Trade Bill

Geraint Davies Excerpts

Tuesday 9th January 2018 Commons Chamber

[Barry Gardiner]

I will deal with issues around devolution later in my speech. Indeed, that is something that my hon. Friend the Member for Sefton Central (Bill Esterson) will be addressing in his winding-up speech.

Having set the context, let us look at the detail. The Bill’s opening clause sets the tone for the power grab that is to come. It gives Ministers the power to implement regulatory changes as a consequence of any country acceding to or seceding from the WTO’s government procurement agreement. This is not a temporary power. It is not simply to facilitate our transition from a member under the wing of the EU to a member in our own right, as the explanatory notes to the Bill claim, but a power in perpetuity without the requirement for any scrutiny by Parliament.

The Government will use the sweeping powers of the Constitutional Reform and Governance Act 2010 to push through the UK’s independent membership of the GPA without a vote in Parliament. The Bill confirms that any future changes to the terms of the GPA will go the same way. We can talk about the merits of the GPA—I am sure that we will find much common cause across the Dispatch Boxes—but the Secretary of State said that we would be acceding on the “existing terms of participation”, if I wrote that down correctly. That is something that Members should be free to scrutinise and debate. The United States, Canada, South Korea and Japan have all put annexes to their schedules for the GPA that allow them to set aside and disapply regulations on behalf of small businesses and other organisations. That is something that we might wish to consider. It would be quite proper for us to do so, to boost trade for our small businesses, but the Bill, as currently formulated, would not allow that.

I have to confess that when I first looked at the GPA, I wondered what material difference this might make to British business. I was quite impressed to find that the Government’s explanatory notes showed that the GPA opened up £1.3 trillion of contracts to UK business—we should all rejoice in that—but when I checked the Bill’s impact assessment, I learned that the total cross-border earnings of our businesses from GPA contracts outside the UK is just £1.2 billion, which is less than 1% of that amount. I also learned that the total earnings by foreign companies from the £68 billion of GPA contracts inside the UK was £16.7 billion, which is about 24.5%. Will the Minister explain what the saving to the public purse was from this procurement agreement that merited £16.7 billion going to foreign companies while just £1.2 billion came back to the UK? There might well be a very good answer, but is this not precisely the sort of issue on which Parliament should have a proper role of scrutiny and holding the Executive to account? Of course, the Bill denies us the capacity to do so.

Clause 2 gives the Secretary of State the most far-reaching powers to implement new international trade agreements without the need for even a debate in Parliament. As his Department has confirmed, the clause includes the Henry VIII power to modify primary legislation without a vote. On that point, we were treated to the extraordinary spectacle of the Secretary of State resorting to the letters page of a national newspaper to deny what is printed in black and white—actually in black and green—in his own legislation. He must have been piqued by a number of articles in response to the Bill’s publication in November that accused him of appropriating powers that should, by rights, lie with Parliament. He responded on The Guardian website on the evening of 20 November, saying:

“In an editorial (13 November) you claim that the trade bill is ‘effectively granting ministers the power to write law behind parliament’s back’ with ‘Henry VIII powers’. This claim is repeated in a column by George Monbiot (18 November). This is untrue. The powers in the bill will only allow for amendment of secondary legislation covering existing trade agreements, and secondary legislation is still subject to parliamentary oversight.”

Yet it was not The Guardian that was wrong; the Secretary of State was wrong. He knew that he was wrong, although he did not correct his remarks, because clause 2 of the Trade Bill, which he had published just two weeks earlier, states quite clearly that the powers in the Bill make provision not only for the amendment of secondary legislation, but for “modifying primary legislation”. Lest there should be any doubt about this, the delegated powers memorandum published by the Secretary of State’s Department to accompany the Bill, which was quoted by the right hon. and learned Member for Beaconsfield (Mr Grieve) with such devastating effect earlier, states on its very first page:

“The Bill contains 6 individual provisions containing delegated powers. Two of these, clauses 2(1) and 7(3), include a Henry VIII power.”

This was not the case of a Cabinet Minister misspeaking or being ambushed in a broadcast interview; this was a written communication that the Secretary of State placed in a national newspaper in the cold light of day that contradicted plain fact and the considered explanation of his own officials. I will happily give way to the Secretary of State if he would care to come to the Dispatch Box and explain himself by putting on the public record why he chose to suggest that there are no Henry VIII powers in this Bill when his own Department had already confirmed the opposite to be the case. I cannot claim to have served with Henry VIII. I cannot claim that Henry VIII was a friend of mine. But, to misquote Senator Lloyd Bentsen’s remark to Dan Quayle, I can say, “Secretary of State, you are no Henry VIII. This Bill is an affront to the dignity of your office and to the authority of this House.”

Clause 2 provides the Secretary of State with unprecedented powers to implement international trade agreements without a vote in Parliament. It is perhaps the most egregiously anti-democratic provision of the Bill, in that it allows the Secretary of State to engage in secret negotiations with a trading partner of the EU, to lay the results of those negotiations before Parliament without the need for a debate or a vote, and to proceed to incorporate the resulting treaty into UK law without the need for a vote either.

The Government have tried to justify this power grab with the sham argument that these are simply roll-over agreements—existing agreements that are just being grandfathered. They claim that the corresponding agreements between 60-plus countries and the EU have already been through the process of scrutiny, meaning that the UK’s new agreements can go through on the nod. Yet the Government have been forced to admit that the UK’s new trade agreements are legally distinct from those previously negotiated by the EU. They are new agreements in international law. If we allow the Bill to go through as it stands, the Secretary of State, as the Government have acknowledged, will be given carte blanche to agree substantively new obligations with third countries and to implement them without a vote in Parliament.

The Government are aware of the magnitude of what they are attempting. The delegated powers memorandum could scarcely disguise its shame with regard to this part of the Bill. It says:

“It is recognised that Parliament will want considerable assurances from the Government that this power will not be used beyond what is necessary to ensure a seamless transition of the agreements in scope.”

The Government have given that assurance, but they cannot deny that the power is there. In the next breath, the memorandum claims, apparently without irony:

“The Department considers that this power is appropriate for the negative procedure.”

The negative procedure is the least rigorous procedure available to this House, as it allows the Government to bypass the need for a debate or a vote, or the possibility of amendment—there is nothing.

I ask the Minister to come clean and confirm to the House that the delegated powers memorandum is correct. Will he assure us that the Government will bring forward their own amendment in Committee to ensure that these new internationally binding agreements must go through a due process of proper scrutiny by Parliament, rather than being signed off by Ministers without a vote?

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

I applaud my hon. Friend’s speech. The Government are making out that this is all about roll-overs and business as usual. Does he accept that what will actually happen is that countries will want to negotiate new terms of trade because we will be a small minnow compared with the EU giant? What is more, when an EU quota is involved, countries within Europe such as Spain may want to take some of our quota. We will keep our quota only if we give better terms of trade, with lower standards, lower prices and a worse deal for us. That is why we must have scrutiny in this place.

[Barry Gardiner]

The honest answer to my hon. Friend is that I do not know, although I share his suspicion that that might well be the case. The point is that the Bill shows that the Government’s expectation is that these are not simply roll-over agreements and that, precisely as he suggests, third countries may demand additional features in new agreements. On that point, he is absolutely right and the Secretary of State is absolutely wrong.

--- Later in debate ---

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

Members have talked about free trade, but Brexit is of course the biggest reversal of free trade in the UK’s history. Margaret Thatcher was a great proponent of the single market, which is the probably the greatest example of free trade in the world. She also did not like referendums and quoted Attlee, who said that they were the instrument of demagogues and dictators because of their use by Hitler. Unfortunately, we now appear to be withdrawing from the customs union and the single market. We are withdrawing from the EU, making ourselves much weaker in negotiations with other countries. We are also making the EU weaker. The EU is currently the biggest market in the world, but that title will go to China after we leave, so there will also be significant impacts on human rights, democracy and the rule of law.

Of course, this Bill is not directly about our relationship with the EU, but we will be reducing our trade with it due to the tariffs that will be imposed if we do not have membership—I hope we will—of the single market and the customs union. This Bill is about our relationship with third parties—the 65 agreements—but it is not fit for purpose in that respect, because it does not do what it says on the can. It claims that it can guarantee the continuation of those 65 agreements on existing terms, but it is intuitively obvious from a business point of view that other countries will see Britain up against the wall, on its own and weaker, and they will demand better terms, whether lower quality, lower standards or lower prices. What is more—

[Greg Hands]

rose—

[Geraint Davies]

I will let the Minister intervene, but he can respond to this as well. The EU has quotas for various countries, but other EU27 countries will want to take some of that business, and we will lose again and again.

[Greg Hands]

I am not sure whether the hon. Gentleman has been listening to the debate or my previous interventions, but that process has already begun. We are in conversations with third parties and none of them is behaving in the manner that he is describing. Let me put his fears to one side: I cannot promise that we will be able to transition every single agreement, but nobody is behaving in that manner.

[Geraint Davies]

The Minister tells us that third parties are not behaving like that at the moment, so he implies that they will not behave like that in the future—what false logic; what naivety.. That is absolutely ridiculous. Any negotiator or country that sees Britain with its back to the wall, turning away from the biggest market in the world, will ask for more. If they did not say that they will give the money to Spain or wherever, they would not be doing their job. What is more, they will be dragging their heels, because they will know that the clock is ticking and that we need to get something sorted out. They have everything on their side. The Minister is so naive. All the negotiations over the past 40 years have been done by EU negotiators. We do not have the negotiating capacity. He is smiling glibly and pretending that it will be all right on the night, but it will not. People will remember what he has said today and how naive he was.

This Bill is simply not fit for purpose. It takes two to tango, and the Bill presumes, as the Minister does, that the EU will tango and not trip us up in the process.

The other facet of the Bill is secrecy and hiding what will happen. My hon. Friend the Member for Brent North (Barry Gardiner) said that the US-UK deal will be hidden for four years, and there are all sorts of fears about our having to import substandard food products from the US, including chlorinated chicken, which the Secretary of State looks forward to eating—his name is Fox—and hormone-impregnated meat. In the US, medicines are introduced into meat and asbestos is for sale. All those standards may end up coming through the back door under the cloak of darkness in these secret deals.

I know that the Bill is not about the US-UK relationship at the moment, but the Minister and the Secretary of State have mentioned CETA, which already enables certain changes to occur. There is a real risk that we will take on some of these problems. Indeed, there is a real risk that we will lose out on opportunities that the EU is creating, particularly in the trade relationship with Japan. That trade relationship will involve 600 million people and comprise 30% of the world’s GDP. The Europeans have built in environmental conditions, particularly through the Paris agreement, and other rights and protections that we enjoy in the EU, and the real problem is that downstream, due to both changing the existing bilateral relationships and as part of future trade relationships, the protections and rights we enjoy through our trade relationships in the EU will be bargained away. Whether it is human rights, environmental rights or consumer rights, those things are now inadvertently on the table, and that table is under the cloak of darkness, as there will not be public scrutiny.

There should be a guarantee of scrutiny, and we should ensure that the rights and protections we enjoy in the EU are sustained in future trade relationships. In my view, we should stay in at least a customs union, and ideally the customs union and the single market.

[Mr Nigel Evans]

The British people voted to leave the European Union, and they were told before and during the referendum that leaving the European Union meant leaving the single market—[Interruption.] Yes, they were. The Prime Minister at the time, David Cameron, said exactly that.

The hon. Gentleman clearly wants to use smoke and mirrors to drag Wales back into some form of European union in which we have to pay money to access the single market and the customs union. Surely that is money that should be spent on the NHS in Wales.

[Geraint Davies]

As we know, 51% of people currently want to remain while 41% want to leave. On the day, it is the case that the people of Wales voted as the hon. Gentleman said, but he will also know that Wales is the beneficiary of billions of pounds of EU, convergence funding, that 70% of our exports go to the EU and that 25,000 jobs in Swansea bay rely on the EU. It is very much in the interests of Wales to be in the single market and in the EU, and that is increasingly the view of the people of Wales. The people of Swansea West certainly voted to stay in the EU.

As everything unfolds, people are essentially saying, “I voted for more money, market access and a greater say, but I find that I am not getting any of those things. I am not getting what I was promised, and I want a final say on the exit deal.” People should have that final say.

Specifically on the money, we know from the Financial Times that we are losing £350 million a week, that the divorce bill will cost £1,000 per family and that the increase in inflation is costing the average worker a week in wages. That was not what people voted for, and people are worried about these deals. I have been contacted by Liberty, for instance, about the loss of workers’ rights and environmental rights, and even about issues such as slavery.

We want open and transparent trade agreements. We want the protection of being in the single market and the customs union, and we want people to have the right to a final say—to think again—on the basis that the facts have changed. That is what democracy and a sensible future for Britain is about.

--- Later in debate ---

[The Minister for Trade Policy (Greg Hands)]

As you know, Mr Speaker, it has become almost a tradition in this place to pronounce, when winding up a debate, that it has been interesting, thoughtful, helpful, vigorous or useful. This debate has been all those and more. Above all, it has been illuminating. It has illuminated the chaos of the stance of Her Majesty’s official Opposition, as did last night’s debate on the Taxation (Cross-border Trade) Bill. It has revealed the deep divisions within Labour on anything to do with trade, customs and markets. It seems that whenever a Division is called on those matters—bear in mind, Mr Speaker, that it is of course the Opposition who call the Divisions—Labour descends into its own chaos.

When we considered the Queen’s Speech, 49 Labour Members backed an amendment tabled by the hon. Member for Streatham (Chuka Umunna) in favour of staying in the single market and the customs union. That was contrary to the manifesto on which they had fought only days earlier. On CETA, the EU’s free trade agreement with Canada, only 68 Labour Members followed the official line from the hon. Member for Brent North (Barry Gardiner) and voted against it, whereas 86 voted with the Government and their free-trade instincts in favour of the agreement. As one of them put it, “If you can’t have a trade agreement with Justin Trudeau’s Canada, who can you have a trade agreement with?”

When we considered the Ways and Means motions for the Taxation (Cross-border Trade) Bill just before Christmas, 28 Labour Members rebelled by backing an amendment in favour of staying in the customs union. Last night, 219 Labour Members voted against the Second Reading of that same Bill, which means that they are opposed to the UK’s having, post Brexit, any scheme of trade preferences for developing countries.

[Geraint Davies]

On a point of order, Mr Speaker. This speech is not about the Trade Bill; it is about the Opposition. The Minister had 10 minutes in which to talk about the Trade Bill.