Trade (Australia and New Zealand) Bill

Geraint Davies Excerpts

Report stage
Monday 12th December 2022 Commons Chamber

[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.

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[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.

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[Geraint Davies]

It is a great pleasure to follow the hon. Member for Arfon (Hywel Williams), who has underlined what this debate is about. The Government are in the dock for selling out British interests, in particular farming interests, at a time when Parliament has basically been blindfolded in the process, unable to see the mandate or the negotiations, or to properly ratify the outcome.

What we have before us is an array of amendments to address the impact of these deals, which have already been signed, on all our sectors—in particular on agriculture, procurement and the NHS. Those are fundamentally important sectors. The amendments, which I support, have been tabled because it is still unclear how much damage has been done by these deals. They were done in haste and rushed through the door, which put us in a weak bargaining position. Any concession was simply just given. We do not know the detail of how much harm has been done. The former Secretary of State for Environment, Food and Rural Affairs said that we gave far too much for far too little, which I would call the understatement of the year. The Government’s projection is that GDP will grow by 0.1% in 15 years, but we do not really know the details.

What we do know though, to take the perspective of a Welsh sheep farmer—we heard from the hon. Member for Arfon—is that Australian sheep farms are on average 100 times the size of Welsh ones. We know too that in New Zealand and Australia they only focus on three or four main breeds of sheep. There are also economies of scale—New Zealand focuses on ensuring that nearly all sheep give birth to twins, as opposed to three lambs, which might kill the mother, or one, which would be less productive. We also know that their shelf life and mechanisation of food processing are far in advance of ours.

We know, therefore, that our farmers face a major threat, at a time when exports to the EU have been stifled by unnecessary barriers as a result of a botched Brexit deal, thanks to which we have seen a 15% reduction in overall trade. So it does not look too good; and what is more, the Government have signed up to giving Australia and New Zealand unlimited access in 15 years, in terms of beef and lamb. What precedent does that set for food exports when we do a deal with Brazil, for example?

With the war in Ukraine, we are now in a world where people are quite rightly concerned about food security, yet we are basically undermining our domestic production, at a time when Russia has increased its overall agricultural production by 15% since invading Crimea and facing sanctions. Basically, we are saying that we will turn our back on the EU and do a deal with Australia, undermining our own farmers. Is that a good idea? Surely, we need to be producing more healthy food locally, at a time when one in four people in Britain is in food poverty.

As it happens, I take a particular interest both in food, as a member of the Environment, Food and Rural Affairs Committee, and in trade, as the rapporteur for the Council of Europe, charged with ensuring that democracy, human rights, the rule of law and sustainability are embedded in agreements, but none of those are embedded in the Australia and New Zealand agreements. On democracy, there is no facility for the mandate, the negotiations, or ratification to be properly looked at, hence all these amendments. On due diligence, there is none when it comes to climate change, human rights and so on, where we can find best practice. For example, the EU deal with New Zealand refers to the rights of indigenous people, the Maori people, and various issues about due diligence in supply chains. Our deal does not have those things because it was rushed forward.

Trading further afield is more environmentally damaging, at a time when we should be concerned about climate change. We also know that Australia is the worst carbon emitter in the world, at 17.5 tonnes per person, compared with the 4.8 tonnes claimed for Britain in terms of production—for consumption, it is 8 tonnes per person. I hope we will have an opportunity to superimpose a carbon border tax in due course and that this deal will not rule that out.

[Sir Mark Hendrick]

I have recently returned from visiting Singapore on behalf of the International Trade Committee, where it was mentioned to us that Singapore has done a green economy agreement with Australia, which looks at emissions as part and parcel of that trade package. Given what my hon. Friend has said about Australian emissions, could he perhaps comment on that?

[Geraint Davies]

My comment would be that Britain should be taking a lead, as it claims to, on mitigating climate change. The way to do that is to take best practice, from Singapore or anywhere else, and hardwire that into current and future agreements. That has not been done, because our economic, climate and other interests have been thrown to one side in order to just tick a box and say that we have got a trade agreement.

[Lloyd Russell-Moyle]

My hon. Friend mentioned carbon border adjustments. Is it not the truth that both Europe and America are now leading on these discussions, because they understand that trade deals without proper carbon and border adjustments are just ways of exporting jobs out of countries—degrading those countries, their workers and the environment in one fell swoop?

[Geraint Davies]

I am certainly a big supporter of what the EU is doing on carbon border adjustments, for instance ensuring that we have a level playing field for steel made in south Wales, which emits half the carbon of Chinese steel, and that there is an incentive to invest in green production domestically. The EU has taken a lead and we need to catch up. The United States is subsidising green industry and, as my hon. Friend will know, there is a tension between the two different strategies when it comes to ensuring a sustainable and greener future for all.

Turning to procurement, clearly it is not exactly a new idea that big multinational corporations will use unelected, private, often secretly held tribunals to try to fine democratically elected Governments who want to pass laws to protect the environment and public health. We saw that in investor-state dispute settlements. Most obviously, at the moment, we have got the Energy Charter treaty, which binds countries for 20 years to being sued if they try to pass laws to help the environment.

People will know that Germany, France, Poland, Spain and others are trying to withdraw from that treaty, although we have not heard much for the United Kingdom—because of its fossil fuel interests, I assume. My question is: why, when we know those companies will be quick on the draw in taking us to court and suing us, do we allow them a way in on procurement, so that when they do not get the business with the NHS, they can suddenly sue us? That concern is covered in new clause 1, which I very much support.

Finally, it is obvious that, out of the carnage of the botched Brexit deal, while obviously we want deals with Australia and New Zealand, the haste with which we have approached these deals has left us in a situation where they get all the benefits and we face a prospective loss. That is absolutely disgraceful maladministration from the Government, and I support the amendments to try to mitigate some of the harm done by their hopeless negotiation.

[The Parliamentary Under-Secretary of State for International Trade (Nigel Huddleston)]

May I say what a pleasure it is to speak on behalf of the Government today as we scrutinise this landmark piece of legislation? I thank colleagues for their contributions to the debates on this Bill, including the general debate, where many of the points raised today were also covered and responses were given by my hon. Friends on the Government Benches. I will try not to repeat that debate now.

The Government are of the view that the amendments tabled are ultimately unnecessary, and I hope that I will be able to persuade right hon. and hon. Members to withdraw them. The new clauses that deal with issues on impact assessment are unnecessary, as the Government have already committed to undertake assessments of impact of these deals at regular intervals.

First, the Government have committed to publishing a monitoring report every two years and a compressive evaluation report for each of the agreements within five years of their entry into force. Those evaluation reports will aim to show how, why and for whom the agreements and their implementation have delivered, addressing many of the points raised by hon. Members in the debate.

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[Geraint Davies]

If New Zealand is not utilising its current quota, why have we chosen to give a completely unlimited quota in 15 years’ time? Given the Minister’s reasoning, New Zealand presumably does not need it, and it just exposes us to unnecessary risk.

[Nigel Huddleston]

All negotiations involve give and take. The hon. Gentleman will also acknowledge, I am sure, that we are also seeking market access right across the globe for farmers and our fantastic food and beverages—for example, by opening up the market in the US for sheepmeat for the first time in 20 years. At the same time, we are seeking opportunities right around the world. Of course, as several hon. Members have mentioned, we are proud of our high animal welfare and food safety standards, which is why we are ensuring that this deal does not compromise on them and that no new permissions for imports such as hormone-treated beef were granted.

On the Government’s engagement with the devolved Administrations, right hon. and hon. Members will be aware that the Minister for Trade Policy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), chairs the inter-ministerial group for trade, previously known as the ministerial forum for trade. That forum provides an opportunity for discussion on all matters of trade policy, including the implementation of UK free trade agreements. The forum is not the only opportunity for ministerial discussions; there are frequent bilateral meetings between Ministers. Indeed, later this week, my right hon. Friend is set to meet the Scottish Minister for Business, Trade and Enterprise, to whom I spoke last Tuesday. I also spoke to the Welsh Minister for the Economy on 1 December on a similar basis. In addition to ministerial engagement, discussions with devolved Administrations at official levels have totalled hundreds of hours across the Australia and New Zealand FTAs, including frequent updates by chief negotiators and detailed discussions to draft text.

It may be helpful to also remind the House that on Second Reading, the previous Secretary of State for International Trade, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who is sitting near me now, committed at the Dispatch Box never to use the power in clause 1 without consulting the devolved Administrations first. That is a sincere commitment, and one that we will honour.