Trade Bill (Third sitting)

Barry Gardiner Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 25th January 2018 Public Bill Committees

[The Chair]

Thank you. I invite Barry Gardiner to begin the questions.

[Barry Gardiner (Brent North) (Lab)]

Thank you, Mr Davies. May I wish everyone a very happy Burns day? So that our Welsh colleagues do not feel left out, I understand that it is also St Dwynwen’s day—I hope I pronounced that correctly—so let me say a very happy St Dwynwen’s day, too.

[The Chair]

You have the tie as well.

[Barry Gardiner]

Indeed.

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[The Chair]

Order.

[Barry Gardiner]

Q 151 Let me begin with Sarah Dickson. In your association’s view, does the Bill set out the consultation and scrutiny processes that you would like? Does it set out proper processes for the conduct of our international trade? Did the way the Government prosecuted the lead-up to the Bill—the way they took on board the representations of your industry and the wider business community—engender trust?

Sarah Dickson: For us, transparent and participative trade policy is really important. As an exporting organisation, we have been dealing with trade policy decisions in countries around the world for many years. We find that the best way to make trade policy is to involve people, consult them in that process and gather views, because you will find that some people will do better out of an agreement than others, and decisions will need to be made. Only by having a wide consultation on that and involving people in the process do you really get to a good outcome that it is then possible to implement and pass.

The Trade Bill as written at the moment—we do not know if there is more legislation to come—does not really cover that point in a statutory way. Of course, you do not have to consult and use statute to do that, but it concerns us that trade policy has been with the EU for many years and the UK has not done it. When it comes to having confidence—it is about confidence, rather than trust—in what the process is and when you would get input into that to have your say, we would be encouraged if we had more detail in a statutory instrument.

[Barry Gardiner]

Q Do you have that confidence yet?

Sarah Dickson: Not at the moment.

Gary Stephenson: I see the Bill as a sort of framework for future implementation of more specific regulations. I think the challenge is in the detail. If we look at key sectors such as animal-derived products, which represent 70% of the food exports from Scotland, there are some specifics there that will be required, on, say, animal health, protection and regulations in regard to which countries are permitted to export to different markets. There is registration for different markets. There are export health certificates and border inspection posts for imports of those materials. All that is fairly complex and detailed. We would hope that we would be consulted on any more specific legislation. It is difficult at this stage to say whether it is heading in the right direction or not. It depends on that ability to consult. There will need to be consultation in the devolved Governments, as well as with the UK.

[Barry Gardiner]

Q So to put that same final question, do you have confidence yet in the framework that the Government have set out?

Gary Stephenson: I am an optimist, so I would like to think that I have confidence that we would be engaged in consultation, yes.

Elspeth Macdonald: From Food Standards Scotland’s perspective, the part of the Bill that engages most with us relates to implementation of trade agreements going forward. If current trade agreements between the EU and third countries are carried over in their current form, that may not change matters significantly. If those trade agreements down the road start to change, or there is a desire or a wish to start to change them, the transparency on how that would happen is not yet evident. Overriding all of that, of course, in the devolved context, is the issue about the constraints in competence that the Bill would bring on Scottish Ministers and the Scottish Parliament, and therefore on ourselves, to be able to provide assurances to consumers in Scotland about standards, and assurance in relation to international trade.

[Craig Whittaker (Calder Valley) (Con)]

Q I want to ask each of you whether you think that the Bill is sufficient to do what it needs to do, bearing in mind that it is not about future trade deals, but is about facilitating the carry-over of deals that are already in place?

Gary Stephenson: It is difficult to tell with the Bill as it stands, because the devil is in the detail. There are 40-plus EU free trade agreements. Some are very small—economically they are not too important—but there are some very big free trade agreements within those. Clearly, we cannot do them all at once, and the key bit will be whether there is some sort of Government prioritisation of those agreements, perhaps from the standpoint of size of markets. There are some very big ones in there: Japan, Mexico, South Africa, South Korea, Ukraine, Turkey and Egypt are very large markets that are certainly important for UK-Scottish producers.

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[Iain Stewart (Milton Keynes South) (Con)]

Before I ask my question, can I just point out an important error in some of the official documents? Whisky is spelled with an “e” on some of the documents, and that is a very different product from Scotch whisky. On Burns night, I thought it was appropriate to point that out.

[Barry Gardiner]

The Government cannot be trusted.

[Iain Stewart]

Q I would like to get a sense from the witnesses of what the impact would be on the food and drinks sector, particularly in Scotland, if this Bill did not happen and we left the EU without the carry-over of the existing EU free trade agreements. Have you quantified the value of transferring over what we already have into our domestic legislation?

Sarah Dickson: For us, 10% of our exports go to those countries and benefit from them. I cannot give you an overall figure, but obviously, if you are not paying the tariff, you are not paying the tariff and you do not have that cost. It would make a difference to about 10% of our exports, and our exports were £4 billion in 2016.

Elspeth Macdonald: I do not have figures in front of me, but I think the document the Scottish Government published recently, “Scotland’s Place in Europe”, about business, jobs and the economy, touched on exactly those issues and put some economic analysis around some of that in terms of trade.

Gary Stephenson: All I can say is that I think about 37% of exports of food from Scotland are to non-EU countries, but we have not quantified exactly what the impact would be and how much of that is going to countries with a free trade agreement. I cannot give an exact answer, but it will have an impact.

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[Judith Cummins]

Q Can I quickly return to geographical indications and ask Ms Macdonald a question? Given the ambiguity of the Government’s position to ensure that GIs are awarded to UK producers in trade agreements—they did not list a single one in the comprehensive economic and trade agreement—what are your concerns about the representation of your interests in trade agreements?

Elspeth Macdonald: Our interests in terms of geographical indications are that consumers know what they are buying and that, whatever system is in place—the Government’s stated intention is that things will be the same after exit—people can have confidence that products are not being misdescribed in terms of their geographic origin. There is confidence in the current system because it is a robust and well-regulated system that is set out in statute. Our particular interests are ensuring that, when businesses trade and when people buy products that are advertised and described in a particular way, those claims, whether they are about origin or anything else, are accurate.

[Barry Gardiner]

Q I want to marry up two things that Mr Stephenson and Ms Dickson said. I was struck by your phrase, Mr Stephenson, that there will be no “lift and shift”. In that context, looking at the way the existing agreements have to be transposed into corresponding agreements, I wonder whether you might comment on the Government’s ability to do that, given their red lines with the Norwegian agreement and the Turkish agreement. One of those currently involves the European economic area and free movement of people, and the other involves the customs union.

I want to marry that up with what you said, Ms Dickson, about the roll-over of terms. When you were asked about South Korea, you did not actually narrate the history of your association’s difficulty with South Korea, which of course was very resistant to the geographical indicator when you presented it on behalf of the Scotch Whisky Association. Do you think there is a possibility that South Korea might use this opportunity to reverse the progress that was made? There is one question for each of you.

Sarah Dickson: I would love to be in the head of the South Korean Government and to know quite where they will take this process. The conversation between the EU, the UK and the South Korean Government will have to be for them. Is it impossible that third countries might try to use this opportunity to reopen agreements? It is not impossible, but I hope that is not the case. When the UK has left the EU and is having its own bilateral trade policy conversations with third countries, we will undoubtedly get into these conversations about what they might want to change.

[Barry Gardiner]

Q Why would the South Koreans not use this opportunity, while we are under pressure to do things within a limited timescale, to negotiate better terms, as they see them? They tried very hard to negotiate those terms with the EU in the first place, did they not?

Sarah Dickson: The flipside is what South Korean businesses are saying to them about the benefits they gain from the trade deal. That is the judgment in all trade deals: who is benefiting, how much they are benefiting, and whether the things they do not benefit from outweigh the benefits they get. As I said, that is really a judgment for the South Korean Government. That is partly why we are trying to protect our GIs as best we can in addition to agreements.

Gary Stephenson: I will build on that. You are exactly right: there is an opportunity for them to renegotiate, and the UK, given the set-up it will be in, will be in a weaker position to defend against that. It would be ideal if the transition were just an extension of article 50, but we know it will not be. We will be out of the EU and trying to negotiate in a transitional period in which we are not supposed to be negotiating and are not supposed to have a final agreement, we want to get things delivered on time, and we do not have all the necessary resources. How do we prioritise everything? I think there are a lot of things rolled into your scepticism, but I share that scepticism.

[The Chair]

Order. That brings us to the end of the time for questions. May I thank the witnesses, on behalf of the Committee, for your evidence? We are very grateful.

Examination of Witnesses

Gordon MacIntyre-Kemp, Jonathan Hindle and David Scott gave evidence.

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[The Chair]

Can I also ask the witnesses to speak up? We seem a long way away back here. I invite Barry Gardiner to begin.

[Barry Gardiner]

Q I seek your thoughts on what seems to be an increasingly complex part of international trade agreements. As we have seen with Canada, negotiating partners are increasingly demanding that any potential difficulties with implementation, when devolved competence matters may be involved, are dealt with up front—for example, in the Canadian situation, the provinces were engaged right at the beginning of the process—and that there are assurances that the final agreed text of any agreement may be delivered. With that being the case, what is your view on the important role of consultation prior to agreements? Do you believe that the Bill sets out a suitable framework for such consultation? In addition, what would the implications be if the devolved Administrations had some measure of consent reserve that implied a veto on the implementation of our internationally agreed obligations? That is quite a complex question in two or three parts, but your response will be of considerable interest to the Committee.

Jonathan Hindle: I certainly do not feel qualified to be commenting on devolved Administrations—it is not part of my remit or where our industry is particularly clustered, so I do not feel qualified to answer that. I defer to the two gentlemen beside me, who probably know more.

David Scott: I am not convinced I am able to answer either, but the consultation is definitely a good thing. There is a voice that needs to be heard and various parties look for representation, not necessarily to veto anything, but certainly to ensure that the best interests of all parts of the UK are represented.

Gordon MacIntyre-Kemp: Business for Scotland was founded in 1996 to campaign for devolution and to set up the Scottish Parliament, so protecting the powers of devolution is one of our key remits. It is an area we have been investigating. This is one part of the whole Brexit process. The European Union (Withdrawal) Bill centralises about 100 Europe-influenced powers in Whitehall after Brexit, even though many of those cross over with the responsibilities of the devolved Parliaments and Assemblies. The deadline to amend clause 11 of the withdrawal Bill was missed, and that means we are sitting here without proper protections in place. The Trade Bill seems to suggest that it puts the power to act almost unilaterally in the hands of a single Minister—a single Minister who has what has been labelled a “hard Brexit agenda”—without clear protections on the public right to consult, scrutinise or stop trade deals.

At best, that means that a great deal of confusion remains over how trade negotiations will be handled where they overlap with the devolved Assemblies and Parliaments, and that is damaging to business. At worst, it looks like a deliberate attempt to delay the transfer of EU-held powers in particular to the devolved Parliaments until after the UK Government has had free rein to agree deals that you could say run roughshod over the devolution agreements that currently exist in these islands.

To give a key example, if we are going to do an instant trade deal, which we want to do with the Americans and which has to be the highest priority, the Transatlantic Trade and Investment Partnership is a great guide to what we can do with them. It is quite progressed; the key reason that TTIP did not make progress in the EU was that the EU wanted to put in protections to allow Governments to maintain public services such as the NHS, and our NHS is something that the United States is very likely to want to have access to.

I do not know much about trade negotiations, but I was trained in negotiation by a FTSE 100 company and by an American top 500 company, and the very first rule of negotiation is, “Make sure the person you’re negotiating with has the ability to say yes to the deal you’re presenting.” If we have devolved Parliaments who have control over the NHS, the Americans will look at that and say, “Well, you don’t have the ability to agree a trade deal with us,” so devolution is ipso facto incompatible with rapid trade deals, especially done under a World Trade Organisation agreement. I see that as being a problem and potentially creating constitutional issues not just in Scotland, but particularly in Northern Ireland.

[Barry Gardiner]

Thank you. That was an extremely interesting response, and I am sure one that will help our deliberations this afternoon, when we come to the first set of amendments. You have raised a number of very serious constitutional questions. It may be that the Minister has clear answers to them, but I think we will all be keen to hear what they are.

[Martin Vickers (Cleethorpes) (Con)]

Q Mr Scott, in the notes we have been provided with, there is a section titled “Your views on the Bill”. It says that you recognise that

“the government is committed to maintaining the existing trade relationships, effectively preserving the status quo.”

You go on to say:

“It therefore seems that there is the potential to spend a significant amount of time, effort and expense to deconstruct the current processes”

and introduce a new process to bring us back to the same place. The way I read them, those two statements are somewhat contradictory. Surely what we are looking at in the Bill is the provision to ease that transition to provide the status quo?

David Scott: From my perspective—I speak for my company, which has 60 individuals in Scotland working in the pharma services sector—there are established regulations and ways in which we currently work with the European Union and with global pharmaceutical companies. The Bill would suggest that, while we seek to maintain those, we reserve the right to deconstruct them and come back to the same position. That is how I read it; I may be wrong, and I do apologise if I have misconstrued that. It is important, from my business perspective, that we maintain our relationship as it currently is, because that is a major way in which we trade with European countries on behalf of the pharmaceutical industry.

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[Matt Western]

Q Finally, would you very much like your sector to be involved in any TRA?

Jonathan Hindle: Very much so, yes. We would certainly welcome having someone on that TRA that understands our sector and all the nuances and complexities that have been alluded to—absolutely.

[Barry Gardiner]

Q Very briefly, Mr MacIntyre-Kemp, I understood your example about chlorinated chicken not to be because you did not realise that this Bill was not about doing a trade deal with America, but to be talking about the need for the devolved Administrations to be involved in determining what are in those trade agreements, because of the way in which they may impact upon the implementation of what are devolved competencies. Do you believe—and do you believe that it is the Scottish Government’s position—that there should not only be consultation but consent at that level for the trade agreements before they are implemented?

Gordon MacIntyre-Kemp: Yes, exactly, and as food safety is a devolved issue in Scotland—

[The Chair]

Order. I apologise to the hon. Member, but we have come to the end of the time allotted to the Committee for questions. May I thank the witnesses on behalf of the Committee for your evidence today? The Committee will meet again at 2 o’clock this afternoon in Committee Room 12.

Ordered, That further consideration be now adjourned. —(Craig Whittaker.)