Future Free Trade Agreements

Debate between Barry Gardiner and Geraint Davies

Thursday 21st February 2019 Commons Chamber

[Geraint Davies]

Does my hon. Friend think it is a cruel irony that Margaret Thatcher was instrumental in creating the single market and getting Japanese car companies to come here as a platform to access that market? The EU-Japan trade deal is one of the reasons they have gone there. The other imperative is that, had we not been Brexiting, those car manufacturers would in all probability stay in the EU, in Britain, where they are already. Given that car workers who voted to leave are now finding that they voted to leave their jobs, should they not have a final say on whether we leave at all? They certainly did not vote to lose their jobs. It is completely farcical.

[Barry Gardiner]

My hon. Friend tempts me into a discussion about Brexit, but I am sure that if I were to be tempted, Madam Deputy Speaker, you would be on my case in a flash, urging me to deal with the matter of future free trade agreements instead.

This debate was originally promised at the last International Trade oral questions on 7 February, but anyone reading Hansard will not have been blind to the fact that the commitment was made as a response to an entirely different question. We did not ask for a general debate on putative trade deals with specific countries. What was asked was when the Government would bring forward a debate about the scrutiny of trade deals. Even if the Secretary of State has not yet got round to reading my eight-page letter of 21 January on the subject—there are many copies on this side of the House if he wants a spare—he cannot have been unaware of the matter, because, to his embarrassment, the Trade Bill’s progress in another place has been delayed as the Government lost a crucial vote.

Their lordships required the Government to set out their proposals for the process, the consultation, the mandate and scrutiny of making international trade agreements in the first place, including:

“Roles for Parliament and the devolved legislatures and Administrations in relation to both a negotiating mandate and a final agreement.”—[Official Report, House of Lords, 21 January 2019; Vol. 795, c.506.]

The House will note that no such proposals have yet been brought forward, so perhaps the Secretary of State will tell us what progress he has made in this respect and when he intends to introduce such a debate.

Today’s debate certainly cannot be considered to constitute that important discussion. It is a general debate on a Thursday, in a week that was intended to be recess, talking about potential agreements before Parliament has even debated the whole process of consultation, impact assessment, negotiating mandate, parliamentary debate, transparency of negotiation, ratification and subsequent review and periodic appraisal that should constitute a framework within which the Government intend to bring such agreements into being.

Furthermore, people watching today’s debate will be incredulous that, given that just last week the Secretary of State was forced to come to this House and admit that he had thus far failed to replicate the 40-odd trade agreements that he promised would be ready to sign one second after midnight after Brexit, last week only five had been agreed, nine were off track, 19 were significantly off track, four were said to be impossible to complete by 29 March and two were not even being negotiated. If there has been progress since then, I will happily give way to the Secretary of State if he wishes to advise the House. No. In that case, I take it that his silence is an acceptance that that is the state of play of the agreements that we currently have. Indeed, the fact that we are instead discussing a host of entirely new trade agreements when we have yet to secure trade continuation with all the countries with which we already enjoy a trade agreement by way of our EU membership rather calls into question the Government’s priorities at a time when businesses are screaming for certainty, clarity and continuity.

Draft EU-Canada Trade Agreement Order

Debate between Barry Gardiner and Geraint Davies

Tuesday 26th June 2018 Commons Chamber

[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.

EU-Japan Economic Partnership Agreement

Debate between Barry Gardiner and Geraint Davies

Tuesday 26th June 2018 Commons Chamber

[Barry Gardiner]

I will not, because Madam Deputy Speaker wants me to press on to allow hon. Members to make their own contributions.

The car industry is far from the only sector involved in what is a comprehensive trade deal. Food and drink producers are also implicated, not least as regards the protection provided in the agreement for products with specific geographical indications. Once again, the Government have failed to defend the interests of British producers on overseas markets. France, Spain and Italy have each listed dozens of their national products for special protection in annex 14-B of the deal and Japan has listed 48 of its products for protection, yet the UK Government could only be bothered to list four products under the geographical indications provisions of the deal—Scottish farmed salmon, west country farmhouse cheddar, Stilton and Scotch whisky.

[Geraint Davies]

What about Welsh lamb?

[Barry Gardiner]

Indeed. As my hon. Friend says, what about Welsh lamb? What about Scotch beef, Dorset blue, Yorkshire Wensleydale, Cumberland sausage and Melton Mowbray pork pies? Can the Minister explain why we failed to register geographical indications to protect more of our UK food produce?

The European Scrutiny Committee raised many further crucial issues relating to the deal that remain unanswered. Under the negative list approach, all service sectors that are not explicitly exempted from liberalisation are included. It is considered to be 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. It means that any emergent sector in the future will be automatically subject to trade liberalisation even where there may be a clear need for Government regulation or intervention. We cannot possibly predict what those will be prior to their emergence, but what is the point of using such “negative lists” to reduce the capacity of the Government to regulate in the future?

Annex 1 allows countries to list existing non-conforming measures that enjoy some protection. Annex 2 is a stronger protection, in that it permits countries to protect service sectors into the future by allowing for the introduction of reforms that would otherwise contravene the EPA rules. As the Minister said, the UK has entered annex 2 reservations for cross-border auditing services, manpower planning for doctors in the NHS, privately funded ambulance services, and residential health facilities services other than hospital services. I repeat: other than hospital services. In other words, they are, and will forever remain in future, subject to liberalisation and competition under this agreement, in contradistinction to the implication that we heard earlier. I therefore repeat the Committee’s question: will the Minister confirm whether he is content with the proposed provisions enabling Governments to regulate in the public sector?

Do the Government intend to negotiate the UK’s future trade partnership and its future investment relationship with Japan at the same time, as one agreement—another question posed by the hon. Member for Stone and by my hon. Friend the Member for Crewe and Nantwich—or will the separate EU-only trade agreement constrain the UK’s ability to negotiate and conclude an integrated trade and investment agreement? The House will be rightly concerned that the Government have simultaneously inserted into the Trade Bill sweeping Henry VIII powers to implement such a future trade agreement without any proper scrutiny or oversight. Will the Minister confirm that no such investment chapters will be included in any future trade agreement with Japan?

Let me be clear: Labour would like to see a trade agreement with Japan. We have an incredibly strong trade and investment relationship between our two countries, and we believe that we can continue to build on that. We want a positive, dynamic relationship that elevates standards, boosts opportunities to benefit from advances in technology and research and development, and continues to support growth and investment in our high-tech manufacturing sectors and world-class services sector. But we cannot be expected to rely on this Government’s quiet promises alone, and it is imperative that Parliament has the proper opportunity to scrutinise and debate these trade agreements well in advance of their being signed.

It is worth noting that this deal has yet even to go through the full scrutiny process in the EU, with INTA—the Committee on International Trade—not scheduled to hold a public inquiry until 9 and 10 July and the European Parliament scheduled to vote on whether to give consent to the agreement in December. If the motion before us is voted through, it will allow Ministers to endorse the agreement without proper scrutiny by the House, and even before the full scrutiny process of the European Union has been properly applied. That sets a dangerous precedent for future trade agreements and makes a mockery of the idea that any future trade agreements to which the Trade Bill applies will have received proper scrutiny by this House.

Trade Bill

Debate between Barry Gardiner and Geraint Davies

Tuesday 9th January 2018 Commons Chamber

[Barry Gardiner]

I will deal with issues around devolution later in my speech. Indeed, that is something that my hon. Friend the Member for Sefton Central (Bill Esterson) will be addressing in his winding-up speech.

Having set the context, let us look at the detail. The Bill’s opening clause sets the tone for the power grab that is to come. It gives Ministers the power to implement regulatory changes as a consequence of any country acceding to or seceding from the WTO’s government procurement agreement. This is not a temporary power. It is not simply to facilitate our transition from a member under the wing of the EU to a member in our own right, as the explanatory notes to the Bill claim, but a power in perpetuity without the requirement for any scrutiny by Parliament.

The Government will use the sweeping powers of the Constitutional Reform and Governance Act 2010 to push through the UK’s independent membership of the GPA without a vote in Parliament. The Bill confirms that any future changes to the terms of the GPA will go the same way. We can talk about the merits of the GPA—I am sure that we will find much common cause across the Dispatch Boxes—but the Secretary of State said that we would be acceding on the “existing terms of participation”, if I wrote that down correctly. That is something that Members should be free to scrutinise and debate. The United States, Canada, South Korea and Japan have all put annexes to their schedules for the GPA that allow them to set aside and disapply regulations on behalf of small businesses and other organisations. That is something that we might wish to consider. It would be quite proper for us to do so, to boost trade for our small businesses, but the Bill, as currently formulated, would not allow that.

I have to confess that when I first looked at the GPA, I wondered what material difference this might make to British business. I was quite impressed to find that the Government’s explanatory notes showed that the GPA opened up £1.3 trillion of contracts to UK business—we should all rejoice in that—but when I checked the Bill’s impact assessment, I learned that the total cross-border earnings of our businesses from GPA contracts outside the UK is just £1.2 billion, which is less than 1% of that amount. I also learned that the total earnings by foreign companies from the £68 billion of GPA contracts inside the UK was £16.7 billion, which is about 24.5%. Will the Minister explain what the saving to the public purse was from this procurement agreement that merited £16.7 billion going to foreign companies while just £1.2 billion came back to the UK? There might well be a very good answer, but is this not precisely the sort of issue on which Parliament should have a proper role of scrutiny and holding the Executive to account? Of course, the Bill denies us the capacity to do so.

Clause 2 gives the Secretary of State the most far-reaching powers to implement new international trade agreements without the need for even a debate in Parliament. As his Department has confirmed, the clause includes the Henry VIII power to modify primary legislation without a vote. On that point, we were treated to the extraordinary spectacle of the Secretary of State resorting to the letters page of a national newspaper to deny what is printed in black and white—actually in black and green—in his own legislation. He must have been piqued by a number of articles in response to the Bill’s publication in November that accused him of appropriating powers that should, by rights, lie with Parliament. He responded on The Guardian website on the evening of 20 November, saying:

“In an editorial (13 November) you claim that the trade bill is ‘effectively granting ministers the power to write law behind parliament’s back’ with ‘Henry VIII powers’. This claim is repeated in a column by George Monbiot (18 November). This is untrue. The powers in the bill will only allow for amendment of secondary legislation covering existing trade agreements, and secondary legislation is still subject to parliamentary oversight.”

Yet it was not The Guardian that was wrong; the Secretary of State was wrong. He knew that he was wrong, although he did not correct his remarks, because clause 2 of the Trade Bill, which he had published just two weeks earlier, states quite clearly that the powers in the Bill make provision not only for the amendment of secondary legislation, but for “modifying primary legislation”. Lest there should be any doubt about this, the delegated powers memorandum published by the Secretary of State’s Department to accompany the Bill, which was quoted by the right hon. and learned Member for Beaconsfield (Mr Grieve) with such devastating effect earlier, states on its very first page:

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

This was not the case of a Cabinet Minister misspeaking or being ambushed in a broadcast interview; this was a written communication that the Secretary of State placed in a national newspaper in the cold light of day that contradicted plain fact and the considered explanation of his own officials. I will happily give way to the Secretary of State if he would care to come to the Dispatch Box and explain himself by putting on the public record why he chose to suggest that there are no Henry VIII powers in this Bill when his own Department had already confirmed the opposite to be the case. I cannot claim to have served with Henry VIII. I cannot claim that Henry VIII was a friend of mine. But, to misquote Senator Lloyd Bentsen’s remark to Dan Quayle, I can say, “Secretary of State, you are no Henry VIII. This Bill is an affront to the dignity of your office and to the authority of this House.”

Clause 2 provides the Secretary of State with unprecedented powers to implement international trade agreements without a vote in Parliament. It is perhaps the most egregiously anti-democratic provision of the Bill, in that it allows the Secretary of State to engage in secret negotiations with a trading partner of the EU, to lay the results of those negotiations before Parliament without the need for a debate or a vote, and to proceed to incorporate the resulting treaty into UK law without the need for a vote either.

The Government have tried to justify this power grab with the sham argument that these are simply roll-over agreements—existing agreements that are just being grandfathered. They claim that the corresponding agreements between 60-plus countries and the EU have already been through the process of scrutiny, meaning that the UK’s new agreements can go through on the nod. Yet the Government have been forced to admit that the UK’s new trade agreements are legally distinct from those previously negotiated by the EU. They are new agreements in international law. If we allow the Bill to go through as it stands, the Secretary of State, as the Government have acknowledged, will be given carte blanche to agree substantively new obligations with third countries and to implement them without a vote in Parliament.

The Government are aware of the magnitude of what they are attempting. The delegated powers memorandum could scarcely disguise its shame with regard to this part of the Bill. It says:

“It is recognised that Parliament will want considerable assurances from the Government that this power will not be used beyond what is necessary to ensure a seamless transition of the agreements in scope.”

The Government have given that assurance, but they cannot deny that the power is there. In the next breath, the memorandum claims, apparently without irony:

“The Department considers that this power is appropriate for the negative procedure.”

The negative procedure is the least rigorous procedure available to this House, as it allows the Government to bypass the need for a debate or a vote, or the possibility of amendment—there is nothing.

I ask the Minister to come clean and confirm to the House that the delegated powers memorandum is correct. Will he assure us that the Government will bring forward their own amendment in Committee to ensure that these new internationally binding agreements must go through a due process of proper scrutiny by Parliament, rather than being signed off by Ministers without a vote?

[Geraint Davies (Swansea West) (Lab/Co-op)]

I applaud my hon. Friend’s speech. The Government are making out that this is all about roll-overs and business as usual. Does he accept that what will actually happen is that countries will want to negotiate new terms of trade because we will be a small minnow compared with the EU giant? What is more, when an EU quota is involved, countries within Europe such as Spain may want to take some of our quota. We will keep our quota only if we give better terms of trade, with lower standards, lower prices and a worse deal for us. That is why we must have scrutiny in this place.

[Barry Gardiner]

The honest answer to my hon. Friend is that I do not know, although I share his suspicion that that might well be the case. The point is that the Bill shows that the Government’s expectation is that these are not simply roll-over agreements and that, precisely as he suggests, third countries may demand additional features in new agreements. On that point, he is absolutely right and the Secretary of State is absolutely wrong.