Draft EU-Canada Trade Agreement Order

Angus Brendan MacNeil Excerpts

Tuesday 26th June 2018 Commons Chamber

[Dr Fox]

I think that something we share across the House is the belief that we would prefer people to be able to trade their way sustainably out of poverty rather than having to depend on aid budgets, and, of course, free trade is one of the key ways of ensuring that that happens. My hon. Friend is right: it is important that we send a signal, and I hope we can add to the signal that we sent last time that it is not possible to believe in the concept of free trade while not agreeing with any of the specific agreements that make free trade happen. It is important that we have consistency throughout.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

rose—

[Dr Fox]

Of course I give way to the Chairman of the International Trade Committee.

[Angus Brendan MacNeil]

I am picking up the clear message that it is the view of the Brexiteer UK Government that the European Union has negotiated a very good trade deal. Is that correct?

[Dr Fox]

We think it is the most advanced and ambitious trade deal that the EU has produced so far. That is not to say that it could not have been more ambitious in some areas, such as services. There is, of course, room for improvement in the future.

Canada is an important strategic partner too. As one of the “Five Eyes”, and as a member of NATO, the Commonwealth, the G7 and the G20, we have bonds that go far beyond just our trading relationship.

As Members will know, CETA was provisionally applied in September last year, removing 98% of the tariffs previously faced by UK businesses at the Canadian border, and UK firms are already benefiting. 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 with the reductions in tariff and non-tariff barriers. We are also seeing new UK exporters to Canada, including Seedlip, which produces the world’s first distilled non-alcoholic spirit. Under CETA, Seedlip does not have to pay the 11% pre-CETA tariffs on its product.

Moordale Foods, which entered the Canadian market in March 2017 with assistance from the Department, was helped by CETA duty elimination. Pre-CETA, its range of products would have been subject to duties of 12.5%. Its prices in Canada are now closer than ever to its current domestic UK price, and its products can now be found in key Canadian gourmet food outlets, including the flagship Saks Fifth Avenue food hall in Toronto. That is an example of trade in action, and of how it will help the United Kingdom to earn more abroad and provide more jobs in the UK.

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[Dr Fox]

As the Prime Minister has made clear, we hope, given we are starting from the position of complete regulatory and legal identity with the European Union and given the size of our trade with the European Union—not least the fact that the European Union has a surplus in goods with the United Kingdom of almost £100 billion—that we would be able to negotiate an even more liberal agreement than CETA. That is of course a decision not just for the United Kingdom Government, but for the other 27 Governments, who need to look not to political ideology, but to the economic wellbeing of their own citizens.

Let me say something 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 Parliament in due course.

I would like to provide further reassurance to the House about the Government’s ongoing commitment to openness and transparency. Indeed, we have scheduled a debate on the Floor of the House on the EU-Japan economic partnership agreement, which the Minister for Trade Policy—it is a pleasure to welcome my hon. Friend the Member for Meon Valley (George Hollingbery) to his position on the Front Bench—will be leading straight after this debate. This is already over and above the engagement required for EU-only trade agreements.

[Angus Brendan MacNeil]

Should the right hon. Gentleman be talking not only about “Parliament”, but about “Parliaments”? Last week, the International Trade Committee took evidence from John Weekes, the former Canadian ambassador to the World Trade Organisation. He was also Canada’s chief negotiator for the North American free trade agreement, and an adviser to the Canadian Government and Parliament on CETA. One of the things he was asked was whether the central Government in Canada were tempted to make a power grab, or to deal with the provinces as they stand. He said that it added a degree of complexity, but that it made for a better deal at the end to respect the provinces of Canada, rather than deal with this centrally. Should the UK Government not ape that, and should the Secretary of State talk not just about Parliament, but about Parliaments? If we reach that stage when Scotland is still in the UK, we will need such respect.

[Dr Fox]

I have considerable sympathy with the hon. Gentleman, although trade is a reserved power for this Parliament. We have to accept as a country that, in an age of increased consumer awareness of trade, the public will want a genuine consultation about any future agreements that the Government reach. That requires us to avoid some of the pitfalls that occurred with the Transatlantic Trade and Investment Partnership, when the public felt that they had not been consulted during the process and were asked to take it or leave it.

It is therefore incumbent on Governments to devise mechanisms by which there is the fullest possible consultation not only with Parliament, devolved bodies and English regions, but with civil society. The Government will set out our proposals on that in the near future. I would add that I am grateful to the Select Committee for its thoughtful work on this area, because I think there will be quite strong consensus across the House about the mechanisms of consultation, even if we do not agree with the outcomes of such consultations.

I welcome this opportunity to make the case for CETA to Parliament, and to provide an opportunity, as the Government have done on previous EU free trade agreements, for full scrutiny of this important agreement. 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 achieved in CETA for UK businesses and consumers, and lay a foundation for an even stronger relationship in the future. Canada is a progressive, dependable and honest trading partner which is committed, as we are, to the World Trade Organisation and the international rules-based system. This is an important time, internationally, to show our commitment to a free trading Commonwealth, G7 and NATO ally. I commend this order to the House.

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[Barry Gardiner]

I am grateful to the hon. Gentleman for pressing me on to the substantive part of the debate, but he will understand that the way in which international treaties progress through this House, the way in which they are scrutinised and the transparency with which that is done are matters of real importance. The reason why is that the substance of these treaties needs to be agreed in terms of a mandate. It then needs to be ensured that the scrutiny that applies is available to Members of this House at all stages. That is what in this situation entirely failed to happen.

The Secretary of State said:

“I am sorry that the timescales meant that it was not possible to have a debate before decisions needed to be made on CETA in the Council. This was down to the parliamentary calendar and the timescale set for us.”

“Not possible”? How did he know? He never bothered to ask. Why would the Government so determinedly pursue such a tack? The Secretary of State told us why when he admitted to the Committee in October 2016 that the

“UK could not be seen to block the agreement as it would send a negative signal to Canada.”

In a meeting between the Secretary of State and his Canadian counterpart that took place on 16 July, we are told by the then Canadian Trade Minister, Chrystia Freeland, that

“when I asked him if I could count on his and Britain’s continued support for CETA, he told me Britain would not just be supporting CETA, Britain would be pushing for CETA at the EU table.”

Heaven forfend that Parliament might have had a say in such a deal now that the Secretary of State had given his gentleman’s agreement to Canada!

There are two key issues that Members need to consider today. One is the issue of substance, and we will come on to the reservations on that score that exist throughout Europe, not just on the Opposition Benches, where they are currently being debated in constitutional courts and campaigned on by colleagues in the trade union movement. Incidentally, they were fully set out in Labour’s general election manifesto last year. The second issue is process. Why have the Government repeatedly attempted to avoid proper scrutiny of the agreement? The reality of today’s debate is that it is nothing more than a masquerading exercise designed to give the illusion of scrutiny when there has in fact been so little. We are now too late in the process and can do nothing to alter its course.

[Angus Brendan MacNeil]

I think many people watching will want to be clear, given the fragile and febrile nature of their politics in the UK at the moment, on what position the hon. Gentleman would adopt on CETA if he was to find himself International Trade Secretary in a few months’ time.

[Barry Gardiner]

If we were out of the European Union, we would then be negotiating a new trade agreement with Canada and we would ensure that all—[Interruption.] Much that is in CETA is to be welcomed, as was outlined by the hon. Member for Brigg and Goole (Andrew Percy) who intervened on me earlier. Much of it is to be welcomed, but there are aspects of the trade agreement that the hon. Gentleman will recognise, and all of Europe recognises, as simply unacceptable.

Other Parliaments have, of course, had the opportunity to properly register their views on this agreement and perhaps this illustrates why the Secretary of State has been so concerned about allowing the House to have its say. In the Committee stage of the Trade Bill, I set out how a Labour Government would ensure full and proper consultation with key stakeholders—businesses, unions, civil society and the devolved Administrations—in advance of entering into negotiations on trade talks. My party believes that Parliament should have a vote to approve such mandates. That was why we tabled amendments to the Bill in respect of the same, but the Government voted down every single amendment we put forward.

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[Barry Gardiner]

I will give way to my hon. Friend in just a second.

The Secretary of State spoke about the need to give investors protection and security and he has boasted many times in the past 12 months about the record number of FDI deals that he has been able to achieve. Unaccountably, he failed to report that those deals, though record in number, showed a 92% drop in value. Today’s figures also reveal a drop in the number of deals, and the number of jobs saved by such investments is down by 54% year on year, according to his website.

Indeed, many Canadian companies have used investor-state dispute provisions in trade agreements to challenge foreign Governments, whether it has been the closing down of mines in El Salvador following a moratorium to protect unpolluted drinking water, or the Obama Administration’s decision to suspend the Keystone pipeline over concerns about potential damage to the environment. The very threat of facing such a case, even when the chance of winning is in the Government’s favour, can clearly act as a deterrent to Governments from pursuing actions in the public interest—a regulatory chilling effect. This may well have been President Trump’s view when he reversed his predecessor’s decision and greenlighted the Keystone pipeline, thus avoiding costly legal action and the chance of a substantial payout.

Having watched cases taken against the Uruguayan and Australian Governments by the tobacco giant, Philip Morris, many countries are cautious about introducing plain packaging in tobacco product laws. It is not just European Governments who have expressed concerns about ISDS.

[Angus Brendan MacNeil]

I am slightly puzzled by the hon. Gentleman. At the moment, there is talk about the provisional application of CETA. What situation would he want with CETA? I know that he has reservations—if I have reservations about a car I am going to buy, I do not buy it. He has reservations about CETA, so would he not apply CETA? Would he provisionally apply it? What would his position on CETA be if he were the Secretary of State for International Trade and President of the Board of Trade in a few months’ time?

[Barry Gardiner]

I did answer that question earlier following an intervention. There are many aspects of this trade agreement that we would welcome and would wish to pursue, but we cannot—[Interruption.]

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[Andrew Percy (Brigg and Goole) (Con)]

It is a pleasure to speak in support of this excellent trade deal between the EU and Canada, and in so doing I want to pick the shadow Secretary of State up on a number of points that he made in his interesting—and somewhat bizarre at times—comments. I like him personally—he is a jolly decent chap—but I am afraid his position on this is completely and utterly incoherent. The idea that he would oppose this deal while also trying to negotiate a new UK-Canada trade deal effectively puts him in the same boat as President Trump, in that he would immediately, by rejecting this deal, presumably reimpose the tariffs that have gone as part of the initial application of CETA. My question to him is: what would he say to British producers? I am thinking of companies like Isle of Harris Gin, whose launch I attended in Toronto in October, and which very successfully got into the Liquor Control Board of Ontario, the second biggest purchaser of alcohol—

[Angus Brendan MacNeil]

rose—

[Andrew Percy]

I am not going to give way, as time is very limited. I know that concerns the hon. Gentleman’s constituency, but he has intervened a number of times.

The hon. Member for Brent North (Barry Gardiner) would impose tariffs in such areas immediately, damaging British interests now. Moreover, he fails to understand the position of the Canadian Government. Their position is that CETA will be the basis of the future UK-Canada trade deal. That is the position not only of Prime Minister Trudeau but of the Canadian Opposition leader Andrew Scheer, who was here and met the Secretary of State only a few months ago. So the hon. Gentleman would rip up a deal that the Canadian side in good faith wants to use as the basis of a trade deal. I am afraid the hon. Gentleman’s position is total nonsense and would be hugely damaging to those British producers who are already benefiting from the initial application of these provisions.

I also want to say something about the current environment in Canada based on what I find when I make my visits out there and also welcome Canadians here. There is massive support for this agreement in Canada, which leads into huge support for a seamless transition into a UK-Canada trade deal, because Canada recognises that, particularly in terms of public procurement, there are specific skills that this country has that are needed to make good on some of Canada’s infrastructure investment plans. In my earlier intervention I mentioned that there are £20 billion-worth of infrastructure contracts up for grabs in the greater Toronto area alone. This treaty makes it much easier for British companies to gain access to them. So the opportunities for UK companies in Canada are huge under this agreement.

On where we should go in the future, the Secretary of State rightly said that this is a good deal but we can do better, although this must of course be the basis of a future UK-Canada deal. There are two areas in particular where we should be more ambitious. First, services is a hugely important area of our economy, and we have a great deal in common with Canada in terms of services, but there are barriers at present that are not dealt with as part of the agreement, and which we would wish to see improved in a future deal. Similarly, CETA does some good things on labour mobility, but there is more that we can and should look to do with Canada in the future on the ability of companies to move people between the two economies.

Finally, I welcome the Secretary of State’s commitment to working with the devolved Administrations here. That is important. We must also recognise in our future negotiations with Canada the important role that Canadian provinces will play. I met with the Quebec negotiator Pierre Marc Johnson in Montreal just a few weeks ago. There is big support in the provinces for a UK-Canada deal, but we must engage with them at an early stage to ensure that remains the case.