had no effect on our plans to come to a conclusion over the next few years. That is a reasonable timeframe in which to conclude this FTA. It was mentioned that in Brazil the political environment allows us to have new discussions with the Government. I am pleased to say that we will be. Officials will engage with Lula’s new team once they are appointed, to understand the new Government’s position on an ETP.

I will finish by talking about the challenges in the region. This is not a region that is completely straightforward. On human rights, I stress that we have not downgraded the Government’s commitment at all. We are clear that more trade does not have to come at the expense of human rights, and we continue regularly to address, support and engage, through support for projects and local partners, public diplomacy and diplomatic dialogue, on a broad range of human rights topics, bilaterally and in the multilateral fora. However, we do not necessarily believe that FTAs and trade agreements are the best mechanisms for aligning our values on human rights. We have been assiduous in working to ensure that individuals whom we believe are particularly culpable have had sanctions taken out against them.

Regarding corruption, the UK takes very seriously allegations of corruption. My noble friend Lady Anelay spoke about businesses finding it difficult to compete in local markets where there is a high degree of corruption. This is often the case in many emerging markets, but we have worked extremely hard; in this instance, to sanction two Venezuelans under the global anti-corruption sanctions regime. We work closely with local Governments to reduce levels of corruption and UKEF complies strictly with anti-bribery and corruption policy.

I will come to a conclusion. As I have set out today, central America is a region bursting with potential. As George Canning famously proclaimed, let us call in the New World,

“to redress the balance of the Old”.

The Government are doing all they can to take their trading relationship with the region to new heights. In turn, this work will enable British companies to share their expertise, enjoy the opportunity presented by these markets, and provide lasting economic and social benefits.

[Viscount Waverley (CB)]

Before the Minister sits down, he made the point that taxpayers’ money is used to compile assessments. It is not for the want of trying over the years. Will the Minister request the Secretary of State to finally release the trade commissioners’ annual reports, which should be public information and would help assess exactly where and what the opportunities are? I have been trying for years to have this achieved, with absolutely zero results.

[Lord Johnson of Lainston (Con)]

I thank the noble Viscount for that request. The Department for International Trade produces a plethora of reports—

[Viscount Waverley (CB)]

From the trade commissioners.

[Lord Johnson of Lainston (Con)]

The trade commissioners contribute to the statistics that we provide as a department. If he has time, I would be perfectly happy to sit down with the noble Viscount and go through the statistics that we produce. If we can find a way to provide more valuable insights, I am sure that we will be delighted to do so.

House adjourned at 9.01 pm.

Iran: Demonstrations

Lord Johnson of Lainston Excerpts

Thursday 27th October 2022 Lords Chamber

[The Minister of State, Cabinet Office and Department of International Trade (Lord Johnson of Lainston) (Con) (Maiden Speech)]

My Lords, before I begin, to follow on from yesterday’s declaration of interests, I have interests in financial services groups that have investments in the region, although I do not think there is anything specific relating to this debate.

It is a great honour to close this debate and address this House for my maiden speech—or, as has been pointed out, almost maiden speech. I thank all those who have kindly offered me advice and friendship since I joined this House, in particular my supporters: my father-in-law and, if I may use the term, my noble kinsman Lord Hamilton of Epsom, whom I sadly cannot see here today, who while introducing me tapped me on the shoulder and whispered, “I thought I’d be long dead before you sat in a place like this”—I am not sure if that was a desire or an expectation; and the noble Lord, Lord Benyon, in whose honour I will have to declare the interest that, like so many people of West Berkshire, I am his tenant. Indeed, the noble Lord has already informed me that he is one of the few residents of the county who is not one.

I also give my warmest thanks, love and appreciation to my wife Alice and my children Eliza, Alexander and Victor—so-called because he was born on 6 May 2010, the day the Conservatives won their historic first victory of many. I also thank my friends and colleagues who have supported me all my life, at least up until this point. Finally, I owe immense thanks to our doorkeepers, clerks, police officers and all the staff, who have been unbelievably kind to me since I arrived earlier this week. This is a very special place, made so by all noble Lords and the people who support us in our efforts.

As an investor and entrepreneur, I am incredibly fortunate to be speaking from the Front Bench as Minister for Investment at the magnificent Department for International Trade. I have put my heart and soul into building businesses across the UK, Asia and America. I want to bring my understanding of just how hard it is being a business partner to this House and to this Government. I will effectively be the UK’s chief salesman, telling everyone about our fabulous firms, people and institutions, and doing my utmost to deliver investment to allow our creatives and risk-takers to flourish.

This job also allows me to pursue my other life’s mission: promoting global free trade. For me, two parties coming together to voluntarily trade goods and services for their mutual benefit is the most magical of exchanges. I believe this kind of trade—free from coercion or corruption—is the greatest force of progress that mankind has ever known. To quote Libanius, the fourth-century philosopher:

“And He created commerce so that all may enjoy the fruits of the earth, no matter where produced”.


It was my ancestor the first Baron Somers who wrote our Bill of Rights in 1689. It is my firm belief that today, with globalisation in retreat and autocracy on the rise, the tenets he espoused could not be more relevant. The freedom from government interference, the protection of private property and the rule of law—these are values that underpin free trade, free enterprise and free societies, and these are the values I will make it my mission to champion here as I fight for our freedoms against protectionism and autocracy.

This fight for freedom brings me now to the subject of today’s debate: the United Kingdom’s response to the Iranian regime’s brutal repression of peaceful protest. I thank the right reverend Prelate the Bishop of St Albans for tabling this Question and his dedication to seeking the betterment of peoples’ lives around the world. I thank all noble Lords for their contributions to this incredibly informed debate, and I will try to answer as many of their questions as I can in my comments.

We are gathered today in this House just 41 days after the death of Mahsa Zhina Amini following her arrest by Iran’s so-called morality police. These are 41 days in which the Iranian people have sent their strongest message yet that their human rights must be respected by the Iranian authorities. The violence levelled at protestors in Iran by the security forces is truly shocking. It is abhorrent that Iran has responded with such unconscionable violence, as well as mass arrests, internet shutdowns and media blackouts. This is no way for any Government to treat its own people. The international community must shine a light on the situation in Iran and hold the Iranian Government to account for the serious human rights violations they are committing. I think we are all agreed on that.

In relation to the question from the noble Lord, Lord Collins, I say that Iran has yesterday returned British citizen Morad Tahbaz to Evin prison. Mr Tahbaz’s horrendous ordeal has gone on long enough. As my noble friend the Minister for the Middle East, South Asia and the United Nations said in a statement yesterday:

“We call on Iran to release Morad back to his family in Tehran immediately. Iran must stop unfairly detaining British and other nationals, and we will continue to work closely with our US partners to hold Iran to account”.


The noble Lord, Lord Mann, raised a question relating Elnaz Rekabi. Forgive me, but it would be unreasonable to go into specific details about some of the other individuals raised. However, we are certainly concerned to hear the reports that she has been put under house arrest. I am sure there will be follow-up comments on that—I appreciate them.

Since Mahsa Amini’s death, protests have continued across Iran on a daily basis. The longevity alone of the protests marks them out as the most significant we have seen in Iran for decades and I note the comments from the noble Lord, Lord Mann, about the bravery of the trade union movement in standing up to this repressive regime. What we are seeing now is exceptional, but I am grateful for his comments.

The protests are an authentic expression of the wishes of ordinary Iranians to enjoy fundamental freedoms. It is too soon to predict their long-term impact, but some facts are clear: Iran must stop blaming external actors for the unrest, listen to its people and stop committing violence against them. Let us be under no illusion: the Iranian authorities’ response to these peaceful protests and the people’s legitimate desires for fundamental freedoms, such as the right to peaceful assembly and freedom of expression, have been completely indefensible. NGOs have estimated over 200 deaths, at least 23 of which were children, but I gather from some of the comments today that that figure may tragically be higher. The Iranian authorities’ use of live ammunition against demonstrators is truly barbaric. The mass arrest of protestors and the restriction of internet access are sadly typical of this oppressive regime and its flagrant disregard for human rights. These are not the actions of a Government listening to their people. Iran’s leaders can and must now choose a more peaceful path.

Noble Lords raised a number of points relating to the UN commission on women and other actions that the Government can take, so I will now go through what we have been doing, to reassure your Lordships that we have been responding with the utmost vigour. The UK has joined the international community in swift and robust condemnation of Iran’s actions. We have, as the right reverend Prelate said, raised our voice. At the 51st session of the Human Rights Council, His Majesty’s Ambassador Simon Manley called on Iran to carry out independent, transparent investigations into the circumstances of Mahsa Amini’s death. Our global human rights ambassador, Rita French, condemned the repression of women in Iran and the violence faced by Iranians who stand up for their fundamental right to freedom of expression. I take note of the various comments made about Iran sitting on the commission for women’s rights. While we do not comment on the election processes in the United Nations, clearly we are working with our international partners to seek a resolution there.

In his statement on the death of Mahsa Amini, my noble friend Lord Ahmad urged the Iranian Government to undertake a transparent and accountable investigation and to respect the right of peaceful assembly. On 3 October, the Foreign Secretary summoned Iran’s most senior diplomat in the UK to the Foreign, Commonwealth and Development Office to condemn the Iranian authorities’ violent crackdown on protest. We urged Iran to respect the right to peaceful assembly, exercise restraint in policing and release unfairly detained protestors.

On 10 October, the UK sanctioned the morality police—this is important, because a number of noble Lords commented on various sanctions and the options therein—and some of its leaders, as well as five other leading political and security officials responsible for serious human rights violations in Iran. All are now subject to asset freezes and travel bans. In total, the UK now maintains close to 300 sanctions designations against Iran in relation to human rights, nuclear proliferation and terrorism. The IRGC is a sanctioned organisation, and a number of the individuals involved in that grouping are also sanctioned. We will not comment on potential sanctions or other actions taken, because, clearly, it would allow those people to avoid them in advance. Noble Lords will understand the discretion I have to employ there. Our sanctions will ensure that the individuals designated cannot travel to the UK and that all their assets held in the UK will be frozen. As the Foreign Secretary has stated on many occasions, the UK has sent a clear message that we stand with the brave Iranian people in their struggle for fundamental rights.

Lastly, the JCPOA and our determination to try to reduce nuclear weapons proliferation in Iran and its development of a nuclear weapon were raised continually. Clearly, the JCPOA has not developed in the way we intended it to. Our view is that we are addressing our options with our international partners, and I hope that noble Lords will support the Government in trying to come to a conclusion on this, and certainly continue to work towards a sensible solution.

In conclusion, the demonstrations following the death of Mahsa Amini have left the world in awe. The courage of the Iranian people is striking. They have for too long lived under the threat of detention, violence or harassment for what they wear or how they express themselves. The people are speaking their truth to power, encapsulated in three powerful words: women, life and freedom. Universal human rights know not of geographical boundaries, so it is our hope that these demonstrations will lead to the advancement of human rights in Iran and safer, freer lives for the Iranian people. The UK’s position is clear: through our words, sanctions and work with international partners, we will hold Iran to account and defend the rights of its people.

UK-India Free Trade Deal

Lord Johnson of Lainston Excerpts

Wednesday 26th October 2022 Lords Chamber

[The Minister of State, Cabinet Office and Department of International Trade (Lord Johnson of Lainston) (Con)]

I ask noble Lords to indulge me with their forgiveness for not delivering my maiden speech as my first item, but I have been asked to answer this Question. I will be giving my maiden speech tomorrow, for those who wish to hear it, in a QSD on Iran. It is a pity, because I should obviously like to use this opportunity to talk about the courtesies and kindnesses I have received from so many noble Lords, but please know that that will be forthcoming tomorrow.

I also declare an interest, as we are talking about India and a free-trade agreement. I have equity in a fund management business that invests in India, although I do not think there are any specific issues raised by this discussion.

With the leave of the House, I shall now repeat the Answer given to an Urgent Question by my right honourable friend the Minister for Trade Policy.

“India is an economic superpower, projected to be the world’s third largest economy by 2050. Improving access to this dynamic market will provide huge opportunities for UK business, building on a trading relationship worth more than £24 billion in 2021. That is why we are negotiating an ambitious free trade agreement that works for both countries. We have already closed the majority of chapters and look forward to the next round of talks shortly.

A strong FTA can strengthen the economic links between the UK and India, boosting the UK economy by more than £3 billion by 2035. An FTA can cut red tape, making it cheaper for UK companies to sell into India’s dynamic market, helping drive growth and support jobs across region of the UK. Greater access could help UK businesses reach more than a billion more consumers, including India’s growing middle class, estimated to reach a quarter of a billion by 2050, and give them a competitive edge over other countries that do not have a deal with India. An FTA with India supports the Government’s growth strategy by taking advantage of the UK’s status as an independent trading nation, championing free trade that benefits the whole of the UK. We remain clear that we are working towards the best deal for both sides and will not sign until we have a deal that is fair, reciprocal and, ultimately, in the best interests of the British people and the UK economy.”

[Lord McNicol of West Kilbride (Lab)]

My Lord, I welcome the Minister to your Lordships’ House and wish him all the best for his maiden speech tomorrow. I know he will agree that achieving a free trade agreement with India is vital for the opportunities it presents— financial opportunities to increase our GDP, create new markets and achieve key areas of shared interest, but also opportunities to raise a number of vital issues where the Indian Government fall short, including on human rights and workers’ rights, the environment, climate and other geopolitical issues.

In January, the Government promised that talks towards the deal would be completed by Diwali, which Hindus across the world are celebrating this week. What makes the Government’s failings on this FTA all the worse and significant is that that deadline was self-imposed, but we all knew it would fail. I challenge the Minister: can he therefore outline to your Lordships’ House what plans his Government are making to get the talks back on track?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord, Lord McNicol, for that follow-up question, and thank him very much for his kindness earlier, as well. He promised to be as kind as possible during this debate, so I thank him for that.

Actually, the Government never promised to conclude these talks by Diwali. We promised to have the majority of the talks concluded by the end of October, which we have: 16 chapters, the majority, are already concluded. This trade deal is actually on track. For me, it is one of the most exciting opportunities this country has had in generations. If we think about what India has to offer us, it is phenomenal. I was in India last week, and I pay tribute to our staff on the ground there, who are doing a huge amount of work to ensure our cordial relations with a country that will, in my view, become one of our greatest partners. I have celebrated Diwali with our high commission office in Mumbai.

Negotiations are ongoing and have been going on today. We have had five formal negotiations so far, I think; we are expecting a sixth in the next month or so. If we expect progression of that, we will be looking forward to substantial progress over the coming months.

[Lord Purvis of Tweed (LD)]

My Lords, I also welcome the noble Lord to his position. Since I have been covering international trade issues for these Benches, he is now the seventh Minister that I have been shadowing, so I wish him a long time in the position. If he lasts more than nine months, he is breaking the average over the last few years.

Given that the Minister has not yet had an opportunity to update his register of interests on the Parliament website—I am grateful for his declaring of that interest at the moment—could he say, given that the UK is seeking to have services as part of this agreement and given that he has a direct financial interest, whether he will recuse himself from any of the discussions on services going forward?

We would support an FTA with India very strongly, and when we debated the issue, we also questioned which areas were still outstanding. Can the Minister confirm that the UK has put wider visa access and mutual recognition of qualifications on the table?

Can he also confirm that—while not disregarding the figures of benefits that he indicated—nearly as much of the benefit for trade with India will be offset by a decline in trade with developing nations through trade diversion, to the tune of about £3 billion, which means that the net benefit for trading with the wider region is far less than what we would expect?

Finally, can he say whether the fact that India has negotiated with Moscow a rupee/rouble swap, for the purchasing of cheaper fuel, has been raised by the UK at the very time that we are discussing services access? Surely it is not right for us to fail to raise issues of such seriousness when we are negotiating with our friendly nation in Delhi.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord, Lord Purvis, for that range of questions, which I am sure we will have an opportunity to discuss at great length personally. I would like to reassure noble Lords that I am very much available to all of them for not only the formal process for discussion around trade deals but also as an individual, to make sure that we share the excitement and the opportunities offered to us and I can give noble Lords as much information as I can, in order that we can progress this process.

I would like to answer, most importantly, the first question. I do not want to go into my financial details now, but I am in the process of ensuring that I will not be presented with a conflict of interest in the next few days—hopefully by the end of the month. Of course, if there is any conflict of interest, I assume that will be addressed in the appropriate manner. I am grateful to noble Lords for your indulgence to ensure that this is done properly and effectively, and I hope that you see me as transparent on this point.

[Lord Hannan of Kingsclere (Con)]

My Lords, I also welcome my noble friend the Minister to the Dispatch Box. If the House will indulge me for a second, I have known the Minister since we were teenagers, and he has always been wise, humble and funny, albeit evincing a curious fondness for the European Union which doubtless will endear him to all sides in this House, including several noble Lords who I see are present here now.

May I ask him about the potential landing zone for the UK-India FTA? There has been a demand from some in Delhi for visa rights equivalent to those for Australia and New Zealand, which I think all sides recognise is not realistic given the disparity in GDP and the disparity in numbers. However, I think that there is space for a more generous visa regime, particularly for business travellers and some work permits, as well as a more generous attitude from the UK when it comes to respecting WTO rules on food, rather than adding on EU additions, in exchange for a lot more market access for our services. Does my noble friend the Minister see the outlines of a deal on that basis?

[Lord Johnson of Lainston (Con)]

I am very grateful to my noble friend for highlighting our childhood friendship and exposing me as a Europhile—I am not sure if that was quite so necessary in my opening gambit. But I am a free trader above all things, and I think he encapsulates very well the views of this Government in terms of the benefits that free trade brings.

I would like to make an important clarification, and I am happy to have further discussions with noble Lords about this. The free trade agreement with India does not include sections on immigration; that is a completely separate matter. What we are talking about here is mobility visas for businesspeople, and we require those opportunities as much as Indian companies do. I remind noble Lords, and my noble friends behind me, that Indian companies in this country employ literally tens and tens of thousands of people. The opportunities we have to swap intellectual property—our human capital, which is what we will export to India in exchange for the huge opportunities that it will present to us—insist on, and ensure we should have, an element of toing and froing. That is how we benefit through the brotherhood of trade and the brotherhood of nations. But I must separate those two points; I think that is very important.

[Baroness Hayter of Kentish Town (Lab)]

On behalf of the International Agreements Committee and as its chair, I welcome the Minister to his place. He will have read our report on the India free trade agreement, so I will ask him two questions. The first is the one that he did not answer from the noble Lord, Lord Purvis, on how this sits alongside the close relationship that India has with Russia, which goes against our current interests. Secondly, facilitation payments are common in India and are well below modern international business standards. What are the Government doing to tackle this great problem in our business relations with India?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I greatly appreciate the noble Baroness’s question. I thank her for all support she has given us in the department to ensure that we have a very powerful exchange and that we work very closely with her and her committee. I hope she will feel that I am fully available to her to ensure that she is thoroughly apprised of our activities around all free trade deals.

It is important that we are negotiating a free trade deal with India, and it is important to note, when it comes to the noble Baroness’s question about Russia, that we work with all our international partners, including India, to co-ordinate the international response to Russia’s unlawful invasion of Ukraine. We encourage all our partners to support international efforts to counter Russia’s flagrant aggression and violation of the United Nations charter, and to avoid any actions that might undermine this. It is important that we stress our position in those words.

[Viscount Waverley (CB)]

My Lords, I too pay due regard to and thank all our representatives in India, including those in Bangalore, Hyderabad and Mumbai. I have recently returned from that country, and I left with an undeniable assessment that there is a firm need for this country to have a strategic relationship with India. We need to run to keep up. One area I can identify in particular is the supply chain, given our issues with China. There is a real role for India to fulfil that position not only for the UK but globally, along with Turkey and Brazil, for example, so that supply chain issues can be diversified to the benefit of the world at large.

[Lord Johnson of Lainston (Con)]

I thank the noble Viscount, Lord Waverley, for his point and I completely agree: the opportunities we see there are phenomenal. If we can find a powerful way to access this market, we will astonish ourselves with the wealth that we will create and the additional opportunities that we will have to control our destiny. When I was there last week, I came across a mobile phone company that had 400 million subscribers and a car company that wanted to sell 30,000 cars in one year and instead sold 100,000 in half an hour. As has rightly been said, there are opportunities for this nation. It is a millimetre away from escape velocity to become one of the greatest economies in the world. The state of Tamil Nadu will have an economy bigger than the UK’s, we think, in 10 to 15 years’ time. I appreciate the noble Viscount’s support and this question. We should be continually striving to do free trade agreements with India and other countries. I very much look forward to the support of noble Lords opposite and my noble friends behind me as we embark on this great mission.