Draft EU-Canada Trade Agreement Order

Barry Gardiner Excerpts

Tuesday 26th June 2018 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

I am grateful for the opportunity to speak in this important debate on the Floor of the House at last. The order will specify CETA as an EU treaty for the purposes of the European Communities Act 1972. It is important to recognise that, unfortunate though it may be, the agreement itself cannot be changed at this stage by anything we might say this afternoon.

We want a comprehensive and mutually beneficial trade agreement with Canada. We want to boost fair and open trade with our closest allies and neighbours. Of course we do. We share a common language, unique cultural and economic bonds, the same parliamentary model and a common legal tradition, and we count Canada among our closest, oldest and most trusted allies.

In 2016, our exports to Canada amounted to some £8.3 billion—our seventh-largest non-European export market. In turn, we are Canada’s third most important export market. Our appetite for Canadian goods means that Canada runs a trade surplus with us of some $6.8 billion according to 2017 figures. We are Canada’s most important European trading partner. The vast majority of Canada’s European-bound goods move through our ports. We are the second-biggest recipient of Canadian investment. Similarly, we are the second-biggest foreign direct investor into Canada. More than an estimated 700 British firms have an established presence in Canada and some 1,100 UK firms are owned or controlled by Canadian interests.

In matters of trade, the UK and Canada face similar issues. Boeing’s efforts to have punitive tariffs levied on Bombardier C Series aircraft threaten thousands of jobs both in Canada and here, where the company’s Northern Ireland plant engineers and manufactures wings for those aircraft. We both face the spurious and illegal tariffs imposed by President Trump on our steel and aluminium exports under the false pretence of national security.

Do we want a trade deal with Canada? Of course we do. Only by working together can we and Canada address and resolve American protectionism and make a concerted effort on the world stage to enforce the rules-based system that underpins international trade. Only by working together can we push for a serious response to global overcapacity issues.

[John Spellar (Warley) (Lab)]

Will my hon. Friend give way?

[Barry Gardiner]

I will give way to my right hon. Friend in a moment if he is patient—I am sure he will be.

Yes, a Labour Government would very much welcome a trade deal with Canada built on the commercial and diplomatic ties that bind our two countries; a deal that seeks to further elevate our shared standards, rights and protections; and a deal that would lead to increased economic prosperity and jobs. The EU-Canada comprehensive economic and trade agreement is not such an agreement.

[John Spellar]

I thank my hon. Friend for giving way. Given the considerable links and advantages of our relationship with Canada, if we cannot do a deal with Canada, which country can we do a deal with?

[Barry Gardiner]

The presumption in my right hon. Friend’s question is entirely wrong. The presumption is that we cannot do a trade deal with Canada, but of course we can. We want to do a trade deal with Canada, but he will recognise that we did not want the TTIP deal with the United States even though the United States perhaps has a claim above Canada’s to be our closest ally on the international stage. The question is not who but what. Of course we can do a deal, but it must be the right deal for British business and jobs.

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

I spend a lot of time in Canada as our trade envoy. What would the hon. Gentleman’s message be to those British companies I meet in Canada that tell me how the provisional application of CETA is helping to boost their trade in that country and open up procurement—there are $20 billion-worth of opportunities in the city of Toronto alone. He wishes to cut that off to British businesses by rejecting this deal, so what is his message to them when they are already benefiting and helping to support jobs in the United Kingdom?

[Barry Gardiner]

As I think I have already made clear to the House, we want those jobs and procurement opportunities, but we want them on the right terms.

[Dr Fox]

For the sake of clarity, is it the Opposition’s position that the United Kingdom should not ratify CETA?

[Barry Gardiner]

I will of course answer the right hon. Gentleman’s question—I will come to it later in my speech. Like my right hon. Friend the Member for Warley (John Spellar), the Secretary of State will just have to be patient a little longer.

The CETA deal has been marred by controversy. Hundreds of thousands of people have taken to the streets across Europe in protest. The deal was largely conducted in secrecy and with minimal consultation. It threatens the essential ability of Governments to legislate in the public interest. That is why it is so essential that Parliament has finally been afforded the opportunity to debate the agreement on the Floor of the House.

I pay tribute to the work of the European Scrutiny Committee under the chairmanship of the hon. Member for Stone (Sir William Cash), who is no longer in his place. In this respect, the Committee made repeated attempts over the past two years to ensure that Parliament was given just such a chance. The debate has been pending since the Committee granted a scrutiny waiver to the Secretary of State in October 2016.

[Catherine McKinnell]

Going back to the earlier discussion, if the position is not to support the Canada trade deal, will my hon. Friend explain what the procedure is for negotiating a new trade deal with Canada, given the complexity of leaving the EU?

[Barry Gardiner]

I do not know whether my hon. Friend heard the Secretary of State’s remarks. He has made it clear that negotiations are under way. The constitutional position is that all current agreements with third-party countries that we have through the EU will have to be rolled over as new agreements. They will be legally distinct. In that respect, they must all be renegotiated.

[Several hon. Members rose—]

[Barry Gardiner]

I see a lot of Members standing. I am happy to give way later in my remarks but I want to make progress now.

The debate has been pending since the European Scrutiny Committee granted a scrutiny waiver to the Secretary of State in October 2016 to proceed with signing the agreement in order to bring the trade elements, but not the investment elements, into provisional application. That waiver was on the express condition that there was prior debate on the Floor of the House. That debate did not take place.

It is unusual to bring a statutory instrument to the Floor of the House rather than to a Delegated Legislation Committee. The Government are pretending to have afforded the House the opportunity to properly debate and scrutinise a controversial agreement and one of the most extensive that the country has entered into—the Secretary of State has admitted as much. However, at this stage it is all too late. The agreement is signed and cannot be renegotiated.

On 5 July 2016, the European Commission published its proposals for the signature and provisional application of CETA. On 7 September 2016, the European Scrutiny Committee recommended an urgent debate on the Floor of the House, noting the significant political and legal importance of the agreement. On 6 October 2016, the Minister sought clearance from the Committee to sign the agreement without having such a debate. On 12 October 2016, the Committee granted the Government a conditional scrutiny waiver, allowing them to proceed with signing the agreement only after a debate on the Floor of the House—the Committee directed the Government to ensure such a debate. [Interruption.] I hear the Secretary of State muttering from a sedentary position, “Process, process, process,” but process is how the House ensures proper transparency and scrutiny.

On 17 October 2016, the Secretary of State advised the Committee that it was his intention to override scrutiny and proceed not only with the signature of the agreement but with its provisional application, despite the controversy attached to it and despite the fact that the House had been given no opportunity to scrutinise or debate it.

[Owen Smith (Pontypridd) (Lab)]

Will my hon. Friend give way?

[Barry Gardiner]

No.

On 18 October 2016, the Government confirmed their support for signature, provisional application and conclusion of CETA. Overriding scrutiny, Mr Speaker, is no minor matter. The Committee rightly called an emergency evidence session demanding that the Secretary of State account for his decision to override the Committee’s scrutiny reserve and to proceed with provisional application. The Secretary of State had the audacity to tell the Committee:

“I very much believe in the democratic process and the importance of transparency and, as the Committee knows, I have long been one of those Members who has been very much supportive of the scrutiny process and I’m sorry that the timescales meant that it was not possible to have a debate before decisions needed to be made on CETA.”

He went on to tell the Committee that this was

“down to the parliamentary calendar and the timescales set for us. However, I therefore reinforce my commitment to the Committee today to hold such a debate and I’m very happy to have that debate on the Floor of the House. Our officials are already working with business managers to identify a date most likely, we understand, in November.”

That, for the avoidance of doubt, was November 2016.

So, November comes around and, having had no indication of a debate being forthcoming, the Committee published its summary of that urgent evidence session and noted:

“We consider such a debate to be urgent and ask that it be scheduled before 13 December”.

[Interruption.] I know the Secretary of State does not like this, because it brings up all the ways in which he has sought to avoid transparency and scrutiny in this place.

By 30 November, the Secretary of State failed to secure a debate in the timeframe he himself had suggested to the Committee. On 7 December, the Committee repeated the need for a debate and called for it to take place before mid-January 2017, recognising that the Secretary of State would not be bringing forth a debate by the earlier stipulated deadline of 13 December.

It was farcical. The Secretary of State had absolutely made it farcical, but it got worse. My office submitted a freedom of information request on 15 December requesting details of the correspondence between the Department and business managers regarding scheduling a debate on CETA since 1 December 2016. It may come as no surprise that the Department failed to respond within the suggested timeframe. However, a response was forthcoming by 25 January. Staggeringly, it admits in its response that the first attempt to bring forward a debate on CETA was not in July 2016, as one might expect, and not even in September when the House returned after summer recess. It was an email sent from an undisclosed official to the Government Chief Whip’s office on 25 October at 1.57 pm, just 24 hours prior to the Secretary of State’s scheduled appearance before the Select Committee.

For the avoidance of doubt, I want to reassure the House that the Secretary of State did not misspeak. He did not mislead the Committee in any way when he told the hon. Member for Stone that

“our officials are already working with business managers to identify a date”.

They had been: for a whole 24 hours and 33 minutes. If it should be that prior to being summoned to give evidence to the European Scrutiny Committee on why the Government had blatantly ignored the Committee’s limited and conditional waiver and the condition that a debate take place, the Secretary of State had instructed his officials to come up with a cover, at least the literal interpretation of his words was strictly accurate. More troubling is his apology to the Committee implying that there had been efforts to find time to schedule a debate, saying,

“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.”

[Jeremy Quin]

I am most grateful to the hon. Gentleman for giving way. For someone who seems so keen to have had a debate on this particular treaty, he seems very, very wary about actually getting on to the substance of the issue we are here to discuss. The only point on which I have heard him say he disagrees with what is laid before the House is some wording about it impinging on national Parliaments to regulate their own affairs. What bit of the treaty does he disagree with? Is it chapter 23, which ensures that we protect employment rights? Is it chapter 24, which ensures that we protect environmental rights? Or is it the legal text that provides protections for our NHS? What is it that he disagrees with?

[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.

[Dr Fox]

Are we then to assume that, for the purposes of consistency, Labour will table a negative motion under the Constitutional Reform and Governance Act 2010—or CRAG—procedure?

[Barry Gardiner]

I will come on to our position in due course.

The European Commission hailed CETA, calling it

“the most ambitious trade agreement between countries ever undertaken.”

However, unlike other deals currently being progressed by the European Commission, it is a mixed agreement—trade and investment.

The investment provisions of CETA touch on matters of national competence and, as such, the agreement must be ratified at the national level and the regional level where appropriate. The European Commission and respective national Governments have sought to circumvent this process by provisionally applying CETA since 21 September last year, but the deal has not been ratified and is therefore not yet fully enforceable. To understand why, we need to look at the Wallonian Parliament in Belgium, which refused to ratify the agreement over concerns about investment aspects of it and, in particular, the investor-state dispute settlement mechanism, now known under this agreement as the investment court system. This is where process meets substance. Belgium has referred the matter to the European Court of Justice to seek a ruling on whether the investment court system is even compatible with EU law.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The hon. Gentleman is making a powerful case about a very flawed process. Following public pressure, the provisions in CETA for an investment court system are still only marginally better than the original investor-state dispute settlement system. Does he share my concern that this still amounts to a parallel justice system for large corporations that could render the UK vulnerable to lawsuits, such as that brought by Veolia against Egypt for introducing a minimum wage?

[Barry Gardiner]

I absolutely share the hon. Lady’s concern. That is one reason why it was part of the Labour party’s manifesto at the last election that we would not approve trade agreements that had these mechanisms in them.

[Sir Desmond Swayne (New Forest West) (Con)]

On a point of order, Madam Deputy Speaker. There is some pressure on time. The hon. Gentleman has been at it for over 20 minutes and we still do not know where he stands. Is it in order for him to keep the House in such suspense?

[Madam Deputy Speaker (Dame Rosie Winterton)]

It is quite in order for the hon. Member for Brent North (Barry Gardiner) to be making his opening remarks. I am sure he is not going to be too much longer; there are a lot of people waiting to speak.

[Barry Gardiner]

Thank you, Madam Deputy Speaker.

[Owen Smith]

Would he give way to a Labour colleague?

[Barry Gardiner]

I would give way to a Labour colleague.

Just last week, the incoming Italian Government signalled that they too would refuse to ratify CETA when the new Agriculture Minister indicated that the lack of protections for Italian food producers presented a serious threat to the sector, calling the deal wrong and risky. France, Germany and the Netherlands have not ratified the agreement, and the Dutch Government are waiting on the ECJ ruling before determining how to proceed. In Germany, the issue is being heard in a case before its domestic constitutional courts to determine whether the investment court system is even compatible with the German constitution.

[Vicky Ford (Chelmsford) (Con)]

The hon. Gentleman is making a very good point but, if CETA is such a terrible deal, why did so many Labour Members of the European Parliament vote for it, including their lead spokesman on the issue, who had full transparency on the deal as it was negotiated?

[Barry Gardiner]

The hon. Lady makes a false premise. Many parts of this deal would be welcomed, but there are essential parts of it that cannot be welcomed and which would stop us, therefore, being able to ratify it in the way she suggests.

The ISDS mechanisms give superior legal rights only to foreign investors to raise disputes against our Government to petition for compensation when their profits, or even their potential profits, are impacted by legislative or public policy decisions. This effectively allows companies to sue Governments when they are legislating in the public interest; for example, by introducing plain packaging for cigarettes, national insurance, minimum wages or even banning fracking. These provisions have become increasingly commonplace in new-generation trade agreements and this is what has resulted in such widespread international public outcry against deals such as the Transatlantic Trade and Investment Partnership, the Trans-Pacific Partnership and CETA.

The proliferation of investor-state dispute settlements can encourage treaty shopping, whereby investors restructure their activities to establish in countries where they may benefit from ISDS mechanisms, should they seek to effect policy change or petition for compensation. While the Government have previously argued that the UK has only ever been subject to four such dispute cases, and that the UK never lost such a case, it begs the question: why does the Secretary of State feel that this mechanism needs to be incorporated in a deal with a country such as Canada?

[Geraint Davies]

Will my hon. Friend give way?

[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.]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Will the hon. Gentleman face the Chair? We cannot hear otherwise.

[Barry Gardiner]

I apologise, Madam Deputy Speaker. There are many aspects of the deal that we would welcome, but there are elements of it that are absolutely unsustainable and constitute red lines. South Africa, India and New Zealand have all stated their opposition to ISDS procedures, and New Zealand has gone so far as to sign side letters with five counter-signatories to the Trans-Pacific Partnership disapplying the ISDS provisions included in that agreement. The current impasse in the renegotiation of the North American free trade agreement hinges on US demands to drop ISDS provisions from the revised agreement, the rationale being that their respective domestic court systems are perfectly capable of adequately settling any disputes. Indeed, if our courts are sufficient for British companies, why should they not be considered so for foreign investors, too? The United Kingdom has long been considered a safe legal system, and a significant proportion of global trade is governed by legal—

[Andrew Percy]

On a point of order, Madam Deputy Speaker. The shadow Secretary of State has now spoken for longer than the Secretary of State. Many Back Benchers are waiting to get in on this important debate. Is he still in order?

[Madam Deputy Speaker (Dame Rosie Winterton)]

The hon. Member for Brent North is still in order, but I point out that a lot of speakers want to come in. I am sure that he will bring his remarks to an end very shortly.

[Barry Gardiner]

Thank you, Madam Deputy Speaker. Indeed—I will respect your decision and, in that regard, I hope that nobody else will seek to intervene as I conclude my remarks.

[Owen Smith]

Will my hon. Friend give way? [Interruption.]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. It is important that the hon. Member for Brent North is heard with politeness, because I know that he wants to bring his remarks to an end fairly quickly. I think we should give him the chance to get on and do that.

[Barry Gardiner]

Over the past few years, the Government have entirely failed to explain why British taxpayers should be on the hook for ordinary commercial risks faced by foreign investors. If a company has concerns about the stability of the regulatory environment, it should factor that into its investment decision. Recognising the flaws in the arbitration model, the European Commission and Canada have moved to a courts-based system, but the Secretary of State covered that, so I will not dwell on it.

A Labour Government would not seek ISDS provisions in future trade agreements, but the threat to the Government’s capacity to deliver in the public interest is not confined to the use of ISDS mechanisms. Modern trade agreements such as CETA and the EU-Japan economic partnership have been negotiated using the negative list approach for the scheduling of services liberalisation commitments. Under this approach, all service sectors not explicitly exempted from liberalisation are included. The use of this method marks a significant departure from the use of the positive list in all earlier EU trade agreements, where only those service sectors listed are subject to the rules and disciplines of the agreement. It is considered a particular threat to public services, as it may prove impossible to shield them from liberalisation effectively once they have been committed to an international trade treaty.

This means that any emergent sector in the future will automatically be subject to liberalisation even where there might be a clear need for Government intervention. We cannot predict what those will be prior to their emergence, but that is the very point of using a negative list—to reduce the capacity of the Government to regulate in the future. Collectively, these measures only benefit big businesses and curtail the rights of Governments to act in the best interests of their peoples. That is why there has been so much resistance and uproar from civil society organisations and trade unions alike.

It is ironic that, just as we are told we need to leave the EU to regain control of our laws and how they are interpreted in the courts, Parliament’s ability to legislate in the public interest is being curtailed by negative lists and regulatory chill and by the establishment of a supranational courts system where foreign businesses are given superior rights to our own domestic companies and can tell our Government what they can and cannot do if they are not to sue us for taking sensible public policy decisions to protect the public against new and emerging dangers.

Similar concerns extend to the labour rights provisions of CETA. One study forecast that 10,000 jobs could be lost as a direct consequence of CETA. The threat to European jobs—[Interruption.]

[Madam Deputy Speaker]

Order. I must insist that the hon. Gentleman be heard out. I am sure he will bring his remarks to a close in the next minute.

--- Later in debate ---

[Barry Gardiner]

The real abuse is the way the Secretary of State has ignored all the waivers he has been given by the European Scrutiny Committee and all the assurances he gave that he would try to secure this debate on the Floor of the House before it became meaningless. The real abuse is the way he has conducted this whole saga over the past two years.

A Labour Government would have demanded better protections for jobs and workers’ rights. The Government’s failure to seek protections for British workers is matched by their failure to seek protections for British businesses.

[Owen Smith]

Will my hon. Friend give way?

[Barry Gardiner]

I will give way to my hon. Friend.

[Owen Smith]

I am extremely grateful to my hon. Friend for giving way, and I am sure that the whole House is enjoying his exhaustive speech as much as me, particularly his looking through the parliamentary entrails of this issue. For clarity, is his position and that of our party now that we believe we could strike a better deal than the EU27 as a standalone nation after Brexit?

[Barry Gardiner]

Indeed I do. We actually said so in our manifesto. We made that clear in the manifesto that both my hon. Friend and I stood on and with which we went to the voters of this country, and he was elected on it just as I was. I propose to stand by it; I am not sure if he does.

For all these reasons, the Opposition cannot support the Government’s motion.

[Dr Fox]

On a point of order, Madam Deputy Speaker. I hesitate to raise this point of order, but in response—or non-response—to a series of interventions, the shadow Secretary of State promised the House that before he sat down he would make it clear whether he believed the Labour party would vote to ratify the agreement or lay a negative motion, which is procedurally very important under the CRAG procedure. Why did we not get an answer?