Trade (Australia and New Zealand) Bill

Gareth Thomas Excerpts

2nd reading
Tuesday 6th September 2022 Commons Chamber

[Gareth Thomas (Harrow West) (Lab/Co-op)]

This has been an interesting and important debate, and the frustration of the House about the lack of scrutiny of these deals to date has been marked, with interventions from the Labour Benches and across the House, most notably from members of the International Trade Committee across parties. They have expressed striking concerns about, in the words of the hon. Member for Wyre Forest (Mark Garnier), the completely meaningless CRaG process that the Secretary of State allowed to unfold. It is also striking that there was absolutely no apology to the House in the Secretary of State’s speech for the process she had allowed to unfold. As my right hon. Friend the Member for Torfaen (Nick Thomas-Symonds) said, Ministers have hidden away whenever they could, rather than face sustained and serious questioning on the substance of these deals. The shadow Secretary of State also made it clear in his opening remarks that we will not oppose this Bill tonight, but we will seek to amend it in Committee.

Australia and New Zealand are two of this country’s greatest friends: allies in the Commonwealth; with us in the darkest moments of our shared history; and with shared values, similar governance and mutual security interests. We have so much in common. We should, and we will, want to work even more closely with both countries for our mutual benefit, as my right hon. Friend the Member for Warley (John Spellar) underlined in his contribution, in particular in deepening our economic and other ties in the months and years to come.

[Angus Brendan MacNeil]

The hon. Gentleman is in full flow, but I want to rewind to the CRaG process, on which he has shared the disappointment expressed across the Chamber and across parties. May I press him? Is he putting the House on notice during the current prime ministerial musical chairs that if Labour were to occupy the seats of power this would indeed change and there would be a more meaningful process than CRaG? That would of course put pressure on the Government to change it now.

[Gareth Thomas]

Of course we will want a much more meaningful process of scrutiny of trade deals when we switch Benches, but we also want to make sure there is a much more meaningful process in the few months left of the Conservative party’s time in government.

As I have set out, it was deeply disappointing to hear and share so many concerns of Conservative Members about the scrutiny allowed to this House of the trade deals the Conservative Government have negotiated with such key partners. We know the ministerial team at the Department for International Trade was in crisis, with the Secretary of State at loggerheads with the Minister of State, open and clearly deep personal animosity, and then junior Ministers resigning in protest over lack of support for British exporters. The chaos was obvious and clearly profound. As with so much from Conservative Ministers, the difference between what was promised and what was delivered is considerable.

The now Prime Minister said when she was still the Secretary of State for International Trade:

“I can confirm that we will have a world-leading scrutiny process…That will mean the International Trade Committee scrutinising a signed version of the deal and producing a report to Parliament”—[Official Report, 8 October 2020; Vol. 681, c. 1004.]

Only then, she said, will the CRaG process start.

The reality has been somewhat different. The Secretary of State was asked eight times to front up at the Select Committee and only finally turned up to answer questions after being shamed into doing so by her rightly angry Back Benchers. Ministers have failed to publish in full vital analysis or modelling to justify key provisions in the agreement, not least on agricultural quotas. The Government began the formal 21-day CRaG process before the International Trade Committee had produced its report, and even before the then Secretary of State had had the courage to show up to defend the agreement.

The Government refused to grant the Committee’s perfectly reasonable request for 15 sitting days between the publication of that extra critical information and the start of ratification of the CRaG process. As my right hon. Friend the shadow Secretary of State underlined, Lord Grimstone—then a trade Minister—confirmed in May two years ago that the Government did not envisage a new FTA proceeding to ratification without a debate having first taken place. World-leading it has not been.

It is similarly extraordinary the Trade and Agriculture Commission is not properly resourced. If that does not change, it will be clear that Ministers do not intend to allow serious scrutiny of future trade deals, either.

[Sir Mark Hendrick]

My hon. Friend mentions the Trade and Agriculture Commission, which it was promised would have proper trade union representation, but many months after it was set up, that has still not materialised.

[Gareth Thomas]

My hon. Friend is right to highlight that ongoing concern. His intervention reminds me that it would be remiss of me not to praise the International Trade Committee, whose work on the deal, notwithstanding all the difficulties that it has faced, is an example of the very best of our Select Committee system at work. Indeed, I say gently to its Chair that perhaps his Committee’s work is one small example of how the UK is stronger together.

I sympathise with the frustration of cross-party Committee members that no cohesive strategy for trade negotiations has been published, making it that little bit easier for Ministers to be pushed and pulled in whatever direction those with whom we are negotiating want. I hope that whoever is confirmed as Secretary of State for International Trade will address that key issue quickly. Why has there been such a contrast between what was promised to the House for such key deals and what has happened? Is it just incompetence, laziness or poor performance from individual Ministers, or is there something more profound here? Is it that the implications for procurement, British agriculture and tenant farmers—the hon. Member for Penrith and The Border (Dr Hudson) and others flagged up that issue—as well as for our food standards, for labour and human rights, for action on climate change, for buying British and for good digital regulation are so significant that Ministers felt it better to try to discourage a sustained look at the provisions in these deals?

The Australia and New Zealand trade deals are not going to deliver the sustained boost to economic growth that the country needs. Many have made that point. Welcome as the deals will nevertheless be, they will deliver at best marginal benefits for business, limited gains for consumers and few additional jobs. In the post-truth world that the Conservative party now sadly inhabits, the deals have been sold to us all as the start of a brave, amazing, fantastical post-Brexit era for British trade and growth. One can only wish that the same effort had been put into the actual negotiations as into the stories being told about these deals.

To be fair, there is genuine excitement from some about these deals: Australian farmers, Australian negotiators and New Zealand farmers were all delighted. On the upside, too, the deals have not led to the value of the pound dropping or a decline in foreign investment, and British farming and food businesses have not seen an immediate hit to their contracts. That, at least, is an improvement on the trade deal that the previous Prime Minister negotiated with the European Union. The overwhelming sense of the trade deals—with Australia in particular, and with New Zealand—is of deals done in a rush, with the now Prime Minister desperate for any deal, at almost any cost.

Some commentators have suggested—this point has been echoed by many in the debate—that in the rush to sign off the two new free trade agreements and bring the Bill to the Floor of the House, Ministers have failed to grasp how the deals leave Britain badly exposed for future negotiations with, for example, the US or Brazil. They argue that by undermining our food, animal welfare and environmental standards, the deals create difficult precedents in key parts of our economy, and that English farmers—and those in the devolved nations too—have been left most at risk of a long-term cumulative hit to their, and our country’s, economic interests, with the terms of these deals being used against us in even more significant negotiations.

It is, I have to say, extraordinary that Ministers made such a big offer to Australian farmers and got so little in return. The unconditional abolition of tariffs on Australian farm produce with few safeguards—a very big concession—is particularly surprising given that Ministers did not even negotiate basic protections for our most famous products, a point made by my right hon. Friend the Member for Torfaen (Nick Thomas-Symonds) and the SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). Why did Ministers not prioritise protections of UK geographical indicators for our most iconic brands, such as Scotch whisky, Swaledale cheese, traditional Grimsby smoked fish, Yorkshire Wensleydale and Cornish pasties, to name just a few?

It is not just in Australia and New Zealand that Ministers cannot negotiate protections for our country’s best brands. Ministers still have not secured GI status in Japan for half the products they claimed they would. Indeed, ironically it appears Ministers are hoping their failure here will be partially put right through the knock-on impact of the EU’s negotiations with Australia.

[John Spellar]

My hon. Friend rightly concentrates on the Government’s deficiencies in handling the negotiations on agriculture, but, as a Member of Parliament representing the heartland of the industrial revolution, does he not see advantages for British industry in this agreement?

[Gareth Thomas]

Absolutely, I see advantages for British exporters, which is why, in my praise for my right hon. Friend in the opening part of my speech, I underlined that we want to see increased trade with Australia and New Zealand going forward.

Given the huge concessions Ministers made on access to our agricultural markets, it is frankly also surprising that they did not insist on more protection against competition from food imports produced to lower standards. Human rights, labour rights and climate change have also been largely unmentioned.

Turning specifically and lastly to the Bill, it gives Australia and New Zealand better access to our Government procurement market, worth almost £300 billion, in return for our firms getting a little better access to their procurement markets, worth just £200 billion together. We will seek to amend the Bill in Committee to ensure there is better scrutiny of the procurement sections of both UK trade deals. The Conservative party has been missing while the people of our country are struggling to make ends meet and deeply worried about how their businesses and other businesses will survive. The Bill will make little substantial difference to those challenges. A more robust trade strategy to generate wealth and share it more fairly is long overdue, and much more robust parliamentary scrutiny needs to be one of the lessons that Ministers learn from the passage of these two deals. We want greater trade with both Australia and New Zealand. We will not oppose the Bill tonight, but we will seek to amend it during its remaining stages.

Trade (Australia and New Zealand) Bill (First sitting)

Gareth Thomas Excerpts

Committee stage
Wednesday 12th October 2022 Public Bill Committees

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Q Ms Monks, thank you very much for being willing to come in this morning to give evidence to the Committee. Will you just say how you think the deals could have been improved?

Lucy Monks: The entire free trade agreements?

[Gareth Thomas]

The entire deals—or are they so wonderful that they could not be improved in any way?

Lucy Monks: Absolutely not. For a long time, Australia and New Zealand have been areas where UK small businesses have been interested in doing a greater amount of trade, so anything that reduces those barriers and makes those markets more accessible is welcome—not only for access to those markets, but because Australia and New Zealand are useful territories as jumping-off points, especially for smaller businesses that might need to take smaller steps into export support.

The areas in which we would want to see a little more movement have been around the movement of people, in essence. We think that there is scope for further discussions with both Australia and New Zealand about moving skilled workers in and out of the UK—lending our skills to those markets, and vice versa.

[The Chair]

I remind Members that questions must be in scope—they have to be about the Bill, not the general issue of trade.

[Gareth Thomas]

Q Thank you for that opening answer, Ms Monks. On procurement, the Government have sold us the idea that there will £10 billion in new procurement opportunities from the Governments of Australia and just under £800 million or so in new opportunities from Government contracting in New Zealand. Do you think that there will be a huge rush from the British small business sector to take advantage of those opportunities?

Lucy Monks: I think the rush will come as far as people are able to be encouraged into those markets. Again, it is useful progress, but it is the implementation that matters. Small businesses have problems accessing public procurement in the UK as it stands, because they find it technically difficult. They obviously do not have the ability to take the same kind of risks as larger businesses. They might not have the technical departments, lawyers or whoever might support them through that process. That is in the UK, which means that small and medium-sized enterprises are basically underserved in the UK procurement processes as well. Those issues need to be addressed if we are to get UK small businesses into Australia and New Zealand as well.

First, SMEs have to understand the opportunities, which have to be made as clear as possible. The scope of the Bill and of the FTA makes it clear that measures have to be put in place to open up transparency, so that small businesses are more aware of the opportunities in front of them, but we have to wait for those things to happen to know how successful they will be.

I am cautiously optimistic. There are small businesses that are working very successfully, but obviously public procurement is just one part of the regime. There are construction businesses, architects and engineers working very successfully to deliver public projects in both Australia and New Zealand, usually because they have a particularly niche skillset that they can provide to those markets—for example, they are experts in delivering railway stations or bridges, with a particular set of expertise that those countries might not have the skills base for. It is about enabling a bigger basis of those businesses to take advantages of potential opportunities and to understand them.

[Gareth Thomas]

Q I was going to ask whether anyone from the Department for International Trade, straight after the Australian or New Zealand FTA was signed, said, “Okay, we need to sit down with you, Federation of Small Businesses, to work out together how we maximise the opportunities for British businesses.” Have you had those conversations?

Lucy Monks: We have, yes—

[Gareth Thomas]

Or has a unit in the Department for International Trade been set up to support you?

Lucy Monks: We are having those conversations. I think there is more focus on it, because International Trade Week is coming up soon. The Department for International Trade has been talking to us and other bodies about encouraging opportunities. It is an ongoing process, because the Australia and New Zealand deals are very new in the context of the UK, so it has to be an ongoing process in which businesses are also able to feed back and to say, “This is working”, or, “That isn’t working.” There has to be a degree of flexibility, because we do not want to be landed with a product that essentially does not improve with time. But the Department is talking to us lots.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Q Thank you, Lucy, for coming here in person and enabling us to keep going. What is the view of the FSB of the fact that implementing legislation is being introduced for the New Zealand free trade agreement before Parliament has had an opportunity to debate the agreement under the Constitutional Reform and Governance Act or CRaG provisions?

Lucy Monks: If it is a matter of process for Parliament, I guess you will have discussions with relevant Ministers about your concerns about scrutiny. There is always a point at which it is useful for us to be able to be part of those conversations. The more information that is available to us and the public, in general, and that we are able to feed into, the better.

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[Lloyd Russell-Moyle]

Thank you.

[Gareth Thomas]

Q I am sure that the three of you have had as much difficulty as I have had in keeping up with the ministerial changes in the Department for International Trade in recent months. One former Exports Minister said that he was unhappy with the level of support given to British exporters by the Department; do you share that assessment, or do you think he was just upset about something else when he made those comments?

Lucy Monks: Basically there needs to be more done to help businesses—especially small businesses—export. There is so much potential with the kind of businesses we have in this country and the kind of markets that might be able to open up to us. We are entering into a new world. We have had conversations with the Department for International Trade over the export support service, which is meant to cover the EU and basically help businesses find their way through the new relationship. Has that worked as well as it could have done? Has it been as targeted as it could have been in the level of support? Not really, but the Department has promised and is in the process of introducing a new system that is supposed to address some of the concerns we have levelled, such as providing detailed information in a way that is accessible to small businesses, rather than just pointing to bits of the Government website, which is what was happening before.

We need to keep working in the direction we are talking about and trying to improve the availability of those kinds of services, while also looking at, for example, new ways of working with the FSB or DIT to encourage more people to understand and to export. We would be happy if that were to continue. There are so many different things that will have to happen to encourage businesses, and especially small businesses, to think about exporting if they are not doing it already, or to export into new markets if they are unfamiliar with exporting to Australia and New Zealand, because the cost and the risk can potentially be so high. We all need to work together to ensure that that can take place.

[Gareth Thomas]

Q Can you flesh that out? It sounds like you think the regime is not very good at the moment. You said that the export support service was just pointing people to a website, and you implied that businesses face a lot of difficulties that are not being picked up and addressed by Government.

Lucy Monks: I am the head of international affairs at the FSB, so I always think that more could be done to help exporters enter into new markets. I do not want to take up the Committee’s time by running through a list of things, because there are so many things—for example, helping businesses mitigate some of the financial risks that they might face, because there are broader benefits to the UK economy if we can get those businesses into those new markets in the first place; providing the right kind of information; encouraging larger businesses to bring smaller businesses along with them; and doing more to allow for market access support. There is so much more that can be done, and we want to ensure that it will be done. If you want to have another conversation about all those things, I would be thrilled to have that conversation with you and with colleagues in DIT.

[The Chair]

May I remind the Committee to make sure that questions are within the scope of the Bill?

[Gareth Thomas]

Q Thank you for getting me back on the straight and narrow, Mr Twigg. In terms of mitigating the risk, one of our later witnesses, Professor Sanchez-Graells, suggested in evidence to the International Trade Committee that there were likely to be some additional legal risks for businesses trying to win Government contracts in Australia and New Zealand. Is that the type of risk that you worry about or not?

Lucy Monks: It is not the only type of risk, but it is a very clear risk—again, especially for smaller businesses that do not necessarily have the experience or the access to the legal departments and trade departments that larger businesses have. The points he raised need to be looked at and addressed for the sake of legal clarity, because he brings up some interesting points.

[Gareth Thomas]

I wonder if Mr Bain or Mr Burwell have a view.

William Bain: In terms of the question about the export capacity of these two trade agreements, we would see the case for a refresh of the export strategy. We think that some elements of it have worked well, so it is a case of examining and rocket-boosting those but also leveraging what business groups and other trade bodies do collectively, in terms of turning what are otherwise dry legal texts into growth-generating instruments for our export companies. In the chambers network we have particular strengths in trade promotion and trade facilitation. We are doing the paperwork that makes international trade happen.

In the other business groups and trade bodies, we all have expertise that can be leveraged with what the DIT is providing, to ensure that we get more exports from agreements such as the two that we are considering today. It is more of a refresh than to discard the export strategy. That seems to us to be the best way forward with both these agreements.

Andy Burwell: I will jump in off the back of that. Thank you for the question, Mr Thomas. I am probably going to have a slightly more positive tone than Lucy and William. The export strategy did take a step forward. The 12-point plan was broadly welcomed by business. If we look ahead for these two agreements and put them in the context of these two free trade agreements, as William said, to a degree it is about utilisation. It is about how industry and Government can work together to really push that utilisation. Due to covid and other reasons, we have had a dearth of trade missions and support from Government for trade missions. There now needs to be a really concerted effort to get out, shout about the UK and excellent goods and services and get British business thinking about travelling overseas.

Under the Trade Act 2021, His Majesty’s Revenue and Customs has an excellent dataset of British exports, which at the moment the Department does not leverage as it could or should. Giving the Department the ability to use that alongside business groups, as part of the approach to encouraging and promoting exports, would be a real opportunity for the Department and industry.

The final point I would make is the importance of continued work between industry and Governments on market access. The issues do not stop at the signing of an FTA and its ratification. There needs to be continual discussion between Departments in the UK and in post about market access issues and non-tariff barriers that we can work on together to further the opportunity for growth.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Q I wonder if I can push you, Mr Burwell. The CBI represents some of the biggest businesses in Britain that export to Australia and New Zealand. You will be aware of the evidence given to the International Trade Committee by Professor Sanchez-Graells, suggesting that there were some serious risks of regulatory chill—I think that is the phrase he used—from the remedies available to business if contracts, as they perceived it, were unfairly tendered and put them at risk. Those remedies are not available in quite the same way as they are in the European Union or in other jurisdictions. Do you share that concern, or do you think he is exaggerating?

Andy Burwell: From his perspective, from a technical point of view it is accurate, but it all depends on how the new access is used and what the experience will be. I think we will have to wait and see whether those concerns come to the fore. It is hard for me to judge right now whether they are correct.

[Gareth Thomas]

Q Just to push you a little further, if I may, presumably you are enthusiasts for the WTO government procurement agreement. He appeared to be saying—we will have the chance to push him further on this in the evidence he gives this afternoon—that the UK-Australia FTA appears to undermine the GPA and that the comprehensive and progressive agreement for trans-pacific partnership, which potentially will succeed the piece of legislation that we are debating, will also undermine the GPA. Would that be of concern to the CBI, or are you fairly relaxed about it?

Andy Burwell: The professor will be much more the procurement expert than me. Speaking to members about these two agreements specifically and whether they had any concerns about the Procurement Bill and its powers, in the grand context of the changes that the Procurement Bill is making and the reforms within it, in a way these pale into insignificance. They are very minor in the grand context of that Bill. In broad terms, our members felt that they would be positive for industry.

[The Chair]

If there are no further questions, I thank the witnesses for their evidence. We will move on to the next witness.

Examination of Witness

Leo Verity gave evidence.

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[Drew Hendry]

Q Do you think that has led to a deficit in the ability of organisations such as yourselves and others to communicate with MPs to ensure that issues are raised in a timely manner and through a proper process, so that people can see publicly the scrutiny of such an important piece of legislation?

Leo Verity: I think so, yes. In truth, I think that awareness of the ratification process for Australia among not only the public but parliamentarians was extremely low, given the way it was snuck through, really, before the summer recess without meaningful notice of when it would be coming. I have seen that the new Secretary of State has made a commitment that for future agreements there will be at least 10 sitting days between the Government’s final report on trade agreements—the section 42 report—and the triggering of CRaG. That is less than the ITC requested—they wanted it to be a 15-day period—but at least it is some kind of structure that we can work by, so there is something about how these processes are supposed to work. But given that we saw that the CRaG process for Australia was so unfit for purpose, I certainly think it needs reform for future agreements.

[Gareth Thomas]

Q Just to pursue that area of questioning, we hope to table amendments that will improve the scrutiny of what comes out of the Bill. Talk us through what you understand about the way that both Australia and New Zealand, or other jurisdictions, scrutinise their free trade agreements, which might be an improvement on the process we currently have here in the UK.

Leo Verity: In terms of Australia and New Zealand, I know that in Australia the treaty is in front of joint committees that are constituted to properly scrutinise the agreement line by line, which is certainly more thorough than what we have. I think that is a relevant point about the Australia timeline. It is another question about why CRaG was rushed through for the Australia agreement prior to the summer recess, given that in Australia the treaty is done in front of a committee and then the implementing legislation will come forward, so there was certainly no rush for that happen.

In terms of other scrutiny processes to learn from, it is worth pointing to places such as America and the European Union, where there seem to be more meaningful scrutiny opportunities throughout the whole process of negotiation. For example, in America negotiating objectives come before Congress; that would be something that we would really welcome. As it stands, Parliament has no opportunity to debate the negotiating objectives that negotiators take forward. There are also more meaningful opportunities for legislators to see texts during negotiations; again, at the moment, parliamentarians do not see negotiating texts at any stage of the process. We would argue that it would be beneficial for the International Trade Committee to at least have a view of the negotiating text during the process. Finally, there will be guaranteed votes and debates on the content of trade agreements after signature; that is the big omission that we saw with the Australia CRaG process. The International Agreements Committee was debated in the Lords, but the International Trade Committee and the Liaison Committee pushed extremely hard for an opportunity to debate the Australia agreement, which was not forthcoming. In the end, an MP tabling an urgent question provided the only opportunity to debate the agreement, but there was still no vote on its content, which is something that happens elsewhere.

Finally, and linked to that, CRaG allows for parliamentarians, in lieu of a vote, to pass a motion against resolution. There is no opportunity to amend the text or anything like that. Even that motion, as I understand it, would just delay ratification rather than resolve against it. Given that there is no precedent, it is not completely clear what form that motion would have to take for parliamentarians, so it seems that ultimately there is no meaningful way for parliamentarians to express dissatisfaction with the trade agreements that our negotiators are coming back with. I think that is a problem.

[The Chair]

Can I remind everybody to stick to the scope of the Bill? A lot of the debate is very relevant, but please keep that in mind, in both asking questions and answering them.

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[The Chair]

Order. Sorry, Mr Southworth. This is very useful information and we are very grateful, but we need to move on to questions. I will ask Gareth Thomas to start the questioning, and I am sure you can add what you need to add at that point.

[Gareth Thomas]

Q You have helpfully touched on CPTPP, which is obviously going to supersede the Australia and New Zealand FTAs. Do you have any concerns that the CPTPP might take away things in the Australia and New Zealand FTAs that are good and should therefore stay on the statute book? Or will the CPTPP just allow us to get closer to the Singapore digital agreement vision that you just described?

Chris Southworth: Others may have comments on that. I am looking at this through the lens of the digitalisation of trade, and I do not think there is any conflict there at all. I think the two things are quite complementary, so we are not concerned by that. There has been no discussion raising those sorts of concerns in any of the networks we are involved in. I hope that answers your question.

[Gareth Thomas]

Q Okay. Let me pick up another area. Do you see the Australia and New Zealand FTAs as offering lots of scope for small businesses, or are they to win Government contracts, or are they more likely to be for much bigger businesses to take advantage of?

Chris Southworth: I think we would all hope that it is opening up opportunities for everybody. SMEs are obviously crucial. It is great to have the big companies using these deals, but ultimately most traders are SMEs, and those are either operating within supply chains or operating independently. I hope that small companies across the UK look at this as a great opportunity to increase their trade with another part of the world—Australia and New Zealand in this context.

[Gareth Thomas]

Q One of the former Ministers at the Department for International Trade suggested that the Department was not doing enough to help SMEs to export. Do you share that judgment or is everything rosy?

Chris Southworth: I would not say it is rosy. You only have to look at the trade figures to see that. There is a range of issues here. If you look at it in the context of digitalisation of trade, it is not as simple as just putting an agreement in place and then expecting it all to happen, which is exactly why we have created the Centre for Digital Trade and Innovation. We need to help industry understand what systems and processes they can use to make trade simpler, cheaper and faster. That is the big opportunity in terms of digitalisation, and that has to be a joint effort. The Government are doing a stellar job in that area. In fact, we are leading in the world on that. Lots of other countries are looking at what we are doing. So there is no issue there in my view.

If there is an issue, a question that I would pose is around the practical model of export support. We are the only big nation that delivers B2B support through Government. Every other major exporting economy works in partnership with the likes of chambers of commerce. This is a great point to reflect on whether we have the right model or whether we could be leveraging the private sector far better. I would argue, having been in government myself, in what used to be UKTI, and looked at exactly these issues, that you do not have to spend very long with other countries—Japan, France, Germany or anywhere else—to see that if Government can streamline and really focus where it adds value, which is more in Government-to-Government negotiations, Government-to-business on the big strategic opportunities where the Government are required, and then in partnership with business on the B2B support, that works exceptionally well. It is very efficient. You can mobilise whole value chains into markets on a whole different level than we can in the UK. That is a huge opportunity and is something that should be reflected upon and debated—whether we have got the right model or whether we can do that in a better way.

[The Chair]

It is important that we keep within the scope of the Bill.

[Gareth Thomas]

Q Thank you, Mr Twigg. Mr Southworth, we are obviously interested in the extent to which the Government are going to provide support to businesses to export to Australia and New Zealand. We have been struck by the decision, which you allude to, to take money away from the British Chambers of Commerce to help businesses export to Australia, New Zealand and elsewhere. If we are lucky enough, I hope to table an amendment to allow more debate on that issue. Are you absolutely clear in your mind that it was the wrong decision by the Government to take that money away a year ago, or do you think there were good reasons to do so?

Chris Southworth: Like I say, I have been around this particular discussion for many years now, both in government and outside government. I personally think it was the wrong call. I think we can do it better. There are lessons to learn from others—particularly the Japanese model. The Japanese chamber of commerce operates like we do, with a voluntary membership model, but it has legislation that provides legal certainty, meaning that it can drive in investment over the long term. That is what we too need to do in the private sector, to make sure we have the right capabilities. It has a really effective relationship with METI, its DIT equivalent.

I personally think we can do this better, and we can do it more efficiently. Ultimately, trade is a business activity. Governments do not trade; businesses do. When a company picks up the phone and asks for advice, it wants business advice from people who do this stuff day in, day out, and it wants proper advice quickly on what to do and what not to do. That is a far more efficient way of doing that B2B piece than it is coming from Government, where you are naturally restricted. On top of that, you are constantly chopping and changing with contracts and different approaches. All that does is create more and more uncertainty, and you cannot build for the long term. We need to build for the long term. There is a big opportunity to do this much better, and I would strongly argue that that has definitely got to be the way forward, but it needs more debate from all those involved.

[The Chair]

Can I remind you again that, in both questions and answers, we must stick to the Bill and not debate the wider policy?

[Gareth Thomas]

Q Absolutely—thank you, Mr Twigg.

One of our later witnesses is a gentleman called Professor Sanchez-Graells, who gave evidence to the International Trade Committee on some of the legal issues relating to remedies for businesses that feel they have been unfairly treated in a tendering process. If I have understood his evidence correctly, he argues that the remedies available under the UK-Australia FTA are worse for businesses that have been treated unfairly than those available under deals we have done with similar countries, such as the EU and New Zealand. As a result, there might be regulatory chill—it might put businesses off bidding for Government contracts in Australia. Is that something that you worry about? If his evidence suggests that there is a serious issue, do you think the Government would need to address it quickly?

Chris Southworth: To be honest, I would defer to others to advise on that. Obviously, the trade remedies framework is very important, for all the reasons you have just set out, but I am not in a position to comment as it is not a space that we are focused on. Others are much more into that space than we are and would be better placed to advise on it.

[The Chair]

If there are no further questions, I thank the witness for his evidence.

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[The Chair]

In this session. There are a number of evidence sessions.

John Cooke: Thank you very much. I am John Cooke. I am a consultant with TheCityUK, and I co-chair an expert advisory group at TheCityUK on liberalisation of trade in services.

[Gareth Thomas]

Q Thank you, Mr Cooke, for being willing to give evidence to us, and congratulations on being one of the great survivors of the trade policy world, at least in the UK. Do you think the deals with Australia and New Zealand are as wonderful as the Government would have us believe? Could they have been improved in any way, shape or form?

[The Chair]

In respect of the Bill—we are talking about the Bill.

[Gareth Thomas]

Yes, in respect of the Bill.

John Cooke: One has to remember about the agreements with Australia and New Zealand that, as far as services are concerned—that is my particular area, and financial and professional services within that—they are agreements with trading partners that already had pretty liberal regimes, so there was only a limited amount extra that could be achieved in the agreements. All the same, they are useful agreements to have, and in particular they have provisions in them on regulatory co-operation that provide frameworks for building further points in the future into the relationship between the United Kingdom and the two countries.

[Gareth Thomas]

Q The legislation that we are debating is likely to be superseded by both the Procurement Bill, if it comes into force, and by the CPTPP. Beyond acting as a stepping stone to the CPTPP, is there any residual value to the Australia and New Zealand FTAs in themselves, or is their value purely that they are a way to prepare Britain for the CPTPP?

John Cooke: I think they have value in themselves, certainly on public procurement and Government procurement. The view we have always taken on financial and professional services is that while Government procurement is often thought of in terms of procurement of goods, such as medical supplies and so on, the UK sector in these areas is very keen that it should be absolutely explicit that Government procurement also applies to services.

We look at this globally, not just in relation to Australia and New Zealand. The example I would give is that if, say, a country has a pensions regime that is provided by the state but also has a private sector pillar for extra investment, we would want to be quite sure that that private sector pillar is open to bidding and tendering by UK financial product suppliers. Sometimes there is a tendency in that sort of thing for a Government to feel, “Well, as the pension provision is in the main a state pension that is Government controlled, any private sector pillar should also be somehow confined to the country concerned.” We are very keen to remove any such assumption and make sure there is open competition, so—[Interruption.]

[The Chair]

We have lost the witness, so I will suspend the session until—hopefully—we get Mr Cooke back.

--- Later in debate ---

[The Chair]

I think you were halfway through an answer, or coming to the end of it. Do you want us to move on to the next question?

John Cooke: I do not know at what point I was cut off exactly. The point I was making was that Government procurement is commonly associated with supplies of goods, but we in services, and in financial services in particular, are keen that, where the Government are commissioning the private sector, for example, to provide a private sector pillar of pension provision, UK financial services providers should be in a position to bid for that; it should not be confined just to financial services within the country concerned, or to nationals of the country concerned. That was the point that I was making. We value the public—Government—procurement provisions for their own sake, as well as for whether they prove to be a stepping stone to CPTPP membership.

[Gareth Thomas]

Q A former Exports Minister in the Department for International Trade said that the Government were not doing enough to help exporters. Is that a view you share, or was he just upset about something else?

John Cooke: I am not familiar with that particular comment. I think it depends very much on the context of an observation like that. For us in financial and professional services, we look for particular kinds of help. On the whole, when dealing with financial businesses —with very big businesses—they might need a certain amount of door-opening help from missions abroad, which I think they get. I do not think that we have expressed any discontentment about that. The question may be much more open for smaller businesses, where the Government might be in a position to do much more by way of helping them in particular markets. The other kind of help that is of course very important for all exporters is the implementation of a trade agreement. The making of a trade agreement is not an end in itself; its implementation needs to be carried through. Where the other party might not implement it fully, that needs to be attended to actively.

[Gareth Thomas]

Q As I understand it, one of the key concerns for businesses bidding for Government contracts overseas or domestically—often when they have to invest huge amounts of money in putting a bid together—is that they have confidence that, if they think they have been treated unfairly, remedies are available to them to get the tendering process suspended or compensation for the way in which the process has played out. It is likely to be put to us—it was certainly put to the Select Committee by Professor Sanchez-Graells, an expert in Government procurement—that the UK- Australia FTA includes measures that reduce the remedies available to businesses bidding for Government contracts. Would that be a concern for any of your members, or is it something you are not familiar with?

John Cooke: It is not a point that I have been made aware of, frankly. I will gladly make inquiries and, if appropriate, submit some written evidence to the Committee, but it is not something that has been brought to my attention.

[Gareth Thomas]

Fair enough. Thank you very much, Mr Cooke.

[The Chair]

As there are no further questions from Members, I thank the witness for his evidence.

Ordered, That further consideration be now adjourned. —(Mark Jenkinson.)

Trade (Australia and New Zealand) Bill (Second sitting)

Gareth Thomas Excerpts

Committee stage
Wednesday 12th October 2022 Public Bill Committees

[The Chair]

We are now sitting in public and the proceedings are being broadcast. We will now hear oral evidence from Sophie Jones, director of public affairs at the British Phonographic Industry, appearing via Zoom. We have until 2.15 pm for this session. Please will the witness introduce herself for the record?

Sophie Jones: Good afternoon. My name is Sophie Jones. I am director of public affairs at the BPI, representing UK record labels.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Q35 Thank you, Ms Jones, for joining us to give evidence. There was a sense that the Government were in a rush to get the Australia free trade agreement, and to a lesser extent the New Zealand free trade agreement, signed. If they had not been in such a rush, how might they have improved on the deals that they agreed?

Sophie Jones: I do not know how much. It did feel like something of a rush, but while some relatively modest progress was made, we welcome a number of strong improvements. I think you are referring particularly to Australia, but that was to New Zealand as well. Some of the things we were most interested to see, particularly around the Australian system of placing broadcast caps on the royalties that can be paid through to music rights holders, artists and musicians, is a commitment to make progress on those matters through ongoing dialogue, rather than firm commitments within the trade agreement itself. Perhaps that, as a significant focus and priority for us, with more time might have been able to make even more progress than the bilateral discussion approach that is being taken. While very welcome, that is perhaps an area that might have been given a firmer commitment.

The commitment is important because currently, in effect, the music industry provides a cross-subsidy to the broadcast sector, so that when musicians have their music played on broadcast channels in Australia, the amount of royalties paid is significantly capped at 1% of the gross revenue from the broadcaster. It is a significant policy area, and we hope to see progress made on that so that artists both in Australia and the UK can see the benefits of it flowing through.

[Gareth Thomas]

Q One of the issues that we hope to explore in Committee is the extent to which the commitments that have been made under the free trade agreement, in particular those under the procurement chapter of the Bill, can be translated into actual export orders. I am sure you will be aware of the comments of the former Exports Minister, who lamented that his own Department was not doing enough to help British exporters. It was the comments that were made in July. What else could the Department for International Trade do to support exporters in your industry, in particular those exporting to Australia and New Zealand?

Sophie Jones: The trade agreements themselves are significant in opening up markets to exporters, such as ourselves. British music is a phenomenal export success. In recorded music, we have seen our export revenues grow steadily year after year. That is partly due to the strength of the UK music sector and partly to do with the phenomenal talent we have here in this cultural capital, as well as the soft power of our music throughout the world. Outside of free trade agreements, we seek to—it is the example I just gave—bring countries more into line with the UK’s gold-standard IP framework and ensure that the value of the music we are creating is fairly recognised.

There are other parallel, accompanying schemes that we think could be more bold and ambitious. For example, we run something called the music export growth scheme with the Department for International Trade and the Department for Digital, Culture, Media and Sport. That provides a really important foothold for British artists—independent artists in particular—when exporting into those territories.

We think there should be bigger, more ambitious support for that scheme, particularly with the rise of streaming, to enable access into markets such as those of Australia and New Zealand, which are really important touring markets but of course very far away, expensive and difficult to get to. The opportunities opened up by the rise of digital streaming mean that British artists have more access into those markets to generate export revenue and engage with fans, but smaller independent companies and artists need extra help to do that.

There is a huge growth opportunity there. We think that recorded music exports are set to double in the next two years, and by the end of this decade they will be at more than £1 billion a year. We need initiatives such as that and investment that helps bridge some of the gap in marketing, so that we can promote into those territories more than we ever have done before.

[Gareth Thomas]

Q I just want to push you on the extra help in particular for small and medium-sized businesses to exploit the opportunities that you were telling us are there in the Australia and New Zealand markets. Just exactly what sort of additional support to a small business would you think is necessary? We are obviously particularly interested in procurement, but I would be interested in your view.

Sophie Jones: If you are an SME or an independent artist, there is a cost of either going to tour in that territory or market yourself in that territory, particularly in a streaming-led environment where competition is so fierce and you are competing against the whole catalogue of music on streaming platforms. The music export growth scheme that we run provides grants that help support that kind of marketing, promotional and touring activity in a way that companies and artists at that scale in the market struggle to be able to meet. It is an investment injection to help bridge that gap.

The scheme is really successful. It generates £13 back for every £1 that is put in through the Government partnership. We see it very much as a valuable, even necessary, scheme to enable that export activity to happen for those who are at the earlier stages of their career development.

[The Chair]

If there are no further questions from Members, I will thank the witness for her evidence. We will now move on to the next panel. Thank you, Ms Jones.

Examination of Witnesses

Jonnie Hall, Donald MacKinnon, Gareth Parry and Nick von Westenholz gave evidence.

--- Later in debate ---

[Chair]

Excellent. You confirm your experience and political agility.

Nick von Westenholz: I touched on it earlier: much as we might want to say, “We can amend the hell out of the primary legislation in order to amend the FTA,” that will not happen, and I also do not think that would be right. The FTA has been negotiated by the UK Government’s negotiators, and what they have come back with has been agreed with Australia and New Zealand. Trying to change the details of it through primary legislation would simply mean opening up the negotiations again; we would have to go back and renegotiate.

I might think that there are elements of the FTA that need renegotiating, but the way to do that is to have much more transparency and scrutiny throughout the negotiation process. As I said earlier, that was agreed in the exchange of letters between the International Agreements Committee and the Government. The Government committed to sharing their objectives before negotiations opened, to sharing updates throughout the negotiations with Parliament, and to providing for a debate on an amendable motion at the end of the process. If the Government do that, one could be pretty assured that the negotiations would end up with a result that is more palatable to a whole range of UK stakeholders. That did not happen in this case, and that is why there has been serious disquiet, particularly in the farming sector, about the deals.

Gareth Parry: Ever since the trade deals were mooted, we have been calling for a level playing field when our producers are in competition, or even greater competition, with producers in Australia and New Zealand. We could be here for hours discussing differences in production methods and standards between the countries, but my understanding is that there is no provision in the trade deals that would allow us to influence how those countries produce food and vice versa. From my understanding, that is why quotas and tariffs are used in trading across the world. If we are not allowed to influence how food is produced in another country, we use quotas and tariffs to create that level playing field. As Nick said, perhaps they cannot be incorporated to negotiate the current FTAs, but they definitely need to be considered when future trade deals come down the line.

Jonnie Hall: I thought the issues of concern were articulated very well in the first question. If they are the issues of concern, it strikes me as being a bit odd that they would be dealt with in legislation on Government procurement, rather than in the original process governing the trade agreements. I guess I am echoing what has been said by Nick and Gareth.

[Gareth Thomas]

Q The Trade and Agriculture Commission has come up in this conversation a number of times. I hope to explore its role, and possible future role in procurement, in line-by-line scrutiny next week. Could the witnesses describe what they see as the commission’s strength, and what could be done to make it stronger still as a force for scrutinising FTAs?

Nick von Westenholz: As I said, I sit on the Trade and Agriculture Commission, but maybe it would be right to say that I am making my comments as a representative of the NFU. Obviously, my role on the commission is as required and set out by the Secretary of State, who asks us to do what she would like us to do and says what she would like us to look at. We do that job as requested, essentially.

From the NFU’s perspective, I think the strength, or role, of the Trade and Agriculture Commission is as strong or as weak as the parliamentary scrutiny process around it. We look very closely, in considerable depth, at the standards aspects of trade deals, and we have produced two reports that go into some depth on that. The value of that is in providing parliamentarians with as much information as possible, so that they can assess the strengths and weaknesses of the FTA. Obviously, that goes alongside the broader assessments that Select Committees in both Houses make. We hope that, armed with that information, parliamentarians can then an informed decision as to whether they like an FTA or not. If parliamentarians, as I mentioned earlier, are not given the opportunity to vote on that, or even to debate it during the CRaG process, that clearly seriously undermines the effectiveness of any assessments, whether from the Trade and Agriculture Commission, Select Committees or, indeed, anything else. The scrutiny process and the role of Parliament in this is vital.

We still are using the CRaG process as the main process. As I say, I do not think that it has been used at all well in this situation, but that is what we have. That process was designed while we were a member of the EU, and really it did not envisage that free trade agreements like these would be subject to the process; it was for international treaties covering many other sorts of things. It seems to me pretty obvious that, having left the EU more than six years ago, we should design a parliamentary process, in statute, that actually deals with the fact that we are an independent trading nation doing these very important and often in-depth free trade agreements. The current situation is not designed to do that, and that is being shown up already in the Australian FTA.

Jonnie Hall: I completely endorse what Nick says. The Trade and Agriculture Commission was set up with the best intentions, and gave the agricultural industry and probably the whole agrifood sector a bit of encouragement that proper scrutiny would take place as trade deals were being negotiated. That was enhanced even further in November 2020, when the UK Government said that the commission would be placed on a full strategy footing, to ensure that the voices of farmers, growers, those in the supply chain and environmental, animal health and welfare groups could be heard while the UK Government were securing trade deals.

However, in March 2021, the terms of reference were published by the UK Government, and they stated that TAC would scrutinise free trade agreements once they were signed. That takes the whole point of the commission away from under its feet in many ways. It would work well, was effective and, I think, did perform a useful function—as Nick says, in informing parliamentarians, more than anything else. It has now been somewhat sterilised in some ways. We still need some sort of body to function in that way.

[The Chair]

The shadow Minister wants to come back.

[Gareth Thomas]

Q My last question is this. The Government have sold the benefits of the two FTAs as partly being about the huge, new, billion pounds-worth of Government procurement options that will be available. Do you think that that is one of the reasons why farming has been thrown under the bus? Was it that the opportunities in other sectors, such as Government procurement, were so good that they could afford to give so much away to the Australians? Or were there other reasons—inexperience, worries about Brexit and so on—why farming came off so badly?

Nick von Westenholz: I would not want to give a long answer; we all have opinions on what happened with the negotiations. I would just say that if you are doing a trade deal with a country such as Australia or New Zealand—countries that are, particularly when it comes to goods, already almost totally liberalised, and are very big and effective agricultural exporters—agriculture in the UK will probably be the main sector to come under pressure as a result. If you wanted to do a deal, and particularly if you wanted to do it quickly, and wanted it to be liberalising, as was the Government’s intention, I am not sure that you could do it in any way that did not at least have the potential to have a negative impact on UK agriculture, though none of us knows exactly what the outcome of the deals will be in the next few years.

Jonnie Hall: If you look at modern trade deals—deals in the last 20-plus years—agriculture has often been the sacrificial lamb in those trade negotiations, no pun intended, so the expression, “being thrown under the bus”, resonates quite clearly with the agrifood sector. In modern-day economies, it is in digital, tech, manufacturing and finance that great gains are to be made. We are the primary producers of a primary product; when it comes to overall value, agriculture and food products will be relegated to the tail end of a trade agreement between modern economies. If you ask other sectors of the economy, they will probably think that the agreements that have been signed are very much in their interests and create opportunity. We tend to see them in another way.

Gareth Parry: I wanted to answer the question on the Trade and Agricultural Commission. Forgive me, but I am not 100% sure of the full list of TAC members; however, we have long had the policy that representation on the commission needs to reflect the potential impacts on the agriculture and food sectors across the UK. I emphasise the need for good representation of all nations. I fully agree with what Nick and Jonnie said about the effectiveness of the TAC. As was said, it is no secret that the agricultural sectors in both the countries that we are talking about are huge. There will always be winners and losers in these types of liberalised trade deals, and unfortunately, as we can see from the impact assessments, agriculture is predicted to be one of the sectors that is a significant loser from these deals.

[Dr Kieran Mullan (Crewe and Nantwich) (Con)]

Q To help me understand better how our arrangements compare to those of others, can you say how much scrutiny you feel MPs had of procurement arrangements when we were in the EU, as compared to now, under our independent approach?

Nick von Westenholz: When we were a member of the EU, all trade agreements by the EU were scrutinised directly by Committees of Parliament. There was, through that process, a good degree of parliamentary scrutiny. At that time, Parliament retained a theoretical ability to either accept or reject all regulations stemming from the EU. A lot of people might argue that the power was exercised rarely, if ever, and that played greatly into the debate on our membership of the EU, but certainly formerly Parliament had a greater ability to oppose trade deals.

--- Later in debate ---

[The Chair]

Professor Albert Sanchez-Graells is professor of economic law and co-director of the centre for global law and innovation at the University of Bristol law school. He is appearing via Zoom, and this session will end at 3. 25 pm. For the record, could you please introduce yourself, professor? Thank you, sir.

Professor Sanchez-Graells: Good afternoon. Thank you for the opportunity. I am Albert Sanchez-Graells and, as you said, I am a professor of economic law at the University of Bristol.

[Gareth Thomas]

Q Thank you very much for being willing to give evidence to us. In the evidence that you gave to the Select Committee on International Trade and the International Agreements Committee in the Lords, as well as some media commentary, I understand that you suggested that the procurement chapters of the Australia deal in particular deviate from the Government procurement agreement. Potentially, there are some aspects of deviation that will undermine the Government procurement arrangement and create legal uncertainty for businesses, and therefore potentially some regulatory chill that might discourage businesses from bidding for Government procurement contracts. Is that right? Could you explain your thinking in a bit more detail?

Professor Sanchez-Graells: Yes, that is correct. Thank you for the opportunity to expand on those ideas. Basically, the starting position is that both the UK and Australia, as well as New Zealand, are members of the World Trade Organisation plurilateral Agreement on Government Procurement. That means that free trade restrictions are already bound by a standard of rules with which they comply, and then they have bilateral agreements on market access. You would have expected that if the UK and Australia wanted to deepen that market access, or the UK and New Zealand wanted to do so, they would do it by adding to the annexes of the GPA, basically by keeping the rules as they are, but accepting that this or that market at national or sub-national level is also open to the tenders of the other jurisdiction. By the way, that is the approach that has been followed in the EU-UK trade and co-operation agreement, basically because that is a clean legal approach. We agree on the rules, we just negotiate on market access.

The difficulties with the chapters in the UK-Australia agreement in particular, and to some extent in the UK-New Zealand agreement, is that they have not done that. They have copied the rules of the GPA and then tweaked them. In those tweaks, there are problematic changes. I have identified two main areas of problem: one is the national treatment rules on access to markets, which applies in particular to suppliers in different jurisdictions, and the other is access to remedies. The access to remedies is the one that worries me because under the chapter with Australia, not the one with New Zealand, there is a clause that allows for the exclusion of legal remedies completely on the basis of public interest. That means that, for example, for very high-profile projects, or very high value, the courts might just set aside any claims for a suspension of the procedure or even for the compensation of damages to admit that there has been a loss to be excluded on the grounds that that is not in the national interest. It is a very open-ended clause. I think that this will make tenderers from Australia, in particular, think twice about tendering in the UK now, when they could basically be mistreated or even illegally excluded from tenders and then not have access to legal redress.

I think that that can be problematic. What is also problematic is that of course it plays both ways. If I am a UK small or medium-sized enterprise and I have to decide whether to invest my limited time and resources in bidding for a contract in Australia or bidding for a contract in, for example, the European Union, I know that, in the European Union, my interests are protected to GPA-plus standards, whereas under the FTA, in Australia, my interests are protected to GPA-minus standards, so I would probably refrain from bidding in Australia, which then brings a big question mark to the practical advantages of the enhanced market access that the Government have claimed the chapter will bring.

[Gareth Thomas]

Q That is extremely helpful, professor. I wonder, though, whether you could bring what you have said to life a little more with two examples. Let me give the example of High Speed 2. Obviously it is a big UK national infrastructure project, where clearly we would want competition but we would not want legal problems to delay that investment when it eventually kicked in. Presumably the Melbourne airport link, which the Australian Government authorities are currently tendering for, is also a significant infrastructure project for them and one in which British business might be interested. You have concerns about remedies. Could you describe them in the context of those two big infrastructure projects?

Professor Sanchez-Graells: Thank you; those are good examples to flesh this out. Let us take High Speed 2 as the first example. Let us imagine that for any bit of the construction of the lines or for the supply of the rolling stock, the UK conditions wanted to prioritise UK steel, as is Government policy at the moment. Imagine that an Australian construction company wanted to tender for the contracts, but the steel that it wanted to use for the rails was South Korean steel. In the current conditions, before the FTA enters into effect, the Australians have to be treated equally to a UK company even if they want to use South Korean steel, because South Korea is also a member of the GPA.

What would happen under the FTA is that, because of the specific wording in the provision—I do not want to bore you with the detail—there would be an option for the UK buyer to take a narrow understanding and say, “You are not offering Australian steel and you are not offering British steel, so I no longer have to treat you equally to UK bidders. Therefore I exclude this construction company from the tender.” The construction company probably would want to challenge that, especially because it spent money tendering but also because it is potentially a profitable contract, so it goes to the High Court. Let us say that the High Court dismisses the claim, on the basis that HS2 is already so delayed and so over budget that there is no public interest in looking at this issue. Then the Australian company is left with maybe one final resort option, which is to try to bring an investment protection claim on the basis of that denial. But certainly it seems strange that if the FTA had not entered into effect, the Australian company would have had access—maybe not to suspending the project if the interest is high, but certainly to claim the damages for that unfair treatment of its tender.

The same thing would happen the other way. Let us imagine that an innovative British company that wants to sell low emissions rolling stock for that metro link in Melbourne airport goes and tenders in Australia. It is excluded for any number of reasons and it wants to challenge the decision. It could also be barred from access to remedies in Australia, which means that the UK tenderer has lost its time and probably made a loss on the project. That would generate a very big disincentive for anybody to try to tender in future projects. But also, again, there would be a risk of maybe trying to raise this issue as an investment protection issue. That would basically, in simple terms, open up a trade war between the UK and Australia.

To me, it is counterintuitive that when we are trying to deepen our trade liberalisation on a bilateral basis, we are creating problems that do not exist under the current multilateral basis, where these issues are not allowed.

[Gareth Thomas]

Q To pursue this a bit further, as I understand it from what you are saying, the GPA includes every country that is still in the European Union—the French, the Italians and so on—and if their companies were treated unfairly while bidding for contracts in Australia, they would have better access to remedies than a British company treated in a similarly unfair way. Is that correct?

Professor Sanchez-Graells: Yes, that is absolutely correct. In the tender process that we are imagining for the Melbourne airport rail link, if a French company, a British company and an Australian company was tendering, and the Australian company was preferred, the French would have access to remedies that could not be excluded, at least in terms of claiming for compensation for lost profits, or at the very least for the cost of having bid, but the UK tender could be barred from those remedies. Again, that does not seem like a post-Brexit improvement of the position of UK businesses under these stand-alone free trade agreements.

[Gareth Thomas]

Q As I understand it, these agreements are going to be superseded by, on the one hand, the Procurement Bill coming down the line and, on the other hand, the comprehensive and progressive agreement for trans-Pacific partnership, assuming accession takes place. Will these problems be resolved by the CPTPP, so we do not need particularly to worry about this Bill? Or do they just continue?

Professor Sanchez-Graells: I would make two points on that. First, even if the CPTPP were to resolve these problems, which it will not—I will explain why later—there would always be the problem of how long it takes between these FTAs entering into force and CPTPP basically overturning them. The reason why CPTPP would leave these FTAs without effect is that both Australia and New Zealand are members of CPTPP, and therefore the later international treaty modifies the previous ones. For any tender that started between the entering into force of these FTAs and the entering into force of the UK’s membership of the CPTPP, the rules of these FTAs would apply. So this is not an issue that might be on the books and is then fixed by CPTPP; it could run for years even if CPTPP enters into force.

The second and more important point is that CPTPP is very close to the Australian procurement chapter, which is probably where its inspiration was drawn from. So it would keep the same problems under the Australian chapter and make the problems under the New Zealand chapter worse, because on remedies the New Zealand chapter is aligned with the GPA, but once CPTPP entered into force all single relationships with New Zealand would have the problematic clause that would allow the barring of access to remedies. So CPTPP would not make it better, and in any case we would have to live with the consequences of these FTAs for the period between the entering into force of them both.

[Gareth Thomas]

Q What you appear to have just said is that there are significant differences between the procurement chapter under the Australian FTA and the one under the New Zealand FTA. Is your sense that the Government realised they had made a mistake in terms of remedies under the Australian FTA and therefore improved things under the New Zealand FTA? Or was it just down to good luck that we do not have the same problems in the New Zealand FTA as we have in the Australian FTA?

Professor Sanchez-Graells: Of course, I am not privy to the negotiations, but my impression is that these chapters very much started from the position of the trading partner. I do not think the reason why the New Zealand chapter is different from the Australian chapter has to do with the UK Government learning from mistakes; I think it has to do with different starting positions among the New Zealand negotiators and the Australian negotiators. Australia has the same sort of clause in most of its trade deals, and it also pushed for it under the CPTPP. You may call it luck, but I think we may just call it an effect of the rush in which the deals were negotiated. Effectively, they have made the UK a rule taker, because they have accepted the proposals of the counterparty just to progress negotiations. That is my observation.

[Gareth Thomas]

Q Okay. You touched on the issue of investment protection. I am not experienced enough in procurement to be able to reprise exactly the line you took, but you mentioned the potential scope for action in terms of investment protection. That brings into play the whole issue around investor-state dispute settlements, as I understand it. Could you confirm that, and explain how that might be a problem?

Professor Sanchez-Graells: This would be an issue that would depend on the terms of the investment chapters in the FTAs, and, again, the investment chapters are different under the Australian and New Zealand deals. The New Zealand deal excludes procurement from all of those outstanding obligations of the investment chapters. That would not be a problem in that FTA, but in the Australian investment chapter there is an obligation to provide fair treatments, which includes common customary law on access to justice.

The point I am trying to make without being too complicated is that the Australian company that had bid for HS2 and had been thrown out on the basis that it wanted to use South Korean steel goes to the High Court and sees its action thrown out on the basis of public interest. It could then say, “Okay, I was trying to acquire an investment in the UK. The UK has to give me fair treatment in the process of trying to gain this investment. They have denied me access to remedies. Also, they have denied access to remedies on grounds that they cannot play with other companies that are in a very similar position to me, including other companies that come from GPA countries.” They could make the case of having been discriminated against in not being given access to remedies and make that an investment dispute.

The difficulty in this context is that under the Australian chapter, to the best of my knowledge, and I am not an investment expert, there is no possibility for the Australian company to sue the UK Government. They have to raise the issue with the Australian Government so that they could raise it as a dispute under the agreement with the UK. That is why I think it opens up the problem of potential trade wars. It is not an issue even of relatively secretive arbitrators determining whether the UK has to compensate the Australian company, but it immediately becomes a potentially very high-profile trade issue between the two countries. It is very difficult in that case to foresee how it will end up being resolved. There will be a panel which will also work relatively similarly to an investment arbitration tribunal. If what the panel decides is not implemented, then we can just go to countervailing measures and other types of sanctions. The prospects are not looking good, unless the UK Government at some point decides to settle the dispute to avoid those problems.

There is a long story, starting with the Brexit process, of very expensive settlements for procurement mishaps, for example, with the ferry contracts or with the Nuclear Decommissioning Authority. Potentially, these could be very expensive claims to settle and the terms of those settlements are never very clearly controlled, and the process whereby those settlements are achieved is also not necessarily well scrutinised in time. That opens up all sorts of other issues with how, instead of being dealt with in the courts, the misbehaviour of a procuring entity in the UK ends up becoming a political and potentially very expensive issue.

[Gareth Thomas]

Q The last question I wanted to ask was about the impact assessment, where the Government claimed that there would be an extra £10 billion of procurement opportunities for British business. Given what you have said about the legal uncertainties, do you think that £10 billion is a realistic figure or overstated?

Professor Sanchez-Graells: I always said from the beginning that it is difficult to know how realistic the impact assessment is because the details have not been made public, so we would need to take the Government’s word at face value. It is difficult to see that some of the touted advantages are going to be exploited, because we are talking about high-profile, high-value projects. We know that usually there is always a risk of protectionism, especially in the current circumstances. If I were advising a big company, I would flag the risk that going to Australia means we are basically putting all of our investment at risk because we may not be able to recoup it. I wonder whether that was taken into account in the impact assessment, but I would think not. That £10 billion probably has to be adjusted downwards for that uncertainty, which will make some companies not take advantage of the opportunities.

The other issue that makes me wonder how accurate the impact assessment was relates to the claims that the Government made in some of the documents that tried to promote the advantages of the FTA. For example, they said that there is now a massive improvement in access to financial services contracts because some authorities in Australia are now covered. But those authorities are already covered under GPA, just at the higher value threshold. There is quite a lot of marginal improvement on market access. I would have wanted to see some evidence that UK companies would have been interested in those contracts but were not bidding because they did not have a legal right to bid, which I have not seen anywhere. I think that the £10 billion is a quite theoretical, best-case scenario. I advise caution in assessing that figure.

[Gareth Thomas]

Q Very lastly, as I understand it the £10 billion figure is an Australian estimate anyway, albeit that the UK Government claim that they have checked it out and, remarkably, think it is accurate. Is that fair?

Professor Sanchez-Graells: That is correct; I think that is what the UK impact assessment claims. When the International Agreements Committee raised this issue in the report, the Government’s response did not provide any further details; they simply said that the figure was properly checked. It may be the cynic in me, but when those figures are not put out for public scrutiny, perhaps we naively accepted the benefit suggested by the counterparty.

[The Chair]

If there are no further questions, I thank the witness for his evidence. We will move on to the next panel.

Professor Sanchez-Graells: Thank you for your time.

Examination of Witness

Michael Gasiorek gave evidence.

--- Later in debate ---

[The Chair]

We will now hear evidence from our next witness, Rosa Crawford, policy officer at the TUC, who is appearing via Zoom. Rosa, thank you for being available a little early. We have until five minutes past 4 for this session. May I ask you to introduce yourself, for the record?

Rosa Crawford: I am Rosa Crawford, policy officer lead on trade and Brexit at the Trades Union Congress, the national union centre that represents 48 affiliated unions, and over 5.5 million workers.

[Gareth Thomas]

Q Thank you, Ms Crawford, for being willing to give evidence to the Committee. We are focusing on the procurement chapters of the Bill. The Government have told us that they will offer businesses billions of pounds-worth of new opportunities, and that that is one of the many reasons why these are fantastic trade deals. Do you share that assessment, or could the deals have been improved in any way?

Rosa Crawford: We as trade unions believe that public procurement has the potential to create tens of thousands of jobs and many apprenticeships, but they need to be on the right terms; we have to make sure that these are decently paid jobs, on good, secure terms and conditions, that support a just transition and promote equality. What causes us concern about the Trade (Australia and New Zealand) Bill is that it does not provide guarantees that those social objectives will be promoted through our public procurement procedures. In fact, there is potential to undermine them, particularly in the parts of the UK-Australia trade deal about public procurement, which this legislation would allow to be implemented.

Article 16.17 of the UK-Australia agreement says only that environmental, social and labour considerations “may” be taken into account by procuring entities, and only when those considerations are

“based on objectively verifiable criteria”.

That could open up scope for Australian companies, via their Government, to challenge social criteria in UK public procurement processes as being potentially unverifiable, because that is an undefined term. Multinational companies are eyeing up our procurement market—this is a big objective in trade deals—and will be looking for any means of challenging any social criteria that they regard as being a burden for business, such as a requirement to pay a living wage or to provide secure conditions. We are very worried about the language in the UK-Australia procurement provisions, which the Bill would allow to be implemented.

Let me connect that to the Procurement Bill going through Parliament. It does not give us the assurances that we need that social criteria will be promoted through its provisions, unlike the EU-derived procurement rules in the Public Contracts Regulations 2015, which allowed the Government to refuse a tender on the grounds of its non-compliance with International Labour Organisation conventions, and required social value criteria to be taken into account in the most advantageous tender criteria. There is no such requirement in the Procurement Bill. That means that now, in UK procurement rules, there are no provisions to prevent public money from being given to suppliers who abuse fundamental workers’ rights. For us, that is going in completely the wrong direction.

In the EU-UK trade and co-operation agreement, we made commitments to promote fundamental International Labour Organisation standards, yet in the Procurement Bill and the UK-Australia agreement, we do not see them promoted. I will highlight two more concerns about the Procurement Bill. There is no requirement for high labour standards—

[The Chair]

Order. Forgive me, but we are not talking about the Procurement Bill. There is clearly some crossover, but if we can try to avoid the temptation to spend too much time on that crossover, I would be very grateful. Thank you.

[Gareth Thomas]

Q Thank you very much, Ms Crawford. You mentioned that the Procurement Bill could supplant the Trade (New Zealand and Australia) Bill. Legislation to implement accession to the CPTPP could do the same, if the Government have their way. Will the problems to which you have alluded be resolved if we join the CPTPP, or will they remain and be similar to those that exist in relation to the two FTAs?

Rosa Crawford: CPTPP could create an even more problematic situation for us. Members will know that the CPTPP contains the investor-state dispute settlement provisions, and unless the UK explicitly opts out of those provisions, we will be bound by them. That obviously means that foreign investors could sue the UK Government for any actions that are interpreted as being a burden on business. That could mean living wages and decent conditions. If we accede to the CPTPP, we could be allowing social criteria that we include in our public procurement provisions to be challenged by foreign investors from across the CPTPP countries, which obviously include some of the largest multinationals in the world.

It is extremely problematic to us that the UK is considering acceding to the CPTPP, and the TUC is opposed to that, as are the majority of trade unions in CPTPP countries. It should be said that the CPTPP takes a very broad, liberalising approach towards its service commitments, which means that a number of public services that are part-privatised could be locked into that privatisation through the CPTPP. The direction taken by the CPTPP, as well as by the UK-Australia trade agreement, which the Bill will implement, seems to us very problematic. It could undermine the expenditure of public money through public procurement—[Inaudible.]—and decent-quality public services.

[Gareth Thomas]

Q Some of our other witnesses, particularly those representing farming organisations, raised concerns about the scrutiny of trade deals. When we start line-by-line scrutiny next week, we certainly hope to explore the potential for greater scrutiny of the regulations that will flow from the Bill. What is the TUC’s position on scrutiny of the FTAs, and more generally?

Rosa Crawford: We have specific concerns about the lack of scrutiny provided for through the Bill, because paragraph 2 of schedule 2 states that any regulations made under clause 1 will be subject only to the negative procedure. Obviously, that will deny MPs the opportunity to scrutinise the procurement legislation introduced via the Bill, so it will not be possible for Members to challenge legislation that undermines social standards in procurement. We believe that clauses 1 and 2 should be subject to the affirmative procedure.

We also have more broad concerns about the lack of scrutiny of the UK-Australia trade deal specifically, as well as of all the trade deals that the Government have negotiated to date. For us, it is really important—[Inaudible.]—scrutiny, and scrutiny by trade unions. Otherwise, those deals will not deliver the best outcomes for workers, public services and all sectors of the economy. We really regret the process that was followed for the UK-Australia deal; Members were not provided with the opportunity to debate and vote on the agreement when it was brought before Parliament in June. The Bill is the only opportunity we have to debate the provisions of that deal, but the legislation is extremely narrowly drawn, and that is completely inadequate, in terms of the democratic process.

Trades unions have also been completely shut out of negotiations. We released a joint statement with our counterpart in Australia, the Australian Council of Trade Unions, at the start of the negotiations, setting out our positive agenda for what we thought a UK-Australia trade deal should look like. We said that trade unions should be in the room to provide expertise from across different sectors about the kind of protections that workers need, as well as the agricultural safety standards required. That impacts on workers’ conditions, and has to do with workers not being exposed to unsafe chemicals and unsafe procedures. We said that unless trade unions were in the room, we would not get the outcomes that workers needed.

The Government made a lot of positive noises about trade unions being included in the negotiations, and last September, the then International Trade Secretary, Liz Truss, said that the trade unions would be included in their trade advisory groups, which are consulted on the text of trade negotiations. We were not given those seats, and we were not consulted on the text of any of the UK-Australia trade deal as it was being negotiated. As a result, we have a trade deal that does not have adequate enforcement mechanisms and has very weak commitments on workers’ rights; there is only a reference to the International Labour Organisation declaration, not to the fundamental conventions. The terms of the deal refer to listing for services, which, in common with the CPTPP, will expose part-privatised services to being locked into that privatisation. The deal also has very problematic provisions on data liberalisation, which could mean that workers’ data is not properly protected. It could allow for that data protection to be challenged as a barrier to cross-border flows of data.

We have ended up with a deal that is completely inadequate and threatening, from a workers’ rights point of view, and from the public point of view, because we did not have engagement with that deal. As I said, that is also the case with the UK-New Zealand deal. In fact, we have not had input to any of the trade deals that the Government have negotiated to date. We really want a change of direction; we want trade unions consulted, as they are in other countries, such as the US; there, they are routinely consulted during trade negotiations. We want Parliament to be given a full say, and to have the ability to debate and vote on any trade deal brought before the House.

[The Chair]

Thank you. We have a little bit more time than we expected, but we also have quite a few questions to get through, as I am sure colleagues will be pleased to hear.

--- Later in debate ---

[Bill Esterson]

Q Can we go back, Rosa, to what you were saying about the impact on workers’ rights, and indeed environmental considerations? Can I confirm that your concern—or one of your concerns—about the Bill and the trade agreement behind it is that organisations have the ability to undercut rights and standards, in spite of what is elsewhere in domestic legislation?

Rosa Crawford: Yes, that is correct. With both the UK-Australia and the UK-New Zealand trade agreements, you have a weak labour chapter that makes reference only to the ILO declaration, rather than a requirement of fundamental international labour organisation standards respected by both parties. That is an issue in Australia and New Zealand because, despite the fact they both have progressive Governments, neither has ratified all the fundamental ILO conventions. New Zealand has not ratified the fundamental conventions on minimum age, health and safety, or freedom of association, and Australia has not ratified the fundamental conventions on minimum age, and health and safety.

Without that base of fundamental rights, there can be potential for a pressure on rights to lower here, as businesses take advantage of the market access they can get through the UK-Australia and UK-New Zealand trade agreements to places where they can potentially respect rights less. That could pressure rights to be lowered here. You do not have a labour chapter that has high standards, requirements and rights, and it has an ineffective enforcement mechanism that requires a proven effect on investment and trade, which we think will be difficult to meet.

There are similar provisions in the CPTPP labour chapter, despite the fact that CPTPP contains countries that are egregiously breaching labour rights—such as Vietnam, where trade unions are banned, as well as Brunei. We have not seen the CPTPP labour chapter being used at all. To us, those kinds of provisions are ineffective when they are included in a trade agreement, so it is concerning that the trade agreements we have with Australia and New Zealand do not have those effective provisions in place for labour standards. It sets a concerning standard for trade agreements we might sign with future partners, particularly as the Government are considering signing trade deals with places where labour rights are much worse, such as Gulf states, India and Israel.

The direction of travel is concerning in Australia and New Zealand. The inadequate protections around environmental standards also have an impact on workers’ rights; allowing produce with lower environmental safety standards to be imported into the UK potentially exposes workers here to more dangerous chemicals and other production methods that impact on workers’ safety and protection. We are concerned about the approach taken in both agreements.

[Gareth Thomas]

Q You said in your earlier evidence that the previous Secretary of State had promised to include the TUC in private discussions about free trade agreements, presumably including the Australia and New Zealand deals, but that that had not happened. Has the general secretary of the Trades Union Congress ever had an apology from the Department for International Trade for not including you and adhering to that promise?

Rosa Crawford: No. We have just had several pledges from successive Secretaries of State for International Trade. Liz Truss, when she was Secretary of State, had a meeting with our general secretary, Frances O’Grady, in which she assured her that unions would be included on these trade advisory groups. As I say, that was in September 2021.

Then our general secretary had a series of meetings with Liz Truss’s successor, Anne-Marie Trevelyan, including a meeting that also included the US trade ambassador Katherine Tai. She also made the pledge that trade unions would be included on these trade advisory groups. After that meeting, she appeared before the International Trade Committee in April this year, where she said that she hoped that trade unions would be included on the trade advisory groups as soon as possible, but we still have not seen any sign of that.

We hope that the new Secretary of State for International Trade will make good on that promise. We have written to Secretary Badenoch to request that the Government fulfil their pledge to include trade unions on the trade advisory groups, but we still have not seen anything. We are surprised and concerned that we have not seen progress in over a year since the Government pledged to include unions in the group. As I say, the outcomes are that we are getting trade agreements that are undermining workers’ rights, and new trade talks are being launched with really serious implications for workers’ rights with countries such as Israel, India and the Gulf states.

[Gareth Thomas]

I do not know whether it is in order, Chair, but to save time for the Committee next week, I wonder whether the Minister might want to reassure the TUC representative that the Secretary of State will grant access to the TUC in the future. It would save a bit of time next week if he were willing to give that pledge.

--- Later in debate ---

[The Chair]

Thank you very much indeed. I call shadow Minister Gareth Thomas.

[Gareth Thomas]

Q Ministers have told us that this is a brilliant pair of deals, and the procurement chapters particularly so. Is there any way in which the deals could have been improved?

Miles Beale: I think there is a small difference between the two deals, in any event. From a wines and spirits point of view, there was—still is—a low tariff that the deals are getting rid of in both cases: a 5% tariff for exports and imports in either direction. Obviously, it is of benefit to consumers and businesses in both countries when those fall away. That is pretty straightforward—fairly simple.

I think we see an improvement on the Australian trade deal in the New Zealand one, because the New Zealand deal includes an annex and has a bit more of a dynamic element to it. The wine and spirits annex will allow us to have conversations over time, and improve on the deal that is already there. That was not available as an annex in the Australia free trade agreement.

There are a couple of things that we were expecting to be able to get out of the New Zealand deal that we are not yet able to get out of the Australian one, particularly around the wider variety of wines and spirits being available on both markets, and better traceability and brand protection, particularly for spirits. There is a distinction you can draw between the two deals, and you can see some progress being made; the New Zealand deal is slightly better than the Australian one.

[Gareth Thomas]

Q Do you think those differences are there because the Australia deal was a bit rushed, or because of inexperienced negotiators? Explain why you think the difference is there.

Miles Beale: Yes, in general terms that is true. There was an effort to get the Australia deal done quickly. You could say rushed; one person’s rushed is another person’s achievement in a shorter period of time. We were keen to support a deal that got over the line. There has been a bit more time for the New Zealand deal and it is probably slightly simpler to do, but the New Zealand deal also benefits from being the second one after a 42-year gap. I think that, certainly on the UK side, officials were in a slightly better position and knew a little bit more.

[Gareth Thomas]

Q The former Exports Minister said that there was not enough support for British exporters from the Department in which he had worked. That was back in July. Do you share the assessment that SMEs need more help to get goods to market in Australia and New Zealand?

Miles Beale: Yes, I think we would share that view, particularly for our exports. Let us take British gin as an example: we think it has significant cachet, and we particularly see smaller gin brands doing very well in the Australia and New Zealand markets. At the Wine and Spirit Trade Association we have organised our own trade missions for some of our small businesses. We normally take a group of them to markets that we think are likely to prove fruitful for them. We have not been able to do Australia and New Zealand, partly because they are geographically very far way and are smaller markets than some of the others we have chosen to go to, such as parts of the US and Japan.

We would like to see significantly more support for British SMEs that have export potential. It is one of the things we have talked to the Department for International Trade about quite a few times. Anything we can do to bring down the costs of entry into markets where we think the products would be successful would be a good idea. We know that other countries do that to a greater or lesser extent. One of the opportunities we see in the next few years is speeding up some of our SMEs getting into exporting wines.

[Gareth Thomas]

Q What response have you had from the Department for International Trade? Is it rushing to respond to help, or just pointing you to a website—or are there some promises that the Minister will come and have a chat and things will get better shortly?

Miles Beale: It is not quite as simple as that. The Department has certainly listened to what we have had to say. In practical terms, we get some support for our SMEs going into market from the posts—the embassies and high commissions in the markets that are out there, usually in capital or larger cities. What we have not had is any financial support. To be honest, that is the thing that would make the greatest difference for small businesses in particular.

Occasionally, there are large food and drink festivals that the DIT—or, in some cases, other Departments such as the Department for Environment, Food and Rural Affairs—encouraged us to point our members towards. In truth, it is rather hard to appear as a small British gin brand or a new sparkling wine brand next to different types of British food and drink where there is probably a more established market, so that tends not to work so well for our members. We would need something more tailored to get the results we need.

[Gareth Thomas]

Why do you think the financial support has not been provided? Is the Treasury just not interested, or does it prefer to concentrate on other areas of support?

[The Chair]

Order. Forgive me; we need to keep within the scope of the Bill. I am sure that the shadow Minister will have ample other opportunities to raise such issues, but today is not the occasion. Mr Beale, you do not have to respond to that.

If there are no other questions, I thank our witness for taking the time today, and I reassure him and his office that Zoom issues happen to us all. It is no problem at all. We are glad that we were able to hear your responses and evidence today. Thank you for your time; it is much appreciated.

Miles Beale: Thank you very much.

Ordered, That further consideration be now adjourned. —(Mark Jenkinson.)

Trade (Australia and New Zealand) Bill (Third sitting)

Gareth Thomas Excerpts

Committee stage
Tuesday 18th October 2022 Public Bill Committees

[The Chair]

Before we begin, may I make a few announcements? Hansard colleagues would be grateful if Members could email their speaking notes to [e-mail]. Please make sure your phones and other electronic devices are switched to silent mode.

We will now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or similar issues. Please note that decisions on amendments do not take place in the order they are debated, but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates.

Decisions on each amendment are taken when we come to the clause to which the amendment relates. A Member who has put their name to the leading amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any of the amendments within that group. A Member may speak more than once in a single debate.

At the end of a debate on a group of amendments, I shall call the Member who moved the leading amendment again. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or to seek a decision on it. If a Member wishes to press any other amendment in a group to a vote, they need to let me know.

Clause 1

Power to implement government procurement Chapters

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I beg to move amendment 19, in clause 1, page 1, leave out subsections (2) and (3).

It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate the Minister on being knighted. [Hon. Members: “Hear, hear!”] It is a pleasure to see him and, indeed, his fellow members of the anti-growth coalition in their places this morning.

Labour Members had hoped that the Bill would provide an opportunity for a much bigger debate on the entirety of the trade agreements with New Zealand and Australia. Sadly, however, the way in which the Bill has been drafted means that it is only the procurement chapters of those agreements that we will be able to debate. I shall illustrate why this is a restrictive approach. There are more than 2,500 pages in the Australia deal—a member of my staff has counted them—but only 30-odd of them are on Government procurement. The New Zealand trade deal has fewer pages, but there are more than 500 of them, with only 30-odd pages on Government procurement. Our opportunities to scrutinise are, therefore, far more restrictive than the House would have liked. None the less, we will raise one or two of the concerns that have been put to us about the Government procurement chapters of both deals.

I should stress at the outset that we welcome increased trade with Australia and New Zealand. They are key allies led by strong, progressive, effective leaders in Anthony Albanese and the incomparable Jacinda Ardern. Their legal systems and value systems are similar to ours, and it makes enormous sense to deepen the economic ties between us.

Our concerns about the procurement chapters arise from the fact that the now Prime Minister appeared to be in a bit of a rush when negotiating both deals. Perhaps one or two mistakes were made and a deal of insufficiently high quality was secured. Members will remember the context in which the Australia deal in particular was negotiated. The flaws in the deal that the now Prime Minster had negotiated with Europe were becoming very obvious, and Ministers were clearly desperate to divert attention from them by negotiating a deal with Australia.

Amendment 19 seeks to delete subsections (2) and (3) from clause 1. Those subsections allow Ministers to extend specific provisions that are included in the UK-Australia and UK-New Zealand agreements, and which go beyond provisions of the Government procurement agreement to all covered procurement. They also bring procurement within the scope of the GPA and other UK trade treaties. These GPA-plus provisions of the UK-Australia free trade agreement could be made part of domestic law and would apply to all suppliers, not just those from Australia. On the GPA-plus elements of FTA clauses relating to estimating values of contracts without a fixed term, the UK-Australia FTA requires that all contracts with unknown value are deemed as covered procurement. Other examples of the so-called GPA-plus provisions that this clause makes available to all suppliers include the advertisement of procurement opportunities and the termination of awarded contracts.

Our amendment seeks to prevent Ministers from quietly slipping into law measures that they have negotiated as part of the trade agreements with Australia and New Zealand, in particular the procurement chapters, that they suddenly think should apply generally. The specific concern that has been brought to our attention relates to contracts of unknown value and length.

Let me go into more detail, to help the Minister and the Committee to understand those concerns. Under current UK rules, contracts of an unknown duration or without a fixed term are advertised only if their estimated cost over 48 months exceeds the relevant value threshold. Under the free trade agreement with Australia, those contracts always have to be advertised. To give effect to the FTA, our domestic UK law will have to be reformed as a result of this Bill.

That surely raises two issues. First, more contracts will have to be advertised, and that will benefit not only Australian tenderers but all tenderers in countries that are members of the Government procurement agreement. That is because the contract opportunity will be advertised online and will be in English. I will explain shortly why that raises concerns. Secondly, domestic legislation is being reformed as a result of free trade agreement, which gives rise to the question whether a trade discussion is the most appropriate way in which to address reforming UK contract law. It certainly gives rise to the question of how much consultation Ministers have had, not only across Government but with business, industry and others who might be affected.

Why does the Minister think it is a good idea to extend to very other member of the GPA the so-called GPA-plus provisions negotiated as part of the Australia trade deal? That gives rise to an obvious question: does it mean that every other member of the GPA will offer us the same arrangement?

I have been describing the concerns in technical detail, so let me give some specific examples to bring the concern to life. On contracts of unknown value, a contract for office printing—a pay-as-you-go service—would come under the scope of the concerns put to us. Let us imagine that a local authority did not want to buy or lease printers, but rather preferred an all-inclusive service comprising availability of equipment, maintenance, help-desk services and supply of paper and other consumables. The contractor would be remunerated on a per-printed-page basis—a pay-as-you-go price. Let us say that the contract was for five years and that the contracting authority—a council on its uppers, perhaps, one like Northamptonshire that had either gone bust or very nearly gone bust—had provided an estimate of the average number of pages printed over the last few years, so as to allow tenderers to price their offers up. However, the contracting authority would not know the total value of the contract at the time of advertising because future consumption could vary.

We have been given similar scenarios that could emerge from cloud computing services. In the cases that I have described, regulation 6(19)(b) of the Public Contracts Regulations 2015, which apply at the moment, requires the contracting authority to calculate a likely monthly value of the contract and multiply it by 48 months. If that estimate exceeded the relevant threshold, which is currently just over £213,000, the contract would have to be advertised. If the estimate was below that threshold, it would be possible that no advertisement was required. If the contract was estimated at below £25,000 in value for the next 48 months, there would be no obligation to advertise the contract opportunity at all. The contract could be directly awarded by the local contracting authority, perhaps following a request for tenders to two or three local small and medium-sized enterprises.

Conversely, under the requirements of the UK-Australia free trade agreement’s procurement chapter—paragraph 9 of article 16.2—given that the total value of the contract over its entire duration is not known in the example I gave, there would be an obligation to advertise the contract. Surely that would reduce the chances of local small and medium-sized businesses getting the contract. There seems to be a clear negative potential effect for SMEs that seems at odds with the Government’s declared policy of boosting SME access to public contracts. Paragraph 13 of the national procurement policy statement refers to that, and paragraph 10 notes as a strategic priority the need to improve

“supplier diversity, innovation and resilience”.

It explicitly refers to the goal of creating a more diverse supply chain to deliver the contracts that will better support start-ups and small and medium-sized businesses in doing business on public sector contracts.

The Minister will remember the clear evidence we heard last Wednesday from Lucy Monks, the Federation of Small Businesses representative, who said:

“Small businesses have problems accessing public procurement in the UK as it stands, because they find it technically difficult. They obviously do not have the ability to take the same kind of risks as larger businesses. They might not have the technical departments, lawyers or whoever might support them through that process.”

She went on to spell out, in even starker terms, that

“small and medium-sized enterprises are basically underserved in the UK procurement processes”.––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 5.]

SME representatives are already expressing serious concerns that the people they represent are struggling to win sufficient UK Government contracts. It appears that under clause 1(2) and (3), Ministers are about to make the situation even more difficult for SMEs. That is particularly the case because it is not just Australian and New Zealand businesses that might want to try to win these contracts in future; every other member of the Government procurement agreement could also bid for these contracts.

Although it might seem unlikely that GPA members such as firms based in Hong Kong would want to bid for contracts of unknown value, a business based in the Republic of Ireland, which is part of the GPA, could conceivably think, “Well, now we’ve got an opportunity to bid for a contract in Northern Ireland, Scotland or Wales. It is within the realms of possibility that we could win that contract and offer it for our purposes.” I gently emphasise to the Minister that he needs to explain not only to the Committee but to SMEs across the UK, which are at the moment able to secure contracts of unknown value and length, why he thinks it is in the interests of our country to make it more difficult for them to do so.

If the printing example has not helped the Committee enough, let me give another example from a different economic sector. The Minister will understand just how important procurement is as a means of supporting the UK’s food and agricultural industries. To be fair to the Prime Minister, even she understood that role very clearly when she was in a previous role as the Secretary of State for Environment, Food and Rural Affairs. She published a plan for public procurement, which was designed to help SMEs to win contracts, especially SMEs from the food and agricultural sector.

Public procurement in this type of situation could sometimes involve the direct delivery of agricultural products, perhaps bought in bulk by local government, but that is less likely than the outsourced provision of meal services for schools or the NHS. With that in mind, tenders for meal services can and increasingly tend to include supply chain considerations that can support local agricultural industries through criteria in the contracts that schools and local NHS hospitals set. That involves shortening the supply chains, perhaps as a way of reducing carbon footprint. Again, that is something that one would have thought we all wanted to continue supporting.

Contracts for meal services can be very difficult to price at a tender stage, especially if there is an element of price competition, which is the norm. It might be surprising that school meals are very difficult to price. However, my own offspring often change their minds over whether they want a school meal or a packed lunch, and I imagine that that scenario is mirrored in families across the country. That makes it difficult for those who are setting the tender terms for meal services to be able to guarantee a set amount of products.

[The Minister of State, Department for International Trade (Sir James Duddridge)]

I followed the hon. Gentleman’s printing example, in the main, but on school meals, is he just being illustrative? I cannot quite see how the meals that my children have at their school might be contracted out and delivered from Australia or New Zealand.

[Gareth Thomas]

Let me come on to the example. I am not saying that at all; absolutely, it is highly unlikely that an Australian firm will decide that it wants to rush over and provide schools in Southend or Harrow with meals. That is difficult to see. But it is not difficult to see that a business based in Ireland might think it could provide services in Northern Ireland. It is also not beyond the realms of possibility that it might think it could offer the same terms in Scotland and Wales, such is those countries’ relative proximity.

The Minister is saying that, under the agreement that the Government have negotiated, the opportunity to advertise contracts of unknown value will be extended not only to Australia and New Zealand but, effectively, to every GPA country. Businesses based in the Republic of Ireland will be made aware of contracts across the UK, and more easily able to bid for them as a result, making it that little bit more difficult for small and medium-sized enterprises based in Northern Ireland, or in Scotland or Wales, to win those contracts.

The other concern that has been put to me in relation to these examples is that the activation of the FTA could generate significant legal uncertainty about the compatibility of supply chain considerations that prefer UK produce over Australian produce, especially where the Australian produce has been given extensive market access under other chapters of the FTA. The practical impact of the duty to advertise would be a risk of a reduction in the likelihood of UK-based SMEs, offering UK-grown produce, winning the contract. The Minister might think that is a good thing, but given the difficulties that SMEs have in winning contracts for Government procurement, why has he made the judgment that all contracts of unknown value should be advertised online and in English, and therefore available to all members of the Government procurement agreement to bid for? Why are we making it that little bit more difficult for British SMEs to win contracts?

I want to ask the Minister some other questions related to the clause, and in particular to the issue of contracts of unknown value and length having to be advertised online and in English. What consultation did his Department have with SMEs about the clause? Is it the case that we were rule takers, and the Australians insisted on its inclusion in the FTA? Given that the benefits will extend to every other GPA country, has he had any discussions with those countries about whether they might now offer the same terms to the UK? What assessment have the Government made of the impact of contracts of unknown value and length being advertised online and in English to all GPA members? What impact does he think that will have on the desire of all of us to see more buying of British produce, goods and services? We on the Labour Benches are strong enthusiasts for “buy British” campaigns, so it would be good to hear the Minister’s assessment of the damage to that aspiration.

I briefly flagged the issue of legal uncertainty. The Minister will know about, and may be directly involved in, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership accession talks. Does the CPTPP procurement chapter include similar provisions? If we accede to the CPTPP, that will trump the Australia and New Zealand FTAs; businesses that have got used to operating in this new context might suddenly find there is a whole series of new rules they have to adjust to very quickly, and may not realise that the Australia and New Zealand FTA provisions that were negotiated under the procurement chapter have been jumped as a result of our accession to the CPTPP.

I am interested to hear the Minister’s responses to the concerns that have been put to us about the extension beyond Australia and New Zealand of this series of provisions. No doubt they were negotiated with the best of intentions, to improve opportunities for Australian and New Zealand businesses here, and for UK businesses in Australia and New Zealand, but they might—inadvertently or otherwise—have a series of other consequences that could damage the ability of British SMEs to win procurement contracts here.

[The Chair]

If colleagues would like to remove their jackets, they can—it is rather warm in here. I remind colleagues to put their electronic devices on silent. I call Bill Esterson.

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I think some of the examples that the hon. Gentleman used were better than others. The one about printing was good, but I am not sure about the school meals point. However, they did illustrate and start teasing out some of the issues. On contract value, looking at things such as construction, where there is an unknown value, may be more appropriate than where the deal was being focused.

[Gareth Thomas]

Don’t worry—I will come to construction.

[Sir James Duddridge]

I look forward to that.

There were some wide-ranging comments about the Bill. This is a very focused Bill, and I will focus on the procurement element. The Government did not produce a focused Bill by design; we focused the Bill on what there was a legislative need to change. Everything else is done through statutory instrument and there has been wide consultation on the deal overall.

There was talk of GPA-plus. It is in the British interest to have many people tendering, beyond Australia and New Zealand, and to have transparent information. There was also a question about CPTPP, on which I think there is a bit of misunderstanding.

[Gareth Thomas]

I intend to come to some of the tensions between competition and “buy British” in our next group of amendments, but let me give the Minister the example of Essex County Council. He seems to be saying that it is fine for SMEs in Essex to face greater competition if they want to win contracts of unknown value and length as a result of the council’s having to advertise such contracts online and in English, even though we have not secured similar pledges from other GPA countries. Those small and medium-sized businesses that might hope to bid for a contract in, say, France or Ireland do not have the same advantages, as Ministers have not achieved that. Why give that bit of negotiating leverage away at this stage?

[Sir James Duddridge]

I think Essex County Council, which is Conservative-run, would think competition is good. The more people applying, whether they are from Essex, Kent or New Zealand, the better. If that provides better services procured with our money—taxpayers’ money—that is fundamentally good. Clearly, local businesses and SMEs have a competitive advantage because there is less transport and a closer understanding of the marketplace; there is a plethora of reasons why that would work. Competition is also good for driving change. If an SME or an organisation in the UK is not competitive or does not have exactly the right product, by not getting that one contract it will try to develop and improve. That is how we grow as a society—but I am straying slightly from the provisions of the Bill.

Let me return to CPTPP. There are some fundamental points here. The Australia and New Zealand trade deals do not die once CPTPP starts, for two reasons. First, they will remain in place because they will be the way we judge what has happened before; deals done in the period before CPTPP will be judged on the Bill. Secondly, the deals will sit alongside CPTPP, in that some of the provisions in the Australia and New Zealand trade deals will be better than those in the deal with the 11 nations in CPTPP, and we would not want to remove those benefits that we have given to our Antipodean colleagues.

[Gareth Thomas]

The Minister is describing an interesting context—the idea of the CPTPP sitting alongside the Australia and New Zealand free trade deals. Specifically on the issue of contracts of unknown value and length, is that provision contained within the CPTPP as well? We will be a rules-taker. That is the evidence that has been put, certainly to me, in terms of the procurement chapter of the CPTPP. Is it the same provision? I gently suggest that if it is going to be in the CPTPP, with largely the same wording, procurement experts have put it to us that we risk having some legal confusion between the procurement chapter of the CPTPP and the procurement chapters of the Australia and New Zealand FTAs.

[Sir James Duddridge]

The wording is in line with the CPTPP. Australia, New Zealand and ourselves are conscious that while this deal is in all three nations’ interests, it is also a potential stepping stone to a bigger deal. Throughout the negotiations we, on all sides, thought very carefully about what will be replicated in the new trade deal—what goes through—and also what we wish to retain in our special relationship with those two nations. As the hon. Gentleman knows, trade is always evolving. These deals contain some new and exciting provisions. I will focus my comments on amendment 19 specifically and pick up on thematic issues later, if the hon. Gentleman probes me on them.

I reassure the Committee that the scope of these powers is only to make regulatory changes that are absolutely necessary to implement the procurement chapters. Subsections (2) and (3) of clause 1 are there to ensure that the regulatory changes can be made. Some suppliers do benefit from a separate set of regulations to suppliers from other nations, including the UK. These provisions simply ensure that any supplier participating in a tender that is covered by the agreements do so under the same rules and processes. The amendment would fundamentally undermine the bringing forward of the deal that has been done with Australia and New Zealand in relation to procurement. I hope I have provided some reassurance to the Committee.

[Gareth Thomas]

Will the Minister explain how the provisions in the procurement chapter of the Australia and New Zealand FTAs sit with the Procurement Bill, which is going through Parliament at the moment, and whether this requirement to advertise contracts of unknown value and length is also touched on in that Bill? If so, there is a risk of confusion, not just as we accede to the CPTPP, but also from our own domestically introduced procurement legislation.

[Sir James Duddridge]

The Opposition Front-Bench spokesman is tempting me to speak to two Bills under one. When the Procurement Bill goes through, this Bill will not be needed. The trajectory the Government are taking is consistent across the board, but it would be wrong for me to debate a future Bill. We should focus today on what is before us, rather than on what might happen. It is still an active debate. That Bill is not even starting in this House; it is starting in the other place. Therefore, I hope the reassurance I have provided are satisfactory. I ask the shadow Minister to withdraw the amendment.

[Gareth Thomas]

I am grateful to the Minister for his reply. Although I am not 100% convinced by the argument that he advanced, this is a probing amendment and we will reflect on what he said.

We cannot find any evidence that there was a consultation with the FSB or anyone else on the impact of extending contracts of unknown value and length and on the requirement to advertise them online and in English to every other country with which we have a trade agreement, notwithstanding the Minister’s argument and the evidence we heard in Committee that there have been consultations between the Department for International Trade and the representatives of small and medium-sized businesses. I wonder, therefore, whether this so-called GPA-plus provision has had quite the attention it merits.

[Bill Esterson]

Did my hon. Friend notice that the Minister did not actually address one of the central points that he and I raised, which is that the opportunity would be widened to all countries that are signed up to the GPA? That causes great concern about the loss of contracts to businesses in this country.

[Gareth Thomas]

To be fair to the Minister, he sort of touched on the issue in very loose terms. Perhaps my hon. Friend may be reassured that amendment 5, which we are inching towards, would require much more consultation down the line. Perhaps that is a way to try to improve things for SMEs across the UK.

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

Is not the big problem—my hon. Friend rightly pointed this out earlier, but the Minister did not really reflect on it—that we are giving away negotiating elements for future deals? Opening this up to all GPA countries means that no GPA country will need to put it on the table. We have opened up our markets for them, and they have not opened up their markets—fantastic. We have cut off the nose to spite the face of all our small and medium-sized businesses, but other countries have not acted similarly. If we do this repeatedly with all areas of trade, in the end we will have unilaterally opened up all our borders but received no benefits for our small businesses. That is the basis of the Conservative negotiating strategy, and it is a disaster, is it not?

[Gareth Thomas]

I appreciate that Conservative Members will be focusing on other mistakes that the Prime Minister has made, but my hon. Friend is absolutely right. One wonders whether, in the rush to get a deal with Australia, Ministers essentially decided just to give up their negotiating leverage on these issues and hoped to push it through quietly without too much attention. None the less, we have aired these issues. We will reflect on what the Minister says, and we may well come back to this matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Ms Anum Qaisar (Airdrie and Shotts) (SNP)]

I beg to move amendment 1, in clause 1, page 1, line 15, at end insert—

“(3A) Regulations under subsection (1) will not come into force before the date on which the procurement Chapters come into force.”

The amendment is pretty self-explanatory. It is about the timing of entry into force. As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey and I have mentioned, the Scottish Government have consented to the intent of the Procurement Bill. The UK Government’s procurement provisions in the Procurement Bill will supersede this Bill’s procurement provisions when it receives Royal Assent.

The draft Bill was not cleared with the Scottish Government in advance of its introduction, while the drafting of key elements of clauses relating to cross-border procurement—which directly engage the legislative consent process—were not cleared with the Scottish Government until the day before the Bill’s introduction. There has therefore been no meaningful opportunity for the Scottish Government to engage on the specific drafting of provisions before their introduction. It is key that we pass legislation that is thorough. That is why such amendments as this are so important. I encourage colleagues to consider the amendment.

[Sir James Duddridge]

It is good to see the hon. Lady in her place. I think it is the first time we have served in Committee together—no doubt, not the last time—and I welcome her to her place.

I also welcome her probing amendment—I assume it is probing, forgive me—but it is unnecessary. Australian and New Zealand suppliers will not gain the benefit of the procurement chapters until the agreements have entered into force, in accordance with the existing framework for domestic legislation.

By way of example, the text of the Australian FTA states that the default date of entry into force of the FTA is 30 days after the date on which notifications confirm completion of domestic procedures on all sides, although both parties may agree otherwise. If for whatever reason we made it 31 days or 29 days, and that was acceptable to both parties, the change could be made to allow for all eventualities.

I argue that the amendment is not necessary and that, were we to pass it, it would remove the flexibility of that small change. I welcome the amendment, but ask the hon. Lady to withdraw it.

[Gareth Thomas]

The hon. Member for Airdrie and Shotts rightly raises an important issue about the linkages between the Procurement Bill and the measures in this Bill. One wonders why Ministers could not get their act together and get that Bill through both Houses of Parliament first. That would have been the sensible thing to do, rather than introducing specific and narrow legislation to implement the procurement chapters of these two free trade agreements, even though they will be completely usurped by the Procurement Bill coming down the line. Does the Minister have any insight into why there has been such a delay in getting the Procurement Bill through both Houses? Is it the chaos in the Conservative party? Is it that there was a need for more consultation with business about the Bill? Why has there been such a delay in the progress of the Procurement Bill?

[Sir James Duddridge]

The Procurement Bill is in the House of Lords. It has still not reached us. I do not wish to be disparaging about the House of Lords, but had the Bill started here and were the hon. Gentleman, the hon. Member for Airdrie and Shotts and I on the case, no doubt we would have sorted it earlier. I ask the hon. Lady to reflect and to withdraw her amendment.

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[Ms Qaisar]

I should say, Mr Pritchard, that it is a pleasure to serve under your chairmanship.

Amendments 3 and 4, which I tabled with my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey, can be summed up as standing up for Scotland and Scottish farmers on procurement. The Bill fails to ensure that Scottish Ministers have the ability to scrutinise matters of procurement that impact on Scotland. The powers in the Bill are drafted too broadly. They confer too many powers on UK Government Ministers without securing consent from the Scottish Government. That does not appear to be democracy in action.

Scottish farmers are already struggling with energy costs, crops rotting in fields for a lack of pickers, rising fuel costs, the loss of EU farming subsidies, and fertiliser prices spiralling. Experts have spoken about the deal. We heard from the president of the National Farmers Union Scotland, who said that it appears to be very one-sided, with little to no advantage for Scottish farmers. That is heightened by so little having been done to ensure the continuity and expansion of Scottish and British agrifood exports to new and existing EU markets. Scottish interests and Scottish farmers are not expendable.

[Gareth Thomas]

I entirely understand and agree with the hon. Lady’s concerns about how Scottish farmers have been treated. They must rightly be very angry with the Government. Does she accept that the concerns of Scottish farmers are replicated among Welsh farmers and many farmers across England, for similar reasons? There is a sense that there has been a huge giveaway to Australia and New Zealand by the Government, perhaps because they were desperate to do a deal. The anger is only made worse by, as she rightly alludes to, the cost of living crisis facing many farming communities. Is she also sympathetic to amendment 5, which references not only the concerns that she articulates in respect of Scotland but those of the people of Wales, England and Northern Ireland?

[Ms Qaisar]

I thank my colleague for his intervention. He is correct that the challenges that Scottish farmers face are the same as those faced by Welsh farmers and farmers from across the four nations. A key point that he failed to mention, however, is that in Scotland over 60% of people voted to remain in the EU, and there is still a lot of anger from Scottish farmers in that regard.

Last week, we also heard from Jonnie Hall from NFU Scotland. He said something that struck me:

“There are clear potential impacts for particular sectors that are already really quite vulnerable in large parts of the United Kingdom, not least in Scotland. I am thinking particularly of the red meat sector and how important that is to the rural economy of Scotland and, indeed, the whole economy. Scotch beef and Scotch lamb are iconic products, but we are not in a situation whereby we can stack it high and sell it low, as it were. Anything that comes along and undermines our position in that respect is clearly going to be a considerable threat—I use that word advisedly—to the viability of agricultural businesses here in Scotland.”––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 32, Q40.]

Concerns have also been raised by the Scottish Cabinet Secretary for Finance and the Economy, Kate Forbes, and the Minister for Business, Trade, Tourism and Enterprise, Ivan McKee. They recommended that the Scottish Government do not give consent for the Bill in its current form. We need to be really careful. The UK Government must not continue on the path of creating delegated powers to implement the Bill.

Amendments 3 and 4 seek to ensure that there are high levels of dialogue and discussion between Scottish and UK Government Ministers. That dialogue would ensure that matters of procurement in Scotland are at the heart of this legislation, crucially protecting the interests of Scottish farmers. In order to support Scottish interests and farmers, I ask Members to please support the amendments.

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[Dame Nia Griffith]

I absolutely agree with my hon. Friend. The whole point is that there should have been much better consultation, either directly with the farming unions or by their representatives in the Scottish and Welsh Governments who have raised these points and have very good, close relations with the stakeholder groups in their respective nations. As my hon. Friend rightly says, a number of concerns were raised by the NFU. The whole point of having consultation and impact assessments is that those concerns can be properly documented and we do not rush into the legislation produced by clause 1 and leave people in a more difficult predicament.

[Gareth Thomas]

Does my hon. Friend agree that one reason why the Minister ought to be tempted by amendment 5 and amendment 22 is that they would give Essex County Council—which is currently Conservative-run but probably not for much longer, given the mess the Conservative party is leaving our country in—the chance to consult directly with small and medium-sized businesses about the procurement chapter deals that have been done in the UK-Australia and UK-New Zealand free trade agreements? As a representative of the people of Essex, he would surely think that that sort of consultation is a good thing that might remedy some of the mistakes that his predecessors have made in this area.

[Dame Nia Griffith]

I absolutely agree with my hon. Friend. The point is that locally based devolved authorities have much closer contact with the people they represent, so the consultation on how this is working out, what we are going to do next and what the next part of the implementation is must be able to take account of the feelings of those stakeholders on the ground who perhaps feel that they have not had a voice until now.

I pay tribute to officials in the Department for International Trade and the Welsh Government for their very positive and professional engagement. Indeed, the Welsh Minister for the Economy, Vaughan Gething, notes that there has been some improvement between the Australia deal and the later New Zealand deal, and I hope that the experience has been similar for colleagues in Scotland and Northern Ireland, and indeed for representatives of local government across the regions of England.

On procurement, the Welsh Government go as far as to say that there may be scope for businesses in Wales to take advantage of the provisions included in the UK Government procurement agreement, and that some Welsh interests in procurement were protected during the engagement with the Department for International Trade. However, Vaughan Gething says:

“I hope we continue to see improvements in the engagement we have with the UK government, and that future deals provide opportunities and benefits for producers and consumers in Wales.”

It should not be a matter of hoping or relying on good will, which is why the concept of consultation should be enshrined in the wording of the Bill and a meaningful consultation should take place before the clause allows for the implementation of the procurement chapters of the FTAs. Of course, there are certain powers that the Welsh Government have already. Under section 62 of the Government of Wales Act 2006, they have the power to make representations about any matter affecting Wales, but we still feel that this needs to be stated explicitly in relation to the Bill.

One of the issues that relates to procurement is the gradual elimination of tariffs on beef and lamb. Under the New Zealand treaty, for example, the UK or New Zealand can unilaterally accelerate the elimination of tariffs. This is clearly of huge importance to Welsh farmers, so the Welsh Government want to know that they will be fully consulted by the UK Government on any possible acceleration of the elimination of tariffs on goods from New Zealand well before any decisions are made, because secondary legislation could emanate from the clause to put that into action. Clearly, we need that consultation beforehand. Why? Because if we had had better parliamentary scrutiny of the trade deal, we might not be in this position in the first place.

[Gareth Thomas]

Given the comments that my hon. Friend has just made, perhaps the Minister will take advantage of this debate and reflect on whether his ministerial colleague, the right hon. Member for Chelsea and Fulham, was wrong to reject amendments to the Trade Act 2021 that would have increased scrutiny. As many suggested at the time, perhaps we should have a debate on each free trade deal as the negotiations are just beginning to get under way, so that interested bodies can set out their concerns and Ministers can properly understand the depth of concerns that particular sectors might have—especially on procurement, given that that is what we are debating at the moment, but more generally as well. We are only having to oppose the amendment because Ministers will not do the sensible thing and have proper parliamentary scrutiny much earlier and at the end of things.

[Dame Nia Griffith]

Indeed. As I said, there are a number of unanswered questions. For example, it would have been nice to have had some analysis from the UK Government to understand why such huge increases were agreed in the quotas of tariff-free beef and sheep meat. Indeed, the Welsh Government requested that but have not had an answer. During the negotiations, the Welsh Government also made calls for market access offers that recognise the risks that large increases in imports could pose to Welsh producers, who have to meet high animal welfare standards. All of this points to why consultation is so important from the very outset and all the way through to the stage we are at now and beyond.

This is not just about the things that have been done by the Bill; it is also about areas where the free trade agreements could have been made better. Let me take the example of antimicrobial resistance. It is okay to stay where we are at the moment, but it would have been useful to work towards a better situation and to use procurement to do that. We do not want just to say, “Well, we don’t want any more use of antibiotics.” Actually, we want to look to reduce their use, although we seem to have missed that opportunity in the trade deals.

We welcome the commitment in the free trade deal to regulate our own standards, as well as the commitment to non-derogation with respect to welfare standards, but the point is that we need the consultation. We want the statutory basis for consultation to extend much further to the point of having some form of concordat with the Welsh Government, the Scottish Government and the Northern Ireland Administration that set out exactly what the consultation would be throughout the process. Indeed, we have a similar concordat on justice between the Welsh Government and the UK Government.

The point is to try to give some shape to the framework, and some certainty, and such a concordat would have so much to contribute. I made a point earlier about the fact that the devolved Administrations are in many ways much more able to engage with stakeholders to represent their views. Going forward, we need to think about issues that might cause problems, such as rules of origin and the fact that small and medium-sized enterprises might struggle and need support in that respect—consultation, impact assessment and feedback are so important to getting this right.

[Gareth Thomas]

Surely one of the other benefits of consultation is that it might start the Welsh Government and the Department for International Trade thinking about how, together, they might help businesses in Wales to capitalise on a free trade agreement. My hon. Friend will remember that a previous trade Minister criticised the Department for not doing enough to support businesses trying to export. Early consultation with the Welsh Government presumably might help to address some of those failings and enable businesses, together with the Welsh Government and the Department, to begin to think more quickly about how they might take advantage of the benefits of an FTA.

[Dame Nia Griffith]

Indeed. Not only might there be a benefit, but the high penalties that can be incurred by the respective parties if, for example, they do not understand rules such as the rules of origin might be avoided. Such fears could be fed back through proper consultation and support put in place to ensure that we were able to take advantage of the free trade deals.

Another pertinent issue is the fact that we are debating legislation that overlaps with areas of devolved competence —for example, procurement policy, agriculture and economic development. We do not want the situation that arose with respect to the United Kingdom Internal Market Act 2020 whereby instead of a proper negotiation on where we should end up and what we wanted and required, we were frightened by the thought of being driven to the lowest possible common denominator on standards by the over-powerful influence of a UK Government purporting to represent the whole UK, but in fact listening only to themselves and not taking into account the views of the devolved Governments.

It is important that we recognise the powers that we have, and that the way forward is through consultation and negotiation, rather than riding roughshod over the issues. For example, the Welsh Government have devolved responsibility for setting domestic sanitary and phytosanitary strategy and policy. Clearly, that is of direct relevance to procurement and the way the FTAs were drawn up.

--- Later in debate ---

We can also look to some of the big procurement authorities, such as Manchester, where concerns about employment rights are very much at the top of the agenda. In Northern Ireland, they too have declared their desire to ensure that their procurement strategy helps to create a fair and cohesive society, emphasising social value. In fact, they are giving 10% of the total award criteria to social value, with that figure rising to 20% next year.

[Gareth Thomas]

In referencing Manchester, my hon. Friend has stimulated a thought in my head that, if I am lucky enough to catch Mr Pritchard’s eye, I hope to return to: the issue of levelling up. If levelling up is going to take place—I appreciate that it appears Conservative Members have now given up on that ambition—something we will have to sort out is the Government procurement market. It is quite clearly skewed away from regions such as the north-east and north-west, and nothing seems to have been done about it for the past 12 years. Perhaps a little consultation on how the procurement chapters of these two trade agreements will be introduced might give Government Ministers and Members some ideas as to how we can use Government procurement to facilitate levelling up.

[The Chair]

I reassure the shadow Minister that he will always catch my eye as long as his comments are—as they are always are—in the scope of the Bill.

[Dame Nia Griffith]

My hon. Friend raises the importance of consultation, working together and wanting to make things better by negotiation, rather than by imposing a view by one central Government Department on areas that are actually within the devolved competence of other Governments.

I will move on to speak more specifically about the issue of impact assessment. There are various reasons for wanting a proper impact assessment of the effects on Scotland, Wales and Northern Ireland and on regions of England. Clearly, there is the levelling-up agenda. There is the fact that different sectors are of different importance to different areas. There is also the fact that the Government’s impact assessment in respect of the FTAs is literally just a table. This is the sop we have to anything to do with the individual nations or regions. We do not have a real study of the impacts of the FTAs on those areas.

As we go forward with the Bill and clause 1, with the powers it provides, it is absolutely essential that it should include a clause for proper impact assessment. The Welsh Affairs Committee was very critical of the lack of detail in that respect. The Committee referenced the Japan comprehensive economic partnership agreement, which includes a better attempt at regional impact assessment—of Wales, for example—but that again did not go far enough. There is a real need for proper impact assessment.

We have mentioned already the impact on agricultural producers and, as I have mentioned, the wellbeing of future generations. The importance of that is of course that FTAs have obligations that bind future generations. They are not things that we can go back on. That is why it would have been nicer to have had impact assessments earlier. If we had them now we could at least prevent mistakes going forward and not have negative impacts on our agricultural sector in the surrounding communities. Given that we already start with negative figures, there is clearly some work that needs to be done. The risk has been exposed. That has been detailed, yet the impact of what that means for farming families and our communities has not been thoroughly explored.

[Gareth Thomas]

The beauty of having a consultation before regulations are introduced as well as an impact assessment once regulations are about to be brought forward is that we can try to prevent mistakes and understand what might happen as a result of procurement regulations. An impact assessment can highlight to the Welsh Government and other Government agencies what ameliorative support might be needed to help businesses adjust to the impact of new procurement regulations as a result of the procurement chapters. That is an advantage of two of our four amendments as well.

[Dame Nia Griffith]

Indeed. In respect of support for businesses, there is a real concern about the cumulative impact. That, again, refers to the first amendment we debated today—the issue of what other FTAs with other countries might be included in the legislation. Also, we need to see what the situation would be if the agreement has a negative impact—for example, unfair subsidies made by New Zealand or Australia to help their businesses, or if there is a particularly high volume of imported goods. It is important that Welsh businesses can report and escalate any concerns to the relevant trade bodies and authorities. Again, the proper relationship with devolved Governments can facilitate that.

To sum up on the issue of impact assessments, the impact on sectors is very important. That dovetails with the question of the different regions in England and the different nations of the UK because different sectors can be affected by trade agreements in very different ways, particularly regarding the output and the employment in the different areas. What is the GVA in those areas? Those are all reasons why we want an absolute commitment from the UK Government to a proper consultation procedure and a proper impact assessment before the implementation of clause 1.

I want to sum up with the question of rights and the rights that we are concerned about. The Joint Committee on Human Rights did not give exactly give the ETAs a clean bill of health as they went through. We have had concerns from the trade unions. The Joint Committee on Human Rights raised the fact that in the Australia deal there is no language about the protection of human rights. I note that in the response to the International Trade Committee, the Minister at the time, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), rather brushed that off as “Oh, there are other ways we can deal with that.” However, as we know, it has become more common for trade deals to have a wider focus.

Whereas historically trade deals would just have focused on the economic benefits of trading relationships, they have now expanded to address a wider set of cross-cutting areas, such as small and medium-sized businesses and gender, labour and environmental policy, including climate change. Those wider considerations are particularly relevant to public procurement implementation because of the role of procurement policies in protecting the environment and fair work.

The Joint Committee on Human Rights was not exactly happy—[Interruption.] It was pleased to see provisions on forced labour, modern slavery and human trafficking, but noted the limitations on enforcement and supply chains, limitations that the trade unions also raised. The trade unions also pointed out that they were not part of the stakeholder consultation and did not have their rightful place at the table. Again, consultation through the devolved Governments could give them a better voice, because there tends to be a better relationship, but trade unions should be at the table, full stop.

I will not go into more detail on climate change, apart from to say that at the time of the negotiation of the Australia deal, Australia had a terrible reputation on climate change, ranking very low in the world, with a terrible record on emissions. This might have been an opportunity, perhaps, to do rather more.

[Gareth Thomas]

It was a Conservative Government.

[Dame Nia Griffith]

It was indeed. I hope that the new Government in Australia may do something of their own accord, but we should not be leaving it to them to act of their own accord, and hoping. That is the point of the amendment. It is not enough to leave things just to happen, because they do not. Unless we put positive steps in to make something happen, it does not happen.

[Gareth Thomas]

My hon. Friend is making a very good point about climate. Is that not one of the differences between the New Zealand FTA and the Australian FTA? Negotiating with a conservative Administration in Australia led to a deal that does not reference climate. Negotiating with a Labour Administration in New Zealand led to substantial provisions on climate—[Interruption.] Would it not be good to hear the Minister explain how he has been talking to the new Labor Administration in Australia about how they might perhaps insert some more climate provisions into the trade relationship between the UK and Australia as a result of some of the joint committees that have been set up under the FTA?

[Dame Nia Griffith]

Indeed, absolutely. One rather suspects that it was not thanks to the UK Government, but thanks to the New Zealand Government that the climate provisions found their way into the trade agreement; they somehow got completely lost in the Australian FTA.

All these points are reasons why we have tabled the amendments. These issues are too important to be left to chance. They should be fundamental to any form of procurement policy, which should be based on a full impact assessment, full consultation and full respect for human rights and employment rights, and our goal of getting to net zero. Those are all very important points.

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[Lloyd Russell-Moyle]

I totally agree. The US is a much better example than us of scrutiny and engagement. It engages its elected representatives early on. We see a Democrat Government there—one of our sister parties—putting trade unions and small businesses front and centre in their ongoing prosperity, rather than trying to run roughshod and have corrupt practices, which the previous party of Government in the US was all in favour of.

There is a better way of doing this. The amendments are not the ideal. I am, desperately unfortunately, missing my Select Committee inquiry this morning on international trade agreements and how we how we process them. I am sure I will read the transcript of the evidence hearing with fascination this evening. The Public Administration and Constitutional Affairs Committee’s inquiry makes it clear that the current ways that we produce trade deals and scrutinise their implementation—what these amendments are about—are inadequate. They are inadequate because they were created in an age when most of it was farmed off to the European Union and we had strong scrutiny processes of secondary legislation that came via the European Union—Committees that looked at that and debates in Parliament.

All that was swept aside—I will not get into the rights and wrongs of leaving the European Union. We have then just relied on a CRaG process and no other proper form of ongoing scrutiny process, which we would have accepted under the European Union, or which every other country has now developed, because trade deals are dynamic.

Gone are the days when trade deals were fixed in one piece of writing; they are ongoing, living, breathing documents. That is quite right, because trade deals really are multilateral deals on numerous issues: on not just direct trade but intellectual property and procurement, as we are discussing today. They affect the domestic implementation of issues, affecting how councils and public bodies are able to go about their day-to-day business, and the ability to consult.

[Gareth Thomas]

I apologise to my hon. Friend for missing his opening remarks. However, as he was reflecting on the weaknesses of the CRaG process, does he not think that perhaps part of the reason why Government Members genuflected towards the CRaG process so much, despite all its weaknesses, is that it was initiated by a Labour Secretary of State, Arthur Ponsonby, albeit 100 years ago? Perhaps that is what gives them some comfort. However, I absolutely agree with my hon. Friend that it is time to uprate and modernise it.

[Lloyd Russell-Moyle]

I do not think that even the most foresighted Labour politician would expect the rules that they designed 100 years ago to still be in operation today. Even if I managed to get one amendment through in my career here, I would not expect it to last 100 years.

The CRaG process, I am afraid, is not fit for purpose in the modern world. Although I do not want to prejudge what my other Committee will say, I suspect that is the conclusion that all sides are coming to—that it needs to be updated. These amendments allow a sticking plaster so that secondary legislation and regulations that are made must go through that process. That is what we heard businesses wanted.

The amendments would also ensure that all regions and nations of our country are properly consulted. The other part of my constitutional affairs hat is that we visit the devolved Administrations every year and speak to them about how they feel their relationships with the Union are going. I can tell Conservative Members that they think it is going very badly. That is not just the SNP in Scotland but Labour in Wales and the Democratic Unionist party in Northern Ireland. They think that the way this Government consult and work with them is arrogant and dismissive. That is what every single one of them said, and what Conservative colleagues in the devolved Administrations said to us too.

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[Lloyd Russell-Moyle]

I think that is the case here.

These amendments, particularly amendments 2, 20 and 22, which relate to the devolved Administrations, provide a failsafe for the devolved Administrations and English regions to know that they will be consulted. They provide a failsafe for the businesses, including small businesses, that we heard in evidence to know that they will be consulted beforehand. Of course, with all consultation, the Government can still go away and say, “We have listened to you. We have heard you. We have put forward our suggestions. You don’t agree with them, but we are still going to push forward, because we think that is necessary.” That is democracy; of course that has to be allowed, but what we cannot have is people being bumped into things at the last moment or presented with things as faits accomplis, and that is the situation at the moment.

I rose to support the amendments. I think that they are vital; more importantly, they are vital in preserving our Union. I know that some colleagues have a different view, and it is people’s own right whether they want to leave or not—it is not my choice—but I would like to see the Union preserved. I think that those on the Government Benches would like to see the Union preserved as well. I am afraid that if we do not start treating the devolved regions and nations of this great country with more respect and more humility, people will be out the door and it probably will be understandable.

[Gareth Thomas]

I rise to support amendments 5, 7, 20 and 22, which were tabled in my name and which my hon. Friend the Member for Llanelli spoke to. In so doing, I want to indicate, as I hope my interventions on the hon. Member for Airdrie and Shotts indicated, my strong sympathy with her two amendments as well. I hope that amendments 5 and 22, in that they are more wide-reaching because they cover Northern Ireland, Wales and the English regions as well as Scotland, might be sufficient to encourage her support for them.

Amendment 5, as we have indicated, seeks to lock in the opportunity for more consultation with the whole UK about particular regulations that might emerge around the procurement chapters. As I said in my opening remarks, the Australia free trade agreement is more than 2,500 pages long, and it is quite easy for the bits on procurement to be largely missed. The opportunity to lock in a bit of consultation at this point—before implementing regs have to be made—would help to ensure that there is specific focus on the procurement chapters in both deals.

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[Bill Esterson]

My hon. Friend is talking about consultation and amendment 5 refers to the representatives of the English regions. Earlier, the Minister was talking about Essex County Council. He did not mention Southend-on-Sea City Council, where he is a Member of Parliament. I could not help but notice that the procurement objectives of Southend are:

“Maximising the opportunities for Social Value, Economic Sustainability, and benefits for the local community”.

Does my hon. Friend agree that the Minister, in accepting the amendment, would do well to engage with the objectives of his own local authority to ensure that procurement policy is put into practice in a proper way?

[Gareth Thomas]

My hon. Friend makes a very good point in suggesting that the Minister look to his own backyard in the troubled times that he and his party are in at the moment. In the context of the free trade agreements’ procurement chapters, it would be particularly helpful for the Minister to seek the views of Labour-run Southend-on-Sea City Council and see whether it agrees with the stance that he is likely to be advancing, which I suspect will be against the idea of more consultation—

Trade (Australia and New Zealand) Bill (Fourth sitting)

Gareth Thomas Excerpts

Committee stage
Tuesday 18th October 2022 Public Bill Committees

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Thank you, Mr Twigg, for the opportunity to resume my speech in this debate that was opened by the hon. Member for Airdrie and Shotts. I will speak in particular to amendments 5, 7, 20 and 22.

It is a particular joy that you are chairing the afternoon sitting, Mr Twigg, because you will know, having been both a Minister and a shadow Minister, just how much the odds are stacked against a shadow Minister in a Bill Committee, with 1,000-plus civil servants backing up the Minister versus just one researcher and, fortunately, some very high-quality Labour colleagues. The odds are very uneven.

When this morning’s sitting ended, I had begun some preliminary remarks on the case for amendment 5. I was about to highlight some of the issues around the differences between the New Zealand free trade agreement procurement chapter and the Australia FTA procurement chapter. I suspect that businesses will need some help to navigate those differences, so consultation with interested businesses across the UK would seem sensible.

It is tempting to think that the differences are so marginal that they can be ignored and that any flaws in the procurement chapters can be swept away by the upcoming procurement Bill or our accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. As the Minister briefly alluded to, with the CPTPP not yet on the statute book and with plenty of issues to be addressed before it gets there—if it does—we have to get the trade deal procurement chapters and their implementation right, as they will, without question, affect the legal landscape in which businesses bid for contracts here in the UK and in which British businesses bid for contracts in Australia and New Zealand.

Not only are there subtle and important differences between the New Zealand and Australia deal procurement chapters, but they are not the only such chapters that we have signed up to since our departure from the European Union; of course, we have the procurement chapter in the deal that the previous Prime Minister negotiated with the European Union. Again, there are subtle but none the less significant differences between the EU procurement chapter and the Australia and New Zealand chapters. It would seem an obvious and sensible thing for Ministers to embrace some help to navigate those differences, and amendment 5 would help them to do that.

Where do the differences lie? It is important to remember that the Government procurement agreement is the foundation text for procurement negotiations. The procurement chapter in the EU deal—the first we signed—keeps the GPA text and builds upwards from it. I hope to come to the evidence of the procurement expert Professor Sanchez-Graells in a little bit. He argues that the text of the procurement chapter in the Australia deal not only replicates but, crucially, modifies the text of the GPA. That creates a GPA-minus agreement and risks all sorts of complications and legal problems when bidding for contracts, both here in the UK for Australian and New Zealand businesses, and in Australia and New Zealand for British businesses.

Another reason that we should perhaps consult firms is that, as I understand it from the evidence that Professor Sanchez-Graells gave us, a UK firm could be barred from all remedies—the interim relief remedy, judicial review, as well as full redress, compensation—if they felt they were being unfairly treated in an Australian Government tender process, on public interest grounds. In a similar process in Australia, a French firm could be barred from interim relief but not from a redress claim. So the French firm could potentially secure compensation if it was treated unfairly if the contract was moved forward on public interest grounds, but the British firm could not. Apparently, that is because the UK firm’s rights are considered under the UK-Australia FTA, while the French firm’s rights would be governed by France’s membership of the Government procurement agreement.

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

Is not this another worrying sign that the trade deals and the Bill often sell British businesses short? British businesses are being deprived of rights that they currently have. I am sure my hon. Friend will confirm that, if we pass the Bill without amendment, it will mean that British businesses have less access and security in the Australian and New Zealand markets than they currently do under the GPA rules that extend to everyone already.

[Gareth Thomas]

That is certainly my understanding of the evidence that Professor Sanchez-Graells gave this Committee, the Select Committee on International Trade in this place, and the International Agreements Committee in the other place.

Let me spell out for the Committee where the problem lies. As I understand it, the Government procurement agreement allows countries to bar access to some but not all remedies, on public interest grounds, for companies that are unhappy with Government procurement decisions, but, crucially, it does not allow a ban on remedies involving compensation. That is the difference with the Australia FTA procurement chapter, which does allow a ban on remedies involving compensation.

Potentially, the firms of other GPA countries will have more comfort and ability to risk tendering for big Australian Government contracts, because they will know that they have some access to remedies if things go wrong in the procurement process and they want to try to get compensation. As my hon. Friend the Member for Brighton, Kemptown rightly says, it takes some skill to negotiate a worse position for British businesses in terms of access to remedies than the situation we have now. That is probably not the biggest mistake that the now Prime Minister has made in her time in office, but it feels like a significant issue, and I look forward to the Minister addressing it.

Government procurement matters enormously. We have touched a little on some of the reasons for that. It helps if Government procurement is done well. One of the reasons why amendment 5 is necessary is to ensure that we do not make the current set-up for Government procurement in the UK worse but, instead, enhance it. Done well, Government procurement can help to build supply chain resilience. We saw the significance of that during the covid lockdowns, when our dependence on China became ever clearer and the need to re-onshore some of our supply chains became a topic for discussion by business and, I suspect, in Whitehall.

We are all too familiar with the horror stories about some of the dodgy personal protective equipment that was procured. We understand the context in which some of those decisions were made, but it is striking that Transparency International, with which I worked when I was a development Minister trying to tackle corruption in developing countries, felt the need to investigate the Government procurement market for PPE. It identified some 73 contracts, worth 20% of all the contracts, that it said raised one or more red flags for possible corruption. That suggests there is work to be done to improve the quality of Government procurement. The National Audit Office also highlighted concerns, where the Government admitted that they were not getting full value for money on PPE.

We also know that good conditions for Government procurement can create more choice and more scope for innovation, and can achieve better value for money. One thinks about the digital procurement expertise that we need, and the potential for artificial intelligence to help revolutionise public services. We need to make sure that the framework under which Government procurement contracts are being offered works well, and that this new injection of uncertainty—but also, potentially, enhanced opportunities for other firms to come into the Government procurement market—does not destabilise the UK procurement market but improves things. A bit of consultation might help in that regard.

I touched on some issues around levelling up, which, to my surprise, prompted murmurs of disagreement from Government Members. I understood from their chuntering that they think everything is rosy with Government procurement outside London and the south-east. However, some figures I have seen from the House of Commons Library suggest that at the moment, there is a clear bias in the Government procurement market towards businesses operating in London and the south-east. The last thing we would want is for the procurement chapters of the Australia and New Zealand trade agreements to exacerbate the difficulties for businesses, not only in London and the south-east but in the west midlands, the north-west, the north-east or the east of England, that are trying to get into the Government procurement market.

House of Commons Library data demonstrates that of the 445 most lucrative contracts awarded by central Government in 2019, 202 went to companies in London or the south-east. That does not suggest that Ministers are using Government procurement to level up. We know they are not doing much else on levelling up, so one would hope that they would take the opportunity to consult more, as our amendment 5 would require them to, in order to ensure that the Government procurement market is not being made worse for businesses outside London and the south-east that want to get involved. It might be an opportunity to look at reforms and think about how businesses outside London and the south-east can be encouraged to do so.

[The Minister of State, Department for International Trade (Sir James Duddridge)]

Would the hon. Gentleman concede that it is possible that the reason those figures are so weighted towards London is that that is where a lot of headquarters are, yet some of those services are delivered from around the United Kingdom and, indeed, from the devolved Administrations?

[Gareth Thomas]

I absolutely concede that point—that is possible, without a doubt—but I gently suggest to the Minister that there are real concerns that, unless there is proper consultation, the procurement chapters of the Australia and New Zealand FTAs could make the situation worse for businesses that are not headquartered in London and the south-east.

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[The Chair]

Yes, it would.

[Gareth Thomas]

Nevertheless, it seems a reasonable question to pose. A bit of better consultation might allow us to think about how we encourage more British businesses to secure Government contracts. The Minister rightly said that there is a good argument for extending the contracts covered by this legislation—he was thinking of contracts of unknown value and length—on the grounds that it would encourage more competition and better value for money, but we need to ensure that that does not put off good British businesses, particularly small and medium-sized ones in the local area, from getting contracts. I am yet to hear any convincing story from this Minister or, indeed, Business Ministers or Cabinet Office Ministers about what they are doing in that space to shift things forward.

Let me come to some of the specific concerns that Professor Sanchez-Graells raised, which are the most troubling of the many issues raised in the evidence sessions last Wednesday. It is worth highlighting Professor Sanchez-Graells’s experience. He is a professor of economic law at the University of Bristol Law School and co-director of the Centre for Global Law and Innovation. He has done a lot of research on economic law, particularly competition law and procurement, and his research concentrates on the way the public sector interacts with the market and how it organises the delivery of public services, especially healthcare. He is a significant witness. He was clearly taken seriously by the International Trade Committee and by the International Agreements Committee in the House of Lords.

Professor Sanchez-Graells argued that there are a series of problems with the way in which the procurement chapter has been written that, in effect, create the GPA-minus problem, which could have a chilling impact on the appetite of British businesses to bid in Australia and New Zealand, unless Ministers can rectify those problems and provide comprehensive reassurance that Professor Sanchez-Graells may not have considered the whole picture. He has been explicit in saying that he wants the procurement chapters of both the New Zealand and Australia deals renegotiated and only then put into law, so it is important that we hear the Minister’s reaction to those concerns.

I had thought that the biggest problems with the Bill were the huge giveaway to Australian farmers, the lack of protection for British agricultural goods, the lack of progress on geographical indications and the shocking levels of scrutiny, but Professor Sanchez-Graells appears to suggest that there are serious issues with procurement and whether the procurement chapters present the huge opportunity that Ministers have been keen to big up. He says that the legal uncertainties in the chapter that the Bill would write into law ensure that the rules clash with the World Trade Organisation’s rules on procurement, and we would then risk breaching international law, be it the GPA or the two trade deals.

We know that Ministers have a record of not being bothered about breaking international law—one thinks of the Northern Ireland protocol or other aspects of the trade agreement with Europe—but if Britain’s reputation for international lawbreaking gathers ground, that could have a chilling effect on our ability to negotiate other trade agreements and implications for the confidence of the markets, which is particularly worrying.

The GPA is the baseline for opening up access to procurement contracts. I commend Ministers for the objective of creating a GPA-plus regime, and the Australia deal secures some more substantive obligations that point in the direction of such a regime, such as the electronic publication of contracts by authorities, the inclusion of a clause on environmental, social and labour considerations and a clause on SME access to procurement opportunities, the expansion of economic coverage through the inclusion of concession and build-operate-transfer contracts, and so on. However, it also deviates in ways that alter or reduce substantive obligations, so we have the creation of a GPA-minus regime instead.

The scope for legal uncertainty risks having a chilling effect in terms of British businesses wanting to bid for Australian and New Zealand contracts, and vice versa. Amendment 5 makes it clear that consultation is key, and amendment 22 would give us the chance to understand fully the impact of these GPA-minus changes. Both would be helpful additions to the legislation and would allow us to address some of the concerns.

The concerns Professor Sanchez-Graells expressed in evidence to the Select Committee were very technical and challenged members of the Committee—they certainly challenged me when I read back over them to fully understand their scope. To bring them to life at our witness session last week, I asked him to give some examples of where his concerns might have played out. One example I asked him to think about was a British construction business bidding for a contract to help build the Melbourne airport link, which the Australian authorities are tendering. He said:

“Let us imagine that an innovative British company that wants to sell low emissions rolling stock for that metro link in Melbourne airport goes and tenders in Australia. It is excluded for any number of reasons and it wants to challenge the decision. It could also be barred from access to remedies in Australia, which means that the UK tenderer has lost its time and probably made a loss on the project.”––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 42, Q52.]

That business could lose its access to remedies if the Australian courts embraced the decision of the contracting authority on public interest grounds—that the contract could not be delayed and the compensation not offered, because it was so important that the Melbourne airport link got built on time.

If the UK tenderer had spent substantial amounts to get that contract and then could not get any compensation for all that money, that would create a big disincentive for anyone from the UK thinking of trying to tender for future projects in Australia. It is important that the Minister and the Department for International Trade explain what steps they will take to prevent that risk from coming to fruition.

[Lloyd Russell-Moyle]

Is there not also a danger that an international company could choose which of its subsidiaries a bid should come from? Rather than choosing the British company and channelling the money through it, it might consider that the protection offered would be marginally better should the bid come from the French or German company. The multinational company will choose to channel its bids through their other subsidiary companies outside the UK, which could deprive UK taxpayers of money and British workers of the contract, when the British company has done some of the necessary paperwork and processing. There does not need to be a material change; there only needs to be a theoretical risk that that could happen.

[Gareth Thomas]

Unfortunately, that is absolutely right, as Professor Sanchez-Graells argued. That is a real risk. There are potentially chilling impacts on British authorities that want to issue contracts, should New Zealand companies, and particularly Australian companies, bid.

On the possible GPA-minus provisions, a broader issue is relevant to the argument for amendments 5 and 22. Is the GPA being undermined? The GPA-minus provisions are not just an issue for the UK-Australia FTA, but are likely to be an issue under the CPTPP. Given how difficult it was to negotiate the GPA and how long it can take to secure improvements, enhancements and modernisation, one has to ask whether Ministers have given up a little on that multilateral process. Have they decided that it is so important to get individual procurement chapters agreed under trade deals with potential allies that we will give up on the process of modernising the GPA? Surely it needs to be a living document, because it dates quickly; the current version was negotiated more than 10 years ago and is already out of date on digital procurement and sustainability. The more GPA-minus provisions there are in trade agreements negotiated around the world, the more difficult it will be for the World Trade Organisation to negotiate an enhanced, modernised GPA. It would be good to hear what plans the Minister and the new Secretary of State have to prevent the UK-Australia chapter, with its GPA-minus provisions, from stopping any effort to modernise the GPA. One hopes that Britain would seek to lead that process at the WTO.

The second major concern of Professor Sanchez-Graells is why we are putting the two procurement chapters into law if we plan to accede to the CPTPP? It has its own procurement chapters, and both Australia and New Zealand are members of it. Those chapters are very similar to the Australia and New Zealand FTA chapters, so there is similar scope for uncertainty. We have been led to believe by the current Prime Minister and the previous Secretary of State for International Trade—presumably the present Secretary of State will tell us something similar—that CPTPP remains the top trade priority for Ministers. Professor Sanchez-Graells is concerned about the Government’s rush to get two procurement chapters on to the statute book when there is scope for future uncertainty. I am not sure what I think about that particular argument, but I would be interested to hear what the Minister has to say.

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[Gareth Thomas]

We know that Conservative Ministers have become enthusiasts for red tape—that was the reality of the deal the previous Prime Minister negotiated with the European Union. I gently suggest that my hon. Friend should not be too surprised that Ministers do not seem bothered about more legal uncertainty for businesses interested in Government procurement contracts.

Either way, a bit more consultation, which amendment 5 would lock in, and a bit more thought as a result of an impact assessment under amendment 22, might help to encourage debate and consultation about how serious the problems are and how to resolve them. That might help to advertise the many apparent benefits of these agreements, which the Government’s impact assessment mentioned. However, I caution Committee members to hold on a second, because the third argument that Professor Sanchez-Graells advanced in public was that the procurement chapters will not lead to the huge benefits for British businesses that Ministers have claimed they will and that the impact assessment Ministers published over-eggs all of those benefits. For example, Ministers say there will be lots of new opportunities for transport firms to run transport contracts in Australia, despite there being many transport networks in the UK that are run by foreign companies. I hope to pick up that issue in the Committee’s discussions on new clause 4, but it would be interesting to hear which companies have indicated to the Minister that they are interested in the procurement opportunities in Australia and New Zealand that he and his colleagues have alluded to.

Professor Sanchez-Graells also noted the consequences of clauses 1(2) and (3), which we debated this morning. He noted that contracts of unknown length and tenure would be extended by regulations to cover more than just Australian and New Zealand firms, with no reciprocity in mind. If only the Secretary of State had given evidence in good time to the International Trade Committee, which my hon. Friend the Member for Brighton, Kemptown sits on, some of those concerns could have been addressed.

To help me understand Professor Sanchez-Graells’s arguments, I asked him to explain them in the context of the Elizabeth line—Crossrail, as it was known—and of the need to rebuild a hospital. Members will remember the significance of the Elizabeth line, stretching as it does from Paddington in west London through to Abbey Wood and Stratford in east London. Its cost to date is almost £19 billion, and it will be fully operational this year. It is a huge public procurement exercise—that £19 billion does not include new trains or a number of other things. It has been a huge success story for the UK and London. It has generated 14,000 jobs, it comprises 42 km of tunnels and it has used 13,500 cubic metres of concrete. In short—

[The Chair]

Order. I understand the argument the hon. Gentleman is making, but I think we get the point about Crossrail. He needs to move on to the relevant argument.

[Gareth Thomas]

The argument I am making is that Professor Sanchez-Graells highlighted the risk of a chilling effect on the progress of the Elizabeth line had the Australian and New Zealand procurement chapters been in force. Let me set out how it might have played out—fortunately, neither agreement was in place, so there was not the same legal uncertainty and we have not had such a delay.

Let us suppose for a second that both procurement chapters had been in force. To slightly simplify it, the Elizabeth line offered three contracts—one for the construction of Crossrail, one for the supply and maintenance of the rolling stock and one for the operation of the line, which was a services concession. That services concession would not have been covered by the UK-Australia free trade agreement, but the construction contract and the rolling stock contract would have been covered under both the WTO’s Government procurement agreement and, crucially, the UK-Australia FTA. There would effectively have been dual regulation contracts.

There could have been a real, substantive clash of provisions between the GPA and the FTA. The crucial issue of access to remedies could then have played out. If an Australian company had expressed an interest in the relevant tender—for construction or for supply of the rolling stock—and had ended up not getting the contract, it could have been barred from access to remedies under the UK-Australia FTA on grounds of public interest. Why would we have wanted to delay the completion of the Elizabeth line?

The Australian company would have missed out on compensation and scope for judicial—

[The Chair]

Order. What clause is this relevant to?

[Gareth Thomas]

This is relevant to clause 5. If we had consulted better with firms across the UK that benefited from the supply chain of the Elizabeth line, they might have been able to highlight their concerns at an early stage, preventing any problems going forward.

If you, Mr Twigg, are not convinced of the relevance of an argument that looks back, let me put to you an argument that looks forward and give the example of a hospital that needs to be rebuilt. Let us say it is the Queen Elizabeth Hospital in King’s Lynn, which we know needs rebuilding. The Australian and New Zealand free trade agreements, and the procurement chapters of both, will be in play at this point, assuming the Bill becomes law. If they are, and an Australian company bids for the contract to rebuild the Queen Elizabeth Hospital, there could be a chilling effect.

Let us say the company is denied access to the contracts, for whatever reason, thinks it has been treated unfairly, tries to put in a bid for judicial review to stop the contract being won and started by the relevant British company, and cannot get judicial review to stop it, because of public interest grounds—because the hospital is falling down. The court might say, “We’ve got to crack on with this.” The Australian company would miss out on judicial review, also on public interest grounds, and the court would be open to rule against giving it compensation. Australian companies would now look askance at the NHS procurement market and think, “We won’t take the risk of bidding for contracts there. We may well miss out because of the terms that have been agreed under the procurement chapter of the UK-Australia agreement.”

It does not just go one way. That same risk is potentially in play in Australia for British firms bidding to rebuild Australian hospitals. If one were falling down and a British company bid and lost out and then thought it had been treated unfairly, it might initially turn to its lawyers and say, “Let’s put in a judicial review bid to stop the contract going ahead while we try to persuade the court to restart the tender process. Let’s at least try to secure compensation for all the money it’s cost us to put the bid together.” In my understanding of the arguments advanced by Professor Sanchez-Graells, under the terms of the UK-Australia free trade agreement, if the contract is not awarded to the UK firm but to an Australian one, and the court decides on public interest grounds that that is fine, the British business would lose an awful lot of money that it might have invested in bidding for the contract.

The irony is that if a French firm bid for the same contract, it might not be able to stop the contract or get judicial review, but under the terms of the GPA, it could argue for compensation. The British firm would not even be able to apply for compensation, but firms from other GPA jurisdictions could. In those circumstances, British firms that specialise in overseas procurement may be tempted to look not at the Australian or New Zealand markets, but at other markets in which they have better protection if future contracts go wrong.

That is a substantive and serious concern, and it would be good to hear the scale of the Minister’s concern about such risk. Ministers and Committee members may still think that companies take risks all the time, so if a contract does not go their way and they cannot secure compensation or judicial review, then tough luck. However, it is also worth considering the effect on the bit of Government that is trying to issue the contract.

I pray in aid the case of Draeger Safety UK v. the London Fire Commissioner, which has been substantially protracted. The London Fire Commissioner wants to upgrade the quality of equipment available for its firemen and women—quite understandably, it wants the best, most modern equipment. Draeger Safety UK lost the contract, thought the contract was unfair, and is trying to secure compensation. That is not an isolated case; similar cases are going through the UK courts.

Adding to the process the complex GPA-minus provisions of the UK-Australia and the UK-New Zealand FTAs could have a chilling—or certainly a delaying—effect on the issuing of tenders. For that reason, I hope that a little more consultation by Ministers with each part of Government around the UK that might want to issue a contract, and a little more thought—perhaps through an impact assessment—about the impact of the GPA-minus provisions that Professor Sanchez-Graells set out, might help to avoid those sorts of problems, and that the procurement chapters of both FTAs could actually be really useful.

I look forward to hearing what the Minister has to say about Professor Sanchez-Graells’s concerns, and I strongly encourage the Minister to support amendments 5 and 22.

[Sir James Duddridge]

rose—

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[Sir James Duddridge]

During long interventions, sometimes Ministers jokingly ask to intervene, but I had been sitting down for so long that I genuinely thought I was listening to a speech.

Relations with the International Trade Committee have not been as good as the Government, the Committee or the House want. That is going to change. We will make ourselves fully available. I know the Secretary of State has already started having those meetings with the Committee. Her diary obviously shifts quite quickly, so I cannot say where she will be, when. I know there is a whole series of activities planned. I am looking at the Public Gallery; there are civil servants looking into how we can link better with members of the Committee. I will play my part as Minister of State at the Department, and will always make myself available to the Committee, if at all possible. It will be my top priority, over and above speaking to the House or taking part in other Committee processes.

The hon. Gentleman said, “You just publish reports. That’s not enough.” If that is all we did, it would not be enough, but it is not all we have done. There are inter-ministerial groups on these issues, which are attended by Ministers from the devolved Administrations, particularly those with responsibility for trade. The forum that we are discussing was established to consider all trade policy, and its effective implementation, and will be able to review and evaluate that policy’s impact.

The hon. Member for Harrow West seems incapable of using the word “effect” or “impact” without prefacing it with the word “chilling”, as if these were haunting issues. We want to evaluate policies, to look at the impact assessment, and to improve all the time. As has been said, the agreements are evolving. They get built on and improved. The forum has met eight times since its inception in 2020. It provides for open discussion about negotiation, and allows Ministers from devolved Administrations to contribute their views directly, both formally and, in the sidings, informally.

[Gareth Thomas]

How many of those meetings have focused purely on procurement?

[Sir James Duddridge]

I have absolutely no idea. As the hon. Gentleman said early on, procurement is a very small section of these matters. Most, if not all, of these meetings were probably open, so I could check the minutes, but I suspect that not every nuance is captured in them. Also, sometimes trade issues can be looked at through lots of lenses. For example, one issue might relate to the motor industry, procurement and Wales.

There are bilateral meetings with counterparts from the devolved Administrations, and there is weekly engagement by UK Government officials. That all helps to build a better relationship. The hon. Member for Llanelli asked whether the relationship could be better. I am unsure of how well sighted she and the Committee can be of the details of that—I think that is what the hon. Member for Harrow West is alluding to—but it would be interesting to look at the Welsh example, in particular; there have been a lot of compliments, with people saying that engagement has increased and is better. That is not to say that it cannot be even better, but let us give credit where credit is due—not to Ministers, but to the Department.

--- Later in debate ---

[Sir James Duddridge]

Absolutely. On unions—I mean unions in the broadest sense; I am not trying to pull a fast one by referring to four regional national farmers unions—my understanding is that six unions, as the hon. Gentleman would understand the term “union”, as opposed to the Conservative and Unionist party, for argument’s sake, are genuinely involved in the trade advisory groups. That is what we would want.

That is on the record. If I am wrong and if I have misread my brief, I will correct the record later and write to the hon. Gentleman with the details of the unions, and perhaps with more information around the issue of the union being invited to something and there being some type of deal, if it is in the public interest to put that out. I want to encourage the unions to come and be part of the process, and I want us to make decisions.

[Gareth Thomas]

To be clear, is the Minister saying that if the TUC, as the representative of the trade union movement, is not on any of the relevant trade advisory committees, he is committing himself to inviting the TUC?

[Sir James Duddridge]

The Minister did not commit to that. I think the question is, will I commit to that? The answer is no. I will commit myself to ensuring that unions are on those trade advisory groups. I think they are on the trade advisory groups—

[Gareth Thomas]

Why not?

[Sir James Duddridge]

Because there are many unions out there. That is not part of the Bill—

[Gareth Thomas]

The TUC is the global organisation for unions—

[The Chair]

Order. The hon. Gentleman needs to intervene properly if he wishes to speak.

[Sir James Duddridge]

This is an interesting question, but the hon. Gentleman, who was an able Minister, would not have made such an on-the-hoof commitment when he was sitting on this side of the Committee without consulting and without thinking about the implications for other unions. However, I am more than happy to go away and look at the issue if that makes him happy. I am picking up the gauntlet to try to bring him onside and get the Bill through, so perhaps that is a nice suggestion.

[Gareth Thomas]

Almost nice. All I would say to the Minister is that I would have known the question was coming.

[Sir James Duddridge]

There were no telepathic Ministers available, so the hon. Gentleman is stuck—

[Gareth Thomas]

Evidence was given—

[The Chair]

Order, thank you.

--- Later in debate ---

On the GPA more generally, first, the Australia deal does not alter the global baseline of GPA, so I do not think the term “GPA-minus” is relevant. The hon. Member for Harrow West is arguing both cases. He says there are problems because the provisions are GPA-plus, but he then argues that there are problems because they are GPA-minus. I think the case is that they are GPA-plus, but he has criticisms of that.

[Gareth Thomas]

If the Minister cannot elaborate on this now, will he commit to write to the Committee with a more detailed respond to Professor Sanchez-Graells’s analysis? He had substantial concerns, which the International Trade Committee and the International Agreements Committee accepted, and nobody challenged it in the evidence he gave last week. I understand that the Minister may not have access to all the information he needs, but I wonder whether he would be good enough to write to us. I hope he is right—I really do—that the provisions negotiated are GPA-plus, but there seems to be doubt that some of the tweaks that have been made might make them GPA-minus, and that needs to be ironed out as a matter of urgency for British business.

[Sir James Duddridge]

I am happy to iron it out. The departmental advisers respectfully disagree with the professor, and I am more than happy to write with their analysis of why they disagree. Clearly, we cannot take evidence from 30 academics and say, “This is an outlier out of 30,” but I will send the Committee that letter.

On the unions, it is slightly more complicated than what the hon. Gentleman asks and what I said. The TUC has already been offered roles on the advisory groups but unfortunately has not taken them up so far. The TUC has been represented on the Department’s Strategic Trade Advisory Group, and in 2021 we offered six unions—that is where the figure six came from—roles on the group. I assumed incorrectly that they had taken us up on that offer. I do not know why, but they have not. They are still welcome, and I am more than happy to write again making that offer, to try to understand why they have not taken it up. We are saying that we want to consult more widely. We have offered the unions a consultation role, and Members say that unions want to have an even bigger role, but they have not come to the table. I am sure that there are complicated, good reasons for that, and we will try to work through those.

Hopefully I have answered the questions sufficiently and have only failed in my lack of telepathic skills to know which questions would come up. I will try harder next time and get the best brains on providing said facility to the hon. Gentleman.

[Gareth Thomas]

I am grateful to you, Mr Twigg, for allowing me briefly to respond. I am grateful for the Minister’s willingness to write to the Committee with a more detailed response to the concerns that Professor Sanchez-Graells raised. I am happy not to press amendments 7 and 20. However, tempting as it is to think that the Minister has given comprehensive answers, he was almost comprehensive but did not give quite enough for us not to press amendments 5 and 22. We will press them to the vote.

[Ms Anum Qaisar (Airdrie and Shotts) (SNP)]

The legislation does not reflect the values that Scotland stands for, and it does not adequately safeguard food and farming standards in Scotland.

The powers in the Bill should not be exercisable by UK Ministers in relation to Scotland without a requirement for them to secure the consent of Scottish Ministers. That is what amendments 3 and 4 propose. While negotiation of international agreements is a reserved matter, the implementation of such agreements in devolved areas such as public procurement is devolved. There is no reason for UK Ministers to hold such powers in relation to Scotland.

The Scottish Government have consistently and successfully implemented international obligations on procurement since 2006, when they first transposed the EU directives, and they have been consistent in their commitment to upholding international law. The Scottish Government continue to engage with the UK Government on the issue, and I understand that officials are in continual contact with counterparts in the Cabinet Office and the Department for International Trade.

It might be better to make provision in the Bill for the implementation of those agreements, rather than using a delegated power. The Minister mentioned the issue, although I still do not understand why that is not possible and there appears to be no particular reason for powers needing to be provided. Such agreements are signed and there is common understanding of the amendments that need to be made to procurement legislation in order to implement them. That could be done in the Bill, which in turn could provide for commencement regulations to ensure that the amendments took effect at the desired moment.

I thank the shadow Minister, the hon. Member for Harrow West, for his sympathy, as he put it, towards amendments 3 and 4. Those amendments are specific to discussion and dialogue between the UK Government and the Scottish Government, and I would argue that amendment 5 is not as strong as our amendments. However, we do support Labour amendments 7 and 22.

Question put, That the amendment be made.

--- Later in debate ---

[The Chair]

Before we come to the question that clause 1 stand part of the Bill, I note that I was quite lenient in the previous sitting about interventions. I would like to remind Members that interventions should be short and to the point.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Schedule 1 agreed to.

Schedule 2

Regulations under section 1

[Gareth Thomas]

I beg to move amendment 9, in schedule 2, page 9, line 5, leave out from “section 1” to end of line 6 and insert—

“may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 10, in schedule 2, page 9, line 8, leave out “negative” and insert “affirmative”.

Amendment 11, in schedule 2, page 9, line 11, leave out from “section 1” to end of line 12 and insert—

“may not be made unless a draft of the instrument has been laid before and approved by a resolution of Senedd Cymru.”

Amendment 12, in schedule 2, page 9, line 13, leave out from “section 1” to end of line 16 and insert—

“may not be made under this Act unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.”

Amendment 13, in schedule 2, page 9, line 25, leave out from “applies” to end of line 26 and insert—

“may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.”

Amendment 14, in schedule 2, page 9, line 28, leave out “negative” and insert “affirmative”.

Amendment 15, in schedule 2, page 9, line 29, leave out sub-paragraphs (5) and (6).

Amendment 16, in schedule 2, page 10, line 2, leave out from “Ministers” to end of line 3 and insert—

“may not be made unless a draft of the instrument has been laid before and approved by a resolution of Senedd Cymru.”

Amendment 17, in schedule 2, page 10, line 5, leave out from “department” to end of line 7 and insert—

“may not be made under this Act unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.”

Amendment 18, in schedule 2, page 10, line 9, leave out sub-paragraphs (9) to (12).

[Gareth Thomas]

Thank you, Mr Twigg. You will understand the frustration of Labour Members present that Ministers are once again seeking to get through a whole bunch of regulations using the negative procedure, rather than the affirmative resolution procedure. Amendments 9 to 18 seek to make it a requirement that the affirmative resolution procedure be used for every set of regulations that Ministers want to propose under the procurement chapters of these two free trade agreements.

In making the case, I note that the affirmative resolution procedure is by no means a perfect process. However, it is better than the negative procedure. Without the affirmative process, Ministers would have carte blanche to introduce regulations based on these procurement chapters without the slightest hint of anything resembling parliamentary scrutiny. The negative resolution procedure that the Government propose is the least rigorous of all parliamentary procedures available to the House for scrutiny.

Having served in government, I can understand the Minister’s appetite to avoid scrutiny. There is very little to be gained for a Minister of State or an Under-Secretary of State in having to come and justify to a parliamentary Committee why particular regulations should be introduced. However, it is none the less important that Parliament has the opportunity to ask questions about regulations that are being introduced and to consider whether they fit with the objectives that were set out for the trade negotiations and actually seek to achieve those objectives.

It is worth remembering that the last negative instrument to be successfully annulled, as I understand it, was the Paraffin (Maximum Retail Prices) (Revocation) (No. 3) Order 1979. With such a small chance of a negative instrument being successfully annulled, I can well understand the appetite of Ministers to use this process.

[Sir James Duddridge]

Does not the evidence that the hon. Gentleman has brought forward actually negate his case? If there was a genuine problem and there had been some error, the Committee would have voted against it or, indeed, the Government would have withdrawn the measure.

[Gareth Thomas]

I gently suggest to the Minister that it is much better not to get ourselves into the position where we have to persuade Members from all parts of the House to vote down an order. One swallow does not make a summer. Just because there is an example in the far distant past that we should endorse negative instrument, a little bit of parliamentary scrutiny and pressure on the Minister, and a few nerves to make the Minister check their brief in more detail before signing off on a set of regulations, would seem sensible. The scrutiny arrangements for the Australia FTA to date have been poor, and we have had no debate on the Floor of the House on the New Zealand FTA, apart from the Second Reading of this Bill. Given that, we should switch from the negative to the affirmative process, and I gently encourage him to adopt an even more reasonable tone than he has adopted up until now.

[Sir James Duddridge]

I am sure the Whips will note with criticism the hon. Gentleman saying that I have been reasonable. In all seriousness, I thank hon. Members for the amendments and I hope to provide reassurance as to why the measures are necessary. The hon. Gentleman says he wants to hold my feet to the fire. He suggested that I may not read the brief quite as closely if I do not have to defend it in Parliament, but I will ensure that I do that anyway. I will regularly check my brief.

It is worth remembering that the amendments would not be a vote on the agreements. They would be a vote on the secondary legislation of a trade agreement. By the time these agreements enter into force, Parliament will already have had the opportunity to scrutinise the obligations of the procurement chapter in these agreements through the process set out in the Constitutional Reform and Governance Act 2010. The Government are certainly committed to transparency in our trading arrangements, and we have put in place a suite of enhanced transparency and scrutiny arrangements that go well beyond our statutory obligations, and we will continue to do so. That includes providing the International Trade Committee and the Lords International Agreements Committee with at least three months to report on the agreements before Parliament scrutinises them more formally through the process set out in the Constitutional Reform and Governance Act, which comes later.

For the Australia agreement, the period was triggered after Parliament had had the deal available to scrutinise for over six months, and it has already been subject to scrutiny through the Trade and Agriculture Commission, which published its report in April 2022. The Department has since responded with the publication of the Australia agreement report under section 42 of the Agriculture Act 2020. In addition, future changes in the procurement chapters will relate mostly to machinery of government changes and the subsequent updating of lists.

This is not a novel procedure. Section 1 of the Trade Act 2021 enabled the implementation of the UK’s membership of the World Trade Organisation agreement on government procurement to operate in a similar way. This approach was acceptable to Parliament, and we received no negative comments from the Delegated Powers and Regulatory Reform Committee. These sessions and holding Ministers to account are useful, but Ministers are a limited resource. We are not an infinite number, and we should perhaps focus on the more critical pieces of legislation rather than just statutory instruments. I therefore ask the hon. Member to withdraw his amendment.

[Gareth Thomas]

I am grateful to the Minister for his response, but I gently suggest that we have not been deluged with regulations from the Department for International Trade, so I do not buy his argument that Ministers or shadow Ministers are so busy that there is no time to discuss regulations. If our amendment is accepted, it may well be that our debates would be relatively short, and they would provide the opportunity to ask questions and raise issues that are slightly outwith this debate but important to a range of stakeholders outside the House. It would make sense to switch from the negative to the affirmative process, so I intend to press the amendment to a vote.

Question put, That the amendment be made.

Division 5

Ayes: 7

---

Labour: 5
Scottish National Party: 2

Noes: 10

---

Conservative: 10

[Gareth Thomas]

I beg to move amendment 6, in schedule 2, page 10, leave out lines 31 to 38.

Amendment 6 would delete part 3 of schedule 2. I want to focus on what that would mean. Part 3 says:

“The power to make regulations under section 1 in relation to”

both Government procurement chapters, or

“any modification of either Chapter which requires ratification, is capable of being exercised before the agreement or (as the case may be) modification concerned is ratified.”

The Minister seems to be asking for carte blanche to be able to make any change to the procurement chapters without proper parliamentary scrutiny, and certainly before the UK-New Zealand FTA has been ratified. I am open to persuasion as to why such a requirement is necessary, but I wonder whether Ministers are again seeking to avoid serious parliamentary scrutiny, specifically on the terms of the UK-New Zealand FTA. The Minister will know that there has not been any sustained debate in the Chamber on the whole of that free trade agreement. I look forward to hearing his justification for this particular part of schedule 2.

[Sir James Duddridge]

I hope to be able to provide that assurance. This part of the Bill is there not at the request of Ministers, but at the request of lawyers, to give legal certainty and predictability. It is a necessary part of the process of implementing trade agreements to make the legislation before ratifying.

The amendment would create legal uncertainty regarding the process of implementing the two agreements. Several steps need to be taken to get agreements into force and allow UK businesses and, indeed, consumers to benefit from the significant economic advantages that they provide. Entry into force is the final step. However, the UK can proceed to enter into force only after it has ratified the agreements. In turn, ratification may only be agreed to once all the necessary domestic legislation is in place. Without the provision that the amendment seeks to change, there would be legal uncertainty about whether domestic legislation could be made before ratification. That is the reason behind it. I hope that the hon. Gentleman, having heard my response, will withdraw what I hope will turn out to be a probing amendment.

[Gareth Thomas]

I am grateful to the Minister for his explanation. I now understand a little better the reason for the provision. I will reflect on his remarks, but for now I will not press this to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Clause 3 ordered to stand part of the Bill.

Clause 4

Extent, commencement and short title

[Ms Qaisar]

I beg to move amendment 2, in clause 4, page 3, line 5, at end insert—

“(4) This Act expires on 31 December 2027.”

[Ms Qaisar]

The UK Government are negotiating trade deals for the first time in more than 30 years, and that is not an easy task. Trade deals in matters of procurement are not just for Government photo ops; they impact on every fibre of our and our constituents’ being. Therefore, we must have high levels of security at the start, during and at the end of discussion about the legislation. I appreciate that we have the CRaG—Constitutional Reform and Governance Act 2010—process during the drafting of legislation, but as has been said this afternoon, it does not guarantee a debate or any votes in Parliament. It is a poor scrutiny tool from the outset.

In setting an expiration date, our amendment would allow for scrutiny at the end. That would enable Parliament to judge the legislation’s effectiveness on the proposed date of December 2027. That would also allow our constituents to examine the usefulness of the legislation in matters of procurement that have arisen over the years. We must also consider the potential of traders across the country getting locked into agreements that do not work for them. Consumer group Which? has already found that 72% of people in the UK do not want food that does not meet current standards coming in through trade deals. The majority of survey respondents—67%—also felt that the UK Government provide a poor level of information about new trade deals. The amendment would ensure that we bring public and parliamentary scrutiny to the forefront. I urge colleagues to support the amendment.

[Gareth Thomas]

Amendments 8 and 21 are probing amendments, to understand better how the Procurement Bill and potential accession to the CPTPP might affect the provisions in the procurement chapters of the Australia and New Zealand free trade agreements.

As I understand it, the Minister has touched on some of the reasons why the New Zealand and Australia free trade agreements need to stay on the statute book for considerable time to come, but I want to understand whether the Procurement Bill will provide the opportunity to sweep up the measures proposed by the two amendments, so that this Bill can be taken off the statute book to avoid any legal uncertainty. Clarity on that would be helpful. If there is a chance that the legislation will not be necessary, because the Procurement Bill would take the matter forward, that creates additional opportunities for Members to consider the impact of the trade legislation going forward.

I wonder whether Ministers might be tempted to think, “Let us stick with the Trade (Australia and New Zealand) Bill because we have no idea whether the Procurement Bill will survive in its current iteration.” I say gently that, given the chaos in the Minister’s party, one does not know which legislation will survive if there are further ministerial changes. He will understand that there has been considerable criticism of the Procurement Bill. Clearly, it would not be appropriate to dive into that now, but it would be helpful to understand the interplay between that crucial piece of UK domestic legislation and the two procurement chapters. If the experts in his Department are wrong about the concerns that Professor Sanchez-Graells outlined about possible GPA-minus provisions now being the problem for British exporters to Australia and Australian exporters coming here, the Procurement Bill might provide an opportunity to sort those problems out.

Amendment 21 refers to the CPTPP and the potential accession of the UK to it. It would be good to hear from the Minister how the negotiations are going and what might be a reasonable timeline for the House to have the chance to consider the accession documents to the CPTPP. I ask that because the provisions in the procurement chapter of the Australia free trade agreement appear to largely mirror the provisions in the procurement chapter of the CPTPP. Everything that has been written about the CPTPP suggests that we will be rule takers and will not be able to shape in any significant way the procurement chapter of the CPTPP that we might wish to join. Was that part of the motivation for Ministers deciding to just roll over and accept the request of the Australians for the GPA-minus provisions in the procurement chapter of the Australia FTA? We would simply have to accept them on joining the CPTPP.

The Minister will know that a series of trade experts have suggested that we will be rule takers if the CPTPP comes into force. We will not have much opportunity to influence the negotiations, and that is a considerable concern given that the idea of Britain being a rule taker was a motivation for many to vote for leaving the European Union. I look forward to the Minister explaining the interplay between provisions in the Trade (Australia and New Zealand) Bill and those in the Procurement Bill and the CPTPP.

[Sir James Duddridge]

I welcome the probing amendments tabled by the official Opposition and the amendment tabled by the Scottish National—or nationalist—party. Forgive me, but I forget which word it is. [Interruption.] I will do my homework better next time.

Amendments 2, 8 and 21 would ensure that the power in the Bill expired, even if provision under it was still required. The Bill is about implementing and maintaining our commitments in the procurement chapters of the agreements. That means that we need to ensure day one compliance as well as compliance beyond that. That is why the amendments that would remove the power are inappropriate. Although the amendments would permit the procurement chapters to be implemented, they would remove the power when it might be needed for modifications, and that would not be a satisfactory position to be in. Future modifications in the procurement chapters may relate to machinery of government changes and updating of lists. An example is when the Department for Culture, Media and Sport added digital. I do not think that we would want to come back to this Committee to make such a change.

Let me deal with amendments 8 and 21, tabled by the hon. Member for Harrow West. Bilateral trade agreements, like the ones dealt with in this Bill, sit alongside agreements like the comprehensive and progressive agreement for trans-Pacific partnership and the World Trade Organisation agreement on Government procurement. The procurement chapters of these deals will not be superseded by the accession to the trans-Pacific partnership. Accordingly, the powers in this Bill will still be needed after the accession in order to implement future modifications to both these agreements.

--- Later in debate ---

[Gareth Thomas]

Will the Minister give way?

[Sir James Duddridge]

I will, but I suspect I am coming to the hon. Gentleman’s point.

[Gareth Thomas]

The Minister mentioned the GPA, which provides me with the opportunity to intervene and press him on it. Presumably the Government are still significant supporters of the GPA, but I hope that the Minister accepts my point about the need for the GPA to be a dynamic and more modernised agreement. If he does accept that, what are Ministers doing to try to convene signatories to the GPA in order to start the process of modernising that agreement?

[Sir James Duddridge]

I agree that the GPA should be dynamic. In terms of what Ministers are doing, I can speak for myself: at G20, I met Dr Bright Okogu, Professor Ngozi’s right-hand man in the WTO, and I agreed that I would go to Geneva for probably a week and meet all the officials there to get up to speed with the detail at a quiet time, rather than the busy time of a multilateral agreement, to raise exactly these types of issues, because we believe in a free trading system globally and the value of promoting that for all UK equity—it is not just exports, but the cost of living and also development, which both of us care massively about.

I think that I have covered the issue about the CPTPP. I cannot give a running commentary on negotiations there. It is a high priority for the Government. At my most recent meetings with internationals, I raised it, both bilaterally and multilaterally, and I will continue to do so, as will other Ministers. The Australia deal and this Bill are a stepping stone to get there. As a precondition, we want to get this done so that we are on a firmer footing for the next transition.

[Gareth Thomas]

The hon. Gentleman will be well aware, I suspect, that one of the big concerns about the CPTPP relates to investor-state dispute settlement. One of the mildly reassuring things about the procurement chapters of the Australia and New Zealand FTAs is that they do not allow for investor-state dispute settlement to kick in in a very obvious way. The CPTPP appears to be much more explicitly in favour of ISDS. It would be helpful to understand from the Minister, at a time of his convenience, whether the Government are accepting the principles of ISDS, locked as they are into the CPTPP, or whether he is actively pushing for them to be deleted from the requirements that Britain has to sign up to in order to accede to the CPTPP.

[Sir James Duddridge]

I really cannot, as part of this Bill, give any more to the hon. Gentleman than I have done on my discussions in international forums and my intention to go out to Geneva. I want to go out there open-minded. A number of issues will be discussed in Geneva above and beyond this one, and I want to have an open discussion. I do not want to prioritise the hon. Gentleman’s equities and desires, or anything else; I want to listen openly to what Dr Ngozi says, and talk about how her priorities fit with the Government’s and how we can move forward together. That is the nature of multilateralism: because every member has a vote, the process can easily be held up, so I am resistant to being too strong in accepting what the hon. Gentleman has said. However, I am very sympathetic to it.

[Gareth Thomas]

I am grateful to the Minister for his explanation about his upcoming meeting with the staff of Professor Ngozi, who is a great figure internationally. The Minister—I do not chastise him in any way for this—had to have a discussion with his Whip, the hon. Member for Workington, but the question I asked was whether ISDS was included in the CPTPP. I wonder whether the Minister might be willing to look at the record and perhaps drop me a note about the question I actually asked.

[Sir James Duddridge]

I will certainly do so.

Turning to the question of whether the powers fall away, as ever it is slightly more complicated than yes or no. The powers in clause 1(b) for dealing with matters arising out of, or related to, the FTA chapters will cease to exist for England, Wales and Northern Ireland when the new procurement system becomes law through the Procurement Bill, assuming that all happens; those functions will instead be carried out through the powers in clause 82 of that Bill. It is different for Scotland, because competency for treaty making is at the UK level, but the actual procurement legislation and processes are done by the devolved Assembly. Scotland has separate procurement regulations from the rest of the UK and will retain those regulations after the Procurement Bill comes into effect.

--- Later in debate ---

[Sir James Duddridge]

I have made the point that we want to establish a good relationship with the International Trade Committee, and the Secretary of State giving evidence to it is clearly part of that. The hon. Gentleman will know that Ministers sometimes need to deal with matters urgently. I do not know what other matters are going on, but I am sure that the Secretary of State has apologised profusely and looks forward—as I do—to attending that Committee. I am more than happy to update the hon. Gentleman in a bit more detail, informally—perhaps even later today if I have time to go back to the Department.

[Gareth Thomas]

As part of this new spirit of transparency from the new ministerial team at the Department for International Trade, will the Minister commit to publishing the analysis used to produce the impact assessment that the Government published for the FTAs? As I understand it, Ministers are refusing to publish the modelling used to generate that assessment. That leaves a slightly cynical taste in the mouth. One suspects that the economic model is not being released because the impact assessment was perhaps slightly inflated.

[Sir James Duddridge]

I would like to make it clear that this is not a new plan for transparency. I am being credited, to a degree, with what is just the old order and transparency—[Interruption.]

[Sir James Duddridge]

I am sorry, Mr Twigg. I will stick entirely to new clauses 1, 2 and 3.

I am more than happy to take away the issue of impact assessments, and look at the formula and what was disclosed. I have read the document, but it is very big. I will probe and look at what has already been disclosed before asking the Department to disclose further information.

[Gareth Thomas]

Will the Minister give way?

--- Later in debate ---

[The Chair]

I would like us to stick to the new clauses as well.

[Gareth Thomas]

I suggest to the Minister that he should approach that discussion with his officials in a slightly different way. Why does he not go to his officials and ask, “Is there any reason why we cannot publish all the economic modelling behind the impact assessment?”

[Sir James Duddridge]

I thank the hon. Gentleman for his suggestions but, with respect, I will do things my way if that is okay.

We published impact assessments within the agreements—we have spoken about that already. In the reports, the Department provides analytical evidence as a base, but we will do more. I have already spoken about the five-year and two-year assessments.

On UK suppliers competing for procurements, there is a designated team in the Department—complemented by staff from Australia and New Zealand—who will support UK businesses across the country. I have already seen a bit of that.

--- Later in debate ---

[Gareth Thomas]

May I point out gently to the Minister that the point on GIs is that Ministers secured nothing in terms of protection for British GIs in the Australia deal. That comes on top of a very lengthy delay to get any GIs agreed with Japan. There is a worrying pattern of British businesses and good British products not getting the protection they deserve.

[Sir James Duddridge]

This is not an adverse change. It is just the start of an agreement and not everything can be done on day one.

I have further good news for the Scottish National party. It is slightly outside the scope of procurement, but there will be big benefits from the financial services industry, particularly in Edinburgh. Exporters were very keen, when the Secretary of State went there, to explain that they were happy about tariffs being reduced. That will reduce prices and increase profit. There is good news for Scottish salmon—not for the salmon themselves, as they will be dead—because they are guaranteed to clear customs in six hours. Hon. Members will know that time is an issue with fresh products. Scotland’s services firms, of which there are many, will benefit from access to millions of pounds worth of extra Government contracts. That is good news for the United Kingdom and good news for Scotland.

--- Later in debate ---

[Gareth Thomas]

Further to that point of order, Mr Twigg. On behalf of the official Opposition, I add my thanks to you and to Mr Pritchard for the generous way in which you have chaired proceedings. I must also thank the Clerks for their assistance with drafting, the Hansard staff for the challenging job that they will have to do to understand my notes in particular, and the Doorkeepers for keeping order. I can well understand why the Minister praises his officials; I hope others will understand if I take the opportunity to praise my one member of staff, who has assisted me in preparing for the Committee.

We have had a lively and provocative debate, in which a whole series of serious issues were raised by hon. Members from the Scottish National party and from the Labour party. I am grateful to my hon. Friends the Members for Llanelli, for Nottingham South, for Brighton, Kemptown, and for Sefton Central for their support.

I note that not one Conservative Back Bencher took the opportunity to praise the person who negotiated the Australia and New Zealand deals today—

[Sir James Duddridge]

Will the hon. Gentleman give way?

[The Chair]

Order. No. This is a point of order.

[Gareth Thomas]

With that, I conclude my remarks.

[Ms Qaisar]

Further to that point of order, Mr Twigg. I will not keep the Committee much longer. I echo the thanks to the Clerks and the Doorkeepers, who are the backbone of this place. Somehow, I seem to have had more help than the official Opposition: Katie, Clo and Calum have been fantastic on the research and background. I am sure that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey and I, and others in the SNP, will be knocking on the Minister’s door in coming weeks, championing Scotland, Scottish farmers and Scottish products.

Bill to be reported, without amendment.

Trade (Australia and New Zealand) Bill

Gareth Thomas Excerpts

Report stage
Monday 12th December 2022 Commons Chamber

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 2—Assessment of impact on farmers—

“At least three months, but not later than six months, after the coming into force of the government procurement Chapter of—

(1) the UK-Australia FTA, and

(2) the UK-New Zealand FTA,

a Minister of the Crown must lay before Parliament an assessment of the impact of the Chapter on farmers in—

(a) each region of England

(b) Scotland

(c) Wales, and

(d) Northern Ireland.”

New clause 3—Impact assessment: equality and human rights—

“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on equality and human rights within three years of the coming into force of Regulations made under section 1 of this Act and every three years thereafter.”

New clause 4—Impact assessment (No. 2)—

“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters within five years of the coming into force of Regulations made under section 1 of this Act and every five years thereafter.

(2) The impact assessment under subsection (1) must present an analysis of—

(a) the impact on each of the four nations of the United Kingdom; and

(b) social, economic and environmental impacts.”

New clause 5—Assessment of impact on hill farmers and crofters in Scotland—

“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on hill farmers and crofters in Scotland within six months of the coming into force of Regulations made under section 1 and every six months thereafter.

(2) The impact assessment under subsection (1) must be laid before both Houses of Parliament and before the Scottish Parliament.”

New clause 6—Assessment of impact on Geographical Indications in the United Kingdom—

“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on the operation of Geographical Indications in the United Kingdom within two years of the coming into force of Regulations made under section 1 of this Act.”

New clause 7—Impact assessment: British farmers—

“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on—

(a) livestock farmers,

(b) arable farmers,

(c) upland farmers,

(d) tenant farmers, and

(e) family farmers.

(2) The impact assessment under subsection (1) must be published within six months of the date of Royal Assent to this Act.”

This new clause would require the Secretary of State to report on the impact of the procurement Chapters on British farmers.

New clause 8—Impact assessment: environmental standards etc—

“(1) The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on—

(a) environmental standards,

(b) food standards,

(c) animal welfare standards, and

(d) biodiversity.

(2) The impact assessment under subsection (1) must be published within six months of the date of Royal Assent to this Act.”

This new clause would require the Secretary of State to report on the impact of the procurement Chapters on environmental, food and animal welfare standards, and biodiversity.

New clause 9—Review of effect on small businesses—

“(1) Within six months of the passage of this Act, the Secretary of State must lay before Parliament an assessment of the impact of the implementation of the procurement Chapters on small businesses.

(2) The assessment must consider in particular the impact of those Chapters on the ability of small businesses—

(a) to import goods,

(b) to export goods,

(c) to employ staff, and

(d) to remain solvent.

(3) In this section, “small businesses” means any business which has average headcount of staff of less than 50 in the tax year 2022-23.”

This new clause would require the Secretary of State to report on the impact of the procurement Chapters on small businesses.

New clause 10—Impact assessment: National Health Service—

“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters on the National Health Service within three years of the date of Royal Assent to this Act.”

New clause 11—Review of negotiation of procurement Chapters—

“Within one year of the date of Royal Assent to this Act, the Secretary of State must publish—

(a) a review of the lessons learned from the negotiation of the procurement Chapters, and

(b) an assessment of how this experience might inform negotiations of future free trade agreements.”

New clause 12—Super-affirmative procedure—

“(1) This section applies where an instrument is, or, as the case may be, regulations are, subject to the super-affirmative procedure.

(2) A draft of the instrument or regulations must be laid before the relevant institution.

(3) The appropriate authority must have regard to—

(a) any representations,

(b) any resolution of the relevant institution, and

(c) any recommendations of a committee of the relevant institution charged with reporting on the draft,

made during the 60-day period with regard to the draft.

(4) If after the expiry of the 60-day period the instrument is or, as the case may be, regulations are approved by a resolution of the relevant institution, the appropriate authority may make an instrument or statutory rule in the terms of the draft.

(5) If after the expiry of the 60-day period the appropriate authority wishes to proceed with the draft but with material changes, the authority may lay before the relevant institution—

(a) a revised draft, and

(b) a statement giving a summary of the changes proposed.

(6) If the revised draft is approved by a resolution of the relevant institution, the appropriate authority may make an instrument or, as the case may be, statutory rule in the terms of the revised draft.

(7) For the purposes of this section an instrument or statutory rule is made in the terms of a draft if it contains no material changes to its provisions.

(8) In this section, references to the “60-day” period in relation to any draft are to the period of 60 days beginning with the day on which the draft was laid before the relevant institution.

(9) For the purposes of subsection (8) no account is to be taken of any time during which—

(a) if the relevant institution is the Scottish Parliament, Senedd Cymru or the Northern Ireland Assembly, that institution is dissolved or is in recess for more than four days;

(b) if the relevant institution is both Houses of Parliament, Parliament is dissolved or prorogued, or either House of Parliament is adjourned for more than four days.

(10) In this section, “relevant institution” means—

(a) in the case of an instrument to be made by a Minister of the Crown—

(i) for the purposes of subsections (2), (5) and (8), both Houses of Parliament,

(ii) for the purposes of subsection (3), either House of Parliament,

(iii) for the purposes of subsections (4) and (6), each House of Parliament

(b) in the case of an instrument to be made by Scottish Ministers, the Scottish Parliament;

(c) in the case of an instrument to be made by Welsh Ministers, Senedd Cymru;

(d) in the case of regulations to be made by a Northern Ireland department, the Northern Ireland Assembly;

(e) in the case of an instrument to be made by appropriate authorities acting jointly—

(i) for the purposes of subsections (2), (5) and (8), both Houses of Parliament,

(ii) for the purposes of subsection (3), either House of Parliament,

(iii) for the purposes of subsections (4) and (6), each House of Parliament

and, as the case may be, the Scottish Parliament, Senedd Cymru or the Northern Ireland Assembly.”

New clause 13—Impact assessment: climate change—

“The Secretary of State must lay before Parliament an assessment of the impact of the implementation of the procurement Chapters on tackling climate change, not less than two years, but not more than three years, after the passage of this Act.”

New clause 14—Impact assessment: labour rights—

“The Secretary of State must lay before Parliament an assessment of the impact of the implementation of the procurement Chapters on labour rights, not less than two years, but not more than three years, after the passage of this Act.”

New clause 15—Welsh sectoral impact assessment—

“The Secretary of State must publish an assessment of the impact of the procurement Chapters on each economic sector in Wales within twelve months of the coming into force of regulations made under section 1 and every 12 months thereafter.”

This new clause would require the UK Government to publish Wales-specific impact assessments which include an assessment of the impacts on specific sectors.

Amendment 1, in clause 1, page 1, line 15, at end insert—

“(3A) Regulations under subsection (1) may not be made before completion of such public consultation as the appropriate authority considers appropriate with the relevant—

(a) Scottish ministers

(b) Welsh ministers,

(c) department of the Northern Ireland Executive, and

(d) representatives of the English Regions.”

Amendment 2, page 1, line 15, at end insert—

“(3A) Where the appropriate authority is a Minister of the Crown, regulations under subsection (1) may not be made until the appropriate authority has consulted the relevant Scottish ministers in relation to any matters affecting farming in Scotland.”

Amendment 3, page 1, line 15, at end insert—

“(3A) Where the appropriate authority is a Minister of the Crown, regulations under subsection (1) may not be made until the appropriate authority has consulted the relevant Scottish ministers in relation to any matters affecting Scotland.”

Amendment 4, page 1, line 15, at end insert—

“(3A) Regulations under subsection (1) may not come into force before the date on which the procurement Chapters come into force.”

Amendment 5, in clause 4, page 3, line 5, at end insert—

“(4) This Act expires on 31 December 2027.”

Amendment 6, in schedule 2, page 9, line 5, leave out from “to” to end of line 6 and insert “the super-affirmative procedure”.

Amendment 7, page 9, line 8, leave out from “to” to the end of line 9 and insert “the super-affirmative procedure”.

Amendment 17, page 9, line 8, leave out from first “the” to the end of line 9 and insert “affirmative procedure (see section 29 of the Interpretation and Legislative Reform (Scotland) Act 2010).”

Amendment 8, page 9, line 11, leave out from “to” to end of line 12 and insert “the super-affirmative procedure”.

Amendment 9, page 9, line 14, leave out from “to ” to end of line 16 and insert “the super-affirmative procedure”.

Amendment 10, page 9, line 20, leave out sub-paragraph (2).

Amendment 11, page 9, line 25, leave out from “to” to end of line 26 and insert “the super-affirmative procedure”.

Amendment 12, page 9, line 28, leave out “negative” and insert “super-affirmative”.

Amendment 13, page 9, line 29, leave out sub-paragraph (5).

Amendment 14, page 10, line 2, leave out from “to” to end of line 3 and insert “the super-affirmative procedure”.

Amendment 15, page 10, line 5, leave out from “to ” to end of line 7 and insert “the super-affirmative procedure”.

Amendment 16, page 10, line 8, leave out sub-paragraphs (9) to (13).

[Gareth Thomas]

We made it clear on Second Reading that we want real and meaningful increases in trade, particularly with two of this country’s greatest friends and allies, Australia and New Zealand—both led so ably by progressive Labour Administrations. We therefore made it clear that we would not oppose the Bill. After all, trade is fundamental to this country; it is part of what being British means and it will be a vital weapon in our armoury to tackle the economic crisis that this country faces, which the incompetence of the governing party has so greatly deepened.

We also made it clear, as others have done on both sides of the House, that there are significant concerns about the consequences of the slapdash way in which these deals, especially the Australia deal, were negotiated by Ministers. I am told that Canada is already using the precedent of the Australia deal to press for similar access for its farmers. These amendments are needed to mitigate some of the impact of those mistakes that Ministers made to try to make the best of a bad job.

I am afraid that in Committee there was little attempt to acknowledge, or indeed apologise for, those failings. Nothing since suggests that Ministers at the Department for International Trade have learned the right lessons. Indeed, the recent detailed comments by the former Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Camborne and Redruth (George Eustice)—now freed from the burdens of office and therefore the requirement to cover up for his colleagues—confirmed the widely held view that the Australia deal was bad for Britain. He reinforced the need for significant reforms to how deals are delivered. The current Prime Minister also thought that this was a one-sided deal. Therefore, our amendments and new clauses would help ensure that the procurement chapters, at least, of both deals could be implemented only following serious consultation with all parts of the UK, proper impact assessments, and further detailed and specific scrutiny by this House.

On new clause 1, the Public Bill Committee and the International Trade Committee heard detailed concerns from one of Britain’s leading procurement experts that the Australia deal would worsen the protection for British firms seeking to win Government contracts in Australia, and that major infrastructure or other high-profile British national projects could be disrupted if an Australian firm, unsuccessfully bidding for a contract, went to court to try to overturn the decision using the legal uncertainties that, he argued, are being written into our contract law by this procurement chapter. He also stated that the potential benefits for British businesses of these procurement chapters were likely to be somewhat less than Ministers had claimed.

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

My hon. Friend is making a very good point—a point that the Secretary of State for International Trade unfortunately did not seem to be fully up on when we questioned her last week. She has now promised to investigate this area. Is it not a good example of how, not necessarily the legal risk, but the uncertainty will lead multinational companies to divert their trade through regimes that are certain? Britain will therefore lose out as long as there is uncertainty, even if that is not a reality.

[Gareth Thomas]

My hon. Friend makes an important point. Equally significantly, Professor Sanchez-Graells, in his evidence to the Bill Committee and to the Select Committee, suggested that the protections for British businesses trying to win Government procurement contracts across CPTPP—comprehensive and progressive agreement for trans-Pacific partnership—countries would be damaged if Ministers continued to negotiate similar provisions to those that are in the Australia procurement chapter. We examined his detailed concerns in Committee. The absence of a cogent and compelling rebuttal from the then Minister was striking. To be fair, shortly after the end of the Committee stage, a further letter from the outgoing Minister of State was sent to me, and a copy was placed in the Library. I shared a copy of that letter with Professor Sanchez-Graells, who reiterated his concerns, noting the lack of clear counter arguments for the assertions in that letter. Indeed, there were not any worked-though, real-life examples of the sort that I raised directly with the Minister in Committee to explain why the concerns articulated by Professor Sanchez-Graells are misplaced.

Given that this Bill is specifically about procurement, and given that Professor Sanchez-Graells was one of only two witnesses asked to comment on procurement by either the Bill Committee, the other place’s International Agreements Committee or this House’s own International Trade Committee, it was a little surprising that there was not better preparation by the Department for consideration of his arguments. I do recognise that the Department was in a degree of chaos at the time, with Ministers coming and going, but one can only hope that the Minister replying to this debate has a little more to offer.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does my hon. Friend agree that this underlines the fact that there is not enough scrutiny and democracy in the process, and that this House should have the opportunity to look at the mandate for future deals and to scrutinise the negotiations as well as the ratifications, so that we do not get a deal that offers a hopeless 0.1% GDP growth over 15 years?

[Gareth Thomas]

Not surprisingly, my hon. Friend leaps ahead of me; I will come on to the issue of parliamentary scrutiny in just a moment.

My last point on the case for new clause 1 is that such an impact assessment would also allow us to explore the extent to which small and medium-sized enterprises were able to take advantage of this trade deal. We know that SMEs need the most support to take advantage of free trade agreements and, given the cuts to the tradeshow access programme, for example, we know that SMEs are likely to face real challenges in exporting. New clause 1 cannot change the way Ministers negotiate future procurement chapters, but it would at least require an honest and detailed assessment of the impact of those chapters on British businesses.

--- Later in debate ---

[Sir Mark Hendrick (Preston) (Lab/Co-op)]

As a member of the International Trade Committee, may I reiterate that point? It was clear to me and many other members of the Committee, as the negotiations went on under two previous International Trade Secretaries, that it was going to be the first deal negotiated from scratch and that therefore there was an attempt to use it as a tick-box exercise, to add to those roll-over deals that were already agreed, and there was haste to get the deal done so they could say for the first time that a separate deal had been done that was not a roll-over.

[Gareth Thomas]

My hon. Friend makes his point well, and I hope he is able to catch Mr Deputy Speaker’s eye later on so that he can draw it out further.

New clause 2 cannot, I am afraid, put right the disregard of those on the Government Front Bench thus far for the vital role that British farmers play in the economic and social fabric of our country, but we can at least learn from that desperate rush to get any deal with Australia, regardless of the price. I hope Ministers will take this opportunity to acknowledge the mistakes made during the negotiations and will back this new clause. If not, I will seek the permission of the House and put it to a vote. I have said I hope Ministers will acknowledge mistakes, but we do not expect any apologies. After all, there have been so many apologies from the Government over the last few months that their worth has devalued more quickly than sterling under the last Chancellor.

New clause 12 and the consequential amendments 6 to 16 are designed to address some of the cross-party concern about the obvious failures on parliamentary scrutiny that my hon. Friend the Member for Swansea West (Geraint Davies) alluded to. In the usual Conservative tradition, having made such enormous errors in her leadership of the negotiations with Australia, there was only one option for the then Secretary of State: she was promoted. Indeed, in the lucky dip that was this summer’s Tory leadership contest, she won the chance to be Prime Minister for the month and, consistent with her achievements on trade, delivered economic chaos, higher mortgage bills and a return to deep austerity.

The following Secretary of State, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), swiftly fell out with her colleagues—a scenario almost too difficult to imagine. Tories falling out with each other? Who on earth would have seen that happening? Instead of the world-leading scrutiny process we were once promised for new free-trade agreements, she adopted a new one: invisibility. On at least eight separate occasions, the previous Secretary of State failed to front up at the International Trade Committee to answer important questions about the new deal. She seemed somewhat keener to tour the TV studios questioning the work ethic of her then ministerial team.

There is, I have to say, a striking consensus outside the House—across business groups of every economic sector, and among trade experts, charities and non-governmental organisations working on trade—that the CRaG process is not fit for purpose post Brexit, and that one of the key lessons from the Australian FTA negotiations is the need for better parliamentary scrutiny. We cannot deliver that better scrutiny for all FTAs today—not least given the narrow context of this legislation—but we can certainly make sure that Parliament considers further the regulations that implement the procurement chapters of the deals. A super-affirmative provision would give Parliament an additional layer of scrutiny for trade deal regulations under the Bill before those regulations can come into force. I hope, again, that Ministers will have the grace to accept the amendment and will not force me to divide the House.

New clause 10 underlines our concern that trade agreements must work for the NHS and not undermine or make even more difficult the task of repairing a great public service after 12 years of callous mismanagement by this Government. On procurement specifically, the last thing that anyone would want in a trade agreement is carelessly drafted provisions that enable a dispute about whether an overseas-owned building firm lost a redevelopment contract fairly, for example, to delay much-needed investment in new NHS hospitals, or vital funds that could have been spent on new doctors and nurses having to be used to compensate overseas firms for not winning a procurement contract. If the independent expert from whom the Select Committee and the Bill Committee heard evidence is correct, the drafting of the procurement chapter in the Australia trade deal—and, I understand, this is also likely to be so in the CPTPP—creates legal uncertainty in the remedies available to overseas businesses bidding for UK Government contracts. It is possible, then, that major public services such as the NHS could see delays to the rebuilding of hospitals and/or money that could have been spent on recruiting doctors and nurses being wasted on compensation for overseas firms that have lost out in a procurement competition.

Take the Queen Elizabeth Hospital in King’s Lynn, for example, which urgently needs replacing. Its roof must be monitored daily, four out of seven operating theatres have had to be shut, and the roof is held up by 3,600 props. That is, I suggest, one powerful example of the neglect and mismanagement of the NHS under the Conservative party. Imagine if funding were committed to and tenders issued for such a rebuilding project, only for building work to be held up because of the legal uncertainties in the Australia deal on remedies for firms that lost out unfairly in procurement processes. Surely, a proper understanding of the impact of trade deals on our public services is essential. If there is nothing to worry about, Ministers should not find it difficult to commit to providing such assessments, should they?

On new clause 11, it is clear that these trade deals are not going to deliver the sustained boost to economic growth that this country desperately needs. Yet in the land of make-believe that the Conservative party now inhabits, the Australia deal was sold to us as the start of a brave and amazing post-Brexit era for British trade. The deal does not look like global Britain; it looks to the world like gullible Britain. On the upside, unlike the Conservative party’s trade deal with Europe, the Australia and New Zealand trade deals did not lead to the value of the pound dropping, but the tendency of Ministers in the Department for International Trade to exaggerate the benefits of the deals they sign underlines the need for a full review of the lessons learned from each negotiation.

We all remember talk of an “oven-ready” trade deal with the EU—it turned out to be anything but. Then there was the promise of 77 of Britain’s most iconic food and drink products, from Shetland wool and Whitstable oysters to Carmarthen ham, getting immediate protection in Japan as a result of the UK-Japan deal. That has yet to happen. We have had the promise of billions more in procurement contracts for British business, but there is little evidence that that will happen.

[Geraint Davies]

My hon. Friend knows that a large of amount of New Zealand and Australian trade is historically in left-hand-drive cars that were made by Japanese companies based in Britain. Those companies are leaving the UK, and the EU has now got a trade deal with Japan and will have one with Australia and New Zealand. It is therefore likely that those Japanese companies will produce left-hand-drive cars and sell them to New Zealand and Australia, but not via Britain. In other words, the deal will prove negative rather than marginally positive.

[Gareth Thomas]

I hope my hon. Friend accepts that the case I am making for providing serious and detailed impact assessments for future trade deals will help to ensure that his point gets proper consideration in future.

I hope that new clauses 13 and 14 remind Ministers of the significance of trade for working people and of the need for trade to play its part in helping to tackle climate change and accelerate progress towards net zero. When the Australia deal was negotiated, two Conservative Governments, both with distinctly underwhelming records on climate and workers’ rights, were in the negotiating room. In this country, the Conservative party has consistently sought to exclude representatives of working people in the trade unions from all significant consultation on trade deals. The trade deals that we as a country sign should raise standards, support better employment and help to tackle climate change instead of, as the Conservative party seems to want, heralding a race to the bottom.

We have tabled amendment 1 to stimulate serious and sustained detailed consultation with all the nations and regions of the United Kingdom on the details of the chapters of the trade deals. It is a reminder to Ministers of the need to step up and improve further their discussions with the devolved Administrations and with the regions of England about the impact of deals on specific communities and economic sectors. My hon. Friend the Member for Llanelli (Dame Nia Griffith) gave the example in Committee of farmers in Wales, where 85% of the beef and 60% to 65% of the sheepmeat produced are consumed in the UK. There is genuine concern about the impact of a huge hike in tariff-free quotas of meat from Australia and New Zealand on our farmers’ ability to sell into our markets, with all the obvious implications for rural communities, family farms and economic, social and cultural life.

There are similar concerns across the regions of England, in Scotland and in Northern Ireland. The Select Committee on International Trade heard evidence that the Department cannot yet model fully the impact of trade deals on the nations and regions of the UK. That is all the more reason for better consultation before new trade regulations come into force.

[John Spellar (Warley) (Lab)]

On livestock and meat, is not it the case that a sizeable amount of our imports comes not from Australia or New Zealand—and they would not under the agreement—but from the EU and South America?

[Gareth Thomas]

Absolutely, but we have conceded that the deals are important and that they must be supported, and we want more trade with Australia and New Zealand. I gently say to my right hon. Friend that it is right to ensure that the deals work much better than they appear set to do at the moment. I hope that our amendments will help to achieve that.

[Jim Shannon (Strangford) (DUP)]

I support the hon. Gentleman’s point in relation to Northern Ireland. We export some 65% of our agriculture produce to the EU and across the world. Ever mindful of that, we seek the same assurance from the Minister—perhaps it will come at the end of the debate—that those in Northern Ireland will not be penalised in any way. I support what the hon. Gentleman is saying.

[Gareth Thomas]

I am grateful to the hon. Gentleman for his comments and support, and I look forward to the Minister attempting to answer his concerns as well as ours.

Free trade agreements were supposed to be one of those freedoms that would bring us prosperity after Brexit, but, in truth, this is not about Brexit; it is about the competence and ability of this Government, and about the honesty and transparency of Ministers. If they believe in any of those qualities, Government Members will adopt these amendments without Division. If they do not, we will have even more proof that this Government do not even believe in themselves.

--- Later in debate ---

[Nigel Huddleston]

I am afraid that the hon. Member is misrepresenting the situation. In terms of concurrent powers, this is an established part of our devolution settlement. We are not, in these proposals, proposing anything unusual.

The breadth of our trade agreements means some policy issues will be within the competence of the devolved Administrations. The Government have always recognised that modern trade deals cover an increasingly broad array of policy matters. To enable more technical discussions, of course, we share draft treaty text with devolved Administrations for comment. That facilitates more detailed and comprehensive discussions between Department for International Trade officials and officials in devolved Administrations. There have already been discussions with the Scottish Government on the drafting of secondary legislation. In respect of the amendments, I understand that the Scottish Government wish to make the necessary statutory instrument to amend Scottish procurement regulations.

On new clause 12 and its consequential amendments, the super-affirmative procedure is used for statutory instruments when an exceptionally high degree of scrutiny is thought appropriate. An example would be remedial orders, which the Government can use to amend Acts of Parliament should the courts find them in breach of the European convention on human rights. It is therefore wholly disproportionate to use that process to approve a minor technical change needed to implement procurement commitments in the Australia and New Zealand deals. The potential unnecessary use of the affirmative or super-affirmative procedure could lead to delays in those agreements entering into force.

The Government are working to enter the agreements into force to ensure that UK businesses and consumers can benefit from the significant economic advantages as soon as possible. That is, of course, also the desire of the Labour Governments in Australia and New Zealand.

I hope that I have reassured hon. Members and that they will not push their amendments.

[Gareth Thomas]

It is always a pleasure to listen to the Minister, but it was rather striking that not one Conservative Back Bencher was willing to come along tonight to defend their party’s deal. We have nevertheless had an important debate with important speeches from my hon. Friends the Members for Preston (Sir Mark Hendrick), for Brighton, Kemptown (Lloyd Russell-Moyle) and for Swansea West (Geraint Davies), and the hon. Members for Gordon (Richard Thomson)—whom I congratulate on his appointment—for Chesham and Amersham (Sarah Green), for Strangford (Jim Shannon) and for Arfon (Hywel Williams), as well as important interventions from my right hon. Friend the Member for Warley (John Spellar) and the hon. Members for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), for Totnes (Anthony Mangnall), for Westmorland and Lonsdale (Tim Farron) and for Tiverton and Honiton (Richard Foord).

Ministers know that there are real concerns about the Australia deal and the precedent that it sets for future deals, and that here have been real concerns across the House about the parliamentary scrutiny of all trade deals, particularly the Australia deal. The behaviour of the previous Secretary of State, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), has only underlined those concerns. Many have noted the huge giveaway of access for Australian farmers and how little we have secured in return in the same space. That is the fault not of the Australian negotiators but of the Government’s own wilful determination to get a deal by an arbitrary deadline, whatever the price.

The House will inevitably return to the issue of procurement. We will certainly encourage those in the other place to explore the concerns that I in particular have articulated in the debate—particularly as negotiations on CPTPP accession are moving forward. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 2

Assessment of impact on farmers

“At least three months, but not later than six months, after the coming into force of the government procurement Chapter of—

(1) the UK-Australia FTA, and

(2) the UK-New Zealand FTA,

a Minister of the Crown must lay before Parliament an assessment of the impact of the Chapter on farmers in—

(a) each region of England

(b) Scotland

(c) Wales, and

(d) Northern Ireland.”—(Gareth Thomas.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Trade (Australia and New Zealand) Bill

Gareth Thomas Excerpts

Consideration of Lords amendments
Wednesday 22nd March 2023 Commons Chamber

[The Minister of State, Department for Business and Trade (Nigel Huddleston)]

I beg to move, That this House agrees with Lords amendment 1.

This Government amendment, tabled in the other place and agreed to, rectifies a minor and technical typographical error in the Bill, and clarifies the power available to Ministers of the Crown or a devolved authority under clause 1. The amendment inserts a single word, “different”, in clause 2(1)(a), making it clear that regulations under clause 1 may make different

“provision for different purposes or areas”.

The intention of the provision overall is to make clear that if it were wanted, the Government procurement chapters could be implemented differently for different types of procurement or in different sectors. The Government do not anticipate relying on this flexibility for the initial set of regulations implementing the procurement chapters, because the chapters will be implemented in the same way for the procurement subject to those chapters. None the less, it is important to retain the flexibility should the need arise in the future—for instance, if it were necessary or expedient for regulations to make provision implementing an amendment to the chapters in one way for utilities and a different way for local government.

The flexibility is also reflected in regulations that may be made to implement trade agreements within the scope of the Trade Act 2021. Section 4(1) of that Act similarly provides that regulations

“may…make different provision for different purposes or areas”.

However, I assure the House that any regulations made under the Bill can be made only for the purposes described in clause 1, namely implementing the Government procurement chapters and/or dealing with matters arising out of or related to those chapters.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Last week the Office for Budget Responsibility published figures on trade which changed the context for this debate on what is an apparently innocuous amendment from the other place. According to the OBR, we now face two years of declining exports, with a huge 6.6% drop in British exports this year, a further drop next year, and then an average growth in our exports of less than 1% for the next three years. We are reaping the results of the Conservatives’ failure to negotiate a better trade deal with the European Union or complete a trade deal with the United States, and the impact of significant cuts in support for attendance at trade shows and access to overseas markets is now all too obvious.

This amendment, and the debates in the Lords, strike me as a big missed opportunity—not for want of trying by Opposition colleagues—to start attempting to put things right. Abolishing the Department for International Trade and moving the deckchairs around in Whitehall is not going to hide away the Conservatives’ dismal record on trade and economic growth. We are lagging behind the rest of the G7 on exports to the world’s fastest growing economies in the G20, and nothing that the Minister has said so far, this afternoon or in previous debates, is going to improve the situation any time soon.

I do not want to detain the House too long, but while the amendment might involve the insertion of only one word in the Bill, the difference it makes does matter, both for what it does and what it does not do. Although there is support across the House to increase trade with our friends in Australia and New Zealand—particularly on the Labour Benches, not least because both countries are now led by progressive Labour Governments—there has also been widespread concern, among hon. Members and certainly outside the House, about what Ministers have negotiated, particularly in the trade deal with Australia. As I say, this amendment feels like a missed opportunity to begin to address those concerns.

We know that Ministers decided to throw British farmers under the bus, ignoring the concerns of the National Farmers Union. We know that the Prime Minister could have intervened, but did not. And we know that the desperation to get any deal meant that too much negotiating leverage was given up. One of the questions that the amendment raises is whether its wording in any way helps to offset, even just a little, those significant negotiating failures by the Government. We on the Labour Benches warned Ministers that the Australian deal would be used as a precedent by the other countries with which Ministers are negotiating, and as the Minister knows, that is exactly what is happening. The weaknesses in the deal that his predecessors negotiated are now being used to demand further concessions in our current negotiations, particularly by the countries with big agricultural interests.

I have considered carefully whether this amendment helps us to find any comfort following the devastating analysis of these trade deals offered to the House by the right hon. Member for Camborne and Redruth (George Eustice), when he explained, back in November, that we

“gave away far too much for far too little in return”.—[Official Report, 14 November 2022; Vol. 722, c. 424.]

He also said that

“the value of the UK agri-food market access offer was nearly double what we got in return”.

I have also considered carefully whether this amendment from the other place improved the scrutiny by Parliament, or even the scrutiny of how the regulations bringing into effect the procurement chapters of these trade deals are implemented. If the amendment had forced Ministers to consult with and in the nations and regions of the UK before the regulations were introduced, it would have been extremely helpful. After all, surely one of the most important lessons from these two trade deals is that the process of parliamentary scrutiny for trade deals is not fit for purpose.

Granted, Ministers in the Department for International Trade were busy disagreeing and attacking each other at the time, but when the then Trade Secretary failed to turn up eight times to give evidence before the International Trade Committee on these deals—and despite that, would not extend the time for the Committee to report on the deals to the House—it became clear that something was very amiss with the system of scrutiny. It is hardly surprising that the International Trade Committee has been abolished by Ministers, but instead of improving the scrutiny of trade negotiations, or even just the regulations implementing the procurement chapters of the negotiations, the amendment makes things a little easier for Ministers.

[John Spellar (Warley) (Lab)]

Will my hon. Friend confirm, notwithstanding the absurdities of the previous Trade Secretary, who was more concerned with a photo opportunity than a proper deal, and some of the other difficulties, that our position is that it is enormously important that we have good trading and all other relations with our great allies in Australia and New Zealand, particularly after we recently strengthened and deepened our strategic relationship through the very welcome AUKUS deal?

[Gareth Thomas]

My right hon. Friend, as ever, makes a hugely important point. Australia and New Zealand, as I said earlier, are important allies of this country with whom we have crucial security interests as well as trade interests. I accept that anything that helps to maintain and strengthen those relationships is very positive, but I am sure he would agree that we need to learn the lessons from how Ministers carried on those negotiations, particularly with the Australians.

Given the specific context of the Bill and the focus on implementing the procurement chapters of the two trade deals, it is a struggle to see how this amendment will help to improve the implementation of the supposed better access to our partners’ procurement markets.

The leading procurement expert Professor Sánchez Graells set out clearly in his evidence to the other place, and indeed to this House, his concerns that the Australia deal worsens the protections for British businesses competing in the Australian procurement market. We are entitled to ask ourselves whether this amendment helps to address that concern in any way. Sadly, I do not think it does.

Professor Sánchez Graells also made clear his view that the benefits of the trade deal in terms of access to Australia’s procurement market have been significantly exaggerated. The noble Lord Purvis and Labour Lords also picked up on that point in the debates in the other House, but the one Lords amendment that the Government backed does not address this concern. What the amendment does, if anything, is ever so slightly increase Ministers’ powers to implement regulations, wherever and however they want.

Given how Ministers excluded some groups from the negotiations—including trade unions—given the disregard for the legitimate interests of our devolved nations, and given the failure to negotiate commitments on climate change or proper protections for specialist British brands such as Stilton cheese or Scotch whisky, Ministers’ apparent determination to try to claim a little more freedom to implement the procurement chapters does not encourage any sense that they have learned lessons from what has happened.

I have one specific question for the Minister on the implementation of these trade deals. It would be very helpful for small businesses across the UK if he set out the Department’s plan to support small businesses that want to access the Australian and New Zealand markets and take advantage of the trade preferences in these two deals.

We will not seek to divide the House, but this amendment is a reminder of the Government’s woeful performance on trade and exports, and of the desperate need for a new Government determined to lift up the living standards of everyone in this country, not just the already very wealthy, by delivering more exports and sustained economic growth.

[Anthony Mangnall (Totnes) (Con)]

I congratulate the hon. Member for Harrow West (Gareth Thomas) on taking such a great deal of time to find some contention in a single amendment that adds only the word “difficult.” I am afraid my remarks will be somewhat shorter.

The whole basis and value of this Bill, and of what the Lords have sent back to us, is in taking the opportunities presented to us by our trade agreements. It is undoubtable that, through the Australia and New Zealand trade deals, new trade opportunities have been delivered. We have to be clear about how those values have offered themselves, whether through defence agreements, through creating new digital partnerships, through joining new blocs such as CPTPP, through exploring the idea of the Gulf Co-operation Council, through signing memorandums of understanding with American states and trade agreements with Israel or through finding ways to join up with India to unlock services and industry opportunities for our country and our businesses.

The hon. Gentleman spoke about how we might be able to help small and medium-sized enterprises. Well, only this morning the Department for Business and Trade held an event in the Attlee Suite of Portcullis House on how we can help SMEs achieve their true value and potential beyond our borders. I hope we see more of those events, because it is essential that we find ways to help our small businesses reach new markets.

I will come on to procurement and the amendment in a second, before I stray too far, but it is relevant to talk about the value of these trade deals. All too often, we are told that they are not of enough value to the UK economy, which is to presume that our trade deals are static and that no one takes advantage of them when they are brought into force. After they are brought into force, we always see them grow.

On the International Trade Committee, I always cite the example of the North American free trade agreement. The expectation when NAFTA came into force was that it would be of very little benefit to the signatories’ economies. In fact, the opposite was the case. It grew steadily over time and has evolved into what it is today under a different name. We should look not at the current forecast value of these trade deals but at how we can encourage businesses in each and every one of our constituencies, from Totnes in south Devon to Harrow West and Northern Ireland, to take full advantage.

We talk about procurement a lot and we are trying to shape it in a meaningful way in this House. So far, we are doing very well, with the Procurement Bill. However, as the Minister has rightly said, this is the chance to take the benefit of procurement opportunities that vary. Where there are differences—it will not just be in defence, as it might be in utilities, services, industry and so on—this will allow us to take the opportunity that comes with that range.

I do not think there is going to be much disagreement on this Lords amendment. At last, it shapes a Bill that—

--- Later in debate ---

[Nigel Huddleston]

I shall be brief. I thank Members for their contributions today. We have had two glass half empty responses and one glass half full one. That does not surprise me at all, because I am still waiting for the Opposition to support one of our trade deals. It is important to remember that the Australia and New Zealand deals benefit every nation and every region of the UK. I am disappointed to hear what the hon. Member for Gordon (Richard Thomson) said, because the attitude of the Scottish whisky manufacturers might be slightly different, as huge benefits will likely come from these deals.

As I said in my opening speech, this Lords amendment is a minor and technical one. It ensures clarity on the point that the power in the Bill can be used only to implement and deal with cases arising as a result of these free trade agreements. Again, the Government do not—

[Gareth Thomas]

I realise that the Minister probably does not have much more to say, but may I take this opportunity to press him to set out the plan to help small businesses benefit from the trade preferences in these deals?

[Nigel Huddleston]

The hon. Member is being slightly too impatient. I said that my speech would be short, but it is not too short. There are a couple of comments that I will come on to.

On the amendment, the Government do not anticipate relying on this flexibility for the initial set of regulations implementing the procurement chapters, but it is nevertheless important that the flexibility is retained should the need for it arise in the future.

I will respond to comments made by hon. Members. I have already mentioned the economic benefits of the Australia and New Zealand trade deals. They will generate billions of pounds of economic activity, to the benefit of UK businesses and, of course, the people we represent. This will lead to more jobs, which is why it is unfathomable that anybody would vote against this.

The scrutiny that we give Bills stacks up pretty well compared with other parliamentary democracies and, of course, is based on CRaG—the Constitutional Reform and Governance Act process—which I remind Opposition Members was developed and implemented during the time of the last Labour Government. If they do not like it, they are criticising their own legislation.

On protections to support the most sensitive parts of the UK farming community, we have secured various measures across both deals that are collectively available for 15 to 20 years for the most sensitive products. We have engaged, and continue to engage, with the farming industry. Of course, these and the many other deals we are negotiating are also ensuring that we are fit for the 21st century. We are no longer in a world where all we do is ship widgets from country A to country B via the countries closest to us. Services, particularly those delivered digitally, are now vital to the UK economy. They represent 80% of the UK economy and it is absolutely vital that they form a key part of our trade deals, as is the case with these two deals with Australia and New Zealand.

On support for businesses, of course, as the Secretary of State has said many times, we need to not only deliver on the deals but make sure that businesses, large and small, right across the country are able to benefit from them, so we will continue to support small and medium-sized businesses. My hon. Friend the Member for Totnes (Anthony Mangnall) highlighted this morning’s export showcase event, at which MPs and Lords were surprised at the extent to which support is already, and will continue to be, available, whether in training, export support services or UK export finance. That is not just for big businesses; it is for small and medium-sized businesses as well. There will be extensive support because we want all businesses, large and small, to benefit from these deals.

The Bill’s measures might be technical in nature, but they will make a real difference for people right across our constituencies and right across the United Kingdom.

Lords amendment 1 agreed to.

UK Infrastructure Bank Bill [Lords] (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the UK Infrastructure Bank Bill [Lords] for the purpose of supplementing the Order of 1 November 2022 (UK Infrastructure Bank Bill [Lords]: Programme), as varied by the Order of 1 February 2023 (UK Infrastructure Bank Bill [Lords]: Programme (No. 2)):

Consideration of Lords Message

(1) Proceedings on the Lords Message shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.

Subsequent stages

(2) Any further Message from the Lords may be considered forthwith without any Question being put.

(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Jacob Young.)

Question agreed to.