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.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 5th March 2020 Commons Chamber

[Elizabeth Truss]

My hon. Friend is absolutely right; every morning more than 1 million people in Britain get up and go to work for American firms, and more than 1 million people in the US go to work for British firms. We want a closer economic relationship so that we can share ideas, products and goods, to the benefit of both nations.

[Bill Esterson (Sefton Central) (Lab)]

The Secretary of State told us on Monday that ceramics factories in the UK could benefit from a US trade deal, but that is not the view of the British Ceramic Confederation, which has warned of the dangers that low-quality ceramics would have on UK industry. Does she not accept that the manufacturing industry is right to be concerned about the threat posed by the agreement she is proposing?

[Elizabeth Truss]

Laura Cohen, of the British Ceramic Confederation, has said:

“A USA trade agreement could help our sector. For example, there are high tariffs on ceramic catering-ware imports…and without this barrier our exports to the USA could grow.”

Of course we will take action through the Trade Remedies Authority to deal with the illegal dumping of ceramic products on the UK market, but it is simply wrong to say that the ceramics industry would not benefit from a US trade deal.

[Bill Esterson]

But Laura Cohen is not talking about the type of trade deal that the Government are proposing, is she? The BCC has warned of the dangers of the Government’s proposed mutual recognition clauses, which is where the flood of low-quality imports would come from. The Secretary of State’s own scoping assessment says nothing about the impact of cheap US imports on UK manufacturing either, so why will she not listen to the industry? Should the Government not rethink their approach to the US agreement and look after our own excellent manufacturing sector, rather than pursuing a policy of “America First”?

[Elizabeth Truss]

I find this pretty ludicrous. The hon. Gentleman will have seen in the scoping assessment that virtually every sector of the UK economy, including manufacturing and agriculture, will benefit from a US trade deal. Steelite International, a fantastic company that I visited recently in Stoke-on-Trent, has also welcomed the potential removal of tariffs on its products—up to 28% on dinnerware—which it says will help it expand its operations.

UK-US Trade Deal

Bill Esterson Excerpts

Monday 2nd March 2020 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

May I thank the Secretary of State for early sight of her statement? We on this side of the House support ambitious trade agreements that unlock economic growth, create new jobs, and elevate rights and standards, so I congratulate her and her officials on the publication of today’s negotiating mandate for the Government’s flagship post-Brexit trade agreement. A year after the US equivalent, it has been greatly anticipated.

Some 20% of our current trade is with the US. It is our second biggest market, and we have enjoyed decades of two-way trade without an underlying trade agreement. The Government predict GDP growth of 0.07% to 0.16%, or £1.6 billion to £3.4 billion, as a result of this agreement. To put that in context, the Government’s own figures suggest a fall in GDP of about £150 billion as a result of the type of trade deal being proposed with the EU. Would it not be sensible to prioritise minimising losses of £150 billion, rather than chasing much smaller gains of £2 billion to £3 billion? How much will be added to GDP by the trade agreements with Japan, Australia and New Zealand, to which the Secretary of State referred? Will she confirm that countries on the other side of the Atlantic or further afield simply cannot come close to replacing what will be lost in the type of trade deal being proposed with the EU?

The negotiating objectives contain references to a level playing field with the US and a commitment to prevent either side from enjoying an artificial advantage—a commitment not being offered to the EU. Does the Secretary of State believe that the EU has not noticed? Or does she think the EU does not have access to translators? Dispute mechanisms are used by the US in international trade agreements to enforce its standards as a matter of course. It is noticeable that the EU negotiating objectives specifically exclude environmental protections and workers’ rights from the proposed dispute mechanism, but no such exclusions have been set out in the objectives published today, so will the UK end up having to back down, or are the rights and protections really the red lines that the Secretary of State would have us believe? Will she insist that the US signs up to International Labour Organisation conventions? How will the agreement reinforce the UK’s commitment to net zero by 2050?

The Chancellor’s adviser said yesterday that we do not need a farming industry or a fishing industry; who should we believe—the Chancellor’s adviser or the Secretary of State? The Government say that they will not allow chlorine or acid-washed chicken—processes used only because of insanitary conditions in the United States—but they also say that such produce is safe; which of those is the Government’s position? Will they make the necessary commitments in law to protect our consumers by adding them to the Agriculture Bill?

The US trade representative says that the US will demand greater market access for US pharmaceutical businesses, which could drive up the cost of medicines. Meanwhile, the provisions of trade agreements can apply inadvertently to public services and lock in privatisation measures, against public concerns and the public interest. Will the Secretary of State confirm that she will ensure that explicit wording rules out liberalisation measures from applying to our NHS and to all public services?

The mandate published today appears mainly to be about tariffs; mucking about with tariffs does not constitute an international trade agreement. The current round of trade tariffs has damaged leading British exports, including Scotch whisky, and caused great concerns in our ceramics and steel sectors. The Government have already spelled out their plans to drop tariffs to zero; where is the incentive for the United States to do the same? What is to stop them walking away from a deal because we have given them everything that they want without the need for an agreement?

The Secretary of State mentioned Congress, so on the subject of scrutiny she must recognise that her statement does not constitute adequate parliamentary engagement on this process. Will she tell NHS patients, farmers, manufacturers, consumers and workers just how she intends to enable scrutiny of this and all other international trade agreements?

[Elizabeth Truss]

I am pleased that the Opposition have acknowledged that there is value in trade deals and, indeed, in a trade deal with the US, because previously many of them have voted against trade deals with Canada and Japan. It is hard to understand who they actually want to do any business with.

The hon. Gentleman asked specifically about the trade arrangements with the EU; the simple answer is that we want a good trade deal with the EU and a good trade deal with the US. That is absolutely possible. Canada has an excellent trade deal with the EU and we want similar terms to it, and it also has a very good trade deal with the US, with an advanced digital chapter. It should be perfectly possible for us to seek such an arrangement that enables us to unlock the economic benefits of a deal with the US.

It takes a party with the economic literacy of the current Labour party to think that £15.3 billion of additional trade is not worth having. Why does the hon. Gentleman not tell that to the people of Stoke-on-Trent and the ceramics factories that could benefit? Why does he not say that to the midlands car manufacturers who want easier testing procedures? Why does he not say that to the people of Scotland, which is one of the regions that would benefit most from a free trade deal with the United States? The hon. Gentleman asked me about the other deals that we are seeking—[Interruption.] Does he want to hear the answer to the next bit? He asked me about the other deals that we are working on at the moment. I will, in due course, be laying out our proposals for a deal with Japan, Australia and New Zealand. I can assure him that we will be publishing the full economic scoping studies, as we have for the United States, and we will be publishing objectives for those arrangements as well, in line with the commitments that we have made to Parliament. I am fully committed to working with Parliament on these arrangements. Of course, a treaty is an Executive prerogative, but, at the same time I will be working with the International Trade Committee and making sure that we have proper scrutiny. We have been working with the devolved Administrations. My right hon. Friend the Minister for trade policy has had regular meetings with his colleagues in Northern Ireland, Scotland and Wales.

The hon. Gentleman does not seem to have heard what I said about food standards and animal welfare. We will not be diminishing or lowering our standards as part of a US trade deal, and we will not be paying more for drugs prices in the NHS. That is clearly laid out in our objectives for everyone to read. Were the US to demand that—I do not believe that that will be the case—we will simply walk away. As he pointed out, we are already trading well with the US. If we do not get what we want from this agreement, we will walk away.

Finally, I want to make a point about British agriculture. As a former Secretary of State for Environment, Food and Rural Affairs, I am a great believer in the fantastic products that we produce in this country. I believe that they should be available in more countries around the world. I want UK beef and lamb to be on US shelves. I want the tariffs on dairy products, which can be as high as 18%—[Interruption.] Indeed, on cheese products as well. I want those tariffs to be lowered so that we can get more of our fantastic products into the US market. I suggest that the hon. Gentleman reads today’s scoping assessment, which shows that UK agriculture will benefit economically from a trade deal with the US.