Education (Environment and Sustainable Citizenship) Bill [HL]

Lord Whitty Excerpts

2nd reading
Friday 16th July 2021 Lords Chamber

[Lord Whitty (Lab) [V]]

My Lords, I thank my noble friend Lord Knight for this much-needed Bill. Most of us have met children—often quite young children, through to teenagers—who are evangelical about caring for our environment, climate change and restoring nature. To us adults, it is heartening and shaming that they are so knowledgeable, so committed and, in many cases, so scared, but their knowledge, concern and enthusiasm is random. It is not the result of any coherent strategy from the education authorities. It reflects the commitment of particular teachers, school cultures and parents. It is no thanks to the curriculum gurus or the Department for Education that kids are so aware. As my noble friend Lady Blackstone and the noble Baroness, Lady Richie, have just said, bits and bobs of climate change will be attached to nature study at primary level and to science and geography at secondary level, but it is not at all coherent.

The failure of leadership from the top in the education establishment was brought home to me this week. I am a member of your Lordships’ Select Committee on the Environment and Climate Change. We asked all Whitehall departments for their preparations for COP 26 and beyond. DfE’s submission was instructive—and utterly depressing. It started with a bang, declaring that the aim was to profile England as a trailblazer for climate education, but then it immediately said, just four months off Glasgow, that it is currently exploring what a climate change policy and programme could look like.

There then follow two pages about reducing carbon emissions on the education estate, which is quite necessary, and a page on skills for the green economy, which are also much needed. But it then goes on to say: “we will explore”—not even “we are exploring”—

“how we can best prepare this generation for the world in which they will live.”

It goes on to say that the department is

“planning to recruit an environmental analyst/scientist”.

Children who are currently in primary school will be only in their 30s by 2050, by which time we are supposed to have reached net zero and halted the global temperature rise to below 2 degrees, or else, if we have not all changed our behaviour, we will be facing existential catastrophe.

A sense of urgency and of strategy is required in the curriculum as part of tackling the problem. Scientists understood global warming in the 1950s. World leaders formally acknowledged it in Rio, in 1990. The Kyoto agreement was in 1997 and Paris was five years ago, and yet in July 2021, the Department for Education is still just

“planning to recruit an environmental analyst/scientist”.

That is not good enough. We need a massive shift to deliver a curriculum on climate and the natural world. We are not getting it from the DfE, nor from our universities and education gurus, but it should be central to behaviour and sustainable citizenship. Our grandchildren need this Bill.

Carbon Emissions

Lord Whitty Excerpts

Monday 9th November 2020 Lords Chamber

[Baroness Berridge (Con)]

My Lords, there is a national skills and productivity board, which matches the local panels, and it will bring together leading experts to ensure that we know the emerging skills that we need. We know that at the moment a number of vacancies are due to skill shortages. We are particularly keen on investing in our ports and have invested £160 million in a fund to that end, because we know that at the moment we are the world’s leading market in offshore wind and we need to seize those opportunities, as the possibility of £2.6 billion of exports is ours to grab if we invest in the skills.

[Lord Whitty (Lab) [V]]

With the supply of mains electricity increasingly sourced from renewable sources, for millions of homes the main carbon reduction challenge is the replacement of gas-fired central heating. How many jobs do the Government estimate will be needed for this transformation, and what is the timescale of training and retraining currently being planned to meet that demand?

[Baroness Berridge (Con)]

Indeed, the noble Lord is correct that transforming the energy in our homes is one of the key targets, and we have announced that by 2030 we want 40 gigawatts of offshore wind to power our homes. There is also a £2 billion Green Homes grant, which will pay up to two-thirds of the cost of the labour required to make changes to the energy efficiency of homes. If you are on a low income, the grant is 100% up to £10,000. So we are serious about funding the changes needed in our homes.

Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation

Lord Whitty Excerpts

Wednesday 1st May 2019 Lords Chamber

Moved by

[Lord Whitty]

That this House regrets that the Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation, while differing significantly from the precursor European Union-Swiss Agreements, does not make adequate provision for trade in services.

Relevant document: 33rd Report from the European Union Committee

[Lord Whitty (Lab)]

My Lords, I tabled this Motion to Regret, effectively on behalf of the EU Select Committee, as the only way available to us to register with the House as a whole our concerns over these so-called rollover treaties—rolling over from EU treaties to UK treaties. There are also implications in the way we are dealing with these for the role of Parliament and of this House in dealing with trade treaties in the future.

First, I emphasise that, contrary to frequently heard claims that these rollover treaties are simply a matter of “delete ‘EU’ and substitute ‘UK’ and all will be fine and relations will continue more or less as before”, in fact this Swiss treaty in particular is decidedly not an equivalent substitute, either in form or in substance, to the arrangements with Switzerland that the UK enjoys as a member of the EU. This is despite the fact that both the UK Government and the Swiss Government genuinely wished for as little change as possible.

Secondly, unlike most of the other treaties with smaller states that our committee has so far reported on, Switzerland is a major trading partner for us in the UK. Indeed, in terms of goods and services, Switzerland is our 10th-largest trading partner. Of course, seven of the first nine are members of the EU; hence, after the US and China, Switzerland is actually the third-largest non-EU global market for the UK. That makes the treaty important in itself, as well as for what it implies for the process.

Thirdly, the House needs to understand the difficulties of having allocated the scrutiny of these rollover treaties to the EU Select Committee and its sub-committees, which have very limited powers. In effect, they are dealing with a fait accompli: a treaty already concluded and signed by the Government.

Lastly, I want to cover the long-run situation, which may be the most important. There is no way in which this Parliament and this House should accept that this extremely limited role for dealing with future trade treaties should apply after this rollover process. I thank the Government for the various publications they have provided as background to this and for continuing to do so for all the treaties we consider. I also thank the Minister for her letter on 20 March, which set out some of the understanding behind this treaty. The House needs to understand, however, that the EU Select Committee’s work in scrutinising this treaty and all the other treaties is a completely new and major task for the committee, and particularly for its staff.

The committee recently published its 10th such report, and those 10 reports cover more than 40 separate treaties. We have gained experience in analysing these agreements, but they have actually raised new issues for this House and for Parliament as a whole. Initially, the draft treaties coming through to us were either to deal with relatively small volumes of trade with small trading partners, or else agreements with larger trading partners but for only one particular sector. The sequence of treaties coming through was a little odd and seemingly random. At one point it appeared that either the Department for Trade or the FCO had a policy of prioritising all such treaties that dealt with the wine trade: perhaps Members of the House would appreciate that sense of priority, but it did seem slightly odd.

Dealing with bitty treaties such as this means that some important, multifaceted agreements that the EU previously had with Japan, South Korea, Canada, and Mercosur in South America have yet to be concluded by the Government, let alone seen by Parliament. Of course, originally all this process was supposed to have finished by 29 March.

Scrutiny of treaties has by necessity been improvised and is limited in two senses: by the limits of Part 2 of the Constitutional Reform and Governance Act 2010 in general, and in particular in relation to this House. That Act constrains the role of this House effectively to comment and advise, the House of Commons having the sole right to reject or send back any treaty. Even then, as I say, the parliamentary scrutiny is limited to the very end of a negotiating process. None the less, I emphasise the importance of this exercise and I hope that as we go forward, and certainly as the larger treaties move centre stage, the House engages with the committee’s report. In addition, it also leads on to the way in which post Brexit we will be dealing with trade around the world.

It is perhaps an unsought benefit for the Government that the extension of the date of the end of the Article 50 process has given us a bit more time to consider these treaties. However, we will need to be quite focused during that time if we are to finish even by the latest putative date of Halloween.

On the Swiss treaty itself, much of its complexity reflects the fact that pre-existing relationships between the EU and Switzerland have been complex and subject, frankly, to some disputes and historic vicissitudes. As a result, there has been no single comprehensive free trade agreement between the EU and Switzerland; instead, there are over 100 bilateral treaties. This treaty itself claims to roll over eight of those existing treaties, which are the most important trade-related treaties. In format, therefore, this treaty is nothing like the pre-existing EU arrangements but the substance is more important, and I will focus on that.

First, and most blatantly, there is the lack of coverage of trade in services and the interrelationship between the trade in services and the movement of people. There are also a number of EU-Swiss provisions which have been disapplied in this rollover agreement or are dependent on further agreements, either between the UK and the EU or Switzerland and the EU, and in some cases feature agreements with third countries. The extent to which any future changes will be subject to an appropriate level of parliamentary scrutiny is also an important issue.

On services, therefore, this agreement almost exclusively covers trade and the procurement process. However, over half the UK’s trade with Switzerland consists of services. Indeed, whereas on goods the UK is in slight deficit with Switzerland, in services the UK has a substantial surplus of £8 billion, including £5.5 billion on business services and £1.5 billion on financial services. My sub-committee, which dealt with this, had highlighted the importance of services trade to the UK economy in one of its early reports on the Brexit process. It is therefore regrettable that the agreement before us fails to account for future UK-Swiss trade in services. The parliamentary report accompanying the agreement and the subsequent letter from the Minister state that there is no comprehensive agreement on trade in services between the EU and Switzerland to replicate. I accept that, but the same can be said of goods, as I have been explaining, in that there are several agreements between Switzerland and the EU on goods, yet the Government have contrived here to present us with a single trade agreement.

This is in sharp contrast to the patchwork approach to services. In addition to this supposedly comprehensive agreement on goods, the Government have so far laid four separate agreements relating to particular aspects of EU-Swiss trade in services, all of which were presented to Parliament in January and February and dealt with by the EU sub-committees last year.

There is the agreement on air services, on international carriage of passengers and goods—although the pre-existing agreement also covered rail, which this one does not—on direct insurance other than life insurance, and on citizens’ rights. This fragmented approach to services makes it very difficult to assess the totality of future UK trade in services and to understand what are the gaps and what the impact will be. I will touch briefly on the substance of the other agreement I just referred to. I note in particular the agreement on citizens’ rights, as it includes citizens’ ability to deliver services—much of services trade depends on the free movement of persons. It includes, for example, the temporary preservation of the current 90-day service provision, but only for five years. Do the Government wish to extend that in subsequent agreements? The agreement was separately scrutinised by the EU Justice Sub-Committee but, because freedom of movement and such issues as mutual recognition of qualifications have such an important implication for trade in services, they also need to be considered in this context.

--- Later in debate ---

[Baroness Fairhead]

My understanding is that there were conversations at official level. After the debate in this House, we made a change and shared the full text of the agreement. For all agreements in place from 20 March, they will get the full text of the treaty. Prior to that, we gave them the text when it was initialled in draft form. We are learning as we go through this process, and fully understand the importance of that involvement.

[Lord Whitty]

My Lords, I thank the Minister very much for her comprehensive reply, and underline my thanks to her officials for taking us through this process.

I do not intend to keep the House much longer; I have already indicated that I will not move this Motion to a vote. I thank everybody who has taken part in the debate. It indicates that, while this may be an umbrella agreement—and the Government clearly needed to provide a degree of continuity with what is, I repeat, our third-largest non-EU trading partner, and mainly in high-value trade—we need to ensure that the holes in that umbrella are rapidly filled, particularly in relation to the whole range of service industries, as noble Lords have raised.

Hardly anyone has disagreed with the findings on the Swiss treaty. The most wounding disagreement came from the noble Lord, Lord Kerr, who, in effect, said that we are being far too optimistic about potential future trilateral arrangements with the EU. Of course he is right—and that is the difficulty. It demonstrates that unless we can reach accommodation with the EU, the arrangements with Switzerland will be more difficult.

It will be even more difficult with the other big trade treaties. A great deal of reference has been made to the good will of both parties on this treaty, but it will not be so easy with Japan and many other countries. Unless they are played against the background of a positive arrangement with the EU, they will run into difficulties. This provides for no deal, but we hope that we will not be in that situation and will move to a broad understanding with the EU. However, if we do not, those problems will undoubtedly arise.

On the wider problem of scrutiny, Parliament has to take a decision and I am glad that the Minister has indicated that the Government are thinking about it. The noble Lord, Lord Robathan, is right that in the past Parliament did not get much involved in these matters or in treaties as a whole. However, since 2010 it has begun to get involved in treaties but, as far as trade treaties are concerned, until we leave that is a matter for the EU. The point I am making is that parliamentary scrutiny was at the EU level. It was not that the noble Lord, Lord Robathan, was asleep in the House of Commons when treaties were considered—not on that occasion anyway—but that they received the detailed involvement of the European Parliament, in a way similar to Congress’s involvement in trade agreements in the United States, as the noble Lord, Lord Kerr, pointed out.

That had the benefit of allowing time and interface with the devolved Administrations and civic society as a whole. That is the way in which we will have to approach the future pattern of our trade—not long-term continuity arrangements—and it will involve a profound rethinking of the role of Parliament in that respect. For all the reasons the Minister has just adduced, we will return to that issue. This treaty demonstrates the need for that. It also demonstrates the shortcomings of simply trying to roll over and the fact that this House and Parliament as a whole will have to return to these issues in short order—particularly if, regrettably, there is no deal. I beg leave to withdraw my Motion.

Motion withdrawn.

Trade Bill

Lord Whitty Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Lords Chamber

[Baroness McIntosh of Pickering]

I congratulate the noble Lord, Lord Grantchester—on what I think might be his birthday—on moving the amendment. I repeat my concerns relating to the earlier group of amendments, not just for the hill farmers of Wales but for the hill farmers of the north of England, including North Yorkshire, County Durham and Northumbria, and Scotland, as well as other parts of the United Kingdom. The noble Lord raised his concerns in an interesting way but I have to echo my noble friend Lady Byford’s concerns, which she so ably addressed. It would be helpful for the Minister to explain whether our understanding is correct and what the relationship is between this amendment and the earlier tariffs we discussed, and whether, if we were to introduce the zero-rate tariff, this would equally be of concern with this amendment.

[Lord Whitty (Lab)]

My Lords, I would like to put in a brief word here. The noble Baroness, Lady Byford, will recall that, towards the end of the time when she and I were crossing swords on agricultural policy, the issue of agricultural trade multilaterally fell down in the Doha round precisely on this issue of tariff-rate quotas. The amendment of my noble friend Lord Grantchester—who was also present on those occasions—is a probing amendment to see how we are going to deal with the situation for imports.

Our exports, to which the noble Baronesses, Lady Byford and Lady McIntosh, referred, are also vitally important, but we need to have a line from the Government in relation to the existing tariff quotas for European imports with a number of our trading partners. It is not necessarily in the interests of those trading partners to preserve what is de facto the UK share of imports from them to the whole of the EU. Some of them are fly enough to actually notice that their bargaining position in relation to the UK on its own might be slightly greater than their bargaining position in relation to the EU as a whole. It is therefore not entirely surprising that, in these existing potential rollover treaties, there might be some attempt to change the amount of imports that the tariff quota allows into the UK. That itself, of course, is potentially a danger to our domestic production in many of these areas. However, assuming that it will be an easy task simply to roll over all of these existing EU-wide treaties is one of the features of the Government’s complacency.

Of course, the issue becomes even more important when rather bigger agricultural producers might actually be approached by us, or approach us, for a free trade agreement down the line, when their interests will undoubtedly be to press for very high import quotas— from Brazil, America or Australia—in any potential free trade agreement that we are seeking to make primarily on behalf of our manufacturing and service sectors. It might well be something on which we need to put down a marker now.

The Government might have some difficulty with the wording of my noble friend’s amendment, but we need to know what their position is on this. Otherwise, we will be presented with a whole series of treaties that incorporate the existing division, which might not be to our benefit and, more importantly, will set a precedent for how we are going to deal with future treaties and agricultural trade within that context.

[Baroness Fairhead]

My Lords, I thank the noble Lords, Lord Grantchester and Lord Purvis, for tabling Amendments 34 and 54 and for giving this House the opportunity to discuss this important area. I entirely agree with the concerns that have been raised, particularly on areas such as agricultural products, affecting farmers and rural areas, which were addressed by the noble Lord, Lord Grantchester, and my noble friends Lady Byford and Lady McIntosh. I would like to take these two amendments together, because there is a fair amount of overlap in the questions that each amendment raises. I would also like to do so in some detail, because they cover a very technical area and I hope that my clarification will help—that is the aim of what I am trying to do.

We have tariff-rate quotas both in the existing EU FTAs that we are working to roll over and in our WTO schedules. A different approach is required for each, which I am happy to explain. In doing so, I will also address each amendment first as it refers to the EU FTAs and then as it relates to the WTO TRQs. I will first address TRQs in EU free trade agreements. The EU has been clear that it will not revise its free trade agreements with third countries as a result of the UK exiting the EU. This is because usage of those quotas tends to be low. The UK is therefore engaging directly with our trading partners to agree new TRQs to apply under the continuity agreements, and we are making good progress. We are agreeing TRQs for the same products at levels that protect existing trade flows. We will continue to report fully to Parliament on the TRQs agreed as part of our Clauses 3 and 5 reports on changes to the agreements. Amendment 34 would therefore be impossible to implement in respect of EU FTAs, as there is no division with the EU to refer back to.

On Amendment 54, as I mentioned, the Government have already committed to lay before Parliament for each transitional FTA a report that sets out any substantial changes to trade-related matters. These reports will include details of changes to the TRQs. Let me assure noble Lords that the reports will also include an indication of the impacts associated with the changes to the TRQs. However, we would not expect there to be substantial business impacts from changes to TRQs, as we are maintaining TRQs for the same products sized at a level which protects existing trade flows.

On the EU Council decision relating to the modification of TRQs, to which the noble Lord, Lord Purvis, referred, I am happy to write to the noble Lord on that point and I will put a letter in the Library.

I turn now to the TRQs found in our WTO schedules. Here, the Government have taken quite a number of steps, and in addressing these amendments I believe it would be of value to noble Lords if I walked through them. To prepare to leave the EU, the United Kingdom has had to establish its own schedules of goods and services at the WTO. In doing so, we have taken the approach that we should maintain our current obligations as far as possible. This was announced to both Houses through Written Ministerial Statements on 5 December 2016. While much of our goods schedule is directly replicable—for example, our bound tariff rates—some parts, such as tariff-rate quotas, are not. Quotas are not directly replicable because they are a quantity coming into the EU 28, as your Lordships will know, and if they were exactly replicated this would lead to an expansion of market access into both the EU and the UK. This is why the Government agreed a co-operative approach with the EU to apportion WTO tariff-rate quotas, based on historic trade flows. This was agreed in October 2017 and communicated publicly through a joint letter by the UK and EU ambassadors to the WTO.

The UK schedule was finalised in July 2018. We sent it to the WTO on 19 July, and once again both Houses were informed through Written Ministerial Statements. Our schedule then began its formal three-month certification period on 24 July. That period was completed on 24 October. While most WTO members agreed with our approach, as I and the Secretary of State for International Trade once again explained through Written Ministerial Statements laid on 25 October, some WTO members have argued that their market access has been reduced by our approach to TRQs. This is why we announced the Government’s intention to enter GATT Article XXVIII negotiations on TRQs at the WTO to establish whether the apportionment we have proposed is a fair representation of the UK’s current rights and obligations.

Between October and 21 December, when the Government formally launched the Article XXVIII process, work was completed to prepare the necessary trade data and the notification for our Article XXVIII process to begin. We are now in the first phase of this, a 90-day notification period that lasts until 21 March 2019, during which WTO members can examine our TRQ trade data and register an interest in negotiating with us. After this, the UK will examine those claims and determine with whom and on which commodities we will be negotiating under Article XXVIII.

I should also mention briefly the EU’s corresponding transition at the WTO. The EU has launched its own Article XXVIII process, as it, of course, apportioned the EU 28 TRQs with the United Kingdom. It formally started this on 22 July 2018. The reason it was able to do so before the UK is because it did not have to establish a new schedule of its own. Our process and that of the EU are legally distinct and are being pursued separately. However, they are linked in that they derive from the same initial obligation, and WTO partners will need to be convinced that their access to the EU 27 and UK markets will be no less favourable once both processes are complete. So our processes are separate but complementary.

Trade Bill

Lord Whitty Excerpts

2nd reading (Hansard): House of Lords
Tuesday 11th September 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, the Minister has been rightly commended for her comprehensive, elegant and precise introduction to the Bill: it was, indeed, a good introduction. However, she did not disguise—indeed, she did not attempt to disguise—that the Bill is very limited in its application and in its relevance to the kind of questions that are being asked out there as to what our future trade position is going to be.

Like many other noble Lords, I have had to absent myself from the Chamber for much of this debate, but I have taken part in two other important, relevant debates. I have been upstairs with your Lordships’ Select Committee, which is finalising its report on customs arrangements. That report will fall on Ministers’ desks, and the rest of our desks, in a few days’ time and it asks a huge number of questions about what the future customs arrangements are going to be, none of which is answered by the Bill.

Then, just now, I was at a reception for the manufacturing sector, for electronics and electrical manufacturers who are asking a lot of detailed questions about how their trade is going to be affected post Brexit, none of which, again, can be answered by the Bill. That is disappointing because, if noble Lords cast their minds back a few months, just post the Lancaster House speech there was an announcement that we were going to have eight Brexit Bills, two of which would be a trade Bill and a customs Bill, which, between them, would describe the whole new golden age of global Britain and its trading place in the world. I fear that this Bill, even taken together with the Bill we considered last week and were not allowed to amend, goes nowhere near giving any answers to the people who are actually doing trade or who wish to trade with us as to what Britain’s position will be.

I will restrain myself, like the noble Lord, Lord Elton, and try to concentrate on what is actually in the Bill, rather than what is not in it. I shall start with the provisions on the rollover of agreements that the EU currently has with third parties. This sounds simple, but it is not a straightforward situation. Not only will we have to get the agreement of those third parties, we will also have to make sure that that the provisions of it do not alienate the EU, and it will also eventually have to be endorsed by the WTO. None of those is straightforward. We heard from my noble friend Lord Grantchester that already there have been objections to the rollover in relation to tariff quotas from Japan—one of the biggest agreements that the EU has, and a new one—and from Chile, and I am sure that other countries will be the same. We know that, in the WTO context, the independent rescheduling of the UK tariffs is being objected to by some of those very people we would expect to be having agreements with: both those third parties that are in an arrangement with the EU, such as Japan, and others such as Brazil and Australia. This is not a straightforward arrangement, and the fact that the Bill provides for the legal implementation of it is all very well and good but it does not actually reflect the trading and negotiating reality.

My second point is rather different. The Bill does not at all address the wider issues of trade negotiations. Clause 1 signs us up to the Agreement on Government Procurement, which is a good thing, in principle, and straightforward. But the other issues that exist in world trade agreements these days are more value laden and have actually caused major agreements such as TTIP to fall flat on their face in the end. These issues include: the rights of workers and ILO conventions; human rights generally; how we implement and reflect within trade agreements the Paris commitments on climate change; food standards; animal welfare; the protection of endangered species—we were debating the Ivory Bill only this week; and the protection of our public services. No doubt the noble Lord, Lord Cavendish, and others will say that the raising of these issues is part of the protectionist mode of the EU and actually you should leave all these extraneous things out of trade agreements, but that is not the politics of trade these days—or of our country. We have developed those things through the EU and they should find an important place in any modern agreement. Yet the Bill, which purports to be the basis of a new determinant for trade policy, does not reflect that at all.

Another area that is only partially touched on in the Bill—the noble Lord, Lord Kakkar, referred to it earlier and it was the subject of an amendment that was carried in another place against the wishes of the Government—is the reference to the medicines agency and the medicines network. I hope that we can build positively on the amendment, but it ignores the fact that even in the transition period, and certainly beyond it, the UK’s future association with so many agencies of the EU is not addressed anywhere in the Bill, not even in relation to the rollover treaties. This is vital for so many areas, but the Bill makes no mention even of those areas that the Prime Minister herself has picked out, such as aviation and chemicals, and our future relationship with those agencies, let alone the food standards and animal welfare agencies, which are vital to both our trade and our agricultural sector.

Clause 4 provides for the Trade Remedies Authority. I welcome the commitment to establishing that early on. My sub-committee of the EU Select Committee did a report on state aid post Brexit in which we recognised the need to establish such a body. I am a bit worried about how its composition is described. Although I do agree on occasion with the noble Baroness, Lady Neville-Rolfe, I rather take the opposite view that leaving the appointments entirely to the Secretary of State without any constraint regarding the sectors, concerns and expertise that should be covered by that agency is not helpful to its positive development.

It was also clear in our report—the noble Lord, Lord Lansley, was already a member of my committee at that point—that the Trade Remedies Authority will deal with only one aspect of future trading problems relating to state aid and procurement. Where there are problems such as dumping, unfair procurement practices or unfair state aid, it is not only the trading partner’s behaviour you have to address but your own. How we are going to deal with the provisions of state aid within our own country in the light of Brexit and the different roles of local authorities and public bodies is an important part of it. That role will be handed to the CMA. It is the congruent part of how we are going to approach state aid in our trade arrangements, yet the role and powers of the CMA are not in the Bill; nor, as far as I am aware, have they yet been spelled out by the Government in any other piece of legislation.

I will touch briefly on the devolved Administrations. The early reference to the devolved Administrations is more inhibiting than empowering. But in relation to state aid, you also have to take account of the role of the devolved Administrations, both in how they implement actions against other countries and how we administer state aid internally within the UK. None of that is covered by the Bill.

Limited though the Bill is, it is too limited and it needs to address some of these problems. I hope that the Minister and her colleagues can address them in the course of debates on the Bill, because there will be amendments brought forward and questions answered. She said in her opening remarks that the Bill was about detailed practicalities and technicalities. My colleagues—who I have left having a drink downstairs—from the electronic and electrical manufacturers of Europe, as well as of Britain, want to know some of the details of those practicalities. This Bill will not tell them.

I end on the same inadequacy with which I ended my remarks on the other Bill last week: the inadequacy of the provision for parliamentary scrutiny. Although this Bill provides for a report to Parliament, and for the statutory instruments to follow, that is at the end of the process when the Government have negotiated with other parties, whether those are rollover countries or others. We need a system of trade scrutiny within this Parliament at least equivalent to that which the European Parliament has had on our behalf for the last 40 years, and that which Australia, Canada and the United States have within their own parliamentary systems. This House and this mother of Parliaments should insist on nothing less.

European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018

Lord Whitty Excerpts

Monday 25th June 2018 Lords Chamber

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, this order designates the EU-Canada Comprehensive Economic and Trade Agreement, or CETA, as an EU treaty pursuant to Section 1(3) of the European Communities Act 1972. This is a necessary step towards UK ratification of the agreement and part of the process to be followed in laying the treaty before Parliament for 21 days as set out in CRaG, the Constitutional Reform and Governance Act 2010. I am delighted that we have the opportunity to debate this agreement. It follows on from the thorough and constructive debate last year in the other place and the overwhelming support shown in a deferred Division. I very much hope that your Lordships will also agree to support this ambitious and progressive FTA today, and that the other place will again support the agreement when it is debated there tomorrow.

This Government are clear that CETA is a good deal for Europe and a good deal for the UK. Our total trade with Canada stood at £16.5 billion last year, up 6.4% on the previous year, and with a services surplus of £1.9 billion. CETA will improve on this already strong economic partnership. The agreement has the potential to boost our GDP by hundreds of millions of pounds a year: it will bring down trade costs by reducing burdens in the form of both tariffs and procedures; it will boost trade and investment; it will promote jobs and growth; and it will increase our ability to access Canadian goods, services and procurement markets to the benefit of a wide range of UK businesses and consumers. Canada is an important strategic partner too: as one of the Five Eyes group and a member of NATO, the Commonwealth, the G7 and the G20, we have bonds that go far beyond just our trading relationship.

As this House will know, CETA was provisionally applied in September last year, removing 98% of the tariffs previously faced by UK businesses at the Canadian border. Already, UK firms are benefiting from this. We have seen drinks exporters such as Dorset’s Black Cow Vodka and Kent-based sparkling wine producer Hush Heath Estate improve their market access and profitability following the reductions in tariff and non-tariff barriers. We are seeing new UK exporters to Canada, including Seedlip, the world’s first distilled non-alcoholic spirit. Under the agreement, Seedlip does not pay the 11% pre-CETA tariff on its product. Yorkshire-based Moordale Foods entered the Canadian market in March 2017, helped by CETA duty elimination. In services, the UK and Canadian architect bodies, ACE and CALA, have notified the EU Commission that they are in discussions on future mutual recognition.

In September last year, during her visit to Canada, my right honourable friend the Prime Minister and Prime Minister Trudeau reiterated their intention to seek to swiftly and seamlessly transition CETA to a UK-Canada deal once the UK has left the EU. To ensure as seamless a transition as possible, they formally announced a working group to take this forward. Officials from our two countries have already begun to meet to discuss transitioning CETA. It is important as a first step that we prevent a cliff edge for British and Canadian businesses. Of course, while we remain in the EU we continue to support the EU’s ambitious trade agenda. Free trade is not a zero-sum game, but rather a win-win. Ratifying CETA will send a strong message about our determination to champion the cause of free trade. This is a key part of the Government’s vision of delivering a prosperous and truly global Britain as we leave the EU. It is important to the UK that CETA is ratified successfully by all EU member states.

During the implementation period, the United Kingdom will retain access to EU free trade agreements but we will also be able to negotiate, sign and ratify new UK-only free trade agreements for the first time in more than 40 years. In doing so, we will safeguard the benefits already achieved in CETA for UK businesses and consumers and lay a foundation for an even stronger relationship.

Those areas of the agreement that were not provisionally applied in 2017 include a large part of the chapter on investment, including the new investment court system, on which there has been extensive discussion both in Parliament and in wider civil society. The UK supports the principle of investment protection and looks forward to engaging further with the Commission on the technical detail of the investment court system. We support the objectives of obtaining fair outcomes of claims, high ethical standards for arbitrators and increased transparency of tribunal hearings. Investment protection provisions protect investors from discriminatory or unfair treatment by a state. They apply only to investments in place, not to speculative future investments. We have more than 90 such agreements in place with other countries and there has never been a successful investor-state dispute settlement claim brought against the UK, nor has the threat of potential claims affected the Government’s legislative programme. Moreover, the agreement provides that member states should not reduce their labour and environmental standards to encourage trade and investment, ensuring that our high standards are not affected by this agreement.

Nothing in CETA prevents the UK regulating in the pursuit of legitimate public policy objectives—and that, of course, includes the NHS. The Government have been absolutely clear that protecting the NHS is of the utmost importance for the UK. The delivery of public health services is safeguarded in the trade in services aspects of all EU FTAs, including CETA. The UK Government will continue to ensure that decisions about public services are made by the UK and not our trading partners. This is a fundamental principle of our current and future trade policy.

On scrutiny, we have committed, through our White Paper published last year, that we will ensure appropriate parliamentary scrutiny of trade agreements as we move ahead with our independent trade policy. The Government can guarantee that Parliament will have a crucial role to play in the scrutiny and ratification of the UK’s future trade agreements and we will bring forward proposals in due course.

I welcome the opportunity to make the case for CETA today and to give the opportunity for full scrutiny of this important agreement, as the Government have done for previous EU free trade agreements. I look forward to hearing noble Lords’ contributions. I beg to move.

[Lord Whitty (Lab)]

My Lords, I certainly do not wish to oppose an agreement with Canada in this way but I have a number of questions—to some extent the noble Baroness has anticipated me—for two reasons. First, the Government have made it clear that on the one hand they regard CETA as a template for future UK-third party agreements around the world post Brexit and, on the other, they intend that CETA will be rolled over post Brexit into a UK-Canada free trade agreement. Both of those may or may not happen, but two slightly troubling points arise.

My second reason for raising this is the same as I gave in a slightly rambling intervention in a debate initiated last Thursday by the noble Baroness, Lady McIntosh of Pickering. The proponents of free trade, among whom I include myself, need to recognise that there is a negative political reaction in many countries around the world to the prospect of greater free trade. We have seen this in Britain in terms of the Brexit vote, in my opinion, and of course very strongly in America, which has effectively stymied the G7 from making a step change in terms of multilateral free trade around the world. Given that political difficulty, it is important that key sections of our population do not regard the extension of free trade as a threat to their security or to their position.

G7 Summit and Future Trade Relations

Lord Whitty Excerpts

Thursday 21st June 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I thank the noble Baroness, Lady McIntosh, for this timely debate. I am somewhat worried that there are not many speakers; indeed, I am the only Back-Bench speaker. I intended to participate in the debate after contributions in support of the noble Baroness from many sides of the House. I will utter a few correctives to the overall approach.

I certainly agree with the noble Baroness, Lady McIntosh, that this is a crisis point for the world and the UK. Unfortunately, the two coincide. The timing of Brexit, along with the timing a breakdown in the cohesion of the G7 and the rejection, in many respects, of the WTO order by the United States, presents us with a double problem. The noble Baroness also pointed out that the British trade balance has moved in the wrong direction, with the notable exception of Yorkshire. Despite the low level of sterling being a bit of a cushion hitherto, we need to take that signal very seriously. The situation underlines the need for us to come to terms rapidly with the EU on our future trading arrangements—thereby moving into the 36 countries that have a trading agreement with the EU—and how they will apply to the UK and beyond.

However, I intended to make two rather broader points. My first concerns how the theory and actuality of world trade sometimes clash. Secondly, I want to refer to the political reaction in many countries, including our own, against the perceived consequences of free trade. I am interested in two news items from the past few days. First, the Charlevoix communiqué, which was very noble. It talked about many things but did not say much about how to extend freer trade. I was also taken by a poll in the United States, which indicated that nearly 80% of the population thinks that the present system of free trade does not benefit them. I am afraid that this may well be repeated in many other countries.

As to what we do about it, my mind is taken back to my youth, which was quite a long time ago. In far left circles, there was an argument between those who argued for socialism in one country and that any trade barriers would defend the building of socialism—as espoused largely by the Communist Party at the time—and those who argued the opposite, as espoused by some but not all strains of Trotskyism: that workers of the world should unite and we all benefit from trading with each other, as long as it was not in the hands of the capitalists. Some of those arguments are still going on. In a sense, I am not surprised that they are still going on in the Labour Party and the far left, but I am surprised that they seem to extend, in a rather mirrored form, to the right of the political spectrum and to the Cabinet, between those who are for a Brexit that is a sort of little England taking control and running our own affairs, and those who see us as a buccaneering global power doing deals with everybody but with nobody restricting the way we do it.

The reality is that progress towards freer global trade on a multilateral basis had already stalled long before President Trump came into office. Indeed, I go back 20 years to when we began talking about the Doha round for a multilateral trade agreement that never transpired. It partly fell on its face—I speak as a former Minister of Agriculture—because of the inability to deal with agriculture in that context and protectionism within it. In fact, we moved from that ambition to relying very heavily on regional free trade areas or near free trade areas—the EU, obviously, but also Mercosur, NAFTA and the Pacific agreement. It was expected that the blocs would have deals between them. That, of course, has not happened. Indeed, the whole TTIP saga shows that it is very difficult to make it happen. Therefore, progress towards world free trade under a rules-based system has been stalled for a long time. It has been replaced by some serious inconsistencies between different approaches in different parts of the world and some weakening of the rules in the World Trade Organization et cetera.

Meanwhile, we have the political reaction. In the United States, Europe and many developing countries the political reaction has been against any further reduction in trade barriers. It is denounced in some circles as populism. Populism is basically an idea that the lower orders find attractive and the elites deplore. In this context, the ability of the European Union and the powers that be within Europe to face down this popular reaction, or to convince those who, for understandable reasons, are beginning to support that action, is one of the big political problems of our time. There has been a very serious reaction against the effects of free trade on people’s jobs, on the structure of industry, on the nature of employment and on the degree of migration that some of that free trade has been associated with.

We also have to remember that they are not entirely wrong. The lesson of history is at best mixed. After all, the UK grew to its manufacturing predominance behind high barriers—plus a bit of imperial preference. So did the US, Germany and Japan. More recently, so did China. It is only very recently that China, having become a successful power, has emulated the United States and Britain in earlier things and, having developed its industry behind barriers, become a great advocate for free trade. At the Davos before last, China claimed that it was the biggest advocate of free trade in the world. The world is actually in a bit of a mess on this.

Democracy is also in a bit of a mess, because when the population blame the world order for their problems and not their own Government we see a kicking over of the traces. We see it in the election of President Trump, in Brexit here and, in a slightly different context, in the election of anti-migration Governments in Poland, Italy and other parts of Europe. We need to grapple with that. It is no use assuming that the rules under which the WTO has operated will work for ever. There is a fear that the supposed rules of the WTO are not being enforced properly and that, as a second order issue, the enforcement mechanism of the WTO is neither accessible nor effective in enforcing those rules and that it takes an awfully long time over it.

But there is another aspect. Whereas rules on, for example, labour standards, modern slavery, treatment of workers, health and safety and so on are often not enforced as part of trade agreements—likewise, environmental standards are not being properly enforced—some aspects are, directly or indirectly, because of the world trade order. For example, on state aid or preferential public procurement states can claim breach of WTO rules and get the WTO to do something about it. The rules that apparently everybody agrees with in standards, treatment of workers, the environment, safety and product standards are not being enforced properly, whereas the rules related to government intervention are being enforced rather officiously—on occasion, they are even claimed to be part of the US Government’s attempt to turn over the WTO procedure.

This suggests that the world trade order and the political reality are getting seriously out of step. We might need to rethink not only how we deal, in the G7 and elsewhere, with world trade and how we take immediate steps to off-set the detrimental effect of Brexit in our own trade negotiations, but whether the WTO rules and disputes procedure are right or whether we as the G7—I hope led by the EU while we are still a member—ought to take the issue a little more seriously and look at how the system as a whole works under the WTO.

Trade and Customs Policy

Lord Whitty Excerpts

Tuesday 5th December 2017 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I thank the Minister for that explanation of the Government’s position, which was rather clearer than what leaps out from the White Papers and the explanations of the Bills.

I thought my prominent position in the batting order today was in compensation for me being almost last in the debate on the Budget last night. However, more logically, it probably relates to the fact that almost exactly a year ago the noble Baroness, Lady Verma, and I co-chaired committees that produced the document on options for trade. At that time we already asserted that trade negotiations would inevitably take some considerable time longer than two years. We also said that whatever change was needed, we would need a transition arrangement. We also said that the least disruptive change for Britain would be to stay within the single market in the EEA. Shortly after that, of course, the Government ruled out in the Lancaster House speech the EEA option and the customs union option. Instead of referring to a transition period, they have continued—like the Minister today—to refer to it as an implementation period. The Government continue, even now, to refuse to accept that they need longer to negotiate a full, bespoke free trade agreement, which is now the preferred option, and that they can still do that in time for March 2019.

More recently, there has been slightly more realistic talk from the Government. David Davis spoke to the Select Committee about a bare-bones agreement by that time, and in different contexts they have referred to an in principle or heads of agreement by March 2019. I welcome this increased realism. However, even that is a tough call, and it means ratification by the European Parliament, which would have to start in October 2018. In addition, of course the free trade agreement itself, which would not come into play until after we had left the EU, would probably be a mixed agreement and therefore require ratification by the parliaments of the 27 member states—no doubt the noble Lord, Lord Kerr, will correct me in a moment. Therefore speed is not exactly on the table in concluding this agreement, even if we have the substance right.

I welcome what the Minister says about the measures being taken to regulate the position under the WTO and to establish our own means of deciding our own tariffs. I welcome also the measures on government procurement and state aid, and on the issue of the trade remedies body. Indeed, my committee is looking at state aid and competition issues post Brexit, which will be helpful. However, on the bigger issues, the Government need to stop prevaricating and explain to the nation where we are. A transition period needs to be a transition period; it is not simply an implementation period, because we will not have agreed what exactly we are going to implement. It needs to be, in effect, a standstill period, during which we can negotiate the full details of a free trade agreement—assuming that we have a bare-bones agreement to start with. It will also probably be used to negotiate a full-scale security agreement. In addition, in the context of this debate, we will need that time to develop and test new customs procedures and the systems they involve on this and the other side of the Channel, and to familiarise business with them, staff them up and make sure that they operate properly.

During the transition period, it seems almost a no-brainer that, while we will have left the European Union, we should stay within the single market and the customs union. That is the standstill option. It will have to last for at least two years and, if necessary, for longer because we do not want two switchovers for British business and trade patterns.

Indeed, we may, as some witnesses to the committee have recently said, need both a standstill period and an implementation period. However, if the Government or the EU maintain their position that 19 March will be the leaving point, we will need a period of stability when we may well be outside the EU politically and constitutionally but we will still be subject to its rules. I recognise that that is a difficult political sell for some within the Conservative Party; nevertheless, it is the rationale and the logic of the position.

However, we must now look beyond that transition period. We need to look at what kind of free trade agreement we want, how it will operate and how it will impact on the subject matter of this debate. In any trade deal, negotiated tariffs should be lower than they otherwise would have been—therefore, in this context, lower than the current common external tariff between ourselves and the EU. Not all of them will be at zero but, even if they are, or if most of them are, that will not fully achieve the alleged objective of the Government to achieve frictionless trade. The reality is that outside of a single market and a customs union, there is really no such thing as entirely frictionless trade. Therefore, a zero tariff across the board does not mean “frictionless”.

At lunchtime I, along with a number of other noble Lords, attended a seminar of customs experts. The message that came across was somewhat complicated and, in some ways, depressing. For businesses—had they been present, as some were—and particularly for small businesses and those with complex multinational supply chains, this is all a headache; indeed, it is a severe migraine. There will almost certainly be additional administration and significant costs. There may be serious delays and businesses may eventually be faced with a deterrence to trade. A lot of those companies are not aware of the complexities, because for 40 years they have not had to operate with them.

Many small companies export only to the European Union and to nowhere else, and they will be faced with much more complex transport, customs and taxation procedures than they have been used to. They will also have to face the rules-of-origin requirements. The EU will need to treat the UK the same as it does other most-favoured nations under some of the other trade agreements that it has around the world. Of course, trading into the EU also requires regulatory equivalence for goods, agricultural products and the whole range of services, which are unaffected by tariffs but will be affected if they need differential regulatory provisions. Regulatory equivalence relates to standards and a regulatory regime, but it also relates to the specific sectoral regulatory requirements. As people keep emphasising, we start from the great advantage that we are currently equivalent and indeed pretty much identical in relation to many regulations, but, as part of a free trade agreement, we will have to agree with the EU a procedure for dealing with proposals on either side of the new relationship for divergent regulations, and we will also have to agree a very clear resolution procedure between the two sides.

At this point, we need from the Government the rapid development of new customs systems and protocols. They will need to be, as far as possible, digitally based but they will be subject to checking and inspection, and borders, ports and airports will mean that the system may not be entirely invisible, as some are hoping for. They will also have to cover differential VAT and excise duty reconciliations, as well as straightforward customs provisions. Therefore, we also need a two-year period in order to develop these systems. Current improvements in the HMRC system have not yet been tested and will need to be scaled up substantially. I understand, as of lunchtime, that the EU improved system will not come into full force until 2025. Therefore, we will need some fairly hefty work on both sides of the channel to ensure smooth, let alone frictionless, trade.

This is a nightmare for a lot of small businesses, and they need taking through it very carefully. Last week, the noble Baroness, Lady Verma, and I met a trade association that explained its anxieties. It represents small, sophisticated electronics companies that have specialist markets in the EU, multi-sourced components and multinational supply chains. One company produces ventilation equipment in Britain and exports it to the EU, but 30% to 40% of its components are made in the EU. It asks questions such as: is there a minimum level of EU content in order for tariffs not to be charged, or for administrative costs to be avoided? What if the components are not of EU origin—as some still are—but are partially EU and partially third country? Is there a minimum level at which that has to be declared? How will origin composition need to be recorded and reported, and with what level of evidence? Will that company suffer duties—if duties there are—on the total value? What records will it need to keep? What checks will it face? Will that mean delays at Dover, Calais or Boulogne for exports or component imports? The company is worried about such things, and about continuing acceptability of the product standards to which it has hitherto worked; hence, it is also worried about continued regulatory equivalence. It and hundreds and hundreds of other exporting companies require clarity, they require it soon, and they need the Government to start that mentoring process now and take them through it.

I hesitate to say something about the Irish border—so I will not. I will leave that for another occasion.

The Minister touched on the situation of the Crown dependencies, because we do have other borders with the EU. I would like her to explain the position on Gibraltar. What about small British territories in the Caribbean whose markets and supplies are with French and Dutch territories in the Caribbean? How will the customs arrangements work in those very small, very independent—and in most cases, recently devastated—Caribbean communities, which are part of the Government’s responsibility and are covered by this provision? I ask that question from left field, but if the Minister could reply to it now or in writing, I would be very grateful.

I will spare the Minister my current views on the Irish situation.