UK-Japan Comprehensive Economic Partnership Agreement

Elizabeth Truss Excerpts

Wednesday 25th November 2020 Commons Chamber

[The Secretary of State for International Trade (Elizabeth Truss)]

I beg to move,

That this House has considered the UK-Japan Comprehensive Economic Partnership Agreement.

I am delighted to open this debate on the UK-Japan comprehensive economic partnership agreement, otherwise known as CEPA, in a landmark moment for our national trading history. This is the first debate we are having on a new trade deal since our departure from the European Union. This is the first time we have been able to have such a discussion in the House of Commons for nearly 50 years. It was not possible when Brussels represented us in trade negotiations, but things have changed. We now have a deal directly negotiated between London and Tokyo, and the whole House will be glad to know that this will be the first of many debates about our independently negotiated trade agreements. There will be more to come as we pursue gold-standard deals with Canada, the United States, Australia, New Zealand and South Korea.

[John Spellar (Warley) (Lab)]

The right hon. Lady is right in one respect, but we have had many debates recently on trade deals. Indeed, we had a veto on those trade deals between the EU and other partners, and views were expressed. I suspect that we were on the same side on the Canada and Singapore trade deals. We have had those debates. This should be about the principles of trade, rather than just the niceties of whether we are in or out of the EU.

[Elizabeth Truss]

I observe that the right hon. Gentleman did support many of those deals. I afraid that the same cannot be said for most of the members of his party, who did not support, for example, the Japan trade deal when it previously went through the House. We are in a completely different position. From 1 January next year, we will be operating our own independent trade policies, we will be setting our own tariffs and we will be operating our own trade agreements. That is a huge step forward for the UK as an independent trading nation. Next year, we will be talking about our accession to the comprehensive and progressive agreement for trans-Pacific partnership, but today we are here to talk about Japan.

The UK-Japan agreement is a British-shaped deal going further and faster than the EU deal in areas such as data and digital, services, advanced manufacturing and food and drink. The deal has been welcomed across the board, from the CBI to techUK and the National Farmers Union. It was even welcomed by the Labour party—although rather tepidly and although Labour did not actually vote for the original Japan deal.

The deal is estimated to add over £15 billion in trade to our already growing trading relationship with the third largest economy in the world. We expect it to be even more. We have asked Professor Tony Venables from Oxford University to lead a review of our future modelling to ensure that it accounts for our world-leading digital and data trade. The United States recent study of its deal with Mexico and Canada found that the biggest economic benefit of that deal came from the provisions on digital trade, and we are confident that this is the case for the agreement with Japan, which is why we want to better quantify the benefits of future free trade agreements.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

On the quantification of future benefits, of course the Secretary of State has given us the most advantageous figures that she has, which are about what trade would have been if we were out of the European deal. The reality is that for businesses on the ground very little will change between the end of this year and the beginning of January, and the reality is that the quantifiable benefit she talks about is actually a maintaining of the status quo, is it not?

[Elizabeth Truss]

The reality is that if we had not negotiated this deal, we would have reverted to trading on World Trade Organisation terms with Japan and businesses on both sides would have faced tariffs and barriers to trade. But we have gone further than just continuity with this deal, and I am about to tell the House exactly how that is the case. This deal is better and more valuable than the Japan-EU deal, which is otherwise known as the JEPA, because in simple terms the CEPA is deeper than the JEPA. It goes further and faster in areas of in vital importance to the United Kingdom economy.

On digital trade, we are protecting source code, enabling the free flow of data while agreeing a ban on data localisation, saving companies the cost of setting up servers in Japan. Our textile and confectionery manufacturers will benefit from more liberal rules of origin, making their goods more competitive by allowing up to £88 million of UK exports to benefit from reduced duties. Our creative industries will have their brands and innovations protected, as we go beyond the EU in tackling the online infringement of intellectual property rights. Our fantastic food and drink producers will benefit from increased protection for iconic goods, as around 70 geographical indications, 10 times as many as before, will be protected in Japan, subject to their domestic processes next year.

Our services industry will have more regulatory co-operation, safeguards on data storage and greater flexibility to move talent across the world.

This is clearly a more British-shaped deal, and it delivers more benefits to the UK than the previous deal. Some Opposition Members have asked for a precise economic assessment of this difference, but in our Command Paper we agreed to assess our deals, not the deals of other countries or trade blocs, and I am not going to waste the time of Department for International Trade economists by asking them to assess deals that are clearly inferior to the one that we have secured.

This is a deal that will benefit every part of the United Kingdom. It delivers for our farmers and businesses, and it delivers for Japanese investors such as Nissan, Toyota and Hitachi, supporting thousands of jobs across the United Kingdom.

[Andrew Griffith (Arundel and South Downs) (Con)]

Does my right hon. Friend agree that, in addition to all the opportunities she lists, this deal is a fantastic opportunity for the growing and sustainable industry that makes British sparkling wine across 770 vineyards in the United Kingdom? It employs 10,000 people today, and is on a journey to increase its exports and could potentially employ 20,000 or 30,000 people in the future. By securing important geographic indicators, my right hon. Friend has unlocked that opportunity for us all.

[Elizabeth Truss]

My hon. Friend is a doughty champion of English sparkling wine and knows that this will be one of the geographical indicators that goes through the domestic process early next year, to be registered in Japan and recognised in Japan, and who knows how long it would have taken under the EU, because under its deal, it has to negotiate every new indicator. We have got agreement on those 70 indicators through the process, and the only circumstance under which English sparkling wine would not qualify is if English sparkling wine were produced in Japan, and I do not believe that to be the case.

This deal aligns with our high environment, animal welfare, labour, data and food safety standards, and it helps to position the United Kingdom as the world’s hub for services in tech trade and establishes us as a major force in global trade. Following Japan’s economic push on womanomics, we have also signed an entire chapter on women’s economic empowerment to help female entrepreneurs in both our nations—another chapter that was not included in the EU deal.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

I do not want to rain too much on the Secretary of State’s parade, but she will be aware that, according to the British Government’s own figures, the Welsh economy will grow by only 0.05% over 15 years, based on a WTO baseline, as a result of this deal. Also, the British Government’s policy of leaving the single market and the customs union means we will need over 70 deals to make up for that loss, and if we have no deal that figure will be considerably worse.

[Elizabeth Truss]

This deal is worth at least £15 billion in extra trade, not including the trade that was already increasing between our two nations, and there are significant benefits for Wales, including the recognition of Welsh lamb as a protected geographical indicator as well as more opportunities for manufacturing industries.

[Craig Williams (Montgomeryshire) (Con)]

I cannot help but stand up when I hear the words “Welsh lamb”. It is a wonderful GI that I know the Secretary of State is working to protect. On Japanese business, Wales saw Japanese trade increase in 2018 by £250 million. That is a 25% increase, and this deal will solidify that. I normally work with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) and welcome what he has to say, but I think that this deal really is terrific for the Welsh economy.

[Elizabeth Truss]

We had a major success in 2019 when we gained access for British lamb into the Japanese market, and, of course, one of the products that is flowing into Japan is our fantastic Welsh lamb.

This agreement is not just about economics, but about our close relationship with Japan and the Japanese. Together we are helping to set the standard for trade in the 21st century. That does not come as a surprise, because our relationship with Japan is deep and long standing. Way back in 1613, King James I concluded the UK’s first trade agreement with Japan. Under Queen Victoria, a treaty of peace, friendship and commerce was signed in 1858. We see that friendship endure under Japan’s current Emperor Naruhito, who has written fondly of his time studying at Oxford. We continue to benefit from Japanese commerce after Margaret Thatcher opened the door to new investment from companies such as Nissan, supporting local jobs and communities.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

A fortnight ago, I was delighted to receive an email from the embassy of Japan, informing me that my constituency of Newcastle-under-Lyme will receive 30 of the cherry trees that it agreed to donate to the United Kingdom. That was agreed in 2017, as part of the prosperity agreement, but it is a real symbol of what we are now doing with Japan in this trade deal. I compliment the Japanese Government and my right hon. Friend’s Department for all they have done.

[Elizabeth Truss]

I thank my hon. Friend. Our relationship with Japan is going from strength to strength. Japan and the United Kingdom are two great island nations, but we are not insular in our embrace of freedom, democracy, human rights and free trade, and we will be working together when the UK has the presidency of the G7 next year to advance on all these fronts and to champion much-needed reform of the global rules for services and digital trade.

Next year, Japan will chair the comprehensive and progressive trans-Pacific partnership, a high-standards agreement that promotes the values that we believe in for rules-based free trade. The CEPA secures Japan’s support for our joining that club and will provide further market access under that agreement. This agreement will turbocharge our trade with dynamic members from Canada and Australia to Chile and Peru. The CPTPP is more than the sum of its parts, because we gain access to a free trade area with common standards and rules of origin, which means flexibility and opportunities, but, unlike with the EU, we retain control of our borders, our laws and our money.

This huge gateway to the Pacific region will help us unleash our potential as a global hub for services and technology trade. On joining CPTPP, global Britain would have unprecedented and deep access to markets covering 13% of the world’s GDP, which equates to more than £11 trillion in some of the world’s fastest growing markets. If we add in the US, this would amount to over 40% of the world’s GDP, which equates to more than £27 trillion.

[Catherine West (Hornsey and Wood Green) (Lab)]

The Secretary of State is very generous in giving way. As a member of the all-party group on Japan, I agree with some of the things that she is saying, but does she agree that, in principle, it would be much better if we had more scrutiny in advance of votes on trade deals, so that we can have this kind of debate rather than having it post facto?

[Elizabeth Truss]

I will come on to the issue of scrutiny later in my speech, but we committed in our Command Paper to produce a scoping assessment, which we did. We have produced our objectives and there are opportunities for them to be scrutinised through the International Trade Committee, and that has been happening during the process. There will be full opportunity for a debate afterwards. This puts us in a very strong position compared with comparative parliamentary democracies, and of course I welcome the opportunity to debate issues such as CPTPP during the accession process next year.

Today’s debate is truly historic, as trade policy is once again a matter for the United Kingdom and for this House. It is part of our new system of proper scrutiny, of which I am delighted to be a part. Parliament will rightly have the final say on the ratification of this deal. I am very grateful for this report from the International Trade Committee, which has made clear the desire for a debate. We will shortly be introducing an amendment to the Trade Bill, which will write the role of our vital Trade and Agriculture Commission into law, again giving independent advice to Parliament on trade and agriculture.

[Neil Parish (Tiverton and Honiton) (Con)]

I, too, thank the Secretary of State for putting together the continuation of the Trade and Agriculture Commission and setting it up as an expert group for the next three years, because it will be very important, as we move forward to deal with Australia and others, that we really drill down on the way that agriculture is done and food is produced to keep our high animal welfare standards in this country.

[Elizabeth Truss]

I am delighted that my hon. Friend welcomes the putting of the Trade and Agriculture Commission into statute, which will be done through the Trade Bill. We need to make sure that farmers are engaged, businesses are engaged and our whole country is engaged in these trade agreements because we are doing them to benefit the United Kingdom—to make sure that every part of this country is helped to thrive. We are lowering barriers to trade and creating—

[Lloyd Russell-Moyle]

Will the Secretary of State give way?

[Elizabeth Truss]

I have already given way to the hon. Gentleman and we have a limited amount of time for this debate.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

rose—

[Elizabeth Truss]

I will, however, give way to my hon. Friend.

[Andrew Bowie]

On benefiting the whole country, we have yet to mention Scotland and Scottish produce. I am delighted that under this agreement we will see increased numbers of products that are geographically protected, with Scotch beef and Scotch whisky added to that list. The trade between Scotland and Japan is incredible. It dwarfs even Wales, with £500 million-worth of trade between Scotland and Japan last year, and this is only set to grow under the incredible deal that has been negotiated by my right hon. Friend.

--- Later in debate ---

[Elizabeth Truss]

My hon. Friend mentions some of the benefits from the Japan deal. Of course, there are also measures to protect the Scotch whisky industry from counterfeiting in Japan. I know that was very strongly welcomed by the industry when we announced the results of the Japan trade deal.

[Charlotte Nichols (Warrington North) (Lab)]

The Secretary of State will know that applications for new food geographical indicators through the Japanese Ministry of Agriculture take, on average, five months and had a success rate of only 15% last year. Can she tell us the equivalent figures for new alcohol applications?

[Elizabeth Truss]

I can tell the hon. Lady that we have agreed with the Japanese that our 70 geographical indications will go through the process and, unless there is some objection by a producer in Japan producing exactly the same product, those procedures will be successful.

As I said, I am grateful for the report from the International Trade Committee, which made clear the desire for a debate. We will shortly be introducing the amendment that I mentioned earlier.

The House will now understand why on signing this deal in Japan, the land of the rising sun, I hailed the dawn of a new era for free trade. Days ago, we struck a vital continuity deal with Canada, which means that we have now secured 89% of the value of UK trade with continuity countries and with Japan, which goes further. These 53 countries cover £164 billion-worth of trade. No other country has conducted so many trade negotiations simultaneously and delivered. We have achieved this by being prepared to stand our ground and to fight hard for Britain’s interests.

I am very confused about Labour’s approach to these deals, which seems to veer between complete capitulation and a refusal to sign any deal. I read that the right hon. Member for Islington South and Finsbury (Emily Thornberry) will not vote for any deal we get with the EU, but apparently she does not agree with her leader on this matter. She has told us before that she would not sign any trade deal with the US, yet she seems prepared to do a deal at any price with everyone else. The Opposition have attacked us for not rolling over trade deals that they did not vote for in the first place. They criticise us for not engaging with countries that refuse to come to the negotiating table, and then they repeat the media lines of foreign Governments. Do they understand how negotiations work? I do not think they do.

Let us be honest: negotiating trade deals in a pandemic is not easy, but I am incredibly proud of our team, who have been negotiating in video conferences and phone calls round the clock, and they have got the job done. Just today, long before Parliament opened this morning, our negotiators were deep in talks with Australia, which are now on to their third round. After the House rises this evening, I will be speaking to my New Zealand counterpart about the next round we are about to undertake. This is just the start for global Britain. We are back out there, making the case for free trade and helping to reshape global trading rules. Our deal with Japan is vital for our economic recovery. It will drive jobs and prosperity across every nation and region of the UK, ensuring a brighter future for the British people. I commend this agreement to the House.

--- Later in debate ---

[Emily Thornberry]

I will rattle through a bit of my speech, because I have the beady eyes of Madam Deputy Speaker on me. Once I know I am definitely halfway, I will take interventions.

The same situation with Opposition day debates is set to be true of the continuity agreements recently reached with Ukraine, the Ivory Coast, Kenya, Canada and, of course, the 11 other continuity agreements that the Government still need to secure in the next five weeks—or 14, if we are still counting Algeria, Bosnia and Serbia.

In other words, the process for parliamentary scrutiny and approval that the Government are relying on for our future deals as an independent trading nation is failing repeatedly at the very first hurdle, through the denial of Opposition day debates. I therefore greatly welcome the Secretary of State’s decision to grant this debate and vote in Government time, and hope that she will amend the Trade Bill, because she will now have realised that this simply will not do; the right to debate and approve future trade agreements should be a matter of law, not just a matter of discretion. That brings me to the main theme of my remarks: the importance of the Japan agreement as a precedent for other trade deals to come, in terms of both substance and the way in which they are presented to the world.

Let me start with some of the positives. I welcome the Secretary of State’s dedicated chapter on the role of women in our economy. That is definitely an important precedent. I hope that her friend Tony Abbott will study it closely to appreciate that female empowerment means more than just plugging in the iron. I welcome the new ground broken in this agreement on trade in digital services and data—a vital area of future growth for exports and investment—and hope that the Government’s stated principles, particularly on net neutrality, will be precedents for our future trade deals with Australia and the United States. But I am afraid that there are many other areas in which I hope that the Japan deal does not set a precedent.

Beyond digital, there is a disappointing absence of any new measures to support the vital role of Japanese companies as investors in our economy and creators of British jobs—something that is especially important in the current climate, as we look to safeguard the jobs provided by companies such as Nissan. There is also a lack of any new, enforceable commitments on climate change and the environment. That is another wasted opportunity and one that does not bode well for the ongoing negotiations with Australia. There is the absence of any progress on workers’ rights, coupled with the failure to consult trade unions on the deal, as well as the rolling back of commitments on civil society dialogue. I am afraid that this is all consistent with a Secretary of State whose official trade union advisory group contains just four members, one of which is the British Medical Association.

When it comes to deeply unfortunate precedents, there is also the sheer extent to which the Secretary of State has exaggerated, oversold and misrepresented the benefits of a UK-Japan deal compared with the EU-Japan deal that it replaces. Let us take a single example: agriculture and food. She tells us that 70 new British products will be protected by GI status thanks to her deal, but that will only be true if they are approved by Japan’s Ministry of Agriculture—a process that takes at least five months and which resulted in the rejection of 85% of applications last year. She tells us that our farmers and food producers will benefit from lower Japanese tariffs, but that will only be true if they are exporting to Japan ostrich feathers, dried eggs or 180 proof alcohol, which none of them currently does.

The Secretary of State tells us that we will benefit from continued access to the EU tariff rate quotas for exports to Japan of products such as soft cheese and cake mix, but that will only be true if the EU does not use up those quotas itself. She tells us that British farmers will have access to Japan’s quota for imports of malt, which, I am delighted to tell colleagues, is true. It is true! But she did not mention that it is actually a global quota to which every farmer in the world has access—so I do not know why she is looking so pleased with herself—and which can be withdrawn by Japan at any time. Finally, her Department’s Twitter feed tells us—during an episode of “The Great British Bake Off”, no less—that imports of Japanese soy sauce will be cheaper, which, as thousands of people pointed out, is not true in the slightest.

In one area after another, the spin from the Secretary of State and her Department does not match the substance, and her concern for how the deal will be presented appears to be more of a priority than the deal that she will actually deliver. That is a hugely damaging precedent, and one that I hope will not be followed—for example, in the Canada deal signed last weekend—particularly when it comes to our cheese exporters. After all, if it is the case that, like the Japan deal, we will only get access to the EU’s quota on exports of cheese to Canada if the EU has not used up the quota itself, that is deeply worrying for our dairy industry.

[Elizabeth Truss]

I assure the right hon. Lady that we have access to the EU reserve on equal terms with the EU.

[Emily Thornberry]

So there is a cake of a certain size—the tariff quota—and the EU and Britain will have access to that cake. Who gets what bit first? What happens if the EU gets the cake first—what does Britain do then? Is it first come, first served? Or is the cake already cut up in pieces? I wonder whether the right hon. Lady could help us with that.

[Elizabeth Truss]

I am happy to furnish the right hon. Lady with a letter about the details of the licensing procedures, but it is important to understand that, in a situation different from that for the tariff rate quota with Japan, the UK reserve is applied for on an equal basis with the EU.

[Emily Thornberry]

Given the time, I will with your leave, Madam Deputy Speaker, take some other interventions at this moment, as I am halfway through my speech.