Comprehensive Economic Partnership (EUC Report)

Lord Shipley Excerpts

Thursday 26th November 2020 Grand Committee

[Lord Shipley (LD) [V]]

My Lords, I congratulate the noble Lord, Lord Darroch of Kew, on his excellent maiden speech and on his clear analysis of this trade agreement.

I am pleased that we are having this debate today and I say at the outset that this trade agreement with Japan is most welcome. I live in a region—the north-east of England—that has benefited significantly from Japanese investment in recent years and wants to go on doing so. The north-east has a long and valued history of trading with Japan, ever since the first official delegation from Japan came to the UK in 1862. The delegation visited two cities, London and Newcastle, to understand better the impact of the Industrial Revolution, where it met civic leaders, engineers and inventors. It was the start of a long and fruitful trading relationship over several decades.

Today, Japanese investment has generated many thousands of jobs in the north-east. Yet we still do not know what our trading relationship with the EU will be in just 36 days’ time. This matters profoundly. This trade agreement is good news in keeping tariffs down, but Japanese companies in the UK need markets to sell into without barriers to their trade. A week ago, in an interview with Reuters, Nissan’s chief operating officer said that its UK business would not be sustainable in the event of a Brexit that added major costs to its business model.

Many thousands of jobs are dependent on the Government securing a good EU trade deal. Is there going to be one? There are, as I said, just 36 days to go. The concerns of the North East England Chamber of Commerce, which we heard about earlier, are amply justified. This is the UK’s first trade agreement on a large scale and it is with our fourth largest trading partner outside the EU, with trade being worth £32 billion in 2019.

It is, however, unfortunate that Ministers were so tempted to engage in hyperbole by claiming that the agreement would increase UK-Japan trade by £15.2 billion over 15 years, somehow forgetting that the estimate of the growth in trade was actually based on the expected increases from before the introduction of the EU-Japan trade agreement two years ago when we were still EU members. Can the Minister confirm what the real increase is expected to be as a direct result of the negotiation of this agreement?

As we have heard, the agreement projects a growth in GDP of 0.07% over 15 years. It broadly replicates our existing agreement via the EU with Japan, with the addition of some important improvements in digital services and in the system of geographical indications. But today trade between the UK and the EU is 20 times bigger than that between the UK and Japan. This agreement will be of limited value if we cannot access EU markets as we do now.

As we have also heard, the EU will remain so much bigger a market for the UK for the foreseeable future, even allowing for possible further access to Pacific markets. Some 50% of UK trade is with the EU, compared with 2% with Japan; that is, £672 billion with the EU, compared with £32 billion with Japan. These are important figures for us to remember as we seek to develop our trading relations with Japan, which we can and must. But to do so requires continued access to EU markets, as we have it now and as so many speakers today have emphasised.