Trade Deals and Fair Trade

Bill Esterson Excerpts

Wednesday 11th March 2020 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

I apologise to you and to other hon. Members for my late arrival, Mr Stringer. I congratulate my hon. Friend the Member for Swansea West (Geraint Davies) on securing this fantastic debate, which is well timed given that the Fairtrade fortnight has just passed.

My hon. Friend started the debate by describing what he thinks of when he considers the subject of fair trade. It is not to gain a competitive advantage through market practices that would be unlawful or unethical in one’s own market. It is about avoiding abuses of human rights or environmental standards, promoting fair competition in domestic markets, and avoiding unfair domestic activity that undercuts or undermines domestic producers. That was a pretty good starting point for the debate, which has flowed from those remarks.

My hon. Friend the Member for Torfaen (Nick Thomas-Symonds) spoke about the importance of high standards and rights around the world, to which I would add regulation. My hon. Friend the Member for Oldham West and Royton (Jim McMahon) quite rightly mentioned the role of the Co-operative party and movement in promoting fair trade. He also spoke of the vital role that the Department for International Trade should play in tackling unfair trading practices around the world and raised his concerns about its potential merging into the Foreign Office. I add to that my concern that the Department does not have responsibility for the negotiations with the European Union, which accounts for nearly half of our international trade. That undermines the Department’s effectiveness.

My hon. Friend the Member for Birmingham, Edgbaston (Preet Kaur Gill) quite rightly spoke about the need for high standards to be maintained in the UK and promoted around the world. In response, my hon. Friend the Member for Swansea West spoke about the importance of standards in the chemical industry through the European REACH system. The film “Dark Waters”, which I recommend to you, Mr Stringer, and to all right hon. and hon. Members who have not seen it, depicts exactly what goes wrong when those standards are not in place. Historically, the United States has not had high chemical standards and the 70,000 population of the town of Petersburg, West Virginia, was put at risk by the irresponsible actions of the chemical industry there. That shows what can go wrong without good regulation.

My hon. Friend the Member for Putney (Fleur Anderson) spoke of the potential for international trade agreements to undermine free trade if they are not negotiated in the right way. The hon. Member for Henley (John Howell) argued for fairer trade, and although my hon. Friend the Member for Oldham West and Royton responded to his point, I would simply add that given the way that economic partnership agreements have been rolled over, it is important that the Government continue to negotiate with countries in the developing world for improvements that benefit those who need fair trade the most. My hon. Friend the Member for Halifax (Holly Lynch), who is not my hon. Friend the Member for Lancaster and Fleetwood (Cat Smith), spoke about what fair trade means for workers and communities in the Ivory Coast and the importance of trade justice and fairness to them. That was reiterated by the hon. Member for Strangford (Jim Shannon). My hon. Friend the Member for Stockport (Navendu Mishra) made an excellent contribution in his first speech in this Chamber about the fact that Stockport is a fair trade borough. He also mentioned the importance of the sustainable development goals.

To pick up briefly on what the hon. Member for Dundee East (Stewart Hosie) said, I agree with him. I am sure we are speaking about the same things when we compare fair trade with free trade. Unfortunately, not everybody uses “ free trade” in the way he and I would use the term. It is very important that we consider, as he did in his analysis of some of the challenges in dispute mechanisms, what we mean by “free”. Who does free trade serve, and who is it free for? Similarly, when we speak of fair trade, who is fair trade for? The hon. Gentleman’s example was to do with investors with deep pockets. They have the ability to take on the public or environmental interest if dispute mechanisms that they can use are in place in the international agreements.

What is fair trade? Typically, we think of it as fair trade for farmers in the developing world, a badge on coffee, chocolate or wine that we see in supermarkets, the kinds of stories that we heard at the Fairtrade fortnight reception in the House of Commons, and the work of the Fairtrade Foundation, but there is so much more to the topic than that. There is the need for a rules-based system governed by the WTO, in which it is incredibly important that the United States plays its full part. I think I put that question to the Secretary of State last Monday: is it important enough to this country that in negotiations with the United States we insist on the United States taking its responsibilities to the WTO seriously, including it appointing to the appellate body?

Fair trade is about international trade agreements that support human rights and workers’ rights, combat exploitation and undermining of trade union activity, and support environmental and climate justice. It is no coincidence that those on the frontline of the climate crisis in the developing world are those who face the most difficult economic times and those most in need of support through a fair trade system. It cannot be right that this country continues to promote and fund the export of fossil fuel projects, which, sadly, the Government still do, as we saw most recently at the Africa summit. We should promote renewable energy and help the developing world to move to a low-carbon and net-zero future at the same time as we do at home. That would also be an opportunity for our domestic technology and export potential.

Not only in the agreements and settlement mechanisms mentioned by the hon. Member for Dundee East, but in the trans-Pacific agreement, we see the ability to undermine trade union activity and the ability for opt-outs in countries such as Vietnam. We already have significant trade with China, another country where there are significant concerns about human rights abuses and a complete absence of trade unions. That is what international trade and its agreements need to consider. It cannot be right that we trade at all costs; it must be right that international trade is done sustainably and fairly.

That brings me to the impact on our own economy. The result of a trade war—as we have seen with the tariffs imposed by President Trump—is an impact from dumping, which we see at the moment, with low-quality cheap goods on our market. Dumping is undermining our steel, ceramics and wood industries. Unless the Government get things right, we will see the potential for the United States to dump low-quality products on us, as a consequence of the type of deal that President Trump would like to negotiate.

It is not good enough to say, “We are going to have zero tariffs to benefit consumers,” because if the goods that come in as a result of those zero tariffs are of a low quality, consumers lose out. My hon. Friend the Member for Swansea West mentioned the problems of poor food standards and the prospect of the poorest in our society being fed chlorinated—or, now, acid-washed—chicken. Remember the reason that chicken is acid washed is the appalling hygiene and animal welfare standards in the United States, and that the United States has 10 times the level of food poisoning that we do in this country is those poor standards. That is what is at stake for consumers.

Our domestic producers will be undermined if cheap food is allowed in as a result of a US trade agreement. If domestic producers are forced by those low standards to compete unfairly, will they survive? Will they survive to take advantage of the reciprocal opportunity to export to the United States market? That seems unlikely, and that concern has been expressed not just by me but by the National Farmers Union and the farmers themselves.

Trade, historically, has been about power relationships. That is a reality. Do we take the opportunity available to us in negotiating new trade agreements to take our responsibilities seriously? The countries that are party to the economic partnership agreements that we rolled over want to revisit them. They want better terms, because of the unfairness of those agreements—concerns that have been expressed historically. Those countries have rolled the agreements over because they want to continue trading, but they have made it clear that they wish to revisit them.

That would be the responsible thing for us to do it but, equally, it would be wrong of us to accept—in a distressed state—whatever terms we are offered by the United States. We have discussed the poor standards that come with such an agreement and that are the consequence of the negotiating objectives set out by the Government. The Government include the dispute settlement paragraph—only a short one—but the problem, as the hon. Member for Dundee East set out clearly is that that dispute settlement mechanism is the back door to undermining, or running roughshod over, all the commitments not to allow US pharmaceutical companies access to our markets to sell their medicines, not to undercut workers’ rights, not to undercut our ability to address the climate crisis, and not to support our domestic manufacturing industries.

I expressed that concern in a question I put to the Secretary of State—I think the hon. Member for Dundee East put the same question. I checked and double-checked the Secretary of State’s responses, but that is the question she did not answer. Perhaps the Minister will take the opportunity now to make it absolutely crystal clear that he understands that the United States has those dispute mechanisms in its trade agreements because it and its investors use them to secure market access, to undermine our domestic producers and to sue the Governments with which the agreements are made. We must not have undercutting of our manufacturers, we must not allow access to public services, we must not have a reduction in workers’ rights, and consumers must not have to put up with lower standards.

When it is fair, trade is a force for good. When it is between equal partners—whether it is between us and the developing world or between us and a larger trading bloc—trade is essential to economic prosperity. Trade has the ability to transform the lives of local producers and communities in the developing world, but it must be balanced and there must be an opportunity for those countries to diversify away from a system that relies on the export of minerals and cash crops and towards a much more balanced economy. Trade must also be on the basis of a fair international rules-based system. It should mean avoiding both exploitation abroad and undercutting at home.

I call on the Minister to carry out the Government’s pledge to revisit the rolled-over agreements with the developing world and to rule out the use of a dispute mechanism in the United States agreement that is very different from what is envisaged for the EU agreement. Given the track record of the United States, that has the potential to undermine all the warm words on workers’ rights, the environment, consumers and access to the national health service, so I hope the Minister rules it out. Fair trade is an incredibly important aspect of what we do and what we support, but it has to be carried out appropriately. We must both act responsibly and ensure that we look after our own domestic markets.