India and Southeast Asia: Free Trade Agreements

Lord Purvis of Tweed Excerpts

Thursday 6th March 2025 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, I am very grateful to the noble Baroness for bringing this debate to us and the very sensible way in which she opened it. It is a regrettable fact, notwithstanding the excellent work of the noble Lords and noble Baronesses who have contributed to UK-India and wider regional trade, that we are punching below our weight when it comes to seizing the opportunities for trade in this area. It is just three years since the boosterism of what had been claimed would be a five-star agreement by Diwali in 2022. The reality of trade policy is such that there are difficult trade-offs—literally—and hard choices to be made.

In that regard, I wish the Government well in the talks that are under way. I believe there is now a sense of reality, not of boosterism. Even under the previous Administration, the anticipated 15-year gains to UK GDP of an FTA with India were forecast to be between 0.00% and 0.08%. Nevertheless, in the very sectors that the noble Baroness, Lady Anelay, mentioned, we can see sector-by-sector growth.

One aspect that has not been mentioned in the debate so far, which I raised in the debate we had in 2022, is trade diversion. We have to be very mindful that if we have an FTA with India, which I would support, then even on the previous Government’s figures almost all of the potential gain in extra trade with India would be off-set by reduced trade with other countries in the ASEAN region through trade diversion. Any tariff benefits for one nation could well be at the cost of others, especially for Bangladesh. I hope that the Minister can say that trade diversion is a key part of the discussions that we are having with India.

It has also been raised that there are areas of complexity in our relationship with India, whether it is India in BRICS, the war-games with Russia that they have been carrying out over the last year or the rupee-rouble swap, where certain sectors of the Indian economy have profited from sanction circumvention on Ukraine. There are also the barriers that many noble Lords in this House have worked hard to reduce over many years, especially within the financial sector, FDI, lack of consensus on greenhouse gas emissions, nuclear energy, farming subsidies and policies, et cetera. I hope all these areas can be addressed in the talks.

Finally, regarding the wider area, just before the February recess I and other parliamentary colleagues visited Singapore and Malaysia through the Commonwealth Parliamentary Association. The Minister is held in very high regard. At every meeting we had, people asked us to pass on our regards to him. That leads to one of our observations, which the noble Baroness, Lady Verma, touched on. We are not sending a sufficient number of Ministers, high-level officials and delegations to this region. Human-to-human discussion is very important when it comes to facilitating trade and soft power, and we should be doing more of it. I am very pleased that Minister West will be in the region; I wish her luck for the visit. It was also very clear to us that Malaysia’s presidency of ASEAN and its green vision for renewable energy and green technology are an enormous opportunity for the UK.

I close with an appeal to the Minister. I suspect that he will not be able to respond to me today. There is an economic integration programme that the UK Government fund, looking at how we promote trade within ASEAN. That is scored as official development assistance because it is technical assistance. I very much hope that with the decisions to cut official development assistance by more than half, those areas of technical support—for trade promotion, for the very growth that we wish to see—will be protected and not cut.