Trade Bill

Earl of Caithness Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Tuesday 6th October 2020 Grand Committee

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

My Lords, the noble Baroness, Lady Bennett of Manor Castle, has withdrawn, so I now call the noble Earl, Lord Caithness.

[The Earl of Caithness (Con)]

My Lords, first, I thank my noble friend the Minister for the correspondence that we have had since our last discussion. I found his letter, which I got yesterday, very helpful. I also thank him for his continued efforts to assuage my concerns with regard to ISDS. He is getting there but he has not won yet. In his letter, he mentioned the Vattenfall case, because I brought that up with him and he kindly agreed to fill in some more detail for me. But surely the Vattenfall case merely confirmed that an ISDS was not necessary. It was actually the German Constitutional Court that sorted out the problem there. The courts, in an open and transparent way, must surely be the right way for trade disputes to be settled, rather than in the murky waters of an ISDS.

My noble friend also said that the UK had never faced an ISDS claim that had reached arbitration. That is absolutely right, and I think that the public reaction would have been a lot noisier and more visible to us all if a claim had reached arbitration. Surely the reason for the current situation is that our ISDS agreements tend to be with developing countries in which we are investing. Looking ahead, the situation will be very different if and when we sign a trade deal with the US, which has very big investments in this country.

It is interesting to note—and I would be interested in what the Minister thinks on this—that Canada, having had rather bad experiences with ISDS when it was part of NAFTA, withdrew from the ISDS in the new USMCA trade deal in order to get away from that difficulty. Unless we follow a somewhat similar pattern, I fear that the UK will get severely punished in the future.

I will pick up a theme started by the noble Lord, Lord Hendy, when he introduced this amendment and to which other noble Lords referred: the chilling effect of ISDS. In particular, my concern is the chilling effect on environmental regulations and environmental law in the future. ISDS has been used to challenge important regulations, such as those on fracking in Canada and, as I mentioned on Thursday, plain packaging for cigarettes in Australia. This has cost Governments in the countries involved a considerable amount of money. Governments have been reluctant to regulate in these areas because of the mere threat of an ISDS. If we are to fulfil the aim of the Prime Minister, which he stated to the party conference this morning, to have a green revolution to bring us back to economic prosperity, the one thing that we cannot afford is to have ISDS threats on environmental regulation hanging over us in the future.

What has not been raised so far in our debates is the report, Costs and Benefits of an EU-USA Investment Protection Treaty, which the former BIS department commissioned from the London School of Economics. Can my noble friend comment on it? It warned of going beyond

“the traditional core of favourable standards of treatment backed up by access to ISDS”,

containing

“provisions concerning the host state’s right to implement treaty-consistent measures to protect the environment”.

The report found that the UK would necessarily incur costs in defending itself against investor lawsuits, even if the UK wins, and that is something that has not happened to date. It goes on to say that it is

“virtually certain that such costs under an EU-US investment chapter will be higher than under the status quo”.

To quote from the report again,

“we suggest 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.”

That is exactly the point I have just been making: it is the chilling effect of ISDS. The report concludes that a treaty without ISDS would be a less costly option for the UK. As a minimum outcome, therefore, we should surely ditch ISDS as a matter of urgency, and I find it quite interesting that at least two of the countries with which we have rolled over continuity agreements, Morocco and South Africa, are ditching ISDS in other trade deals that they are doing.

--- Later in debate ---

[The Earl of Caithness (Con)]

My Lords, much of what I wanted to say has already been said in this useful debate. I am supporting the noble Lord, Lord Grantchester, again. I have been doing that quite a lot in recent weeks. I have to say to him that it might not continue for very long after today, but it has been fun so far.

The House of Lords Select Committee on Food, Poverty, Health and the Environment made the important recommendation that food imports must be required to adhere to the same health, environmental and animal welfare standards as food produced in the UK. Like the noble Lord, Lord Rooker, I sat on that committee, and I was convinced by the evidence we received that it was necessary to put that on the face of the Bill. We have tried it with the Agriculture Bill, but it is also worth trying to get it in this Bill.

Let us be absolutely clear that restricting imports that are below standard will not solve the health problems of this country. We produce a lot of good, healthy food in this country, but the food industry turns it into processed rubbish that poisons us. As the Prime Minister said this morning, it was his obesity that caused a lot of the problems that he had when he got Covid. So it will not be a panacea, but it will help.

We need to be very careful that we do not malign the USA too much. The noble Baroness, Lady Ritchie of Downpatrick, mentioned chlorinated chicken. I have been to the USA every year for the last 21 years —except for this year, because I was banned from going because of Covid—but in each of those years I have eaten chlorinated chicken, and delicious it was, too. We chlorinate a lot of the food that we eat; a lot of vegetables are chlorinated. The point is that it is not the chlorination that is the problem but the standards in which the hens are kept before chlorination. Those animal welfare standards are the most important thing in this discussion.

So I am happy to support the noble Lord, Lord Grantchester, once again, and I wish him well with this amendment.

[The Deputy Chairman of Committees (Baroness Finlay of Llandaff) (CB)]

I call Lord Judd. We appear to be unable to reach the noble Lord, Lord Judd, so I call the noble Lord, Lord Beith.