European Union (Definition of Treaties) (Colombia and Peru Trade Agreement) Order 2013

Baroness Miller of Chilthorne Domer Excerpts

Monday 2nd December 2013 Grand Committee

[Lord Popat (Con)]

My Lords, the EU-Andean free trade agreement covers the trade and investment relationship between EU member states and Colombia and Peru. Although this deep and comprehensive agreement constitutes a small part of the EU’s ambitious programme of bilateral trade and investment negotiations, it is an important and valuable step in improving our trade relations with Latin America. Together with our important trade negotiations with such countries as the US, Japan and Korea, it demonstrates that the EU is looking to advance its trade with countries large and small, developed and emerging. Taken together, all the EU trade negotiations stand to boost the EU’s GDP by over 2% and bring over 2 million jobs to the EU. The Government are proud to be a major voice in support of the EU’s overall trade agenda.

Not only will this trade agreement bring significant benefits to the Andean economies of Peru and Colombia, but it sends an important message of the benefits of open markets and the importance of resisting protectionism to the rest of Latin America. The free trade agreement will aid UK firms in getting a foothold in those two emerging markets, which have enjoyed strong growth figures in recent years. The agreement will also help UK companies already trading in this part of the world. Analysis shows that the deal could benefit our economy by up to approximately £400 million a year over the long term.

In line with other recently concluded trade agreements, the deal is ambitious and comprehensive. It stands to substantially improve the market access for UK exporters to the Andean region through the elimination of tariffs and technical and procedural barriers to trade, improve market access in procurement and service markets, and enforce common standards and rules that will level the playing field. It will also bring stability in areas including the protection of intellectual property. Furthermore, the deal stands to bring in greater transparency on subsidies and implement processes to settle disputes.

Not only have the economies of Peru and Colombia enjoyed strong recent growth, but they provide a combined market of almost 80 million people, and are increasingly becoming important commercial partners for UK firms looking to trade in Latin America. Between 2007 and 2012, overall UK exports to the combination of Colombia and Peru almost doubled. With this FTA in place, providing British firms with improved access to these rapidly growing markets, UK export levels should grow even further. We have already seen a variety of UK firms set up businesses in these countries, from fragrance house CPL Aromas, to retail firms such as Mothercare, Accessorize and Hackett. Those last three firms have all now opened shops in Bogotá, the second largest city for retail in Latin America. It is my hope that further UK firms will follow and take advantage of the new opportunities brought by this agreement.

Since the trade agreement entered into provisional force earlier this year, the UK Government have worked closely with UK firms and the respective Governments of Colombia and Peru to maximise opportunities presented by the deal. In particular, UKTI officials have identified significant opportunities for UK firms in infrastructure markets, financial services and energy. This FTA provides opportunities not only for larger companies but for SMEs. It also provides further opportunities for companies already established in these respective markets, those which are looking to establish themselves in these markets or those which are yet to consider trading with these two countries. A number of ministerial colleagues have also visited Colombia this year. The noble Lord, Lord Green, David Willetts, and the lord mayor of London visited Peru and Colombia this summer. I look forward to more official visits which will build on this momentum.

To assist SMEs looking to trade with Colombia, the Government launched a new business-to-business organisation called UK Colombia Trade, which hosted an event at the UK ambassador’s residence in Bogotá in November to showcase the varied commercial opportunities that arise from this trade agreement. I look forward to hearing about future such events as firms take advantage of the important opportunities that the deal provides.

I am a firm believer in free trade, and trade agreements bring competition in the marketplace. Ultimately, it is the consumers who stand to benefit from increased choice and companies from sourcing inputs and components from abroad. By improving our trade relations with new countries we are improving markets around the globe and not merely with our traditional commercial partners. Increasing trade and investment is at the heart of generating balanced, long lasting and strong economic growth. The United Kingdom continues to be the most influential voice in ensuring that trade liberalisation is at the heart of the EU’s growth strategy. Rapidly ratifying this FTA in the UK will strengthen our relations with these two important Latin American countries, bring major benefits to UK firms and underline the UK’s position at the heart of global trade liberalisation. I commend the order to the Committee.

[Baroness Miller of Chilthorne Domer (LD)]

My Lords, I, too, welcome this trade agreement. I will mostly confine my remarks to Colombia, which I was lucky enough to visit last year as part of an IPU delegation. First, I shall make a couple of slightly regretful general remarks. Originally, this free trade agreement was to be for the whole Andean region of Colombia, Peru, Ecuador and Bolivia. For reasons which I imagine partly are what the Minister was alluding to when he said that this would send a strong message, Bolivia and Ecuador are not included in this agreement. There are two obvious difficulties with that. One difficulty is that, for those of us who believe that open markets and free trade bring prosperity, it will make an even more two-tier Andean region. We have seen some of the effects of Colombia’s successful push against illegal coca growing, which has been pushed towards Bolivia and Peru. I am nervous that we should do anything further to divide the region when I am sure it would benefit from a more cohesive approach.

That said, I shall concentrate the rest of my remarks on Colombia. Obviously, Colombia has particular issues because it is coming out of decades of conflict and is just entering into, it seems, a successful peace negotiation. That puts a particular onus on those of us who are entering into a free trade agreement to put human rights issues right at the heart of our considerations, partly because human rights are self-evidently incredibly important but partly because the speed of development is going to have a tremendous impact on Colombia, with all the interest in it and indeed with the Colombian Government’s own efforts to develop its infrastructure and to raise the people of its regions out of poverty, especially as a lot of the development will be concentrated on the extractive industries and agriculture.

I get the extremely good briefings from our embassy in Colombia, which highlighted in its September briefing that some of the conflicts have resulted in the deaths of protesters: four protesters were killed in one conflict and one in another, and indeed one policeman has been killed, so it is a matter of life and death.

I underline my praise for the British embassy’s work there. We met His Excellency John Dew, who has since handed over to a new ambassador. The embassy’s work in highlighting the importance of human rights in welcoming in various groups, whether from the peace communities, which are small agricultural farmers, or the trade unions, has been very important. I am sure that its efforts will not lessen with this trade agreement going through.

If the first issue is human rights, the second is biodiversity. The country is one of the most biodiverse in the world. I know that the Colombian Government are well aware of the treasures that they have, but again the extractive industries tend to need infrastructure and are often looking at extracting minerals from some of the most sensitive areas of the country. All this poses a challenge for any companies going in, and I hope that all British companies involved will be very mindful of these issues.

My question to the Minister is: how will we monitor the human rights issues and what is happening with them? Clearly our own embassy is doing that but the trade committee in Europe that is concerning itself with the free trade agreement does not really have a human rights remit at all. That is the question that I would like the Minister to answer.

[Lord Avebury (LD)]

My Lords, I share my noble friend’s regret that Ecuador and Bolivia are not included in this treaty. I am hopeful that the Minister may be able to say something in his concluding remarks about the prospects for them joining at some later date. Of course, everyone welcomes free trade between the EU and third countries as a means of enhancing economic prosperity on both sides and, although it is not a stated object of the treaty, potentially reducing the disparities of wealth and income that are an endemic feature of third-world societies.

I am going to speak exclusively about Peru, having been president of the Peru Support Group for 11 years until I was succeeded a year ago by the noble Baroness, Lady Coussins, and I declare an interest accordingly. I am indebted to the support group for advice on the effects of the treaty, on which I am going to base my own remarks.

Women and indigenous people have not benefited proportionately up till now from Peru’s impressive rates of growth. There are also huge disparities between the regions. There is no reason to assume that the benefits of this treaty will be applied so as to reduce these inequalities, but if they were so applied then it would be advantageous not only for the poor but for Peruvians at all levels of the economy, and hence for British investors and traders.

The Minister said that the treaty would benefit the UK economy to the tune of £400 million. Has a similar calculation been made, I wonder, on behalf of Peru? Has my noble friend anything to say about the potential benefits for the worst-off in Peruvian society? Similarly, there is no link between the rising national prosperity that will result from the treaty and the improvement in human rights that rests on the flimsy foundation of a single article, as my noble friend has pointed out, providing that respect for the Universal Declaration of Human Rights and the rule of law constitute an essential element of the agreement. The Minister in another place also referred to Article 8, which deals with the fulfilment of obligations under the treaty generally but is clearly intended to deal primarily with trade matters that are the overwhelmingly predominant purpose of this massive document.