Future Free Trade Agreements

Angus Brendan MacNeil Excerpts

Thursday 21st February 2019 Commons Chamber

[Dr Fox]

I really find it quite insulting that the United Kingdom, the fifth biggest economy in the world, should be described as a dwarf by the hon. Gentleman. We are one of the most successful global economies. It is also worth pointing out that the European Union does not have a trade agreement with China or with the United States because it was too difficult to get an agreement with the 28 nations in those negotiations. He is right to suggest that economies of scale have a role in trade agreements, but so also does the ability to conclude those agreements and to ratify them. That has shown itself to be easier when dealing with single nations, which is why Australia has a trade agreement with China but the European Union does not.

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

The Secretary of State has given us a good rundown of eastern growth metrics. This is why the EU is making the free trade deals with Japan and Korea that we are worried we are going to fall out of. The percentage that I would like him to give us is the gain to gross domestic product for the UK in any deals. We know that the UK will probably gain about 0.2% of GDP with a United States deal, as opposed to the 6% to 8% that it is going to lose from the European Union. That is only about one thirtieth or one fortieth of the gain. If the right hon. Gentleman is talking percentages, will he give us the percentages in context? He says that there will be a loss from Europe and gains with the United States of America and other places, but sadly those gains will be dwarfed by the losses.

[Dr Fox]

But that is a false prospectus, because we want a full and comprehensive trading agreement with the European Union that maintains that trade for the United Kingdom plus the extended opportunities that will come with increased access to those markets that are growing faster. It is possible to do both. It is possible to maintain our trade with the European Union and to improve our trade with the rest of the world. In fact, Britain will have to do that if we want to generate the sort of income that we require for the provision of our public services. Work done by the Institute of Economic Affairs suggests that in 2017 the big increase in UK exports of about £60 billion fed back into the Exchequer at a level of something like £15 billion to £20 billion. That is an example of how, when we come to balance our budget, it is not simply a choice between raising taxes and cutting spending; it is also about earning more money as a country.

[Angus Brendan MacNeil]

Is the right hon. Gentleman seriously saying that the Treasury’s suggestion that getting out of the European Union and the single market will hit the UK economy by 6% to 8% is not actually the truth? That is what is going to happen; he knows that we will take a GDP hit from that. He also knows that a deal with the USA, which accounts for a quarter of the world’s GDP, will give us only a 0.2% gain. He will need to make about 30 or 40 USA-style deals to make up for that loss. Given that the USA accounts for a quarter of the planet, he is going to have to trade with seven or eight planets to make up the loss resulting from his Government’s policy on Europe.

[Dr Fox]

I know that the hon. Gentleman feels very strongly about this. He did not like the result of the referendum and he does not like the decision to leave the European Union, but we are leaving the European Union and we need to ensure that we have sufficient access to the European market, but in a way that does not tie our hands in relation to increased access to other global markets. He makes assumptions on growth in other markets that I do not accept. Nor is this purely about access to goods markets; it is also about the growing access to services markets. In the global trading environment, we have simply not seen the sort of liberalisation in services that we have seen in goods since the establishment of the World Trade Organisation. There is huge potential to unlock the economic benefits to the United Kingdom in seeking global liberalisation in services trading, which is not factored into any of the equations that the hon. Gentleman has mentioned.

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[Dr Fox]

At the other end of the scale, the Australia-US trade agreement was an extremely short one to negotiate. So where there are compatible economies, it is possible to do that. I spoke to my Australian counterpart yesterday, and we hope that, given the openness of our economies and their compatibility in terms of shape, we will be able to conclude an agreement as soon as possible. There is no way, in advance of a negotiation, to say how long it will take. At the beginning of this process, our Australian colleagues are likely to be involved in a general election, which may mean that it will be slightly later when we can get into the process, but I hope to be able to conduct bipartisan negotiations with them to ensure that we can make progress as quickly as possible, which is in our mutual interest.

On 20 July 2018, we launched four online public consultations, providing the public with an opportunity to give their views on potential future trade agreements with the US, Australia and New Zealand and on accession to the CPTPP. All four consultations were open for 14 weeks—two weeks longer than the EU’s trade agreement consultations—and collectively attracted more than 600,000 responses, making it one of the largest consultation exercises ever run by the UK Government.

Alongside the consultations, we ran 12 events across the different regions and nations of the UK to seek their views on how prospective trade agreements could support prosperity and growth. The evidence provided in the responses to those consultations will inform the Government’s overall approach to our future trading relationship with these countries, including our approach to negotiating any trade agreements. Decisions made as a result of the consultations will be published before potential negotiations start.

This is the first time that the United Kingdom has consulted on potential future trade agreements independently. The volume of responses across all four consultations, run simultaneously, means that it is only right that we take time to consider the responses and the views of this House in detail. While there are many other markets that the UK will look to for new agreements, our shared values and our strength of trade with the US, Australia and New Zealand make them the right places on which to focus our initial attention, alongside our interest in potentially negotiating accession to the CPTPP.

Let me turn to future scrutiny of our free trade agreements—a topic that has received much discussion in both Houses, including through the inquiry co-ordinated by the International Trade Committee and the published response.

[Angus Brendan MacNeil]

Let me provide a little extra scrutiny. The Secretary of State has talked a lot about trade policy and trade agreements, but these are very different from trade; trade is a different thing. I am thinking about my constituency, where there are guys who travel to the European continent on a weekly rotation basis with lorries containing live shellfish. Now, if we have trade agreements with New Zealand, it is not so easy to drive there on a weekly rotation with a lorry of live shellfish. These guys would also face snarl-ups and there would not be the openness that there currently is to access the French, Spanish, Italian and German markets. How will the interface between trade, trade policies and trade agreements actually work in practice for lorry drivers of shellfish? That is what these people need to know.

[Dr Fox]

The mechanics of the market become immaterial if there is no market to sell into. We are looking to ensure that UK producers have increased market access so they can trade more, sell more of their products and make more profit, which enables us to employ more people. That is what the whole concept of free trade is about. The hon. Gentleman is quite right that the mechanics at borders need to be ensured—not only in the United Kingdom, but in many of the other countries that we are selling into. That is what the trade facilitation agreement that we signed last year was all about. There has to be an improvement in global trading mechanics, including through using new technologies.

The Government are committed to the established principle that Parliament must be able to scrutinise trade agreements at the beginning, throughout and at the end of negotiations. We must have a mechanism that balances real and meaningful scrutiny with the need to maintain the greatest possible security for sensitive negotiating positions and potentially market-sensitive data. I am grateful to Members on both sides of the House for their encouragement and the private conversations that we have been able to have on this issue. The Government are considering how best to balance these elements and I will bring forward further proposals very shortly, not least because we need this for the Trade Bill to make progress on Report in the other place. We will of course take account of views expressed on the subject in this debate.

As we leave the European Union, the United Kingdom will have the opportunity to negotiate, sign and ratify free trade agreements during the implementation period. Working with like-minded partners such as Australia and New Zealand in bilateral agreements and adding our weight to the CPTPP—a modern and ambitious agreement— alongside an agreement with the largest and one of the most innovative countries in the world, the United States, will allow the United Kingdom to take advantage of the opportunities that leaving the European Union affords. This will allow us both to break down barriers that exist with our established partners, and to adapt to the momentous changes taking place in global trading patterns and the growth of the global economy.

Across the world, new markets are emerging that will provide golden opportunities for British goods and services, and it is right that the Government seek out like-minded partners to build the relationships and trading environments that will best maximise those opportunities for the benefit of the United Kingdom and the wider world.

[Barry Gardiner (Brent North) (Lab)]

There is a saying that the longest journey begins with the first step. I have always thought that very foolish. Surely the longest journey begins with deciding upon one’s destination. Without a destination, one is simply wandering about aimlessly. Of course, the other part of key journey planning is knowing what we want to do when we get there. Well, it seems to me that today’s debate shows that, when it comes to trade, the Secretary of State has identified the countries that he wants to visit—New Zealand, Australia and the United States—but that he is not really sure what he wants to do when he gets there.

The Secretary of State must persuade the House today that he has a clear itinerary and agenda. What are his objectives in securing these new trade agreements? What are the attack sectors in the markets that he has particularly identified as ones where we need to secure liberalisation and access for our suppliers and exporters? Which are the defensive sectors in our own markets that these other countries may seek to attack in response? What are the measures that he is proposing to use to defend those sectors in the UK?

My right hon. Friend the Member for Warley (John Spellar) intervened on the Secretary of State to elicit a clear statement of his firm intention to safeguard our NHS. Perhaps the Secretary of State would confirm that he was not actually quoting from the CETA, but from its non-legally binding interpretive side document. What sacrifices is he prepared to make in the negotiations to secure his objectives? How do his objectives sit alongside the objectives of his colleagues in the Department for Environment, Food and Rural Affairs? Do they compromise our food standards or producer capacity? In the Department for Business, Energy and Industrial Strategy, do they fit alongside the plans for a low-carbon transition of our economy to net zero? A successful strategy is one that has thought through all these questions beforehand.

My hon. Friend the Member for Bishop Auckland (Helen Goodman) exposed how only this week we have seen an announcement by Honda, whose future in the UK has been sacrificed as a result of Japan now being able to export Japanese-made cars tariff-free to Europe. The Secretary of State said, “Well, of course, they’re still going to be able to do that after we’ve left the EU, and we’d have no way of changing it inside.” We have no way of changing it outside, because Honda will still be able to export those cars to Europe tariff-free; the Secretary of State knows that. The point that my hon. Friend was making so powerfully was that the relevant impact assessment was not done and that this Government had therefore not insisted that the relevant protection was made for our industry in the EU-Japan agreement.

[Angus Brendan MacNeil]

I have a philosophical question. There are two schools of thought regarding what is to blame for the Honda situation. It is either Brexit and the anticipation of trouble at the borders either now or in 21 months’ time as the Prime Minister kicks the can down the road and we leave the customs union and the single market; or, as the hon. Gentleman has just postulated, it is the EU-Japan free trade agreement. If it is the latter, is it not negligent for a country within the EU not to raise this issue as a defensive interest and ensure that this situation does not happen? It would seem to be extreme UK negligence for a country within the EU to have burned its car industry on the basis of getting a free trade agreement.

[Barry Gardiner]

The hon. Gentleman makes two distinct points. Of course, he is right to talk about the impact of Brexit on the automotive sector in the UK. All Members in this House should be concerned about that. The point that my hon. Friend the Member for Bishop Auckland quite rightly made was that Honda said, as the Secretary of State mentioned, that there was no imputation that this decision was made as a result of Brexit, but there was a clear indication that it was as a result of Japan now being able to import tariff-free to Europe—including the UK, but the whole 28 member states. At the point when this Government should have been making representations during the negotiations on that agreement, they were not doing so.

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[Barry Gardiner]

There is no need for me to comment. The empty Benches are screaming my hon. Friend’s point louder than I could amplify it.

[Angus Brendan MacNeil]

Will the hon. Gentleman give way?

[Barry Gardiner]

I will make a little progress.

The Government’s primary focus must be securing a deal with the EU, which accounts for 44% of all our exports. The Department for International Trade’s primary focus must be to secure the so-called roll-over agreements—a promise repeatedly made by the Secretary of State, which he has now only 35 more days to deliver. Thousands of businesses depend on the ability to continue to operate their just-in-time supply chains, and thousands of jobs in this country depend upon the same.

Questions have repeatedly been asked of the Government’s capacity to handle even the volume of work required to get these deals over the line—more so given the UK’s relative lack of trade negotiation experience after some 40 years of not being able so to do under the EU’s common commercial policy—yet today’s debate is to consider a number of potential new free trade agreements with Australia, New Zealand and the United States, and the potential accession of the UK to the comprehensive and progressive agreement for trans-Pacific partnership.

The Opposition want to see progressive, positive trade agreements that benefit the UK, help to grow our export potential and further enhance the UK’s attractiveness as a destination for investment, but we have been clear from the outset that the priority must be securing a deal with the EU and ensuring continuity of trade for British business, including with respect to trade agreements that the EU has with third countries. There is a good reason for that, which is that any major trading partner will want to know what trading arrangements we have with the EU before concluding a trade agreement with us in future. That seems self-evident. If we are not able to conclude the free trade agreement with the EU, perhaps right into the transition period, that will substantially impair our ability to secure a new trade agreement with any of the three countries that we are considering today.

The Secretary of State is like a general who fails to secure his rear before charging off in search of a new enemy to fight, but that is not his only embarrassment. The letter written to the Prime Minister this week by the chief executive of the British Ceramic Confederation is excoriating about the total lack of understanding displayed by the Secretary of State of the impact of the proposals he favours for a move to zero tariffs in as many areas as possible. The chief executive sets it out in surgical detail:

“Removing import tariffs gives a leg up to foreign competitors, thus threatening British manufacturing jobs.”

She continues:

“Our manufacturers would still be paying other countries’ import tariffs including, in the event of no deal, EU MFNs and other countries’ MFNs where we will have just lost our preferential access. The net effect across all sectors could be to increase imports at the same time as exports are being put under pressure with a resulting adverse effect on balance of payments.

No tariffs makes the UK’s emerging trade remedies system ineffective from the outset by lowering the cumulative duty paid on the distorted imports, for example, by 12% in the case of dumped Chinese tableware.

It would weaken the UK’s hand in making free trade deals with other countries. If we give away access to Britain for free, why would anyone need to do a trade deal with us?”

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[Barry Gardiner]

I was seeking an intervention, Madam Deputy Speaker.

According to the Office for National Statistics, Australia was our 16th biggest export market over the past 20 years, with machinery, Scotch whisky and particularly motor vehicles being among our primary exports. House of Commons Library data suggests that we exported £10.8 billion of our goods and services to Australia in 2017, representing 1.8% of our total exports. In turn, we are Australia’s primary EU market, with primary imports consisting of metals, including precious metals, as well as gems, wine and agricultural products.

The UK Government have recently announced that a UK-Australia mutual recognition agreement has been agreed alongside an agreement on trade in wine. [Interruption.] This is not a glass of Australian wine that I am drinking. That agreement is intended to replicate the terms of existing agreements between Australia and the EU. Australia maintains a number of trade co-operation agreements with the EU, and the current state of play on the UK Government’s progress in rolling over these agreements remains unclear. Although Australia does not currently have a free trade agreement in place with the EU, discussions towards an agreement began last June. Australia has repeatedly made it clear that the EU agreement remains its priority agreement, and that any trade agreement with the UK will not be possible until Brexit is settled.

The European Parliament approved the negotiating mandate for the trade agreement, but noted that there must be

“special treatment for some sensitive agricultural products, for example, through tariff-rate quotas or transition periods, and a request that consideration should be given to the exclusion of the most sensitive sectors; and the preservation of governments’ right to regulate with a view to achieving legitimate policy objectives.”

Furthermore, the European Parliament called on the Commission

“to conduct negotiations as transparently as possible”,

and said that

“the role of the Parliament should be strengthened at every stage of the FTA negotiations.”

I ask the Secretary of State whether the UK Government will be adopting the same mandate in the negotiations. Where they are not adopting the same mandate as the EU-Australia agreement, will he will set out precisely where it will differ?

In the same year, our exports to New Zealand totalled £1.5 billion, representing 0.2% of our total exports. The ONS statistics for the period show that New Zealand was our 54th biggest export market over the past 20 years. Again, our biggest goods exports to New Zealand were primarily motor vehicles and machinery, with agricultural products and wine constituting some of our major imports. The US was our primary export destination in that period, and of course it continues to be our biggest trading partner, discounting the EU. We record a trade surplus with each of these countries, so it would be fair to imagine that it is in their interests to ensure that any future trade agreement grows their own export base.

The EU and New Zealand also commenced negotiations towards a free trade agreement last year, with the mandate again being presented for a vote in the plenary of the European Parliament. Concerns were raised about the impact of agri-food imports on farmers, and the European Parliament requested

“that due consideration should be given, for instance, either to the inclusion in the FTAs of transitional periods or appropriate quotas, or to the exclusion of commitments in the most sensitive sectors.”

It said that the negotiations should seek to ensure

“the inclusion of a specific chapter devoted to generating business opportunities for micro-enterprises and SMEs; special treatment for some sensitive agricultural products, for example, through tariff-rate quotas or transition periods, and a request that consideration should be given to the exclusion of the most sensitive sectors; and the preservation of governments’ right to regulate with a view to achieving legitimate policy objectives.”

The European Parliament called on the Commission

“to conduct negotiations as transparently as possible,”

and MEPs stressed that

“the role of the Parliament should be strengthened at every stage of the FTA negotiations.”

Again, I ask the Secretary of State whether, in pursuing the trade agreement with New Zealand, he will be adopting a mandate that is similar to the one already adopted by the EU. If not, will he now set out precisely where it will differ?

With that in mind, we must be clear about what the opportunities and threats are in respect of further liberalisation of trade with these countries by way of a free trade agreement. It would therefore have been helpful had the Government set out their priorities for each of the trade agreements we are talking about. I had hoped that this would be an opportunity for the Secretary of State to come to the House and do precisely that—to set out the sectors of attack, the sectors of defence and exactly what trade-offs he might foresee.

The hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) and his colleague who speaks on trade for the SNP, the hon. Member for Dundee East (Stewart Hosie), both challenged the Secretary of State by saying that neither the contribution to GDP nor the volume of trade secured in these future trade agreements would compensate for the loss of trade with the EU. When they intervened on him earlier to do so, they gave figures and statistics, but the Secretary of State did not do so.

What impact assessments have the Government done on the specific rises in GDP and volume of trade that the UK seeks to secure from the agreements his working groups have been working towards? With those assessments we might be able to hold him to account in the future. For example, given that motor vehicle exports make up our largest goods exports to Australia and New Zealand, it would be helpful to know what assessment the Government have made of recent market developments, or of our ongoing capacity to export motor vehicles to those countries.

[Angus Brendan MacNeil]

I hesitate to intervene to make a discordant point, because the hon. Gentleman was being generous. However, on balance I think I should say that if we have a customs union only and are not in the single market, which is the Labour party’s policy, that itself will probably mean a hit to GDP of about 4%. If we need about 30 agreements at 6%, then we would need about 20 similar agreements—20-ish such American agreements—to make up for the damage his policy would bring in loss of trade to the European Union.

[Barry Gardiner]

Yes, indeed. That is why I have consistently said that I believe that Brexit will do economic damage to this country. Unlike the hon. Gentleman, however, I believe in democracy. I believe that, after the referendum took place, this Parliament had an obligation to do what the British people said we should do.

There is also the question of geography to overcome, with the traditional trend towards trade being with one’s nearest geographical neighbours. That is called trade gravity. While we may share a common history, have cultural relationships and even share a legal system—in trade terms, that is critical and very helpful—there can be no avoiding the significant logistical challenges of shipping goods right around the world to the Pacific. It is worth our considering that these countries are all major agri-food producers and exporter nations, with Australia and New Zealand being members of the Cairns Group bloc at the WTO.

The Cairns Group is an interest group committed to the abolition of agricultural subsidies and the elimination of tariff and non-tariff barriers to trade for their agricultural exports. Other members include Canada, Chile, Malaysia, Peru and Vietnam, which, alongside Australia and New Zealand, make up of seven of the 11 CPTPP countries and seven of the 19 Cairns Group members. There may well be potential to grow our exports to those markets, and the ask on their side is clear. It goes precisely to part of the question posed earlier by my hon. Friend the Member for Bishop Auckland.

The ask on their side is clear: “Open up your markets to our food products.” The impact on our domestic agricultural sector could be substantial as our farmers find themselves struggling to compete with an influx of cheaper food products.

The Secretary of State has repeatedly welcomed the perceived benefit to UK consumers of cheaper New Zealand lamb, and today he again dismissed—I was glad to hear him be so robust—safety concerns over things such as GMO foods or chlorine-washed chicken from the United States. In response to one of his colleagues, he said that there will be no lowering of either sanitary or phytosanitary standards or of animal health and welfare regulations in this country. I welcome that, and we will hold him to it.

If a trade agreement between our countries requires the removal of all tariffs on such goods and the abolition of tariff rate quotas, that could well mean the end of our livestock and poultry sectors. We already know that there has been a big push by the agricultural lobby in those respective countries to seek greater market liberalisation, and some of those countries, including New Zealand and the United States, have slowed the progress of our accession to the Government procurement agreement. It is likely that some countries have also voiced objections to the lodging of our WTO schedules and that the Government have had to agree to a number of future concessions to smooth the road. Again, I would happily give way to the Secretary of State if he wanted to come to the Dispatch Box and deny that is the case, or to set out any concessions or commitments he may have given, but he appears unwilling to do so.

The farming sector in this country is extremely nervous about the impact on its ongoing viability should the UK open up market access for imported agri-food, particularly from the United States. Concerns over production standards, animal welfare, sanitary and phytosanitary standards have not been put to rest by the Environment Secretary’s repeated assurances that our domestic standards will not be lowered. At no point have the Government ruled out allowing access to our markets for goods produced to lower standards than our own. Indeed, the latest rumour is that the Government will seek to counter the impact of the importation of such goods with tariffs. The Secretary of State did not rule that out in his earlier remarks—again, I would give way to him if he sought to intervene, but he does not.

Where a trade agreement is in place, such tariffs are likely to be removed and therefore will do nothing to defend our farmers from cheaper imports from those countries. The argument that that will benefit consumers must be demonstrated credibly, with a proper impact assessment and economic modelling that fully considers the effect on our domestic producers and jobs in that sector. Lower prices will not benefit consumers who find themselves out of a job as a consequence of our producers going to the wall. Concerns have been similarly raised about the chapter on sanitary and phytosanitary measures in the CPTPP, which are referred to by some academics as “SPS minus” and are significantly lower than the EU’s current sanitary and phytosanitary rules that the UK will inherit as retained EU law. Acceding to that agreement and allowing products that have been produced to lower or differing standards than our own to enter our markets could further compound the threat to our domestic farmers and undermine any future relationship with the EU and the standards alignment that we need.

Sanitary and phytosanitary standards are one of the most sensitive aspects of trade policy and they have, for good reason, been a major point of contention in discussions about our relationship with the EU post Brexit. It is not only our farming sector that is concerned about the impact of those agreements. Last week, we saw reports that the US steel-producer lobby has been petitioning to block or restrict access for UK producers to Government procurement contracts in the United States under the terms of any potential trade agreement. Indeed, President Trump has been abundantly clear with his America first agenda that he will not countenance any trade agreement that he views as being counter to American interests—namely, domestic protectionism and ensuring a US trade surplus with trading partners.

President Trump has publicly stated that the US is

“losing billions of dollars on trade”

and would find a trade war “easy to win”. Such rhetoric should be alarming to British businesses as Trump is clearly not out to do a good deal for us. President Trump stands on an America first platform and believes that by forcing trade partners into submission and competitor companies out of business, he can restore manufacturing in the United States. In truth, those tariffs are hurting US businesses who participate in global supply chains and face countervailing tariffs overseas. As part of his trade war, President Trump has also refused to endorse nominations to the WTO appellate body, thus blocking the progress of dispute resolutions and the enforcement of the rules-based system. We should be very wary of doing a trade deal if we cannot seek enforcement at the WTO for any actions taken in violation of those rules by another country, and the US is blocking that possibility.

A recent report by a number of right-wing think-tanks—many linked to the Secretary of State, who is understood to favour the report—suggested that a US-UK free trade agreement should “enshrine” the “negative list” approach to liberalisation across goods, services, investment and Government procurement, which is conducive to faster, broader and deeper economic integration. The Secretary of State will know that the negative list system, which has been adopted in some trade agreements that we have already entered into, means that future sectors—some of which we cannot currently even conceive—would automatically be liberalised, no matter what the public policy consequences would be. That is extremely dangerous, and it would be good if the Secretary of State assured the House that when he considers future trade agreements, he is mindful of that point and would not wish to have a negative list system that could expose us in that way.

The Secretary of State has established a number of trade working groups, including with Australia in 2016, New Zealand in 2017, and the US in July 2017. To date, we have precisely no information about what has been discussed in those working groups, what progress has been made towards a future trade agreement with those nations, what assurances have been sought and concessions agreed, or what representations have been made on those issues. The Secretary of State has made no secret of his desire to fast-track these agreements and have them ready to go after the UK withdraws from the EU, but it is not at all clear that his counterparts share quite the same ambitions.

Australia has repeatedly stated that its priority is securing a trade agreement with the EU, and the American President has suggested that a trade deal with the US is all but impossible with the Government’s preferred approach to Brexit, as set out in the Prime Minister’s proposed deal. Just this week, Simon Birmingham, Australia’s Minister for Trade, Tourism and Investment, poured cold water over any idea that the UK could quickly accede to the CPTPP noting

“obviously it’s a statement of fact that the UK is not within the Pacific.”

[Interruption.] That is not me; that was Simon Birmingham. He went on to say that

“some of the other TPP members would think that there are some nations within the Asia Pacific region who might be earlier starters in terms of coming in.”

Does the Secretary of State believe that he can confidently conclude these agreements with the same speed and ease with which he promised he would secure the roll-over agreements?

Has the Secretary of State had conversations with CPTTP member countries about the UK’s accession to that agreement, and what commitments has he received or given in respect of the same? He will no doubt be aware that New Zealand has sought, through a series of side letters with other members of that agreement, to disapply the investor-state dispute settlement provisions of that agreement. I would be delighted if the Secretary of State said that he is going to do the same. Will the UK be seeking ISDS provisions in trade agreements with Australia, New Zealand and the United States, despite the fact that, as he said, the Secretary of State believes they should not be necessary

“under systems such as the UK’s”?—[Official Report, 7 February 2019; Vol. 654, c. 385.]

Many colleagues will be extremely concerned that a number of those issues will already have been discussed privately through the trade working groups and that assurances and commitments may already have been exchanged. We are here debating potential agreements that may well already be loosely drafted. This debate can hardly be considered to be a meaningful say from Parliament on the terms of those trade agreements. The Government’s approach to trade agreements has been little more than warm words and window dressing. Public consultations were opened by way of an online survey on the Department’s website on July 2018 and have since closed, but we have yet to have any report on the findings of those consultations.

This approach does not constitute a proper consultation and oversight framework that ensures the best agreement possible for the entire country as we withdraw from the European Union. Key stakeholders are concerned that they are being invited to give views merely as a tick-box exercise, with no real say on helping to shape trade talks and with no capacity to feed back on any complications that concessions during negotiations may present. That is why my party has repeatedly called for a proper consultation structure that would require formal engagement with affected stakeholders, civil society, trade unions and the devolved nations.

Such a process must also ensure that Parliament has a role in the approval of mandates, impact assessments and reviews of trade agreements. The Government voted down every amendment to the Trade Bill to that effect. We have also been clear that consultation alone is not enough. A comprehensive, independent sustainability impact assessment needs to be conducted in advance of the launch of new trade and investment negotiations to establish the potential social, economic and environmental consequences for all sectors and regions of the UK.

To conclude, we in the Labour party would welcome trade agreements that grow our export base across all regions of the United Kingdom and that help maintain and elevate rights and standards. If the Secretary of State could show that these potential trade agreements could achieve those objectives, we would of course welcome them. However, we are extremely concerned at the lack of information presented to Parliament on the prospective benefits and on the potential threats to our domestic producers, which are clearly evident. The Government must ensure that proper assessments are carried out and must ensure that Parliament has a proper say in future trade agreements that are ultimately to be concluded between our nations.

[Sir Paul Beresford (Mole Valley) (Con)]

As usual, I have a couple of declarations to make. First, I belong to the National Farmers Union, not as an active farmer but certainly as a member in this country. With my background that is to be expected. Secondly, as my accent has already made clear, I have dual nationality. I come from New Zealand and I have a New Zealand passport. I also have a UK passport and I have lived here longer than there. I am extremely supportive of what the Secretary of State for International Trade and President of the Board of Trade, my right hon. Friend the Member for North Somerset (Dr Fox) says, particularly when he talks about negotiations to join the TPP, and working on negotiations for a deal with Australia and New Zealand. Australia and New Zealand can teach us a number of things as we head into a field that they headed into as we went into the EU.

There are at least two relevant factors involved in the negotiations on going into the TPP. First, most people see Britain as an asset as a TPP partner. After all, free trade agreements are two-way—or perhaps I should say that they cut both ways. Secondly, as I have made clear, we almost certainly have at least two friends, two Commonwealth friends, who have been supportive for generations, even kith and kin. They will be supportive as we move towards the TPP.

When we went into the Common Market, New Zealand’s trade with this country teetered overnight from 90% to 50%, and then dwindled to 5%. It must find it a bit strange and have a wry smile that we want to go back. Fortunately, it is most likely to be helpful and positive to our interest, but equally, we must remember, with its own interests definitely in mind. After the crash of the New Zealand economy when we entered the then Common Market, New Zealand and Australia forged an aggressive export drive. They also shocked their economies into action. In New Zealand’s case, I remember the Prime Minister, a few years after that trade blow, explaining to one of our well known characters on the “Today” programme that it had lifted its trade export market to over 100 more countries. We need to watch that as we go out. There was a slight but not too serious hiccup between Australia and New Zealand when a small group of Australians suggested that New Zealand should become another state of Australia. That generated much antagonistic steam. In fact, the New Zealand Prime Minister at the time stated that

“Any New Zealander moving to Australia would increase the IQ of both countries.”

I am sorry that the hon. Member for Australia and Scotland has left the Chamber. [Laughter.]

The main export for New Zealand then and now is agriculture. New Zealand farming was radically shaken up very quickly. Farming subsidies were removed at a stroke overnight, but so were the restrictions. The freedom that gave those farmers made such a difference to them entering a really effective market. Farming became an industry. It became open, competitive and free market. Australia did much the same. They will be our competitors and partners both through our trade agreements and if we go into the TPP.

I find the thought of a Pacific link curious, because the only UK geographic link to the Pacific is the overseas territory of Pitcairn Island. As has been said, I understand that Simon Birmingham, the Australian Trade Minister, did not sound particularly enthusiastic—we heard a couple of quotes. Contrary to that, however, he has also said that Australia is ready to fast-track some sort of deal with the United Kingdom. New Zealand, on the TPP, was a little more confrontational. Commenting on New Zealand’s membership of the TPP, Catherine Beard, the executive director of ManufacturingNZ and ExportNZ said:

“New Zealand would benefit from $222 million in tariff savings yearly.”

As an NFU member, I am also aware that she said:

“Agriculture is widely expected to be a big winner with kiwi fruit, beef, wine, dairy, forestry, and seafood products all expected to benefit from savings on tariffs and the chance to more easily make aggressive entries into foreign markets.”

That could be a warning for us. I think of that when I look round my Mole Valley farms. My constituency has a dairy farm that is supposed to be big. It has 350 cows. Mole Valley has sheep farms with perhaps 1,000 sheep, and some of those farms get 90% of their income from subsidies. These farms are tiny compared with New Zealand and Australian farms. Two dairy farms near where I lived as a youngster in New Zealand milk 1,500 and 2,500 cows, twice a day. The farm I came off in the middle of the South Island had 1,000 head of cattle, 1,000 head of deer and 23,000 lambing ewes. When they lambed we had 50,000 sheep. The land, the atmosphere and the weather resembles much of the hill country of Scotland. It is right up where “Lord of the Rings” was filmed.

We have nothing to compare with that here in the UK. The size and the power of the industry in New Zealand could shatter our farming. If we are going for free trade, we have to wake up. We have time. We can do something about it, but we have to give our farmers the chance to dramatically improve. There is protectionist talk of product care and standards matching ours. That is the correct approach, but it is the correct approach for food safety reasons, but not for protection because Australia and New Zealand meet those standards already.

Vineyards are another classic example. There are square miles of vineyards in New Zealand. You can stand on a high hill and see nothing but vineyards.

[Angus Brendan MacNeil]

The hon. Gentleman talks about improvement. I just wonder what he means by that. Does he mean expansion and growth? When he talked about having 23,000 sheep, with 50,000 after lambing, my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) asked me, “How many do you have?” I said 32—just 32. We are talking about a hugely different scale. Is he talking about farms in the UK getting bigger and amalgamating, and a whole change in the structure of UK farming?

[Sir Paul Beresford]

There is a list of ways in which we can look at that. Perhaps I can answer with an old story. I was upbraided by my farmers some time back and they finished with an anti-politician joke. I explained to them that the son of one of my Surrey farmers had gone out to New Zealand and had bought a farm the same size out there. When shearing time came around, he called up the shearing contractor and said, “Will you come and shear my sheep?” The contractor said, “I’ve got two gangs near you. One’s up the Waimakariri and they have 17,000 sheep to go, and the other ones can be with you next week. How many sheep have you got?” He said, “17.” The contractor said, “17,000?” He said, “No, no—17 sheep.” The contractor said, “Oh, are you English?” He said, “Yes.” The contractor said, “Are you from Surrey?” He said, “Yes.” The contractor said, “Right —you’re English, you’re from Surrey, and you have 17 sheep. Can you tell me their names?”

What I am getting at is that we have an opportunity—I will touch on this in a minute—to counteract that. Australia is a huge agricultural producer. The gross value of Australian farm products in 2016-17 was $60 billion. The Australians export about 77% of what they grow and produce. Fortunately, through the TPP and other arrangements, those two nations are pouring their products into Europe, China, the middle east and even the US, and they are not fulfilling their quotas. There is a real opportunity for us to improve our efficiency in farming and everything else, because Australia and New Zealand may well be looking for us to help them to fulfil those quotas, including, particularly, the quota for lamb meat going into the EU.

--- Later in debate ---

[Mr Fysh]

The hon. Lady makes a good point. The earlier the involvement in these conversations, the more confident communities can be about a mandate that the Government can take to a negotiation, and the process of ratifying whatever comes back from the negotiation can then take place in a timely manner, which I think is essential. I shall talk about the NHS in a bit more detail later, but I see no reason why there should be those fears about it. Indeed, I can see reasons for it to benefit, and for its users to benefit, as a result of deals with, for example, the United States that might allow earlier and cheaper access to drugs than is possible now.

This debate is, of course, about future free trade agreements, but those agreements, and the trade strategy, are inevitably coloured by consideration of what our potential relationship with the EU might be, and what obligations we might enter into in order to acquire it. I now want to say a little about the impact of the restrictive nature of the proposed withdrawal agreement, including some of the prejudices to our future trade policy and strategy that it sets up.

The withdrawal agreement commits us to paying a lot of money without real limits, and with oversight by the European Court of Justice of the exact obligations that will be required. It allows the possibility of an extension by up to two years of the transition period that is being contemplated. We do not know at this point what sort of competition or anti-competition legislation the EU might produce in the next four years, but it might affect our economy, and might have an impact on what we could or could not do with future trade partners, either during that time or afterwards. The agreement gives the joint committee very wide powers of interpretation of what it says, and, in fact, powers to change what it says, as if it had the effect of law and Acts of Parliament. That means that the position in another two to four years’ time is very uncertain.

It should be noted that the agreement proposes the acknowledgement and implementation of the current EU system of geographical indications. I am not necessarily opposed to their being implemented in the same way in the future, but that really should be a matter for the future trade negotiation, which we have been told all along cannot take place during the article 50 negotiation period.

What is slightly more worrying for us in this discussion of future trade policy is that the agreement strengthens the current requirement for “sincere co-operation” within the common commercial policy to which we are subject as members of the EU, which effectively means that we are obliged not to undermine the EU’s interests in any international forums. I do not think we should be in the business of trying to undermine its interests, but that requirement may well restrict what we can discuss with future free trade partners during the transition period. That, I think, adds to the uncertainty that already exists about the transition period, and about what has or has not been agreed by the EU and the UK. Whether and how the EU’s existing free trade agreements with the rest of the world will apply to the UK during the transition period remains opaque, as does the extent to which the UK is able to sign free trade agreements during the transition period in the context of that sincere co-operation.

Within the backstop provision for after the transition period should nothing be agreed, there is a hard veto for the EU on any superseding agreements. Article 20 of the protocol is very clear that there needs to be a joint decision by the EU and the UK for future alternative arrangements to succeed the backstop. So whatever the best endeavours clause does or does not do, that is still a hard veto that needs to be dealt with.

The reality of the operation of the backstop as written for the UK is very dramatic from the point of view of trade and competitiveness. For example, the EU will be able to increase state aid during the period after 2019, but the UK must maintain it at current levels. If that happened for four years, it could really undermine the competitiveness of some of our domestic producers, which is exactly what we have said we need to think hard about in future trade agreements. Because of how the annexes operate, state aid provisions would effectively be applicable to our defence manufacturing industry for the first time in a way that they are not in the EU. That would enable the European Commission to take cases in our courts against defence manufacturers and/or the Government in instances that were considered to be state aid to the defence manufacturing industry.

Those are the sorts of hostages to fortune that are lurking in the backstop, and that is one reason why I am against it. We need to be very mindful of that sort of leverage over our future arrangements with the EU, whether on the status of Northern Ireland within our constitution, if our fishing is open to European actors, the status of Gibraltar, or our defence capability and sovereign ability. Those are all potential hostages to fortune in the current backstop arrangement, which is a big part of the reason why I am opposed to the current proposal and want those backstop arrangements to be replaced now, or at least to have full legally binding guarantees that they will be replaced over time.

As the backstop is currently written, it envisages a customs union. There has been much talk about whether that means frictionless trade.

[Angus Brendan MacNeil]

I am grateful to the hon. Gentleman, who serves with me on the International Trade Committee, for giving way. He has clearly laid out his opposition to the backstop for various reasons, and I respect what he has said on that, but where does he go then: to no deal or to the revocation of article 50?

[Mr Fysh]

I do not think it is as clearcut as that. In the Malthouse compromise, which some might have read about, there is a proposal to replace the backstop with a permanent arrangement that is effectively a zero-tariff environment for the time being with a trade facilitation agreement, which allows very efficient trade to take place across the border. It would not be a unilateral exit from the backstop, and there would not be a time limit on it; I understand communities in Ireland wanting some certainty about that. I actually think it is a much better idea to replace the backstop within the withdrawal agreement if we want to pass the agreement now, and if that does not happen we should keep offering to do exactly that. I will come on shortly to some of the back-up plans should that not be acceptable either.

The customs union arrangement within the backstop would oblige us to continue to adopt the common external tariff and would potentially oblige us to have the common commercial policy. There is a great deal of uncertainty about the physical operations at our borders. What the annexes of the withdrawal agreement backstop say is required, in black and white, is that every transaction between Great Britain and Northern Ireland and vice versa, and between Great Britain and the EU across the channel, would require an a.uk physical, stamped certificate, effectively showing where the duty has been paid in the customs territory it is coming from. That is a massive administrative burden. Based on the HMRC numbers of transactions with the EU, the number the CHIEF—customs handling of import and export freight—computer has to handle will be going up from 55 million currently to 255 million in the future. That means there will be an extra 200 million of these things every year; that is over half a million physical certificates a day that HMRC officers will somehow have to process. That is wholly unrealistic, and when one talks to the Government in detail about it, or to the EU, they admit this is totally unworkable and will not be introduced. How then can they say they cannot introduce alternative arrangements now that would have another two years to be implemented on the ground?

In addition to those physical stamped certificates there would have to be export declarations into the export control system, which would enable the logging of whether a tariff needed to be collected or indeed whether rectification was needed in the inward processing relief systems. So the idea that this is a frictionless system is wrong, and it needs to be replaced. It is unworkable; it is full of friction and it also prevents an independent trade policy for the time that it persists.

If we were to continue to offer the Malthouse proposals even if we could not get a withdrawal agreement done, we would continue to offer a stopgap measure of a zero-tariff, simple free trade agreement, or an agreement between the UK and the EU to prefer each other’s trade for a period of time, which could be notified to the World Trade Organisation under article XXIV of GATT—the general agreement on tariffs and trade. That is a very simple thing to propose, in a sense: because it would be a goods-only agreement, it would not need ratification by all 27 member states, and it could be agreed and implemented very rapidly.

If the EU did not want to do that either, although that would be best because it would be absurd for us to be charging tariffs on each other, we would need to look at other things we might do. We heard discussion earlier of some elements of the unilateral free trade policy that we would potentially need to put in place to prevent price rises for different goods. That does not mean we would have to unilaterally reduce our applied tariffs for every product; we can make that choice product by product.

We have already heard on the grapevine that we are not planning to zero-tariff agricultural goods in our future tariff policy. That makes sense in many ways, because we need to take a nuanced approach. We need to look, product by product, at where domestic producers need some sort of tariff or programme so that they are not exposed to world prices immediately.

We also need to consider an interesting strategy that would encourage other countries to enter into free trade agreements with us. It would propose that we would take a unilateral free trade approach for a period but that we would reintroduce tariffs going up towards the bound tariff level—the common external tariff level—after, say, two or three years. That would encourage the countries that want the continuation of free trade to enter into free trade agreements with us to achieve it.

In the meantime—coming back to agricultural products and taking beef as an example—while we might have a tariff, we would still have a tariff rate quota that allowed some nations zero-rated access to the UK market up to a certain quota. We could open those quotas that would have been for the EU to the rest of the world. The EU would then have a choice. It could enter into a free trade agreement with us and have a quota or it could see the markets that it currently has in the UK being opened to the rest of the world. I personally think that it will want to have a free trade agreement, at least on a temporary basis.

[Angus Brendan MacNeil]

I am trying to follow what the hon. Gentleman is saying as closely as I can. He talks about working on a tariff-by-tariff basis and making judgments or decisions depending on domestic demand or production, but this would open us up to a retaliatory or mirror action from the European Union. For example, if there were no citrus fruits such as oranges here and we decided to get rid of tariffs on oranges, impacting the Spanish and Portuguese orange producers, they could ask themselves what tariffs had existed only to protect the United Kingdom as part of the EU pot. They could then pluck out those tariffs, and we would find ourselves in an even more disadvantageous trade situation.

[Mr Fysh]

I thank the Chairman of our Committee for his intervention. I absolutely agree that it makes the most sense to have a free trade agreement. That is the simplest thing, and it would eliminate the absurdity of even having to discuss these matters. So it would be my first proposal, my second proposal and my third proposal to have just that kind of FTA. This is really the fall-back to the fall-back to the fall-back position—

[Angus Brendan MacNeil]

The backstop?

[Mr Fysh]

The backstop to the backstop to the backstop, exactly. I really do not think that we should get into that position. Looking at the sensible contingency planning that the EU is doing in lots of other areas, I see no reason why it should not continue to be sensible and reasonable, just as we are, and I believe that we will get there.

I want to come back to the trade facilitation issues, because they are really important to the consideration of what trade costs and therefore to the potential value of future free-trade agreements as well as the value the EU’s current agreement. I would like to congratulate HMRC on its work to make trade efficient in the event of no deal at the end of March. Indeed, that work will also be applicable in the future if we are outside a customs union and the single market. These will all be very useful things.

The transitional simplified procedure that has been opened up to operators is really good news, but I think the Government should take it further straight away by making it available to intermediaries such as the logistics service providers that control a large amount of our trade. That would make the most sense, because it would enable them to be authorised consignees so that they could close out the transit documents that will be an essential part of future trade.

The Government should also look at a more comprehensive scope of waivers for transit guarantees, because the financial liability, especially of operators, cannot close out those guarantees. That will be essential to keeping our trade flowing. They should also look at underwriting some elements of the liability to duty in the EU, so that our export side can operate efficiently.

These things come down to the impact assessments that we have seen. When I have spoken to logistics service providers, customs brokers and others, it is obvious that these documents—the transit documents, the export declaration on this side and the import declaration on the other side—will need doing. It is more than we have to do now, so people need to get ready. I say to business: get ready. Businesses being able to do these things, and ensuring that their logistics service providers are able to do them, will be essential to enabling their trade to flow efficiently.

These measures cost about £50, not hundreds and hundreds of pounds. The value of the goods on a truck crossing the channel can be £10,000 if it is carrying bread or bread products and up to £300,000 for beef or beef products, so £50 is just a tiny fraction of that. We are talking about, at most, 0.5% of the value. According to the Government’s impact assessment, the cost of customs administration in the event of no deal would be 5% to 6% of the value, which is wrong by an order of magnitude. We must not underestimate the value of our future trade agreements based on a misapprehension of the real costs of trade.

Similarly, as the Opposition spokesman said, we should not get the gravity relationship wrong. In the UK, the factor of linkage between trade and distance is only about 0.23%. When we back that number out of the Treasury’s forecasts before the referendum, we get the figure of 0.9%. The figure of 0.9% is the intra-continental EU gravity factor, and it is my contention that the wrong one has been used in our models. That undercooks the benefit to us from free trade around the rest of the world and really overcooks the value of the EU’s trade. I am not saying that we do not want the EU’s trade—we absolutely do—but we want to trade with Europe and with the rest of the world. The referendum result was about us wanting both.

The Government really need to pull their socks up over what they have been saying about UK businesses’ access to Europe. The Secretary of State for Environment, Food and Rural Affairs has again said that there is a big risk of our agricultural products not being allowed into the EU, but that is simply not right. The EU has stated it will put contingency arrangements in place, that we will be listed on the right lists and that we will not be shut out in that way. It is simply wrong to say that we will. I personally think that it does our farmers a disservice to frighten them unnecessarily in that regard.

Similarly, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Richard Harrington), who is also in charge of no-deal planning at the Department, said on “The Week in Westminster” on Saturday morning that UK car manufacturers could not be sure whether they could sell their products into Europe because of the regulations. That statement is in grave danger of misleading the British public and the auto industry, and it could be devastating to the confidence of smaller players in the automotive market that may not be aware of what the rules are or what the EU’s position really is.

The reality is that the EU Council and Commission decided on 8 January that UK vehicle certificates can be registered in the EU. There is no reason for UK car manufacturers to fear that their parts or their cars cannot be sold to Europe. That is simply not the case. The Government need to look at themselves in the mirror and stop scaremongering, which is not in the national interest.

Quickly, because I know that everyone wants to get to speak, although it seems that I am the only one left on the Government Benches—

--- Later in debate ---

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

Thank you, Mr Deputy Speaker. I will take cognisance of the fact that I started at 2.7 pm and will look to not to be too long. I want to thank the hon. Member for Brent North (Barry Gardiner), who reminded me as he was speaking that I had not arranged for somebody to feed my sheep this morning. My 81-year-old neighbour Iain MacLean stepped into the breach quite admirably, but only because I was reminded by the hon. Gentleman.

I was talking earlier about how citrus fruit may not be an offensive trade interest, but I have just heard that the weather today in Aboyne, Lossiemouth and Altnaharra in the highlands of Scotland is about 17° C or 18° C. It is a summer’s day in Scotland, so anybody watching who is looking to have a decent half-term break should head to Scotland and forget about going anywhere else. It seems to be the place to go for the temperatures. I note that the Conservative Benches are empty, but perhaps they are in Val d’Isère taking advantage of free movement while it still exists. This may be the Brexiteers’ last holiday.

I also thank the hon. Member for Brent North for his frank honesty. I was talking earlier about damage to GDP and gains through the trade agreements. Of course, a no-deal Brexit and crashing out would, according to the UK Government, damage UK GDP by 8%. Now, the gain in GDP would be about 0.2% from a USA-style trade agreement, but that would mean we would need 40 USA-style trade agreements to make up the gap. There is only one problem. The USA accounts for over a quarter of the world’s GDP, so needing 40 USAs means that we will have to find 10 planets of people as wealthy as Americans in 2019—not 1919 or 1819, but as wealthy as they are today.

If there is an FTA, which is the route the Government want to take after kicking the can down the road for another 21 months of European Union membership—putting the pain off for another wee while—there would be a 6% hit to GDP. We would then need 30 USA-style agreements, or seven and a half planets.

If we follow Labour’s policy of a customs union only—I pay tribute to the honesty and candour with which the hon. Gentleman admitted this—there would be a 4% hit to GDP, requiring 20 USA-style agreements, or five planets, to make up for the lost GDP caused by ripping up our current deal with the European Union.

It is important to bear that in mind. It is nice to talk about flashy new trade agreements and trade policies but, in actual fact, trade is what drives all this. As I said to the Secretary of State, people who are selling shellfish or frozen fish, as people I know in the north-west of Scotland are, will not be able to do their rotations to Europe because of the barriers and all the paperwork listed by the hon. Member for Yeovil (Mr Fysh), and they cannot exactly drive their lorry on a rotation to New Zealand, South America, Chile or wherever else in the CPTPP, or wherever else we might find ourselves having an accidental trade agreement.

As Chair of the International Trade Committee, I welcome this opportunity to debate these potential free trade agreements with the United States, Australia and New Zealand, and to debate possible UK accession to CPTPP. The Government initiated consultations on these potential trade agreements last summer and, despite having closed four months ago, we have yet to see the Government’s response, which would have helped to inform this debate. The Government received a vast number of responses to the consultations, but I understand that many of those 600,000 responses were duplicates. I hope we will see the responses soon.

The Committee recently went to the World Trade Organisation in Geneva, where there is much bemusement as to what the UK is doing. Trading on WTO terms is the most expensive form of trade, and the deputy director general of the WTO, Alan Wolff, said that if we trade on WTO terms, or something close to it, rather than the open single market we currently have, a “Brexit gap” in economic performance would damage our GDP. That is a good way of seeing it, because we are talking about a 4%, 6% or 8% Brexit gap in our economic performance.

It is good that we are having this debate, because the Committee published a report in December titled, “UK trade policy transparency and scrutiny,” which made a host of recommendations on Parliament’s role in future free trade agreements. One recommendation is that Parliament should have an opportunity to debate the Government’s negotiating mandate, or “outline approach” to use the terminology that the Department for International Trade favours, on a substantive motion before negotiations begin on the free trade agreements. I think negotiators would find it useful to have such a steer on the will of Parliament as to what they should progress in any negotiation.

An example of how not to do it is the Prime Minister’s approach to her international agreement with 27 other actors under one umbrella, the European Union. She came back to Parliament and found herself with a whole range of people, from Yeovil to the north of Scotland, ranged against her for various reasons. Had she tried to carry Parliament with her from the beginning, she might have found herself in a different position. We should be adopting such an approach to future trade agreements. Governments come and Governments go, and an awful lot of work might be done before being stopped and wasted. The resource of trade negotiators is few and far between, and they take a long time, so we do not want to negotiate something for three or four years and then find ourselves having to scrap it—assuming we Scots are still here, because independence may well be around the corner for us.

My Committee also recommended that devolved Governments should be consulted on this, as Canada and other countries tend to do. We have to make sure that we have as big a buy-in as possible. As we are seeing with Honda and Japan at the moment, there can be winners and losers in these agreements. As I said to the hon. Member for Brent North, the automotive sector in the midlands of England has perhaps lost out in the EU-Japan agreement.

If there are to be losers, how do we compensate them? If the UK enters a free trade agreement that, say, benefits the south-east of England and destroys, for instance, Welsh lamb, is there any idea of fiscal transfer or compensation for the sacrifice of the Welsh for the south-east of England? Do not think these are esoteric, way-out-there possibilities, because the air agreements that the UK entered into after 1945 specifically mentioned international flights only flying into London airports, which damaged the north of England, Wales, western England, central Scotland, northern Scotland and many other places. Iceland, for obvious reasons of its geography, was one of the first to break that. Having created the advantage of a transport hub in the south-east of England, there was a huge reluctance to cough up for the sacrifice imposed on others.

There are trade-offs in the decisions and directions that Governments take. Interestingly, of course, the Irish Government were quite different during that period. Rather than centralising around Dublin, they actively promoted the west, which is why Shannon airport is still the destination it is, and Knock airport in the north-west has also benefited.

The Committee feels that the Government should publish a trade policy strategy that articulates a vision for the UK as an independent trading nation—if all those things come into being—and outlines the UK’s immediate and future trade priorities at bilateral, plurilateral and multilateral levels. We propose that such a strategy should outline the UK’s key objectives, interests and priorities in respect of its trade policy. Sadly, we have yet to see such a strategy, so I urge the Government to publish one, as it would allow potential new FTAs, such as the ones we are debating today, to be seen in a wider context.

The UK has been spoken of as being a dwarf in comparison with the US, and the Secretary of State robustly jumped to the Dispatch Box to say that the UK is absolutely not a dwarf compared with the United States and that it is the fifth largest economy. When we actually look at it, the United States makes up about 28% of global GDP—about a quarter, as I said earlier—and the United Kingdom is about 2.3% of global GDP, so it is about a twelfth of America. If I came across somebody 12 times taller than me, I might feel rather dwarfish. We might find that the muscle that can be applied in trade negotiations by a grouping 12 times larger than us is somewhat more substantial than what we bring to the table ourselves.

[Ben Lake]

The hon. Gentleman makes an important point about how many other nations will look at the market size of the UK and will perhaps consider that they do not want to concede in the same way in these negotiations as they perhaps would have if we were still a member of the European Union. Perhaps that goes some way towards explaining some of the difficulties that the UK Government are having in trying to sign off on some of these roll-over agreements.

[Angus Brendan MacNeil]

The hon. Gentleman makes an interesting point. There are 40 such agreements with about 70 countries, and the UK’s hope is that we can stand on the shoulders of the European Union and roll over that work, which of course relies on 70 other countries not seeing a possible advantage in getting better trading terms, as a number of them certainly do. A negotiator who wants to be promoted within their trade negotiating structure will, when the UK appears over the horizon with probably not the most experienced negotiators—they certainly will not have the same track record on international negotiations—see too great an opportunity to resist.

Interestingly, I note that the countries that have concluded the much-trumpeted trade agreements are ones with a tremendous balance of exports in their favour. Chile’s is about £150 million to £200 million in its favour, but the outstanding winner here has to be the Faroe Islands; I like to blow the Faroes’s trumpet as chair of the all-party group on the Faroe Islands, but my goodness! It exports £229 million-worth into the UK while importing only £16 million-worth back. So not only have the Faroes got themselves up the scales of acknowledgement, but they have done themselves a fantastic piece of business by rolling over what was already a very advantageous trade agreement. So well done the Faroe Islands, and I hope the welcome in Tórshavn will be as good as it always is.

Let me now look at UK-US trade relations. When we went to the US the farm lobby asked, “Why folks? Why have you done this?” They were just bemused. Ford said that for it, “The UK-US is incremental, but the UK-EU is existential, particularly the interplay with the UK-EU and Turkey. The tariffs that could be accumulated in that direction could be problematic.”

The International Trade Committee’s key recommendation was that

“the Government should undertake detailed work modelling the potential effects of a UK-US agreement on the economy.”

Evidence to the inquiry regarding the impact on GDP varied, but it was about 0.2%. We also have to make decisions about whether we have some increase in regulatory barriers with the EU in exchange for the removal of barriers with the US, and what the overall benefit of that is. As someone who keeps a few sheep, as I mentioned to the hon. Member for Mole Valley (Sir Paul Beresford), I can see a huge problem if we find ourselves putting up barriers to the EU to please some Americans and the American Administration in order to wave a piece of paper and say, “Trade agreements in our time.” That huge danger presents itself to a UK Government who might rush into trade agreements for the sake of it.

[Drew Hendry]

My hon. Friend is making a point about trade agreements having an impact on sheep farming in the highlands, but if those kinds of conditions are written into these trade agreements, could they not have a massive effect on trade and exports across the whole of the highlands and islands in respect of a range of different goods and services?

[Angus Brendan MacNeil]

Absolutely. My hon. Friend is correct about that. This whole area needs to be fully assessed, as the impacts are as yet unclear. If the Government are looking for trade agreements in our time, we might wake up some while after we have concluded these agreements with whole areas of the economy that we currently rely on being devastated and with the shock of having to realign, which would take a number of years to do. This would have huge impacts on people’s lives, as we saw in New Zealand. There may have been an idea that with New Zealand agriculture an easy and seamless change could be made, but that certainly was not the case.

Before entering into any free trade agreements, the Government must be clear about the relative weight they intend to give to different sectors in the UK economy and about the geographical spread. I could say a number of other things about the UK-US agreement, but I recommend to you our report on it as bedtime reading one of these fine evenings, Mr Deputy Speaker. Of all the reports that any Committee has produced, the International Trade Committee’s reports are the best, and the UK-US one is one of the better of the best, so I am sure you would enjoy reading it from cover to cover. I can see nodding and I am very pleased.

To keep the bedtime reading going, my Committee is currently working on an inquiry on trade with Australia and New Zealand. This is a keen inquiry and, since its launch, we have received 46 pieces of written evidence and heard from 10 witnesses, over two evidence sessions. We have focused on wine and agriculture to start with. Something interesting came up about wine exports from Australia and New Zealand to the EU. A number of these exports come to the UK in bulk, where they then get bottled in England and are exported on to the EU. Of course, the problem might be that if the UK is outside the customs union and single market, the wine that is coming from Australia and New Zealand, and currently providing jobs in England, might have to be re-routed elsewhere in the EU to enable it to be bottled without picking up tariffs as it crosses the border into the EU member states. The dairy industry in the UK felt that such an agreement might not be a huge priority for it, but Fronterra, a New Zealand-based dairy company, said:

“We see a New Zealand-UK FTA as a great example for setting a benchmark for a high-quality, ambitious FTA for the UK.”

We are also fortunate that George Brandis, the Australian high commissioner, has been paying attention to this, at least he was when he was here earlier. Australia is very keen to have a fairly simple FTA with the UK that has few carve-outs. Agriculture is said by the Australians not to be a major interest for them, as they have so much else of the world to service. Perhaps therefore we might, just like the Americans did with them, carve out a number of areas, and so agriculture might not be part of it. Australians say that it is not such a huge concern for them, but it is a concern for us. When they dealt with America, over 14 months, a number of carve-outs were made by the Americans, on pharmaceuticals, on the investor-state dispute settlement and on sugar access. So people will pursue their own interests and needs in trade agreements.

You will be upset to know, Mr Deputy Speaker, that the Committee has not looked very much at the CPTPP. We have not had time to do that, but we will be addressing it. It will certainly be discussed with the Secretary of State, who is due to appear before us again on 6 March. There are a number of areas where trade is being altered by the political choice made by two of the nations of the UK to take the whole United Kingdom out of the EU. This is seen, by all sides, as being damaging to the economy. The one thing that gives me hope is that even Brexiteers nearly all agree that the option of a hard Brexit on 29 March is damaging to the economy. The Secretary of State himself said it would damage the economy. Others have said it would be catastrophic, and a number of other adjectives have been used to express the same fear. At least Brexiteers are starting to see that some Brexit options are bad. When we give them the hard percentages, they see also that the upsides of trade deals and trade policies are not quite the same as trade. I hope and pray, and appeal to them even at this late stage, that the thing they really want to do, to save the upheaval and damage to the economy, is simply revoke article 50. An amendment to that end will be tabled next week. I appeal to Liberals, Greens and those who have talked about the people’s vote or extending article 50: it is too late, the damage is under way. They are all agreed that economic damage is coming. The revocation of article 50 could be done in an afternoon and it would save us all. So, Mr Deputy Speaker, 21 minutes after starting my speech, I am finished.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

You said you would be brief.

[Catherine West (Hornsey and Wood Green) (Lab)]

What a pleasure it is to speak in this debate with so many other antipodeans: the hon. Members for Mole Valley (Sir Paul Beresford), for Yeovil (Mr Fysh) and for Edinburgh North and Leith (Deidre Brock). The words “Australia” and “New Zealand” were in the longer title of the debate and therefore we seem to have been attracted out the woodwork. I cannot promise to compete with the knowledge of the hon. Member for Mole Valley about New Zealand sheep farms, but having grown up in Sydney I have a bit of a feel for some of the topics discussed, and it is a pleasure to be serving on the International Trade Committee and looking into the debate on this.

There are not many debates in the House where we go for three hours without a woman speaking. It took three hours for us to get there today, so I will try to set the tone by being brisk—

[Angus Brendan MacNeil]

Quality not quantity.

[Catherine West]

Exactly.

We are in the bizarre position of not having a proper agreement with our main trading partner, the EU, with which we do almost half our trade, or a little bit more than half, depending on which academic work one reads. The question of Brexit remains unsettled and not at all a done deal, yet at the same time, because of the Government’s rather interesting negotiating style, there remain big questions about tariffs. My hon. Friend the Member for Brent North (Barry Gardiner) hit the nail on the head when he said that the written statement on tariffs that will be published later really should have come in advance of this debate, so that the debate could have been possibly shorter and more meaningful.

We know that right now goods are on their way to Korea and Japan and their exporters do not know what tariffs will be charged on arrival, because in under 40 days Brexit could happen and there could be no deal. That is leading to a great deal of concern, not only about exports but about imports. The hon. Member for Yeovil said that he felt the farming sector was perhaps being a bit frightened, or need not be so worried or scared, but every time one opens a newspaper, one finds that reliable titles such as the Financial Times are citing extreme concern about what tariffs will be put on to goods coming into the UK.

The National Farmers Union spokesperson has been eloquent in expressing the union’s concerns. As a Member representing a London seat I would not want to say that I could be any more knowledgeable than she, and she is presenting some very important concerns from the agricultural sector and about our lovely countryside. My hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) made a good point about whether the sector could be more efficient without our losing the wonderful beauty of the countryside. A move toward an agribusiness model could have a big effect on the countryside.

I can describe the position we face today only as neither in nor out—halfway. With under 40 days to go, that is a dereliction of duty. I feel that to some degree industry is being let down, doubly so after Honda’s announcement this week. It is not just about industry but, of course, about the people who work in industry and all our partners.

Let me briefly set out some principles, because that is far as we can get today, given that we do not really know what is going to happen in the next 34 days. First, liberalisation may sound fine as a principle, but we know that there are problems. Members have mentioned issues relating to the ISDS provisions in various free trade agreements. A famous example is the tobacco companies in Australia taking the Australian Government to court for loss of profit because of changes in Government policy. People find the idea deeply anti-democratic and think we should be very careful in how we proceed. Furthermore, when the International Trade Committee visited Canada, we heard about the Dow v. Canada case, in which the US chemicals giant Dow sued Canada for attempting to ban the pesticide 2,4-D. The full details of the settlement were unclear, but it is likely that some concessions for the company were agreed, despite the environmental impacts of pesticide use. Those two examples show why, if we embrace a form of trade liberalisation, it is extremely important to remain vigilant about the long-term impacts.

The second principle is scrutiny. The Select Committee heard about some impressive best practice in Canada, where there had been regional consultations and the debates around equalities and human rights were an element of the consultation. That is a good way of engaging the regions in discussion about consultation and scrutiny. We need to look more closely at that. Given that the Government are trying to bring forward an industrial strategy—it is difficult to tell right now whether that has been successful—we should look at the best practice in that area.

The third principle is preparedness for our future, depending on what happens with Brexit. In the Select Committee’s evidence sessions on the Trade Remedies Authority, I have been concerned about the sense of unpreparedness. I felt that when questioned, the chief executive was not familiar with our current tariff levels with different countries. When questioned on her views about various trade matters, she seemed rather unprepared. That suggests that the Department desperately needs to do more work. Furthermore, on Member engagement, although I welcome today’s debate, there needs to be more in-depth consideration. It is a pity that Members had to look on the Swiss Government website to see details of the Swiss agreement, when we had asked as a Committee for more information and were not given it—and that is Committee members, who are interested in trade, let alone Members of Parliament as a whole. It is disappointing not to see more interest on the Government Benches in today’s debate and what our future is going to be.

The fourth principle is human rights. My fear is that we will lack clout with some of the big players, such as China. Put simply, China is more likely to countenance a dialogue about human rights with a partner with the clout of 500 million people than with the UK. We will struggle to maintain our integrity and what we believe to be important at the same time as managing our twin concerns about national security and trade. The three principles of trade, national security and human rights are hard to get right as a smaller country. It is easy to discount such a country, particularly when we may be giving off a whiff of desperation right now, with our debates and the sense that we need them more than they need us. We need to take that into account.

The fifth principle is standards. We currently have the EU’s gold standard for goods. Other Members have mentioned the challenges relating to animal welfare standards, particularly in respect of a US deal and sanitary and phytosanitary standards. That throws up a wealth of questions. I am convinced that the US would like agriculture to be a sectoral element of any future free trade agreement. Again, we need to get the balance right between protecting what we have, the beauty of our landscape and our traditions, and being open-minded about new ways of doing things.

The hon. Member for Yeovil mentioned the NHS and seemed relaxed about how the US health system might be able to “improve”—I hope I am not misquoting him—it. My right hon. Friend the Member for Warley (John Spellar) intervened earlier to emphasise the fact that our national Government set the tone for the NHS and any intervention in it or other public services, but in respect of an interface with the NHS, we must be aware that the US healthcare system is among the most expensive and unequal healthcare systems in the world.

[Angus Brendan MacNeil]

I wish to echo and strengthen the hon. Lady’s point. Bernie Sanders—I wish him the best of luck in his attempt at the presidency of America—made the exact same point. The idea that co-operating with America on health is going to make anything any cheaper is far from the truth.

[Catherine West]

I thank the hon. Gentleman for his intervention and for his leadership of the Select Committee. It is a very interesting Committee that he manages very well, given the breadth of views among its members.

I have a further point to make on TTIP, or what I call trip-up. Many of the TTIP proposals were quite anodyne, but they were politically mishandled. When the Select Committee visited the US Senate and the House of Representatives, the famous Democrat John Lewis said to us that had labour rights been raised much earlier in the discussions around NAFTA, there may not have been quite the problems that arose when Mr Trump first became President. Had labour rights been much more at the forefront and given much more scrutiny, and had everything been much more open and debated much more freely, perhaps messes might not have been got into. That applies to TTIP or any form of agreement. Any sense that the public are being kept out, that it is secret or that the trade unions or civil society groups are not involved can lead to a trip-up.

--- Later in debate ---

[Matt Western (Warwick and Leamington) (Lab)]

It is very disappointing to see how few Members are present in the Chamber today—that applies to the Benches on both sides of the House, but certainly to the Government Benches. I have a lot of respect for the Under-Secretary of State for International Trade, the hon. Member for Beverley and Holderness (Graham Stuart), and I am sure that he, too, is disappointed that a topic of such importance should actually have attracted so few people to the Chamber today.

Today’s debate honours the Government’s commitment that was made back in the summer to hold a debate on these future trade agreements, but it does not provide for the much-needed debate on the Government’s outline approach on an amendable, substantive motion, as proposed by the International Trade Committee in our report on trade policy transparency and scrutiny, which is disappointing. It seems that the Government’s conduct of marginalising Parliament in the process of Brexit is evident once more—so much for taking back control. As the Committee stated, handling trade negotiations is the prerogative of the Executive, but there must be a meaningful role for Parliament in the trade policy process.

The Committee has been absolutely clear that trade policy needs to be open and inclusive, maximising the benefits across and throughout the UK; that Government must operate from a presumption of transparency; and that consultative processes must be formalised. Specifically, the Committee was interested in the role that Parliament, the devolved Administrations, local government, businesses and civil society should have in the process—all elements that are included in Labour’s policy on trade deals. However, it would seem that the Select Committee report is being ignored.

Since his appointment, the Secretary of State for International Trade has asserted a great many things: in July 2017, we were told that a deal with the EU would be the easiest in human history, and in December 2017 he stated that the 40 free trade agreements covering 55 countries could be rolled over a second after the UK left the EU. A couple of months earlier, Lord Price, the then Trade Minister, told us that there were 36 FTAs with 60 countries, and he said that they could simply be cut and pasted and that that had almost been done. It was not until the Select Committee was told by Professor Andreas Dür that there were in fact 41 free trade agreements covering around 70 countries—a figure confirmed by the Financial Times—that we absolutely knew where we were. As suspected, the notion that free trade agreements could be rolled over has not proved quite as easy as the Secretary of State originally claimed. Although not central to this debate, that does illustrate the huge challenges that we will face.

Just two weeks ago, the Secretary of State came before the Select Committee to face questions, and it was quite clear that rolling over these agreements was not really going that well. Despite his considerable obfuscation, the reality of the state of the deals was evident from the Secretary of State’s own briefing note. Anyone in the Committee Room could see that on the piece of paper in front of him there was a huge amount of red, a little bit of orange and very little green. Under that green, amber and red traffic light system, the status of these free trade agreements was quite clear. When the Secretary of State was challenged on that point, he claimed colour blindness, yet hours later in the afternoon he was more forthright with business leaders—sadly not with us. It was yet another example of keeping Parliament in the dark.

[Angus Brendan MacNeil]

On that idea of keeping Parliament in the dark, if the UK and the EU were to enter into a trade negotiation, European parliamentarians would know more than Members of the House of Commons, and our best way of finding out what was happening would be to ask our friends from Ireland. Far from us taking back control, the European Parliament would actually have more control in that particular trade negotiation, which is a supreme irony of the whole Brexit carry-on.

[Matt Western]

I thank the hon. Gentleman for his chairmanship of the International Trade Committee, which he does so well, and for the important point that he has just made. One senses that we are being kept in the dark, that there is there is far greater transparency on the EU side, and that we will probably end up learning more from the EU and other countries about how our deals are progressing. The Select Committee has actually found that to be the case when we have visited Geneva, Brussels or elsewhere; we are discovering the reality from trade ambassadors in those other countries.

[Matt Western]

My hon. Friend makes an important point, which I was going to come to later in my speech. He is quite right that the Government are kind of fudging the situation along, and no one is absolutely clear how these things will be managed. Our rural and farming communities will be extremely concerned because, having been so dismissive of the common agricultural policy, it is absolutely not clear how we are going to manage our all-important farming and agricultural sector post Brexit.

I was talking about the free trade agreements and the discussions of the Select Committee last week. It has subsequently become clear that the situation is a real mess. The status of the deals has been leaked and we now know that just five have been agreed, nine are off track, 19 are significantly off track, four are not possible to complete by March 2019 and two are not even being negotiated. So much for colour blindness—perhaps it is more of a blind spot.

In the case of the five deals that have been rolled over, their lack of priority and importance is perhaps self-evident. The Faroe Islands, which were mentioned earlier, are the UK’s 114th largest trading partner—critical, then—and account for 0.1% of total UK trade. Clearly we buy a lot of fish from them. Then there is Chile, our 65th largest trading partner, which also accounts for 0.1% of total UK trade. The eastern and southern African region accounts for £1.5 billion and another 0.1%. Switzerland and Israel are the only countries that are bringing deals of the scale that we would have expected earlier in the process. Perhaps most concerning are the agreements with South Korea and Japan, which are way off track, and the lack of diplomacy is only hampering them.

It is clear that the Secretary of State and his Department favour securing deals with Anglosphere countries—the US, Australia, New Zealand and Canada being prime among them. The US is a major market, but so is the EU. Perhaps it is the appeal of another strong and stable leader that is driving the Prime Minister and her Secretary of State to prioritise a deal with the US. Elsewhere, of course it would be good to have better deals with Australia and New Zealand, but is it not more sensible to prioritise the customers on our doorstep? When I did a paper round, I always thought that it was better to do the paper round on my own street, rather than on the other side of the village; maybe I am wrong.

The public should not be fooled into thinking that this will be over by 2020 or 2021. As we have heard, these deals will take six to 10 years to negotiate. This will not be easy. The EU-CETA deal took six years. That is typical, and we have heard from trade negotiators, trade lawyers and those involved in other countries just how difficult this will be. The public need to know, as do those in our industrial and business sectors. The US is a great country, but it is an even better trade negotiator. In trade deals, as in any business deal, size matters, and since the election of President Trump we have seen a new approach that favours the bilateral agreements that he prefers. That puts the US at an immediate advantage. Hence, NAFTA was redone. The Select Committee happened to be over there back in the spring of 2018, and the anxiety was palpable among the Canadian negotiators about what that would mean—but not just among them. It was palpable among US exporters and the car industry, as we heard earlier.

Perhaps naively, or perhaps because it is the outcome that the Secretary of State favours, we will face the mother of negotiations when our people sit down in Washington, and we should be under no illusion as to what the US will want to trade on. It will be services and cars, traded for agriculture and healthcare. We should remember the issues from the negotiations on the now-abandoned Transatlantic Trade and Investment Partnership, otherwise known as TTIP. Foremost among the public’s concern was the threat posed to our precious health service from a possible corporate takeover in any form. That deal, lest we forget, was being negotiated between the EU and the US, virtually equal-sized economies.

I have nothing against the US. In fact, I love the US, but I love the NHS more, and I am suspicious of the strategy of the Government and the Secretary of State. I have nothing against him personally, but let us be honest, he was the founder of the Atlantic Bridge, and his motivations and intentions have always been clear.

Like so many of my constituents, I fear not just for our health service but for our excellent, world-leading car manufacturers, local farmers and all those involved in our agri-food industry. None of those working in that sector should be under any illusion that they will be safe in a trade deal that the Secretary of State will seek urgently and desperately to secure in order to preserve the Government’s position. Without doubt, financial services will be his priority.

Our farmers should also be concerned by what concessions are likely to be made in the trade deals elsewhere, especially in the trade of livestock. Likewise our fisheries. Just last week, there was disagreement between the Secretary of State for Environment, Food and Rural Affairs and the Secretary of State for Business, Energy and Industrial Strategy, and that was echoed this morning, as we have just heard, in the comments about who would subsidise our farmers in those circumstances should we leave the EU. While both Australia and New Zealand have much to offer, their markets are still a small fraction of that of the EU, and the Secretary of State should be clear about that. By my estimation, trade with the EU is 30 times the combined trade that we do with New Zealand and Australia.

By contrast, the comprehensive and progressive agreement for trans-Pacific partnership has considerable scale. Naturally, its members comprise the nations around the perimeter of the Pacific, which will benefit from free trade in that sphere. I struggle to see how it will benefit or be appropriate to the UK. Call me old-fashioned, but doing business locally was always easiest and remained the priority. That seems no longer to be the case. Of the countries involved, our trading negotiations with Japan and South Korea are the most critical—far more so than those with Australia or New Zealand. In conversations with Japanese and Korean investors, it is clear how concerned they are by Brexit.

At an event in October last year held by the Japanese Chamber of Trade here in Parliament, its chief executive made it clear to those present, including the Secretaries of State for Business, Energy and Industrial Strategy and for Transport, that Brexit would seriously affect its businesses and investments in the UK. Spring forward three months, and Nissan has cancelled its investment in Sunderland, Honda has announced the closure of its plant in Swindon with the direct loss of 3,500 jobs, and Hitachi has cancelled its investment plans for a nuclear station in Anglesey. A clear pattern is emerging.

Let me return to the question of priorities—let us call them business priorities. Surely our priority must be to secure our existing trade in inward investment. I do not understand why the Government seem so relaxed about walking away from their biggest customer and in the process damaging existing relations and undermining both domestic and foreign direct investment.

[Angus Brendan MacNeil]

The hon. Gentleman has mentioned Japan. Does he think that the lack of concern that has been shown for Japanese interests in this whole Brexit farrago will not serve the UK very well when it comes to negotiating a trade deal with Japan? The list of companies he gave and the concerns that the Japanese have raised have not registered or led to any deviation in UK policy, and it is understandable that the Japanese feel quite slighted, given their interests and that 40% of their EU investments were on island UK.

[Matt Western]

I thank the hon. Gentleman, whose constituency name I always get wrong—the Outer Hebrides—for his important point. It is not until we actually talk to investors and their representatives, and to major corporations that have given so much prosperity to these islands over the last 30 or 40 years, and consider how they feel—he used the word “slighted”—that we realise that respect is such a critical part of the culture in Asia. It is absolutely clear that they feel disrespected in this process and that we have not approached them and engaged with them sufficiently well. The Government may well have done that to an extent, but the fact that we are now seeing this haemorrhaging of investment from the UK underlines how seriously that is felt. At that reception held by the Japanese embassy in October last year, attended by the Secretaries of State for Business, Energy and Industrial Strategy and for Transport, the words of the chamber’s chief executive were chilling. He said, in summary, about Brexit, “We will be watching you.” Never have so few words concerned me so much.

I cannot help but conclude that this country is being seduced by a prospect of some sort of brave new world—empire 2.0, perhaps—when, in reality, the existing world in which we trade is both stable and prosperous, no matter the present headwinds. Actually, I agree with the Secretary of State for International Trade that we could be performing better in Asia Pacific markets, but I disagree with him on his solution. How can it be that, as I have said previously in this place, German exports to China are 10 times those of the UK? Germany is part of the EU, is it not?

Sometimes, we—the UK public—have bought the lie that being a member of the EU has held us back in international trade. It has absolutely not. To be fair to someone I did not necessarily agree with, Margaret Thatcher recognised that and recognised the importance of the EU. As was said by my hon. Friend the Member for Swansea West (Geraint Davies), who is no longer in his seat, it is perhaps the greatest irony that she would have sought to protect our membership of the EU single market, of which she was the architect, recognising its importance to businesses based here, and particularly the Japanese companies she persuaded to invest here, such as Honda and Nissan. She will be turning in her grave.

I remain convinced about and committed to protecting our market and our businesses, and our jobs that they provide. Likewise, I am concerned for our farmers and those in the south of my constituency around the villages of Barford, Bishop’s Tachbrook, Hampton Magna and Norton Lindsey, who I believe will be seriously damaged by the industrial-scale farming they will be forced to compete against in future.

I also remain convinced about and committed to the EU market. Surely it provides greater certainty than the prospect of being caught up in the crossfire of the US-China trade wars. The truth is that, whether it be the uncertainty of negotiating with the current President of the United States or the significantly smaller markets presented by Australia and New Zealand, the priorities claimed by the Secretary of State are far removed from the certainty of the EU market. We should be wary of where we are going.

--- Later in debate ---

[Graham Stuart]

Excellent. That is delightful.

I have been speaking for eight minutes so far, and will seek to stay within the time. My hon. Friend the Member for Mole Valley (Sir Paul Beresford) was informative, fascinating and interesting when he talked about the scale of farms. Agriculture was raised in the debate. There is a balancing act to be done between looking after consumers and making sure that we look after the beautiful countryside, not least in the north-east of England, but in the rest of the country as well. If there are to be any changes—liberalisation, for example—they need to be done in a sensible way that maximises the potential upsides and minimises any downsides to any losers.

The Chairman of the Select Committee, the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), said that we needed to carry Parliament with us, and he is absolutely right. In talking about winners and losers, he mentioned compensation for areas that lose out. By having a central Treasury, this country makes sure that we provide a counterbalance between those areas that do less well and those areas that do better. I point to the behaviour of the Department for International Trade. As the Minister responsible for investment, my job is to lead the investment team. [Interruption.] Well, the shadow Minister, the hon. Member for Sefton Central (Bill Esterson), seems to invent facts rather than actually access them. If he looks at the latest numbers from the United Nations Conference on Trade and Development, probably the most respected ones globally, he will see that they suggest that, while global foreign direct investment fell markedly last year, that in the EU fell even more, and the UK—despite that—went up by 20%. So there is little truth in the suggestion, which we hear so often from the Opposition, that somehow things are going downhill. We have more people in work than ever before, more disabled people in work than ever before, rising wages and lower inflation. The truth is that we have fewer unemployed young people than at any time in our history. This is good news. Trying to talk the country down about both its future and its present may be a standard Opposition tactic, but, in the current circumstances, it is, frankly, disingenuous.

[Angus Brendan MacNeil]

Other than spending consequentials in this centralised UK state, there are no fiscal transfers from the south to the north of England—for example, when the north of England got damaged by the air transport policy that the UK ran for about 40 years. I just caution the Minister against being too complacent. The UK is not doing what it should to offset the bias of the sterling zone and the UK centralised Government towards the south-east of England.

[Graham Stuart]

We have seen investment spreading out from London and the south-east. If the Chair of the Select Committee looks at the EY report, he will find that there has been a big change in the amount of investment going into the regions and nations of the country—away from London—over the last number of years. I recommend that report to him. In addition, it points out that there has been an increase in the share going to manufacturing.

The Opposition are again peddling the falsehood that we are somehow seeing a loss of manufacturing. On the contrary, manufacturing is becoming more efficient and competitive. It is competitiveness that will ultimately lead to higher living standards and it is competitiveness that this Government understand. The Opposition too often want to be on the side of protection, rather than enhancing competition while managing it, and that is why almost every Labour Government in history have ended with higher unemployment at the end than at the beginning, and it is why the Conservative party and this Government have a proud record of creating more employment.

I hope that these limited responses have been helpful to hon. Members. As I have said, we are listening closely to the views expressed in this debate and will reflect seriously on them before laying our outline approaches to our first negotiations before the House—and we will do that.

The United Kingdom’s exit from the European Union provides us with a golden opportunity to negotiate, sign and ratify new free trade agreements as an independent free trading nation for the first time in more than 40 years, and it is an opportunity that this Government and this party are determined to seize.

Question put and agreed to.

Resolved,

That this House has considered potential future free trade agreements: Australia, New Zealand, US and a comprehensive and progressive agreement for Trans-Pacific Partnership.

EU Trade Agreements: Replication

Angus Brendan MacNeil Excerpts

Wednesday 13th February 2019 Commons Chamber

[Dr Fox]

First, let me thank my right hon. Friend for the work he has done in my Department as part of this overall process. What stands out in this debate is the utter humbug we hear from the hon. Member for Brent North, who talks about the need to roll over agreements such as the one with Canada and asks why the Government are late in doing so. The Labour party voted against the agreement in the first place; Labour did not want us to have the agreement. So now, to come to the House asking why we are not rolling it over on time is, sadly, absolutely typical of the way he does business.

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

The serious matter here is that on 29 March, transition or no transition, the UK is going to be at the mercy of the sovereignty of 70 other countries in their agreeing to the trade deal roll-over. The EU seems to have been very good at these trade agreements, which include human rights. The Secretary of State wants to maintain those agreements, despite wanting to rip up trade agreements with the most important partners, namely the 27 countries in the EU trading bloc.



The importance of the 40-odd trade agreements with 70 countries is recognised by the Society of Motor Manufacturers and Traders, which warns that even if EU trade agreements are rolled over, advantages will not always be met. For example, the EU-Korea agreement allows for 55% automotive content, but the UK cannot reach 55% automotive content. As the Society of Motor Manufacturers and Traders has warned, that will put the UK at the disadvantage of not being able to fulfil the rates of the trade agreement, and we will be on the more disadvantageous World Trade Organisation terms as well. In the 40 agreements with 70 other countries, how many other instances are there of clauses such as the one on 55% content that cannot be met? People who trade and export from the UK need to know, and they need to know now, with 44 days to go.

[Dr Fox]

The central premise of the hon. Gentleman’s question is that we intend to rip up our trade agreement with what he describes as our most important trading partner, the EU27. We have no intention of having a breach. We want to have a full, liberal trading arrangement with the European Union. We do not want Britain to be subjugated in a political relationship that the voters have told us to leave. When it comes to continuity, the Government have set out what we will do with the agreements. For each of them, we have set out to Parliament—this is in both Libraries—the text of the agreement, an explanatory memorandum and the political statement on where there is any change between the agreement in place and the one we are rolling over, if utter and complete replication has not been possible. We have done that already, and we shall do that with the others.

European Union (Withdrawal) Act

Angus Brendan MacNeil Excerpts

Monday 14th January 2019 Commons Chamber

[Dr Wollaston]

My hon. Friend makes a valid point, but the point is that if this House agreed to a referendum Bill, those decisions would be made by this House. My feeling is that it should be a choice between, “Is this what you meant by Brexit? Do you want to proceed on the terms of this deal—the only realistic deal on the table?” and “Do you want to remain?” It would be up to this House to decide whether a further option was included, but what would be wrong would be to deny people the opportunity to discuss that.

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

But effectively the deal will be dead tomorrow, so the premise of the people’s vote will be dead tomorrow, leaving only a hard Brexit or revocation of article 50. That is what we are down to now.

[Dr Wollaston]

As it happens, I do not agree, but I do not think that any of us should pretend that it is for us, right now, to decide what the referendum question would be. We now know what the deal is. This is the only realistic deal on the table. It would be unconscionable for members of the Government to impose no deal. We have heard what the consequences of no deal would be, and I am afraid that they would be highly damaging for all the people we represent. It would not be damaging so much for big interests; it would be the most disadvantaged in our society who would pay the highest price.

[Angus Brendan MacNeil]

If Parliament voted down the deal tomorrow, the deal could be resurrected again for the people’s vote. That is a perplexing situation.

[Dr Wollaston]

If the deal does come back to this House—and once the Labour party has gone through its processology and is able to deliver on the wishes of its own members to back a people’s vote—then many former clinicians, including me, will be bringing forward an amendment to make it conditional on informed consent and obtaining that through a people’s vote. That would be the right thing to do, in recognition that, as we can all see, this House has reached an absolute impasse. That is the simple truth of the matter. There is no consent for any of the versions of Brexit. Now we have reached that point, absolutely the right thing to do, and the ethical thing to do, is to be honest about it and take the decision back to the people with a simple question: is this what you meant by Brexit or would you rather remain on the deal that we already have?

Oral Answers to Questions

Angus Brendan MacNeil Excerpts

Thursday 13th September 2018 Commons Chamber

[George Hollingbery]

It is important to point out to my hon. Friend and, indeed, to the House that our duty of sincere co-operation means that we are only exploring information at this stage since we may not, cannot and should not explore actual free trade deals. However, the UK-US trade and investment working group has now met on four occasions and will meet again in November in Washington. We want our future trade agreements to work for all sectors and regions of the UK, including the UK’s highly valued ceramics industry in Staffordshire, for which my hon. Friend is a doughty champion. The Secretary of State will be chairing the consultation in Birmingham on 1 October. My hon. Friend recently wrote to me requesting a meeting for that particular sector, and we will be exploring dates shortly.

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

A potential free trade deal with the United States of America is reckoned to be worth about 0.2% of GDP, but the loss of GDP with a mere FTA deal with the European Union is 6%, which is a loss thirty times greater than the gain from America. Even if the Minister got an equivalent free trade agreement with the rest of the world, he would need a world population of 15 billion —twice the current population—to make up the gap. There are only 7.5 billion people on earth. Where are the Government going to make up the gap in GDP loss that this Brexit is costing the United Kingdom?

[George Hollingbery]

I point out to the hon. Gentleman that the British people voted in a referendum to leave the European Union and that is exactly what we are organising. We are in the middle of negotiating with the EU on a wide-ranging and comprehensive package of proposals that will allow trade to continue with the EU hopefully much as it does now.

Trade Bill

Angus Brendan MacNeil Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 17th July 2018 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I should like to speak to new clause 20, which is in my name and those of my hon. Friends. I shall also speak to new clauses 22, 23 and 24 and make brief reference to new clause 21. New clauses 20 to 24 combined are an attempt to provide and further strengthen a comprehensive framework for future trade negotiations. This is to ensure that the devolved nations are respected, consulted and fully engaged in trade deals, and that their voices and national interests are properly reflected in trade deals, from determining the negotiating mandate right through to reviewing progress on deals after ratification and implementation.

That is important because although the UK devolution Acts grant Westminster full power over international trade, the domestic impact of many trade agreements extends beyond the competence of Westminster. The devolved Administrations have responsibility for a broad range of policy issues including health, education, agriculture and the environment, and many modern trade agreements include provisions with the potential to lower environmental standards, open up public services to privatisation, expand intellectual property rights or risk increasing the cost of medicines. Those agreements can encroach on the devolved Administrations’ policy space, restricting their ability to make public policy in those areas. That is something that none of us wants to see.

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

My hon. Friend is making an important point, and he is not asking to reinvent the wheel. In Canada, the International Trade Committee heard evidence from John Weekes, who is an ambassador to the World Trade Organisation and also a Canadian negotiator. He said that squaring off the provinces of Canada, though adding to complexity, made for better trade deals and a more harmonious Canada. Canada is obviously more interested in keeping itself together than the current United Kingdom is.

[Stewart Hosie]

My hon. Friend the Chair of the International Trade Committee makes an important point. We have already seen the impact of sub-state Parliaments in Europe on previous European trade deal discussions. Indeed, my hon. Friend is right that we have seen the impact of provincial governments in Canada, and we would do well to take that on board here. In a sense, that is what my new clauses are about.

New clause 20 sets the role of the devolved Administrations in helping to approve the negotiating mandate. It suggests that a joint ministerial committee on trade be set up with representatives from all the devolved Administrations, that that committee be required to reach consensus on any draft negotiating mandate, and that it be revisited if the mandate changes during the negotiations. New clause 20 also requires that the consent of the Scottish Parliament and the other devolved Administrations be secured specifically for areas under devolved control that may be affected by a trade deal. That is not a veto, as the Labour Front-Bench team would describe it; it represents responsibility for the areas that the devolved Governments have responsibility for. In short, new clause 20 ensures that any negotiating mandate is first approved by the devolved legislatures and that a joint ministerial committee is created to co-operate and agree the mandate.

--- Later in debate ---

[Jeremy Lefroy (Stafford) (Con)]

In speaking to the amendments on the transparency and scrutiny of free trade agreements, I ask the House to lift its eyes beyond the detailed scrutiny that will inevitably and necessarily take place in this House and consider whether we should not also be looking to join others not in the European Union but in free trade associations.

Pretty much every single country in the world is part of some kind of free trade association, whether a very close one or a much more loose-knit one—whether it is Mercosur in South America, the Common Market for Eastern and Southern Africa or the North American free trade agreement. I therefore ask the Government to look at the European Free Trade Association, which is not synonymous with the EEA or with Switzerland. If it will have us, as I very much hope it will, EFTA would provide the ideal vehicle for both the withdrawal agreement and the transition arrangement of 21 months, during which time we will be members of the EEA, and for the association agreement thereafter.

[Angus Brendan MacNeil]

The hon. Gentleman is fantastic in making the fundamental point that the rest of the world is in regional trade agreements. He is just about correct. Only five countries are not in regional trade agreements, which is what the UK is heading towards: East Timor, Somalia, South Sudan and, we think, Mauritania—

[Mr Speaker]

Order. We do not have time for these long interventions. Short question, one sentence. Thank you.

[Angus Brendan MacNeil]

Does the hon. Member for Stafford (Jeremy Lefroy) think it is incumbent on the UK to think again about being in that company?

[Jeremy Lefroy]

Yes.

--- Later in debate ---

[Barry Gardiner]

My hon. Friend has put it very succinctly, and he is absolutely correct. That is why the SNP’s new clause 20 does not respect the devolution agreements; nor is it about ensuring that devolved authorities have a say. If that were the case, I would have expected SNP Members to support the amendment that we tabled in Committee, which called for the Joint Ministerial Committee to be convened to consult on the implementation of regulations under the Bill and on negotiations on future trade agreements. Indeed, our new amendment 19 would ensure that such consultation frameworks are established.

Similarly, in new clause 21, the SNP has sought to ensure that each devolved authority takes aspects of trade competence from Her Majesty’s Government and to provide for devolved authorities to have their own appointed trade negotiators at trade talks. Our new clause 4 could does not support that, because it could ultimately lead to several trade negotiators’ working against each other to secure the best terms only for their respective territories. Such a bunfight at the negotiating table would allow negotiating partners to play our own negotiators off against each other.

We believe that trade deals must ensure that benefits are delivered across the United Kingdom and that a whole UK approach must be taken to negotiations. That is why we have called for advanced consultation to ensure full and proper representation in those negotiations. It is also why we would have been happy to support new clause 22 had it been put to the vote. It sought to ensure transparency on trade talks, and it would have afforded a right to the devolved Parliaments to scrutinise all aspects of a trade agreement and related correspondence or documents as they so required.

Our new clause 4 would absolutely guarantee the right of consent to devolved Administrations whenever a Government sought to implement regulations to carry out their obligations under international treaties. What it would not do is give the devolved Administrations a power of veto over the ratification of international treaties, the negotiation of which is a matter for the Westminster Government. SNP Members would seek to secure the ultimate power of veto that has thus far eluded them in other amendments and that they have been very clear about seeking.

[Angus Brendan MacNeil]

Will the hon. Gentleman give way?

[Barry Gardiner]

I am pressed for time. I know that you want me to conclude my remarks very shortly, Madam Deputy Speaker.

While other amendments are about consent before the making of regulations implementing obligations arising under a trade agreement, that clause would prevent the trade agreement from ever having legal effect, as it could not be ratified unless the devolved authorities had consented. It has been carefully worded, but its intent is clear: it is not limited only to matters of devolved competence, but covers all trade agreements in their entirety even if no aspect of that agreement would touch on devolved competence and even if absolutely no regulations were required to implement that agreement. New clause 23(3)(b) would ensure that any trade agreement

“having an impact within the territory over which the devolved authority presides”

was subject to this consent power. Quite clearly, every single trade agreement will be, as there will be exporters across the UK who can trade under the terms of that agreement. It is a thinly veiled attempt at securing the Wallonian veto power that the hon. Member for Kilmarnock and Loudoun (Alan Brown) told us in the Committee was his intention.

The Committee took many more pieces of evidence. I will not detain the House with them today, but simply say that new clause 4 absolutely respects the devolution settlement. It sets out the right relationship so that Government cannot overreach into devolved competence nor the devolved authorities reach up into powers that are reserved for this sovereign Parliament.

I also support new clause 19, but I will not detain the House any longer.

[Stewart Hosie]

I shall speak to amendment 25 in my name and to amendments 26, 27, 28 and 29. New clause 21 is in this group, but I referred to it earlier so will not do so again now.

First, however, let me make an observation about the Labour party’s position. It seems to rely on the new form of words that the UK Government would not normally legislate or do this or do that in relation to anything that was a devolved competence. If we were talking about normal, reasonable people in normal, sensible times when they did not interfere at all except in extremis, perhaps we could accept that. However, they have taken the Scottish Government to court to undermine a democratic decision of the Parliament, so, of course, we accept the principles of devolution, but to make them work there now must be formal arrangements and consent must be sought. We can no longer rely on the formulation of the UK Government not normally doing x, y or z.

[Angus Brendan MacNeil]

Does it not also show, sadly, a centrist approach from the Labour party, which cannot adopt the maturity of Trudeau’s Canada and scoffs at the fact that Belgium is not such a control-freak state that it can allow Wallonia some say in the governance of Belgium?

[Stewart Hosie]

“International” only goes so far—perhaps just to the white cliffs of Dover.

The Trade Bill among other things ensures that the UK can implement any procurement obligations that arise from it being a member of the GPA—agreement on Government procurement—in its own right and ensures that agreements with partner countries corresponding to the EU’s free trade agreements are in place prior to Brexit. If that is all the Bill did, and it maintained all the rights and responsibilities, it might not be great, but it would make sense and probably go through on the nod. The problem is that it goes further than that: it carries on from the provisions in the EU withdrawal Bill limiting the actions of the Scottish Government and other devolved Administrations in areas that are, or ought to be, devolved, and—this goes to the first point about the GPA—that includes procurement.

That is why when the Scottish Government lodged a legislative consent motion in the Scottish Parliament initially, it explained their objections to the Trade Bill with the recommendation that Parliament could not consent to it being introduced. While they welcomed the powers being conferred on Scottish Ministers, the LCM made it clear that they could not accept the constraints placed on the use of those powers, which were analogous to those in the EU withdrawal Bill.

Legislative consent is required for part 1 of the Bill, but is not required for some of the other parts. Specifically, consent is required for the purposes within the devolved competence of the Parliament, which is that the Trade Bill seeks to maintain continuity in the UK’s trade and investment relationships through two implementation powers: implementation of the agreement on Government procurement as an independent member of the WTO; and assisting in the transition of current trade arrangements by enabling, so far as may be required, the implementation in UK domestic law of trade agreements the UK intends to conclude after withdrawal from the EU. These powers may be exercisable within devolved areas, and that is why this is important.

--- Later in debate ---

[Kirsty Blackman]

Perhaps the right hon. Gentleman did not hear what I said. The issue is that the UK Government have chosen to negotiate swaps that directly disadvantage Scottish fishermen. The concern is that the weight of the population in the south of England will mean that the UK Government continue to take decisions that improve life for people in the south of England without taking account of the fact that those decisions are detrimental to people in Scotland.

The amendments we have tabled would therefore ensure that, in decisions that are taken in this place—decisions on which the UK Parliament will have more power than it has had in recent decades—the voice of Scotland is heard, because we need decisions that do not disadvantage the people of Scotland.

[Angus Brendan MacNeil]

You catch me finishing off a Trebor extra-strong mint, Madam Deputy Speaker, and very nice it was, too.

At a time when the House is investigating bilateral trade agreements, my hon. Friend the Member for Aberdeen North (Kirsty Blackman) made the fantastic point that for 40 years the UK Government stipulated in their bilateral trade agreements, “London airports only.” It was only when they demanded that Iceland should fly to London airports and Iceland said, “There is no way we’re flying to a London airport to get the sleeper back to Glasgow,” that some change was brought about—that was relayed to me by the Icelanders themselves.

Trade agreements, by their very nature, require trade-offs, and there should be aggregate gains to the two parties involved. Within those aggregate gains, there will be people in certain sectors who lose. My International Trade Committee heard about that from Kevin Roberts of Meat Promotion Wales. He told us that some 80% of Wales is either upland hills or pasture and is suitable only for livestock farming, which is a fragile sector. About 80% of the net farm incomes of Wales come from EU subsidies, which is another matter.

Let us consider a situation in which the UK Government find themselves in a trade negotiation with somebody who says, “Do you know what? See if you could let us have some access to your market for our lamb and we’ll give you something else.” Wales would lose out. The aggregate gain to UK GDP would be increased—the right hon. Member for Wokingham (John Redwood) spoke on this point—but there would be a loss to Wales and there would be resentment in the UK to fiscal transfers back to Wales, which had sacrificed and given up things for the aggregate gain of the UK as a unit. That is one reason why many countries do not have the control freakery of the Labour and Conservative parties and allow territories, states and subnational Governments to have a voice at the table.

We should remember that Wales is not a member of the UK in the same way as Ireland is a member of the European Union. Ireland, as we have seen week in and week out, day in and day out, month in and month out, and hour in and hour out, has a real voice in Europe. In fact, some Brexiteers complain that Ireland is now the tail that wags the EU dog. If only that were a possibility for Wales, Scotland or Northern Ireland within the UK, there might not then be the concerns that my hon. Friend the Member for Dundee East (Stewart Hosie) raised. That is why there should be some responsibility and some form of acknowledgement from the big beast of the UK—England, or the south-east of England—that it might gain from a free trade agreement at the expense of other places. We need some counterbalancing measures.

In a way, the Brexiteers are constitutional gold dust, because I want to see Scotland catching up with Ireland at the top of the EU growth league, rather than being at the bottom with the UK. This is putting a strain on the United Kingdom. As Laura Dunlop, QC, told the Exiting the European Union Committee:

“At the moment, there is a sense of a double-whammy: that the international arrangements, whatever they are going to be, will be negotiated by the UK Government, and then the UK Government will be telling the devolveds what they have to do to comply with them. The participation is minimal.”

That is an unsustainable way forward. It does not respect the words we heard in 2014, “Scotland, stay in and lead. Do not just be a part; lead the UK.” When push comes to shove, as we have seen all the way through the European Union withdrawal process, Scotland is shoved to one side. It is all rhetoric. If the Government had the grace to put some of their rhetoric into action, they would be accepting some of the amendments here today. This is not big stuff in any other country, so why is it a big deal in the centralised UK, both to the Tory Government and, sadly, to the Labour Opposition, who feel that they must also adopt the centralising approach? It is really disappointing from both of them.

--- Later in debate ---

[Nicky Morgan]

No. Some Government Members chose to try to scupper that agreement and those proposals yesterday. Some of us tried to stop that; but sadly, we failed. What is proposed in new clause 18—I am delighted to join my hon. Friend the Member for Wimbledon (Stephen Hammond) in proposing it—is eminently sensible. We want to give the Prime Minister space for the negotiations, and it is clear that there is a majority in this House for a customs union to safeguard business, jobs and our constituents’ future financial security. I hope that the House will have the opportunity to demonstrate that shortly.

[Angus Brendan MacNeil]

The majority of the world’s countries are in a customs union. We need to be in a customs union and, I would argue, the single market. The damage that will result from not being in those two things and instead having a free trade, or less trade, agreement with the EU will be 6% of GDP. The panacea often offered is the United States of America, but the US will counter that drop to the tune of 0.2%. To make up for the damage that will be done by not being in the customs union and the single market, we need 30 US-style agreements. The US has a population of about 300 million, and a deal with it will yield a 0.2% gain in GDP. By that arithmetic, we need to make US-style agreements with about 9 billion people, but there is one problem for the Brexiteers: the population of the world is only about 7.4 billion. They should be listening to their friends and colleagues and making absolutely sure that they are not playing fast and loose with jobs, security, employment and with the life chances of people in the UK, young and old. It is a pity for me that Scotland is hitched to this lot at the moment.

--- Later in debate ---

[The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)]

I beg to move, That the Bill be now read the Third time.

Let me begin by thanking right hon. and hon. Members from across the House who have shared their time and expertise to help enhance the Bill. We have spent today on Report thoroughly examining the measures in this short but significant proposed legislation. This followed four days of line-by-line scrutiny in Public Bill Committee. I would like to thank those who gave oral evidence to the Committee, and the individuals and organisations who provided written evidence and recommendations. I also extend particular thanks to the members of the Committee, on which the hon. Member for Brent North (Barry Gardiner) led for the Opposition and the hon. Member for Aberdeen North (Kirsty Blackman) led for the Scottish National party, for their detailed examination of the Bill and the positive way in which they contributed to debates on its provisions. I would also like to pay particular thanks to my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), who as Minister of State for Trade Policy played a vital role in developing the Bill and in steering it through the preceding parliamentary stages. I, and all my parliamentary colleagues, owe him a great debt.

This is an important Bill. It provides continuity and stability as the UK leaves the European Union for individuals, businesses and our international trading partners. It will be the confident first step that the UK takes towards establishing itself as an independent trading nation for the first time in over 40 years. As the hon. Member for Brent North concluded on Second Reading:

“The need for a Bill to establish a trade remedies authority, to establish our independent membership of the WTO government procurement agreement, to enable us to maintain strong trading ties with partner countries that have had historical agreements with us through the EU, and to establish the power to collect and share…information—all are uncontroversial requirements.”—[Official Report, 9 January 2018; Vol. 634, c. 221.]

I wholeheartedly concur.

As the UK leaves the EU, the Government are committed to seeking continuity in our current trade relationships. One way we will achieve this is by introducing powers to let us make domestic legislation implementing our independent membership of the Agreement on Government Procurement, or GPA. This continuity is important for both business and the taxpayer. GPA membership will maintain the access of UK businesses to a global public procurement market estimated at £1.3 trillion every year, across major economies such as the United States, Canada and Japan.

Taxpayers and users of public services will also benefit. The GPA has led to increased choice, quality and value for money in the public sector. TheCityUK, which represents financial and related professional services, wrote to the Public Bill Committee to say:

“We fully recognise the need for the UK to become a party to the WTO GPA”.

As it explained:

“The GPA requires that open, fair and transparent conditions of competition be ensured in government procurement…which cover both goods and services”.

The Federation of Small Businesses said:

“it is essential that the UK is able to become an independent member of the GPA, allowing small businesses to have continued access to government contracts and procurement opportunities.”

It is clear that the agreement is of great value to UK businesses and its importance is endorsed by organisations representing their interests.

As an EU member, the UK participates in many trade agreements with partner countries. We want continuity as far as possible in our existing trading relationships with these existing partners. As these agreements account for 12% of the UK’s total international trade, this will be important in preventing disruption to businesses, consumers and workers. The International Trade Committee observed in a recent report that:

“Almost no one who contributed to our inquiry suggested that the Government’s policy objective of seeking continuity was the wrong one.”

Additionally, the Scotch Whisky Association, which I have much pleasure in promoting at home and abroad, has said that

“continuity of current EU trade agreements is vitally important to us”.

British Sugar stated:

“We support the Government’s overriding intention to maintain continuity by replicating existing trade as closely as possible and believe that this is the best means by which to provide certainty to business.”

Continuity for the taxpayer, businesses, consumers and our international partners—that is what this Bill is about. To be absolutely clear, and as I made clear in my statement yesterday, this Bill is not about signing new trade agreements or making substantial changes to existing ones.

Despite many misleading claims to the contrary, the Government will not use measures in the Bill to implement substantially different agreements with existing partner countries. Our policy has always been, and remains, one of securing continuity first and seeking new opportunities second. We have been clear with our trading partners that continuity remains our primary objective, as I made clear earlier this evening. However, as debated on Report, to further reassure the House, the Trade Bill requires the Secretary of State to table a report outlining all the changes made to existing agreements as part of the transition into UK-only agreements. This places in statute the Government’s clear commitment to transparency—to aid appropriate parliamentary involvement, allowing Members of both Houses of Parliament the opportunity to see what changes have been made to secure continuity.

Additionally, the use of the clause 2 power will now be subject to the affirmative resolution procedure, allowing both Houses to debate regulations made under that power. The Government will not use the powers in the Bill to implement the obligations of new free trade agreements—ones with countries with which the EU does not already have a free trade agreement. We consider these to be future trade agreements and we announced this week our proposals for them.

The Bill also provides for the establishment of the Trade Remedies Authority. The World Trade Organisation allows its members to provide a safety net to protect domestic industries against injury caused by unfair trading practices, such as dumping and subsidies, and unforeseen surges in imports. Trade remedies level the playing field and restore the competitive balance. They are key to ensuring an effective rules-based system for international trade. The European Commission is currently responsible for undertaking trade remedies investigations and imposing measures on behalf of the UK. The Government are establishing the TRA to ensure that the UK can continue to provide a safety net for domestic industries after we have left the EU. I am grateful to Members on both sides of the House for the support that they have given on this issue.

Specifically, the TRA will be responsible for making an assessment in a case for a trade remedies measure, based on the evidence available. It will then make impartial recommendations to Ministers. This includes protection from goods that are heavily subsidised or dumped in the UK market at below domestic price. It also includes injury caused by unforeseen surges in imports. The investigative and decision-making framework that the TRA will be responsible for delivering is set out in the Taxation (Cross-border Trade) Bill.

The Government’s commitment to establishing the TRA has been recognised by stakeholders—by both producers and consumers. The Public Bill Committee was told by the British Ceramic Confederation:

“It is clear that we need a TRA, and it is certainly welcome that the Bill establishes one.”––[Official Report, Trade Public Bill Committee, 23 January 2018; c. 64, Q123.]

In its written evidence, consumer organisation Which? stated that it

“recognises the need to develop a trade remedies regime and establish a new TRA which will be able to consider the need for remedies objectively, on a case by case basis”.

As the International Trade Committee also recently acknowledged:

“Establishing a trade defence regime is critical to protect UK domestic industries from injury from adverse trading practices.”

The Committee described the Trade Bill and the Taxation (Cross-border Trade) Bill as “important, necessary steps” and stated that

“we welcome the Government’s attention to this subject.”

The Bill also includes measures that will allow HMRC to collect more detailed information on trade and share it with appropriate bodies, primarily the Department for International Trade. This will allow the Government a sharper picture of how the UK trades and where we can best target support for British businesses. These provisions will also ensure that the UK is able to fulfil its international transparency obligations to share data with organisations such as the WTO. This function is currently undertaken by the European Union and it is vital that the UK can take over this responsibility, if we are to operate an independent trade policy.

Appearing as an expert witness before the Public Bill Committee, Professor Winters of the UK Trade Policy Observatory said:

“Information is very important, not least in my trade, for analysing what goes on. The case for collecting reasonable amounts of information, as long as it is cheap to do so, is very strong indeed”.––[Official Report, Trade Bill Public Bill Committee, 23 January 2018; c. 57, Q108.]

In a similar vein, the British Chambers of Commerce told that Committee:

“If, in the future, there can be a more robust collection of data and stronger assessments of UK-third country trade, that would be helpful.”––[Official Report, Trade Bill Public Bill Committee, 23 January 2018; c. 72, Q136.]

[Angus Brendan MacNeil]

Given the vote just now and that the UK is turning its back on the customs union, we will most likely have a border in Ireland. In that eventuality, we will not have a transition agreement with the Republic of Ireland. If we have a border but no transition agreement, will the Government be ready in March 2019 with the TRA and will they have in place the 40 trade agreements that are vital for industry?

[Dr Fox]

I do not accept that the Government’s proposals will require a border in Ireland. In fact, the Cabinet took a specific decision to bring forward a proposal to take to the EU that will prevent us from having that border. Nor will we accept a border down the Irish sea, because all parts of the UK, however much the hon. Gentleman might dislike it, will be treated the same by this Government, who are proud to be a Conservative and Unionist Government.

The Bill also brings forward measures that will ensure a joined-up UK approach to implementing the GPA and continuity trade agreements. However, the Government respect the devolution settlement, as reflected by the amendments tabled by the Government on Report and accepted by the House. We have worked closely with the devolved Administrations to make progress towards legislative consent. Let me reiterate the Government’s commitment to not normally using the powers in the Bill in areas of devolved competence without the consent of the devolved Administrations. These powers are primarily here for administrative efficiency. We will not be taking back any powers currently in the hands of the devolved Administrations, however much the nationalists pretend that we will be. In fact, as powers return from Brussels, more will sit with the Scottish, Welsh and Northern Irish Governments than ever before.

As we leave the European Union, we want to provide continuity for businesses, for consumers and for our trading partners. This Bill sets the scene for the United Kingdom’s independent, sovereign trade policy. We will approach that with optimism and confidence. I commend the Bill to the House.

Oral Answers to Questions

Angus Brendan MacNeil Excerpts

Thursday 28th June 2018 Commons Chamber

[Mr Speaker]

The hon. Gentleman can always shoehorn in his concern on any question, and the Chair is accommodating of him. I hope that his mood will improve as the day proceeds.

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

An important issue connected with trade deals is actually a Home Office matter, I refer to the issue of visas. Whether the trade deals are with developing countries or with Australia and New Zealand, the big thing that they talk about is not two-year visas but five-year visas. What work is the Minister doing with the Home Office to bring some sense into this area? Incidentally, that is also needed on the west coast of Scotland in relation to fishing.

[George Hollingbery]

The hon. Gentleman will know very well that mode 4 is applied in many circumstances, and that it was part of the Japan-EU free trade deal. Our conversations with the Home Office are ongoing, but it will always be a matter of national policy that we will control our own immigration system. Despite what is said in trade deals, that is protected.

EU-Japan Economic Partnership Agreement

Angus Brendan MacNeil Excerpts

Tuesday 26th June 2018 Commons Chamber

[George Hollingbery]

My hon. Friend is plainly right: we have debated this matter and are giving it further scrutiny today.

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

rose—

[George Hollingbery]

I have already taken up nine minutes of the House’s time, so if the hon. Gentleman will allow me, I shall make a little progress.

The treatment of UK services suppliers will be fairer as a result of the EPA and comparable to that of Japanese suppliers. That is good news for UK priority sectors such as finance, postal, telecommunications and maritime.

The national health service, which was discussed considerably as part of the heated debate—as were, indeed, public services generally—is a national treasure. I know all too well the importance that fellow Members and, indeed, the population of the United Kingdom place on the need to safeguard the NHS for generations to come. I share that view and wish to be clear with the House that the delivery of public health services is safeguarded in the trade-in-services aspects of all EU free trade agreements, including the EU-Japan EPA. For the avoidance of doubt, for the UK that incontrovertibly includes the NHS in this agreement.

Although investment protection is not featured in the agreement, investment liberalisation provisions will help to improve market access for British companies. Right hon. and hon. Members should note that the EU and Japan will continue to engage to negotiate a stand-alone investment protection agreement.

For the first time in an EU trade agreement, there is a dedicated chapter on corporate governance, which sees the EU and Japan reaffirm their commitment to the OECD principles on corporate governance. The UK played a key role in agreeing those principles at the 2015 G20 summit. The House should be clear that the inclusion of corporate governance provisions in the EPA does not unduly limit the UK’s ability to act further in this area at national or international level.

The agreement explicitly refers to our commitment to labour rights and environmental standards, and neither party will seek to reduce such thresholds to boost trade.

[Angus Brendan MacNeil]

I welcome the Minister to his new position and wish the right hon. Member for Chelsea and Fulham (Greg Hands) well for the future.

This is the second time today that we have heard the UK Brexiteer Government welcome the European Union’s trade agreements; it seems that when ideology is put to one side and practicality comes in, the EU does not seem to be at all as bad. Currently, what really concerns the Japanese is the relationship that the UK will have with the European Union, because 40% of Japan’s investments in the EU are currently in the United Kingdom. That has led to considerable nervousness in Japan. As well as this agreement, will the Minister be cognisant of that fact?

[George Hollingbery]

I take the hon. Gentleman’s point, but I must say that I do not think it is widely relevant to the matter before us. Suffice it to say that the UK Government clearly share concerns that we should have a good and friction-free relationship with the European Union after we have left.

--- Later in debate ---

[Mr Marcus Fysh (Yeovil) (Con)]

It is a pleasure to follow the hon. Member for Dundee East (Stewart Hosie) and to have heard a free trade speech from the Opposition Benches. I welcome my hon. Friend the Minister. Let me also praise my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) for his sterling work on these issues in the Department, and for his engagement with the various Committees of which I am a member.

This agreement is very important to the UK, and I support it. The total trade between Japan and the UK is worth £127 billion, and Leonardo, in my constituency, has a relationship with Kawasaki, producing helicopters, which it would like to expand. As my hon. Friend the Minister said, the Government’s impact assessment forecasts gains amounting to no less than £3 billion from the new agreement, partly as a result of increases in both imports and exports. Cheaper imports help our economy, which is one of the main reasons why we voted to leave the EU and its customs union.

After we leave the EU there will be great opportunities to improve on the Japan agreement, especially in respect of services, in which our economy has a strong interest. The Japan EPA states that world standards should be followed, and demonstrates how we can use methods of regulatory co-operation in the agreement that we make with the EU to guide, smooth and facilitate the handling of goods at our borders with it.

[Angus Brendan MacNeil]

Given the high praise that the hon. Gentleman is heaping on the European Union, might it not be important to have some bits of paper from both the European Union and Japan saying that this relationship could continue—as he has suggested that he would like it to—following the UK’s departure from the European Union? We would not want to find ourselves in a less advantageous position.

--- Later in debate ---

[Jeremy Quin]

I will allow the hon. Gentleman to continue.

[Angus Brendan MacNeil]

rose—

[Geraint Davies]

Go on.

[Angus Brendan MacNeil]

The hon. Gentleman is making an absolutely fantastic speech on inputs and imports. [Interruption.] He actually is, if Members would listen to what he is saying.

The important point, which the hon. Gentleman will be aware of, is what I heard when I was in Detroit with the International Trade Committee in February. It is that the Americans are more concerned about the relationship that the UK has with the EU—and, I suspect, that we have with Japan as well—because if the companies in which they have invested find there are obstacles and their supply lines are disrupted by tariffs, border checks or whatever, that will have serious economic effects.

[Geraint Davies]

It is in the interest of the Americans for us to be separated, isolated and small so that we can be picked off. They obviously intend to impose their standards. They are selling more asbestos, they have lower chemical standards and lower standards of food safety—I am thinking of chlorinated chicken and so on. They will impose those standards because we will be desperate to have a deal and we face problems. We are better as part of team EU.

There are worries if we find ourselves excluded from the Japan-EU deal as we Brexit. That will include services—80% of our exports are services—and financial services. The axis of yen plus euro would be a danger to the City of London.

Captain Fox is boldly going to try to establish trade relations that no one has had before, but might find that we currently have a trade relationship that is even better. In the round, when people realise that and lose their enthusiasm for Brexit, they will realise that such trade agreements underpin the need for a public vote on the deal. When we have that, Britain will decide that it wants to stay at home in Europe.

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[Emma Little Pengelly (Belfast South) (DUP)]

I welcome the motion before the House. As with the previous debate, I believe this is a logical and sensible approach as we move through Brexit into the transition and into renegotiating these matters. The Democratic Unionist party will therefore be supporting the motion.

In Northern Ireland, we have a number of Japanese-owned businesses. This has happened more through an organic approach, whereby companies have been taken over by Japanese companies. However, I had the opportunity to go to Japan with a trade mission a few years ago and I could certainly see huge opportunities, which will only help and which I think will be good. I believe this is a good deal.

I think some will be surprised by the comments and criticisms that have been made today, particularly on process, but there is a very easy answer to them. It is only through the United Kingdom leaving the customs union and leaving a customs union that we can put in place our own meaningful processes on international trade. European Union processes, in relation both to this motion and to the previous motion on CETA, have flushed out a number of key issues relating to investors, arbitration and services. I welcome the Secretary of State’s statement about looking at services and their potential as we move forward and renegotiate the deals that are in place. The experience of the European Union in such deals provides valuable learning opportunities that can inform our way forward as the United Kingdom takes responsibility for this policy area.

We have heard many different contributions from across the House about free trade, which we proudly support. The Secretary of State has also said, however, that free trade does not mean trade without rules. Brexit provides the opportunity for a meaningful discussion and debate, for the first time in a long time, on what the rules should be for the United Kingdom.

Fundamentally, international trade deals must be good for all parties. They must be positive for business, consumers and our economy, and for building international relationships. To listen to many, including in this place, there seems to be much confusion about that. I have no doubt that our UK negotiators and the UK Government must—and will—go and fight for the best deal, and a good deal, for the United Kingdom with the European Union and in trade deals globally. However, that must take into consideration our UK regional interests. It must also take account of Northern Ireland interests.

The freedom to make our own trade deals undoubtedly brings opportunities, but sadly they have been drowned out by so much negativity. I believe that not having a proper and meaningful debate thus far about the potential for trade deals, free of the European Union, is sad for business and bad for business. We need to move on and embrace the opportunities that Brexit will bring. The Secretary of State will be aware of the very strong desire to do so of many in business and the strong advice on economic impacts relating to the importance of EU-third party trade deals to the UK economy. I support the Government’s policy on rolling forward the EU third-party trade deals with some 40 countries. Some will be surprised that there has been opposition from the Labour Front Bench team today to the Canadian and the Japanese deals, and, since it is the Government’s policy to roll forward the existing deals with all 40 countries, there needs to be an indication now of which of those deals Labour Front Benchers no longer support and feel should be renegotiated.

[Angus Brendan MacNeil]

Would it not be useful if the UK Government could give bits of paper to those 40 countries to show that the warm words actually mean something?

[Emma Little Pengelly]

Absolutely. As I indicated, I fully support the desire of the Secretary of State and the UK Government to secure those agreements and roll them forward. It is absolutely clear that the best approach—the logical, sensible approach—is to secure the current situation. We should agree this motion, as we agreed the previous motion, and use that as the foundation to build on and renegotiate in due course. It is absolutely clear that business wants as much certainty as possible about this. I welcome the fact that there have been discussions with many of the third parties who have the EU-third party trade deals, but I, along with many others across this Chamber and with business right across the United Kingdom, want certainty as quickly as possible. I support the Government in getting on with that job, getting the clarity that we need and getting the best deal for the United Kingdom as we Brexit.

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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.]

--- Later in debate ---

[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.

US Steel and Aluminium Tariffs

Angus Brendan MacNeil Excerpts

Monday 4th June 2018 Commons Chamber

[Dr Fox]

My hon. Friend, who knows a great deal about this subject from his time as a Defence Minister, is absolutely right. We will be looking at the displacement issue very closely to see whether safeguards are required for aluminium as well as steel. He is right about Bridgnorth in his constituency, which exported £21 million of products to the US in 2017. The irony is that the only potential competitor in that particular market is Alcoa in Warrick, Indiana, which has shown little, if any, interest in it. This situation can only lead to damage to US customers at the other end.

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

As Chair of the International Trade Committee, may I take this opportunity to thank the Secretary of State for his courteous phone call to me at the end of last week outlining the situation that he found himself him? These tariffs stem from the very weird belief of the US President that if the US has a deficit with anyone, it is a result of unfair trading. Given that just about any two sets of nations find themselves in surplus or deficit with each other at times, there would be global trade chaos if the rest of the world were to follow his example of what the Secretary of State calls unjustified decision making. Meanwhile, how confident is the Secretary of State that the UK can legally take safeguarding trade defence measures if it finds itself out of the EU in March 2019, and that a trade remedies authority will be in place? My Committee has concerns about that, as I am sure he knows.

[Dr Fox]

I am very grateful to the hon. Gentleman for his comments. He is right that we have to have the TRA up and running. As he knows, we have now advertised for the most senior appointments and agreed its setting in Reading.

On the wider economic issue, the hon. Gentleman is absolutely correct. It is impossible, in an open and free trading system, that all economies will be in balance with one another. Surpluses and deficits are part of the allocation of resources that happens inside a free market. Were we all to aim for a trade policy where everybody was in balance, it would not be a free trading system. Apart from anything else, consumers would soon feel the detrimental effects of such a system.

--- Later in debate ---

[Dr Fox]

There are two interesting points to make on that tirade of nonsense. First, we do not have the legal authority in the United Kingdom on our own, because the European Union is responsible for this issue on our behalf. When we leave the European Union we will have greater freedom, but I say to the hon. Gentleman in all seriousness that escalation is not what we require. We need a proportionate response, made calmly, giving the United States time to reflect and change its mind. This is about getting the right result, not the right rhetoric.

[Angus Brendan MacNeil]

Put him in the bunker!

[Mr Speaker]

Order. The hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) is chuntering from a sedentary position about putting something in a bunker. I am not going to comment on that. It is not for me to pronounce on the merits or demerits of the matter, but I simply say, with due affection to the hon. Member for Bassetlaw (John Mann), that it is always interesting to hear from him on the golfing situation, and we have done so today.

Oral Answers to Questions

Angus Brendan MacNeil Excerpts

Thursday 11th January 2018 Commons Chamber

[Dr Fox]

Clearly, there would be a major disruption in the local economy, which is why it is so important that we get that continuity. The reason the Government introduced the Trade Bill with the parameters it has is that we are looking to get stability and continuity on the agreements we already have. I reiterate what I said in the House a couple of days ago: it is not about new free trade agreements; it is about giving stability to the ones we already have, which is why I am amazed that anyone should vote against the Bill.

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

What analysis has the Department done of the cost to business of complying with possible new non-tariff barriers, and what help will the Government provide companies, particularly SMEs, to understand the impact of any possible changes in this area?

[Dr Fox]

Of course we look at all possible scenarios, but I reiterate what I have said several times today: we want to see an open and comprehensive trading agreement with the European Union, because that is good not only for the United Kingdom but for the European Union. European member states are looking for their companies to have access to the UK market, just as we are doing the other direction.