Trade Bill (First sitting)

Gareth Thomas Excerpts

Tuesday 16th June 2020 Public Bill Committees

[Stewart Hosie]

Q Allie, I have one question for you. In your introduction, you said that while there are some concerns about future trade agreements, you are broadly supportive of this Bill because it delivers continuity. However, in clause 2(6)(a), it does allow the Government to modify primary retained EU law. Are there any anxieties among IoD members that those modifications, made in order to get some kind of a deal, may mean that we end up with a worse arrangement than we currently have with one or more countries?

Allie Renison: You are very right to raise that point. On the modification issue, I suppose we do not know to what extent that will become an issue, as it depends on where we get to with the roll-over process. I cannot speak for other countries’ priorities, but I think there is a distinct feeling that when the roll-over process was happening during the article 50 period, the time pressure certainly meant that it was a choice between either having an agreement and rolling it over or not having it in place. That may have helped get the agreement over the line. There may be some scope for increased modification.

That probably becomes a bigger negative issue for some of the agri-producers, depending on whether, for example, quotas are changed to get a deal over the line. It depends on the level of quota, it depends on the sector and it depends on the sensitivity of that sector. That is probably the only example, and it is not a particularly prominent one. We have far more members in the processing industries when it comes to agri-food retail and wholesale, rather than actual producers. Their priority is making sure that you are able to get the agreement over the line in the first place.

Just to wrap up my answer, when I say that there is some concern about future trade agreements, I should probably clarify that that means they wanted to understand what the purpose of the Bill was and whether it laid out enough scope for engagement with other devolved Administrations. That is an important point to put on the record: we do not want to get to a situation on the one hand where a future trade agreement can be easily held up, with the Walloon experience in Belgium in the rear-view mirror. However, it is very important that we see it. We do not think that the current CRAG provisions are sufficient for future trade agreements, simply because we want to see the devolved Administrations more involved from the outset, rather than coming in as a blocker at the end. That is why I should clarify the delineation between the concern over future trade agreements and the split in process.

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

Q Allie, I apologise for putting it like this but can you speak a little slower? I was up last night with two very young children, so my brain is taking a bit of time to get going this morning. One of the areas of contention about the Bill is the extent to which it should cover the future free trade agreements that we might want to enter into. I just want to get a sense of your two organisations’ understanding of the offensive and defensive interests for deals with the US and Japan.

Allie Renison: I am happy to begin on that, and I will slow down, rather than speeding up to get more information in. Keep in mind that that deal is a future trade agreement, rather than what is covered under the Bill. On future trade agreements, although I think the Government can do both, if you were to look at it in terms of priorities, the EU negotiations are four times as important as new trade agreements for our members.

With that in mind, however, when it comes to the US market, it is difficult to compare this with members’ views on the US negotiations with the EU, because there were not triangulation issues to the same effect. We do not know to what extent liberalisation with the US will impact on our relationship with the EU, so we simply do not have that triangulation problem. The triangulation issue rears its head more often now. If you think about it purely from a tariff perspective, a number of people in Great Britain who are trading in Northern Ireland simply want to know how it is going to work with the Northern Ireland protocol and how the tariff will operate. I do not think many members at this point have an offensive/defensive point of view. They want to know how the tariff changes will intersect with the EU negotiations. That is probably where the majority of our members are.

From a defensive point of view, some businesses have an eye on what changes there will be from an inward procurement perspective. There are some concerns about how standards will feature, without knowing how they are being discussed. I would not say that standards—chlorinated chicken and hormone-treated beef, for example—are big-ticket concerns for our members, because we do not have a lot of them in our membership.

From an offensive point of view, several big things unite our whole membership. First, there are the changes to delivering services physically—not immigration policy, but temporary labour mobility and the ability to go and provide services in the US. That is a big-ticket item for many members, who do not know whether that will be part of the trade agreement discussion. Secondly, e-commerce and facilitating digital commerce will probably be an even bigger offensive interest for both sides in the light of the pandemic.

[The Chair]

Q Jonathan, would you like to add anything to that?

Jonathan Brenton: Quickly, I would separate Japan and the US. For Japan, the timescales are very short because the legislation will need to go through the Japanese Parliament. Our members’ first priority is to ensure that we have a deal that matches what we already have. Given the chance, they would like to go further. Data is an important area. They also have concerns around pharma and the implementation of the economic partnership agreement, and there are some defensive interests around accumulation and ensuring that what we have in EPA is maintained.

On the US, I second what Allie said about mobility and services, and I would add mutual recognition of qualifications. It is notable, for example, that some US companies use Australian architects because they cannot use British architects, so there are deals to recognise qualifications in that area. There are historical tariffs that could be cut back. I agree with Allie about e-commerce, and there is a whole piece on future regulation. The role of the US market for SMEs is very important; it is a great way to begin exporting. Finally—this is an aspiration, perhaps—public procurement needs to start being opened up on a regional basis.

Many of our members make the point that the US deal should not jeopardise what we already have. We have a thriving relationship, and it is important that we safeguard what we have and go further.

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[The Chair]

Thank you. This will have to be the last question, given the constraints on time.

[Gareth Thomas]

Q Jonathan, you alluded to some concerns about the Bill at the very beginning of your appearance before us, so to speak. Certainly, the last time the Trade Bill had an outing, the CBI was clear that it wanted much more provision for Parliament to be able to do more scrutiny of trade agreements. Is that still the CBI’s position?

Jonathan Brenton: Can you repeat the question closer to the microphone?

[Gareth Thomas]

Could you expand on your hint about some concerns with the way the Bill has been drafted, which you alluded to in your opening remarks? Secondly, can you tell us whether the CBI still holds to the view it had the last time the Trade Bill was debated—that there should be more scrutiny of trade agreements by Parliament?

Jonathan Brenton: Do you mean parliamentary scrutiny?

[Gareth Thomas]

Yes.

Jonathan Brenton: I think we probably recognise that the debate about parliamentary scrutiny is, first and foremost, not for us, as a business organisation, although I think some of our members say that they would like to see more. Very important to us is that we have a trade policy built on consensus, with wider support built up in Parliament and civil society. One thing I commend about the STAG and ETAGs is the place for trade unions, non-governmental organisations and so on, and the fact that there is debate.

Our position is that we recognise, on balance, that the Bill has to be done in the time and conditions we are under, and that we need to be ready for the Brexit deadline, which is looming fast. However, we have not given up on our aspiration and calls for a more strategic approach to trade. We have said that repeatedly, and I think you will hear us say it more. We would like to feel that we have an approach to trade policy that is aligned with trade promotion, and an approach to trade deals that plays to the UK’s strengths, such as services, and future strengths. We would like to think that there are tested systems in place for consultation with business. I think some of these things are happening—the STAG system and ETAGs systems are evolving, and you can see the work that the Department for International Trade is doing on expanding its digital networks—but it would be reassuring for business to have that set out more comprehensively, and aligned with other policy areas like climate, and with the covid agenda, so that we had a confident framework.

Let us remember the historical moment that we are in, the time pressures we are under and the huge changes that have been brought on by the popular vote for Brexit and subsequent elections. We need to move pragmatically, given the situation we are in.

[The Chair]

Q Thank you. Allie?

Allie Renison: You may have heard my remarks earlier; to reiterate them, for a future trade agreement, we do not think that the Constitutional Reform and Governance Act is sufficient, simply because this is where we take a view on the long-term impact and role of trade policy. We have all learned from the way in which the agreement between the EU and Canada was held up because of that country’s constitutional requirement to ratify it. [Inaudible.]—to have concerns about that early in the process. While we would not want to see, for example, devolved Administrations or Parliament trying to block trade deals at the outset, we think it is important to have that scrutiny requested. Perhaps in the Bill that is through developing future negotiating mandates, or asking whether we follow the EU trade example on that.

There needs to be a lot more front-loaded effort to help with future trade agreements, whether from a buying perspective or a scrutiny perspective. We do not want trade policy to become a politicised issue, in the way that it is in other countries. We would like this to be an issue of consensus as far as is possible. That is why we perhaps take a stronger view about the future role for scrutiny. We see this as integral to trying to build a bigger consensus around trade, rather than having it become another issue for both sides to argue about. I would distinguish that from this Trade Bill, which is about the continuity agreement. There is that possibility for modifications, the extent of which may vary, but we would separate that from the comments that I have made, and would distinguish between the continuity agreements and future trade deals.

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[The Chair]

Yes, please.

Konrad Shek: The association is a member of the Professional and Business Services Council, which is co-sponsored by the Department for Business, Energy and Industrial Strategy, and also a member of the Creative Industries Council, which is sponsored by the Department for Digital, Culture, Media and Sport. I sit on a number of the DIT expert trade advisory groups. Among professional business services, advertising and market research is one of the largest exporters. We exported £9.7 billion, according to the latest Office for National Statistics figures.

There is general support for the Trade Bill from our members from the trade continuity perspective. I would caveat that somewhat, given that many of our members are preoccupied with covid-19 and Brexit. The technical details of the Trade Bill are perhaps not a high priority among members at the moment.

Trade with the EU is a significant portion of exports. The largest destination for our exports is France and Germany, so there is a lot of interest in getting a deal with the EU. There is also a lot of interest in the public procurement side of things from ad agencies and market research companies. Advertising agencies typically get involved in trade investment promotion, events and education promotion. They work for state-owned enterprises, especially sovereign wealth funds. Market research companies obviously get involved in opinion polling. Because of the international nature of London, we are very fortunate to be a global hub for advertising and market research, and a lot of companies get invited to tender for such projects.

[Gareth Thomas]

Q How would you improve the Bill?

Konrad Shek: Looking at some of the research out there, and analysis of the Bill, there is probably capacity for more scrutiny of the Bill. There is probably a lack of detail on the Trade Remedies Authority, although that is not necessarily a huge priority for us. A lot of remedies tend to be focused on the producer side of things, whereas we tend to export a lot more services. From the association’s point of view, I do not think that we necessarily have strong views on where the Bill would be improved, other than what I have said.

[David Johnston (Wantage) (Con)]

Q I want to ask you about the data collection provisions in the Bill. I would have thought that your members might welcome that data being collected, and being used to help to promote companies in this country around the world.

Konrad Shek: One of the difficulties about data collection for services generally is that it is quite hard to collect that information. When you see reports from the ONS on the export of services, there is a significant lag in the reporting of that information. It is not quite as easy and straightforward as reporting the export of goods. Obviously, if there were an improvement in collecting data regarding the export of services, that would be hugely beneficial.

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[Matt Western]

Q To pick up on a point about the competitiveness of the sector, you said, quite rightly, that London is a global leader, both in market research and advertising output. Are you happy with the protection through the TRA, whether it be for intellectual property or otherwise?

Konrad Shek: I do not have a particular view on the Trade Remedies Authority at the moment. As I say, a lot of these anti-dumping subsidies tends to fall on the exports of goods rather than services. It is very hard to understand what distortions might come into play. As services are delivered by people, they are generally affected more by migration and immigration policies than subsidies or specific duties. I cannot think of a particular example at the moment, but there is a possibility that a country may put a tax on digital trade.

[Gareth Thomas]

Q One of the areas of the Bill that we may discuss is future free trade agreements. Have you any particular offensive interests, in terms of future free trade agreements?

Konrad Shek: There is obviously a lot of interest in future free trade agreements. There seems to be a lot of discussion about moving away from the current structures of free trade agreements and looking for these lighter, more flexible types of free trade agreements, which can be negotiated in a shorter time. That is something we welcome, but there is obviously a trade-off; the lighter and more flexible type of agreements mean there is a lot better detail.

We would welcome having these agreements—[Inaudible.] Also, it has an important information aspect. If the UK signs a free trade agreement with a country, that disseminates the information that it is okay, or encouraged, to do business with that country. It sends a very good signal in terms of promoting trade investment links.

There probably needs to be some thought as well about the consultation process and the understanding of what companies require in terms of the wider economy and understanding the trade-offs. By opening or liberalising one particular sector, do we lose out in other sectors? There needs to be a balance, and a lot of political decisions need to be taken there.

There is scope for more consultation and perhaps a feedback process, hopefully for constructive criticism. One issue I have found with the DIT consultation is that it was good that we were able to feed in information, but there was perhaps less information being fed back to help in understanding about how issues lay or were being prioritised in the whole agreement.

[Theo Clarke]

Q My question is about what would happen to the trade preferences given under the EU’s economic partnership agreements with developing world partners. I am thinking about countries such as Kenya, Ghana and those in the Caribbean.

Konrad Shek: I do not have that much information on them. I do not suspect that our advertising agencies have a huge amount of business with those types of country. I do not have a particular view on that. There may be some side projects, perhaps for market research, but I do not have any detail on that.

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[The Chair]

If you could introduce yourself, Roy, that will be great. I will now ask members of the Committee to ask you questions. We can hear you fine, so do not worry.

[Gareth Thomas]

How would you want the Bill to be improved?

[Katherine Fletcher]

Q Mr Freeland, I am going to relay the question, because we are in a big, echoey room. Gareth Thomas MP just asked you how you would like to see the Bill improved.

Roy Freeland: I am broadly very supportive of the Bill because, as other speakers have said, we need to be pragmatic about the situation we are in. However, there are some issues. I am speaking as a representative of a high-technology SME supplying the rail industry that has particular problems or requirements for GPA, simply because many of our customers are effectively part of a Government procurement in their countries, so it is uniquely important to transportation businesses. I also have some comments on SME issues.