Draft EU-Canada Trade Agreement Order

Stewart Hosie Excerpts

Tuesday 26th June 2018 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I will be as brief as possible to allow as many others in as possible. [Interruption.] I may take slightly longer than four minutes, but I will be as brief as possible.

The Secretary of State said we should take this opportunity to reaffirm our commitment to the principles of free trade. I think we should take any opportunity to reaffirm principles in support of free and fair trade, but we are not engaged in a general debate on trade; we are engaged in a debate on a specific trade agreement—one which is incredibly important to the whole of the UK, and indeed for Scotland because of our history and record of trade with Canada.

I welcome what the Secretary of State said in response to my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), the Chair of the Select Committee—that he was sympathetic to finding other ways to engage and consult with the devolved Administrations, and indeed wider society. That is very important, particularly for Scotland, because we are a trading nation. Indeed, the most recent stats—year-end, quarter 1 of 2018—showed that Scotland’s international exports were growing at the fastest rate of any UK nation: a 12% increase over the year, compared with 8% for the UK—6.5% for England and as low as 5% growth for Northern Ireland. Scotland saw some phenomenal increases in trade—a 48% rise in exports with the Netherlands—and the Secretary of State laid out the trade increase between the UK and Canada.

So we would normally want to be able to support free and fair trade agreements that support and encourage trade, GDP growth, productivity growth and jobs. But trade agreements need to be properly scrutinised and debated, and to contain necessary protections to ensure that our vital public services are protected now and into the future, and there are two aspects of this CETA treaty that we must take issue with and probe. There has not been time to scrutinise it properly, and one might argue that that is now par for the course for this Government, not least in the way that they treat this Parliament. Indeed, in October 2016, the Secretary of State had to apologise to the European Scrutiny Committee after failing to make time for a debate on CETA before the decision was made in the Council by the UK Government to support it, and since then, although there have been outings in Committee, Westminster Hall and oral questions, there has been nothing substantive on the Floor of the House. It is also a disgrace that the Scottish Parliament has not been given any formal role in the negotiation process, particularly when we saw the input of the Canadian provinces and sub-state Parliaments in the EU.

Despite this lack of scrutiny, however, the UK is subject to all the rights and obligations arising from CETA while it remains in the EU, it will be bound by its obligations during the transitional period, and the UK Government’s aim is to roll over the EU trade agreements into an equivalent UK third-party agreement post the Brexit transition. It is therefore all the more important that there is proper scrutiny both in this House and the devolved Parliaments and Assemblies.

We also have concerns that CETA fails to properly secure key protections for Scottish, and UK, public services. According to a note prepared for the European Parliament—the Secretary of State alluded to this today—public services are excluded from CETA, including health, education and other social services. But the counter-argument notes that negotiators have used the so-called negative list approach, which means that all services are open to market liberalisation unless a specific and accurate reservation is entered, at the outset. That can, of course, lead to the creeping liberalisation of public services, as negotiators have failed to include sufficiently watertight exclusions.

I am conscious that time is short, so I will end with two quotes. I heard very clearly what the Secretary of State had to say about protections, but Friends of the Earth has said—I am grateful to the Library for this—that the CETA proposals,

“offer no significant improvement to the dangerous”

investor-state dispute resolution agreement

“and should fool no-one”,

and that the new or renamed

“Investment Court System is nothing but private arbitration under another name”.

The Corporate Europe Observatory and others summed up their objections in this regard by saying that

“it would empower thousands of companies to circumvent national legal systems and sue governments in parallel tribunals if laws and regulations undercut their ability to make money.”

The very fact that those strongly worded critiques exist and run counter to what the Secretary of State says tells me and my party that there is not sufficient clarity or certainty that the protection for our public services is fully and properly in place in this agreement.

European Affairs

Stewart Hosie Excerpts

Wednesday 14th March 2018 Commons Chamber

[Greg Hands]

I am going to make a bit of progress.

I am going to give a few examples of our work around Europe. I promoted the UK’s defence industry in Sweden, visiting Saab, whose new generation Gripen fighter jet could be worth £1.1 billion to UK industry. I and my colleagues engaged with the Polish Government directly on behalf of UK companies to discuss high-value retail opportunities in the Czech Republic—in Czech, I might add, Madam Deputy Speaker. I and my colleagues from DIT and the Department for Exiting the European Union have addressed chambers of commerce right the way across the European Union—in Austria, Hungary and Bulgaria, among many others. I enjoyed making use of my language skills when I gave speeches in German to senior business leaders in Munich, Düsseldorf, Osnabrück, Tegernsee and so on.

DIT’s relationship with Europe does not just extend to export and investment promotion. The vote to leave the EU was not a vote to undermine the EU. It is very important to understand that it is in this country’s interest to have a strong and effective EU. We continue to engage constructively in ongoing EU trade policy, as we currently are a full and equal member of the EU. As the House heard on Monday, we are working closely with our European partners as well as bilaterally to respond to President Trump’s decision to impose tariffs on imported steel and aluminium.

[Stewart Hosie (Dundee East) (SNP)]

Will the Minister give way?

[Greg Hands]

I will make a bit more progress. We are committed to ratifying the CETA agreement with Canada, which provisionally came into effect in September. I was delighted that we were joined by 86 Labour MPs—many of whom are in the Chamber at the moment—who, in defiance of their Front-Bench team, supported the EU’s trade agenda in making sure that CETA was passed. In defiance of the party Whip, they voted for that important agreement with Justin Trudeau’s Canada.

We are supportive of the EU’s work to sign third-country trade agreements in future, and I have attended four Trade Ministers’ Foreign Affairs Councils, which included discussion of these. The Commission has been particularly focusing on agreements with South America’s Mercosur union and with Mexico. We continue to support the ongoing negotiations for both free trade agreements. On Mexico, we would like to see progress made wherever possible in the negotiations, although we recognise the complexity of North American Free Trade Agreement renegotiations running in parallel. We will continue our support for EU-Mercosur trade negotiations and would like to emphasise the urgent need to progress the trade components. It is essential to keep momentum and to achieve a swift political agreement.

Another high-profile agreement is the EU-Japan economic partnership agreement, which the Commission is strongly pushing to fast-track, so that it can be signed during Japan’s Prime Minister Abe’s visit to Brussels in July 2018. As a champion of free trade, the UK has been one of the strongest advocates—actually, I believe the strongest advocate—of this EPA, and we warmly welcome the work of both sides to reach this agreement, which will support global prosperity. We continue to engage constructively on EU business and with our European partners, and we continue to push UK trade and investment to businesses on the European continent. It is important that our trade engagement includes Europe, because our trade with Europe—our nearest and largest neighbour—will always be of great importance.

I often hear the criticism that trade deals outside the EU cannot make up for a loss in EU trade—that has already been referred to in a couple of interventions—but, as I say, this is not an either/or choice. I can assure the House that the Government fully understand the importance of European trade. The EU is our largest trading partner, accounting for 43% of our exports and 54% of our imports. Complex and integrated supply chains across the UK and EU show the importance of making cross-border trade as free and frictionless as possible, and that is why it is important that we get our relationship with Europe right.

--- Later in debate ---

[Greg Hands]

It was a long intervention, Madam Deputy Speaker.

With all due respect to my right hon. Friend—she and I served alongside each other in government—the British people have made the decision to leave the European Union. That was the crucial decision made in June 2016. The Government’s purpose is now to ensure that we have the best possible frictionless trade deal with the European Union, while still being able to take advantage of trade opportunities beyond the EU. As I have stated repeatedly during this debate, that is the Government’s objective.

[Stewart Hosie]

Will the Minister give way?

[Greg Hands]

No. I have already used up 25 minutes, and I am going to make a little more progress.

On services, we have the opportunity to establish a broader agreement than ever before. Of course we recognise that we cannot have the rights of single market membership, such as passporting for financial services, just as we understand that we cannot have all the benefits of single market membership without the obligations, but that does not mean that we should be shackled by existing precedent.

I know that some Members will ask how we can be sure that the EU will agree to our approach. The main point to bear in mind is that it is strongly in EU countries’ interests—economic and otherwise—to sign and agree such a deal. On the day we leave, the United Kingdom will overnight become the EU’s second largest trading partner—larger than China, Japan or India. The Commission estimates trade between the UK and the EU27 to be worth €812 billion. That is only 8% behind the EU27’s main trading partner, the United States, but it is 60% more than with China, which comes third.

Given the effort that the EU has put into deals with the likes of Mexico, Vietnam and Singapore—all of which, crucially, we support, but each of which is significantly less important to the EU than ours—it would be odd indeed for it to reject proposals from us. Furthermore, both the EU and the UK need to send a loud and clear message that we are strong believers in free trade. What message would be sent if we could not reach a free trade agreement?

However, even that underestimates our importance to the EU, because it is the type of trade that matters, not just the volume. Our strongest comparative advantages are in the business, professional and financial services that other businesses need to grow, and in the pharmaceutical goods that no one wants to exclude. For an advanced economy, good financial infrastructure is just as important as physical infrastructure, even if it is not as obvious. Restricting Europe’s access to the City’s financial infrastructure would be the act of a latter-day Beeching—although this time the main line would be closed, not the branch. Yes, the rest of the network could try and pick up the slack—the Frankfurts or Parises—but as I know, because I have worked in the sector, that network has less capacity and is less efficient, and EU businesses and manufacturers could not connect with the capital market that they need. The EU talks about a capital markets union, but how tenable is that without access to Europe’s main capital market?

Our relationship goes beyond mutual economic interest, however. Our membership of the EU is only one part of our relationship with Europe. We can still be neighbours when we leave: we are 30 km from the coast of France. We have cultural ties from before the EU was founded. We will still be in the same core organisations that the EU or its members are part of, from the European Court of Human Rights to the UN to NATO, and from the International Monetary Fund to the World Trade Organisation—the economic, security and humanitarian firmament that holds the international system together.

--- Later in debate ---

[Stephen Gethins]

Well, we have worked out the impact on the NHS and on education, and that will be devastating to our public services because of the empty promises that each and every one of us will pay for.

[Stewart Hosie]

Will my hon. Friend give way?

[Stephen Gethins]

I will just make a little bit of progress.

I say gently to Government Members that there are serious issues around tax raised and GDP that we must all wrestle with in a serious manner, offering some suggestions, but right now the Government are not handling some of the big issues of the day. Time that is being taken up with this issue is strangling political debate. The strikes in our universities right now are crucial for all parties and we should all take them seriously; yet, as we look to a fair solution, this matter cannot be a priority because this Government are so consumed by Brexit and what is going on with leaving the European Union that other issues simply get ignored. Brexit strangles that proper and serious debate.

--- Later in debate ---

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

I would like to focus on the ongoing negotiations between Scotland’s two Governments on the powers set to be transferred from Brussels to the Scottish Parliament, which will have an impact on Scotland’s ability to do business and trade, especially if we get it wrong.

While those negotiations are ongoing, and in the light of the fact that the UK Government have now published their amendment to clause 11 of the EU withdrawal Bill, the SNP Scottish Government are rushing another Brexit Bill through the Scottish Parliament. The EU withdrawal Bill may have its faults, but it is at least legal; the same cannot be said of the SNP Government’s so-called continuity Bill, which is currently being considered by Holyrood. It has been ruled unlawful by the Scottish Parliament’s Presiding Officer and strongly criticised as inconsistent by a range of experts, yet it is still being rushed through in a few days with minimal scrutiny by MSPs.

[Stewart Hosie]

I hope that the hon. Gentleman will be very clear in his words. The continuity Bill has not been declared illegal by anyone. The Presiding Officer has raised a question over its competency, but as the hon. Gentleman well knows, the Lord Advocate has said that it has been carefully drafted so that it is not incompatible with EU law and does nothing to alter EU law until after Brexit, and he made the rather serious point that it is simply preparing for Brexit in exactly the same way as the UK’s withdrawal Bill. I hope, therefore, for the sake of clarity and accuracy, that the “illegal” word will be withdrawn.

--- Later in debate ---

[Stewart Hosie (Dundee East) (SNP)]

My hon. Friend the Member for North East Fife (Stephen Gethins) made a very considered speech in which he laid out in some detail the damage that Brexit will do. I do not intend to go over that ground. Rather, I want to talk specifically about the Scottish Government’s continuity Bill. It is important that the House understands precisely what the Scottish Government are doing in relation to Brexit and why they are doing it.

Before I do so, I want to comment on two things that were said earlier. First, the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont), who is no longer in his place, spoke about the continuity Bill in Scotland being subject to many amendments. Indeed it is—147 or so wrecking amendments from the Tories. I simply say gently to the Tories from Scotland that it would have been better if they had signed up to amendments to the UK’s EU withdrawal Bill as a bloc rather than tabling all those wrecking amendments to the Scottish legislation.

Secondly, the hon. Member for Aberdeen South (Ross Thomson) spoke about trade liberalisation—and I agree with him. At the moment, however, an American company, the Harley-Davidson motorcycle company, is telling us that Donald Trump’s tariff regime will add $30 million to its cost base. If his Administration are prepared to damage all-American businesses, it is naive in the extreme to assume that some kind of good deal will be cut for the UK.

[Ross Thomson]

I am glad that the hon. Gentleman agrees about trade liberalisation. Does he not agree, therefore, that as the EU is the most protectionist organisation there is, with high tariffs on imports coming into it, we will be better off out of it, so that we can help lead the world in liberalising trade?

--- Later in debate ---

[Stewart Hosie]

I know the Scottish branch of the Tory party does not like expert opinion, but the pre-Brexit Treasury leak estimates a loss of up to 10% of GDP, the post-Brexit analysis estimates an almost similar amount, and the Scottish assessment estimates a comparable amount. We are faced with a catastrophe in every circumstance, not only if we go to WTO rules. Better, I think, to fix the problem, to maximise trade, to try to stay within the customs union, and to accept the free movement of people, than to talk about unicorns and rainbows—the Brexiteers favourite slogan.

The Scottish Government’s continuity Bill prepares Scottish devolved laws for the UK’s withdrawal from the European Union. It means that the EU laws currently in force will be retained after withdrawal and that the Scottish Government will be given the tools needed to make sure that our laws keep working after withdrawal. It is a devolved version of the UK Government’s EU withdrawal Bill. I want the House to understand that the Scottish Government have not rejected out of hand the UK Government’s proposals. Their preference is to rely on the UK’s EU withdrawal Bill. But the Scottish and Welsh Governments continue to seek an agreement with the UK that would allow the necessary consent to be given. In this scenario, the Scottish Government would seek to withdraw the continuity Bill. However, the continuity Bill has to be introduced now, and it is going through the Scottish Parliament now, so that if legislative consent is not given, Scotland’s laws will still continue to work properly. That explanation is rather different from the uber-Unionist “wrecking” version that we heard from the hon. Member for Berwickshire, Roxburgh and Selkirk.

This is important because under the UK Government’s proposed way of preparing for the EU withdrawal Bill, they acknowledge that it requires the consent of the Scottish Parliament to become law. Right now, though, neither the Scottish Government, the Welsh Government, nor, on a unanimous cross-party basis, the Scottish Parliament’s Finance and Constitution Committee agree that consent should be given. That is extremely important because, as they say, the Bill allows the UK Government to take control of devolved powers without the agreement of the Scottish Parliament. That is why both the Scottish and Welsh Governments have called it a power grab. The all-party Finance and Constitution Committee has said that it is “incompatible” with the devolution settlement in Scotland. The UK Government’s proposed changes to the EU withdrawal Bill do not yet address that. They would retain the UK Government’s ability to change the limits of devolution without the agreement of the Scottish Parliament. That is important.

In that way, the Scottish Government’s measures differ greatly from the UK Government Bill. The main difference is that the Scottish continuity Bill gives the Scottish Parliament its full role in the preparation of Scotland’s devolved laws for EU withdrawal. It gives the Scottish Parliament an enhanced role in scrutinising proposals for changes to laws as a result of withdrawal and makes some different policy choices, including retaining in law the EU charter of fundamental rights. It also contains a power to keep pace with EU law, for good reason, where appropriate, after the UK chooses to leave the EU.

[Paul Masterton]

The Opposition amendments to the Scottish Government’s Bill significantly water down the massive power grab attempt by Scottish Ministers in relation to continuing alignment with the EU, which I think the Scottish Government want for five years, then five years, then five years. Does the hon. Gentleman agree that those amendments to the Bill are a welcome defeat of the Scottish Government?

[Stewart Hosie]

When Conservatives talk about a power grab in Holyrood, it is code for defending all powers coming to London. I suspect that lots of Tories would settle for direct rule of Scotland and the abolition or dismantling of devolution completely. I am not going to fall into the trap of the hon. Gentleman’s trick question.

The question is: why are the Scottish Government introducing this legislation now? The truth is that Scotland’s laws must simply be prepared for the day the UK leaves the EU. If we did nothing, laws about matters such as agricultural support or food standards may fall away entirely. Many others would stop working in the way they were intended. That is important.

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

Will the hon. Gentleman give way?

[Stewart Hosie]

No, I have given way twice, and there are no extra minutes left.

As my hon. Friends said earlier, we accept in principle that there may be a need for UK-wide frameworks on some matters. It is true that the Scottish and Welsh Governments have been working with the UK to investigate those issues and explore how those frameworks would work. However, it is vital to recognise and respect the way that devolution works. If it is not reserved, it is devolved. If it would normally fall under the remit of the Scottish Parliament and is currently in Europe, it must be put into the devolved institutions now. Should a UK-wide framework and joint working be required, let the UK, the Scottish, the Welsh and indeed the Northern Ireland Governments negotiate that framework.

What we simply cannot have is a power grab where the powers that the UK Government are not certain about are taken back to London, and they then decide in a very patronising way what, if anything, might be devolved in the future. It is completely unacceptable for the UK Government to rip up the devolved settlement. That, in a sense, is the consequence of the power grab.

On Thursday 8 March, the UK Government said that they had drawn up a new list of powers, including ones they say are reserved, that had not previously been shared or discussed with the Scottish or Welsh Governments. A year down the line of these negotiations, a new list is drawn up. We have agreed that the list should be published for the sake of transparency, but we certainly do not agree to the list.

[John Lamont]

Will the hon. Gentleman give way?

[Stewart Hosie]

No, I am not going to give way again.

The Scottish Government are being asked to sign away the Scottish Parliament’s powers with no idea how UK-wide frameworks will work, how they will be governed and how we will go from them being temporary restrictions the UK Government want to agreeing longer-term solutions.

Despite the UK Government’s promise, they failed to bring forward an amendment in the House of Commons to the flawed clause 11 of the withdrawal Bill. Those measures are going through the Lords, but of course, that does not allow proper debate in this place. However, a new amendment—the one that has been proposed—would still allow the UK Government to restrict the Scottish Parliament’s powers unilaterally through an order made in this place, and it could be done without requiring the consent of either the Scottish Parliament or the Scottish Government.

If Brexit is itself, as I believe, an unmitigated disaster, its implementation—because it has not been thought through, and there is no plan—is threatening devolution entirely. There is a lack of understanding and respect for the idea that if a power is not reserved, it is devolved. I therefore ask the Minister to return to the respect agenda: if a power is not reserved, devolve it now. The Government should stop the power grab and get on with negotiating properly with the devolved Administrations, so that the UK withdrawal Bill can actually work without threatening the powers of the other nations within the UK.