EU-Singapore Free Trade Agreement (FTA) AND INVESTMENT PROTECTION AGREEMENT (IPA)

Debate between George Hollingbery and Barry Gardiner

Monday 10th September 2018 General Committees

[George Hollingbery]

I would like to correct the record if I may, Sir Henry, because I called you Mr Bellingham throughout my remarks, which I am sure others noticed but I am afraid I did not, and I apologise.

With the leave of the Committee, I will respond briefly to the points raised by the hon. Member for Brent North. Non-tariff measures are very important, but it is not our analysis that they are better for Singapore than they are for the UK in these agreements. I refer the hon. Gentleman to graph 5 in paragraph 1.30 of the economic impact assessment, where he will find a considerable number of areas where Singapore imposes non-tariff measures—for example, instruments, clocks, recorders and reproducers, vehicles, aircraft and vessels, machinery and electrical equipment, base metals and articles, textiles and articles, and paper and paperboard.

The list goes on and on. Hon. Members may not have this document to hand, but by comparison there is another graph that shows the number of non-tariff measures applied by the UK on Singapore. There are almost none at all that we can evidence. The impact assessment absolutely does assess that, and it is quite clear to me on reading it that there are many more measures to be washed away by Singapore than there are by the UK. I will give a few more examples. Banks will be able to increase the numbers of branches, which was previously controlled. Insurance sales will be able to be made online in ways that were not possible before because of regulations. Substantial procurement opportunities will be opened up that hitherto did not exist because the entities being addressed were not included in the procurement schedule. There are all sorts of areas where the FTA opens up opportunities for British business.

On the sectors most affected by increased imports, I do not have the evidence to hand to give the hon. Gentleman, but my impression is that a good deal of what will occur in this area is import substitution, because an awful lot of what Singapore supplies to the UK is intermediate goods that go on to make other goods. I would expect the impact to be greater on substitution than on British companies. That is not to deny that there will be an impact; indeed, the impact assessment addresses that. I should probably say to him that the costs identified in the impact assessment, which he finds so risible, are about the cost of compliance or using the FTA. They are not costs to the British economy; they are simply the costs to businesses of taking on board the FTA and understanding it so that they can participate in that market. The actual net costs, as the FTA will affect the United Kingdom because of potential job losses and reductions in GDP, are accounted for in the £95 million figure. Therefore, they are properly modelled.

There are issues with the model, and I would not disagree with the hon. Gentleman that it is not entirely ideal, but the effects for the UK consumer and businesses as a whole, and for UK GDP, are undoubtedly positive. Furthermore, the estimates use bound figures for the liberalisation of services; basically, all they do is lock in calculations as to the certainty of the old rules now being completely complied with. They do not look at the potential for new services coming into the Singaporean market from UK companies and, despite the fact that this is a sensible, reasonable and rational estimate of £95 million, we believe that if we really bottom out, there are potentially much greater benefits to be had.

The hon. Gentleman asked questions about the participation agreements and whether they are confirmed in the EU mechanism, which I think I addressed in my opening remarks. The answer to the question about changes to the agreement, and whether we will use clause 2 powers from the Trade Bill to radically change this agreement, is unequivocally no. The clause 2 powers are there to transition agreements. That is not to say that there will not be some circumstances where it might be appropriate to use clause 2 powers to change that agreement; if they change slightly, if there are bodies that arise and fall away, that might well be something that we would look at in the future. However, it would be by far and away our preference to use clause 2 powers for transition alone. I do not rule out the fact that clause 2 powers exist and can be used for further work at a later date.

If and when it is agreed that both sides in this bilateral relationship feel it is appropriate for more work to be done on a future trade agreement that would substantially modify what has been transitioned for the sake of continuity for business and consumers, that will almost certainly come back as a future trade agreement and will therefore engender all the mechanisms that the Government have described around those. That would be made clear at the time; we make no judgment at the moment, but that mechanism exists to look at new free trade agreements and the Government will come forward with proposals at the time for what they want to do.

Of course, the clause 2 powers also carry with them substantial obligations to inform Parliament about how an agreement has changed, what the substantial nature of that change is and how any delegated legislation will enact the changes described. Parliament will remain totally informed of any changes that the Government propose under clause 2 powers. That is the compromise that was reached on the new clause 6 argument, which the hon. Gentleman will well recall. I believe the House accepted that as a sensible, transparent way of dealing with this issue, and of course it must be agreed in both Houses. If we have a new free trade agreement, that will undoubtedly come forward under the new mechanism that the Government have described, some elements of which are still being developed.

[Barry Gardiner]

I appreciate that the Minister is trying to answer the specifics of the questions I have posed. Do I take it that what he has just said is confirmation that the Government have not received formal confirmation from Singapore that Singapore will not seek to negotiate any substantive changes to the terms of this agreement? If that is the case, given that we have an existing bilateral investment treaty with Singapore, does he not see that there is a certain convolution—to put it no more strongly—in moving from an existing bilateral investment treaty to a future treaty that we are seeking to take as a roll-over now, which will then be subject to further clauses of negotiation to be a substantive further treaty in due course? Does he not see that as a somewhat otiose methodology?

[George Hollingbery]

I think all I want to add is that we currently have the bilateral investment treaty in place and any future trade agreements or any changes will go through the mechanisms. On our attitude to future investment treaties that go along with the free trade agreement, the thinking is not set on either side and those negotiations continue. I understand the hon. Gentleman’s concern, but I do not believe it is a concern; I believe it is very straightforward. The Singaporean Government, through the Prime Minister, have made very clear indications to us that they will be willing to accept a technical replication and then—at a future date yet to be agreed and through conversations yet to be had—we will discuss future arrangements, but nothing is set in stone in that way.

On investment protection arrangements more generally, Committee members will know very well why these exist. If one signs free trade agreements and one wants one’s companies to be able to invest in a foreign territory where there is the slightest question about the rule of law in that area—I do not necessarily apply that to Singapore in any way, shape or form, but there are plenty of companies out there looking for that level of confidence, which is a good thing to put in place—or simply if a company or investor decides to make an investment in a third-party country whose Government have undertaken to have in place certain arrangements that the business relies upon, then it seems reasonable to have in place some mechanism to pursue a dispute where promises have not been kept, if the investment was made on the basis that certain regulations or agreements would be implemented in a certain way.

I think this is probably just a difference of principle between us. It seems to me that the Labour party has an issue with this. I believe that such a mechanism makes it a great deal easier for companies to consider investing abroad, and I would have thought that it was something that we would want to encourage.

I thank the hon. Member for Nottingham East for his comments. I will be happy to engage with him on the rolling-over of existing trade agreements at some stage—although I note that I already have, in the International Trade Committee last week; in which case I will finally wrap up.

Today we have discussed the benefits of the EU-Singapore FTA. We have also heard the reservations and concerns of hon. Members. I truly believe that the FTA is a positive agreement for the UK, and that it is in our national interest to see that it is signed and concluded. Although it is not anticipated that the IPA will apply to the UK before we leave the EU or during the implementation period, it is only right that the UK ensures that fellow member states can get on with the business of ratifying the agreement by supporting signature and conclusion of this agreement. After all, we remain members of the European Union and we have obligations that we must fulfil.

As the UK asserts its position as a global champion of free trade, now and as we leave the EU, we will continue to play an active and supportive role in the development and delivery of EU trade policy. We will also continue to work together to ensure continuity of our trading relationship as we leave the EU. I have been clear about the Government’s commitment to engaging further with Parliament as we develop our independent trade policy, and we will continue to work with stakeholders across the whole of the UK. I commend the Government’s motion to the Committee and urge members to support it.

Question put.

Trade Bill

Debate between George Hollingbery and Barry Gardiner

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 17th July 2018 Commons Chamber

[George Hollingbery]

I thank the hon. Gentleman for his question. What I can say on that is that the Scottish National party has already welcomed a number of measures in the Bill today. The negotiations are ongoing with the Welsh Government and I would hope that in due course we will reach those legislative consent motions.

As I was saying, this will ensure that England, Scotland, Wales and Northern Ireland maintain the greatest amount of certainty, continuity and stability in our trade and investment relationships for our businesses, citizens and trading partners. I am certain that all Members across the House support the importance of maintaining these trading opportunities for business across the UK, such as we see with the 10% of Scotch whisky exports that go to countries with which we wish to transition existing trade agreements. As parts of these agreements will touch on devolved matters, this legislation creates powers for devolved Administrations to implement them. These powers will be held concurrently by the devolved Administrations and the UK Government. That approach will ensure that where it makes practical sense for regulations to be made once for the whole UK, it is possible for this to happen. However, in the trade White Paper, and throughout the Committee stage, the Government have publicly and repeatedly committed to not normally use the powers in the Bill to amend legislation in devolved areas without the consent of the relevant devolved Administrations—and not without first consulting them. I make that commitment again today. As such, new clause 4 is unnecessary.

[Barry Gardiner]

I take in good faith the assurance the Minister has given across the Dispatch Box that the Government would not normally do that, but surely he cannot equate that with having the security of that commitment in the Bill. He must accept that on this side of the House we have tried to be even-handed in ensuring that the terms of the devolution settlement are respected both by government and by the nationalists in Scotland. If he is simply saying, “Everybody must rely on an assurance across the Dispatch Box”, that is not good enough.

[George Hollingbery]

I say to the hon. Gentleman that the Sewel convention is well established. It has been in place for many years and it has proved more than adequate up to now. We believe it is the right way forward to handle this particular issue, so we see no need for new clause 4 to be in the Bill.

We will work closely with the devolved Administrations to deliver an approach to the implementation of trade agreements that works for the whole of the UK, reflecting the needs and individual circumstances of England, Scotland, Wales and Northern Ireland. The Government’s approach respects a long-standing and robust convention between the UK Government and the devolved Administrations.

--- Later in debate ---

[George Hollingbery]

If Members do not mind, I shall make a little more progress.

Concurrent functions have always been a normal part of our devolution arrangements, and the Bill broadly replicates the concurrent approach taken under section 2(2) of the European Communities Act 1972. That has proved an efficient and effective precedent for the devolved Administrations and the UK Government. I thank the hon. Member for Dundee East (Stewart Hosie) for raising the issue of the devolved authorities’ role in the transitional agreements and any extension of the sunset provision. I am happy to confirm that, should they make the decision to use the three-year sunset extension or provision, the Government commit to engaging the devolved Administrations in that decision-making process in advance.

The Government have made a number of their own amendments to reduce restrictions on the powers conferred on devolved Ministers, bringing greater parity between UK Ministers’ powers and devolved Ministers’ powers. I particularly wish to draw the House’s attention to two changes. Government amendments 64 to 67 change the requirement on devolved Ministers from seeking the consent of UK Ministers to consulting UK Ministers before making regulations under the Bill’s powers that relate to quotas or the pre-exit commencement of regulations.

[Barry Gardiner]

I am concerned about what the Minister said. Does he not accept that if the provisions in clauses 1 and 2 are taken in conjunction with Government amendment 34, they will allow the Westminster Government to use Henry VIII powers to modify primary legislation or retained direct EU legislation in areas that are a matter of devolved competence? That is to go beyond “not normally”, which is why new clause 4 is essential.

[Mr Speaker]

Order. May I just emphasise that there is no obligation to continue up to the wire? I know that sometimes some people on the Government Bench say “Keep going till the cut-off point,” but it is not necessary to do so. There is a lot of other material to be debated. The Minister, who is a most courteous fellow, was extremely succinct earlier; he should not think that that was unpopular in the House.

[George Hollingbery]

You will be glad to hear, Mr Speaker, that I do not have a great deal more to say.

Let me engage with the shadow Secretary of State’s point. The powers that the Government are taking relate to where any regulations under section 12 of the European Union (Withdrawal) Act are in force and intersect with devolved Ministers’ rights to modify retained direct EU law. We are carving out an area in which the UK Government believe it is right and proper that the interests of the wider United Kingdom have precedence. I think the shadow Secretary of State understands what I mean; indeed, from the look on his face I believe he probably secretly agrees with what I am saying.

[Barry Gardiner]

indicated dissent.

[George Hollingbery]

The hon. Member for Dundee East will know that work is ongoing around the extent of the areas which I have just outlined to the shadow Secretary of State and which will be covered by section 12. The changes I have outlined recognise the important role that the devolved Administrations will play in implementing trade continuity agreements in devolved areas. I reiterate that, in line with convention, UK Government will not normally implement such measures in devolved areas without the consent of the devolved Administrations.

The amendments demonstrate significant progress in our discussions with the devolved Administrations.