Trade Negotiations

Debate between Lord Purvis of Tweed and Lord Sharpe of Epsom

Tuesday 13th May 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, we on these Benches welcome free trade. It is a cornerstone of a prosperous and competitive economy. It benefits everyone, from workers to businesses and from consumers to industry sectors. Trade allows us to access a broader market, to promote innovation and to create jobs. When done right, it provides opportunities for the UK to grow and to succeed on the global stage. This deal is a reminder of one of the key benefits of Brexit. No longer bound by the limitations of collective EU decision-making, we now have the freedom to forge our own trade agreements, tailored to the strengths of our economy and aligned with our national interest. That sovereignty over trade policy is a fundamental asset and one that, used wisely, can bring real and lasting prosperity. I confess that I am at a loss to understand why the Government have repeatedly said that this is a matter of opinion and not fact.

However, while we acknowledge the importance of trade agreements and the positive elements of this UK-US deal, we must approach it with a critical eye and an understanding of the broader context. Trade deals are not simply about negotiating numbers or quotas; they must also be about fairness, sustainability and long-term growth. In this case, I am concerned that the deal, while a step in the right direction, does not go far enough in delivering the kind of comprehensive, ambitious agreement we need.

The agreement announced with the United States contains some very welcome steps—for example, tariff reductions on cars, access for UK beef producers, and the removal of punitive levies on British steel and aluminium, to name but a few. The Government are right to highlight the thousands of jobs that will benefit from these provisions. However, take, for example, the automotive sector: there are more questions that need answers. Reducing tariffs from 27.5% to 10% is undoubtedly welcome, but this deal covers only a relatively small quota of 100,000 cars, a figure that represents just a fraction of total UK car exports. What happens when that quota is reached? Are we going to see tariffs increase again? Where are the long-term assurances for our manufacturers and workers? A more strategic and forward-thinking approach is needed.

This cannot be the end of the road. If we are to make the most of our new trading freedoms, we must push for a comprehensive free trade agreement, one that goes beyond quotas and partial tariff relief and that delivers true long-term certainty for British businesses, across every sector. The 10% reciprocal tariff on a range of UK exports remains in place, affecting sectors that are critical to our industrial base and our export strength. The Government must be clear. When will negotiations begin to eliminate these tariffs, or have they already started? We urge Ministers to move beyond vague commitments that work will continue and to set out a clear timetable and a strategy for achieving a more ambitious deal.

There is particular disappointment in the pharmaceutical sector, for example, where the UK has not yet secured a carve-out from remaining tariffs. This is an industry where Britain leads the world. We are talking about jobs, innovation and the secure delivery of life-saving medicines. We must see more urgency from the Government on this front. What of the creative industries, specifically film and television? The failure to secure any protection for this sector is alarming. The threat of 100% levies on UK-made films exported to the US remains a serious concern. This is a world-leading industry with the potential to deliver billions to our economy and to showcase British culture on the global stage. It deserves far greater attention from the Government.

We on these Benches are not here to oppose free trade; we champion it. However, we want to see trade deals that are ambitious, balanced and comprehensive, and that reflect the best of Britain and support all our key sectors, from farmers to filmmakers and from scientists to steelworkers.

The Minister was somewhat vague in answer to the question from the noble Lord, Lord Purvis of Tweed, yesterday on parliamentary scrutiny of the deal. In an effort to save her from writing many letters, perhaps she can update us on this now.

This deal is a good start, and that deserves to be recognised, but the Government must now finish the job. We call for greater transparency, clear timelines and firm commitments to extend this agreement into a full and fair free trade deal that truly reflects the potential of post-Brexit Britain.

[Lord Purvis of Tweed (LD)]

My Lords, I look forward to the Minister answering my question from yesterday, as referenced by the noble Lord.

I wish to refer exclusively to the India agreement. We have debated in this House on a number of occasions UK-India trade, and on those occasions I have rehearsed the long-standing position on these Benches that free trade is part of our party’s DNA as a political movement. We believe fundamentally that free trade benefits consumers and businesses alike, and, combined with the means by which it is fair trade and inclusive, that it can be beneficial for wider policy ambitions on climate, sustainability, social justice and the reduction of poverty. These are the parameters by which we will judge any agreement that this Government sign with other Governments, as they were for the previous Administration, and specifically on the agreement with India.

We start from the position that we wish this agreement and the Government well in ensuring that it is the basis upon which India trade can develop. This is a complex time in international trade, as it is buffeted by policies and chaotic uncertainty from the United States. The fact that India has now signed an agreement with the UK, and that on Monday the second round of negotiations on an FTA between India and the European Union began, shows those of us who believe in widening free trade around the world that we need to redouble our efforts to reinforce the global trading environment and the rules upon which it is based.

The India agreement has been launched with a high degree of boosterism, last seen under the Boris Johnson Administration, and of course we would be a world leader in trade if press release assertion was a commodity. The Government say that we have a series of anticipated benefits as a result of this agreement. No doubt the Minister will rehearse some of those in her reply. However, looking carefully at the Government’s technical papers and not the press release, we can see that the cash figures of potential GDP growth, which she may quote in a moment, are purely a mathematical extrapolation of potential global trade in 2040, which the Government have then converted into pounds sterling, taking a starting point of 2023. This does not take into account the Trump Administration’s disruption of global trade. Therefore, all the cash figures that are presented are purely illustrative.

The technical papers also helpfully suggest that the Government made a policy decision to round up to 0.1% for the growth figures. Rounding up to 0.1% highlights that there will probably be modest results. Furthermore, very deep in the Government’s papers is that, to get their very ambitious figures on UK trade growth, the Government have taken the starting point as the baseline of 2019, which does not take into consideration the pandemic, the Ukraine war and the Trump supply chain issues. So they start at a high point in order to get higher. We do not necessarily oppose the agreement in principle, but we look at it from perhaps a more realistic and sober perspective. The issue then becomes how we will support our businesses to take advantage of the new market access arrangements.

According to the United Nations data figures, India has seen its exports rise over the last 10 years by 13.2%. This is an export market which the UK consumer wishes to benefit from. UK exports over the same time have expanded by only 5.1%. This is marginal growth over a decade, so it is right that we want to be part of a growing market. However, the European Union export growth has expanded by over 9.5% over the same period, nearly double the UK rate. We now have barriers erected, additional costs and more bureaucracy with the European Union, and we are trying to reduce them for India. So the fundamental issue is not that we have a tariff agreement but how British businesses will see the Indian market as barrier-free, open and accessible across all states, and reliable under the rule of law, with less corruption, more transparency—so that we trade more—and businesses supported more to access the market, which this agreement theoretically facilitates. What are the practical steps of actively supporting businesses that will take advantage of this agreement?

Because there is little reference so far in what the Government have said, can the Minister confirm that the agreement will include a human rights chapter, with clearly articulated mechanisms to address human rights supply chain concerns that have been raised in this House on a number of occasions, including by myself—for example, on broadcasting and civil liberties. If there is to be market access on digital, media and broadcasting, are we ensuring that it is reciprocated and that the restrictions that have been put in place for media have been lifted? Can the Minister confirm that there will be a climate chapter in the agreement that demonstrates that this agreement reduces emissions rather than contributes? On Monday, India and the EU announced their intent for an agreement by the end of the fourth quarter this year. Whether this happens is out of the Government’s hands—I completely understand that—but any comparative advantage that we are likely to have as a result of this agreement is likely to be impacted if there is an agreement between India and the European Union. On rules of origin and other areas of standards, how will we triangulate between India and EU trade?

Finally, I will ask the Minister about potential trade diversion and preference erosion as a result of this agreement. The House is well aware that I look for all the juicy details of these agreements in annexes, and typically on every page after page 200. In the previous Government’s scoping document, annex 9 of the technical paper showed that, with all the likely potential trade benefits for the UK of over £5 billion, which is very similar to this Government’s estimate, it is likely that there will be trade preference and trade erosion of over £3.25 billion.

What does that mean? It means that we must discount all of the benefits from the India agreement with the diversion of trade and the preference erosion from other countries—primarily Bangladesh, Pakistan, Kenya, Senegal, Ghana, Indonesia, the Philippines and Jamaica. For Bangladesh alone, the previous Government estimated that the trade erosion would be £1.5 billion less trade with the UK. So I hope the Government will have an impact assessment clearly articulating the likely trade erosion and trade preference. Will there be primary legislation as a result of this, what will be the extent of it and when are we likely to see it?