India and Southeast Asia: Free Trade Agreements

Lord Leong Excerpts

Thursday 6th March 2025 Lords Chamber

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am pleased to respond to this QSD. I congratulate the noble Baroness, Lady Anelay, on securing this debate and thank all noble Lords who have contributed this afternoon. I will aim to respond to as many points raised as I can and, if I do not, I promise to write to noble Lords on their unanswered questions.

First, I want to briefly touch on the close relationship between the UK and India. The UK and India have a deep and vibrant relationship, building on the living bridge between our two countries. Some 1.7 million people with Indian heritage call the UK their home, including many of our colleagues in this House and my wife. Our two countries are deeply interwoven through our shared values as democracies committed to the rules-based international order, our cultural ties and—it would be remiss of me not to mention—our shared love of curry and cricket. Our relationship also includes the millions in India who follow the Premier League and the huge market for Bollywood movies in the UK, which I and my wife enjoy most weekends and whose music we occasionally dance to.

Of course, these ties are also visible in our mutual championing of trade—free and fair trade, and investment —which is what we are here to discuss today. This Government’s core mission is to deliver economic growth. Boosting trade abroad is essential to delivering growth at home. That is why this Government are committed to negotiating a comprehensive free trade agreement and bilateral investment treaty with India—one of the fastest-growing economies in the world.

Securing a deal with India is a top priority for this Government and it is easy to see why. India is expected to be the third-largest economy in 2028, with 60 million middle-class consumers by 2030. But UK exporters currently face substantial tariffs, including a 150% tariff on whisky, as one noble Lord mentioned earlier.

Our trading relationship with India was worth £41 billion last year. Our investment relationship already supports close to 600,000 jobs across both economies, with Indian FDI projects in the UK creating more than 7,500 jobs in 2023-24. But there is more that we can do. That is why, on 24 February, my right honourable friend the Business and Trade Secretary, Jonathan Reynolds, travelled to India to relaunch negotiations towards a free trade agreement. The bilateral investment treaty that liberalises the trade of goods and services between our countries upholds the UK’s high food safety and environmental standards and protections, and facilitates easier temporary movement of businesspeople to provide their expertise. I am pleased to say that good progress was made and negotiations continue to move forward at pace towards a deal that delivers on our mutual ambitions of economic growth.

I will touch on a couple of points raised by noble Lords before I move on to the issue of trade with south-east Asia. We are aware of India’s ongoing talks with the EU and their stated ambition on a timeline. Although our focus is on delivering a quality agreement rather than any agreement that may be achieved at pace, securing a deal is a top priority for this Government, as it is for India, so we are pleased that progress was achieved in the Secretary of State’s recent visit towards our shared commitment to progress these negotiations at pace.

I hope Members of this House will appreciate that, in order to secure the best deal, I cannot compromise the UK’s negotiating position by getting into the specifics of a live negotiation. In any trade agreement, one of the main ambitions is to reduce the tariffs that UK exporters face. This is particularly important when Indian tariffs can exceed 100% on goods such as whisky, as I mentioned.

On visas, which several noble Lords mentioned, our negotiations consider only business mobility, so they cover only relevant business visas, which are, by their nature, limited, temporary and for specific purposes. This is also beneficial to UK exporters delivering services abroad. Student visas are not part of the trade deals.

The Government have made clear that we are willing to negotiate at pace towards a deal in the best interests of the UK. Although I recognise and agree that we would all like this deal to be speedily signed, the Government can sign only once we have secured the right deal for the UK, so we will prioritise the quality of the deal rather than the haste with which we can secure it.

The noble Baroness, Lady Anelay, asked whether there are any red lines and, if so, what they are. To achieve the best possible deal for the UK, we need to protect our negotiating positions. That is why we cannot go into details of live negotiations. What I can say is that this Government will seek a deal that drives economic growth for the UK as a whole while respecting key UK sensitivities, such as those in the NHS, our food, and health and safety agreements, which will not change under this or any UK free trade agreement. Any free trade agreement will not undermine the UK’s high sanitary standards, which are not and will not be decided in any trade agreements. The Government are firmly committed to upholding these high standards.

On post-study work visas, which the noble Baroness, Lady Anelay, and the noble Lords, Lord Bilimoria and Lord Loomba, mentioned, I remind all noble Lords that this Government’s position on net migration has not changed, and I make a plea for them to wait for the government White Paper on migration. I am not going to be drawn on this at this stage.

We remain committed to the protection of universal human rights. When we have concerns, they are raised directly with partner Governments, including at ministerial level. This engagement is undertaken separately from negotiations of any free trade agreements, although they are part of building on open and trusting relationships with important partners.

On the issue of CBAM, we will not compromise our high food standards, as I said earlier. We will also not undermine the effectiveness of our CBAM when we are implementing any trade deals.

The noble Baroness, Lady Verma, asked about trade envoys to India. The UK-India trade relationship is a top priority, as I mentioned. The Government will consider the noble Lord’s suggestion. I put on record that we currently have an excellent UK trade commissioner to India, and he is doing a fantastic job.

The noble Baroness, Lady Bennett, asked about ISDS. The Government consider ISDS on a case-by-case basis, and I am not going to pre-empt the outcome of any further negotiations. The noble Baroness also asked about the environment and labour. We cannot use an FTA to change a partner’s domestic legislation, but an FTA builds on a closer relationship to have honest conversations. On intellectual property, I will have to write to the noble Baroness, as that touches on some very complex areas.

I turn to the issue of trade with south-east Asia. I was born and grew up in Malaysia, in the ASEAN region, which has 10 member states with something close to 670 million people and a combined GDP of some £3.6 trillion, and is growing at a rate of 5% annually. It is a big market and we should consider it. The UK recognises the importance of south-east Asian markets to UK businesses and to the global economy. The noble Lord, Lord Purvis, is right: more Ministers should visit the region, and I encourage my ministerial colleagues at the Department for Business and Trade to consider visiting Malaysia, Singapore and the wider region. I am really pleased that the Minister, Catherine West, is visiting Malaysia this week.

Total trade between the UK and south-east Asian markets is worth about £50 billion, as mentioned by the noble Lord, Lord Vaizey. I want to place on record my thanks for all the work he has done as chair of the UK-ASEAN Business Council. He has done a fantastic job.

South-east Asia can be a valuable source of investment and growth for the UK. As we have seen recently, the Malaysian company YTL announced £4 billion-worth of investment in the UK over the next five years, including transforming the Greater Bristol area and delivering something like 30,000 jobs across the UK. The UK has secured bilateral free trade agreements with Singapore and Vietnam through the CPTPP, as mentioned, and it secured an agreement with Brunei and Malaysia for the first time. In February 2022, the UK and Singapore signed a digital economy agreement.

Outside of the formal free trade agreements, the UK has strong trading relationships with south-east Asian countries. The Department for Business and Trade has regular trade and economic dialogues with Singapore, Vietnam, Thailand, Indonesia, the Philippines and Malaysia. The UK and Thailand recently signed a UK-Thailand enhanced trade partnership. The UK engages regularly with ASEAN as a dialogue partner, and I think we are the first European dialogue partner to ASEAN. The UK and Indonesia will work towards a new Indonesian-UK economic growth partnership, which is normally the precursor to any formal conversations on a free trade agreement.

The noble Lord, Lord Purvis, asked about trade diversion. The Government carefully consider the impact on the wider region when negotiating a free trade agreement, and will do so as part of any deal.

The noble Baroness, Lady Anelay, asked about Indonesia and the potential for economic growth. Recognising the importance of Indonesia to the global economy, the Prime Minister and President Prabowo agreed to work towards a new Indonesian-UK economic growth partnership, as I mentioned earlier. The UK values projects such as those that the noble Baroness mentioned, and transnational education is one of the fastest growing sectors for this country.

The noble Lords, Lord Vaizey and Lord Sharpe, asked about future trade agreements. While we cannot currently commit to seeking new FTAs with partners in south-east Asia, it is important that we find ways to enhance our bilateral co-operation and economic ties, and to maintain our trade relationships into the future. That is what we have been doing with enhanced partnerships.

In conclusion, the Indo-Pacific region remains a key and ongoing area of interest for the UK. Its dynamic and developing economies represent opportunities for the UK. I am pleased to see strong progress in our discussions with key partners in this region, ensuring that our future relationships remain mutually beneficial, forward-looking, and supportive of prosperity and economic security.

House adjourned at 5.44 pm.