UK Trade Performance

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

Tuesday 7th May 2024 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, the Secretary of State’s facts and figures Statement to the Commons last week said nothing new. It was as if one of her advisers had opened up ChatGPT and asked it to cherry-pick statistics and make reference to the Brexit trade bonus, as if that were anything other than a slogan without substance. In some ways, I am not sure where to start. It was, after all, not aimed at us in Parliament or the wider international trade community; rather, it was aimed internally, at the Conservative Party, and the jostling for post-election leadership positions.

Let us take a look at the detail—a proper look at the statistics that lie beneath the facts and figures Statement. Figures released earlier this year by the Office for National Statistics showed that the volume of goods, imports and exports, last year had fallen by 7.4% since 2018—the single largest five-year decline since comparable records began in 1997. In the words of the OBR:

“Growth in UK goods trade … has fallen well behind the rest of the G7”.


While the rest of the G7 saw an average increase of 5% from 2019 to 2023, in the UK we saw a 10% decrease.

I want to share her optimism but I fail to see the success story that the Secretary of State in the other place assures us of. Ed Conway, the economist and data editor at Sky News, pointed out that the document the Secretary of State referred to in her speech fails to adjust for inflation, so in real terms goods exports remain well below the pre-Brexit levels. British businesses, manufacturers and farmers need consistency and leadership, but all this Government have been consistent about is failing British producers and exporters.

As my honourable friend Gareth Thomas MP pointed out when this was debated in the other place last week, the Government’s own figures show that FDI—foreign direct investment—is down by a third since 2016-17. Under the previous Labour Government, the UK accounted for an average 8% of the world’s FDI, but since the Conservatives entered government in 2010 they have managed to halve that to only 4% of world foreign direct investment. Business investment is now lower in the UK than in any other G7 country, and the UK ranks among the lowest in the OECD for investment as a share of GDP. Does the Minister recognise this decline since 2010? If so, what plan does he have to bring FDI up to the levels last seen under the previous Labour Government?

I also found it bizarre that the Secretary of State chose to mention accession to the CPTPP. In our debates and discussions on the CPTPP, we in this House seemed to conclude that the impact on the UK was minimally positive at best. If that is the most we can hope for from this Government, we really are in need of a new one.

In her speech, the Secretary of State made no mention of the Government’s MoU—memorandums of understanding—programme with individual US states. Do the Government now consider them to be a success—I am sure that the Minister will want to point to some of the US individual state MoUs and outline their wins—or have they accepted that they are not substantive Brexit wins but rather, in the words of the FT’s senior trade writer, Alan Beattie, “pointless pieces of paper”?

In conclusion, I have a number of questions for the Minister. Business investment is lower in the UK than in any other country in the G7, and the UK is among the worst performers in the OECD38 for investment as a share of GDP. What steps do His Majesty’s Government intend to take to increase business investment in the UK?

UK exports have grown at a slower rate than in every other G7 country except Japan, far behind Canada, Germany and the US. Many UK businesses want to know what steps the Government will take to support them to export their goods and services. Given that this House has repeatedly been promised an amazing trade deal with India, usually by Diwali—that is, last Diwali—will the Minister update your Lordships’ House on the state of the free trade agreement negotiations with India?

As the devastating news of south Wales continues to come, we have heard next to nothing from the Government on the damage that has been allowed to be inflicted on the British steel industry. Does the Minister still think that spending millions of pounds of taxpayers’ money to make thousands of people redundant and leave us as the first developed country with no primary steel-making capacity is, in the words of his Secretary of State, “a great deal”?

I agree with the words of the Nissan CEO, referred to by the Secretary of State in the Statement, that the UK has

“both great people and great talent here”.

It is a shame that both are being greatly let down by this Government.

[Lord Purvis of Tweed (LD)]

My Lords, as this month we are likely to see the UK economy moving from recession to stagnation, I can imagine that there were briefings in the department a few weeks ago to show some of the trade figures. There will probably be a collective view from Ministers, saying, “We don’t like those facts and figures; bring us some different ones”, so I am grateful for the alternative facts and figures of the state of British trade to be presented to Parliament.

Unfortunately, as I read the Statement, it had a degree of pathos. It is quite sad that Ministers keep banging on about Brexit, and have not got over some of the grievances they had before and immediately after the referendum. It is rather a pathetic sight to see them making a Statement such as this, with very few people listening.

Many people in some of the key sectors of our economy are looking for action, not rhetoric and Parliamentary Statements. Many of our exporting partners in our key markets are looking for reduced barriers and burdens. I shall come to that in a moment. Primarily our businesses are looking for reduced costs, less bureaucracy and the Government knuckling down to ensure that what has been claimed to be “the world’s best border” actually functions as just a decent one, not one with its processes 20 miles from Dover for likely checks, for whose introduction there has been delay upon delay upon delay.

Any good news about British trade is good news, and I welcome it. I seek the best for our exporting businesses. However, that will not come about through rhetorical Statements such as this. For example, we are told that the UK economy has grown faster than those of Germany, Italy and Japan—without the obvious context that we fell the sharpest and the deepest after Brexit and as a result of Covid. Any recovery at all over that timeframe would be faster. The question is not the speed, but the totality of whether our economy is likely, at the end of this decade, to be bigger than it was before the referendum, or would have been if there had not been a referendum. Every indicator, including the Government admitting this to the OBR, says that on a compound basis, after 4% a year, our economy will be considerably smaller. To say that is not to do down our country; that is just, as the Government might put it, a fact.

The Government have issued a Statement. It would have been useful to have some footnotes with links to the documents. I commend the officials for scouring the UN and UNCTAD, as well as our official government statistics. As the noble Lord said, they have done a grand job of cherry-picking. The UNCTAD trade briefing for the UK shows, for example—this is one indicator—that since 2015 exports are up from £467 billion to £533 billion. That is good, and the Government refer to an increase in exports. What they do not say, however, is that UK imports have gone up much more, from £630 billion to more than £823 billion. The United Kingdom trade deficit in goods has gone up—and not only gone up, but doubled as a percentage of GDP. UNCTAD says that in 2015 it was 1.59% of GDP, whereas in 2022 it was 3.01% of GDP.

The Minister might say that talking about trade deficits is old fashioned, and that our economy is a service-sector economy. However, the trade deficit is very important when we analyse who that deficit is with. It is primarily with China. Yes, that is an indication of the growth in the economy of Asia, but the UK now has the biggest trade deficit with a single country ever in our history. The deficit with China is more than £40 billion. The Minister heard me refer to that.

That puts all the individual references, such as to access to the Mexican market, of £18 million, in perspective. Access to the Mexican market of £18 million is good; I welcome that. But I am more concerned about the fact that the UK has not done a resilience analysis of our key sectors, with an enormous trade deficit of £40 billion—that is £40,000 million—with China. In the context of President Xi visiting Europe, but also Hungary and Serbia, UK trade in the world is now a geopolitical consideration.

The Government have indicated that, as the Statement says:

“We are tearing down the barriers to trade”.


The Minister will probably not be surprised to hear that I disagree with him, and I will not be surprised that he will disagree with me, so we might want to settle with regard to the independent Regulatory Policy Committee, which advises Ministers on this very issue, and its analysis since the period referred to in the Government’s Statement. We can take one example from the 2017-19 Parliament, and I quote directly from the committee. It said:

“For the 2017-2019 Parliament, the relevant government set a … target of a £9 billion reduction in direct costs over the length of the Parliament, however the final position was an increase in costs of £7.8 billion. Similarly, the government has set a holding target of £0 for the current Parliament”—


zero was the holding target for the Parliament we are in—

“but in the first year of the Parliament, there was an increase of £5.7 billion (excluding the very significant impacts of temporary COVID-related measures)”.

This Government have presided over the biggest single increase in business burdens—bigger than any of their predecessors—and the fact that some have been removed, without any reference to the totality of the sum of the 500 referenced in the Statement, is pointless to put in.

My final point concerns what Governments can do to reduce burdens. My noble friends Lord Fox and Lady Randerson have raised repeatedly the increased costs now per British business, of £145 per consignment. This is, I remind the House, “the world’s best border”, and it is a typical cost per business of £100,000 since the new measures have been put in place—but it is also about friction of trade, when it comes to safety and security certificates, customs declarations, evidence of origins of goods, VAT requirements, health certificates and chemical certificates. These are all barriers. I hope the Minister can give an indication now of what the estimated net reduction in British business for trade will be. We have seen that the increase has been £100,000; what is the trajectory down? As I started, British businesses are not looking for boosterism, they are looking for bureaucracy and costs to be reduced and, unfortunately, nothing in this Statement would suggest that they are.

Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [HL]

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

Committee stage
Thursday 7th December 2023 Grand Committee

[Lord Purvis of Tweed (LD)]

My Lords, the Committee is in the debt of the noble Lord, Lord Lansley. He is rare among us in being able to identify the questions, ask them and then come up with a sensible answer, all in one. He did so on this. I am slightly anxious, because he took away the only thing I was going to mention: tied aid and some of the experiences that we have unfortunately had with it—we have banned it in the UK—and the Pergau dam situation with regards to contracts that have been issued. We have memories of how this can go awry.

I record a recent visit I made to Vietnam. I wish to see UK trade with Vietnam grow and am very supportive of any areas in which we can make that happen, but in some CPTPP member countries it is less clear than it is in the UK what the balance is between private and public enterprises and what are the funding mechanisms of bodies that would be open to potentially benefit from UK procurement access. The noble Lord asked valid questions, and I have a degree of sympathy with his conclusion that it would be worth accepting his amendment.

[Lord McNicol of West Kilbride (Lab)]

My Lords, there is very little to add to the detailed probing question—and answers—from the noble Lord, Lord Lansley. With that, I look forward to the Minister’s response.

Australia Free Trade Agreement

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

Monday 11th July 2022 Lords Chamber

[Lord Purvis of Tweed (LD)]

I was not born.

[Lord McNicol of West Kilbride (Lab)]

I was four. Negotiating from scratch in itself should not have been an issue, but analysing in detail the Australian agreement raises very real concerns about what has been negotiated and what has not. Parliament has been virtually neutered in the whole process. The Australian agreement was signed in December 2021 and the New Zealand agreement in March 2022. We are now in July with just over one week before Parliament rises. Yes, it has been examined by the International Agreements Committee and the International Trade Committee in the other place but it will then be laid before Parliament similar to any other statutory instrument.

I wonder, as many other noble Lords have this afternoon, whether better parliamentary scrutiny would have led to a better, fairer, greener and more equitable agreement. There is a paradox at the heart of the Australian deal—the Government’s own impact assessment estimates that our farming, forestry and fishing sectors will take a £94 million hit and our semi-processed food industry a £225 million hit. Yet, again by the Government’s own predictions, overall trade will increase by less than 0.1% of GDP by 2035, while there is fear of real damage to some of the UK’s most important sectors.

As many other noble Lords have this afternoon, I worry that the prize of the deal, the prize of the headline, the prize of being first was more important to the Government than the detail of the agreement itself. As my colleague Nick Thomas-Symonds MP said in the Commons:

“Other countries, in future negotiations, will look at what was conceded to the Australian negotiators and take it as a starting point.”—[Official Report, Commons, 5/1/22; col. 67.]


UK exports to Australia as a result of this deal are supposed to rise by 53%, but I see no great basis for that optimism. Few trade deals have ever had that kind of impact, and certainly not those between two countries where there is already a good trading relationship with historically low tariffs. The 53% is also somewhat higher than the original estimate. Can the Minister explain this leap in optimism between the original estimate and the secondary estimates?

As we have heard from the noble Duke, the Duke of Montrose, the noble Baroness, Lady McIntosh of Pickering, and the noble Lord, Lord Liddle, the labour, environment and animal welfare chapters are pretty weak and do not necessarily focus on UK interests. Would the Minister care to elaborate on any specific improvements negotiated which will bring a positive benefit to our labour, environmental or animal welfare standards?

Minette Batters, the NFU president, said:

“The government needs to level with farmers about the commercial reality of this and ditch the soundbites that lost any meaning a long time ago.”


She continued:

“It needs to set out a detailed agri-food export strategy, with complementary policies that will enable UK farmers to compete and adjust.”


Those were some of her more measured words, but she is right.

As always, agreements include carve-outs. How confident is the Minister about the predicted rise in exports given the protections to Australia’s services market? This is in stark contrast to the lack of protection given to the UK food sector in the tariff schedules. Were any of our devolved nations involved in adding to our 12 pages of carve-outs? As I understand it, the Australian states were consulted and state protections included. Were any of the concerns of the UK’s devolved authorities recognised and incorporated into our carve-outs?

I fear that the Australian agricultural corporations will not be held to the same high standards as our farmers. Animal welfare standards have been mentioned a number of times, but what the Government have agreed is a non-regression clause. To be clear, that does not mean that the standards will be the same in both countries. What will actually happen is that meat produced to lower animal welfare standards will get tariff-free access to the UK market. So much for the promise that the Government had no intentions of striking a deal that did not benefit British farmers. Australia’s former negotiator said:

“I don’t think we have ever done as well as this.”


How much engagement did the National Farmers’ Union have after the agreement in principle was published? Was the NFU given the opportunity to raise concerns or make counterproposals? More importantly, was it able to assess the true impact of the FTA before it was finally signed?

The UK granted Australia generous agricultural market access. Why was this not leveraged to press Australia for more ambitious commitments on climate change? As we have heard, there is no reference to the temperature goals which were fundamental to the Paris Agreement, nor to reducing Australia’s reliance on coal, which was addressed in the free trade agreement with New Zealand. As my noble friends Lady Liddell and Lady Hayter have said, we now have a Labor Government in Australia so there is an opportunity to revisit it.

With the energy security Bill making its way through Parliament, this feels like a missed opportunity for the Government to show leadership on the world stage on an issue which is increasingly global, instead of taking an insular approach. Tariff-free access to our UK markets is a prize that Ministers should not give away easily. However, looking at the concessions made by this Government, are we not right to worry? This was a deal the UK Government “were advised” they had to do for the bigger prize of CPTPP accession. I would like to hear the Minister’s views on that.

I return to my opening point, and I cannot put it any better than the noble Lord, Lord Kerr of Kinlochard, with regard to this Australian deal. We are allowed only to debate it; we can do nothing about it.

Subsidy Control Bill

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

Committee stage
Monday 7th February 2022 Grand Committee

[Lord Purvis of Tweed (LD)]

My Lords, it is a pleasure to follow the noble Lord. I was thinking that it is not usual for us to have difficulty hearing what the noble Lord, Lord Dodds, says: it was down to technology and I am glad it got sorted. I welcome his amendment because it is another opportunity for the Minister to address these serious points. As the noble Lord indicated previously in Committee, on my Amendment 53, we have tried, as the noble Lord, Lord Empey, asked us to do, where there are difficult areas, to navigate a way forward. Because he is absolutely right: before his resignation, the noble Lord, Lord Frost, said in the Chamber—I think it was in reply to the noble Lord, Lord Hannan—that the Government’s intention was not to replace the protocol but to improve it.

So, we are in a situation where the noble Lord and I come, perhaps, from a different starting point but reach the same conclusion: we find ourselves in an undesirable situation but it is one of the Government’s making, and if there are ways to ameliorate the position, the Government have to come up with the solutions, because what is not really in question, as the noble Lord, Lord Empey, said, is that the Government are not looking to replace the protocol. We are, then, tasked with trying to remove one of the barriers that the Department for the Economy in Northern Ireland has indicated, which is that uncertainty is itself a barrier, and that has to be recognised. That uncertainty is ongoing, which is already one of the damaging impacts, as the noble Lord, Lord Dodds, indicated.

We are, I think, in month four now of a three-week process that Boris Johnson promised to Jeffrey Donaldson of a short, sharp negotiation on the protocol. Four months in, it might just be that Boris Johnson is not so reliable in the commitments he gives—it is a suspicion of mine, but it may well be the case. Nevertheless, as the Minister, the noble Baroness, Lady Bloomfield, indicated to me last week in Grand Committee, when I asked if it was the case that, if the Government secured everything they asked for in the negotiations, then EU state aid rules will continue to apply:

“To respond to the concern of the noble Lord, Lord Purvis, that state aid rules would continue to apply even if the UK’s negotiating position were accepted, these are specific and limited circumstances. I trust that this will allay the Committee’s concerns on this important issue.”—[Official Report, 2/2/22; col. GC 244.]


It really comes down to “specific and limited”. “Specific and limited” will mean that there is the ability for reach-back. It will mean that, for parent companies, the guidance will stand that they will now have to start to run two sets of accounts. It will mean that there will be dual reporting, depending on whether it is state aid or subsidy control. It will mean that there will potentially be dual challenge mechanisms. It will mean that the CJEU will still define the state aid component elements of it. Whether or not there are streamlines, whether or not it is more efficient, whether it is less bureaucratic, as the Government’s Command Paper said, or whether it is “specific” or “limited”, it still means that it is different; it still means that it is not the UK approach. That, I think, is symbolic, but it is also important in content.

I will not use any of the language of “territorial nature” et cetera; that is not for me to say. I will close with one element, though. In the 100-page document The Benefits of Brexit, there is not a single independent reference to Northern Ireland at all. That was published on the day that the Northern Ireland First Minister resigned. We are in difficulty, Minister, and I think that taking what has been offered by some as a way of making the situation better is something the Government should consider very carefully indeed.

[Lord McNicol of West Kilbride (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Purvis, and his detailed analysis, especially picking up and bringing back some of the issues from last week. With his contribution and the others, I will be short. I am grateful to the noble Lord, Lord Dodds, for tabling this probing amendment and facilitating discussion on this hugely important topic. I will focus my short remarks on the bigger picture rather than the specific details, which I think have been covered well enough.

Regardless of where people stand on the Northern Ireland protocol and the Government’s negotiations to reform it, it is a part of international law, as we have heard. This legislation therefore needs to be consistent with it. There are different legal opinions on the matter and, while some are favourable to Her Majesty’s Government’s approach, others suggest that decisions relating to Northern Ireland will at best be complex but at worst be subject to challenge or litigation. Neither of these outcomes would be good for firms, businesses or the authorities operating in Northern Ireland.

When this Bill was in the Commons, the Government were asked if they would pause to allow room for negotiations to continue. The answer was no. Despite the passage of those months, we appear to be no closer.

With that, I will leave my comments and look forward to the Minister’s response.

Subsidy Control Bill

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

Committee stage
Wednesday 2nd February 2022 Grand Committee

[Lord Purvis of Tweed (LD)]

My Lords, I support my noble friend Lord Fox and will add a couple of points. First, on the streamlined schemes, there is the potential for them to be very major and, in effect, a policy driver in themselves. But if they are laid and are not in an order, which we would have the ability to scrutinise, they will not necessarily come with an equalities or impact assessment. It will be a fundamental weakness if they are simply laid. It goes against the grain of what we have been trying to argue, which is for good-quality proposals that come with equalities assessments. It will bypass that and that is a retrograde step.

On the ability to amend without there also being scrutiny, I point out, having checked on legislation.gov.uk, that there are 15 references to deposit-takers in other legislation and 34 references to insurers. What the Government propose is simply to amend primary legislation and a suite of other measures. The area of confusion for me is that there is also legislation that relates to Scottish insurance, which could be changed by a Secretary of State without there being proper scrutiny of that either.

My final point relates to the element of secrecy in Clause 47(7). The Government seem to be proposing that we go back to a situation of hue and cry, in which measures by the Treasury that could be supporting individual businesses will never be reported. We will know only if there are whistleblowers, if people are raising concerns and they have that knowledge. We saw to our cost with the Libor-fixing situation what can happen when there is a lack of transparency and reporting. It is simply not good enough. When I was a member of the Finance Committee of the Scottish Parliament, we had mechanisms for our committee to meet in private when Finance Ministers were able to say, either on the grounds of national security or during the economic crash, that there were reasons why information would not be made public at that point. We were briefed and there would, subsequently, be a report that Parliament could have. There are other mechanisms for secrecy than this approach.

Finally, I have been a Member of two Parliaments for 18 years now. I never thought I would read a parliamentary committee highlighting this statement:

“In other words, because the Government might be defeated if the direction could be voted upon, there should be no parliamentary procedure and no vote.”


This provision should not progress. It is as simple as that.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I am grateful to the noble Lord, Lord Fox, for tabling these amendments. As we have heard, they reflect the bulk of the DPRRC’s recommendations. I also thank the noble and learned Lords, Lord Judge and Lord Thomas of Cwmgiedd, and the noble Lord, Lord Fox, for signing Amendment 50, even if it was not to support me but the recommendations of the DPRRC.

The DPRRC took the unusual step of voicing its concerns for Clause 47(7) at first, rather than working through the Bill and its clauses in turn. That goes to highlight even further its real concerns, specifically around issues of transparency and secrecy. We will come on to further amendments on transparency and try to open this up because, as we have heard, when you shine a light on the decisions being made, they are put under scrutiny. Issues and concerns can be brought to the fore so that we do not, as the noble Lord, Lord Purvis, said, end up relying on whistleblowers.

Taking the point made by the noble Lord, Lord Purvis, it may be that the immediate release of certain directions and information could have undesirable consequences in terms of market behaviour, but there must be other ways of taking it forward. The noble Lord has touched on one of them at the Scottish Parliament, where meetings were in private but the information was subsequently released.

At Second Reading, the Minister said:

“However, we will of course take into account the findings from the Delegated Powers and Regulatory Reform Committee’s report and we will review accordingly.”—[Official Report, 19/1/22; col. 1712.]


I know we are all sitting here waiting to see if any of those will be enacted, and I very much look forward to the Minister’s response. The words of the DPRRC have been quoted but it is worth putting on the record points 13 and 14 in its 17th report, which say that:

“We do not recall any other occasion where the Government have argued that one reason why Parliament should not be able to scrutinise delegated legislation is because the Government might be defeated on it … Neither have the Government cited any precedent where the ability to disapply a legislative provision (here, the Bill’s subsidy control requirements) can be achieved by a direction that can be kept secret from Parliament.”


With that, I look forward to the Minister’s response.

Professional Qualifications Bill [HL]

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

Committee stage
Tuesday 22nd June 2021 Lords Chamber

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

I have received one request, so far, to speak after the Minister. I call the noble Lord, Lord Purvis of Tweed.

[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to the Minister for indicating that we will have more information on Report, but we have been asking some questions of concern since Second Reading, so I think the very least the Minister and the Government can do before we start Report, and indeed before the deadline for amendments on Report, is to provide information. Otherwise, it is pointless once we are on Report.

My question follows up a question from the noble Baroness, Lady Hayter, on trade deals to which the Minister referred. In an earlier group, in response to a question I had about legal services in the Australia deal, the Minister categorical ruled out that there would be mutual recognition of lawyers in the Australia deal to try to allay my fears that it would override the internal market Bill. The attachment in the Minister’s letter to me, which is about the agreement in principle, has a specific paragraph:

“Legal services provisions which will both guarantee that UK and Australian lawyers can advise clients and provide arbitration, mediation and conciliation services in the other country’s territory using their original qualifications and title”.


If that is not a new agreement on professional qualifications that will have to be implemented by this legislation, in which the Minister is intending to using a Henry VIII power rather than primary legislation under previous commitments, how on earth can we trust any other commitments about intent from the Dispatch Box?

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord, Lord Purvis, for that. I really believe that we have to wait until we see the detailed text of the Australia FTA, which will be subject to proper scrutiny. I think if there is one thing that the noble Lord and I agree on, it is the need for proper scrutiny of free trade agreements once the text is available. Trying to debate these free trade agreements purely on the basis of brief references to what they say is not something that I believe either he or I would feel is satisfactory.

Coming back to his earlier point, I will communicate with noble Lords as fully as can before Report on the matters to which he referred.

Trade Bill

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

Report: 2nd sitting (Hansard): House of Lords
Wednesday 13th March 2019 Lords Chamber

[Lord Purvis of Tweed]

My Lords, this feels like an intermission between two parts of the main feature this afternoon, so I shall be brief. The amendment is even more important given the vote in the Commons last night and the votes likely to come up in the other place. It would provide for a duty on the Government to update the information that they published on 21 February.

I signed up to a weekly trade newsletter from the European Commission at the start of this Bill’s consideration. It includes a weekly digest of the latest news on EU trade, new trade negotiating texts, reports and studies about ongoing discussions, upcoming events and consultations and the EU Trade Commissioner’s statements on related topics. That is the type of information available through the Commission that should be the benchmark by which our Government provides information, not only to Parliament but to civic society and interested groups across the country. But unfortunately, it is in stark contrast with the kind of information that the UK Government publish to date. It is appropriate that we have information on the status of discussions and highlight areas where there are justifiable public differences in approach or policy between our Government and other Governments.

The amendment is not asking for commercially sensitive information or for information that would diminish the ability of negotiators to carry out a set mandate or agreed policy objectives. It is necessary for continuity in the areas that we are discussing.

Also, as we discussed in the previous debate, if there is no deal, we have unilaterally decided to engage in a different trading relationship with countries we currently have arrangements with, and possibly add new tariff lines on goods that are not in place in the current FTAs. The Government seem to think that it is rational to discuss continuity agreements with other countries if there is no deal, apply a new tariff regime with nearly 500 extra tariff lines to businesses trading from those countries and roll over agreements, thereby reinstating the zero tariffs we currently enjoy with those countries by virtue of our membership of the European Union. It is a bizarre approach that the Government think will be beneficial, but it stretches credulity.

At the start of proceedings on the Bill, the Government said that the whole process of moving over agreements would be easy. The noble Lord, Lord Price, the Minister’s predecessor, said that all countries had agreed to roll over agreements but, in fact, they had not. Ministers said repeatedly that all the agreements would be in place by 29 March but many of us knew that that would not happen. The Government denied that there was a problem when it was apparent to everyone that there was, and we knew that those agreements were not going to happen for a number of reasons. Only after frustrated officials leaked information did the Government demur and publish a one-off statement admitting a degree of reality. That is not sufficient and we need to move away from that approach.

The amendment addresses a way forward. It would lead to more information on the trading relationships with the countries we have an agreement with through the EU, but will end if we crash out. The amendment calls for a weekly update before we leave the EU—if we leave—and a monthly update that will form the basis of reporting until the texts of the agreements are shared with Parliament. Unless we have a consistent mechanism, we will have a bizarre situation involving two reporting systems from the Government: one on the progress on continuity agreements and the other on successor or new agreements.



For example, the Government intended to have a continuity agreement with Japan but no reporting undertakings. However, the Japanese have now said they want a successor agreement, which would be covered by undertakings in the Command Paper. But the underlying policy intent has not changed and there will be nothing to stop discussions with a country such as Canada on a continuity agreement then becoming a successor agreement—and there will be two parallel systems of reporting. That is not helpful for clarity or transparency.

Finally, we heard clearly last week from the noble Lord, Lord Kerr, and others who have been at the highest level of negotiations on behalf of the UK, that greater transparency and the involvement of Parliament in approving mandates actively strengthen the UK’s position, not weaken it. In order for Parliament to do its job correctly and engage with civil society groups and those with an interest in trade, or who will be impacted by decisions made in the negotiations, we need a high level of information on progress, rather than simply a descriptor such as “engagement ongoing”, as referred to on 21 February.

That is why I hope that the Government will look favourably on the amendment and, if they cannot accept it, at least establish some principles whereby reporting mechanisms can be more up to date, regular and meaningful than a one-off publication on 21 February. I beg to move.

[Lord McNicol of West Kilbride (Lab)]

My Lords, the noble Lord, Lord Purvis, has outlined the reasoning for and detail of the amendment. I intend, therefore, to be brief as we have a number of amendments of greater importance.

It is a shame that the Government will not accept the amendment or work with noble Lords on this side of the House to bring more detail and clarity to the reporting mechanism and progress analysis on rollover agreements. Suffice it to say, Her Majesty’s Government are woefully behind on negotiating, securing and signing agreements that will need to be rolled over. Only a handful of deals are close to completion. Ministers have admitted that they are struggling to make progress with the other trade agreements that Liam Fox has a number of times promised would be ready for the day after Brexit.

Trade Bill

Debate between Lord McNicol of West Kilbride and Lord Purvis of Tweed

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

[Lord McNicol of West Kilbride (Lab)]

My Lords, Amendment 31 is a short amendment but an important one. This is my first Bill and first amendment from the Opposition Front Benches in your Lordships’ House, so please forgive any mistakes from the outset.

Nowhere, as far as I can see, are rules of origin mentioned or dealt with in the Bill. This is worrying for a number of reasons. Most importantly, rules of origin will have a huge impact on the UK’s efforts to replicate our current EU trade agreements with other countries. Rules of origin are about how we define where a product or products really come from, and what “Made in Britain” actually means. It is important to the Bill because, if we are to take the Government at their word, this is just a Bill to allow the rollover of existing trade agreements—agreements that we currently have because of our membership of the EU and customs union. Without changes, rules of origin locally should be expressed in exactly the same way as they currently are. My concern is that they will not be. Post Brexit the EU will no longer be classified as “local”. The UK will be the new “local”. So a new definition will need to be written into these rollover trade deals, where “local”—which until leaving the EU meant inside the whole of the EU—will now mean not just the UK but the UK and the rest of the EU.

The issue of rules of origin is inextricably linked with our membership of the customs union. The big advantage now of being inside the customs union is that no tariffs or taxes are placed on imports or exports of goods traded between member states. Fulfilling the country-of-origin principle ensures that products can enjoy zero tariffs as part of free trade deals if they meet the requirement: conversely, if they do not, they will not. To give a practical example, trade deals in the car industry usually require about 55% of the components of a car to be considered as local. But most cars made in the UK have just 40% of UK-only content. If we then look at the fact that many of the subcontractors source many of their parts from abroad, a UK-made car could be less than 30% made in the UK. This is improved and passes a 55% threshold due to the fact that other manufactured parts of the car come from EU countries, currently classified as local. I ask the Minister: when we leave, how will this be addressed in each of the possible exit scenarios, as this is pertinent to the rollover of existing trade agreements? I also ask the Minister to clarify, if amendments need to be made to the text of existing trade agreements, how parliamentary scrutiny of those changes will be handled. I beg to move.

[Lord Purvis of Tweed (LD)]

My Lords, I congratulate the noble Lord on moving his first amendment to a Bill. It does not get any easier—I do not wish to offer any false reassurance—but I happily concur with his remarks in moving the amendment. I have little to add except to reinforce the point that, for the UK in particular, the majority of our imports from our biggest market and an even larger majority of our exports are intermediary. They include components that are from a number of different countries and not from here.

This issue was raised briefly with the Minister on the cross-border taxation Bill. It is the complexity not just of the components but what is necessary to ensure that many UK exported goods and our imported consumer goods have a seamless transaction process. It is less about the tariffs applied and much more about the regulatory aspects and checks that will be necessary, which I shall turn to in a moment. Therefore, for our key sectors—the noble Lord mentioned automotive, but for wider engineering and overall production and for our exporters— this issue is critical.

I will cite one example from HMRC’s advice to businesses that is close to my heart, living in an area that has a rich tradition of manufacturing in textiles. It shows some of the complexity when rules of origin have to be applied. Each business has in effect to do its own certification. The advice states:

“For example, yarn spun from non-originating man-made fibres in France”,


would not be considered as originating within the EU for preferential purposes when considering whether rules of origin apply.

“However, cloth woven from that yarn in the UK would be an EU originating product, just as if the weaving had been done in France or Germany”.


That is one tiny example of where, if we do not have a customs union with our biggest market, we will have difficulty with rules of origin with our largest market and then, as we move to trade with other countries outside the customs union, we will have difficulty in deciding which are applicable for other preferential or other trade policies.

That is part of the complexity that leads to Amendment 51 in my name, which is in the view of these Benches necessary to align with our biggest market in order for us to exploit trade with other markets. We need to triangulate as little as possible, which seems to be what the Government seek. The best way to do that is through these arrangements. I understand that there is tacit agreement from the Government on this point, because the announcement last week of an in-principle agreement with Israel to roll over our agreement means that it seems that the United Kingdom is in principle considering what is in effect a rules of origin regime with the EU, the EEA, Switzerland, the Faroe Islands, Morocco, Tunisia, Egypt, Jordan, Israel, Montenegro, Bosnia-Herzegovina, Serbia and Turkey—all countries that have in effect a rules of origin regime.

It would be helpful if the Minister could clarify the Government’s intention for rules of origin in the existing rollover agreements and how they consider the future. However, even if we operated under such a regime, necessary checks and certification still have to be done electronically; each exporting company has to apply its four-digit tariff heading and carry out its own checks on whether rules of origin are being complied with. If we are to have a separate anti-dumping and corrective measures system—which, incidentally, the Government promised us for consideration before the final stages of the Bill—and if we are to have a preferential rules of origin system for developing countries, we will have to have some form of check system to ensure that those countries comply with it. It is one thing to say that we will have an electronic system for our closest trading partner—but how will we know that it is not being abused by other countries that wish to circumvent it?

Up to the Lords stage, the Government said that the language as set out in these amendments would necessarily tie their hands and weaken their negotiating flexibility by having them take all necessary steps—but this is no longer the Government’s position because we see that language in Clause 6. This is now government language, where it relates it to the European medicines regulatory network. The Government seemingly do not intend to bring forward any amendments to delete that from the legislation, so if they do not then that is the government language. That means that the Government should not have any problem with accepting this language.

Secondly, the Government said, prior to yesterday, that it would be inappropriate for Parliament to set a mandate for how the Government should take forward negotiations. That is clearly no longer the case because, as the Secretary of State for Exiting the European Union and the Prime Minister herself have said, Parliament has set the Government a mandate with regards to the Northern Ireland protocol. So there is no barrier to the Government accepting the language of these amendments. As to the necessity of them, it is very clear that this is what most of the industrial sectors of this country are seeking.