Transatlantic Trade and Investment Partnership

Caroline Lucas Excerpts

Tuesday 25th February 2014 Commons Chamber

[John Healey]

I do agree. What is interesting about the way in which the debate has progressed in the seven months since the House last discussed the issue is that the Commission has become much clearer in saying that the stance of its negotiating team will be not to lower consumer, environmental or labour standards. I will suggest later that that should be one of four central tests that we or anyone else should be able to level at the quality of the negotiations and the agreement struck.

My central point at this stage is to say that, for the first time—because of the level of interest and the level of mistrust in the establishment, politicians and big business—this cannot be a traditional backroom trade deal done by the elites in Brussels and Washington. Like justice, good trade policy must not only be done but must now be seen to be done. Any legitimate agreement must command the broadly based confidence that it will bring benefits to British consumers and workers, as well as to British business. It must be subject to the scrutiny of open debate; otherwise, there will be a risk that bad policy will remain unchanged and that fears will flourish unchallenged.

My argument to the Minister in particular is that those involved in securing and ratifying an agreement—Government Ministers, negotiators and elected politicians—will have to work much harder and more openly for a deal, and those of us across all parties who are for a deal will have to work much harder to provide support to enable that to happen.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I thank the right hon. Gentleman for securing such an important debate. While Ministers seem keen to keep the public in the dark, the banking lobby is so happy with the financial services proposals that it has said that the text could have come straight from its own brochure. Does that ring the same alarm bells for the right hon. Gentleman as it does for me, and does he agree that the TTIP must not allow banks to undo the crucial EU agreement limiting harmful commodity speculation in particular?

[John Healey]

I had not heard that statement and I am surprised that the financial services industry has the detailed text of what is on the table, because we are not yet at that stage of the negotiations.

I want to do two things: first, I want to spell out a progressive economic case for trade and for the TTIP, and secondly, I want to set out four tests that I think a good TTIP deal and the Governments and negotiators involved must meet. On the economic case and why it is so important to the UK at present, I think that the great depression of the 1930s was the last economic crisis that was in any way comparable to what we suffered in 2008 with the global financial crisis and downturn. The policies pursued by the UK and the US back in the ’30s are, I think, widely seen to have prolonged that slump and held back any recovery. Not only were there deep cuts in public spending; there was also a sharp rise in protectionism and a decline in multilateral trade. Therefore, part of the reason why deals such as the TTIP and, indeed, the EU’s recent agreements with Canada and Korea are so important is that they avoid that default to beggar-my-neighbour economic policies and instead look to increase global trade through international co-operation. The UK has a particular need for the economic benefits and boost of trade.

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[Mark Field]

Very much so. I suspect that my hon. Friend knows more about the chocolate industry than I, particularly as he is a Yorkshire MP.

The enthusiasm that I mentioned has been seen predominantly on this side of the Atlantic. The main aims of the partnership, on which formal negotiations began last July, are to increase trade and investment between the US and the EU by reducing tariffs, particularly on agricultural products; to align regulations and standards; to improve the protection for overseas investors; and to increase access to services and government procurement markets for foreign providers.

There is no doubt that the prize is enormous and that the TTIP is highly ambitious. The US is and will remain the EU’s most important trading partner, with some $2.7 billion of trade daily in goods and services.

[Caroline Lucas]

I am sure that the hon. Gentleman is aware that the Department for Business, Innovation and Skills has commissioned a cost and impact assessment on the agreement. That research states that

“an EU-US investment treaty would impose costs on the UK to the extent that it prevents the UK government from regulating in the public interest.”

Why is the hon. Gentleman so gung-ho about such an agreement when the Government’s own impact assessment states that the investor state part of it will cause problems for us?

[Mark Field]

I look forward to the Minister destroying one or two of those arguments. I suspect that the hon. Lady has provided a selective reading of the BIS impact assessment.

Much of the media coverage of the TTIP has focused on the trade of manufactured goods. Rather less attention has been given to a sphere of commerce in which the UK economy excels globally: financial and professional services. I represent the City of London, which is a hub not only for banking, but for a range of related service businesses such as accountancy, insurance, consultancy, the law and pensions management. To put into perspective the importance of those industries to the UK, in 2012 the financial and associated professional services sector employed some 7% of the UK work force, produced some 13% of total economic output, contributed £65 billion in tax and generated a trade surplus of £55 billion.

The City of London is strongly supportive of the TTIP, but has been consistent in its belief that no industry should be excluded from the partnership’s scope, including financial and professional services. There would be benefits not only through boosted trade, but through a reduction in the potential for the kind of regulatory arbitrage that currently means that differences in the implementation of financial standards are exploited, thereby putting financial stability at risk. Some of the regulatory differences are unavoidable because of the variations in EU and US market structures and cultures. Others cannot be justified on prudential grounds.

As was demonstrated so painfully in 2008, we tend to get regulatory co-operation only in times of severe crisis, when deals are brokered at the eleventh hour to avoid market fracture. If financial services were within the TTIP’s scope, I believe that we could design a stable, long-term framework for the discussion and co-ordination of regulatory issues long before we hit the next crisis point. The other great prize is that we could create a larger, more efficient market place for EU and US financial institutions, thereby solidifying their leading role in global financial regulation—a market that will get much bigger in Asia as the emerging economies of China, India and the like strengthen.

It is for those reasons that the EU has been lobbying hard for such services to be included in the TTIP negotiations. However, there is still stiff opposition from the US Treasury, which suggests that the TTIP is primarily a trade pact, not a forum for regulatory co-operation. The fear seems to be that the US might lose its sovereignty over regulation. It must be made clear that that is not what the EU proposes. Nobody wants to undermine existing regulations, even the Dodd-Frank Act. Co-ordination is quite different from capitulation. We need sustained, high-level political engagement to bring financial services within the TTIP’s remit.

I am concerned that there is insufficient public awareness of the TTIP, including what is at stake, what the challenges and benefits are—I accept what the hon. Member for Brighton, Pavilion (Caroline Lucas) says—and what the potential benefits are. Quite understandably, given the systematic undermining of the world’s political and economic elite in recent years, which has been referred to, there is a wave of distrust at the tenor of the negotiations that are under way. There is a common perception that side deals are being brokered to benefit global corporations, posing a risk to national sovereignty that might see our independent courts being made subservient to outside arbitration. It would be helpful if the Minister clarified his position on those arguments this afternoon. I encourage the Government to run an even more visible campaign on the TTIP that allows us all to have an open, honest discussion about its potential benefits and drawbacks.

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[Jonathan Edwards]

I am grateful for that intervention and I will go on to agree with some of the points the hon. Gentleman has just raised.

We in Plaid Cymru support the principle of affording exporters in Wales the opportunity to further their trade with the USA. It is the largest destination for Welsh exports outside the EU and involves 23.7% of all trade, which naturally leads to the question of whether there is actually a problem to solve with the proposed trade deal. Certainly, we would support any deal that was of mutual benefit and in the Welsh national interest, and we would want guarantees that SMEs are genuinely afforded entry into the market with the chance to create more jobs and grow the economy. For example, exports from local farmers in Carmarthenshire could benefit from a favourable deal. Indeed, the Farmers Union of Wales is very encouraged by the TTIP.

However, Plaid Cymru would be opposed to any deal that ended up favouring big corporations and allowed the further hollowing out of industrial sectors of the Welsh economy. We also have grave concerns about the proposed EU-US trade deal as it currently stands with regard to investor state dispute settlement—I will talk a little more about that later in my remarks.

Much needs to be done to increase transparency in these negotiations. I am an avid follower of the Twitter account launched by the EU negotiating team, but much greater effort needs to be made by the EU and member states to explain and inform people about the TTIP. Economists at the Munich-based Ifo Institute found that a trade deal would lead to a 13.4% increase in US income per head in real terms over the long term, but an average rise of only 5% among the EU 27, now 28—we in Wales welcome our friends in Croatia to the EU table.

The figures assume that the US and EU agree on a deal that would lower transatlantic tariffs, and harmonise and ease regulations in many sectors that are often referred to as non-tariff barriers to trade. Trust in any trading partner is essential. That is why last year I read with great concern the revelations that the National Security Agency surveillance programmes had been spying on Governments in Europe, with the help of intelligence services in the UK. The spying revelations had the potential to derail the proposed deal, given the understandable outrage in some European capitals. I am amazed that there has not been more public outrage here, given the level of intrusion into private lives. I imagine that had any other foreign Government pursued such blanket intrusion, the UK Government would have armed the nukes. Their deafening silence about the NSA revelations indicates a worrying collusion aimed at sidestepping UK civil liberty protections. That is why it is incredibly important that, at every stage of the negotiations on any deal, there is full transparency and accountability, and that all groups are allowed input. This is a matter for all EU nations and regions, not just the leaders of a few select large and economically powerful states within it.

EU Trade Ministers agreed on a mandate for the European Commission to conduct negotiations with the USA on the TTIP. A lack of transparency in future negotiations is a major cause for concern, yet EU Governments insist on keeping the mandate confidential. The trumped-up excuse—that it is necessary for negotiations —does not stand up to analysis, as it will be available for the US to access. The mandate on the terms of any deal should be freely debated in the European Parliament and in European Parliaments, and not arrogantly assumed by the European Commission and state Governments.

The French Government have apparently secured the exclusion of culture and audiovisual services from the mandate. There are still many risks that deserve the same attention. There are serious concerns that negotiations could lead to investor claims that threaten core EU standards and rules on the protection of public services— such as the NHS, which was raised earlier—intellectual property, food safety, GMO crops, and health and environmental standards.

[Caroline Lucas]

The hon. Gentleman is making a very powerful case. Does he agree that it is not enough simply to plead for special exemptions to one or two sectors, such as the NHS? Corporations should not be given new rights to sue the Government for legislating in the public interest, whatever the sector. That bit of the TTIP should simply be taken out.

[Jonathan Edwards]

I fully concur with the views of my hon. Friend. I will go on to talk on that specific issue in the remaining parts of my speech.

Concerns over data protection have been completely overshadowed by the US Prism spying programme. The US is much better organised in economic and industrial policy and will have no qualms about defending its narrow interests, making the need for transparency in the negotiations imperative. Most worrying about the TTIP as it stands are the proposals for investor-state dispute settlement. This would weigh law in favour of big business, allowing them to sue Governments that attempt to defend their citizens. Secretive panels of corporate lawyers could circumvent legal protections and override the will of Parliaments.