UK-Japan Comprehensive Economic Partnership Agreement

Gareth Thomas Excerpts

Wednesday 25th November 2020 Commons Chamber

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

While I welcome this deal and the recent announcement of the Canada deal being rolled over, I am not sure it merits the “truly historic” or “groundbreaking” description that the Secretary of State would have us use to describe it.

The problem is that, out of the hearing of the Secretary of State and her cheerleaders today, there are very few experts who think this deal is quite as good as she does. The more generous suggest privately that it is a deal just a little bit worse than the EU agreement, while even the more considered suggest that we look at the impact assessment. On the upside, from that impact assessment it is clear that trade is set to rise significantly between our two nations, and as a key strategic ally, that is welcome. However, this is a deal that, according to the Government’s own calculations in the impact assessment, will see 83% of the almost £16 billion increase in trade over the next 15 years between the UK and Japan going to Japanese exporters, while the share coming to UK exporters is just 15%. Clearly, the last thing we should do is adopt a mercantilist attitude, but a deal five times better for the other side’s exporters than for our own does, I think, merit a little pause for thought. Even Donald Trump might not have rushed to describe this as a “truly historic” triumph.

In May, the Secretary of State published alongside the Department for International Trade’s scoping objectives for a UK-Japan deal, an impact assessment showing the limited benefits of the deal she was hoping to achieve. As the impact assessment on the final deal reveals, she was not even able to reach the sunlit uplands of those limited heights. Not only will our negotiating partners apparently benefit by five times as much as our firms and employees, but the deal will apparently increase our GDP by just 0.07%, and that is in comparison with there not being a deal.

Strikingly, Ministers claim that the deal they have negotiated is better than the EU-Japan deal, but they provide zero evidence to back up that claim. Despite repeated requests, as again today, from the shadow Secretary of State in written parliamentary questions, letters and parliamentary debates, Ministers have refused to estimate what impact the deal has achieved above and beyond the EU-Japan deal. It has been 75 days since the shadow Secretary of State asked the Secretary of State why she could claim that her deal goes far beyond the existing EU deal. She again, in her opening remarks today, did not give us any figures to back up that assertion. One can only assume that the difference between the two deals is marginal at best.

My hon. Friend the Member for Coventry North West (Taiwo Owatemi) rightly drew attention to one of the other comments in the impact assessment. The Government’s estimates show that as a result of increased imports from Japan arising from the deal, there will be economic costs for the UK—indeed, a long-run fall in employment in chemical, machine and automotive production as a result of cheaper Japanese imports. There was again no word from the Secretary of State on how she plans to help the industries and communities in our country affected by those job losses.

Japan is a valuable export market for our agricultural goods. The tariff reductions agreed in the UK-Japan trade deal are almost identical to those set out in the EU-Japan deal. Important analysis by the independent UK Trade Policy Observatory found that there are just 11 out of 9,444 products where the tariffs on UK exports are set to be lower under the UK-Japan deal. As my right hon. Friend the Member for Islington South and Finsbury (Emily Thornberry), the shadow Secretary of State, pointed out, the extra concessions to the UK are striking by the lack of logic behind why Ministers sought them, as, for example, we have had no exports to Japan of any of these products, which include dried eggs and ostrich leather.

The Secretary of State has also claimed that another 70 of our food and drink products will be recognised by Japan under the geographical indication scheme, increasing their value and protecting their brand. I say this gently, but it does appear that the Secretary of State is exaggerating just a little. There are only seven, not 70, GIs recognised in the UK-Japan deal—exactly the same as in the EU-Japan deal. All that has been agreed is that the UK can apply to Japan to have more of our products recognised, with at least two Government Ministries in Japan having to be involved and deciding whether or not to grant them. There is absolutely no guarantee of success.

One of the key questions about the deal was whether the UK would be able to roll over all the anticipated agriculture benefits of the EU-Japan deal into our UK-Japan deal. In some areas, this appears to have been relatively straightforward. Tariff reductions for exports for lamb and beef, for example, are exactly the same in the UK-Japan deal as apply under the EU deal, but there does appear to be one key difference, which was alluded to in the exchange between the Secretary of State and the shadow Secretary of State. The European Union has 25 separate tariff-free quotas with Japan for agricultural goods. The UK has managed to secure partial access to just 10. Of those 10, it would appear that the UK gets only what is left after the rest of the European Union have had their fill. I will read with interest the legal letter that the Secretary of State is going to release after this debate, but one has to ask why such a letter was required and why this was not clarified in the text itself.

A series of Members have highlighted the need for better scrutiny arrangements for trade deals going forward, from my right hon. Friend the shadow Secretary of State to my hon. Friends the Members for Leeds North West (Alex Sobel) and for Brighton, Kemptown (Lloyd Russell-Moyle), the hon. Member for Stirling (Alyn Smith)—the SNP spokesperson—the right hon. Member for Orkney and Shetland (Mr Carmichael), and, most welcome of all, the hon. Members for Wyre Forest (Mark Garnier), for Tiverton and Honiton (Neil Parish) and for Folkestone and Hythe (Damian Collins).

Of course, I should emphasise again the shadow Secretary of State’s great thanks to the Secretary of State for being so kind in allowing the House the opportunity to have this debate at all. Under the so-called CRaG process for considering trade deals, there is absolutely no legal requirement for this type of debate to take place. It is entirely in the Government’s gift. If the Trade Bill was amended in the other place to demand the same level of scrutiny as we are applying to the Japan deal today, how could any Member of Parliament reject such a reasonable proposition, given that at the moment we rely entirely on the generosity of the Government as to whether or not to grant a debate?

Despite the rather complacent air of the Secretary of State’s speech, I hope that the Government will not be resting on their laurels. Even after the loss of Algeria, Bosnia and Serbia, there are still 11 continuity agreements waiting to be agreed, covering some £55 billion of our trade last year. There are serious questions, too, about the UK’s future membership of the CPTPP. It is not a done deal; it will warrant serious debate in this House.

There are serious questions that the Minister of State could answer now. When will there be an impact assessment setting out what Ministers expect to be the benefits? Will we simply have to accept the provisions already in the CPTPP? Will we be a rule taker, or will we be able to be a rule maker? What will be the benefits of CPTPP for UK exports, jobs and economic growth, and what might be the downsides? What we know is that the Secretary of State has negotiated a deal with Japan that appears to put British farmers and agricultural exporters at the back of the European queue for tariff-free quota access and that, by her own Department’s analysis, benefits Japanese exporters five times as much as it does British exporters.