Trade Bill

Baroness McIntosh of Pickering Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Tuesday 15th December 2020 Lords Chamber

[Baroness Noakes (Con)]

It is a pleasure to follow the noble Baroness, Lady Bull, but when I read Amendment 13 I thought that she and the noble Lord, Lord Fox, had temporarily forgotten that the Government were elected on a promise to get Brexit done, and that a part of that promise was to take back control of our borders. That means controlling who comes into our country. My right honourable friend the Home Secretary has made fantastic progress in reorienting our approach on this. I know that some noble Lords still cling to a faint hope that, even though we have left the EU, we can carry on much as before, and at the heart of this amendment is that very notion. Whatever noble Lords who support the amendment have said, at the heart of what they are trying to achieve is something akin to the status quo.

In the negotiations, which have been so tortuous, it has not been difficult to miss that mobility has simply not been on the table. Indeed, the provision of services that is the target for the amendment is not a significant part of the negotiations. These are facts. Do noble Lords think that, at this late stage, the UK should go back to the EU and say that negotiations should start all over again and build in a mobility framework? That cannot be more than a pipe dream. It might be realised in due course, but noble Lords must accept the reality that there will be no special arrangements in the near term. We must learn to live the new normal of the UK being outside the EU, with all that this entails. Some service providers, notably financial services, have already adapted their business models; others will have to follow. Noble Lords may not like change and may wish to cling to the past, but we have moved on, and this amendment belongs in another era.

[Baroness McIntosh of Pickering (Con)]

My Lords, with all the respect and affection which I hold for my noble friend Lady Noakes, I must disagree with her most strongly. I hope that, when summing up this debate, the Minister will set out the facts as they are. We passed a statutory instrument looking especially at the free movement of lawyers, and we have undertaken in this country to grant access to lawyers of the European Union and EEA to come and practise on the same terms going forward as are currently available. I realise that, as it is a different department, the Minister may not have the answers at his fingertips, but I would welcome a written response, to get the facts as they are. What update can the Minister give today on the basis that we have allowed incoming professionals?

I am particularly interested in lawyers, but I accept that the noble Baroness, Lady Bull, and the noble Earl, Lord Clancarty, are looking at the overall picture, which is that 51% of all services that we export go to the European Union. That is an inescapable fact. Have we now progressed? Do we now have a situation in which those such as myself, some 30 or 40 years ago, will be able to go over on an ongoing basis—allowing those European and EEA lawyers to practise here, establish themselves and set up a freedom to provide a service as an attorney, lawyer or advocate—on the basis of reciprocity, so that mutual recognition is a two-way process? Is that now the case? Has that been agreed with our European partners? I believe that the generosity of spirit must be reciprocated by them.

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[Lord Sheikh (Con) [V]]

My Lords, I support both amendments in this grouping. Amendments 14 and 21 are important because they are about aligning our climate and environmental targets with our trade agreements. I spoke on these issues in Committee and reinforce the point that these amendments would enable us to be an effective environmental leader. I commend the Government for their increasing attention and leadership on environmental issues, which will not just protect our health but drive our economic growth. This has been shown in the recent spending review and 10-point plan.

These are positive amendments, which will help us to have a proper green industrial revolution. In the late 18th century, the Industrial Revolution began in the United Kingdom and by the 1830s, it had spread to Europe and the United States. I hope that the green industrial revolution can do the same and that the UK can become a true leader in green growth. In Committee, my noble friend the Minister said that this Government have done a huge amount to protect and improve the environment. I completely agree that they have done so. However, this should not mean that we sit on our laurels. Amendments 14 and 21 will help drive our green agenda forward.

Amendment 14 would mean that future trade agreements cannot be signed or approved if they are inconsistent with our climate change obligations. This includes being compliant with the Climate Change Act 2008, and our international obligation to tackle climate change under the UN Framework Convention on Climate Change.

This amendment will help us reach these emissions targets by making sure that we have considered the impact of trade agreements on the climate. For example, subsection (4) states that a Minister would have to make a statement on any agreement

“confirming that the agreement will not give rise to a net increase in greenhouse gas emissions.”

By doing so, we are sending a message that not only do we take emissions seriously but that we are helping to reduce our environmental impact. I welcome subsection (4)(b), which means that if a trade agreement leads to increased net emissions, detailed mitigation measures must be laid before Parliament. So, if we are at risk of emitting too much, we have the chance to put it right, not just for the benefit of our targets but for our own health and well-being. Given that the UK was one of the first major economies to set a net-zero goal, Amendment 14 means that we can properly commit to achieving this target and be a true leader in the run-up to our COP 26 presidency.

At the virtual Climate Ambition Summit 2020 last weekend, the United Nations Secretary-General asked nations to make their promise of a net-zero world a reality. During the summit, the Prime Minister announced the UK’s ambitious targets to cut emissions by at least 68% by 2030, and this is the first time we have put forward our national climate plan separately from the European Union. Furthermore, in its sixth carbon budget report, released last week, the Committee on Climate Change said we need early action and key policy building blocks to reach net zero by 2050. This Trade Bill gives us a chance to do that and to shape our own trade policy. Amendment 14 allows us to be explicit about where we stand on slowing down the rate of climate change and should be supported.

The risk to the environment from poor trade policies is significant, but trade can play an important role in reducing our environmental impact. This is also something the Government said in their 25-year environment plan: environmental sustainability should be at the very heart of global production and trade. Amendment 21 means that future international trade agreements can be ratified and implemented only if their provisions are consistent with the achievement of our environmental and climate change commitments. Again, this is a positive amendment that will help us do what we set out to do and not hinder us. I am glad that subsection (5) outlines a range of commitments and agreements that are relevant to this amendment, including those to protect biodiversity and natural capital and to improve environmental quality, which has a direct impact on our quality of life. This is not limited to this list, so any new or updated commitments will also be relevant.

Amendment 21 requires that reports be made to Parliament. The first is

“a report that explains whether, or to what extent, the provisions of that international trade agreement … are consistent with”

achieving our environmental or climate change commitments and maintaining the protections outlined in subsection (3)(b). A trade agreement is eligible for signature or ratification only once a report has been laid before Parliament. This is very important in protecting our health and environment by making sure that sustainability is not an afterthought. The amendment also requires that a report be made to Parliament within 12 months of ratifying an agreement or making regulations assessing its impact on our commitments. This shows we are committed to being green leaders and are taking our impact on the environment seriously. Furthermore, these reports will incentivise deals and stimulate greater collaboration; for instance, on developing green technologies.

We have great potential in advancing offshore wind, driving the growth of the hydrogen sector and accelerating the shift to zero-emission vehicles. Amendment 21 would enable us to grow the market for low-carbon goods and provide a level playing field for British businesses, because our industries will not be undermined by foreign industries that do not meet our standards. Now we are leaving the European Union, we should of course control our own green agenda, but we need to ensure that our trade agreements support us in doing so. As a businessman, I can see that supporting Amendments 14 and 21 is a sensible business decision and the Aldersgate Group, which represents many major businesses, has also shown its support. The Committee on Climate Change has shown that by 2030, the market for low-carbon goods will be worth more than £1 trillion a year. More and more frequently, consumers in the UK are considering the environmental impact of their purchases. Is it not time to make this a key part of our trade agreements? Together, Amendments 14 and 21 can strengthen our economic competitiveness and truly make us a global leader in the environmental field.

I know that the Government have said they are committed to protecting the environment and mitigating climate change, but I say again that these amendments will allow them to do so. I think that these are fair amendments and I hope that the Minister will consider supporting them.

[Baroness McIntosh of Pickering (Con)]

My Lords, to pursue the analogy made by the noble Baroness, Lady Hayman, earlier, that a nod is as good as a wink, I shall nudge my noble friend a little further as to whether these amendments, the contents of which I support in principle, are actually required.

I understand that sustainable development and protection and preservation of the environment are already fundamental goals of the World Trade Organization; they are enshrined in the Marrakesh agreement that established the World Trade Organization and they complement the World Trade Organization’s objective to reduce trade barriers and eliminate discriminatory treatment in international trade relations. So, while there may be no specific agreement dealing with the environment—and therefore, I understand, with climate change—under WTO rules, members can adopt trade-related measures aimed at protecting the environment, provided a number of conditions to avoid the misuse of such measures for protectionist ends are fulfilled. That is something that I welcome.

If, in the course of negotiating future free trade agreements, rather than rollover free trade agreements, this is something that other parties raise, would the Government look favourably upon it? We see that President Macron of France made a statement today, offering a referendum on climate change so that climate change will actually become part of the French constitution. This is something that seems to be happening among many of our erstwhile partners, so while I can see the thinking behind Amendment 14 on climate change obligations and Amendment 21 on environmental obligations, if this is already covered by the World Trade Organization itself, and protocols thereunder, is this needed, or is it implicit in what the Government’s approach to free trade agreements will be?

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[Baroness Chakrabarti (Lab) [V]]

My Lords, it is a pleasure briefly to follow those who have already spoken on this group, and I support Amendment 19 in particular. I am no expert in international trade law, but I rest assured that my noble friend Lord Hendy will speak very shortly.

Briefly, my concerns about ISDS are that the mechanism overrides the supremacy of Parliament—including your Lordships’ House and the other place—overrides the domestic rule of law, discriminates on grounds of nationality in favour of foreign investment corporations and prioritises the profits of investor corporations over people and the planet, as we heard from the noble Baroness, Lady Bennett of Manor Castle. Therefore, I see the mechanism as a fundamental challenge to the rule of law, both domestically and internationally, and not what taking back control is about in the minds of most people in the United Kingdom and further afield, I suggest.

My one question to the noble Baroness, Lady Kramer, who spoke so clearly about her own concerns, is: will the multilateral tribunal that she anticipates really be capable of addressing those fundamental concerns about prioritising corporations over the wider public interest—climate catastrophe, human rights and so on? Will it be capable of designing something that is not the wolf in sheep’s clothing that the noble Baroness, Lady Bennett, described? With those concerns firmly on the table, I support Amendment 19.

[Baroness McIntosh of Pickering (Con)]

My Lords, the authors and mover of these two amendments have done the House a great service. I welcome my noble friend the Minister to his place for the first of these debates that he will be summing up this afternoon. This is a very vexatious area in trade disputes, and it has been very much at the fore of this critical stage of an agreement on free trade with our EU partners— I know that is not the subject of this afternoon’s debate. It is worrying that, at this late stage, we are still arguing—and have been for two years, since the European Union (Withdrawal) Act was passed—about what the dispute resolution mechanism will be.

I will make a general point: it is extremely important at this stage that we know what the dispute resolution mechanisms will be. I place on record my acceptance as less than satisfactory of the arrangements of the World Trade Organization. I think it fair to say that the current position of the United States in this regard is less than clear. As I understand it, in his time, President Obama made moves to remove the US from the general World Trade Organization dispute resolution mechanism scheme—the next stage after disputes have been raised. It is by no means clear, and I have not yet heard—I may have missed it—what the incoming Biden Administration will do in this regard.

My noble friend Lord Caithness mentioned the Huawei decision, and, obviously, we are also caught, as I understand it, in the Boeing situation, with infringement tariffs being whacked on us for the Airbus scenario—and, latterly, we have come forward, seeking to do the same to Boeing, for similar infringements of the World Trade Organization arrangements there. As such, I am very uneasy that, in the current state of the Bill, I do not see any reference to what the dispute resolution mechanism will be in the agreements that fall under this—unless I have missed it—so I would like confirmation of what that resolution mechanism will be.

I welcome that the noble Baroness, Lady Kramer, said that the UK has been at the forefront of setting this in the EU-Canada arrangement—but then my noble friend Lord Lansley said that those arrangements have never been brought into effect in relation to the EU. This is a very grey area, and it is vital that, before the Bill leaves Parliament, we know what the dispute resolution mechanism in this regard will be. Mindful of the lengthy debate that we had in Committee, I seek further clarification at this stage, using these two amendments as an opportunity to probe in this regard.

[Lord Hendy (Lab) [V]]

My Lords, I am grateful to the noble Baroness, Lady Kramer, and my noble friend Lord Stevenson, for moving and speaking to Amendments 15 and 19, respectively. They significantly improve, but do not eliminate, ISDS. On that basis, I support them, since my assessment is that the elimination of ISDS is not currently politically feasible.

We now know a lot about ISDS, which is relatively common in international trade agreements. We know how objectionable it is and the chilling effect it can have. It is objectionable because it overrides the supremacy of Parliament, defeats the rule of domestic law—a concept familiar to all of us after recent debates—and discriminates on grounds of nationality. Far from taking back control and asserting British sovereignty, the current catchwords of government, ISDS surrenders both.

A couple of years ago, a petition against the inclusion of ISDS in the then-proposed EU-US trade deal, TTIP, attracted 3 million signatures—500,000 of them in the UK. The legitimacy of ISDS in EU agreements is now doubted by the Court of Justice of the European Union as well as by EU citizens. In Slovak Republic v Achmea, the court held that ISDS in the Netherlands-Slovakia trade agreement

“has an adverse effect on the autonomy of EU law”

and is therefore incompatible with it. By like reasoning, ISDS in UK trade deals will adversely impact the autonomy of UK law.

ISDS is a mechanism whereby a corporation of one state party to the international trade agreement can bring a claim for compensation against the other state. It sounds fair, but it is not fair. ISDS claims bypass the courts of both state parties, and bypass the laws of both states. ISDS is a special privilege accorded only to foreign corporations, for use, in the case of the UK, against a democratic sovereign Government. ISDS is a right to claim compensation against the host state in which the corporation has made its investment—a right denied to the corporations and citizens of that state. That point is important and goes beyond the insult to sovereignty.

ISDS offends against the rule of law because a right and remedy against a host state is given to one class of putative claimant—foreign investment corporations—and denied to all the citizens, companies, co-operatives, trade unions and other organisations in the host state. ISDS offends against the rule of law, whereby that right and remedy is exempt from the courts and the legal system of the host country. It offends the principle of non-discrimination because that right and remedy is only available to non-nationals of the host state.

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[Baroness Sheehan (LD) [V]]

My Lords, I will say a few short words about Amendment 16, which may enlighten the noble Baroness, Lady Noakes, as to why I think it is very important. I am grateful to my noble friend Lord Purvis of Tweed for putting it down.

The Pergau dam scandal of the early 1990s offers a timely reminder of how badly things can go wrong when tied aid becomes, as it did then, a regular feature of the aid budget—so much so that, in 1997, the UK’s aid budget was removed from the Foreign Secretary’s remit and placed with a newly formed Department for International Development. Maybe old habits die hard as this was followed in fairly short order by the International Development Act 2002, which tightly defined development assistance as two things: furthering sustainable development and improving the welfare of people in developing countries. It was designed to be pro-poor and, in effect, to ensure no more tied aid.

However, that and other Acts of Parliament on international development now have a sword of Damocles hanging over them. My noble friend Lord Purvis has outlined in quite a lot of detail the conflicting statements that we have heard with respect to the 0.7% target, which, as we now know, is to be reduced to 0.5%. He has therefore quite sensibly covered every eventuality in his Amendment 16 by invoking the OECD Development Assistance Committee’s recommendation on untying official development assistance. I hope the Minister will add his assurances to those of the Foreign Secretary and tell us that the bad old days of tied aid are indeed over. Trust is a hard-won commodity, and it is running in very short supply with this Government. I ask the Minister, whose word I have no reason to mistrust, to ensure that assurances given at the Dispatch Box are followed through.

Turning to Amendment 25, to which I have added my name, the Government’s early commitments post Brexit to protect current trading relationships with poorer countries, keep prices in check and help build our future trading partners are not turning out to be quite as reliable as we would have hoped, as with many other government commitments post Brexit. It now looks as though the world’s poorest countries will instead face additional challenges post Brexit. Quite a lot are being overcome, but not all.

Amendment 25 is necessary to ensure that developing countries do not lose market access or share, either because time has run out to agree continuity deals or because other arrangements have run into difficulties. Including some of those countries which could face higher tariffs in the list of least developed countries, as per proposed new subsection (2), would offer some protection.

My noble friend Lord Purvis has explained some of the issues surrounding our difficulties in agreeing a trading arrangement with Ghana. I hope the Minister will agree that insisting on a historic stepping-stone deal was unrealistic. As my noble friend said, Ghana asked that the existing ECOWAS EPA with the EU be used as a basis; I am delighted to learn from my noble friend that it will form the basis of ongoing negotiations. To have insisted that the stepping-stone agreement should form the basis of agreements going forward with Ghana was to disregard the fact that it is now a member of ECOWAS—the Economic Community of West African States—and as such has notified that agreement under the WTO. That would break international agreements, which I hope the Minister would agree is not a good look.

Ghana could have signed our agreement for the enhanced framework as a way out of the scheme but, as my noble friend Lord Purvis explained, it was presented with some difficulties in doing so because bananas are not included in the enhanced framework scheme. I hope this issue can be resolved so that other countries are not caught in the same trap. Had Ghana signed up to the enhanced framework scheme, about 30% of the bananas we eat in the UK, which come from Ghana, could not have got here. That would be a real shame, because a large proportion of them are Fairtrade; the Fairtrade Foundation has had great success in getting better working conditions and fairer deals for poorer farmers and the workers and communities that rely on them. I do not need to remind the Minister that the Fairtrade movement enjoys wide support in the UK. Proposed new subsection (3) is designed to overcome this difficulty for Ghana and other developing countries caught in a similar conundrum.

Time is tight, so I will move straight to the end. The regional economic unions in Africa—east, south, north and west—are now all pretty well established and the African Continental Free Trade Area, which represents a market of 1.2 billion people with a combined GDP of $1.3 trillion, opens on 1 January 2021. This October, just a few weeks ago, talks took place between the EU and the African Union on a modern relationship between the two trading blocs. What plans do we have for a modern trading arrangement with the African Union?

[Baroness McIntosh of Pickering (Con)]

My Lords, in connection to Amendments 16 and 25, I really would prefer to go down the continuity agreement route than to adopt these two. It is my understanding that the UK has reached—I think the noble Lord, Lord Purvis, said this in moving Amendment 16—a rollover agreement with Kenya. Indeed, it was signed this month, less than a week ago, which I welcome. I know that we had a long debate in Committee about the asymmetry of many of the free trade agreements, but I do not know if that applies in this case. It would be my strong preference that we press the Government to continue their good work in reaching agreements, with the rollover economic partnership free trade agreements.

My question to the Minister is therefore very simple: could he say where we are in reaching agreement with Ghana—which reached an EPA with the EU relatively recently, in 2016—and Cameroon, which reached an EPA with the EU in 2014? Rather than at this stage lumbering the Government with even more add-ons, as set out in Amendments 16 and 25, it would be my preference to carry on the work that they have achieved with the Kenya rollover agreement. I urge my noble friend the Minister to continue to complete the agreements with Ghana and Cameroon.

My noble friend said earlier—it was not his exact phrase—that it takes two to tango. It takes two to complete these agreements, and if any specific obstacles have been raised with any specific products relating to the rollover agreements we currently enjoy, through our membership of the EU, with Ghana and Cameroon, it would be very helpful to know what they are this afternoon.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly to speak in favour of Amendment 16 in the name of the noble Lord, Lord Purvis of Tweed, and Amendment 25, in the name of the noble Lord, Lord Purvis, and the noble Baroness, Lady Sheehan.

I want to reflect on the context in which we are having this debate: a double blow has come forward in terms of our international aid budget. Someone came to me on Twitter and said, “I’m really confused, because it seems like our GDP is going down, so our aid is going down anyway, so why are we also cutting the percentage of aid?” I had to say, “No, you’re absolutely right, this is a double blow.” We have often given very effective help to some of the poorest people in the world, so it is important that we do whatever we can to make sure that aid is directed in the right kind of way.

The second, contextual, point I want to reflect on is why these countries are in the least developed and lower middle-income categorisations. If you go down the road to the Foreign Office, up to Liverpool or across to Bristol, you will see the colonial legacy of lots of the wealth of these countries, which was sucked out in the past. That legacy continues to have extremely deleterious effects. There is also the impact of multi- national companies—very often corrupt—today, which hold down the essential development of many least developed and lower middle-income countries. I note what the noble Baroness, Lady Sheehan, said too about the history of how DfID came to be split from the Foreign Office, and the concerns that have to be expressed about that reunion.

In those contexts, it is really important to do whatever we can in your Lordships’ House to defend, to hold the line and to keep whatever we have now. We will have the fight about the aid budget percentage when it comes along, but let us do what we can now in the Trade Bill.