Transatlantic Trade and Investment Partnership (EUC Report)

Earl of Sandwich Excerpts

Tuesday 17th June 2014 Lords Chamber

[The Earl of Sandwich (CB)]

My Lords, this has been a fascinating learning exercise for me, and I think for other people involved. The chairman has given us an upbeat introduction; I hope and think that he is not being overoptimistic, but that is his characteristic. It has been a privilege to work with him, not only because of his extensive knowledge of the EU and the United States but because he has been such good company, and it was a pleasure to travel with him and some of the committee to Brussels.

I was brought up in a non-government environment in which fortress Europe was a concept to be resisted because it was always going to be built at the expense of the rest of the world, notably the poorest developing countries. The notorious CAP we all remember, in the time of the butter mountains, was also the enemy because it would ultimately work against protectionist philosophy and destroy markets enjoyed by the old Commonwealth countries.

Time has moved on and the CAP has been slowly adapted to the needs of the environment. I have to admit that I am a very minor beneficiary of the CAP through the countryside stewardship scheme. The Cotonou agreement has made life a little easier for the African, Caribbean and Pacific countries in the transition to freer trade arrangements, which have to come. The new treaty will also bring many benefits in the long run to third countries, as our chairman has said, and as our report tries to demonstrate, although it is a difficult argument to make at this time.

The wild card is, of course, China, whose premier, Li Keqiang, is in London this week. We in the UK have a lot of ground to make up if we are going to attract more trade with China while retaining our proud position on issues such as Tibet, human rights and student visas. It seems very likely, as the noble Lord, Lord Tugendhat, has said, that TTIP will help us in this situation in the long run. My strongest memory in Brussels is of the Chinese envoy to the EU, Mr. Zhang Kening, stoically pretending across the table that TTIP might help the US and the EU, but that it would not be a suitable template for a multilateral treaty. This was not what we wanted to hear, but, as we state on page 23 of the report, the Chinese warned us quite solemnly that there were varying degrees of economic development around the world among WTO members, and each member would have to see whether the idea was “a good one or a bad one”. I felt during our inquiry that this is a critical issue in the negotiations: whether the treaty, whatever its advantages for the two parties, can also become a catalyst to international trade as a whole and provide a new impetus to the moribund Doha round, as the noble Lord, Lord Lamont, mentioned and I think the Government believe.

We all know that the US and some EU member states have their eye firmly fixed on China and the potential prosperity that we will enjoy and how it will react to TTIP, given its immense present and future influence in world markets. Our former Minister, the noble Lord, Lord Green, expressed the hope that China would become increasingly involved and that following the Bali agreement the UK should keep up the momentum in our own global interest. Equally, we must take seriously China’s message to us that it stands with developing countries when it comes to making concessions in the Doha round.

There is a school of thought, mentioned by the noble Lord, Lord Liddle, I think, that TTIP could be an economic version of NATO, softening the Atlantic relationship into one which will gradually lubricate the crevices of political alliances and opposing nation states. The disadvantages of this happy metaphor are obvious: that the EU and the US are still mainly concerned with themselves and their western concepts of freedom and democracy when in fact they ought to be opening out still further to a much wider world of partnerships and trade links.

That, in broad terms, is the position of the unions and the trade justice campaign, which see fair trade disappearing into a sea of mercantilism and the long-fought rights of workers dissolving in the erosion of core labour standards. They are also apprehensive of the investment and procurement provisions of TTIP which they say could, under this treaty, enable US companies to buy into much cherished institutions at home, such as the NHS.

I am sorry that we did not give a little more space in the report to the impact on third countries because the evidence was inconclusive. The TUC and others said that tariff changes in TTIP could have a negative effect on countries, such as Bangladesh, selling footwear and textiles and could devalue existing agreements. On the other hand, the noble Lord, Lord Mandelson, told us that most developing countries were not competing with the EU at the top end of the value chain.

Professor Baldwin indicated that the EU could provide development assistance which would compensate the losers, as it had in the past with free trade agreements. Perhaps the Government will comment on that. Another benefit was seen in the form of harmonised regulation: if TTIP succeeded in its aims, and the principle of mutual recognition was non-discriminatory, the rest of the world would be dealing with one set of regulations instead of two.

We cannot expect everything from this treaty. I agree with our chairman and the noble Baroness, Lady Quin, about the virtues of a living agreement. That is surely going to come and is something that I think the trade commissioner was advocating privately.

The usual channels have been generous in giving us time for this debate. We were concerned that TTIP was still an obscure subject. I have never seen the Chamber empty faster than today when our poor chairman rose to speak. It was certainly not a comment on him but shows the awareness of the subject. This is partly because the negotiations are still not transparent. Our report could help to spread the word, although it will hardly be at a popular level. We asked for a communications strategy and the new Minister, who is here, the noble Lord, Lord Livingston, appeared to agree—I hope he will confirm that—and told us that increasing public awareness of the treaty was a priority for Her Majesty’s Government. Perhaps he will comment on the relationship between that and the negotiations. Surely this is much more important in the public mind than the musical chairs going on in Strasbourg and Brussels.

Finally I thank Julia and Roshani and our specialist adviser, Dr Dennis Novy, among others, for their remarkable grasp of this quite complex subject and for making it intelligible to me and the army of readers who we hope will be scrutinising this report.