Trade Bill (Fifth sitting)

Barry Gardiner Excerpts

Committee Debate: 5th sitting: House of Commons
Tuesday 30th January 2018 Public Bill Committees

Implementation of international trade agreements

[Barry Gardiner (Brent North) (Lab)]

I beg to move amendment 5, in clause 2, page 2, line 13, leave out subsections (3) and (4) and insert—

“(3) Regulations under subsection (1) may make provision for the purpose of implementing a free trade agreement only if—

(a) the other signatory (or each other signatory) and the European Union had ratified a free trade agreement with each other immediately before exit day, or

(b) where the regulations are made before exit day, the other signatory (or each other signatory) and the European Union have ratified a free trade agreement with each other on the day the regulations are made.

(4) Regulations under subsection (1) may make provision for the purpose of implementing an international trade agreement other than a free trade agreement only if—

(a) the other signatory (or each other signatory) and the European Union had ratified an international trade agreement with each other immediately before exit day, or

(b) where the regulations are made before exit day, the other signatory (or each other signatory) and the European Union have ratified an international trade agreement with each other on the day the regulations are made.”

This excludes from the scope of section 2(1) those international trade agreements agreed between the UK and a third country where the corresponding agreement between the European Union and that third country has been signed but not ratified.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 9, in clause 2, page 2, leave out line 33.

This would remove the Henry VIII power allowing for the modification of primary legislation that is retained EU law.

Amendment 10, in clause 2, page 2, line 40, at end insert—

“(7A) An ‘international agreement that mainly relates to trade, other than a free trade agreement’ means a strategic partnership agreement or mutual recognition agreement that is ancillary to a free trade agreement as defined in subsection (7).”.

This would define international trade agreements that do not fall within the category of a “free trade agreement” as defined under subsection (7).

[Barry Gardiner]

I am delighted to see you in the Chair, Ms Ryan. I look forward to the Committee proceeding at a rapid pace under your guidance. I am tabling amendments 5, 9 and 10, in my and my colleagues’ names, as on the amendment paper.

We are now talking about the implementation of the new international trade agreements to be negotiated between the UK and those third countries that already have an agreement with the European Union. The Government are seeking to appropriate to themselves the power to make regulations to implement those new agreements without any scrutiny by Parliament. I cannot state it better than the House of Commons Library briefing paper, which states that the Bill

“seeks to minimise Parliament’s role”

in this regard, in that it will make all secondary legislation under clause 2(1) subject to a negative resolution procedure only.

The rationale behind this attempt to sidestep due democratic process is that the trade agreements that the EU had previously negotiated with the third country in question had already undergone scrutiny when they were prepared for ratification—that is the argument the Minister used last week when we debated this. By the Government’s sleight of hand, he would say there needs to be no parliamentary scrutiny of any new UK trade agreement because that job will already have been done on the earlier agreement negotiated by the EU.

The Minister was particularly keen to point out that we were suggesting that all the levels of scrutiny that took place at the EU would be done away with. I think he thought he was trapping us when he asked us to agree that a good level of scrutiny had taken place, and that we should allow these measures to go through on the nod because that scrutiny had already happened. We reject that argument, and we were pleased to register that business representatives who gave oral evidence to the Committee agreed with us. The Committee will recall that.

The new trade agreements are not only legally distinct, as the Government have admitted, but may well include substantial new obligations, which will have been through no process of scrutiny whatever. That is why we demand a new approach to these agreements in subsequent amendments to schedule 2, where scrutiny is addressed. However, the provisions of clause 2(3) and (4) go even further, in that they allow the Government to sidestep scrutiny of not only those new UK agreements that are set to replace existing ones, which have been through the full scrutiny process prior to ratification, but UK trade deals that replace EU agreements, which have not even been through the process of ratification. Our amendment speaks to that extraordinary attempt to undermine democracy still further, the significance of which might be demonstrated if I give the Committee an example.

The economic partnership agreement between the EU and Japan was finalised last month. Negotiations were concluded on 7 December last year, and the text of the agreement is currently undergoing the double process of what is called legal scrubbing and translation into the official languages of the EU, so that it can proceed to signing in 2018. The agreement will subsequently undergo the due process of ratification by Japan and within the EU, including parliamentary scrutiny by the European Parliament. However, that process will not be completed until later in 2019, if experience is any guide, and therefore after the point at which the UK is no longer a member of the EU.

Japan is also one of the countries with which the Government have established a trade and investment working group. That working group held its first meeting in Tokyo during November of last year, and is tasked with advancing the trade and investment relationship of the two countries, with the eventual aim of signing a UK-Japan trade agreement at some point in the coming years.

According to the Bill, any future UK trade deal with Japan will be counted as a roll-over agreement, and will therefore escape parliamentary scrutiny altogether, because the EU and Japan will have signed a trade agreement during 2018—that is, before the UK leaves the EU. Note that that will be the case even if the future UK-Japan deal bears no resemblance to the EU-Japan economic partnership agreement. As stated earlier, the Bill makes no requirement for the future UK deal to match the EU’s agreement in any way, shape or form; the Bill requires only that the other country and the European Union were signatories to a free trade agreement before Brexit takes effect. The regulations to implement those new obligations will be subject to a negative resolution procedure, which is the effective negation of parliamentary scrutiny, as the Government would have us consider the new UK-Japan deal simply to be a roll-over or a grandfathered agreement.

I would like to draw attention to the oral evidence provided last Tuesday by Dr Lorand Bartels of the University of Cambridge, who spoke to exactly that issue. Dr Bartels drew particular attention to the forthcoming trade agreement with Japan, and pointed out that

“there is a fundamental difference in international law between a signed and provisionally applied agreement and a ratified agreement.”—[Official Report, Trade Public Bill Committee, 23 January 2018; c. 42.]

The Government would do well to heed that distinction. I hope that the Minister might accept our amendment and that he will see it, in a friendly spirit, as one that might improve the Bill.

Without the amendment, we are in danger of effectively granting the Government carte blanche to do what they like to secure a new UK-Japan deal. That would be a major concern to businesses and workers up and down the UK. Japan is a major player on the world stage, and Japanese companies are important investors in our economy, so the obligations that we, as a nation, undertake in relation to those companies are critical to the future of some of our most dynamic industries. Are the Government really telling us that we, as parliamentarians, should have no right to scrutinise those obligations?

[Faisal Rashid (Warrington South) (Lab)]

Despite the fact that the Government have continued to argue that there is no need for parliamentary scrutiny in the Bill because existing deals have been subject to sufficient scrutiny in the European Union, does my hon. Friend agree that that is not the case here and therefore that it is vital in the interests of the British people that we secure such an amendment?

[Barry Gardiner]

I am grateful to my hon. Friend for his intervention because he reinforces the very point that I am trying to establish. Despite the processes that are currently in place for scrutiny of trade deals as they proceed through Europe, and ultimately through the European Scrutiny Committee and through the House under the Constitutional Reform and Governance Act 2010 procedure, we have here a situation in which a deal that was going to be concluded between the EU and another country can proceed to be signed, but not implemented. Then, in the lacuna—that is, the space between that signature and our leaving the EU—we could be confronted by the Government with a completely different set of trade relations. The trade agreement could be totally different, yet, under the Bill, the Government would have the power to sign and implement it simply because they had already signed a previous agreement before we had left the EU. That cannot be the right procedure for what could be completely new issues under that future agreement.

In one sense, the amendment is a modest one, given the seriousness of the issue it addresses. It merely seeks to exclude from the antidemocratic provisions of the Bill any regulations stemming from treaties such as a future UK-Japan trade agreement, where the correspondent EU agreement will have been signed but not yet ratified, along with all the scrutiny that ratification requires.

Other EU trade agreements could fall into this same category: the EU-Vietnam free trade agreement, the text of which is also being prepared for signing at some point this year; the EU-Singapore free trade agreement which has been initialled but held up by internal EU discussions as to whether it is a mixed agreement or exclusive EU competence, leading to the European Court of Justice ruling on this issue in May last year; and, potentially, some of the economic partnership agreements still to be finalised between the EU and different groupings of African, Caribbean and Pacific states, which were criticised so trenchantly by Professor Alan Winters of the UK Trade Policy Observatory in his oral evidence to the Committee last week. Also in this category is CETA, the comprehensive economic and trade agreement between the EU and Canada, which has been signed but not yet fully ratified, as it is a mixed agreement requiring ratification in each of the EU member states, in addition to the centralised EU institutions of the Council of Ministers and the European Parliament.

Finally, the amendment tightens up the language of subsections (3) and (4) by requiring not just that the EU and the other signatory or signatories should have ratified trade agreements, prior to Brexit, but that they should have done so with each other. The Bill as it stands simply says that they must have signed “a” trade agreement; it does not say that they have to have signed it with Japan—with the corresponding party. This is ridiculous. The Minister is looking confused. If he wants to intervene, I would be happy to give way to him on this point because it is material.

[The Minister for Trade Policy (Greg Hands)]

I thank the hon. Gentleman for allowing me to intervene. I am a little confused about his position on CETA. If CETA is not yet ratified by all the EU28 countries, the amendment, if it became law, would effectively prevent the UK from transitioning CETA to be a UK-only agreement. I know that the hon. Gentleman is opposed to CETA, and he represents a minority view within his party. However, the great majority of Labour MPs welcome CETA and voted in favour of it. It is also something that has already taken effect, so the effect of his amendment would be to take us out of the provisions of CETA that have already been in place and been provisionally adopted since September.

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[Barry Gardiner]

The Minister, of course, chose not to respond to the point I allowed him to intervene on because of his confusion.

[Greg Hands]

The hon. Gentleman asked me to explain my confusion.

[Barry Gardiner]

I am happy to address the Minister’s point and have set out the Labour Front-Bench position very clearly. He should know that the provisions of the amendment do not do what he has claimed they do. What it says is that there must be proper parliamentary scrutiny. He is denying precisely the opportunity for that to happen when a treaty has been signed but not yet ratified. The point of the amendment is to ensure that proper scrutiny can take place and that ratification can have taken place to ensure that.

[Faisal Rashid]

On the point about CETA, does my hon. Friend share my concerns about the implications of bringing in certain provisions of the deal and not ratifying—for example, the investor-state dispute settlement provisions? The key point is that there will not be sufficient scrutiny or consultation or an impact assessment carried out.

[Barry Gardiner]

My hon. Friend pre-vents me—I think that is the sort of Latin term: he goes before me. He picks up a theme I was about to come to. The ISDS procedures have been a major concern of not just parliamentarians but many other people in this country and across Europe. Any hon. Member who says that his postbag and email have not reflected that has simply not been examining them carefully enough.

On my point about the requirement to sign “a” trade agreement, clause 2(3) states:

“Regulations under subsection (1) may make provision for the purpose of implementing a free trade agreement only if—

the other signatory (or each other signatory) and the European Union were signatories to an international trade agreement immediately before exit day”.

It does not specify that it must be the same agreement, and stating the need for a treaty “with each other” would clarify that, which is what the amendment seeks to do. There is no great confusion, but there might be some because the clause is ambiguous.

Amendment 9 speaks to the first of two Henry VIII powers. Those powers are the most egregious example of the power grab that characterises the Bill, despite the extraordinary spectacle of the Secretary of State using the letters page of The Guardian to claim the opposite—a travesty I detailed on Second Reading and which, for reasons of time, I do not wish to reprise here. For the record, though, I draw attention to paragraph 2 on the very first page of the delegated powers memorandum that accompanies the Bill, which states, in plain English:

“The Bill contains 6 individual provisions containing delegated powers. Two of these, clauses 2(1) and 7(3), include a Henry VIII power.”

I am still waiting for the Secretary of State to correct the record that he so carefully muddied previously. Amendment 9 simply seeks to remove the first of those two Henry VIII powers.

Ms Ryan, I am glad that your grouping of amendment 9 with amendment 5 has enabled me to speak to it now, because it follows nicely on from my comments on the UK-Japan trade agreement. It is bad enough that talks towards a trade agreement should have been initiated behind closed doors by a secret working group—no agendas, no minutes, no access to any documentation, no website to keep Parliament or the public abreast of what was being decided in our name—but at the end of that charade, a set of formal negotiations, still in secret, determined what obligations we as a country might or might not be saddled with for a long time.

[Faisal Rashid]

Does my hon. Friend agree that if the Government are certain of their ability to roll over existing agreements, there is surely no need for the Henry VIII powers?

[Barry Gardiner]

My hon. Friend is entirely right. The Henry VIII powers show that the Government also realise that it is not simply replica provisions that are being rolled over but, in fact, new agreements that may contain substantially different clauses. Because of that, they need powers to be able to progress those agreements. The Committee tried to address that during its sitting last Thursday afternoon but the Minister has been reluctant to take the matter on board, even when pressed on how he thought, given the Government’s red lines, he would be able to roll over our current agreement with Norway on the free movement of people, and that with Turkey on the relationships we have through that country’s agreement with the EU customs union. The Minister has failed comprehensively to address those points. It would be interesting if he were to do so when he responds to this group of amendments, but I fear my hon. Friend might languish in hope rather than expectation of the privilege of hearing such a response.

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[Barry Gardiner]

If it is the Minister’s intention, as he says, to do what the amendment asks him to do, namely to apply these clauses only to agreements that have been ratified—and he says that they will all have been ratified—what problem does he have with accepting the amendment?

[Greg Hands]

The answer to that is straightforward. Although it is our intention to have ratified the agreements, that does not necessarily mean that they will have been ratified by the other EU27 countries. That is the important thing. I will come on to why the hon. Gentleman’s amendment would put at risk agreements that the UK is already party to and that UK businesses are already benefiting from.

We must remember that EU free trade agreements that contain areas of shared or member state competence must be ratified by all 28 member states before they come into force. As we know, that process can take considerable time. We drafted the clause 2 power so that signed EU free trade agreements fall within its scope. That will ensure that it can be used to implement agreements to replace those that have been signed, and which may have been provisionally applied but are yet to be ratified by the EU or the partner country.

Many such agreements are benefiting businesses and consumers as we speak. In other words, they have already taken effect. I know that the hon. Gentleman is opposed to CETA, for example, but we believe that it has benefited UK businesses considerably since it was provisionally applied and took effect in September. I know that he wants to throw away those benefits, so I remind him that most of his party sensibly sees the merits that CETA provides this country. Under his amendment, we would be unable to implement a free trade agreement that falls within this category, which would risk a cliff edge in any trading relationships covered by such an agreement.

To take another example, the UK ratified the EU’s Andean FTA with Colombia and Peru in 2014. In 2016, UK trade with those countries had a value of more than £2 billion. However, that FTA is still awaiting ratification by both the European Union and a number of EU countries. If that is still the case by exit day, the amendment would prevent the clause 2 power from being used to implement a transitioned FTA with Colombia and Peru, resulting in a likely reduction in trade flows between the UK and the Andean countries.

Let me turn to a few points that the hon. Gentleman raised elsewhere. He asserted that the agreement has to be signed by both parties. Clause 2(3), which relates to free trade agreements, states that in order for the Government to be able to use the power when implementing an agreement with a partner country, both the EU and that country must have signed a free trade agreement before exit day. In other words, both must have signed the same agreement.

[Barry Gardiner]

It does not say “the same”.

[Greg Hands]

I think the hon. Gentleman said it was ambiguous, but the Government’s intention is clear. We have all laid it out frequently: to transition the effects of the 40-plus EU FTAs, not to renegotiate new agreements. He mentioned the cases of Norway and Turkey. As I laid out at considerable length at the Select Committee on International Trade last week—I know two of his colleagues are members of the Committee—the situation will depend largely on the UK’s future relationship with the European Union, which is a matter for the current negotiations, as Norway, Turkey and Switzerland’s relationships are very much linked to whatever our future relationship with the EU might be.

[Barry Gardiner]

Of course, the Minister is entirely right to say that the nature of the agreements that we conclude with those countries would depend on our future relationship as we negotiate our withdrawal from the EU, but the point is that this Bill is supposed to be simply rolling over the existing agreements. The Minister has made a great deal of the fact that we want no change and are simply rolling over what exists into what comes afterwards. That is the trap that he has set for himself, and he must extricate himself.

[Greg Hands]

I will just repeat what the Secretary of State said on Second Reading: the Bill is designed to be robust to the different cases of where the future UK-EU relationship might lead us following the negotiations.

The hon. Gentleman mentioned Japan. In the small number of cases where the EU seeks to establish an FTA, it might be too late to go through conventional EU scrutiny here, and there are also our agreements that will now be sole EU competence. Also, they might not necessarily happen through the current EU scrutiny process. We will consider this in due course, but we are committed to Parliament having its say. Earlier this month we published a response to the trade White Paper, and the Government will consider views as we develop proposals regarding the role of Parliament in future trade agreements.

If we are to avoid trade disruption, we need to make sure that signed EU agreements that are not yet ratified by the EU, including the examples I have given, such as CETA, the Andean agreement and the partner country agreements, fall within the scope of the Bill, otherwise we will jeopardise a considerable part of the current trading relations that benefit this country so much. Contrary to what the hon. Gentleman says, the amendment would not improve the Bill. It would actually threaten a great number of our existing trading arrangements.

It is worth remembering that a delay in ratification by another EU member state has no real relevance to the content of an agreement, or indeed to UK scrutiny of it. It is merely a reflection of that country’s domestic situation. To allow such a state of affairs as that suggested in the amendment, and to cause disruption to UK businesses, would be profoundly unsatisfactory.

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[Greg Hands]

I am absolutely clear that this Bill relates to the transition of our existing trade agreements. How we approach future trade agreements will be a matter for future consideration. I mentioned earlier that we will look carefully at the responses to the consultation. Of course, if the hon. Gentleman has views, we are keen to hear them. Indeed, we will be seeking views from across this House on what Parliament’s views on these matters might be, but that is entirely a matter for the future.

Amendment 10 would clearly create an unacceptable risk that agreements essential to trade could not be effectively provisioned. If the members of the Committee are concerned about the scope of this power, please let me reassure them that, as I referred to earlier, we have already set out in clause 2 restrictions on the scope of the power.

Given these constraints, the existing drafting of the power, and our clear and firm assurances that this power is not intended to be used for the implementation of future trade agreements, it would be strange to include this amendment, which sets out the required procedure for future trade agreements. I therefore ask the hon. Gentleman to withdraw amendment 5.

[Barry Gardiner]

I am not prepared to withdraw and I propose that we move to a vote.

Question put, That the amendment be made.

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[Judith Cummins]

I thank the hon. Lady for that intervention. Fair trade should absolutely be a key element of any Bill that deals with trade.

[Barry Gardiner]

My hon. Friend quite properly reminds the Committee that the amendment is in scope—otherwise it would not have been selected; the Chair would have ruled it out of scope—because of the words at the front of the Bill. The amendment would of course have an impact on the roll-over agreements, as the Government call them, which are legally distinct, new agreements. If these provisions were put into law, they would apply to all new agreements that we completed in the future. I do not doubt that many Government Members would be happy to see included these provisions about human rights, equality and the rights of children—things that David Cameron, when he was Prime Minister, was keen to negotiate as one of the leaders on the SDGs. Would Government Members accept that the amendment is not only in scope, but could have a positive effect on future conclusions of trade agreements?

[Judith Cummins]

I thank my hon. Friend for his intervention.

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[Barry Gardiner]

Perhaps the hon. Gentleman will allow me to clarify. I believe that the contention is not that we cannot have a nationalised industry as a member of the single market; it is that once the sector has been liberalised, it then becomes very difficult to take it back under national control. That is the point my party’s leader was making, not the one he suggests.

[Alan Brown]

I thank the hon. Gentleman for that clarification. I would still contend that there is a confused viewpoint regarding the single market and how it aligns with membership or otherwise of the EU. Again, where the rail franchising system in the United Kingdom has been liberalised, clearly there is no impediment to the Scottish Government making a public sector bid. That proves that it can happen within the EU single market.

In conclusion, I welcome any commitment to strengthen the public sector ethos and public sector ownership, and I will be interested to hear what the Government have to say.

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[Greg Hands]

We have been clear that many EU trade agreements presently provide those protections and we have been clear that this exercise of transitioning existing EU free trade agreements will not be used for any back-door attempt to do anything to the NHS that would prevent our right to regulate domestically for the NHS. This party has a proud record of defending and protecting the national health service, and that will continue.

[Barry Gardiner]

Does the Minister recall that during the drafting of CETA, while Germany put a clear exemption into the agreement’s text that it would not allow any privatisation of its health service in that way, the UK failed to do so? One reason the ancillary document—the interpretative document—was necessary was to make that clear, but that document was not binding in law. As such, the Government do not have a good record on this, do they?

[Greg Hands]

The hon. Gentleman and I had an extensive debate on this matter in February. We are satisfied that the protections in CETA are adequate for protecting our national health service and our right to regulate in the domestic market.

It has long been an aspect of UK Government policy under successive Governments to make sure that trade agreements work for services. That is actually in the UK national interest—80% of our country’s GDP comes from services and 79% of our employment comes from services—and has been an objective of successive Governments.

I remember when the hon. Gentleman was a Minister under Tony Blair. The Blair Government rightly ensured, in particular within the European Union, that services were part of the trade agenda. Although the hon. Gentleman has changed his opinion on many matters in the intervening 10 years since Mr Blair left office, I am a little surprised that he and his colleague now seem to be arguing against the UK doing more to ensure that services are a key part of future trade deals.

[Barry Gardiner]

Will the hon. Gentleman give way?

[Greg Hands]

Of course I will allow the hon. Gentleman to intervene, to clarify where he is with Tony Blair.

[Barry Gardiner]

My relationship with our former Prime Minister is probably not in scope for the Committee. However, I assure the hon. Gentleman that the Labour party and the Opposition in Committee do not in any way want to stop the very valuable exports that our service industries make to the rest of the world. We want to see them flourish, but we want them to do so within a framework that does not prejudice the protections that should properly—as the Minister has acknowledged—be in place for public services and the public sector in this country, and the right to protect our national health service and to ensure that public procurement can be done properly.

[Greg Hands]

I think we shall leave it at that. I thank the hon. Gentleman for his clarification of where he stands in relation to Tony Blair.

Protecting the UK’s right to regulate public services is, of course, of the utmost importance. UK public services are protected by specific exceptions and reservations in EU trade agreements where relevant. As we leave the EU, the UK will continue to ensure that rigorous protections are included in all trade agreements that it is party to. On that basis, I ask the Opposition to withdraw the amendment.

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[Barry Gardiner]

On the point made earlier by the hon. Member for Kilmarnock and Loudoun, proposed new sub-paragraph (iii) of the amendment refers to

“any other public authority specified in regulations made by the Secretary of State”.

Does my hon. Friend agree that that therefore makes provision for the other Administrations’ bodies to be included in the scope of the amendment, although I entirely take the hon. Gentleman’s point that Food Standards Scotland was not specifically mentioned, and it might well have been?

[Judith Cummins]

I thank my hon. Friend and the hon. Member for Kilmarnock and Loudoun for their interventions, in which they both made valid points.

In the USA, the requirement is reversed. Those who wish to introduce products or processes to the market are free to do so unless the authorities can prove that they are unsafe. What they have tried to call the “scientific” approach to food safety, as opposed to the risk-based approach that we enjoy in this country and throughout Europe, has meant that the USA has ended up with lower standards of food hygiene and food safety. That is why the processes behind meat production on either side of the Atlantic are so radically different.

More than 90% of US beef is produced with the use of bovine growth hormones that have been linked to cancers in humans. We have food safety regulations in place across Europe that have banned any imports of hormone-grown beef from the USA and other countries for 30 years. US poultry producers are permitted to douse chicken and turkey carcasses with chlorine washes before selling them on to consumers. Again, that practice has been banned in Europe for more than 20 years, and the USA has challenged the ban at the WTO as being a barrier to its ability to penetrate the EU market.

The connection with animal welfare is paramount in this respect, in that the European regulations seek to introduce at least some consideration for the welfare of the animals that are farmed for human consumption. The USA has no comparable regulations on animal welfare, and the conditions in which its industrial farming takes place do not bear thinking about. Let me make the central point clear: the issue before us in this Bill is not whether we like the idea of eating hormone-grown beef, or whether we care about animal welfare in the raising of poultry for slaughter—those are debates we can have another time; the issue before us here is that we must be the ones to decide on food safety and animal welfare issues, and we must do so in an open forum as the elected representatives of the people of the United Kingdom.