Earl of Caithness
Main Page: Earl of Caithness (Conservative - Excepted Hereditary)
The Earl of Caithness (Con)
My Lords, I am a committed free-trader, as are most of those who have spoken in this debate. The evidence is there for everybody to look at: since the end of the Cold War, the proportion of the world’s population living on less than $1.25 a day has dropped from 40% to 23%, and that is due to free trade. We should congratulate not only ourselves but the other free-traders in the world, such as America.
I pick up on what was said by my noble friend who spoke before me: there are major problems. When one looks at CETA, one asks what is stopping that free trade agreement. Ninety-eight per cent of the tariffs will be taken down; there will be annual savings of €500 million in duties. What is stopping that and why is free trade such an important issue in the American election? Why did Bernie Sanders, Clinton and Trump all highlight not free trade but protectionism? There is a worry. It reminded me a little of that old Scottish saying:
“Wha’s like us? Gey few, and they’re a’ deid. If they’re not deid, they’re dying”.
We are going down a route that is absolutely right, but we have to sell it. As my right honourable friend the Prime Minister said, there are those just managing in this country who do not like free trade. They do not see the benefits of it.
I want to take a slightly different road from that taken my noble friend and look at what are the problems with free trade. Free trade agreements have become far too complicated. They include matters that are not trade. If we are trying to win the argument, let us get back to a trade agreement that does not include things such as patents.
The problem areas are many, but the real difficulty, as highlighted by the Walloons, is the investor state dispute settlement. It is quite wrong that big corporate bodies should be able to sue Governments, which puts them in a powerful position, equating to government, overriding local sovereign democracy and being able to influence Governments in a way in which they never did before. That is one of the main reasons that CETA is failing at the moment. The Walloons want a lot of protectionist measures which I do not approve of, but I sympathise with them on that point. It is not good.
It is also very noticeable in America—which is, or has been, our biggest ally in this area—that these ISDSs are growing in number and causing increasing problems for the Americans. That is why TTIP is not going to happen and why the TTP and NAFTA are under threat—because of the threat of corporate bodies. If corporate bodies want to take a risk overseas, they must take the risk, not the people.
There must therefore be more transparency in our free trade agreements. The EU is good on this; America is lousy and needs to change. One of the things Britain can do, through its diplomacy, is get the USA and others to be much more open about this. A free trade agreement needs tighter definition on rules of origin. Those are being abused, and if they are abused, it leads to resentment. There need to be more enforceable and substantive labour and environmental rights. We need to be able to protect those, while continuing free trade.
My noble friend Lord Bamford said that changes in currency are a bigger threat than tariffs. He is absolutely right. That was why Mr Trump wanted to shove on a 45% tariff against the Chinese, because they have manipulated their currency. Our currency has just fallen and that is distorting our free trade agreements. We need to look at that.
I end with a point for free trade: it does boost productivity. Since the 2008 crash, there has been a levelling off and down-turn in productivity. It is trade that builds that up. That leads to prosperity, that leads to a better feeling and that will lead to a happier community.