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.

UK Trade and Investment Strategy

Bill Esterson Excerpts

Tuesday 23rd July 2019 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Hornchurch and Upminster (Julia Lopez) on her thorough speech. In her stout advocacy for the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), whom she mentioned more than once in the course of her remarks—

[Julia Lopez]

Only once.

[Bill Esterson]

Was it only once? It felt like so much more—I cannot think why.

The hon. Lady called for the merger of the Department for International Trade and DExEU. I wonder where the Minister might fit in the brave new world of the new combined Department—whether, indeed, he has a place in it. I wondered also whether the hon. Lady’s challenges to him were part of his job application for one of the roles among the new Ministers. Perhaps how well he does in that job application will depend on his responses to her questions.

I agree with the hon. Lady about the need for a coherent and global world trade strategy that is attractive to investors. We probably diverge a bit after that point, but we agree about the importance of a strong trade and investment strategy.

The folly of the Government’s strategy—or lack of one—was shown in the comments of their Canada trade envoy, who set out the stupidity of publishing zero tariff schedules. It is now pointless for the Government of Canada to spend time negotiating an agreement with us, as it will not be better than the deal that we have already unilaterally given away. Zero tariffs mean opening up to importers with no guarantee of anything in return. An effective strategy would, of course, ensure the best market access to our main trading partners and build confidence among investors.

We are about to have a new Prime Minister—I am assuming it will be the right hon. Member for Uxbridge and South Ruislip—who advocates a no-deal Brexit and is keen on the idea of undermining our economic relationship with our nearest neighbours and a trading bloc that accounts for well over half of our trade, either directly or through agreements with 70 countries to which we are party through our membership of that critical trading bloc. It is madness to be considering no deal. It is the opposite of the robust, considered and credible strategy that is needed. It is an act of economic self-destruction, and Parliament must do all in its power to prevent such an outcome.

Investors want us to have the best access to the EU, and so does the Labour party. Businesses need frictionless trade and regulatory alignment, and so do workers. The prospect of no deal is causing enormous damage, as businesses and investors wait or decide to move elsewhere while we delay. No deal must be ruled out. It is in our strategic interest to do so, and it is what business organisations and trade unions are calling for.

The fall in inward investment shows what is happening as a result of the lack of certainty. There has been a massive fall in investment projects and new job creation, while the number of jobs saved through investment has fallen by nearly 80%. The number of foreign direct investment projects has also dropped sharply. On the point about uncertainty, Kent County Council said in its evidence to the International Trade Committee that there is no doubt that the UK’s reputation has been significantly damaged by Brexit-related uncertainty.

The British Chambers of Commerce says that we lack consistency in provision of trade support for both imports and exports, and ADS draws attention to the poor funding of the British presence at trade shows; other countries have much larger pavilions and a more coherent national offer to prospective customers. They also give a strong signal that the Government back their domestic sector. The Society of Maritime Industries made the same point in its evidence to the International Trade Committee. It submitted a photograph of the German pavilion, which was much larger than the neighbouring British pavilion. It asked: which country’s message is more effective—the simple “Made in Germany” in large letters or “Innovation is GREAT” in much smaller letters? It also asked which pavilion made the companies more attractive to visit. It was in no doubt that its German competitors had better support. Our reputation has been damaged through Brexit incompetence. There is a lack of support for exporters, and no sign anywhere of a strategy for trade and investment.

To succeed in international trade, we must align our domestic and international strategies. That means delivering on the Government’s stated aim of moving to a zero-carbon economy. Labour recognises the benefits to be had in jobs and prosperity from investing in the $26 trillion global opportunity of moving to a zero-carbon world. That figure comes from the Intergovernmental Panel on Climate Change.

The Government say that they are committed to net zero by 2050. However, that does not stack up when we remember that we are funding fossil fuel development overseas; 99.4% of UK Export Finance provision in the energy sector went on fossil fuel development in places such as oil refineries in Bahrain. Just £1 million was spent on renewables, but £4.8 billion went on oil and gas. Raiding the international development budget—something announced yesterday by the Secretary of State—is not the answer. We should use aid to help developing nations, not to give further support to the fossil fuel industry.

UK Export Finance should be helping with the development of renewables; otherwise, we are just exporting our emissions to the developing world and elsewhere, as of course is the case when we do not include emissions from shipping and air freight in our carbon reduction targets. The emissions do not go away as if by magic just because we pretend they are not part of our carbon footprint. Christian Aid rightly says that the support for fossil fuels is incoherent. We have world-leading marine technology in tidal energy. Where is the focus on renewable energy at the heart of an exciting and financially rewarding export strategy?

Under article 2(c) of the Paris agreement, the Government’s policy priority should be:

“Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

The figure of 99.4% going to fossil fuels from UK Export Finance is the exact opposite of the stated policy of our Government. As Global Witness told the Select Committee, UK Export Finance should measure the greenhouse gas impact of the projects it funds. The US Overseas Private Investment Corporation adopted a greenhouse gas cap for its projects in 2007, and it is no surprise that it has shifted towards clean energy investments. If the private sector in the United States can do that, why cannot we? Labour believe we can.

Global Witness says that, for trade and domestic policies to match, UKEF should no longer invest in fossil fuel projects. Ministers like to remind us that UKEF is an award winner—but why should it not win awards for its low-carbon policy? The Canadian and French export credit agencies have more stringent controls on fossil fuel support. One of the two Swedish agencies did not lend to any fossil fuel projects in 2015 or 2016. If they can do that, why cannot we? Global Witness also says that the Department for International Trade should realign export support to renewable energy. There is an export opportunity for us, if we want to grasp it, in what it describes as floating offshore wind. Why not? UKEF has stopped investing in businesses that rely on child labour. Why not take the same approach to global warming?

The Government have woefully underprepared the UK for operating an independent trade policy. Trade remedies legislation is still not ready. There is no sign of the Trade Bill passing through Parliament. Existing trade deals are vulnerable to lapsing without replacement, not least because of the incompetence of the International Trade Secretary in announcing zero tariffs, as the hon. Member for Brigg and Goole (Andrew Percy) reminded us in his resignation statement as the Canada trade envoy. He described it, let us remember, as “cack-handed” planning and felt patronised by the Secretary of State when he warned of the dangers of a no-deal tariff schedule and its impact on the prospects for the roll-over of trade agreements. As the hon. Gentleman has asked, why would those who are already getting 95% of what they want rush to sign up to what the UK want in the event of no deal? It does not bode well when a Back Bencher has a better grasp of international trade policy than the Secretary of State.

Labour will align our trade and industrial strategies to promote sustainable low-carbon export growth. We will introduce a transparent and consultative framework for the development of trade agreements, and be a strong and supportive partner of our small and medium-sized enterprise exporters. We will use trade policy as a tool to elevate rights and standards domestically and with our international partners, to ensure that the benefits of global trade are shared through society—whether that is in moving to a zero-carbon world or in enhancing the achievement of the sustainable development goals.

Trade must not be used to lock future Governments into a deregulatory agenda or to erode the capacity of Governments to legislate in the public interest. Neither can trade strategy be a series of controversial arms sales. In stark contrast to the present Government and their new Prime Minister, it is only Labour that is committed to delivering the robust trade strategy that our country needs. We will play a leading role in demonstrating that trade can be the force for good that it should be.

--- Later in debate ---

[Bill Esterson]

I am glad that the Minister mentioned numbers and outcomes. Let us look at some. Jobs saved through investment fell, from 2016 when they were 28,000, to just 6,000 in 2019. That is an 80% fall. Those are numbers. They are not exactly encouraging, are they? They are not exactly a sign of the Government’s success. Meanwhile, 13% of Asian investors have reduced their investment and 14% have put activity on hold, and there are similar figures for north America—slightly lower for western Europe. How is that a record of success on the numbers?

[Graham Stuart]

I am grateful to the shadow Minister for that intervention. The danger is in selectively seeking those things. On every possible measure, we see the UK—[Interruption.] I hope the hon. Gentleman will stop barracking; he knows what is coming. Even though he pretends not to, he must have seen the UNCTAD numbers—the official UN numbers—for 2018. What did they show? They showed that in 2018, according to the UN, the global stock of foreign direct investment—the yearly amount of total flows—fell.

[Bill Esterson]

What, by 80%?

[Graham Stuart]

The overall stock fell. The hon. Gentleman is talking about flows; he should try and get to grips with this. Maybe this will be a useful seminar for him to do so.

If the hon. Gentleman looks at the stock line for Europe, which is the accumulated level—not at the flow line, as flows go up and down year by year and are essentially volatile; they always have been and I project they always will be—he will find that it fell in Europe too. The net amount fell; there was net disinvestment in Europe and in the world. What happened in the UK? It went up again, but not quite as quickly as it did before. It is the global context. By every possible measure—flow, stock, greenfield, mergers and acquisitions—we lead Europe.

We have strengthened our position in Europe. Why has that happened? It is because of the business-friendly policies that we have put in place. As the shadow Minister is feeling so aggressive, I put it to him: in what possible parallel universe in which there is increasing competition for mobile global investment, with the massive number of jobs and the prosperity that brings, would jacking up corporation tax rates lead to more jobs, more opportunities and more prosperity for people in this country? That is the trade and investment strategy of Labour.

We do not need to think just about what Labour’s current policies will do; we can look back at every previous Labour Government. By the end of the 2000s, France was just about overtaking the UK; now we have more than twice as much as France. Just think of the hundreds and hundreds of thousands of jobs—I am most interested in that number. While the hon. Gentleman and his party play politics, we deliver the investments that lead to prosperity and jobs. If he is interested in going further into the subject, he should look at Ernst & Young and the pattern over the last few years. What have we seen? We have seen an increase in investments outside London and the south-east, and an increase in the share of the FDI going into manufacturing, which has been maintained and strengthened in this country.

That is the exact opposite of the picture that the hon. Gentleman tried to lay out. It is there in every figure—from the OECD, UNCTAD, the Economist Intelligence Unit, Deloitte and fDi Markets. That is a fascinating one. Some people say, “If you include mergers and acquisitions, and you include intra-company transfers, that is not real FDI. We should look at greenfield and new start-ups, not someone buying a factory. What difference does that make? What about creating a new one? Let’s look at that.” Who looks at that? That would be fDi Markets. What did it show last year? From memory, it showed that the UK got 1,268 projects, that France temporarily overtook Germany, with 580 projects—well done President Macron, who has put a lot of work into that—and that Germany had 560 projects. In other words, despite Brexit uncertainty, in 2018 the UK had more greenfield investment projects than Germany and France combined. On what basis would anyone other than the most devout and misguided socialist try to suggest that those figures are not good?

[Graham Stuart]

My hon. Friend is a particular champion of industries in his area, not least ceramics in Stoke. I thank him for speaking in my constituency last Friday and talking about the success that has come from the effort put into that local economy to help to turn it around and strengthen it.

Since 2010, we have been working to turn around the toxic economy legacy bequeathed by the last Labour Government and to support the pioneering, innovative, entrepreneurial brilliance of British business once again. Success has come from policies designed to promote the dynamism, openness and flexibility of our economy. A further important step was taken by the Prime Minister when she established a dedicated trade Department for the first time in British political history. The Department for International Trade has just celebrated its third birthday and is crucial to the delivery of trade and investment success.

Given that this could be a valedictory performance by me, as we get a new Prime Minister later, I pay tribute to the Secretary of State for International Trade and President of the Board of Trade, my right hon. Friend the Member for North Somerset (Dr Fox), for the brilliant work he has done leading and establishing this Department of State. Its work will become even more vital after we leave the European Union. We must build a global, outward-looking Britain that is a dynamic and independent champion of free, fair, rules-based international trade.

Our trade and investment strategy seeks three basic things: higher exports, greater foreign and outward investment, and reduced trade barriers. Contrary to what we have heard, exports are booming. Total UK exports now stand at a record high of £647 billion, bearing out exactly what my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) just said. They are up in real terms—[Interruption.] Maybe the shadow Minister only looks at numbers that suit his narrative? They are up 25% in real terms.

In 2017-18 alone, the Department for International Trade helped UK businesses to export goods and services worth around £30.5 billion, which is a year-on-year increase of 4%. We are proud of our work in encouraging more companies to export, as my hon. Friend the Member for Hornchurch and Upminster said in her excellent opening speech. A lot of the difficulty is in overcoming the timidity and the concerns that companies have in exporting. Nearly 111,000 firms exported goods in the first quarter of 2019, which is 5,000 more than in the same period last year.

I have talked about the foreign direct investment numbers, but the latest figures from UNCTAD show that the UK hit a record high of almost £1.5 trillion in FDI stock by the end of last year, which is more than Germany and France combined, creating 76,000 new jobs and safeguarding 15,000 more. That was in one year and in marked contrast to 2010, when France was close to overtaking us.

To put the FDI numbers into further context, UNCTAD’s figures show that FDI flows—flows not stocks; I hope the hon. Member for Sefton Central (Bill Esterson) knows the difference—fell by 19% globally in 2018. [Interruption.] I am now talking about flows as opposed to stocks, so it is repetition, but about a different aspect of something that I hope the hon. Gentleman would take an interest in. FDI flows fell by 19% globally and by 73% in continental Europe. What happened to FDI into the UK? The flows increased by 20%. So much for the negative effects of Brexit uncertainty.[Official Report, 3 September 2019, Vol. 664, c. 2MC.]

The pace of change in the global economy is increasing but, for the agile, opportunities abound. The Department for International Trade provides the platform to give the UK a unique trade advantage, by locating export promotion, trade finance, trade remedies, export licensing and international negotiations all in a single Government Department.

I want to respond to some points made by my hon. Friend the Member for Hornchurch and Upminster. She asked about the 100 days. We will continue to prepare for no deal to be the outcome, which is not the avowed intent of either of the leadership contenders for the Conservative party. We prepared and were in a good position ahead of 29 March, and we are working with the Department for Business, Energy and Industrial Strategy to be able to meet questions coming in from businesses. We are ready to meet any surge in demand at that level.

My hon. Friend asked about state-level engagement with the US. The Secretary of State and I met with Senators from Florida and Texas the other day. As we expand and strengthen the Department’s reach, we recognise that it is not all about working at the national and federal level, whether in the US or elsewhere, such as in Brazil. I was pleased to meet the Governor of São Paulo, which itself has more than 30% of the GDP of Brazil. There is a lot more to be done at that more granular level in order to identify barriers and overcome them.

My hon. Friend made an interesting point about language. Given our national weaknesses on foreign languages, I hope that officials may be able to follow up on that point. She also touched on the DIT working more closely with the FCO and DFID. We are absolutely trying to do that. I am delighted that we are becoming an official development assistance Department. We have to bring trade and development together. That is how people get out of poverty. This involves so many countries. There is now the Ghana Beyond Aid initiative; I visited Ghana’s investment conference in London last year. These countries do not want to be seen primarily as aid recipients. They want to be seen as countries with great entrepreneurs, great technology and great capability. That is why, after the Prime Minister’s speech last year in Cape Town, I am helping to organise the Africa investment summit on 20 January 2020. It is precisely to ensure that, cross-Government, we are able to support increased investment in Africa and take advantage of the opportunities there.

My hon. Friend touched on the subject of regulators. Whether further changes are required in their missions as defined by Government is something that I will leave for others to wrestle with, but I can say that our regulators really are stepping up to the mark. The Financial Conduct Authority, with whose representatives I have met, is making a major difference. People can look at our FinTech bridges. We lead the world on FinTech—financial technology. It is enormously valuable, and we are creating FinTech bridges with a number of other countries. For instance, we are deepening our engagement with Hong Kong and Australia. In both cases, the FCA has been a fundamental part of the team as we try to ensure that start-ups there can more easily come to the UK, and vice versa. It is precisely that kind of opening up of markets that is so important.

I am not sure that I have ever given a speech from my iPad before. When the screen goes blank—

[Bill Esterson]

Your mind goes blank.

[Graham Stuart]

It is better to have your screen go blank than your mind go blank, as may have happened to the hon. Gentleman when he started to talk about FDI, on which we are doing so well.

Last year we launched a new export strategy to encourage, inform, connect and finance businesses of all sizes, with the goal of increasing our exports from 30% to 35% of GDP, which would move us to the top of the G7. We are committed to working with the devolved Administrations in doing that. I will follow up on any suggestions. I hope that, if there are problems, we can immediately sort them out. It is certainly not this Government’s policy in any way to inhibit the effectiveness of the devolved Administrations in trying to promote business in their areas. We work together hand in glove. I remember that at MIPIM, the world’s largest property conference, last year, I launched the Scottish capital investment portfolio. We worked closely together on doing so, and we can do so again. That is very important, particularly in the Scottish context, because, if my numbers are still correct, exports as a percentage of GDP in Scotland are only around 20%, whereas for the United Kingdom as a whole the figure is 30%. That shows the importance of helping the Scottish Government to do a better job in promoting Scottish exports, because there is huge capacity there.

I am proud of what we have done with UK Export Finance. We have doubled its appetite since 2010 and we have revolutionised its performance as a world-leading export credit agency. It now has a capacity of £50 billion and its offer has been extended; it is now available in 62 international currencies, so when support is provided, that can be done in the local currency, thereby reducing risk. That has helped too. We have run it at no cost to the taxpayer, lowered its cost ratio since 2010 and ensured that no UK export fails for lack of finance or insurance. Earlier this year we went further. Now, companies that are not exporters themselves but are part of the supply chain of companies that do export can access UKEF finance too.

We have convened the Board of Trade for the first time in 150 years to promote a culture of exporting and investing, spreading the benefits and prosperity of international trade to every corner of our United Kingdom. Whether I have been in Stirling or Belfast with the Board of Trade, I have been delighted to see the local response and people’s enthusiasm for what we are doing at the DIT to promote trade from those areas.

Time has passed, and you would probably like me to bring my remarks to a close, Mr Davies. If I may, I shall continue just briefly. We have created an overseas network of Her Majesty’s trade commissioners, the most recent one being for Australasia. There are 10 of them and they have been selected for their expertise in particular markets. They are building our regional export plans and working to secure market access across the globe.

Whether it is on promoting exports with our export strategy or promoting foreign direct investment—for which we remain the No. 1 destination in Europe, well ahead of our competitors; in fact, we are third in the world, behind only the United States and China/Hong Kong—we are determined to go further. And of course in the area of trade policy, there is not only the issue of free trade agreements; my hon. Friend the Member for Hornchurch and Upminster was right to say that we should not fetishise them. As our second permanent secretary and chief negotiator has noted, for every one person working on FTAs, we want three or four working on market access.

Therefore, whether it involves opening up Taiwan’s pork market, cosmetics in China or lowering duties on Scotch whisky going into Latin American countries, we are, across the piece, upping our game. Having a dedicated trade Department—this might be my last speech while a member of it—was a significant and important step forward, particularly given the growing importance of trade and investment to the prosperity of this country and the world. The Department—with or without me—will continue to be an advocate for an open, rules-based, liberal trading system. It will continue to work to reverse the negative impacts on manufacturing and so much of our other trade and investment performance that happened inevitably—it happened in almost all cases—under the last Labour Government. We must ensure that Labour never comes into government again, and that this Government can go out there and continue to strengthen the DIT and strengthen our prosperity in the world. I thank my hon. Friend the Member for Hornchurch and Upminster very much for securing the debate today.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 11th July 2019 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

The Society of Maritime Industries says that export finance support in the UK lags behind what is available in other countries. It is calling for a much-needed follow-up detailing the specifics of the export strategy. If the Government are serious about the UK being a zero-carbon economy, where is the detail, the coherent plan and the investment into exports of our world-leading renewables sector? Labour believes in the industry; when will the Government start to?

[Graham Stuart]

I shall try to give a straight answer to a not entirely straight question. As I said, we have the sector deal. We have the export strategy and we are putting enormous effort into that. I am pleased to say, Mr Speaker, that in this 100th centenary year of UK Export Finance, it has, under this dedicated trade Department, been rated the best export credit agency in the world.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 6th June 2019 Commons Chamber

[George Hollingbery]

As the hon. Gentleman knows well, the UK has extensive funding for climate change mitigation and for sustainability. I would simply say to him that, as and when we manage to reinstitute the Stormont Assembly in Northern Ireland, we can have discussions between the DIT and other parts of the UK Government to ensure that those issues are taken forward.

[Bill Esterson (Sefton Central) (Lab)]

The Secretary of State’s damascene conversion to addressing the climate emergency is welcome, but, as we have heard, some of those with whom he wishes to conclude trade agreements are less enlightened. Given what he has just said, will the Minister commit to introducing climate clauses to all future trade agreements? Will he publish specific details of the support his Department offers the fossil fuel sector through export finance, and say how that support conforms with the Equator Principles?

[George Hollingbery]

As I have said, we will consider each and every FTA on its own merits, and in certain circumstances we may find partners who are not prepared to put those sorts of clauses in an FTA. On balance, however, we will look at the advantage to exporters of low-carbon products, and ensure that as and when we proceed with those agreements—if we decide to do so—we facilitate the export of low-carbon products so that economies represented by Governments who do not wish to include an FTA clause on the environment can benefit from the transition that lower input costs produce. I have already made clear the Government’s position on publishing the output of UKEF. There will be an element of carbon-based energy generation in UKEF’s mix in the short term. The UK has huge and growing expertise that will no doubt come to the forefront of UKEF financing in due course, as that transition happens.

--- Later in debate ---

[Rory Stewart]

First, it is shocking to hear this from the Archbishop of Erbil. We should pay tribute to what the Kurdistan Regional Government have been doing to look after an incredible number of displaced people in Iraq, but it is certainly true that Christians and Yazidis have suffered terribly through the fighting in Syria and Iraq and through persecution led by Daesh in particular. This Department must do more to protect Christians around the world if they are vulnerable, marginalised and abused.

[Bill Esterson (Sefton Central) (Lab)]

10. What steps he is taking to ensure that aid spent through the prosperity fund is focused on poverty reduction.

[The Minister of State, Department for International Development (Harriett Baldwin)]

The primary purpose of the prosperity fund is reducing poverty through inclusive economic growth. Departments that execute prosperity fund programmes are responsible for ensuring that they meet the requirements of the International Development (Official Development Assistance Target) Act 2015.

[Bill Esterson]

Between 2016 and 2018, the prosperity fund financed 16 fossil fuel projects across the world, including two in fracking. Is not this obsession with fossil fuels, despite the fine words of the Secretary of State, just confirmation that this Government could not care less about addressing the climate emergency, which is, after all, one of the biggest threats to alleviating world poverty?

[Harriett Baldwin]

These funds are obviously administered by other Government Departments in compliance with the wording of the Act, so I am not seized of the specifics of what the hon. Gentleman refers to. He will know that we do need to work together as a world to reduce emissions. One of the ways in which we are doing that is to encourage people to power past coal. Often we can do that by substituting less polluting fossil fuels. It may be in that context that these disbursements were made.

Future International Trade Opportunities

Bill Esterson Excerpts

Wednesday 1st May 2019 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

In congratulating the hon. Member for North Warwickshire (Craig Tracey) on securing the debate, I call on the Minister to deal with the point made by the hon. Member for Dundee East (Stewart Hosie). What the hon. Member for North Warwickshire failed to address was not so much the need for seven or eight new planets, but the gaping black hole that cannot be filled by the figures he gave for how we will replace trade with the EU.

It is fitting that we are debating the future of international trade at the same time as Members in the main Chamber are discussing Labour’s call to declare a climate emergency. The opportunities in the low-carbon economy for trade in goods and services as part of—as the Intergovernmental Panel on Climate Change has said—the global economic benefits of $26 trillion, need to be at the heart of our industrial and trade strategy. However, before concentrating on the export potential of renewable technology, I will spend a few minutes on other topics.

Trade in services is vital to our economy. The hon. Member for North Warwickshire mentioned the importance of insurance, and my hon. Friend the Member for Harrow West (Gareth Thomas) mentioned the other service parts of the economy that are crucial to his constituents. Trade in services represents the majority of the economy, driving jobs and prosperity to Britain, and it will be significantly impacted by the nature of our future relationship with the EU. Having a strong relationship with the internal market of the EU is therefore essential.

Turning to the Government’s failure to make progress in negotiating replacements for the 43 agreements with 70 or so countries to which we are party through our membership of the EU, at the last count we were told that four deals were off track, 19 were significantly off track, four were impossible to complete and two were not even being negotiated. Perhaps the Minister can update us. It is no good the Government’s saying we should have voted for the Prime Minister’s deal. The fact that the details of the future relationship with the EU will be negotiated only after we have left means that what is on offer is blind Brexit. That is why the Opposition cannot support the current deal.

[George Eustice (Camborne and Redruth) (Con)]

Is it the view of the Labour party that we should have disregarded the EU’s statement that, under its laws, it did not think it was possible to negotiate the future partnership until after we had left?

[Bill Esterson]

That is another debate. I will stick to the topic of international trade and future arrangements.

As any business person knows, you look after existing relationships first and maximise them—something I learned through running a business for 15 years. The same principle applies to countries, which is why a close relationship with our biggest trading partner is essential. Meanwhile, there is no sign of the Trade Bill returning from the Lords, and Government plans to implement zero tariffs unilaterally really would create a disincentive for countries to negotiate a trade deal with us, because we would be giving away the shop before negotiations started and would have nothing to offer in return for a trade deal.

I want to give the Minister plenty of time to respond, so in the time remaining I will speak about the low-carbon economy and the need to address the climate emergency. This Government’s record in international trade is a cause for concern in relation to the low-carbon economy: £2.362 billion of UK export finance over the past five years has been spent on exports to low and middle-income countries in the energy sector relating to fossil fuels, with just £1 million invested in the renewables sector. If we are serious about tackling climate change, those figures need to be completely reversed, so it is disappointing that after the Intergovernmental Panel on Climate Change’s report last autumn, this Government announced that they were considering support for a Bahrain oil refinery.

We have many success stories in renewable energy; we are often world leaders in technology—Windhoist, for example, sells wind turbines to Taiwan and Australia—but for other companies there is only frustration. Award-winning exporter Nova Innovation exports tidal energy equipment. Its chief executive officer, Simon Forrest, says:

“At the moment, we hold the trump cards in marine power—the resource is abundant, it’s completely predictable, we have a global lead and we have got the supply chain. What we don’t have is revenue support to take us to market. That’s what Denmark did with wind, and we didn’t. Having built up this lead, we will lose it to Canada or Japan.”

We cannot afford to let that happen in sectors such as tidal energy. We can be leaders in the low-carbon economy. Meeting the challenge of the climate emergency can deliver future prosperity through a proper industrial and international trade strategy in renewables, not fossil fuels. It is time to develop the future, not the past.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 25th April 2019 Commons Chamber

[George Hollingbery]

As we approach the negotiations with the EU on the future economic partnership, services will play a large part in that. We have signed mutual recognition agreements with Australia and New Zealand, and as for the Norway and Switzerland deals, we should never forget that 35% of pretty much all the goods contracts entered into by the UK is contained within services value. This is not just a matter of pure services, but of goods as well.

[Bill Esterson (Sefton Central) (Lab)]

Service exporters depend on an international workforce, but arbitrary immigration targets limit their ability to recruit the staff they need. Growing our market share in services is essential to the future success of our economy, so if this Government truly have a global strategy, why are businesses that want to export being denied access to a global pool of talent?

[George Hollingbery]

On the whole, the services businesses that are exporting are doing so by establishing overseas, and therefore recruitment in the UK does not particularly concern them, as they are employing people in foreign countries. That said, we know there is an issue with provision of skilled labour in the UK. The immigration Bill, when it comes forward, will provide reassurance on the ability to recruit people with certain skill levels, and I look forward to seeing that.

--- Later in debate ---

[Kelly Tolhurst]

I would be very happy to meet women who are using all manner of tools. I met eBay yesterday, and it talked about the work it is doing to encourage women to start their own businesses. It particularly talked about how it is working with retail businesses in Wolverhampton. I am always available to speak about anything that will encourage women in business—in fact, not just women but all people.

[Bill Esterson (Sefton Central) (Lab)]

6. What assessment she has made of the potential merits of introducing a duty on employers to prevent workplace harassment.

[The Minister for Women (Victoria Atkins)]

The Government strongly condemn sexual harassment in the workplace and are committed to seeing it end. Employers are already responsible for preventing sexual harassment in their workplace and can be held legally liable if they do not, but we are consulting this summer to gather evidence on whether reinforcing this with a proactive duty would lead to better prevention of this terrible practice in the workplace.

[Bill Esterson]

Women who work in the retail and hospitality sectors in the UK have little protection when they face workplace harassment, which is something that happens far too often. As last year’s Presidents Club scandal shows, employers have no duty to protect their staff. May I encourage the Minister, when she carries out that review, to give serious consideration to reinstating section 40 of the Equality Act 2010 to give women the protection at work they have every right to deserve?

[Victoria Atkins]

I am grateful to the hon. Gentleman for raising this, because it is important; every woman—indeed, every person—should be able to enjoy their place of work without the threat or risk of sexual harassment. I take issue gently with him on section 40. He may know that it was used only twice when it was in force and it had the three strikes approach, which we believe was one reason why it was not used as often as it should have been. We are very open-minded; we have this consultation, and I encourage everyone to participate in it, so that we can find solutions that suit not just employees, but responsible employers.

Draft Protecting Against the Effects of The Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2019

Bill Esterson Excerpts

Monday 1st April 2019 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. Thank goodness the Government were defeated in their attempt to prevent the business of the House motion from going through; otherwise this debate would have been held on the Floor of the House rather than under your chairmanship. I think this is probably the right way around.

The statutory instrument appears to be a sensible piece of proposed legislation. It is necessary to ensure that British legal and natural persons are not subject to judicial overreach by the courts or judiciaries of foreign countries when implementing their Governments’ foreign policy objectives. I thank the Minister for his opening remarks and for taking us through the detail of what is quite a technical set of draft regulations. I saw him outside, and while I will not say that he was sweating in his preparation, he was certainly going through it with a fine-toothed comb. He may not be the only member of this Committee to have been through such a process.

A number of concerns flow from the Minister’s opening remarks about how the draft regulations might be applied in a domestic setting, and whether what he has expressed as the Government’s desire is indeed what will happen. It is right and proper that the United Kingdom should determine our own approach to foreign policy and the treatment of our citizens and those legal and natural persons who call the UK home.

The draft regulations address the continued disapplication of third-country laws that might have an impact on our citizens. In particular, they refer to listed sanctions measures imposed by the United States on Cuba, Iran and Libya. The underlying EU regulations were introduced as a response to the Helms-Burton Act 1996, which allows US-based companies to sue foreign persons for trade relating to expropriated US-owned goods or assets. Such trade is considered trafficking under that Act and claims may be brought under title III by US companies even where the link between that trade and what may have been expropriated is tenuous.

Similarly, Canada, Mexico and Argentina have applied blocking measures in their respective jurisdictions, showing a similar level of concern to the EU in doing so. Such was the international uproar over the measures when they were introduced that successive United States Presidents have suspended the application of title III for a period of six months on a rolling, concurrent basis. I think I am right in stating that no such cases have been brought against British companies to date.

The current President of the United States, however, has demonstrated that he takes a rather different interest in and approach to international diplomacy and international law compared with his predecessors. In January, he determined that the suspension of title III would be continued on a 45-day basis only. That period has now expired, and it seems it is now open season for US companies to take action against foreign companies. It is against that backdrop of the very real threat of legal proceedings and substantial financial claims being made against British individuals and companies that we consider these important draft regulations.

The draft regulations seek to replicate the EU’s existing list of third-country legislation to which these measures relate. However, as one might expect, they allow the Secretary of State to add to or delete from the list. Given the imminent threat faced by British businesses, can the Minister confirm that the Government do not intend to delete anything from that list once we have left the European Union? Perhaps he could also indicate whether he has any intention of adding to that list, and whether he is aware of any further extraterritorial legislation that may be in the pipeline, particularly given the approach of the current United States Administration with respect to Venezuela.

British businesses will rightly be concerned about the risk of extraterritorial judgments being awarded against them, encouraged by a White House that has declared open season for US investors. Can the Minister tell us what assessment his Department has made of the potential impact of such claims and of the exposure of British entities to them?

Under the existing EU measures, namely Council regulation 2271/96—the so-called blocking regulation—and Commission implementing regulation 2018/1101, which have been implemented into our domestic law by statutory instruments 1996/3171 and 2018/1357, EU persons are specifically forbidden from complying with the judgments, actions or proceedings of any judiciary of those third countries, unless otherwise authorised to do so by the European Commission. The blocking regulation obliges any EU person who may be so affected to notify the Commission within 30 days, so that a determination as to whether to authorise may be made.

In order to clarify the Government’s policy intentions, I ask the Minister whether either he or the Secretary of State intends to regard authorisations already given or refused by the European Commission as precedent to follow, and whether any future decisions by the European Commission will inform our own.

The current list of extraterritorial legislation to which these draft regulations apply includes only laws and regulations introduced by the United States. The Secretary of State has had many conversations—both formal and informal—with his counterparts in the United States. The Minister may have had similar conversations. During those discussions, what conversations have taken place on matters covered by these draft regulations, and what representations has the Secretary of State or the Minister made in defence of British businesses against potential title III claims?

On the face of it, these draft regulations appear relatively straightforward, largely replacing references to European Union institutions that remain in retained EU law with references to the United Kingdom. Such amendments will ensure that the provisions, which currently seek to disapply the effects of extraterritorial third-country legislation, will continue to apply in a UK-specific context after Brexit.

In so doing, however, the Government have made a number of amendments to the original European wording and have sought to delete provisions that provide for a degree of scrutiny by the European institutions, without suggesting similar scrutiny measures to replace them. That should be a matter of concern to members of this Committee.

Under article 5 of the blocking regulation, the Commission may authorise that a person complies with third-country legislation, to which these draft regulations apply, where to not do so

“would seriously damage their interests or those of the Community.”

Draft regulation 3(6) seeks to transfer that power to the Secretary of State, who may make such authorisation by way of a statutory instrument.

The Government have also sought to amend the powers under article 5 by further allowing the Secretary of State to make, by way of regulation,

“provision in connection with the making and consideration of applications to be so authorised.”

Such extra powers appear to be wide in scope, and it is unclear precisely in which circumstances the Government envisage they would need to be employed. I would be grateful, therefore, if the Minister explained the Government’s intention and whether these powers will be used without the further approval of either House of Parliament.

Under article 7 of the blocking regulation, the Commission is obliged to

“inform the European Parliament and the Council immediately and fully of the effects of the laws, regulations and other legislative instruments and ensuing actions mentioned in Article 1, on the basis of the information obtained under this Regulation, and make regularly a full public report thereon”.

Draft regulation 3(8)(c) seeks to transfer those powers to the Secretary of State but removes the obligation to inform Parliament immediately and fully of the effects of the laws, regulations and other legislative instruments and ensuing actions mentioned in article 1. It retains the obligation to make a public report, but removes the sense of urgency by removing the reference to “immediately” for the new arrangements.

Why has the Minister removed the obligation to immediately inform Parliament? Will he set out when and how such public reports will be delivered, including under the reporting obligations set out in article 4 of the Extraterritorial US Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading Interests) Order 1996, as amended in 2018?

Article 7(b) and article 8 of the blocking regulation make provisions for the European committee on extraterritorial legislation to be consulted in respect of authorisations that are to be made compelling a person to comply with the extraterritorial application of third-country legislation. The draft regulations omit those provisions and contain no proposal for any corresponding committee to have such a role in the United Kingdom.

Can the Minister tell us whether there are plans to create such a committee? If not, how will existing European Union committee scrutiny be replicated in respect of the regulations? The Government pretending to return sovereignty to our Parliament, while repeatedly applying powers withdrawn from European institutions exclusively to the Executive, has become a familiar occurrence. As an aside, I draw the Minister’s attention to what we think is a drafting flaw resulting from draft regulations 3(8)(c) and 3(8)(d), which suggest that article 7 requires no additional paragraphs.

Turning to other proposed changes, draft regulation 3(7) amends article 6 of the blocking regulation, which sets out the powers of an affected person to seek redress or recovery of damages. The clause has been referred to as the “clawback clause”, as it allows affected counterparties to initiate proceedings against the foreign entity by which they have been affected. A judgment may be made that results in the awarding of damages and legal costs, and in the potential confiscation of assets to settle outstanding liabilities.

The blocking regulation dictates that such proceedings must be made in accordance with the Brussels convention, which requires claims to be made in the jurisdiction of the member state wherein the person causing the damage, or an intermediary or assets held thereby, is located, as the Minister mentioned in his opening remarks. It would be helpful to understand why the Government have sought to remove that section entirely, and how they propose to administer penalties for failures to comply with the obligations set out under the blocking regulation.

Draft regulation 3(12) seeks to amend article 11 of the blocking regulation, which sets out to whom it applies. Draft regulation 3(12)(g) inserts a new definition:

“For the purposes of this Article, a natural person is resident in the United Kingdom where that person has been so resident for a period of at least six months within the 12-month period immediately prior to the date on which, under this Regulation, an obligation arises or a right is exercised.”

The question of residence has been debated many times by hon. Members in this House and has been clearly defined in statute, with the most familiar test being whether a person has been present in the United Kingdom for at least 183 days in a 365-day period. The definition presented in the draft regulations does not appear to apply the same test, in that it suggests that a person must be resident for at least a six-month period. I ask the Secretary of State—[Interruption.] No, not the Secretary of State; he is not here. If only he were.

[The Chair]

I do not think the Minister minds.

[George Hollingbery]

Oh, I do.

[Bill Esterson]

As the Secretary of State is not here, we will settle for the Minister. Can he clarify whether it is the Department’s intention that persons must have been resident for a continuous six-month period or is the 183-day test to be applied?

These are serious and complex matters and I welcome the opportunity to debate them today. As the United Kingdom seeks to be a stronger voice in defence of the rules-based system that underpins global trade and international relations, it is important not only that such legislation is in place, but that the Government address the matters raised in this debate and put their policy intention on the record.

[George Hollingbery]

As a small matter of fact, the Burton-Helms Act is not back on the register, but 17 April is just around the corner, so I absolutely take the point made by the hon. Member for Sefton Central. That is why Cuba is included on the list.

The hon. Gentleman asked a number of questions. I was asked to confirm whether the Government have any intention of deleting from or adding to the list, and the answer is no. I have had no conversations to that effect that I am aware of, and my officials advise that that is the case as far as they, too, are aware. He asked whether there was any Government assessment of the potential effect on UK companies of any such claims coming forward. The answer is that it is impossible to know without knowing how many claims would come forward, when they would come forward, to whom and on what issues. Therefore, it is impossible to make that sort of estimate.

However, I cannot think it would necessarily change any policy decisions, certainly in this regard. This draft instrument is designed to demonstrate to the United States that we do not respect the extraterritoriality of its legislation. That is the principal issue we face; I do not think that doing that assessment would have changed our mind about that, and in any event I cannot see how we would calculate it.

[Bill Esterson]

I am sure it is not an easy thing to do, but presumably some assessment must have been carried out when the EU originally brought in the blocking regulations. Of course, we are staying consistent with that approach, but presumably there is some sense of intent on the part of the United States Government, or of companies in the United States, that would inform the decision and why it is so important that these regulations are transferred.

[George Hollingbery]

One could argue about this for hours. Quite straightforwardly, we have not done such an assessment. The regulations are there, for example, in addition to the penalties and fines that the hon. Gentleman is talking about, to ensure that the United States or United States-based companies cannot sue UK companies in UK courts. I do not know how one would assess the level of return and/or cost that that might represent.

To my mind, this is about a base principle: we do not recognise the extraterritorial power of the US regulations, and we are therefore legislating to ensure that British companies do not have to comply with them in our courts or indeed elsewhere. I am not at all aware that any cost analysis was done when the measure was previously put in place, but I do not believe we would add much to the mix by doing another one for a UK context, particularly given that it has been in place for the best part of 20 years. It is what it is; it has been in place for 20 years, and we are seeking today to transfer it into a UK context.

The hon. Gentleman asked about notification and the amount of time within which it is expected that people will tell the Government. The answer is 30 days. He also asked whether I have had any conversations with the United States trade representative, Bob Lighthizer, and others. In a personal context, I can answer that I have never had such conversations, nor am I aware of any other such conversations having taken place with others.

We will publish a list of those who have been authorised and what they have been authorised for. The EU does not currently publish such a list, so we believe that will be a useful piece of information and that it will apply transparency to our suggested arrangements. We went over the issue of legal cost to jurisdictions and other member states. Plainly, there is no equivalent item for ensuring that the member state in which that person lives is notified to the Commission, because that person is living in the United Kingdom as a citizen, so I cannot see why that section is required.

I will speak quickly about enforcement. The Department for International Trade does not carry an investigation directorate. If we found that a complaint merited further investigation, we would pass the details on to the police and they are entirely entitled to investigate it. If companies feel that they have been disadvantaged by other people complying with the extraterritorial legislation of the United States, they are entitled, if they wish, to bring an action against that company in civil courts. That is provided for.

Finally, I thank the hon. Gentleman for his pointer towards the drafting errors in draft regulations 3(8)(c) and 3(8)(d). I have no particular knowledge of that, but I have no doubt that the lawyers will look at it carefully.

[Bill Esterson]

I asked the Minister about the transfer of the current scrutiny arrangements. The specific institutions of the EU that scrutinise the operation of the regulations in the EU have not been replicated in the UK; they have just been taken on by the Secretary of State. On the issue of the immediacy of reporting to Parliament, the requirement for the EU to report immediately is not replicated in the proposed regulations.

[George Hollingbery]

It is the UK Government’s intention to publish, as I have described, in every instance. We have not yet determined the exact method for that, or the period in which it will be done, but I can say that the Opposition and others have my absolute commitment that those names will be published along with what those names or companies are allowed to do.

Question put and agreed to.

draft Cat and Dog Fur (Control of Import, Export and Placing on the Market) (amendment) (EU Exit) Regulations 2019

Bill Esterson Excerpts

Tuesday 26th March 2019 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Paisley, on an issue that is of extreme interest to many of our constituents. The brevity of the Minister’s opening remarks possibly does not do justice to the size of the mailbag that many of us receive on such occasions.

I was struck by how odd it was that we were given this statutory instrument to scrutinise while we have not been asked to scrutinise certain others, such as the 42-page and 79-page trade remedies statutory instruments that the Minister’s Department laid before the House of Commons on 5 March and brought into force the following day, missing the 21 days for which it is custom and practice to let such instruments be laid before us to consider and, if we so wish, object to. It is odd to compare such a small, uncontroversial SI as the one that we are considering—we will support the Government in what they propose—with such significant documents as those on trade remedies, with their far-reaching implications. Frankly, that shows what a bizarre situation we are in.

[Mr Mark Harper (Forest of Dean) (Con)]

Will the hon. Gentleman give way?

[Mr Harper]

I will keep my remarks focused on this Committee. Is not the reason why we are considering this statutory instrument that the European Statutory Instruments Committee, which scrutinises the range of European statutory instruments and makes a judgment about whether they should be considered using the negative or affirmative procedure, decided that it should be considered in this way and, I presume, that the others should not?

[Bill Esterson]

I shall not be drawn too far in responding to that intervention, Mr Paisley, but of course it is not just the statutory instruments Committee that can decide whether an SI is considered using the negative or the affirmative procedure. The Government can decide, in the first instance, whether an SI is dealt with using the affirmative procedure.

We will move on. The detail of the European Union’s impact assessment, when it brought the regulation in, acknowledged just how straightforward, important and uncontroversial that was, and its assessment was extremely thorough. That is in stark contrast to the fact that the Government did not feel the need even to revisit what was in the EU’s impact assessment of some years ago and to make similar points about the desirability of these regulations in removing the trade in cat and dog fur and the implications for trade in the fur of other animals. It is regrettable that yet again we have an SI without an impact assessment, especially given the quality and depth of the EU’s work, even on something so straightforward and uncontroversial.

I shall explain why I am raising the matter now. I am sure that all hon. Members will reach the same conclusion: this measure is straightforward and clearly something that we need to adopt in UK law and will all want to support. However, without the evidence that we could have been given in a thorough impact assessment and without the engagement of a full consultation process, how can we, as laymen and women without the necessary expertise, really be in a position to judge whether these regulations deliver the technical detail needed to achieve what the Government say they want to achieve? We are having to take this as an item of faith, without the necessary scrutiny to back up the decision making. I place on record that that is a concern we have, but we will have to put that to one side later on.

I am aware that this instrument replaces a similarly named instrument previously laid and subsequently withdrawn because of a technical error. That sort of makes the point that I was alluding to about concerns regarding the technical nature of such regulations. I would therefore be grateful if the Minister could advise the Committee of what error was made in the initial drafting and how the amended drafting rectifies the errors or individual error.

That said, the regulations before us seem right and proper to ensure that the UK maintains the existing ban on the import and export and placing on the market of products that use cat or dog fur, with the attached criminal penalties for any breach of the ban. It is entirely right that steps are being taken to ensure that the ban remains in place once the UK has withdrawn our membership of the EU and where we are no longer covered by the existing legislation, which comes by way of EC regulation 1523/2007 as adopted in domestic law under the Cat and Dog Fur (Control of Import, Export and Placing on the Market) Regulations 2008.

The issue brought to our attention by the sifting Committee is the power conferred on the Secretary of State to

“make regulations allowing the placing on the market or the import or export of cat and dog fur or products containing such fur for educational or taxidermy purposes.”

I therefore ask the Minister whether the Government have any plans to bring forward regulations to that effect, and if so, how they propose to determine the intended purpose of such imports and how they would ensure that any such future concession is not subject to abuse.

The ban was introduced due to public indignation and moral outcry about the trade in fur products and is considered a potential test case for future efforts to end the trade in furs, pelts, skins and other products that have been subject to animal cruelty concerns about the way in which they are harvested. As the right hon. Member for East Yorkshire pointed out at the start of the Minister’s remarks, there is great public interest in this—so much so that 400,000 people signed the “Fur Free Britain” petition.

It would be helpful to know the Government’s policy intention in that respect and whether the regulations may be followed in due course by other measures to bring about an end to the fur trade or the importing of goods that are considered to be in contravention of our domestic standards on environmental animal welfare or sanitary and phytosanitary grounds. Recent public opinion polls suggest that fewer than one in 10 people in the UK find it acceptable to buy or sell dog, cat or seal fur products.

There is, of course, a risk that cat and dog fur products may still enter the UK market, having been mislabelled or otherwise, and I ask the Minister to clarify what efforts the Government are making to police that. He will remember that great concern was raised in the European Union’s impact assessment about the challenge of products from outside the EU in the trade in cat and dog fur. What efforts have been made and what analysis have the Government carried out to determine how much of a problem this trade from outside the EU has been, and what plans do the Government have to address that after we have left the EU?

My party has been clear that a Labour Government would ban fur imports entirely. Do the Government intend to bring forward their own policy proposals in that respect? Article 20 of the general agreement on tariffs and trade lists the general exceptions under which members may introduce restrictions on trade, which include measures:

“(a) necessary to protect public morals”

and

“(b) necessary to protect human, animal or plant life or health”.

As such, the EU and US bans on cat and dog fur products have not been challenged through the World Trade Organisation since their introduction more than 10 years ago.

[Mr Harper]

The hon. Gentleman just made a point about the Labour party’s policy. If we were to have a permanent customs union with the European Union, would a Labour Government be able to introduce a unilateral ban on dog and cat fur without the European Union’s permission?

[Bill Esterson]

We are very clear that we want to maintain minimum standards and alignment with the EU as part of that customs union, as I am sure the right hon. Gentleman knows. It is as important to influence what goes on in the European Union as it is to develop our own domestic policy.

[Mr Harper]

rose—

[Bill Esterson]

He is going to have another go. All right.

[Mr Harper]

I promise I will desist shortly, Mr Paisley. The problem is that if we are in a permanent customs union and are no longer in the European Union, we will have no say over the rules. If the European Union did not want to ban this stuff, we could not do it unilaterally, and if the European Union woke up one day and decided to allow this stuff to be imported, we would have no ability to stop it if we were in a permanent customs union. Is that not correct?

[Bill Esterson]

I will say what I should have said in answer to the right hon. Gentleman’s first remark: it is not membership of the customs union, but access to the internal market that would affect such regulations. I was making a point about the WTO, and perhaps the Minister can tell us about the assessment his Department has made of the likelihood of a challenge being made against the United Kingdom as a consequence of the regulations being transferred from the EU to UK-only competence. Assuming that the Minister confirms that such a challenge is unlikely and certainly could not be successful, will he explain why the Government have not sought to ban other imports into the EU such as hormone-fed beef or chlorine-washed chicken in line with existing EU bans once we have left the EU? There is a clear and demonstrable public opposition to such imports on morality and animal welfare grounds, let alone outstanding questions about the impact on human health.

[The Chair]

Order. We really are going out of scope.

[Bill Esterson]

I am about to conclude my remarks. We welcome the Government’s efforts to introduce these measures. There are serious concerns about the Government’s future policy intentions. When the Minister responds, perhaps he will address those concerns and state whether he will rule out imports of agricultural products now or in the future, including those that I mentioned, that are not produced to the same standards as our own and that offend our national moral sentiments.