G20

Lord Newby Excerpts

Monday 10th July 2017 Lords Chamber

[Baroness Smith of Basildon (Lab)]

My Lords, from a number of reports I have read, this seems to have been quite a challenging G20 meeting, but the Prime Minister’s Statement strikes an extremely optimistic note about future trade relationships—she spoke about “exciting opportunities”. It is clear that, for her, our role in the global economy and trade relationships and trade deals following Brexit were high on her agenda.

The Statement refers to the bilateral meetings with America, Japan, India and China. We have had reports of that meeting with President Trump. I understand that the Prime Minister claimed to be “optimistic” that President Trump could be taken at his word regarding a swift trade deal with the UK. Let us remind ourselves of what President Trump said, because, as we know, he never knowingly understates a case:

“There is no country that could possibly be closer than our countries. We have been working on a trade deal which will be a very, very big deal, a very powerful deal, great for both countries and … we will have that done very, very quickly”.


Yet the experienced Canadian negotiator who dealt with the Canada-US trade agreement described that statement as “political puffery”. As well as understanding the complexities of international trade deals, the President would have to consult Congress, which would have to take at least six months to consider the issue. Is that the Prime Minister’s understanding as well? It would be helpful to have some clarity and detail about those discussions, as well as about the timescale that the Prime Minister discussed with the President given his quite emphatic statements. We also need assurances that, in her eagerness to ensure a deal, we do not negotiate away the protections that we have gained—for example, for the environment, for employees and for food safety—that have served this country well.

Many of us may have heard the report a few weeks ago on Radio 4—I think that it was on the “Today” programme—about American poultry farmers who, post Brexit, want to export their chickens and turkeys to the UK. US standards allow chemicals in production that we in this country do not consider safe or appropriate. We have to maintain our high standards, so assurances on that issue would be welcome.

Is the noble Baroness able to provide some more information on the other bilateral discussions with Japan, China and India, which do not seem to have received the same attention? At the last G20 meeting in September, following our bilateral with Japan, the Japanese Prime Minister issued a 15-page document on its specific concerns regarding a trade relationship. When the Japanese returned to the bilateral at this meeting, did they discuss that document and have those concerns been addressed? Last time, the Prime Minister was unable to say whether they had discussed car manufacturing. Is the noble Baroness able to do so today, particularly with reference to any financial assurances that have been given for the post-Brexit era? Also, the Statement referred to a meeting today—not at the G20 but today—and discussions at No. 10 with the Australian Prime Minister. I am not quite sure why that is in the Statement: it does not seem any different from the casual assurances and statements made at last year’s meeting, but seems to be just a repetition of an ambition, at some point in the future, post Brexit, to do a trade deal. Can the noble Baroness tell us what those discussions were today and why that is in the Statement?

Staying with trade issues, the Statement refers to the risks created by the dumping of steel on global markets. One report at the weekend said that UK officials acted as a go-between during the disagreement between the US and China over the alleged overproduction of steel. The Statement refers to calls to remove excess capacity in steel from global markets. The noble Baroness may recall that the steel industry in this country was desperate for the Government to back European intervention to protect our steel industry from being destroyed by imported steel, yet the UK Government at that time refused to act. Therefore, I am curious now about the role the UK played as a so-called go-between. Can she enlighten us on that?

On economic issues, the declaration raises a number of matters under the heading “Building Resilience”. Mark Carney, who is also the chair of the G20 financial stability board, has warned about the continued economic risks to the UK banking sector. While the UK’s financial stability remains resilient, there are a number of worrying trends; specifically, the increase in consumer credit, which at more than 10% is outstripping household income. The ratio of household debt to income is high by historic standards. Is this the case across the G20, and was this considered at the summit?

On counterterrorism, which was the first issue the Prime Minister raised in her Statement, the noble Baroness will be aware that I have returned to this issue many times to express concerns about how our leaving the EU improves our serious and organised crime and counterterrorism operations and investigations. Obviously, we welcome any successful co-operation on counterterrorism, including tackling the funding of extremism. In the Statement the Prime Minister says that:

“The UK is leading the way”.


Does she understand and recognise that part of leading the way is through the co-operative work we lead and are part of within the EU? What consideration has been given to post-Brexit negotiations on this issue? Given that the Statement refers to tackling the funding of such activities as being key—the noble Baroness will be aware that this issue has also been raised many times in your Lordships’ House—when will the Government release the report into the foreign funding of extremism and radicalism in the UK?

Before she met President Trump the Prime Minister said she would raise with him his personal attacks on Sadiq Khan, the Mayor of London. The President’s attacks on the mayor on Twitter were extraordinary. What the mayor said, in reassuring people after the horrific terrorist incident in London, was “You have no need to be alarmed about additional police and armed police on our streets; they are there for your safety”. This was a perfectly reasonable and responsible comment to make. The President attacked him constantly on this on Twitter and the Prime Minister said that she would raise that directly with the President. Did she do so? The Observer newspaper reported that she failed to do it. If that is true, and given that she said she would, can the Minister assure us that she is seeking another opportunity to do so? The mayor was speaking and acting for Londoners at a difficult time and should not be attacked for doing so by a foreign leader.

Finally, my favourite film is “Casablanca”. Bear with me—it might not seem relevant but I am getting there. One of my favourite scenes, and the saddest, has Rick saying goodbye to Ilsa at the airport as she leaves with her husband to continue their work trying to save France from the Nazis. Rick tells her not to worry, saying, “We’ll always have Paris”. When the Paris agreement on climate change was signed last year, to great acclaim, I am sure that I was not the only who thought of that scene. To protect the world from climate change, we’ll always have Paris. But will we? Nineteen of the 20 countries remain committed. But President Trump’s rejection is a bitter blow. In the Statement, the Prime Minister said that she raised this personally with President Trump but I understand that she did not raise it in the bilateral, which was the appropriate and proper place to do so. So how and when did she raise it? I hope it was not an informal chat over a cup of tea later on. It is all very well being “dismayed”, as the Prime Minister said in the Statement, but if our close relationship with President Trump is to be meaningful, it has to be two-way and it has to have an honesty about it. If she did not discuss it with the President in that informal meeting, did she talk to, support or advise President Macron in any way, and thank him for taking a lead on this issue? What are the implications of the US rejection of the agreement?

[Lord Newby (LD)]

My Lords, I thank the Leader of the House for repeating the Statement. “Casablanca” is also one of my favourite films. I think the line that the Prime Minister takes from it is, “Play it again”, because the use of exceptionalist phraseology is played again and again in prime ministerial responses to this kind of international gathering.

I suspect that this summit will not be remembered for any great new international agreements, for there were none. But it is possible that historians will look back on it as marking the end of US primacy in world affairs and the point at which the US accepted tacitly the Russian strategy of regional hegemony, to which there was no opposition, as far as one could see, in the long meeting between President Trump and President Putin. I suspect that at the end of those two hours it was President Putin who was smiling behind his hand, rather than his opposite number. The change in the balance of power in the world was evidenced by the summit’s communiqué, which made no attempt whatever to hide the differences between the US and the rest of the world on climate change. I was intrigued when the Prime Minister said that she urged President Trump to rejoin the Paris agreement and that she hopes that he will do so. Has she any reason to believe that this is even a slim possibility?

Many of the issues debated at the summit were worthy and important and it is a great sign of progress that we have the 20 most important countries in the world discussing issues in a constructive manner, whether it is security, migration, modern slavery or women’s empowerment. Modest baby steps forward were taken on all those issues. However, listening to the Statement, one cannot but be struck by the lack of progress on—or even mention of—some of world’s flashpoints; for example, there is nothing about the Middle East or North Korea. Clearly, this is to be regretted.

On our own domestic agenda, the summit did discuss trade, where again the US is in danger of taking a unilateral line which would weaken the world trading system. But clearly the key trade issues for the UK relate to Brexit. The Prime Minister met the leaders of America, Japan, China and India, all of whom, we are told, expressed an interest in having new bilateral trading relationships with Britain post-Brexit. The situation in respect of Japan is particularly concerning. Japan has just signed a deal with the EU which covers 19% of all world trade. It took four years to negotiate and along with the traditional tariff reductions, there are major new levels of co-operation on standards, regulation and opening up public procurement markets. What is rather chilling is the thought expressed by a leading commentator in today’s papers that unless the UK replicates the EU’s trade agreement with Japan, Japan will have a closer trading relationship with the EU than we will. Even if we replicate it, there is a major challenge to the British motor industry if we are not inside the customs union. First, Japanese direct investment is likely to go to the EU, and, secondly, rules of origin mean that unless 50% of a product is made in the country, it does not qualify for free entry into the other country. How many motor cars made in the UK have 50% of their parts made in the UK? Very few. I wonder how the Government hope and expect to be able to, at worst, replicate the trade agreement now entered into or coming into force between Japan and the EU.

As far as America is concerned, the Prime Minister seems to take President Trump at his word when he says we are going to have a terrific, new, quick trade agreement. She is the only person in the world to do so. The rest of the world just does not think it is doable. Even if were doable, it is very noticeable that the EEF has said today that the damage caused by the kind of Brexit being pursued by the Government would not be made up any potential trade deal with the US. Equally, this very weekend we had the head of the German industrial federation saying that, as far as he and Germany are concerned, trade with Britain will be second to protecting the single market and the four freedoms. So how do the Government think they are going to be able to protect trade in a situation where they are not prepared to contemplate the single market or the customs union at a time when, as the ONS pointed out this very day, some 2 million people working in Britain today owe their jobs to direct investment from the EU? That investment is jeopardised by the Government’s stance.

This was an eminently forgettable summit for the UK. The major challenges to our well-being, whether in terms of the economy, security or influence, stem from Brexit, and here the Prime Minister certainly has a lot of work to do.

[Baroness Evans of Bowes Park]

I am grateful to the noble Baroness and the noble Lord for their comments. As the Statement set out, this summit saw Britain leading the way on a number of complex and challenging issues and also showed that there is a shared desire to build and maintain strong relationships. Leaders from around the world made clear their strong desire to forge lasting relationships with the UK after our exit from the European Union.

The noble Baroness and the noble Lord mentioned the possible trade deal with the United States. Discussions are at a very early stage, but we are optimistic about a deal that can be struck. The International Trade Secretary was in the USA a week or so ago talking to the American Trade Minister about future trade opportunities. The Cabinet Secretary has set up a working group with Wilbur Ross, the US Trade Secretary, to discuss how we can start setting out mutually beneficial parameters for a trade deal but, as noble Lords will be aware, there is a legal limit to how much can be done before we leave the EU. However, we are starting early and positive discussions.

The noble Baroness and the noble Lord also asked about Japan. The Prime Minister welcomed the announcement of the agreement in principle between Japan and the EU in relation to a free trade agreement. As we leave the EU, we are seeking to ensure continuity in our trading relationships. The EU/Japan deal could be a good starting point for that.

The noble Baroness asked about steel. Certainly, the Government recognise that dumped, or subsidised, steel is a significant global issue. We are disappointed that not all countries have fully engaged with the global forum since it was set up last year. The Prime Minister raised this issue directly with President Xi in her bilateral with him. We have also invited the UK steel sector to use the opportunity of a sector deal through our industrial strategy to set out its plans to capture future opportunities and long-term growth. We certainly value the sector and have provided support to it. We have made sure that social and economic factors can be taken into account for public sector steel procurement. We have successfully pressed for the introduction of trade defence measures to protect UK steel producers from unfair steel dumping, and we continue to compensate for the costs of renewable polices.

The noble Baroness asked about counterterrorism. As I have said many times at this Dispatch Box, we want to continue to work closely with all our international partners, and have shown the impact we have had. The actions following the G7 Statement have shown that when international leaders put their collective weight behind an issue, action can be taken. We called on the private sector to step up efforts to tackle extremist content on the internet, and two weeks ago, we saw the announcement by the four major communication service providers of an industry-led global internet forum to counter terrorism. We will continue to work with our international partners in a whole array of forums to ensure that we continue to do this.

The noble Baroness asked about the review commissioned into the funding of Islamic extremist activity in the UK. The review was comprehensive and has improved our understanding of the nature, scale and sources of funding for Islamist extremism in the UK. Ministers are currently considering advice on what in the report can be published and will update Parliament in due course. In relation to the comments that President Trump made about Sadiq Khan, the Prime Minister has been very clear that she in no way supported what the President said. She made that clear and will of course continue to support the mayor in his efforts to help protect London.

The noble Lord and the noble Baroness both raised the issue of climate change. We joined many other leaders at the G20 in making it clear that the Paris agreement and the international momentum that underpins it are irreversible. The Prime Minister brought up the issue of climate change with President Trump and had many conversations with him about it over the time they were at the G20. As the noble Lord rightly said, she will continue to encourage and press him to bring the US back into the Paris agreement. We continue to hope that this will happen.

The noble Lord, Lord Newby, asked about North Korea. The Prime Minister raised that issue in her bilateral meeting with President Xi. The noble Lord also asked about trade deals. As he is well aware, we are working to negotiate a good and comprehensive free trade agreement with the EU and are confident we will get a good deal for both the UK and EU. We will talk to countries that have existing relationships and arrangements with the EU about what arrangements we can come to so we can ensure a smooth process as we leave. But we are also talking, as I have said, to countries such as America and India about what we can do in terms of improving our trade relationships and what trade agreements we can have once we leave the EU.