Future Free Trade Agreements

Angela Crawley Excerpts

Thursday 21st February 2019 Commons Chamber

[Stewart Hosie]

I am going to say more about the ISDS component—the arbitration competent—of these things later. I do not want the public sector to be impacted on in any way by trade globalisation with the US. If there is to be some deal cut, there is language that can be used—for example, that used to exempt military and intelligence operations. That should be included rather than the vague protections for the NHS that many of our constituents simply do not believe are robust enough.

[Angela Crawley (Lanark and Hamilton East) (SNP)]

One of my constituents’ biggest fears is that private companies will be able to buy off parts of the NHS in future deals with the USA. Does my hon. Friend agree that it would be catastrophic for our NHS to be sold off to the highest foreign bidder?

--- Later in debate ---

[Stewart Hosie]

That demonstrates that it can be done and there is nothing to be afraid of. It is vital so that Scotland’s national interests, as well as those of Wales and Northern Ireland—all the devolved nations—are given equal weight to the needs and ambitions of exporting companies in London and the south-east.

[Angela Crawley]

To pursue that point, the increasingly broad scope of modern trade agreements is such that often we will have to deal with a wide range of reserved and devolved policy areas. Does my hon. Friend agree that if the UK Government consider Scotland to be an equal partner in the Union, they must commit to allowing legislative consent in the Scottish Parliament for any deals that affect Scotland?

[Stewart Hosie]

Yes I do. That ties in directly to the powers the UK Government have seized over public procurement. In Scotland, we have a fantastic record of small and medium-sized enterprises winning public sector contracts. The Westminster figures are rather less compelling. We could lose that advantage because of what has happened in Westminster; equally, we could lose it if foreign companies were able to challenge the way in which we currently do our public procurement.

Trade deals need to be fair, not only to every partner in the UK but to every citizen. That means we cannot accept deals that allow secret investor dispute courts where taxpayers can be put on the hook or public services subjected to forced privatisation and competition in a one-way ratchet, limiting the ability of any Government to deliver services the way they feel is best for the benefit of their public, not for the profit of international businesses.

Even excluding the EU, many of the UK’s biggest trading partners already have or will soon have a free trade agreement with the UK via the EU, so it is unlikely—perhaps even impossible—that net trade with those countries could be increased as a result of the UK leaving the EU. It is far more likely, because the UK will be in a weakened position, that the terms of trade will be less advantageous, but even if they were not, any new FTAs would simply be filling the gaps in trade left behind, and that gap is likely to be very wide indeed.

I intervened on the Secretary of State to ask about the NIESR report published in 2017, which showed a 22% to 30% fall in total UK trade, depending on the type of Brexit. It also suggested a total rise in UK trade of about 2.6% from an FTA with the main English-speaking economies, and a similar rise with an FTA with the BRICS countries—Brazil, Russia, India and China and South Africa. That is nowhere near close to filling the trade gap that Brexit will cause. It is hard to believe that the deals being discussed today with the main English-speaking economies, plus the CPTPP deal, would do any better.

My key questions today are mainly about process. Current procedures are such that this could be the only opportunity MPs have to debate four major trade deals. That would be woefully inadequate. General debates unaccompanied by objectives, strategies or impact assessments, and lacking a vote or the possibility of tabling amendments, do not provide adequate scrutiny and could lead to trade deals being signed that are bad for the UK, contain controversial provisions, or do not have public support. Is this, in effect, the debate on the mandate for these trade deals, or will other debates follow? If they will, how will they be conducted? Will there be a public set of negotiating objectives and comprehensive impact assessments?

Modern trade deals can have major implications across the economy and society. They can touch on financial regulation, public services, environmental policy, intellectual property and Government procurement—all areas where sovereignty normally resides with the legislature. A vague proposal to initiate negotiations is, therefore, concerning. We know that the US is insisting on an agriculture chapter, which would seriously affect UK farming. The US also wants to change chemicals regulation and access to public service contracts—potentially locking in contracting out for public services such as the NHS.

The CPTPP is already written. It contains worrying provisions, including ISDS mechanisms that allow investors to sue Government in secret arbitration courts. Have the Government produced impact assessments of the CPTPP and other deals, and when will Parliament see those assessments? Will they include consideration of third country impacts? Will the Government accept ISDS provisions in any trade deal they sign? Will they promote such provisions? Will the Government exclude public services from future trade deals, and will they use the same strength of wording as is used for military and security exemptions?

It is encouraging that some 600,000 individuals have contributed to the consultation so far, but it was woefully inadequate because it failed to give any sense of negotiating objectives or red lines. What steps will the Minister take to address the serious public concerns raised in the consultation? Will there be a further consultation based on the negotiating objectives accompanied by impact assessments? Will this consultation be a model for future consultations on other trade deals?

My final substantive remarks are more about ISDS or equivalent arbitration. The SNP and many members of the public have real concerns about the impact those provisions could have on Governments. I will give two brief examples.

In the first case, between 1995 and 1997, the Canadian Government banned the export of toxic PCB— poly- chlorinated biphenyl—waste, in order to comply with their obligations under the Basel convention, to which the United States was not a party. Waste treatment company S. D. Myers then sued the Canadian Government for $20 million in damages under chapter 11 of the North American free trade agreement, which is a similar arbitration scheme. The claim was upheld by a NAFTA tribunal in 2000, even though Canada had taken action to remain in compliance with an international treaty.

In the second case, in April 1997, the Canadian Parliament banned the import and transport of petrol additive, MMT—methylcyclopentadienyl manganese tricarbonyl—over concerns that it posed a significant public health risk. Ethyl Corporation, the additive’s manufacturer, sued the Canadian Government, again under NAFTA chapter 11, for $251 million, to cover losses resulting from the “expropriation” of both its MMT production plant and its “good reputation”. That was upheld by the Canadian dispute settlement panel, and the Canadian Government repealed the ban and paid Ethyl Corporation $15 million in compensation.

Those cases involved toxic PCB waste and a petrol additive that was deemed to have a public health impact. It is quite wrong for large corporations to be able to sue Governments simply for taking steps to protect the wellbeing of their citizens, or for enacting public health measures which they believe to be right and for which they may well have an electoral mandate.

While we will welcome new trade deals, whether the United Kingdom cuts them or, better still, they are cut by the EU—for those would be better deals—they need to be fair, and the process of agreeing them needs to be transparent and inclusive, with, for instance, the formal involvement of the Scottish Government and other devolved Administrations at all stages. There needs to be an honest appraisal by the UK Government of the fact that no number of new FTAs can possibly compensate for the damage to trade that will be done by Brexit. There also needs to be a clear understanding that FTAs that include secret ISDS-type courts, which limit the ability of Governments to act in the best interests of their citizens, are simply unacceptable.