UK Trade Performance

Lord Purvis of Tweed Excerpts

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.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)]

I thank noble Lords for their response to the Secretary of State’s Statement in the other place. I am very happy to take the points raised, but I must say that I feel we are living in a slightly parallel universe. Let me try to persuade noble Lords that we are in a very privileged position here in the UK. We are the sixth-largest economy in the world and the fourth largest in the G7. We have just moved to being the fourth-largest exporter in the world, after the US, China and Germany. We are the second-largest exporter of services in the world and we have just moved to be the seventh-largest manufacturer in the world.

Our economy is 80% services and 20% goods. That is where our people work: 80% of our employment is in services; 80% of our exports are in services; 20% of our workers work in manufactured goods, yet 45% of our exports are in manufactured goods. What does that tell you? Our goods are very good. They go around the world and people want to buy British goods. Our manufacturing sector has never been in better health. Everywhere I go, every country I visit, they want to buy British goods. There is a clear understanding now about services, so 55% of our exports are in services and the direction of travel will be that this country will be two-thirds services and one-third goods. What is great about services? We do not need to transport them; they can move digitally. They are usually in sectors that pay higher wages and that is why the workforce in the UK is now skilling up into services and getting higher wages.

Take the OECD numbers that were mentioned and let us just remind ourselves what the OECD said in its 2016 report about Europe, indicating that when we joined what was then the Common Market, Europe accounted for one-third of global trade. In 2019, when we left, it was 16% of global trade and by 2050 it will be 9% of global trade. Therefore, putting aside geography and culture, the British people made a very savvy business decision to tilt to where the trade is. The trade is in the Indo-Pacific. We have just joined this thing called the CPTPP, the trans-Pacific partnership. Last time I looked at the map, the UK was not anywhere near the Pacific Ocean. We could not have got into that deal when we were in the EU: that is 15% of GDP and 40% of the world’s middle-class consumers. It feels like a good place to be.

The OECD report looking forward to 2050 says that the three mega economies will, obviously, be the US, China and India. It sounds as if the CPTPP will be a very interesting fourth bloc to be part of, and we are part of it. Coming out of Brexit, we must remember that that was actually a trade deal. We did a tariff-free trade deal with the EU 27 and now, 41% of our exports go to the EU 27. If we include the Europe 34, it is 49% of our exports. It is still our biggest market, with which we are trading very strongly across both goods and services. The US is 20% of our pie chart, while 30% is the rest of the world, and that is where the growth is. We are tilting to where the growth is, while still being able to trade very successfully with Europe.

Looking at the numbers themselves, our exports are worth £862 billion today. We now have numbers we can actually look at, from 2018 to the end of 2023, so that takes in the most difficult five years we have had in the economy in the post-war era. A number of disruptions happened in that period. We had Brexit, Covid, the war in Ukraine, a massive spike in energy prices, a massive spike in inflation, and massive disruption to supply chains, probably the biggest we have seen since the Second World War.

Let us look into the numbers on an inflation-adjusted basis. From 2018 to 2023 our exports were up 26%, but if we take out inflation, they were up 2%. Basically, that means that we are now just ahead of where we were before this massive five-year disruption happened. Our manufactured goods are down 13%, inflation-adjusted, and our services are up 15%. Thank goodness we are a service economy and that we are able to rely on our services. Manufactured goods are down the world over.

The most interesting stat in the whole pack looks at manufactured goods to the EU 27 versus manufactured goods to the rest of the world. Manufactured goods to the EU 27 in this five-year period were down 13%, inflation-adjusted, and manufactured goods to the rest of the world in the same period were down 13%. There is no difference. There is no difference between our trading of manufactured goods to the EU 27 and to the rest of world. However, our services are up 8% to the EU and up 19% to the non-EU—the rest of the world. We have a pie chart of £860 billion, and 24% of that is manufactured goods to the EU 27. That is the only bit that the Financial Times and the BBC will report on. I am here to tell you that the other 76% is going—we have used the word in this Chamber before—gangbusters, so that must mean that the Government are doing something right to drive the economic agenda forward. Therefore, I can clearly refute the idea that we are in a difficult place. We are actually undergoing a massive recovery post Brexit and post Covid.

We have talked about the trade deals. On our EU exit, we immediately had 65 trade deals that we rolled over from the EU. We have now got that up to 73. What is interesting about the new deals? They are the most progressive in the world. Let us take the Australian trade deal. The EU did not really bother with services; it was fixated on manufactured goods. Now, the Australian trade deal has chapters on services, digital, innovation and digital trade. We have just passed the Electronic Trade Documents Act; we can now send goods around the world without paperwork. We have just sent a bunch of valves from Burnley to Singapore without any paperwork. We are bringing in a single trade window in 2025; instead of filling out 28 forms, you fill one out once and it cascades down through the system. We are putting in place a digital border, which will be the most progressive in the world. It will give us the value of £3 billion over the next five years. Yes, there will be some costs along the way, and yes, we need our borders to be protected, particularly from an SPS point of view. Our farmers think it is an unfair playing field right now and that imports versus exports in agri is not a level playing field. We are putting that in place, and in a very light-touch, careful manner.

Wherever I look in my portfolio, I see good news. If we are talking about world trade, we have these 73 trade deals; that covers 60% of world trade. Our target was 80% of world trade; well, the missing 20% is the USA, which is not doing trade deals with anybody right now, so it is not personal. We are trading very well with the US right now; in fact, our exports to the USA are at record amounts, both services and goods, and it may well be that that is good to continue as is.

Eight MoUs were signed with eight states. If you talk to Andy Burnham, recently re-elected as a Labour mayor, about the MoU with North Carolina and what the northern powerhouse is doing direct with North Carolina, he loves it; he is not talking it down, and he is not complaining about there not being an FTA with the USA. Right now, you can see that what they want in Manchester is a direct link to North Carolina based on mutual recognition of qualifications; it is to do with digital and the direct links he can make between his northern powerhouse and North Carolina. What we are hearing back is, “What a clever thing the UK has done”; we are dealing with individual states rather than getting bogged down in Washington.

If we take that as the missing 20%, we effectively have free trade with 80% of the world’s trade. We are in a very strong position when it comes to business investment; we do not need to go through all the numbers. We know that Alastair Campbell was on record saying that, following Brexit, Nissan will leave. What has it done? It has invested all the more—another £4 billion in its plant in the north-east. Some £2 billion of government investment has been matched by £24 billion from the private sector. Is that not the point of government? The Government are a pump-primer. The Government do not do business; the Government should not be doing business. The Government should be an enabler and facilitator for the private sector to do business. So, £2 billion of pump-priming results in £24 billion of investment; that is a pretty good deal.

India is clearly a big market. Right now, it is only 2% of our exports, but it will be a very big market for us to deal with. We have done 95% of that deal. Guess what? In any negotiation, the last 5% is the most difficult. Right now, India has an election on, so that has stalled at the moment—stalled is the wrong word, so please do not quote me on that; it is awaiting them to come out of purdah. But we have closed 13 rounds and 26 chapters on a whole range of issues with India, which does not really do free trade. What we are doing with India is groundbreaking.

When it comes to steel, we have net zero targets. We all agree on net zero targets, do we not? We must move to the new way of creating steel—electric arc furnaces. We must remind ourselves that we do not have iron ore here in the UK, so in Port Talbot 8,000 jobs are at risk. We have done a deal to save 5,000 and put in place a £500 million package for the other 3,000. I come from Clydeside, where we shut down the shipyards, and we did not have that deal; there was no furlough scheme. Here, a deal is being done with government to work on an industry going through transition—meeting our net zero targets, moving to electric arc furnaces, and saying that we cannot save every job, but we will invest in 5,000 of the 8,000 and work out a plan to help with the 3,000 redundancies. That is a pretty good deal.

I think I have covered most of the points. At the end of the day, the UK economy is the fourth largest in the G7. Our numbers are good, and our forecasts for growth are good. In November 2022, the OBR expected a year-long recession and GDP to fall; in fact, the economy grew in 2023 and inflation has more than halved and is falling fast. That is good for business. We should remind ourselves that, at the end of the day, GDP is a meaningless measure, except for economists. You cannot eat your GDP; GDP is an output. I have yet to meet a business that say when they get up in the morning that they are going to increase their GDP today. I have never met a household that says, “How is your GDP doing today, in terms of your budget?”

We should deal with the fact that, in 2023, people’s real incomes were £1,200 higher than the OBR expected in its March forecast. Real household disposable income per capita is higher today than it was in 2019, when we came out of the EU. In terms of our workforce, 33 million people in our population of 66 million work and produce a tax revenue of over £1 trillion. By increasing the national minimum wage and upskilling our workforce, the number of workers in our economy who are on what was called low hourly pay is now 8.9%. In 2010, that was 21%. Benefits in 2010 were the largest source of income for the poorest working-age households, whereas under the Conservatives their wages are now the highest contribution. Is that not what matters?

What matters is how we put food on the table. We are upskilling our economy. We are a service, modern, post-industrial economy. Where our manufacturing is world-class, it has been protected by this Government and invested in by the private sector. In the meantime, our service economy is going gangbusters, our workers are being upskilled and our SMEs are exporting and becoming exemplars in their local communities. Our economy is doing very well and I commend the Secretary of State’s Statement to the House .

Comprehensive and Progressive Trans-Pacific Partnership (IAC Report)

Lord Purvis of Tweed Excerpts

Tuesday 19th March 2024 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, I declare that I co-chair the All-Party Parliamentary Group on Trade out of Poverty. I thank the Minister for the advanced information through correspondence regarding the treaty. He is unfailingly accessible, as is his office; I appreciate that. He and I are enthusiastic free traders. He has a skill of finding greater enthusiasm for certain agreements than I do, but nevertheless we are both free traders. He must have erred in some other policy areas for him to be on those Benches and not these. Nevertheless, we share an ambition for the growth of UK exports and trade.

I also thank the noble Baroness, Lady Hayter, and the committee for their work. The IAC report is another excellent publication, building on its first report, as the noble Lord, Lord Lansley, indicated. It is especially important given that not only has the House of Commons not been debating the CPTPP but it no longer has a committee that specifically looks at international trade policy—so the service that this committee does for this House is even more important. The report’s opening probably gave the most succinct post-Brexit summary I have ever read. It said that

“it remains to be seen whether the Government’s intended trade and geopolitical benefits will materialise”.

We are still waiting with anticipation.

We understand from the Government that this component of that ambition will amount to a contribution to the UK’s GDP of between £1.8 billion and £2 billion a year after the 15th year—0.08% of GDP, as the noble Lord, Lord Anderson, said. The noble Lord, Lord Lansley, believes that will be the floor, not the ceiling, of the ambition. Sophisticated modelling by the civil servants takes all the optimism into consideration, but optimism bias is not unique to policy areas other than trade. There has always been a trade agreement that we hoped would do better than the one we were replacing. We also know that the OBR has suggested a lower figure, equating the likely growth to 0.04% of GDP.

The Financial Times humorously said that if the impact of the CPTPP was described in decibel terms, it would be the equivalent of

“a cat sneezing three rooms away”.

Now, it seems as if next door’s cat has the sniffles. Nevertheless, any growth is welcome, given the state of the UK economy. As the committee says, the Government have indicated that it is not just about economic growth. Indeed, that might not even be the primary aim. It is about greater integration with those economies. This is news to many of the nine countries with which we already have an FTA with the purpose of integrating our economy with theirs. What extra integration will the agreement to which we have acceded allow us? It may well be there.

I want to put into context what the level of growth activity would be after the 15th year. The £1.8 billion for the British economy is the equivalent of five and a half days’ trade with Holland. When we put up barriers to our nearest trading neighbours, we do much greater harm than any anticipated long-term benefit we gain from agreements such as this. The noble Lord, Lord Lansley, said that we can perhaps deduce the direction of travel from the Government’s activity. In the foreign affairs debate, the noble Lord, Lord Cameron, said we should never confuse activity with action. Therefore, we have to see not what the Government’s good intentions are but what their resulting actions realise.

In February the Sussex University trade observatory highlighted that

“the UK’s trade in goods with the world has underperformed compared to other comparable countries over the last few years”.

This anticipated growth with the rest of the world, other than the EU, is eluding us so far. Nevertheless, it may come about.

This is where the narrative starts to be challenged. Later in the debate, I suspect we will hear about how we need to be part of the fastest-growing part of the world’s trading economy within the Indo-Pacific area and how this agreement will allow the UK the increased growth benefit that those countries have seen. But the growth in the economies of the countries we are joining in the CPTPP has been almost exclusively because of the growth of the Chinese economy. Strip out the growth of China’s economy and its trade with Vietnam, Malaysia and the other countries in the CPTPP, and the figures look very different. In fact, their growth looks almost static. Now, with the slower growth in the Chinese economy, we will see what that level of trajectory looks like. Are we putting a lot of tariff-free eggs in this CPTPP basket when we are being very shoogly with our European Union neighbours?

This also has to be seen in the context in which the UK, more than any other European country, is now dependent on goods imports from China. The House has heard me say time and again that we have a trade deficit in goods with China of £40 billion. Germany has a trade surplus.

What also frequently goes unnoticed is that the world’s largest trading deal is not the CPTPP but the Regional Comprehensive Economic Partnership of 15 Asia-Pacific countries, including China, Australia and New Zealand. That represents 30.5% of global GDP, compared with the US-Mexico-Canada agreement at 28% and the EU at 18%. The RCEP’s growth is estimated to be far beyond that of any other agreement that we are acceding to. As much as this is a strategic debate about trade with the CPTPP, it is actually about the UK’s relations with China. The Government have said that this is an Indo-Pacific tilt towards those countries as an alternative to China. But there have been many rounds of negotiation between China, Japan and South Korea for an FTA between those countries. Whatever we do with our trade in the Indo-Pacific, we will be impacting on our relationship with China. We support an industrial and trade strategy because what our trading relationship with China will look like needs to be clear.

Finally, where we have seen bureaucracy, costs and paperwork added is in our trading relationship with the European Union. Yes, we will see a marginal, minimal decrease in bureaucracy with CPTPP countries, but we are seeing it actively increase for our nearest trading bloc—£100,000 of extra costs per typical UK business. That far outweighs even the most optimistic benefits mentioned by the noble Lord, Lord Lansley, that we would see for UK businesses in the CPTPP.

However, as I have said to the Minister, when we tilt towards one area, we are tilting away from another. Our trading partners in the Caribbean in CARIFORUM and in Africa in the African Continental Free Trade Area are seeing and hearing mixed messages from the UK. Therefore, I have called out the Government, time and again. For example, when we have signed an FTA with a Commonwealth country, not a single one has had a Commonwealth chapter for trade facilitation for the Commonwealth, allowed for under the WTO, which I have called for.

There may be one further final aspect. I close with a question to the Minister. It is likely, as the noble Baroness, Lady Hayter, said, that our relationship with China will come into more context if it wishes to join and accede. But we have a friendly, free, democratic nation within the region, Taiwan, with which we can see the expansion of UK trade. I have been on a number of occasions. It is a reliable and trusted trading partner which has demonstrated that it can be a stable, democratic and rule of law-based country. I hope that the Minister will agree with me that it is time for a UK Cabinet Minister—a Cabinet Trade Minister—to visit Taipei, sending very clear signals. If we are seeking to tilt to the region and sending signals that it is not towards China, then a Cabinet-level official visiting Taipei would probably be the strongest signal of all.

UK-EU Trade: Small and Medium-sized Enterprises

Lord Purvis of Tweed Excerpts

Wednesday 31st January 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

The reality, as we said yesterday, is that our economy is 80% services and 20% goods, but our exports are 50/50, because our goods are good. We make things that people, especially in Europe, want to buy. European countries are coming to us and saying that they want to get rid of these barriers because they want our goods imported. We are working on a country-by-country basis and it is improving all the time.

[Lord Purvis of Tweed (LD)]

My Lords, yesterday the Minister admitted to me that UK trade with the EU has declined but said that UK trade in services and goods with the rest of the world was going “gangbusters”. I looked up two things this morning. First, UK trade with the EU has declined by 1.4%, which is regrettable, but UK trade with the rest of the world has also declined, by more than 4%. The second thing I looked up was the definition of “gangbusters”, which means “very well”. Would he like to correct the record? Given that EU trade with the rest of the world has gone up while ours has gone down, why does he think that that is the case?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that stat-fest. I said yesterday that the most difficult part of the pie chart is the 24% of our manufactured goods to the EU 27, but the other 70% is increasing in particular services, which have gone up by 19% over the last five years, relative to inflation. That is why I said that the rest of our exports are trading very well.

UK-Canada Trade Deal: Suspension of Negotiations

Lord Purvis of Tweed Excerpts

Tuesday 30th January 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

Cheese is now a pawn in the game, and that has now become the focus of attention. When we were in the EU, we had 2,000 out of 14,000 tonnes of cheese allocated to us. That has now been taken away and allocated to Europe—France and Germany, mostly. We are now allocated 6,000 for the rest of the world. Canada knew that we had a right to roll that over to 2,000 within the WTO trade agreement. We do not have that now. That is £18 million of trade. Out of £26 billion, one might say that is a small number, but we know that the farms in Somerset and Wales in particular, which produce incredible quality cheese, have built up a superior market share in Canada. The Canadian consumer wants this cheese and has been buying and stockpiling it for six months in advance of this happening. This has only happened because the Canadian farmers want to send hormone beef to the UK and we refuse to drop our standards, as some people said we would do when we left the EU.

[Lord Purvis of Tweed (LD)]

My Lords, among the letters I received from Ministers after every trade negotiating round with Canada, saying everything was on track, the letter telling me that things had gone off the rails—sorry, “paused”—must have gone astray. That information that the Minister gave is not new information. I warned the noble Lord, Lord Johnson, last summer, after I led a CPA delegation on trade to Ottawa and Toronto, of the difficulties—but he ignored them. That is compounded by the fact that businesses are now paying £100,000 more per business for trade with Europe and new checks will be coming into place tomorrow. So when does the Minister forecast that we will have frictionless trade with Europe?

[Lord Offord of Garvel (Con)]

With Europe, as the noble Lord knows, when we agreed to join what was then the European Common Market, Europe accounted for one-third of global trade. We all know that, when we left in 2019, that was 16% of global trade. In 2050, the OECD says it will be 9% of global trade. So the UK has tilted to where the market is. The market is in the Indo-Pacific, which is why we joined the CPTPP. The last time I looked at the map, Britain was not anywhere near the Pacific. We managed to get America’s place in the CPTPP, which is 40% of the world’s fastest-growing consumers. As we sign those trade deals and go around with Vietnam, Indonesia, Korea and Japan, we are building out a trade base for our farmers and manufacturers which is far greater than they had in Europe.

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

Lord Purvis of Tweed Excerpts

Tuesday 23rd January 2024 Lords Chamber

[The Earl of Sandwich (CB)]

My Lords, may I ask the Minister a very brief question? I was on the committee at about the time he joined so he may not remember this, but as a committee we were very strongly in favour of the department bringing out a trade policy paper which would highlight all the good things about Britain, if you like. It would tell us more what the department was thinking while we were going through line by line. Can he resurrect that project? Will he give us an answer?

[Lord Purvis of Tweed (LD)]

My Lords, the Companion is quite clear that we do not reopen at Third Reading elements of the debate that we had at earlier Bill stages, so this is an opportunity for me to thank the Minister for his openness. He has been assiduous in replying to questions, as I am sure he will be for those asked of him today. It perhaps illustrates that while we are passing this Bill which facilitates the UK ratification of the accession, the other member states will also have to ratify and go through their own constitutional processes to do so. Many of the issues raised during the passage of the Bill will continue to be relevant, such as the impact on developing countries and the standard issues on impacts that my noble friends raised. We will continue to engage with the Minister with regard to all those.

I also welcome the diplomatic community who have been gathered by the Minister to bear witness to this. They are excellent representatives of their countries. Notwithstanding that, according to “Rotten Tomatoes”, “Ocean’s Twelve” is the weakest of the film series, as my noble friend Lord Fox pointed out, we always consider the Minister as the George Clooney of the Government in this House. For myself, I think Brad Pitt probably had the better role.

However, if the whole country is to benefit from the largesse of the 0.08% growth over 15 years, it will be as a result of the Minister’s enthusiasm. If we could market and export ministerial enthusiasm, we would be on to a winner with that he presents. All six of his predecessors whom I have shadowed in this House had equal levels of enthusiasm for growing British trade. We will see the operationalisational elements of this agreement by the fact of British exporters needing support to access the markets, for there to be an industrial strategy from the Government and for the export strategy to be grown. We want success for our exporters, trading with our friends, using this agreement and I am sure this will not be the last time we will debate our trade with these nations.

In the meantime, I congratulate the Minister and thank him for what he has done during the proceedings of the Bill.

[Lord Kerr of Kinlochard (CB)]

I too congratulate the Minister and thank him for the way he has handled relations, not just with the House but with its International Agreements Committee. He has been open, transparent and forthcoming with documents.

I also make a public service announcement. In the next couple of weeks, the International Agreements Committee will be publishing a full report on our accession. Let me reassure the House, as we pass this Bill, that the International Agreements Committee will not say anything which would imply that we should not pass it. We too very much welcome this accession.

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

Lord Purvis of Tweed Excerpts

Report stage
Tuesday 16th January 2024 Lords Chamber

[Lord Lansley (Con)]

I am grateful to all who took part in this very short debate, and in particular to the noble and learned Lord, Lord Hope, and the noble and learned Baroness, Lady Butler-Sloss, for their contributions on the legal aspects.

Unfortunately, I have not had an opportunity to look at the reference my noble friend refers to elsewhere in the GI regulations. That was not an aspect of this to which he referred in his letter of 10 January. He referred to the concept of the tort of passing off as a justification for it. My problem was that putting something in a statute that is justified by reference to a common-law definition seems problematic, since one might be assumed to be trying to create a statutory definition. I did not think the definition existed; I may be proved wrong about that.

I am just hopeful that it is not the case that one use of an unregistered trademark before the date of a GI means that it is established by use. It must be defined somewhere else and I hope that that is what my noble friend is suggesting—that “established by use” in relation to a GI is somewhere codified and defined. That would establish a degree of protection, and I hope we do not subsequently encounter circumstances in which the inclusion of this language causes a problem in relation to those who are responsible for distinguishing between registered and unregistered trademarks.

I remember, and my noble friend will recall from the debate we had in Committee, that we set out to secure GI recognition in the UK-Japan economic partnership agreement. We need to get on with it. Equally, in the UK-Australia deal we set out to secure protection for our GI indications. But it was made clear in the Australia deal that we would do so only in so far as, and to the extent that, the European Union secured protection for its GIs, and I am not sure that we have made the progress there that we should have.

These are very important aspects of our potential trade advantage and, if we are going to maximise our trade benefits, we need our geographical indications to be protected and we need to be using them in export markets. I should declare my registered interest as co-chair of the UK-Japan 21^st Century Group. I will be in Japan at the beginning of next month and I will make it my business to ask about what progress we, and they, are making in protecting our GIs in Japan. For the moment, we thank my noble friend—

[Lord Purvis of Tweed (LD)]

Before the noble Lord sits down, I am unaccustomed to supporting the Minister in these areas, as he and the House are aware, but, having glanced at legislation.gov.uk, regulation 2019/787, regarding the relationship between trademarks and geographical indicators, does indeed have the definition of “established by use”. I am not a lawyer, as I very willingly admit, but if the Government have had the good sense to transpose what we had in the EU legislation into domestic legislation, then that might satisfy the noble Lord.

[Lord Lansley (Con)]

I am grateful to the noble Lord, and it may indeed satisfy me as long as we do not abolish it any time soon. With all those helpful comments from noble Lords, I beg leave to withdraw Amendment 3.

Amendment 3 withdrawn.

Amendment 4

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[Baroness Lawlor (Con)]

My Lords, I am sympathetic to the amendment moved by the noble Lord, Lord Alton. I approach it from a somewhat different angle, on which he himself touched, which is the use of economic tools to gain hegemony geographically. We are talking about the wide area of influence that China already commands, not just in the Indo-Pacific. Already 20% of Chinese goods are destined for CPTPP countries; 50% of them are intermediate products. Of those countries, Malaysia, Vietnam and Mexico have the highest level of imports from China. When we join, that figure will go up because 13% of our imports come from China.

Whatever the outcome of the decision on this amendment, I urge the Government to consider very carefully some arrangement so that there can be collaboration between Parliament and government on the very important business aim of the UK, which is to prevent economic tools being used against UK interests, including those to which the noble Lord, Lord Alton, referred.

[Lord Purvis of Tweed (LD)]

My Lords, I have added my name to the amendment in the name of the noble Lord, Lord Alton, and did so very happily. I will comment on a couple of points that have been raised in this short debate and then, without adding to what I said in Committee, highlight the reason why strategic debates about the UK’s trading relationship with China are important.

One of the reasons I was attracted to my party was that the Liberals were part of the founding movement for free trade. At that time, we traded with China and we will trade with China in the future, but this is a debate not about trading with China but about the UK’s resilience and our strategic trade interests. The noble Lord, Lord Hamilton, made the point that Parliament’s role is not to assess trade negotiations or assess whether China would meet the benchmarks for accession to the CPTPP. His argument was rejected by his noble friend Lord Lansley, who came to the conclusion that China is a long way from meeting the benchmarks. I cannot second-guess what the other members of the CPTPP will say, and nor can we hold them to account, but we can hold our Government to account for the assessments that they make. There will have to be a public process because the difference—I put it to the noble Lord, Lord Hamilton—is that China’s accession is less of a negotiation; it is an accession process, which is different from a bilateral FTA process. On that issue of substance, it is quite different.

The noble Lord, Lord Hamilton, also said that it would be wrong if we sought, by approving this amendment, somehow to provide a veto or to bind Ministers’ hands. It would not be a veto: there is nothing in the amendment that would allow it to be a veto. I refer also to the comments of his noble friend Lord Lansley, who said that there would be nothing to stop the Government bringing a report anyway. Opposing something that the noble Lord, Lord Lansley, suggested was in the Government’s interest to do is a bit of a stretch, but the Government have the ability to present a report, and this amendment says that they should. We have argued consistently for this in the Trade Act and on other trade negotiations.

The reason why China is particularly important, as was alluded to by the noble Baroness, Lady Lawlor, is not just the scale of the UK’s trade with China but how resilient we are in relation to it. It is absolutely right that the noble Lord, Lord Alton, raised the issue of Taiwan. I have just written to the President-elect, whose DPP is a sister party of ours on these Benches, to congratulate him on a remarkable victory. UK trade interests with Taiwan and shipping coming from that area are of critical importance. It is not just that British consumers enjoy the benefit of buying Chinese products, but we have the biggest trade deficit in goods with one country in our nation’s history. The trade deficit of £40 billion with China comes at a time when the whole narrative of UK government policy is that we would do trade with other countries in Asia, not China, that would offset any theoretical reduction with trade with Europe. We know that is not the case; it has proven harder to replicate the trading arrangements that we had with our European partners with those in Asia. We also know that the growth in trade in Asian economies, as the noble Baroness, Lady Lawlor, said, is because of their trading relationship with China. We cannot have it both ways.

If there is anything that suggests why we should have more of a strategic debate about how resilient the UK is when we have the biggest trade deficit of any nation on earth with China—I remind the House that Germany has a trade surplus in the export of goods to China—it is last Friday’s actions by the Royal Air Force. The shipping of goods from China, which we depend on for our consumers, comes through the very area where we have deployed military assets in the last few days, which we discussed last night in this House. It is in our geopolitical and strategic trading interests that Parliament debates our relationship with China. Given the potential for interventions in our trading and shipping through the Red Sea and through Suez, interruptions to our trading through the Taiwan Strait or other interruptions—because China can, without notice, change its national security profile and how it seeks to impact on a country such as the UK—we are uniquely vulnerable to another nation state’s decisions about its strategic position on exporting to the UK.

On the one hand, one might argue that the more that China being more of a part of the rules-based WTO mechanisms is in our interest—that is right, but it is a separate debate. Here, we are discussing how our Parliament will hold any Government to account for decisions that they may take on an assessment of whether it is in our strategic interests to support China acceding to the CPTPP. Asking for a report and for it to be debated in Parliament is the very least that could be asked for, and I hope that will not cause any big division across the House. We should all support this, and the Government should perhaps accept the need for a report and a debate in Parliament. That is what this amendment seeks to do.

[Lord Rooker (Lab)]

The noble Lord, Lord Alton, is to be commended for this amendment. I will briefly develop one point made by my noble friend Lady Kennedy, who referred to the work of Sheffield Hallam University on trade, which I have read in considerable detail and previously raised in this House. That work clearly shows that, while China is one of the world’s biggest growers of cotton, it is also the world’s greatest cotton launderer, hiding where its cotton products are grown by laundering them around the world. The work at Sheffield Hallam has shown this, and, as a result, the Americans stopped importing the cotton.

As I have said previously, the Government have taken no action whatever to check the source of the cotton, but it is possible to do so. A lot of the cotton in China is grown in the Uighur area—this is a slave labour issue. I say to noble Lords, and to ladies and gentlemen, that any cotton in the clothes they are wearing at the moment can be analysed to show where it was grown and whether this was in Xinjiang or in another part of China or Egypt or somewhere else. Paper-based monitoring systems are worthless simply because China is hell-bent on laundering the cotton in its products and hiding where it comes from. Therefore, although we talk about free trade, it is not free trade if you are laundering your cotton to hide where it has come from. The Government have repeatedly been asked to do something about the products they buy on behalf of the British public. Have they used any of the element-analysis processes organised by Oritain to check the source of their cotton? The answer is no.

They have never taken any steps whatever to source the cotton and see whether it was grown in Xinjiang or not. Is that because we do not care about the use of slave labour or the source of materials? Well, I think we should and the noble Lord, Lord Alton, has given the House a further opportunity for this issue to be raised.

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[Lord Purvis of Tweed (LD)]

My Lords, on a point of clarification, the Minister told us that it would be wrong for a country to comment on another country’s application and gave reasons for that to be the case, but the Government sought in our application support from other countries, and indeed welcomed Japan’s public comments that it would welcome UK accession. Why did we previously seek and welcome support from other countries for our application if the Government are now saying it would be dangerous if we made any comment about China’s potential application?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord, Lord Purvis, but it may surprise him to know that we are not yet fully acceded or party to CPTPP. As soon as we are, it is absolutely right that we make comment on other countries, but only after the process and we have joined. To include an amendment in the Bill now would be completely inappropriate, as I hope I have made clear. I think it would cause significant issues in this overall process.

I return to the point on which it is important to reassure the House. The House is looking for reassurance about whether any country can be sneaked under the wire to join CPTPP, and the clear answer is that it cannot. We have made clear commitments to clarify the process from the Dispatch Box to ensure that we know, as Members of this House and of the other place, that there will be a robust process around any new party joining CPTPP.

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

Lord Purvis of Tweed Excerpts

Committee stage
Thursday 14th December 2023 Grand Committee

The monitoring and enforcement actions that have been discussed in considering Amendments 15 and 16 are of course related to issues that the Committee will debate later in considering Amendments 26 and 33, on the effect of investor state dispute settlement provisions. I hope that I am not, in the words of the noble Baroness, Lady Hayter, about to go too much off piste. However, I want to apologise to the Committee for not being able to be here for that debate, and to say that it is important that we explore the potentially damaging effect on environmental policy-making of those provisions and understand whether the Government could be doing more to pursue side letters with CPTPP parties such as Canada, in order to obviate the risks that come with being bound by ISDS provisions. While I cannot be here to listen to what the Minister has to say on those issues, and apologise again for that, I will certainly read what he has to say with great interest.

[Lord Purvis of Tweed (LD)]

My Lords, this has been a significant debate and has had a number of themes. One is how we use this accession to benefit UK business. The Minister heard me say on the first day in Committee that I am a passionate advocate for the proper operationalising and implementation of trade agreements, to the benefit of UK business sectors. But of course, as my noble friend Lady Bakewell and the noble Baroness, Lady McIntosh of Pickering, said, there are lingering concerns that we need to monitor very closely.

My noble friend and the noble Baroness made the case for their amendments very well, as did the noble Baroness, Lady Willis, who comprehensively laid out hers. I too look forward to the Minister’s reply to the very strong case she made, to which I will listen very carefully. I suspect that she and I are both grateful to Hansard for putting the Ts, Ps and Cs in their correct places as we have debated this issue.

I have a number of amendments in this group. On Amendment 30, I am grateful to the noble Baroness, Lady Hayter, for her support. I had some notes to make the case for it but she made it better than I could, so I simply acknowledge that. Her fellow member of the committee, however, is slightly more quizzical with regard to my Amendment 32. I always listen extremely carefully to the noble Lord, especially when he agrees with me, but I do so even when he does not. To some extent, this amendment is a wee bit like a child of many of the cases that he has made, arguing strongly for Parliament to have a stronger say in the early stages of when we enter into trade agreements. He has made the case, with his great experience in the United States, that members of Congress were able to use the power that they had to allow the US trade negotiators to have a stronger hand when it came to many of these discussions. That is what I have called for in many respects in previous trade debates, and he has made that case very strongly.

If we are to do that, we need some form of mechanism, such as Amendment 32, to allow us to understand who is seeking to accede to the CPTPP, what implications there would be for the UK and what are the particular areas with regard to those countries that are important to the UK. If I have a concern about an accession to a trade area rather than entering into negotiations on a bilateral FTA, it is that we will have even less ability in Parliament to understand the consequences. This is no way to undermine the UK’s trading relations with Ecuador, Costa Rica or Uruguay, but it is perhaps even more important when it comes to China and Taiwan. To have transparency in parliamentary debates about the implications for and impact on the UK in advance of their accession is therefore even more important. I hope the noble Lord might be able to reconsider his position on that.

On the noble Lord’s point about the amendments relating to the commencement of the Bill rather than accession to the treaty, he made that point very well on the first day in Committee before he had to go into the Chamber. If he had had an opportunity to see Hansard, he would have seen my reply, which was that there are powers even greater than he and I—namely the Public Bill Office—which ask us to put forward amendments in scope of the Bill. I have tried as much as I can to go beyond scope but, unfortunately, I was not able to do so, which is why I have these probing amendments.

On Amendment 31, I hope the Minister will notice that I am asking for an impact assessment within two years of the passing of this Act, and I expect him probably to simply accept this, with great humility. Regarding an amendment on further accession, we will have an opportunity to debate that when we come to the next group, specifically with regard to the potential consequences for China.

Finally, I just make reference to Amendment 29, because I have repeatedly raised this matter in relation to trade negotiations when the UK comes to join FTAs, bilateral FTAs or, as now, a trade area, and the consequences for developing nations and our trading relationship with them. We now have the UK Global Tariff and the Developing Countries Trading Scheme, which maintain preferences for us trading with developing nations outside the European Union. I had the pleasure of welcoming Minister Huddleston when he launched that scheme in Parliament in a meeting that I co-chaired with Theo Clarke MP on the All-Party Parliamentary Group on Trade out of Poverty. I support this trading scheme and commend the officials who have put it together. My concern is whether, when we join new agreements, especially the CPTPP, there will be preference erosion for those developing nations. One of the concerns is that, with the CPTPP, there will be and, indeed, that it may well set a precedent.

I give just one example of why this is important for UK trade. Regarding the concessions that we have given, the tariff rate quota for Mexico and Peru could well become a precedent if there are new members. As the trade area grows, it has the potential to erode trade preferences even further. One of the strongest examples of such erosion is the UK’s import of bananas. We secure our bananas from African nations, as well as those that may well join the CPTPP. For the British consumer, it is very important to receive their bananas but, for the producing countries, it is even more important. In Ghana, a Commonwealth partner of the UK, exports of edible fruits and nuts accounted for nearly 5% of all exports in 2021. For Côte d’Ivoire and Cameroon, it was nearly 9% and over 1% respectively. These are rural developing nations, so we are talking about 80,000 direct jobs, affecting the livelihoods of and sustaining half a million people in very rural areas. These are sometimes vulnerable economies which rely very much on the UK as both a trading partner and a sustainability and development partner. Anything that could impact that gives me concern.

UK consumers enjoy high-quality, cheap fruit. So much cost has been stripped out of the supply chains that a consumer in the UK buying a banana from Ghana pays the equivalent of the 1987 price, according to the Office for National Statistics. Given that we have had 180% inflation since that time, the real price of what was then a 50p banana would now be £90 if we included inflation. No one on earth is suggesting that the British consumer should pay £90 for a banana but, if we are not paying £90 for a banana and we are still buying our fruit from developing nations at 1987 prices, it shows that the economic value of producers in those developing countries has been suppressed considerably. This question will not be answered by anything that we can say in this debate, but it highlights one of my concerns about entering into new trade agreements: we are not giving sufficient consideration to preference erosion. It makes little sense to enter into new preferential trading schemes if those preferences are eroded by our entering into new agreements that have a meaningful impact on them.

I would be grateful if the Minister could say what consultation we had with our developing nation trading partners as part of the accession to the CPTPP. What mechanisms are in place for us to ensure that the benefits accruing from the new trading preference scheme will be protected when we enter into new agreements? How are the Government carrying out assessments? If they are not doing so themselves, and the assessments are not published, some form of amendment will be necessary, however it is drafted, whatever the timeframe and however it is linked. If we have trade preference agreements, they must be protected, and we have to ensure that there is no further precedent. I look forward to the Minister’s reply.

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[Lord Purvis of Tweed (LD)]

The Minister has given quite an extensive reply, for which the Committee is grateful. At Second Reading, my noble friend Lord Fox raised preference erosion, giving specific examples of developing nations, but the Minister did not have time to respond to him. I met the Minister before Committee and said that I would raise it as an issue. I have tabled an amendment and given specific examples today. I am not doing that just as an academic exercise so that I can listen to my own voice. These are important issues regarding our relations with developing countries and I would appreciate a response.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for raising that point and I ask his forgiveness if I have failed to cover it. It is very important. I did look at his maths: the price of a banana, if it goes up 180%, goes to £1.70, not £90—I just point that out, if I may. Aside from that, it is very important to say that our developing nation commitments are not derogated by joining the CPTPP.

We are very aware of the importance of the prospect of preference erosion and it is quite right for the noble Lord to raise it. I am very comfortable writing to him in more detail about this, but we are very clear that our developing country trading programme is an important priority for this Government’s trade policy. We will ensure that any new trade agreements, including this one, are compatible with that policy agenda. I am very happy to write in more detail and have further discussions. If there is further detail where he believes that this is not the case, I again give my sincere apologies for that.

[Lord Purvis of Tweed (LD)]

I am grateful to the Minister for writing, and I look forward to it. I am sure that would agree that cumulative inflation of 180% since 1987 would mean that £1 then is £180 now.

[Lord Johnson of Lainston (Con)]

I will not get drawn into the debate on that, but I think that would be 1,800%, rather than 180%. However, the point is that the noble Lord is right to raise the matter of the estimated expected costs compared with the actual costs today, and the deflationary impact of global trade on some of our developing nation partners and the importance of ensuring that it can be mitigated in some way, regardless of the other trade deals that we are pursuing. I am grateful for his point.

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[Baroness Lawlor (Con)]

My Lords, I support the proposed amendment from the noble Lords, Lord Alton and Lord Leong. I take the point that it is sometimes a very good idea, as the noble Lord, Lord Kerr, said, for Governments not to reveal their hands. None the less, there is a lot to be said for having both Houses consider in Parliament the degree to which, without China having joined the CPTPP—as the noble Lord, Lord Kerr, said, it may never join it—it has already caused a global imbalance to supply chains, and the levels of dependency in other economies on Chinese production, right across a range of goods.

As far as I understand it, certain economic research, particularly in the US, suggests that we are far better off as states if we do not depend for more than 25% of our imports on any one country. If China were, for some reason or another, to be accepted as a member of the CPTPP, there would be a danger that the existing imbalance which we see already would grow, as would the powers to influence and destabilise the global economy and, indeed, the security of smaller countries on which it has its eye. For these reasons, I support the spirit behind the noble Lord’s amendment.

[Lord Purvis of Tweed (LD)]

My Lords, it is a pleasure to follow the noble Baroness, and I agree with what she said. I start by apologising to the Minister. My maths in my intervention on him were wrong. I admit that and want it on the record—that prevents him mentioning it in the letter he will write to me, which I look forward to.

I support the noble Lord’s amendment, and the context of what he said is very important. Together with the latter part of the contribution of the noble Lord, Lord Kerr, it means that we must have a wider public debate about UK-China trade in particular. I acknowledge that China’s accession is a very large “if”, and I will come back in a moment to the many reasons why, but that would have an even greater impact on UK trade, because China already has five bilateral FTAs with CPTPP members: Singapore, Australia, New Zealand, Chile and Peru. It is also part of the two plurilateral frameworks which the noble Lord mentioned. We are already, in acceding to the CPTPP, entering into trading relations through FTAs with China.

This is even more important because, in 2019, according to the University of Sussex UK Trade Policy Observatory—I shall source my figures on this now—approximately 20% of Chinese exports were already going to CPTPP members, of which 50% were in intermediate products. What does that mean? It means that it is linked with what we debated on the first day of Committee: that when it comes to rules of origin, many aspects of UK trade will be involved with goods from China. That is notwithstanding the enormous trade deficit that we have in imports in our trade with China already. The Office for National Statistics report stated that, in 2021, China was the UK’s largest import partner. That is not to the extent of 25%, but 13.3% of all goods to the UK are imported from China. What gives me concern is that we have a £40 billion trade deficit in goods with China. When we look at certain key sectors, this becomes a strategic issue, not just a trading issue or one of the importation of goods. Our trade deficit with China in goods is larger than our overall trade with Italy, Switzerland or Norway, so this is of great significance. When we consider that Germany has a trade surplus in goods with China, it is a valid issue to debate.

The increase in Chinese exports to CPTPP countries has grown very significantly, including in services, which on average has grown by 11% a year. When we have been debating UK trade, moving away from the single market into the fastest growing part of trade within Asia, we know that we have a combination: we are heavily dependent on imports from China, and growth in Asian trade has been as a result of their relationship with China too.

On that basis, if we look at the position of China, what does the UK do? We know that we are heavily reliant on it, that the Government say our future is in this area, and that those countries are heavily reliant on China. The growth trajectory is based on Chinese growth, so when we look at aggressive military exercises, human rights challenges and abuses, or increasing territorial disputes—including of course with Taiwan, another applicant country or customs area—this becomes geopolitical. We have also seen clear examples of Chinese economic coercion against other trading partners. It probably would lead a rational assessment to consider that, if it was a choice for the UK between Taiwan and China, it should be Taiwan. But how do you make such a decision when we are so intertwined with the Chinese economy, as I have highlighted?

We are debating the various chapters for the UK. On digital trade, which we debate quite a lot in this House, we discussed concerns around China complying with standards on digital trade. Chapter 17 is on state-owned enterprises. These areas were debated considerably during the procurement legislation. Chapter 18 is about intellectual property, which we have debated quite considerably. The noble Lord, Lord McNicol, raised chapter 19 on labour and chapter 26 on transparency and anti-corruption. All of these aspects may lead to the conclusion that the noble Lord, Lord Kerr, gave: that this is a hypothetical situation.

That may be correct, but nevertheless it has applied. We will be a member; we may form part of the commission to discuss this, and we may have a key role in those discussions about consensus for the application. Up until the point that China withdraws, I believe that our Parliament needs to have regular debates and we need to be informed. That is why I am sympathetic to this amendment.

[Lord Johnson of Lainston (Con)]

I thank noble Lords for their significant contributions to this important section of the debate. I will go through the key points one by one.

In joining CPTPP we are securing our place in a network of countries that is committed to free and rules-based trade, and which has the potential to be a global standards setter. The CPTPP acts as a gateway to the dynamic and fast-growing Indo-Pacific region, and expansion of this agreement’s membership will only bring further opportunities, in our view, for British businesses and consumers.

There are currently six economies with applications to join the CPTPP, including China, Taiwan, Ecuador, Costa Rica, Uruguay and Ukraine. As noble Lords will be aware, the CPTPP is a group of 11 parties and will become 12 when the UK accedes. It has been agreed within the group that applicant economies must meet three important criteria. They must meet the high standards of the agreement, have a demonstrated pattern of complying with their trade commitments, and command consensus of the CPTPP parties. It is very important that I clarify that for this discussion. These are strong criteria.

Our own accession was successful because we are demonstrably a high-standards economy with a strong track record, and we garnered the support of every party for our accession. This sets a strong precedent: the robust experience that the UK has been through has reinforced the high standards and proved the bar is not easy to meet.

As a new member of the CPTPP group, it is right that we work within the principles of the group to achieve a consensus decision, rather than giving our own individual narrative on each applicant, such as through the report proposed in this amendment. This is not a question about one particular economy. The UK is closely involved in discussions on this topic but will have a formal power to oppose an application only post-ratification, as I am sure the noble Lord, Lord Leong, will be aware. We joined first so that we would be on the inside judging other applications, not vice-versa. It is therefore crucial that the UK ratifies this agreement and becomes a party. This will ensure that the standards the UK has met and abides by are continually upheld under CPTPP, with every future applicant going through this same rigorous process.

I reassure the noble Lord and the noble Lord, Lord Purvis, who spoke so eloquently, that accession of new parties after the UK has joined will entail a change in rights and obligations of existing parties. Any new agreement requiring ratification by the UK would be subject to the terms of the Constitutional Reform and Governance Act 2010 as per the Government’s commitment surrounding the CRaG process.

I assure noble Lords that accessions will proceed only if applicants have met the rigorous criteria and have consensus of the CPTPP parties, of which the UK will be one only once we have acceded. We will continue to engage with the public and Parliament through the mechanisms I have just outlined, before any future negotiations. In this complex matter, I ask the noble Lord to withdraw this amendment.

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[Lord Davies of Brixton (Lab)]

My Lords, I speak in favour of Amendment 26 and my Amendment 33. As my noble friend has clearly explained, this is about investor-state dispute settlement mechanisms. This is a very important issue, so I make no apology for exploring it in further detail, even at this late hour for a Committee.

For the benefit of new readers of Hansard—I am aware that everyone here is by now more than aware of what we are talking about—the investment chapter of the CPTPP contains the ISDS mechanism. The provision allows companies to sue Governments over decisions that impact their corporate profits, even if those decisions are made in the public interest. That is the key point. In simple terms, ISDS allows firms to sue the Government for legislation that they have introduced for the general public good, where those decisions impact on company profits. This can have disastrous effects across the board of social and public policies, but particularly on policies on the environment and health and measures to combat climate change.

These concerns are widely shared and this is a big issue, which is why I wanted it to be discussed in a separate group. The noble Baroness, Lady Hayman, mentioned it, and she apologised for being unable to be here to support the arguments being made. ISDS has been used to challenge important environmental regulations under separate arrangements: water pollution controls in Germany, a ban on fracking in Canada and various regulations on mining in east Asia and South America.

I am a bit hesitant to mention the impact assessment because, effectively, the Minister suggested earlier that although I have read all 142 pages of it, I need not really have bothered. He did not seem to feel that what was in it should be taken seriously—but it does touch on this. There is one bullet point of 26 words, which covers the issue, and it says:

“A modern and transparent investor-state dispute settlement mechanism will ensure that UK investors can access an independent international tribunal should they not receive such treatment”.


Well, that is only half of what the mechanism achieves. The other half is foreign companies suing this Government for measures that they take. My view is that is the more important part, yet we have no assessment of its impact, which I would have thought is essential. The truth is there is a real proximate risk that ISDS would be used to challenge new regulations which are essential for fighting climate change.

There is also evidence that ISDS in recent trade agreements would be used to challenge health provision, labour rights and other important legislation. Here are some further examples. ISDS was used in Egypt to challenge an increase in the minimum wage. Philip Morris sued Australia for attempting to introduce plain-packaged cigarettes—albeit it lost, as was explained. However, it is the threat that is the real problem. Then Slovakia was sued for attempting to nationalise part of the health service.

I am not given to quoting the CBI—it is not my usual source—but it has expressed concerns. It stated in 2021 that there was,

“a risk of the UK becoming disproportionately targeted through ISDS”

and that

“there could also be environmental implications of the UK being exposed to the ISDS mechanism”.

That is the CBI expressing its concern. The UK did not include ISDS in its recent trade agreements with Australia, New Zealand and Japan, and the provisions were suspended in the rollover agreement with Canada. The Government could have sought explicit side-letters in CPTPP to be exempt but has chosen not to do this, which means that, if this treaty is passed, the UK will now, de facto, have ISDS agreements with Canada and Japan. This contract would effectively import these settlement mechanisms into the existing agreements, which the Minister has referred to.

In my view, the ISDS process is suspect in and of itself. Arbitrators appointed to reach a settlement are paid on a case-by-case basis and benefit from an increase in claims. Governments cannot do it the other way; they cannot use the ISDS system to sue investors, so arbitrators naturally have a bias towards companies or investors so that they encourage further investor claims and thereby benefit commercially.

There is a code of conduct for ISDS proceedings. It was established under the partnership to address legitimacy concerns that arise when a system allows adjudicators to act as an arbitrator in one case and legal counsel in another—so-called double-hatting. This provides some objectivity in the process, which other agreements lack.

However, if we look at the recent record, we find that the most utilised treaty for challenging climate action is the Energy Charter Treaty, under which many cases have been brought by western-based companies against Governments taking action to limit their expanded use of fossil fuels. So problematic has this flood of cases become that the largest European countries have now all signalled their exit from the treaty. The Government themselves have said that they are reviewing their Energy Charter Treaty membership and will

“carefully consider the views of stakeholders in business, civil society and Parliament”.

In this context, we are not really having a debate about the ISDS process in general—that is a big debate, and one we need to have—but there is a growing realisation that these clauses are an impediment to social policies and to climate action in particular. It seems perverse to sign us up to another ISDS clause in the partnership, exposing us to potential future lawsuits from companies with tens of billions of pounds invested in the UK.

I have two questions for the Minister. First, the impact assessment says that it is a “modern and transparent” mechanism, but what is modern and transparent about it? Secondly, should we not have an assessment of the likely impact of the mechanism where foreign commercial interests can require limits? In effect, they have a veto on our domestic policies. We are told that the whole point of leaving of the European Union was to take back control, as my noble friend mentioned, but these mechanisms reduce our control, taking it away from intergovernmental bodies and handing it over to people totally outside any sort of responsibility to the public.

[Lord Purvis of Tweed (LD)]

My Lords, I thank noble Lords for allowing us to raise very important issues relating to ISDS. We have previously debated these in considering trade Bills and particular FTAs, and I have a great deal of sympathy for the arguments that have been made. My party supports a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes. I have been studying the European Union’s recent proposals on moving towards a more global, multilateral element, and that is my party’s position.

As we have heard, these amendments are important because it is vital that the Government state their view. We knew that the noble Lord, Lord Grimstone, was a strong supporter of ISDS mechanisms because he said so during consideration of the Trade Bill, but, as has been mentioned, we then had FTAs that excluded them. There is now uncertainty regarding those who were excluded but who are now also members of the CPTPP.

Like other noble Lords, I have questions to ask the Minister. Does the UK support an appellate mechanism within the CPTPP? Will the UK, as an acceded member, seek to implement the mechanism through the CPTPP in our relationships with Canada and Japan? Without the side letter, there is uncertainty. Will a company or a member be able to choose to resolve disputes through the CPTPP process or the FTA process? I am not aware of how that would operate, so some clarity from the Government will be important.

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

Lord Purvis of Tweed Excerpts

Committee stage
Thursday 7th December 2023 Grand Committee

Moved by

[Lord Purvis of Tweed]

A1: Clause 2, page 1, line 16, at end insert—
“(1A) The Secretary of State must, within 12 months of the passing of this Act, by regulations made by statutory instrument require conformity assessment bodies to publish reports on the impact of the provisions on the treatment of conformity assessment bodies in Article 8.6 of the CPTPP on the accreditation of goods from CPTPP parties.”Member’s explanatory statement
This amendment would require that UK conformity assessment bodies conduct and publish a report on the impact of the provisions on the treatment of conformity assessment bodies in this Act on the accreditation of goods from CPTPP parties.

[Lord Purvis of Tweed (LD)]

My Lords, it is always a reassuring sight on trade Bills in Committee to have a reunion of many of our colleagues who have participated in debates on previous trade Bills. I apologise to the Minister and others that I missed Second Reading; I was out of the country at the time. However, on that visit I was engaged in many discussions about trade, especially access to the EU market. If the Minister and his officials have been able to see the question that I asked the Foreign Secretary on Tuesday, they will be aware of the issues I raised with regard to that visit. I also apologise to the Committee that I will have to leave prematurely to speak in the debate in the Chamber on the relationship between the UK and Latin America. Trade is a considerable part of that relationship, which I will refer to in the Chamber.

At Second Reading there was much debate about the overall view that there is benefit to the United Kingdom’s trade with regard to CPTPP accession. The extent of that, and how we will be able to then utilise some of the benefits that the Minister has said will accrue to UK business, is probably part of this detailed consideration now, going forward. Amendment A1, as well as the other amendments in my name and that of my noble friend Lord Foster, and some of the others, are probing amendments, to iron out some of the technical aspects of the implementation of our accession and to explore and to hear from the Minister how we would be able to see our businesses take advantage of the opportunities that the Government have said are now open to them.

The first element with regard to standards, assessment of standards and certification, and whether it comes to conformity assessment, is one of these areas that is almost technical in nature but fundamental with regard to our trading relationship. As the Government have said in their own papers, about £10 billion-worth of UK exports to CPTPP economies form some degree of conformity assessment and enter into that market. The fact that there will then be no discrimination for those conformity assessment bodies that would certify goods entering into their markets, as well as those markets’ exports to the UK—there will be equivalent treatment with regard to those—is a positive.

I want to explore just two areas where some element of concern has been raised and ask for further clarification. That primarily regards countries that will be exporting to the UK, which will then have to have their goods assessed for a certificate. We already know in context that the vast majority of that £10 billion—if not all of it—is traded under CE marks already. Only with Brunei and Malaysia will there be some form of difference. We know that, if there is expansion of exports to CPTPP countries, the likelihood is that UK exporters will continue to use CE marking. In fact, as one business said to me, “It is all well and good that the UKCA as well as the conformity assessment will be operating, but we export both to CPTPP countries and we want to have access to the EU market—so we will continue to use the CE markings anyway”. It is likely, as the Minister will know, that countries that operate in exporting to the UK will also take advantage of the agreement that we have made with the European Union to continue to use CE markings anyway.

The issue then will be how we interact with imports to the UK from countries that will not be self-certified and will not use CE markings. My understanding is that, broadly, that will involve medical equipment and machinery, which are important parts of UK trade. As we do not have mutual recognition agreements, a process will have to be carried out so that our conformity assessment bodies can be satisfied that the standards of the equivalent conformity assessment bodies meet our standards for certifying that goods may enter the UK market, especially if the goods constitute medical equipment bought by the NHS. This probing amendment simply asks for there to be a report of the relationship between the UK conformity assessment bodies and those in the CPTPP countries, so that we are operating on the same level of standards.

I found the information from the Welsh Government quite interesting. They raised a slight concern: if there are further trade agreements where we offer equivalence of other certifying bodies but outside a mutual recognition agreement, how will we know that those other conformity assessment bodies will operate to the same standards as ours? I hope the Minister can allay some of that concern.

Fundamentally, we on these Benches wish to see exports grow, and imports of a very high standard. One of the ironies of the CPTPP, as discussed in our previous debates, is that the modest level of growth that is forecast is because we already have well-developed trading relationships with the majority of the members. The combination of the fact that their economies have grown because of their trading relationship with China and that they operate under CE marks to export into the UK means that there is perhaps a limited area of growth. The probing amendment seeks to ensure that, if there are areas of growth, they are equal to the standard that we would want to see. I beg to move.

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

I am grateful to Members who took part in this short debate. I like the Minister, and his enthusiasm for the 0.08% bounty to our economy from this Government’s vision is infectious. But we want businesses to take the opportunities from this.

I have a couple of points that the Minister might want to write to us about. If he will forgive me, the question I neglected to ask in moving the amendment is a concern that still plays slightly on my mind. If the United Kingdom Accreditation Service is now approving those within CPTPP countries, will those accreditation bodies be sufficiently aware of the Windsor agreement and the internal market of the UK? As the Minister knows, there is not just the UK certification badge on goods; if it is to do with the Northern Ireland market, there is also the UKNI certification process. This is complicated—we have debated it long and hard—and it will be a task for our accreditation service to judge whether the bodies within CPTPP countries are sufficiently qualified to understand our market and entering goods into all parts of the UK market, not just GB.

As the noble Lord, Lord Lansley, rightly said, there is currently a workaround for this because of the CE markings. From my point of view, it would be eminently sensible if we just kept that going on in perpetuity. However, the noble Viscount, Lord Trenchard, and the noble Lord, Lord Frost, may have issues with that, because it would mean that we would have to maintain EU standards in perpetuity too—so there would perhaps be consequences to that. In the absence of mutual recognition agreements, we will probably have to keep an eye on this. I am aware that there are some MRAs within and between CPTPP countries, and whether we wish to take the next step forward with those countries is an interesting issue. I am certainly very open-minded about that, because it makes eminent sense, as the noble Lord, Lord Lansley, indicated.

Fundamentally, if we are to approve other bodies, it would be helpful to know, through a report, which bodies have been approved, which have not and why. If they are not able to certify goods properly within the categories that are not self-certifiable under the WTO, there will still be that lingering doubt that goods will be entering into the UK market without the proper process. If there is a reason why our accreditation bodies have not approved them, there is a reason why those goods should not necessarily enter into the UK market.

I hear what the Minister said. Can he give an indication about whether he will write to me on Northern Ireland? He is nodding from a sedentary position, but is he willing to intervene?

[Lord Johnson of Lainston (Con)]

I will do that and, on the other point, clarify where I think there may be a misunderstanding about the conformity assessment bodies and our current imports. Do not forget that we already import a great deal from CPTPP countries without this arrangement in place; this just facilitates the effectiveness of the CABs internationally and vice versa. I hope we can clarify that—I can write to Members to do so.

[Lord Purvis of Tweed (LD)]

I am grateful for that—as we know, there are currently imports under both the WTO approach and the CE markings, so, if this is moving away from that, a little understanding is needed. On Northern Ireland in particular, I am grateful that the Minister said he would write. At the moment, I beg leave to withdraw.

Amendment A1 withdrawn.

--- Later in debate ---

I know this is a probing amendment, but when I tabled it I thought I had better go and find out what it is all about, and I did. The conclusion I have reached is that, with respect, the Government ought to accept the amendment—maybe not at this stage, but certainly on Report. I beg to move.

[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.

--- Later in debate ---

Moved by

[Lord Purvis of Tweed]

8A: Clause 4, page 5, line 4, at end insert—
“(13) The Secretary of State must, within 12 months of the passing of this Act, lay a report before Parliament on—(a) protections for UK geographical indicators in territories of each CPTPP party, and(b) accountability of the self-certification on rules of origin.”Member's explanatory statement
This probing amendment would require the Secretary of State to lay a report before parliament on protections for UK geographical indicators and accountability surrounding the self-certification of the rules of origin in each CPTPP country.

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

My Lords, Amendment 8A builds on Amendment 8 to some extent because it also relates to geographical indications, and if there is to be further information from the Government with regard to the interaction with trademarks, I look forward to seeing it. It is linked. As someone who lives in and represented a consistency in Scotland, I know that there are particular aspects with regard to the Scottish and Welsh Governments and geographical indications in those areas. Indeed, it could well be that there are trademarks for certain products in those areas. If we are now in a situation where there is to be wider use of other CPTPP countries’ trademarks and geographical indications that are not to be policed under this treaty, the points that the noble Lord, Lord Lansley, raised are valid. I listened carefully to what the Minister said, but they are valid. I cannot speak on behalf of the Scottish Government or the Welsh Government, nor would I wish to, but the issues that they have raised are important.

Mine is another probing amendment and, indeed, another reporting amendment because it is seeking reports on how businesses are operating in what is potentially a more complex environment in addition to better market opportunities. Ultimately, where the treaty is going to be a success or failure is in whether our businesses understand what opportunities are available to them or whether they decide that there are more complexities in utilising some of the agreement than there will be economic benefits for them. For very small businesses that may be valid, given, as we know, that it is not the tariff aspect of this agreement that is important but the non-tariff aspects. Regular reporting on the protection of UK GIs in this market will therefore be very important. As I mentioned earlier, when it comes to GIs there are no more protections under this agreement, but the interaction with how we will be able to export very important UK GI goods will be vital.

The Minister will be well aware that very many businesses manufacturing products that benefit from an EU-protected UK GI are small businesses. Melton Mowbray is one example, as was mentioned, but there is a whole series. They are small businesses—some are micro-businesses—and therefore the complexities involved will require government help. Guidance and support will be vital for them. We know, because we debated it at length on the Australia agreement, that the protection of UK GIs in Australia, as it will be in many areas, is dependent on the European Union policing them, because that is a consequence of the UK agreement with the European Union. Our ability to police the protection of our GIs now resides in Brussels. That may or may not be desirable, depending on your particular persuasion, but it is a fact. The relationship and interaction with the European Union on this will therefore also be very important. GI protection for UK accession to the CPTPP is reliant on the European Union. I would be grateful if the Minister could say what discussions he has had with his counterpart, the European Trade Commissioner, about how the EU is minded about doing us the wee favour of protecting our goods in the CPTPP agreement. Is there a written understanding when it comes to UK accession to CPTPP that the Commission will police our goods for us because that is the situation in Australia?

Given that the vast majority of the CPTPP countries have trade agreements with the European Union, it will police both: it will police its champagne and our pork pies. I wonder which it will give preference to? Of course, they match, and they should have equal status for protections, but I would be grateful to hear what response the Minister has had to his pleas that the European Union will protect us.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I absolutely make myself available to have discussions outside this Committee on all points. I refer the noble Lord, Lord Alton, to my original statement that collaboration around this is very high.

I will try to make a philosophical point which I think is very important: this is a free trade agreement. It is concerned principally with tariffs, smooth movement of trade and other principles. It is very important to separate that from the important standards that we hold ourselves to in this country. It is right that we have a number of very important pieces of legislation that drive standards in supply chains. Any of us who have been involved in business know that we have to ascertain our supply chains. In other areas, particularly in relation to the environment, I believe that supply chains are covered very well by our legal processes in terms of child slavery and other abhorrent activities. That is well understood and the supply chain obligations are very clearly understood. In the environment, it is still more nuanced. It will always be a complex area, because other geographies clearly have different environmental advantages and disadvantages compared with us. We are still working on that, but it is for a separate track of legislation. I do not think that it is right to confuse the principles of the legislation around free trade agreements with legislation around our own supply chain obligations.

When given the decision, should one be in a free trade area, able to bring to bear one’s own values to make necessary changes, or not be, because you do not believe that the participant parties are aligned with your values? I would prefer always to pick the former.

Although I would not necessarily suggest that there was a significant gulf between us, Australia and New Zealand when we negotiated the Australia and New Zealand FTAs, there is absolutely no doubt in my mind that the engagement with the UK on environmental and animal welfare issues resulted in significant changes in the Australian and New Zealand domestic animal welfare and environment policies. I have no specific evidence of that, but I know full well that there were strong levels of conversation around that and, at the same time, Australia and New Zealand made significant changes in our direction in both areas. Either that was a great coincidence or it was partially supported by the fact that we were collaborating with them more effectively. This is what the CPTPP will allow us to do.

I refer back to the TAC report, which made clear our own standards for pesticides, which were raised by the noble Lord, Lord McNicol. That does not change: nothing changes in our standards the day after CPTPP comes into force—that is for our own sovereignty to control.

I ask that this amendment is withdrawn, but clearly I am here to discuss in detail how we can reassure noble Lords that the principles around the need to report on the effectiveness and concomitant effects of the FTA are properly established, as well as other key points around derogation and key values issues, which should be properly controlled and contained.

[Lord Purvis of Tweed (LD)]

I am grateful for the Minister’s helpful and interesting reply. My understanding is that Ministers are always advised to read Hansard: that is when they find out, the next day, what they should have said at the Dispatch Box and what officials have made sure is in print. The noble Lord, Lord McNicol, is absolutely right: nothing in the Companion required noble Lords to say that they met the President of Korea, but I guess it sounds good.

I thank all noble Lords who took part. At the start of his contribution, the Minister said that he did not see the value of the statutory reporting in many respects. I noted that he subsequently quoted from a statutory report and said that there was great value in it. Given that the TAC was the result of amendments that Parliament asked of the Government, I will take the second part of what he said as the basis of the ministerial response—there is great value in that statutory report. But, as my noble friend Lord Foster said at Second Reading at col. 700, it would have been helpful to have had that report in advance of the start of the Second Reading. Nevertheless, we will study that report now that it has been released.

The noble Viscount, Lord Trenchard, was right to make reference to the growing economies within this area. However, if we had the data on the growth of the CPTPP economies and stripped out their reliance on the growth of the Chinese economy, I wonder what those growth figures would look like vis-à-vis those in Europe. I suspect that they would be rather similar. It is hard to disaggregate the growth of the Asia-Pacific economy from that of the Chinese economy. I note that UK imports from China, for example, have grown to over £40 billion, now that we have a trade deficit in goods with China. The impact of China’s growth is disproportionate with regard to them all.

[Viscount Trenchard (Con)]

China is not a member of the CPTPP, so I absolutely do not understand the relevance of what the noble Lord said. My point was that, for the CPTPP 11—soon to be 12—the economic growth rate is twice that of the European Union.

[Lord Purvis of Tweed (LD)]

I am fully aware that China is not a member—I do not think there is any doubt about that—but surely the noble Viscount is aware that the growth levels of the Vietnam economy have been entirely, or at least very largely, dependent on the growth of the Chinese economy. Given that New Zealand has had a free trade agreement with China for more than 20 years, the growth of the Chinese economy has been a major, if not the predominant, factor in the growth of the Asia-Pacific economy, which—it is regularly cited—is the fastest-growing economy and one we need to be part of. It is the fastest growing because it has been dependent on the growth of the Chinese economy—but that is an overall debate.

On the CPTPP members, the noble Lord, Lord Lansley, is absolutely right: with some of them, such as Australia, we are still awaiting the police of the GIs—the European Union, for us—to make an agreement with it. We are still in that situation. My noble friend Lord Foster raised that where businesses have an opportunity to choose between two systems, for some businesses that is a burden because of the complexities associated with that and therefore clarity on advice about the preferential way of utilising this is important. The Minister responded very fairly.

I agree with the thrust of what the noble Lord, Lord Davies, said. I know that he will be in the Chamber for the Rwanda Statement, but in response to the point made by the noble Lord, Lord Kerr, with regard to my drafting, there are even greater powers than the Minister or others in this Committee. They are the clerks in the Public Bill Office who tell us what is or is not in scope of the Bill, so my drafting was in order to satisfy the greatest authority, the Public Bill Office, in order to put down an amendment so we could discuss it. However, I am very happy to explore further options. This issue, connected with those raised by the noble Lord, Lord Alton, that we will discuss in future, is significant.

[Lord Alton of Liverpool (CB)]

I am very grateful to the noble Lord, Lord Purvis. Given what the Minister said a few moments ago about Malaysia, I draw his attention to a report in today’s Daily Telegraph about Shimano, which I think is the biggest bicycle parts company in the world, which operates out of Japan. It is selling through a supplier in Malaysia products that have been made by slave labour in Nepal. That is a good illustration of the kind of problems that we will run into. Although that is not necessarily part of the treaty, it is part of our obligations under British law to ensure that such things do not enter our supply chain.

[Lord Purvis of Tweed (LD)]

I am grateful to my friend the noble Lord, Lord Alton, because he and I often think alike in many of these areas. He slightly pre-empted me because I was specifically mentioning Malaysia to close and to stress why it is important. With the greatest of respect to the Minister, I think it is valid to know on the record what the interest in Malaysia is since we will be debating it going forward. In 2021, in the Chamber I raised the fact that the UK had a £316 million contract with a Malaysian firm, Supermax, to supply PPE gloves through NHS Supply Chain. That company’s exports to the United States were impounded by the United States because of contraventions of ILO standards and slave labour concerns. This has still not been resolved. I raised that, and I was grateful to the Minister’s predecessor, the noble Lord, Lord Grimstone, who initiated a review within the department. As I understand it, this is still being litigated. I do not expect the Minister to have an answer today, but I would be grateful if he would write to me because this is pertinent to the next stage in Committee with regard to multi-million-pound contracts through supply chains. I know that NHS Supply Chain is a distinct part of the NHS. With regard to this Malaysian firm, the United States activated powers which we did not. Now, with regard to procurement, as the noble Lord, Lord Lansley, indicated, supply chains and the standards that we seek, there are genuine, valid concerns. I remind the Committee that the contract was worth £316 million. The United States had the equivalent impounded.

I know that we will come back to some of these general issues. I am grateful to noble Lords who have taken part and grateful to the Minister, who as always is open and accessible to discuss these aspects. I beg leave to withdraw the amendment.

Amendment 8A withdrawn.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Lord Purvis of Tweed Excerpts

Thursday 20th July 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

Noble Lords, it is a momentous occasion to be able to talk in this House about the signing of the CPTPP. This is a tongue twister, but we are all going to have to get our mouths around it because we are going to hear a lot more about this in the future. This is a massive region of 11 countries in the Indo-Pacific, which account, together with the UK, for 15% of world trade GDP.

We know that this trade deal originally had the US in it, and Donald Trump took the US out. That created a gap. For those of us who play the game of rugby football, you always go for the gap. The UK has taken that gap and got into this deal, which, to come to the specifics of the question, will in no way impact on our food standards and regulatory standards.

On the matter of China, China is not a member of this group. China has expressed some interest, but there are other interested countries such as Costa Rica, Ecuador, Uruguay, the Philippines and Korea that are in line before China. So, as far as we are concerned, at the moment we are not commenting on China’s accession. China has expressed an interest but, on the exact question, there will be no reduction of food standards and general regulation through this deal.

[Lord Purvis of Tweed (LD)]

My Lords, I very warmly welcome the 0.08% estimated growth over 15 years of this momentous agreement. But, with regard to China, it is more than simply expressing an interest; it is seeking to commence the accession process. If that happens, we will be bound to share data with China under part of the CPTPP common data provisions. That will mean that we will no longer have data adequacy with the European Union. We currently have a trade deficit in goods with China of £43 billion. Would it not make more sense to have eased trade with Europe rather than more trade deficit with China?

[Lord Offord of Garvel (Con)]

Some 45% of our trade in the world is with the EU. In fact, if you take Europe as now being 34 countries—if you take the likes of Norway, Switzerland, Israel et cetera—it is pushing 50% of our trade, whereas China is £100 billion, which is more like 10%. So we are very clear that our primary market is with Europe and the first deal we did on Brexit was a free trade agreement with Europe. So we have free trade with Europe, as we stand, and that will continue to be our dominant market. This is the bonus that we get from going to international markets that we could not get access to before. If we were inside the EU, we could not have signed this deal, just as we could not have signed a deal with India. When you have 28 people wanting 28 different things, it is difficult to negotiate, is it not? Here we have a deal with the CPTPP which we would not have access to otherwise and I think we should celebrate.

As to the number on GDP, we are talking about a £2 billion impact on trade, which is a big, big number. It will go all around the UK, not just to London and the south-east. I can give you a breakdown of the numbers in every region, if the noble Lord needs it. The fact is that it will be a dynamic deal. This is going to be the fastest-growing consumer sector in the world. It is going to have a big increase in GDP. As the Secretary of State said at the press conference, it is up to us now. It is up to the UK now to maximise the benefits of this deal and I am very convinced that we will get great trading opportunities out of it.

CPTPP: Conclusion of Negotiations

Lord Purvis of Tweed Excerpts

Wednesday 19th April 2023 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, the Government’s record on trade is quite dreadful. UK exports are projected to fall by 6.6% this year, which is over £51 billion lost to the UK economy according to the OBR. The failure to deliver the India trade deal or the US trade deal promised by the end of last year is a significant issue, so it is important to scrutinise what exactly Ministers have agreed to in these talks. The Government have a history of lauding trade deals one minute and then criticising them the next.

As we all know, CPTPP is made up of 11 countries—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—but we also know that other countries, including China, have applied to join or expressed an interest in doing so. We are all aware of the developing situation in relation to Taiwan. It is inconceivable that there would not be economic consequences should tensions continue to escalate in the way some fear they might. Can the Minister let the House know, as far as he is able today, whether our involvement with CPTPP might affect the UK’s response? What is the UK’s position on the application of China to be part of CPTPP?

The UK will be the first new member since the bloc was established in 2018, and the first European member. The Government say that CPTPP membership brings a range of benefits, including lowering trade barriers to a dynamic region. Accession also forms part of the Government’s Indo-Pacific tilt set out in the integrated review. However, the UK already has bilateral agreements with nine of the 11 CPTPP members.

Over the year to September 2022, the UK exported £60.6 billion of goods and services to the CPTPP countries, which is 7.8% of the UK total, and imported £50.2 billion, or 5.9%, so the economic benefits appear at this stage to be relatively small. In fact, the Government’s own assessment tells us that the long-run increase in GDP will be 0.08%. Can the Minister confirm that the figure of 0.08% is correct?

As part of the Spring Budget, the OBR forecast that, in 2023, UK exports are set to fall by 6.6%. That is a hit of over £51 billion to the UK economy. Can the Minister explain why this has happened? The Prime Minister wants us all to be better at maths, so can the Minister lead by example and tell us what proportion of that loss he thinks this deal is going to replace?

Other countries joining CPTPP have negotiated safeguards and put in place support for their domestic producers. For example, New Zealand and Australia have put side letters in place to opt out of the dispute mechanism. Is the UK going to do this and if not, why not?

There needs to be as close to a level playing field as possible, especially on issues such as workers’ rights but also environmental protections, safety and animal welfare. How can Ministers assure us that the highest possible standards are agreed and implemented, so that UK workers are operating on a fair playing field and workers internationally do not become exploited? On the environment, have conditions been put in place to address concerns around the import of palm oil, which has been linked to deforestation?

What consultation has been undertaken with the devolved Governments to assess their views on negotiating outcomes and how will they be involved in the ratification process? Importantly, what detailed assurances can the Government provide that the CPTPP will not undermine the Windsor Framework, given the closeness of standards regimes and the green lane system?

What safeguards have been secured for UK farmers and what support will the Government offer to our agricultural sector on exports to CPTPP countries, particularly given the strong feeling there is that Ministers sold out our farmers to get the Australia deal over the line? The RSPCA has made it clear that the CPTPP has no explicit language on animal welfare, so what safeguards have the Government put in place to ensure that animal welfare is maintained for products imported to the UK?

Can the Minister also update the House on the progress of negotiations with India and the United States? Is it correct that negotiations with those countries will not even start until 2025?

The reason I have asked a lot of questions—I accept that—is that the problem here is detail. It is very important but very thin on the ground at the moment, and I am afraid that the Government do not have the best track record in supporting UK producers on those issues. There absolutely is an opportunity here, but there is risk too. We do not want to find ourselves again in a position where the Government make an agreement without fully understanding the consequences.

[Lord Purvis of Tweed (LD)]

My Lords, I thank the Minister for being approachable and proactive in communicating. I also thank his office for its openness and willingness to engage. I am sure that will continue, so if he could indicate what the timeframe will be with regard to the legal text being ready, and when we expect the treaty ratification process to commence, that would be enormously helpful.

These Benches believe passionately in free, fair, open and sustainable trade, so we welcome any reductions in tariffs for our exporters and moves towards reducing non-tariff barriers in new markets. As the International Agreements Committee and others have remarked, this will be the first agreement the UK enters into in which we will knowingly increase net emissions. What is the update from the Government with regard to the climate component of this accession? The Government do not provide much clear information with regard to emissions.

As the noble Baroness said, the UK already has trade agreements in place with most CPTPP members. This agreement absorbs the new ones that the UK has signed with Japan, Australia and New Zealand. Are there carve- outs in this agreement that we will be able to understand clearly when we receive the text?

With regard to the omissions in the Australia and New Zealand agreements on protecting geographical indicated foods, for those agreements, UK GI foods—some of the most cherished brands and produce in this country—will be protected only if Australia and New Zealand sign an EU trade agreement so we can protect them through the TCA. What is the protection for UK geographical indicated produce?

The Trade Secretary was getting into a bit of a tangle over the issue of modelling and the figures on Monday, so it is worth reminding the House that the Government’s scoping paper stated that the net benefit to the UK over 15 years of accession would be a mere £120 million per year to the UK economy. The trade writer for the FT said that, in decibel terms, this was

“a cat sneezing three rooms away”.

The Trade Secretary then asked us not to use the Government’s own paper regarding the 0.08% potential benefit. So I suspect we will have to await a full impact assessment. When can we expect to see that?

The Trade Secretary said that the CPTPP accession was “the future of … trade”. She correctly highlighted that this was the “fastest-growing” trade area but did not say that it was because of those countries’ trade with China. She also did not say that the pace of EU trade with those countries is now forecast to outpace what the Government’s modelling has said that the UK will benefit from in accession. The Trade Secretary said that this was the future of trade and that the people had voted for this, not the past—in some way indicating that there was a choice to be made; we trade either with Asia or with Europe. That is obviously nonsense.

The Government’s approach paper was pretty clear. It said that if we had maintained EU membership and the existing trajectory, UK trade with CPTPP members was already set to increase by 65% by 2030, or £37 billion. This accession is only adding 0.08%. I would be grateful if the Minister could say why it is opening up so little in additional markets.

The accession was also spun as a tilt away from China. However, we know that most of the countries within that agreement are also part of an agreement with China in the Regional Comprehensive Economic Partnership, which represents 30% of global GDP. Negotiations are in the final stages between China, Japan and South Korea for an FTA. What is the Government’s position on whether they believe that China should accede to CPTPP?

Finally, there is an omission from all the Government’s data. In the scoping paper and the Statement, there is no mention of trade diversion. There has been no consultation with developing countries on what the likely impact of market access will be. There is one line on page 52 of the Government’s scoping paper that says:

“While the impact of the UK’s accession to CPTPP on GDP in developing countries is likely to be negligible, developing countries with a high share of trade with the UK and CPTPP member countries are most likely to be impacted”.


We already know that some exporters from Africa are complaining that they were not consulted and that their produce is going to be harmed by this accession, so perhaps the Government could provide information on trade diversion.

As with the India agreement, I have a considerable fear that some, if not most, of the benefits that we are likely to see will be trade diversion from developing countries with which we are seeking to encourage trade. I hope that the Minister can provide detailed information with regard to those questions.

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

I thank the noble Lord, Lord Purvis, and the noble Baroness, Lady Chapman, for their questions and comments. I am only sad that I have to inject an element of enthusiasm into this Chamber for what is one of the greatest trade deals this country has struck in many decades, probably in my short lifetime. We have joined a £9 trillion group and there is no common army, there is no flag, there is no currency; there is only a common group of nations, liberal-minded in their economic outlook, which want to work together for mutual recognition, not for harmonisation. I will quote, if I may, William Seward—Abraham Lincoln’s Secretary of State, if noble Lords are not sure who he was—who said that

“the Pacific Ocean, its shores, its islands, and the vast regions beyond, will become the chief theatre of events in the World’s great Hereafter”.

I am extremely proud of the work that the Secretary of State and our department have done. I thank her, our chief negotiator Crawford Falconer and Graham Zebedee for the incredible number of hours they put in, and the previous Secretaries of State, who embarked upon this post-Brexit vision of Britain, to turn what could be called “Ocean’s 11” into “Ocean’s 12” with our accession, I hope, over the coming year.

I also thank the businesses that have participated, which will see the benefits of being able to export their goods more easily to these key countries, where the rules of origin benefits will be significant in terms of managing supply chains; where business mobility will be written into law; and where there will be protections for our industries and the agricultural community in this country, which will allow them access to markets that previously they were unable to access. These now include our free trade opportunities with Malaysia, where we did not have a comprehensive trade deal. We have the opportunity over the coming year or so as accession takes place to have a full trade deal with this nation that has a GDP of just under $400 billion. Vietnam, one of the countries of the CPTPP, is forecast to grow faster than any other major country on earth, I read today, between now and 2050. I was grateful to the noble Lord, Lord Purvis, for his statistical analysis.

However, this is not just a trade deal of statistics; it is about our focus on the growing economies of the Indo-Pacific region. It is right that this nation, in trying to ensure that we have close and good relationships with the European Union in our tariff-free and quota-free access to that valuable and essential continent of our neighbours, is also exposed to the future growth economies, the populations and the services that we can sell to them over the coming decades. So I congratulate the businesses that participated in this process to drive this forward, and our department that achieved it.

Finally, I thank the countries which supported us. When my Secretary of State gave her Statement to the other place a few days ago, she was watched and admired by the ambassadors, I believe, of Vietnam and Japan—just two of the countries which were so important in propelling us into this important trade group, which will stand as a beacon for liberalisation, free trade and economic growth for decades to come. I am surprised that everyone I have spoken to has congratulated me—not that I did anything, by the way, to accede us to CPTPP apart from providing moral enthusiasm and my work generally as an atom of the department—on Britain being able to join the accession process for CPTPP.

I went round Asia last week—I went to Japan, Australia and Singapore—and we were cheered and had standing ovations solely for the fact that we had recently acceded to the process of joining CPTPP. So I am amazed and saddened that we do not have more delight at this one act. Yes, there are important areas for inquiry and I hope that noble Lords have seen in my work over the Australia and New Zealand trade Bill the seriousness with which I have engaged personally with Members on all sides of the House in making sure that we do scrutinise these agreements. If we do not all get behind them, they will not have the effect of galvanising our exporters to action and making the most of the opportunities presented by these treaties.

I am extremely keen to engage where I can, at every opportunity and with all Members of this House, as we progress towards signature and accession to CPTPP. But I would like a little more enthusiasm and celebration, if possible, for something that, frankly, all Peers have been calling for and we are now starting to deliver—it will genuinely change lives.

I am happy to go through some of the core points raised by the noble Baroness, Lady Chapman, and the noble Lord, Lord Purvis. I am sure they will understand that I will have to come back to them on some of their questions—I think they would want me to be specific and accurate—but they certainly set the tone with some of their points. The important point is that, in this free trade agreement—rather than the customs union that was the old European Union—we do not abrogate any of our standards for imports: standards on pesticides and food remain exactly the same. We control our standards, and it is important for everyone in this House and the country to hear that clearly. Nothing has changed in what we allow to be sold in our shops; that is the whole point of a trade deal, rather than a customs union.

On many occasions I have been asked about countries acceding to the CPTPP in the future, but I will not be drawn on that for the simple reason that we have not even joined yet, so it would be totally inappropriate for me to comment on that. I echo the Secretary of State’s statement on that point earlier this week. But this is a liberal, free markets trading group, and we hope it will act as a beacon for all countries around the world to reform their markets and economies to become liberal, free and open to world trade. I hope that all nations will look at it as a beacon of hope.

Questions about our treaty possibilities with the United States were raised. Again, this came up a few days ago in the other place. We are keen to do a trade deal with the United States—and with most countries in the world—because it is a huge part of the global economy, although it is not in a position to negotiate with us at the moment. So what have we done? That is a rhetorical question—we have signed specific memorandums of understanding with states, and this will enable us to have better links and closer co-operation, particularly for the all-important and growing services, and professional qualification recognition aspects of those services. I believe that my honourable friend, Minister Huddleston, was in Oklahoma this week, signing such an agreement—forgive me if I have got the state wrong, but he is certainly in the US at the moment, signing further MoUs.

It is important to turn to the comments by the noble Lord, Lord Purvis. He likened the economic benefit of this deal to a sneezing cat three rooms away—

[Lord Purvis of Tweed (LD)]

The FT did.