Japan Free Trade Agreement

Geraint Davies Excerpts

Monday 14th September 2020 Commons Chamber

[Elizabeth Truss]

I thank my hon. Friend for his question, and I know that the Minister for Trade Policy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), recently had a webinar with businesses from the Black Country, but of course as we approach 1 January, we want to encourage more businesses to get involved in this exciting trade with Japan. It is a huge market, the British brand is very appreciated there and it is also a gateway to the wider Pacific region.

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

Margaret Thatcher got Japanese car companies to come to Britain as a platform to export into the single market. As a result of this Japanese deal, along with the Secretary of State’s expected EU deal, will there be more or fewer Japanese cars being exported from Britain into the EU?

[Elizabeth Truss]

I am very pleased to hear the hon. Member’s tribute to our great Prime Minister, Mrs Thatcher. That is a first from him, and I hope it is the first of many. The answer is that we want a successful British car industry, and car companies such as Nissan are supportive of this deal because it brings extra benefits to the UK.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (Accession)

Geraint Davies Excerpts

Wednesday 17th June 2020 Commons Chamber

[Elizabeth Truss]

My hon. Friend is right that it is an agreement of which many people want to be a part. In fact, other countries are looking to accede alongside the UK. One reason that our friends and allies across the world want us to join is that they see the UK as a key asset to CPTPP.

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

Will the Secretary of State ensure that product, environmental, health and workers’ standards do not fall below EU standards in order not to jeopardise an EU trade deal that is 47% of our trade? Equally, will she seek an exemption, as New Zealand has, from the investor-state dispute settlement, so that, in the event that we want to raise our standards of health and environment above EU standards, we will not be sued by big corporations? She has given a verbal undertaking, but will she put that into action and seek an exemption now?

Trade Deals and Fair Trade

Geraint Davies Excerpts

Wednesday 11th March 2020 Westminster Hall

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

I beg to move,

That this House has considered trade deals and fair trade.

It is a great pleasure to move the motion during Fairtrade fortnight. The debate is about how to hardwire the ethics of fair trade into future trade deals as we break out of Europe. I stand here as a Labour and Co-operative MP. The Co-op has a proud tradition of fair trade, solidarity and social justice, and, on the retail side, promoting Fairtrade coffee, bananas, wine, chocolate, and so on.

I represent Swansea West, and I am pleased to say that Swansea has been a Fairtrade city since 2004. In fact, Wales became the first fair trade nation in 2008, and a lot of that work was done by the Swansea fair trade forum. I am also a supporter of the Fairtrade Foundation, which has tended to focus on cocoa producers in the Côte d’Ivoire and Ghana, where there are issues surrounding living incomes, gender inequality and environmental standards.

Coming to the crux of the matter, we are all aware that we face opportunities and risks in striking trade deals. Naturally, a lot of focus has been on the removal of subsidies and tariffs, and some of the focus has moved on to standards of products and services. However, I wish to talk about standards in relation to the environment, labour, and crop diseases and the like, which can be used to undermine free and fair trade by providing unlevel playing fields.

In a nutshell, fair trade is the principle that market actors should not gain a competitive advantage by adopting practices in other states that would be unlawful or unethical in their home states. The fair trade principle is that we should not outsource abuse—whether in terms of human rights or environmental standards—and then import products made under such conditions, creating unfair competition for domestic producers, who have to live up to high environmental and ethical standards. It is important that we do not import products that are produced below our standards and by virtual slave labour. Such imports naturally lead to people complaining locally that trade is uncompetitive, and to rhetoric about stopping trade and how everything is unfair to domestic producers, who miss out.

[Nick Thomas-Symonds (Torfaen) (Lab)]

I congratulate my hon. Friend on securing the debate in Fairtrade fortnight. Does he agree that Britain needs to be a real example around the world in standards, and would it not be a good idea if the Government set out clearly that they intend to remain a signatory to the European convention on human rights?

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[Geraint Davies]

Yes, that is crucial. There has been some ambiguity over whether we will continue with the European convention on human rights. Ministers have simply said, “We’re still in it,” when questioned. They have not ruled out leaving it, and that is of great concern. If we, as a country, decide on our own definitions of rights and human rights, other countries, such as China, Russia and others, will say, “Oh well, Britain is doing that.” We became a signatory 60 years ago. Winston Churchill was an architect of the convention. It is very important for our standing that we remain a signatory to it.

There used to be a commitment to including dynamic alignment on environmental and labour standards in our agreement with the EU, but that is no longer the case. If those commitments are not given, the EU will consider imposing restrictions based on the presumption that non-alignment might be a doorway to providing uncompetitive trade and an unfair advantage, by undermining rights, the environment and labour standards. I certainly would not want to see that.

International agreements tend to be policed by independent tribunals invoked by investor-state dispute settlements. Those settlements focus very much on the interests of the inward investor, and on any profit that they might lose from the host nation’s introduction of laws and restrictions. Such laws and restrictions are often introduced to protect the host environment, workers’ rights and so on, and such settlements make it possible for a fine to be levied against the host country. The Minister will know of cases such as Lone Pine fracking in Canada, which sued Canada for hundreds of millions of dollars because Quebec decided to have a moratorium on fracking. There are cases of companies suing Mexico on the grounds that it introduced a tax on fizzy drinks to protect people from diabetes. There are cases of such mechanisms being used against Slovakia when it tried to roll back privatisation.

The point that I am making is that such arrangements contain a chapter for the investor that completely overwhelms the balance of power in relation to human rights and the environment. There may be an environmental chapter in some of the agreements, but it will not have the enforceability that investor-state tribunals do. The Government should look at that in order to hardwire labour and environmental standards into trading agreements, and to help to sustain and grow fair trade. It would also be ideal to hardwire the Paris agreement and the convention on human rights into new trade deals. We know that in the US-UK negotiations, the US explicitly wants to rule out climate change and the Paris agreement, and that is of great concern.

I am moving towards suggesting to the Minister that trade agreements should allow states to penalise social and environmental dumping as well as economic dumping. At the moment, under World Trade Organisation rules, most trade agreements allow players to penalise other countries that overtly subsidise and dump products on their marketplace by way of tariffs, and so on, or they allow referral to a dispute resolution mechanism, as I mentioned. They do not include similar mechanisms for social and environmental dumping. I ask the Government to look at such mechanisms to ensure that countries are not undermined by the abuse of human rights and environmental conditions, thereby undermining prices in the market and providing unfair competition.

Some trading agreements include references to some of those things, but they are essentially unenforceable. There are warm words about hoping to look after workers and the environment, but they are not enforceable. When push comes to shove, that leads to disaster, particularly in very poor countries. If we are serious about taking back control when we leave the EU, we need a trade policy that respects the environment, public health, social justice and democracy.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I congratulate my hon. Friend on securing this important debate. Does he share the Co-operative party’s concern about the mooted winding up or merging of the Department for International Development? We need it to grow in order to tackle inequalities around the world.

[Geraint Davies]

That point is very well made. This is a critical time, during which DFID needs to be closely engaged in the whole issue of negotiating trade deals. It is helpful for DFID to be separate from the Department for International Trade. We do not want DFID to be absorbed, eliminated, pushed into the Foreign and Commonwealth Office or whatever; we want it to be a strong voice in a difficult time as we move forward, so that Britain can be seen to champion these values for others to follow, rather than undermining standards and leading people in the opposite direction.

Coming back to the point about democracy, it is important that we are all in this together, so to speak, by virtue of having democratic scrutiny and a vote on the mandate. The process should be as transparent as is sensible, and then there should be final scrutiny and a vote on the deal in Parliament. That is something that the US Congress enjoys, and democracy in trade deals is not much of an innovation. The US Congress looks at trade deals, and there is public consultation. Of course, the European Parliament also has a vote on trade deals. If we are taking back control, we should have similar or better rights ourselves.

[Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)]

My hon. Friend is making an excellent speech, and I congratulate him on securing this debate. Does he agree that the current avenues for public and parliamentary scrutiny of future trade deals are not fit for purpose; that the Government must be transparent about their negotiating priorities to ensure that social and environmental protections are adequate; and that they must provide scope for genuine parliamentary debate and influence in any and all trade deals?

[Graham Stringer (in the Chair)]

Order. Can I just say to the hon. Lady that it is normally good practice to not intervene on a speech when you have not heard the beginning of it? The hon. Gentleman gave way, so I allowed the hon. Lady to speak, but it is not good practice to come in midway through a speech and intervene.

[Geraint Davies]

Thank you very much, Mr Stringer, and I thank my hon. Friend very much for her intervention. I agree with the points that she made, because in a mature and open democracy such as ours we do not want to have trade deals done in secret, and then find out that they contained all sorts of strange things that we did not want. By way of example, we would not want to wake up one day and find GM food scraps on our shelves. Neither would we want chlorinated chicken or hormone-impregnated beef, which provokes premature puberty in children.

We would not want certain things to be negotiated on the grounds of regulatory co-operation. That might include moving away from REACH—a process that the Minister will know about—on the chemical front. Under that process, if he were to produce a chemical, he would have to show that it was safe. If I were to produce a chemical in the United States, however, the Environmental Protection Agency would have to show it was hazardous. That is why asbestos is still for sale in the United States. We would certainly want to debate and scrutinise whether regulatory co-operation would lead to a much higher incidence of hazardous chemicals or poor food, which I would not want to see.

I know that the Government have committed to maintaining our standards of food production. However, the threat now is that while our farmers are delivering good food, the doorway will be left open for American farmers to pump in low-grade, low-price products that are consumed by poorer people who are under the hammer of austerity, and who end up feeding hormone-impregnated beef to their children, with strange medical side effects. I would not want that, and we would certainly want an open debate and discussion about it, so the intervention by my hon. Friend the Member for Birmingham, Edgbaston (Preet Kaur Gill) was well made.

In addition, we do not want our NHS to be undermined behind closed doors. The Government have said, “The NHS is safe in our hands,” and all that sort of stuff, but as we already know, the Americans will want to compete in areas of the NHS that are nationalised. They want access to patient data, and in fact a lot of patient data has already been leaked to private companies. They also want to increase medicine prices by protecting patents more effectively, and the World Health Organisation also promotes higher medicine costs. At this tragic time when we face the threat of coronavirus, and when we are talking about public health and equality of availability of drugs to deal with this and any future threats, such protections are essential.

We need democracy to shine a light and blow out the bugs in the system, so that we know what we are doing. Indeed, we want to eliminate any clauses about ratcheting and stand-still that are basically designed to stop the renationalisation of privatised utilities and industries. Clearly, people have different political views, but in a democracy the balance between public and private should be a matter of debate, discussion and public mood. It should be a moving target, rather than being fixed in one place or continuously going towards privatisation.

I will say a couple of words about what we might want to change and retain as we leave the EU. The Minister will know that the EU offers certain developing countries tariff rate preferences through its general system of preferences on everything but arms schemes. There is a risk that our bilateral trade agreements with other countries will lead to a relative erosion of those standards, or that developing countries will lose out as we carve up arrangements with developed countries.

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[Stewart Hosie]

Nor am I, but I am surprised and slightly disappointed that the UK Government’s stated intention is to exclude certain important matters from dispute resolution or arbitration. But—and this is a big but—not all arbitration and dispute resolution mechanisms are the same. Although the SNP will continue to support the inclusion of all the aspects of modern trade deals that I have mentioned, we would be deeply concerned if other future trade deals implemented the one-sided ISDS-type mechanisms that the hon. Member for Swansea West mentioned.

[Geraint Davies]

I am following the hon. Gentleman’s speech closely, and I agree with what he is saying. Does he agree that it is imperative that the UK stands up for dispute resolution mechanisms that include social and environmental matters and other areas beyond investment, as a precedent for when the EU—and indeed the UK, which is in a much weaker position—talks to the US or China? The EU will be the future of fair trade globally.

[Stewart Hosie]

Of course I agree with that. It is important that the wide range of issues that form the basis of modern trade deals—not simply tariffs and quotas—are included. As I have said, however, not all arbitration mechanisms are the same, and I would not want one that operated on the basis of the secret ISDS-type schemes that we have seen.

That is primarily because of the potential restrictions that such mechanisms could place on Governments, including the UK Government, in legislating even on public health, for example. To demonstrate, I will give two brief examples of how ISDS-type arrangements are unfair and limit the Government’s ability to act in the interests of citizens. The examples are not new and the information has been around for some time.

In the first case, between 1995 and 1997, the Canadian Government banned the export of toxic polychlorinated biphenyl waste to comply with their obligations under the Basel convention, to which the United States was not a party. Waste treatment company SDMyers sued the Canadian Government for $20 million in damages under chapter 11 of the North American free trade agreement, which included an ISDS-type arbitration scheme. The claim was upheld by a NAFTA tribunal even though Canada had acted to comply with an international treaty—that is quite extraordinary.

In the second case, in April 1997, the Canadian Parliament banned the import and transportation of the petrol additive methylcyclopentadienyl manganese tricarbonyl, because of concerns that it posed a significant public health risk. Ethyl Corporation, the additive’s manufacturer, sued the Canadian Government—again under NAFTA chapter 11—for $251 million, to cover losses resulting from the “expropriation” both of its plant and its “good reputation”. The claim was upheld by the Canadian dispute settlement panel, and the Canadian Government repealed the ban and paid Ethyl Corporation $15 million in compensation.

Those cases involved toxic PCB waste and a petrol additive that was deemed to have an impact on public health. In my view, it is quite wrong and unfair for large corporations to be able to sue Governments simply for taking steps to protect the wellbeing of their citizens, or for enacting public health measures that they believe to be right and fair, and for which they may well have an electoral mandate.

Although we welcome new trade deals, they need to be fair. As has been said, the process of agreeing them needs to be transparent and inclusive. For example, it must formally involve, at all stages, the Scottish Government and other devolved Administrations; and approval must be sought from and granted by Members of Parliament. That mirrors the point about democracy that the hon. Member for Swansea West made.

A clear understanding is required that although genuine dispute resolution mechanisms are vital for delivering fairness, free-trade agreements that include secret ISDS-type courts that limit, or appear to limit, the ability of Governments at any level to act in the best interests of their citizens are wrong, unfair and profoundly unacceptable.

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[The Minister of State, Department for International Trade (Conor Burns)]

It is a pleasure to serve under your chairmanship, Mr Stringer, for my first speech as a Minister in Westminster Hall. I congratulate the hon. Member for Swansea West (Geraint Davies) on securing the debate, and other hon. Members not only on their contributions but on their ingenuity in using this occasion at the end of Fairtrade fortnight to widen the debate into one about our future free trade agreements around the world, in particular with the United States. I also congratulate the hon. Gentleman on having been such a doughty advocate for the cause of fair trade over the years—a position that the Government share.

The Department for International Trade works very closely with the Fairtrade Foundation; indeed, the foundation serves on the strategic trade advisory group—the STAG—which I chair as the Minister responsible for trade policy. The global fair trade system reaches more than 1.5 million farmers and workers in more than 73 countries, many of which have historical ties to the UK, principally through the Commonwealth. The UK market for Fairtrade certified goods, which is underpinned by fair trade standards, minimum prices and direct payment of premiums to producers, has grown into one of the world’s largest. The Fairtrade mark continues to be trusted highly by the UK consumer, with more than 80% of the public saying they trust it.

Working towards a living income in domestic and global value chains is one of the keys to driving poverty reduction and economic development, and fair trade plays a crucial role in that. It also provides a means to create wealth, jobs and prosperity in local communities, in turn driving a country’s development and allowing it to grow into a trading partner of the future.

I will give some examples of how the Government, across various Departments, support free and fair trade. Between 2010 and 2016, the Department for International Development provided £20 million to Fairtrade International to help it to have a greater impact through its work and to make the global fair trade system stronger. DFID has also supported fair trade by investing more than £30 million in the responsible, accountable and transparent enterprise programme. That programme has helped to fund Shift, which works to improve companies’ human rights reporting through capacity building in business and human rights, and a new reporting database. It has also piloted and promoted Fairsource, a suite of supply chain mapping tools for use by companies to improve the sourcing of agricultural commodities such as flowers and cocoa, which was referred to by the hon. Member for Strangford (Jim Shannon). Fairsource dashboards are now available for more than 410 businesses and have been used by household names such as Ben & Jerry’s, Marks & Spencer and Starbucks.

Achieving the UN sustainable development goals by 2030 means achieving inclusive economic growth and decent jobs. The Government are committed to supporting that to spread opportunity ever more widely. We have the trade and investment advocacy fund to build developing countries’ capacity to participate in trade negotiations and fully engage at the World Trade Organisation. We have the SheTrades Commonwealth programme to enhance the competitiveness of women entrepreneurs in Commonwealth countries by connecting them to international markets. We have the Commonwealth Standards Network to increase awareness and the use of international standards across the Commonwealth in order to boost trade.

[Geraint Davies]

The Minister mentioned the good work of DFID in promoting fairness. Will he confirm, or press the Government to ensure, that DFID’s work continues and that it is integral to trade negotiations? There is some concern that the Department for International Trade is working in isolation and in the interests of investors, while DFID may be thinking about fair trade. It is important to hardwire the interests of fair trade into future trade arrangements.

[Conor Burns]

I agree with the hon. Gentleman. I know that my right hon. Friend the Prime Minister, when he served as Foreign and Commonwealth Secretary —I was his Parliamentary Private Secretary at the time—was frustrated to a degree by the disconnect that sometimes existed between DFID and the Foreign Office in pursuing Britain’s overall development and foreign policy objectives. It absolutely makes sense that we should try to co-ordinate our activity across all the international Departments of Government to get maximum influence for the United Kingdom and, most importantly, the most positive outcomes. One of the key drivers that motivates us in the Department for International Trade is the opportunity of trade with some of the poorest countries in the world to increase the opportunity for wider prosperity there. That will be at the heart of trade policy as we develop future free trade agreements.

We give £15 million to support the implementation of the trade facilitation agreement programme, which helps developing countries to reduce inefficient border processes, excessive red tape and administrative bottlenecks, which are hindrances to effective trade. The UK is the largest donor to the WTO’s enhanced integrated framework, providing technical and financial support to build trade capacity in 51 of the poorest countries in the world and to increase agricultural productivity for both local consumption and export. Through our support for the Impact Management Project, more than 2,000 organisations are harmonising a global approach to managing impact, including robust global standards on measurement and reporting. We are also examining the potential for fair trade standards to encourage businesses to be more responsible and reach vulnerable people in their supply chains.

Let me turn to a point raised by the hon. Member for Strangford—who is currently being interfered with by my hon. Friend the Member for Beckenham (Bob Stewart), who has just arrived in his coat. The hon. Gentleman mentioned the terrible conditions in which some people work in some of the poorest parts of the world. We are absolutely clear that those people and providing them with opportunities are at the heart of our trade policy. That means engaging across the whole supply chain, working in partnership with businesses, NGOs, producers, investors and consumers to be more responsible and reaching vulnerable people to ensure safe and decent opportunities for all.

Now that we have left the EU, we have a superb opportunity to advance the agenda further. It will enable us to build a fully integrated training and development package, encompassing trade preferences for developing countries alongside our existing aid spending. We know that trade is a key driver of economic growth, helping to raise incomes, create jobs and lift people out of poverty. That is why the Government are working to place development and global prosperity at the heart of UK trade policy.

Free and fair trade has been a great liberator for the world’s poor. Between 1990 and 2015, the number of people living in extreme poverty globally fell by more than 1 billion, but as the hon. Member for Strangford indicated, there is still so much to do. I say to the shadow Minister, the hon. Member for Sefton Central (Bill Esterson), that fair trade also means free trade. Let me tell him and colleagues that by free trade we mean supporting the international rules-based global trading order to ensure that trade works in the interests of all countries, large and small. As an independent trading nation, the United Kingdom will prioritise fair trade and, in particular, trade that helps developing countries to lift themselves out of poverty. That starts with working to ensure continuity in our trade agreements with those developing countries.

Following the transition period, the UK will put in place its own trade preference scheme granting duty-free, quota-free access to 48 least developed countries and tariff reductions to other developing nations. Far from rowing back, as was suggested, we intend to use our new independence to go forward. I contend that while DFID is the Department spending 0.7% of gross national income on development, the Department for International Trade is also, in a very real and profound sense, a Department for development by providing opportunities for creation of wealth and prosperity through trade.

We have signed four development-focused economic partnership agreements with the Southern African Customs Union, and Mozambique and other specific eastern and south African states. We continue to work with our partners on arrangements for the remaining countries covered by EU economic partnership agreements, including Cameroon, Côte d’Ivoire, Ghana and Madagascar. As was alluded to by the hon. Member for Halifax (Holly Lynch), we are absolutely determined to get those over the line. In fact, only last week I met representatives from some of those countries to discuss how we could get those agreements rolled over by the end of the year. We are also using our influence in organisations such as the WTO.

[Geraint Davies]

The Minister will know that the history of investor-state dispute mechanisms is basically about protecting investors who invested in countries without established systems of law and protection for investors. These days, we need a system in which people can invest in the knowledge that the host nation will also protect its environment and workers’ rights. Will he endeavour to strike deals that ensure that those social and environmental rights will be protected alongside investors’ rights, with investors’ rights not trumping those rights and attempts in host countries to protect those vital interests?

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[Geraint Davies]

It has been an interesting debate My response to the Minister is that if we agree on ensuring social justice, ensuring environmental protections, ensuring that human rights are protected and so on—we may do—we need to build those commitments into our trade agreements and not just hope for the best. Investor-state dispute systems are specifically focused on the interests of investors. Let us ensure that those values persist as we look at those relationships with the EU and, in particular, in the interests of the poorest—

[Graham Stringer (in the Chair)]

Order.

Motion lapsed (Standing Order No.10(6)).

Oral Answers to Questions

Geraint Davies Excerpts

Thursday 6th June 2019 Commons Chamber

[Graham Stuart]

We have a supplier relationship management programme, where we have built relationships at ministerial and senior official level with the largest investors into the UK. It is notable that in 2017-18, the 2,072 FDI projects that landed in the UK created 75,968 new jobs. Investors are not put off by Brexit, but they are deterred by the threat of nationalisation by the Labour party. It is the fear that job creators most often express to me, which goes to show that Labour does not even need to be in power to damage British jobs and living standards. The threat of Labour is enough.

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

My father, David Thomas Morgan Davies, was head of economic development at the Welsh Office and got Ford to move to Bridgend in the ’70s, yet this week we find that it is announcing its closure at a time when Donald Trump is saying that we are going to have a great trade deal. Does the Minister agree that the people working in Ford who voted in good faith to leave the EU did not vote to leave their jobs and deserve a say on the final deal, so that they can think again and stay in the EU instead of losing their jobs and being decimated by the Americans?

[Graham Stuart]

The hon. Gentleman again wants to frustrate the will of his constituents. The automotive industry is in massive global flux, and trying to link every decision to Brexit leads people astray, just as he and so many of his colleagues do as they come up with these false arguments for a second referendum. The people want the thing they decided to be done and they do not want to hear weasel words from the Labour party, trying to say the opposite.

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[Rory Stewart]

First, I pay tribute to those businesses in my hon. Friend’s constituency. It is incredibly important that, through every bit of Government policy, we support small and medium-sized enterprises in Britain. There is huge potential around the world. I would just warn, however, when people start talking about a no-deal Brexit, that we need to be very careful in specifying what kind of tariff levels people are talking about and with whom they are negotiating, because certainly farmers in my constituency, the automotive sector and the aviation sector will suffer terribly if we end up with the wrong arrangements.

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

On that point, we know that Donald Trump favours a no-deal Brexit so that we turn our back on the EU market and sit at his feet—the American economy is seven times the size of ours. We know that Donald Trump does not agree with climate change, but will the Secretary of State ensure that we focus on investing in renewable technologies via overseas development, rather than continuing to subsidise fossil fuels through export credit guarantees, so that we can build a sustainable world together?

[Rory Stewart]

This is a very big challenge. There is huge potential for the British economy and, of course, for the world and the climate emergency in getting involved in new technologies. To take one example, I would very much like to put considerably more money from DFID into research and development in renewable technologies at British universities. If we can develop the next generation of solar film—light spectrum technology —it can convince China not to build the next generation of coal-fired stations. That will make a huge difference to the climate and the world, but also to British research.

Future International Trade Opportunities

Geraint Davies Excerpts

Wednesday 1st May 2019 Westminster Hall

[Craig Tracey]

The hon. Gentleman will not be surprised that I disagree. One of the issues with the single market is freedom of movement, which was an issue in the referendum, and similarly the customs union ties our freedom of policy. Being able to develop our own wider trade policies offers far more exciting possibilities to my constituents and to businesses around the country.

Speaking of my part of the country, it is good to see that, primarily as a result of Brexit, a new strategy is forming. Traditionally, parts of the midlands have tended to work separately on their trade policies, but through initiatives such as the midlands engine they are working much more closely together, with a great sense of teamwork and unity, and more joined-up thinking to deliver a wider, more focused outlook, which is to the benefit of the midlands as a whole.

I raise my main topic today as one who was an insurance broker for more than 20 years and as chair of the all-party group for insurance and financial services. I will focus my comments on this sector, because insurance has to play a leading role in our future trade success. It is fundamental to economic improvement in every one of our constituencies, and is apparently one of the UK’s most successful export industries.

I say that insurance is important in all our constituencies because overall it employs about 300,000 people and, contrary to popular belief, two thirds of those jobs are outside London. The specialist London market itself employs about 52,000 people, but again, 17,000 of those jobs are outside London. In terms of premium income, the UK market is bigger than all the markets of its major competitors—Bermuda, Singapore and Zurich—combined. This country attracts large commercial business from more than 200 territories around the world, bringing to the UK about £65 billion of premium annually. On top of that, we have a reputation for product innovation to cover new types of risk. That is important as technology grows. Some of the products recently developed in London include cyber and data-breach insurance, stand-alone terrorist cover and natural catastrophe cover.

We cannot afford to be complacent about the industry, though. Research by the London Market Group, highlighted that premium coming from emerging markets into the UK has declined and that we face significant and growing competition from overseas, especially from markets in Bermuda, Singapore and Zurich, whose Governments support regulators that actively promote their industries and insurance markets. Meanwhile, our share of mature insurance and reinsurance markets stagnates. Asia is the highest growth market globally, and the region in which the UK lost the most ground in commercial insurance between 2013 and 2015, mainly to growing regional insurance hubs such as, again, Singapore, which had an annual growth rate of 4%.

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

The UK is the third biggest by value importer of food. If the United States wants access to that market, with lower quality food and hormone-impregnated beef for instance, does the hon. Gentleman think that is a permissible exchange for greater penetration for insurance and other financial products into the United States?

[Craig Tracey]

Although the US is one of our biggest import markets, I do not necessarily think so, because the Government have committed to maintaining high food standards. I am primarily talking about the insurance industry; I am sure the Minister can give some reassurance, but I think there is plenty of scope for us to grow imports from a whole range of countries around the world. The scope of where our imports come from seems to be very narrow.

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

I shall be brief. It will be a massive challenge to recover the trade that we shall lose. We currently negotiate as Team EU; standing alone as Britain, negotiating with other countries—particularly large ones, such as the United States and China—will be very difficult. There is a debate about climate change in the main Chamber at the moment. It seems to me that we shall have to trade further afield, which will harm our climate. I hope we see the introduction of carbon pricing to save the climate, but that will not be good for trade.

The hon. Member for North Warwickshire (Craig Tracey) mentioned the WTO. There are 160 countries in the WTO, many of which have dictators and so on, and they will jointly make rules that govern us. It is a massive organisation, with a panel of unelected judges that will impose rules on our courts. We will not, for instance, be able to bring the railways and water companies into public ownership, as some in the Labour party would like to.

There will also be a great threat to our standards from things such as hormone-impregnated meat, chlorinated chicken and the sale of asbestos, all of which we see in the United States. The United States is likely to put pressure on us to allow the lowering of standards in exchange for access to digital and financial markets, for example.

[Julia Lopez (Hornchurch and Upminster) (Con)]

I just note that when the International Trade Committee went to Japan and South Korea, the thing that sparked most concern among Japanese investors was the nationalisation of industries under a potential future Labour Government. That caused greater alarm than any discussion about Brexit. Does the hon. Gentleman agree that nationalisation may cause wider worry among international investors?

[Geraint Davies]

Ironically, the architect of the single market was largely Margaret Thatcher. As has been pointed out, it is one of the most perfect marketplaces in the world. She enabled the Japanese to platform into the European marketplace. Of course, they are all leaving now, because we are Brexiting. There is an EU-Japan deal, which we will be cut out of, and the car manufacturers are moving for that reason, too. Historically, the Japanese brought together the Government and industry in a way that allowed platforming, and used active government to help industry. That is what a Labour Government would want. The Japanese are not very happy about Brexit, and they are basically pulling out, which is a complete disaster for Britain.

On how we move ahead with the Trade Bill, I want assurances from the Minister about the scrutiny, accountability and transparency of future trade deals. It seems to me that there will be enormous pressure on standards, human rights, the environment, workers’ rights, consumer rights—everything. The Department is denying access even to the aims and objectives of trade negotiations, which are transparent in the United States and the EU. In fact, as I understand it, there is currently a freedom of information case in court because the Department is resisting providing access to that information. That is appalling. It bodes very badly, and I am very concerned.

I also want assurances from the Minister about investor-state dispute settlements, especially as fracking companies, for example, presumably will want to continue the appalling work that this Government have started. We are debating fracking to a certain extent today in the main Chamber. It is so destructive. The Minister may know that 5% of the methane is leaked, and that methane is 85 times worse than carbon dioxide for global warming, making fracking worse than coal. Under investor-state dispute settlements, big fracking companies such as Lone Pine have fined the Canadian Government hundreds of millions of dollars for imposing a moratorium on fracking in Quebec. Will he therefore rule out investor-state dispute settlements?

Will the Minister ensure that Parliament can fully scrutinise and agree on the negotiating aims of future trade deals? Will he allow MPs to access some of the documentation, and to have debates and votes? We do not want, week after week, to be presented with a deal versus no deal choice in which the Government say, “Here’s the deal with Chile. If we don’t sign it, even though it’s not as good as the one we’ve got already, we won’t get anything. Come on,” and force through appalling trade deals that are not in our interests and may undermine human rights abroad and environmental protections here and elsewhere.

Oral Answers to Questions

Geraint Davies Excerpts

Thursday 14th March 2019 Commons Chamber

[Victoria Atkins]

My hon. Friend raised a constituency case during the International Women’s Day debate last week, and we want the draft Domestic Abuse Bill to support both the victims of the many forms that such abuse can take and the children who live in abusive households. I urge my hon. Friend to write to the Joint Committee on Human Rights, which is scrutinising the Bill, to make her point.

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

As the Minister for Women and Equalities knows, the estimated 18% gender pay gap is likely to grow following Brexit as women in public services and retail are disproportionately affected. Does she accept that the women who voted to leave did not vote to leave themselves worse off and that they deserve a final-say referendum on the exit deal?

[Penny Mordaunt]

No. We do not want a second referendum, which would be disastrous. We are doing specific work in those sectors to close the gender pay gap. However, I caution that some companies that are doing the right thing will see their pay gaps widen because they may be recruiting many more young women, so we must look at the figures in detail to see that good progress is being made.

Future Free Trade Agreements

Geraint Davies Excerpts

Thursday 21st February 2019 Commons Chamber

[Dr Fox]

The UK as well as the EU have been at the forefront of improving the investor-state dispute settlement system and its transparency; in particular we supported the UNCITRAL—United Nations Commission on International Trade Law—rules on transparency that became effective in 2014. We have always seen this as being a necessary part of agreements, but we do absolutely agree that transparency is one of the ways to give greater public confidence in the system itself.

It is predicted that the share of global GDP of the seven largest emerging economies—Brazil, China, India, Indonesia, Mexico, Russia and Turkey—could increase from around 35% to nearly 50% by 2050, which would mean that they would overtake the G7, although of course even with more mature economies the International Monetary Fund has predicted that the United States will grow over 50% faster than the euro area this year, at 2.5%. This historic shift in global economic and demographic power will reshape the opportunities of international trade in the years to come, perhaps faster than many expect.

We cannot wish away this change and nor should we. Providing the employment and economic growth the UK needs means navigating this shift successfully. Happily, the United Kingdom is well placed to take advantage of these new opportunities. British businesses are superbly positioned to capitalise on this new environment, as both established and growing economies drive demand in precisely those sectors in which the UK excels. Anyone who has travelled widely will have seen how impressed global businesses and consumers are by the high quality of British goods and the professionalism of British services.

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

But surely Team EU collectively, with Britain in it, would have much more negotiating leverage against those very large emerging markets. An extreme example would be China. We are dwarfed by China but, as the EU, we can negotiate the best deal. The EU is negotiating deals with Singapore, Japan and others. Surely the Secretary of State must agree that we would get a better deal as part of the EU than isolated as a dwarf outside it.

[Dr Fox]

I really find it quite insulting that the United Kingdom, the fifth biggest economy in the world, should be described as a dwarf by the hon. Gentleman. We are one of the most successful global economies. It is also worth pointing out that the European Union does not have a trade agreement with China or with the United States because it was too difficult to get an agreement with the 28 nations in those negotiations. He is right to suggest that economies of scale have a role in trade agreements, but so also does the ability to conclude those agreements and to ratify them. That has shown itself to be easier when dealing with single nations, which is why Australia has a trade agreement with China but the European Union does not.

--- Later in debate ---

[Geraint Davies]

Does my hon. Friend think it is a cruel irony that Margaret Thatcher was instrumental in creating the single market and getting Japanese car companies to come here as a platform to access that market? The EU-Japan trade deal is one of the reasons they have gone there. The other imperative is that, had we not been Brexiting, those car manufacturers would in all probability stay in the EU, in Britain, where they are already. Given that car workers who voted to leave are now finding that they voted to leave their jobs, should they not have a final say on whether we leave at all? They certainly did not vote to lose their jobs. It is completely farcical.

[Barry Gardiner]

My hon. Friend tempts me into a discussion about Brexit, but I am sure that if I were to be tempted, Madam Deputy Speaker, you would be on my case in a flash, urging me to deal with the matter of future free trade agreements instead.

This debate was originally promised at the last International Trade oral questions on 7 February, but anyone reading Hansard will not have been blind to the fact that the commitment was made as a response to an entirely different question. We did not ask for a general debate on putative trade deals with specific countries. What was asked was when the Government would bring forward a debate about the scrutiny of trade deals. Even if the Secretary of State has not yet got round to reading my eight-page letter of 21 January on the subject—there are many copies on this side of the House if he wants a spare—he cannot have been unaware of the matter, because, to his embarrassment, the Trade Bill’s progress in another place has been delayed as the Government lost a crucial vote.

Their lordships required the Government to set out their proposals for the process, the consultation, the mandate and scrutiny of making international trade agreements in the first place, including:

“Roles for Parliament and the devolved legislatures and Administrations in relation to both a negotiating mandate and a final agreement.”—[Official Report, House of Lords, 21 January 2019; Vol. 795, c.506.]

The House will note that no such proposals have yet been brought forward, so perhaps the Secretary of State will tell us what progress he has made in this respect and when he intends to introduce such a debate.

Today’s debate certainly cannot be considered to constitute that important discussion. It is a general debate on a Thursday, in a week that was intended to be recess, talking about potential agreements before Parliament has even debated the whole process of consultation, impact assessment, negotiating mandate, parliamentary debate, transparency of negotiation, ratification and subsequent review and periodic appraisal that should constitute a framework within which the Government intend to bring such agreements into being.

Furthermore, people watching today’s debate will be incredulous that, given that just last week the Secretary of State was forced to come to this House and admit that he had thus far failed to replicate the 40-odd trade agreements that he promised would be ready to sign one second after midnight after Brexit, last week only five had been agreed, nine were off track, 19 were significantly off track, four were said to be impossible to complete by 29 March and two were not even being negotiated. If there has been progress since then, I will happily give way to the Secretary of State if he wishes to advise the House. No. In that case, I take it that his silence is an acceptance that that is the state of play of the agreements that we currently have. Indeed, the fact that we are instead discussing a host of entirely new trade agreements when we have yet to secure trade continuation with all the countries with which we already enjoy a trade agreement by way of our EU membership rather calls into question the Government’s priorities at a time when businesses are screaming for certainty, clarity and continuity.

Trade Bill

Geraint Davies Excerpts

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

[Richard Graham (Gloucester) (Con)]

Thank you, Mr Speaker. I welcome the Minister’s announcement that today’s debate is about continuity and transparency, but the truth is that it is laced with a cocktail of amendments with very different agendas. The two most popular agendas represent attempts to lock us into either the or a customs union, as in new clause 5, or to secure a customs union were the negotiations to fail to secure frictionless FTAs, which is in new clause 18. That would be the clearest invitation to the European Union to refuse those negotiations. The third one—[Interruption.] Be patient.

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

On a point of order, Mr Speaker.

[Mr Speaker]

I hope it is a point of order, not a point of frustration.

[Geraint Davies]

The hon. Gentleman is referring to new clause 18, which is in the next group. We have limited time and he is talking about the wrong section of the Bill.

[Mr Speaker]

Forgive me; because I was engaged in discussions at the Chair, I did not notice that. The hon. Member for Gloucester (Richard Graham) must focus with razorlike precision on the matters in this group. If he does not wish to do so, he must wait until we are discussing another group. If he can find a way of delicately relating his concerns to the group with which we are dealing, rather than one with which we are not, that would be in order.

[Richard Graham]

Thank you, Mr Speaker. If the hon. Member for Swansea West (Geraint Davies) had waited but two seconds, he would have realised that I was precisely there with my third illustration of today’s agendas: the attempts to avoid free trade agreements altogether, of which new clause 3 is the most striking example, or to scrutinise them to death, as set out in new clause 20.

I wish to linger on new clause 3. It may appear to those outside this House that it contains reasonable requirements. It states that Ministers of the Crown should lay a draft of the negotiating mandate, setting out fields, sectors, principles, limits and desired outcomes of agreements that may well be an exact and absolute rollover of existing agreements that were negotiated decades ago. The truth is that this is the “we do not want any free trade agreements” clause. It would frankly be absurd to pretend that we could ever get anything done, given the requirement to ensure that

“between each round of negotiations”

of some 40 agreements

“all documents relating to the negotiations have been made available for scrutiny by select committees”,

unnamed and unnumbered. Those who drafted that new clause would clearly have been against the anti-corn laws of 1832 and against Adam Smith’s “The Wealth of Nations”. They would be against this country actually receiving anything at all in trade, specifically if we manufactured or produced it here in this country. Micro-management would run riot, and it would mean the end of all free trade agreements for all time. I therefore completely reject that approach.

My second point is that what we are talking about tonight ultimately comes down to difficult decisions about what type of nation we want to be when we leave the European Union. It has always been clear to me that if we are to leave the EU, we cannot stay in the or a customs union. It is bizarre that some Opposition Members do not see that our inability to decide our trade preferences, particularly with the poorer nations of the world that are currently disfavoured under the common external tariff regime, could not be significantly improved by having our own free trade agreements.

The next point—the right hon. Member for Twickenham (Sir Vince Cable) is a classic example of this particular school of thought—is that we will not be able to negotiate effective free trade agreements on our own once we have left the European Union and the customs union. I urge all those in this House who believe that to look closely at the potential of the Trans-Pacific Partnership and the warm interest from all those involved in that complicated and important agreement in an area of vital growth to the world. The opportunity for us there is significant. We should not listen to those who put up new clauses that would get rid of free trade agreements forever, and we should seize the opportunities that leaving the customs union will offer us if we are to leave the European Union, which we are.

[Geraint Davies]

I will be brief. The Trade Bill is of course the latest part of the Brexit fantasy built on the illusion that the trade we lose from the EU will be made up by the US and, in particular in this Bill, by the continuation, without any change, of the existing 14% of our trade with third countries. We know from Donald Trump that we cannot rely on the US. This is about whether we can rely on the 70 countries and 40 agreements to deliver the 14% of our trade in the same way, and the simple fact is that, rather than negotiating as team EU, any country now looking to negotiate against the UK alone is bound to want a new agreement, because we are a much weaker party.

That is why, in speaking to new clause 16, I simply ask that MPs have information about the countries that ask for changes in those agreements. The current Minister and previous Ministers have claimed that no one is asking for any changes, but we already know that both Chile and South Korea are asking for such changes. This is about transparency and scrutiny.

As it stands, the Trade Bill gives Ministers the power to amend domestic law to match any new trading arrangements, so we are talking about Ministers having the right, behind closed doors, to change standards, to change tariffs, to change human rights, to enable visas, to change environmental protections, to undermine public health and to change workers’ rights. [Interruption.] There is a bit of heckling, but the reality is that in bilateral trade agreements if Ministers decide there will be different standards, rights and protections, that may be permitted without the scrutiny of this House. Indeed, tribunals and mechanisms like the investor-state dispute system could be introduced behind closed doors. All new clause 16 says is that there should be scrutiny of that.

[Charlie Elphicke (Dover) (Ind)]

Will the hon. Gentleman give way?

[Geraint Davies]

There is no time for me to give way. All I am asking with my simple amendment is that we have the power to know in advance when people ask for concessions. The Government should accept the amendment, because they claim that nobody is asking for any changes and that it is business as usual. If they deny the amendment, they will just be illustrating that, behind closed doors and under the cloak of darkness, we could see our protections and rights undermined.

EU-Japan Economic Partnership Agreement

Geraint Davies Excerpts

Tuesday 26th June 2018 Commons Chamber

[George Hollingbery]

I am not entirely sure whether the right hon. Gentleman is talking about my achievements or those of my right hon. Friend. [Interruption.] The establishment, in conjunction with the Secretary of State, of a brand new Department for International Trade and preparing ourselves for Brexit is evidence in itself—I could list a great many things.

The Government have an overarching commitment to free trade—

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

With all due respect to his predecessor, does the Minister accept that there has been no firming up of deals with third countries that we are assured will continue? Furthermore, South Korea, Chile and Australia have already said that they want to renegotiate their deals, so we have been left in a state of uncertainty and without any deals.

[George Hollingbery]

The fact is that the previous Minister was engaged, as was I, in a great many lines of negotiation with countries that have agreement with the EU. Progress is being made and will continue to be made under this Administration.

The Government have an overarching commitment to free trade, which is a fantastic and progressive means of stimulating economic growth, creating jobs and providing greater consumer choice. The UK has been, and will continue to be, a leading voice in support of free trade globally. We will continue to support the EU’s ambitious trade agenda while we remain an EU member state. As I have just illustrated, this includes some 40 trade agreements, including the EPA with Japan, which we are talking about today. Ongoing UK support for these agreements, including in respect of signature and conclusion of the Japan agreement in July, will send a positive message about our commitment to global free trade, now and as we prepare to leave the EU.

--- Later in debate ---

[George Hollingbery]

I thank the hon. Lady for her intervention, but I should point out that there have been a number of large-scale investments by Japanese companies in the UK. Toyota, Nissan and Honda have all recently made large-scale investments. Furthermore, the trade deal that has been negotiated includes increasing access for supply chain elements to the automotive market into Japan in a way in which it has not hitherto been accessible. We should always remember that there are small businesses that will have access to the market that did not realistically have that access before.

Hon. Members will have seen from the Government’s detailed and comprehensive impact assessment that the EPA is estimated to be worth up to £3 billion to UK GDP annually in the long run. UK imports are due to grow by up to £8.4 billion per year in the long run, which reflects reduced input costs for British businesses, which in turn are expected to lower prices for consumers. UK exports will increase by up to £5.4 billion, with the largest gains in the chemicals and automotive sectors.

[Geraint Davies]

Does the Minister accept that when we technically exit in March there will be no legal obligation for Japan to keep us in this trade agreement, and that after the transition period we certainly will not be in it? There is every risk we will be out in the cold. That just shows we are better negotiating as part of team EU.

[George Hollingbery]

Clearly, all sorts of scenarios are possible, but the hon. Gentleman will also know that a piece of legislation is coming to this House shortly that lays the framework to ensure that we can continue those arrangements. As I have already said, efforts are ongoing across the piece to go around those 40 organisations and 70 countries with which we already have agreements such that we can continue them after exit.

--- Later in debate ---

[Barry Gardiner]

I will not, because Madam Deputy Speaker wants me to press on to allow hon. Members to make their own contributions.

The car industry is far from the only sector involved in what is a comprehensive trade deal. Food and drink producers are also implicated, not least as regards the protection provided in the agreement for products with specific geographical indications. Once again, the Government have failed to defend the interests of British producers on overseas markets. France, Spain and Italy have each listed dozens of their national products for special protection in annex 14-B of the deal and Japan has listed 48 of its products for protection, yet the UK Government could only be bothered to list four products under the geographical indications provisions of the deal—Scottish farmed salmon, west country farmhouse cheddar, Stilton and Scotch whisky.

[Geraint Davies]

What about Welsh lamb?

[Barry Gardiner]

Indeed. As my hon. Friend says, what about Welsh lamb? What about Scotch beef, Dorset blue, Yorkshire Wensleydale, Cumberland sausage and Melton Mowbray pork pies? Can the Minister explain why we failed to register geographical indications to protect more of our UK food produce?

The European Scrutiny Committee raised many further crucial issues relating to the deal that remain unanswered. Under the negative list approach, all service sectors that are not explicitly exempted from liberalisation are included. It is considered to be a particular threat to public services, as it may prove impossible to shield them from liberalisation effectively once they have been committed to an international trade treaty. It means that any emergent sector in the future will be automatically subject to trade liberalisation even where there may be a clear need for Government regulation or intervention. We cannot possibly predict what those will be prior to their emergence, but what is the point of using such “negative lists” to reduce the capacity of the Government to regulate in the future?

Annex 1 allows countries to list existing non-conforming measures that enjoy some protection. Annex 2 is a stronger protection, in that it permits countries to protect service sectors into the future by allowing for the introduction of reforms that would otherwise contravene the EPA rules. As the Minister said, the UK has entered annex 2 reservations for cross-border auditing services, manpower planning for doctors in the NHS, privately funded ambulance services, and residential health facilities services other than hospital services. I repeat: other than hospital services. In other words, they are, and will forever remain in future, subject to liberalisation and competition under this agreement, in contradistinction to the implication that we heard earlier. I therefore repeat the Committee’s question: will the Minister confirm whether he is content with the proposed provisions enabling Governments to regulate in the public sector?

Do the Government intend to negotiate the UK’s future trade partnership and its future investment relationship with Japan at the same time, as one agreement—another question posed by the hon. Member for Stone and by my hon. Friend the Member for Crewe and Nantwich—or will the separate EU-only trade agreement constrain the UK’s ability to negotiate and conclude an integrated trade and investment agreement? The House will be rightly concerned that the Government have simultaneously inserted into the Trade Bill sweeping Henry VIII powers to implement such a future trade agreement without any proper scrutiny or oversight. Will the Minister confirm that no such investment chapters will be included in any future trade agreement with Japan?

Let me be clear: Labour would like to see a trade agreement with Japan. We have an incredibly strong trade and investment relationship between our two countries, and we believe that we can continue to build on that. We want a positive, dynamic relationship that elevates standards, boosts opportunities to benefit from advances in technology and research and development, and continues to support growth and investment in our high-tech manufacturing sectors and world-class services sector. But we cannot be expected to rely on this Government’s quiet promises alone, and it is imperative that Parliament has the proper opportunity to scrutinise and debate these trade agreements well in advance of their being signed.

It is worth noting that this deal has yet even to go through the full scrutiny process in the EU, with INTA—the Committee on International Trade—not scheduled to hold a public inquiry until 9 and 10 July and the European Parliament scheduled to vote on whether to give consent to the agreement in December. If the motion before us is voted through, it will allow Ministers to endorse the agreement without proper scrutiny by the House, and even before the full scrutiny process of the European Union has been properly applied. That sets a dangerous precedent for future trade agreements and makes a mockery of the idea that any future trade agreements to which the Trade Bill applies will have received proper scrutiny by this House.

--- Later in debate ---

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

It is a pleasure to follow the hon. Member for Yeovil (Mr Fysh), who made a number of interesting points about the uncertainties we face. In particular, we have Brexit day in March and then a transition period, and our status within this very welcome EU-Japan deal is very uncertain.

The first key point I want to make is that we should relish the fact, as the right hon. Member for Chelsea and Fulham (Greg Hands) essentially did, that we have been part of the EU and have had the strength of the EU to enable us to negotiate a good deal. The real fear is that, after Brexit, we will be a stand-alone country facing big opportunities but also big challenges—whether with Japan, China or Trump’s United States. That is something I very much regret.

It is good to see that we do not have an investor court system in the Japan deal. That underlines the point that such a system is simply unnecessary for trading between two mature economies in democracies with established judiciaries, because there is already protection for investors. That is the case for Canada, and also for trade with the United States, in which investors are protected. The problem with investor court systems is that they put the investor first, above the environment or the public interest. There is an endless list of examples, but—[Interruption.] The Under-Secretary of State is chuntering from the Front Bench. By way of example, let us take George Osborne’s sugar tax. When such a tax was introduced in Mexico, such a system was used to sue Mexico for the profits lost by protecting people from diabetes, so these things do happen.

[Kevin Hollinrake]

The hon. Gentleman is citing the Cargill case, in which Mexico was actually fined by the World Trade Organisation for inappropriately applying tariffs that were contrary to a free trade agreement. In that case, it was ruled against not just under the investor-state dispute settlement process, but in the WTO itself.

[Geraint Davies]

The WTO did get involved, but the essential point—[Interruption.] No, let us get this clear. The essential point of these arbitration courts is that investors invest, and if Governments change the rules and doing so changes their future profits, investors can sue for compensation, as was the case with the sugar tax. That would be the case if there was a plastics tax, for example, or if there was a diesel tax, and so on. That is why people are very worried, and the Government must not trade off the environment, the public interest and wider considerations of public law. Thankfully, there has been concern about this in Europe, which is why such an unnecessary system has not been applied in the Japan deal.

On Japan, 40% of its inward investment into Europe is to Britain. Why? Is it because the Japanese love British people? We do speak English, which is their second language, but it is basically because we are a platform, through the customs union and the single market, into the biggest market in the world. These are the facts. If we are not in the single market and the customs union, which we will not be after the transition period—if we go ahead with the barmy negotiation that is being suggested—that foreign direct investment will go to mainland Europe, and we may just be left on our own.

This is the situation we face. In particular, as has been said, President Trump basically has an America first policy. He does not recognise anything except a zero-sum game. We have had a conversation about imports and exports.

[Jeremy Quin (Horsham) (Con)]

Will the hon. Gentleman give way?

[Geraint Davies]

I will take the hon. Gentleman’s intervention in a moment.

The hon. Member for Stone (Sir William Cash), who is sadly no longer with us—I mean he is not in the Chamber—has always argued that we have to get out of the EU because we have more imports than exports, yet that is the case in Japan, as has been pointed out. There is a bigger picture here, because cheaper imports are often inputs that make our products less expensive relative to elsewhere, and there is a balance in relation to foreign direct investment as well. These are complicated issues, and I do welcome the deal. I will take the intervention of the hon. Member for Horsham (Jeremy Quin).

[Jeremy Quin]

I will allow the hon. Gentleman to continue.

[Angus Brendan MacNeil]

rose—

[Geraint Davies]

Go on.

[Angus Brendan MacNeil]

The hon. Gentleman is making an absolutely fantastic speech on inputs and imports. [Interruption.] He actually is, if Members would listen to what he is saying.

The important point, which the hon. Gentleman will be aware of, is what I heard when I was in Detroit with the International Trade Committee in February. It is that the Americans are more concerned about the relationship that the UK has with the EU—and, I suspect, that we have with Japan as well—because if the companies in which they have invested find there are obstacles and their supply lines are disrupted by tariffs, border checks or whatever, that will have serious economic effects.

[Geraint Davies]

It is in the interest of the Americans for us to be separated, isolated and small so that we can be picked off. They obviously intend to impose their standards. They are selling more asbestos, they have lower chemical standards and lower standards of food safety—I am thinking of chlorinated chicken and so on. They will impose those standards because we will be desperate to have a deal and we face problems. We are better as part of team EU.

There are worries if we find ourselves excluded from the Japan-EU deal as we Brexit. That will include services—80% of our exports are services—and financial services. The axis of yen plus euro would be a danger to the City of London.

Captain Fox is boldly going to try to establish trade relations that no one has had before, but might find that we currently have a trade relationship that is even better. In the round, when people realise that and lose their enthusiasm for Brexit, they will realise that such trade agreements underpin the need for a public vote on the deal. When we have that, Britain will decide that it wants to stay at home in Europe.

Draft EU-Canada Trade Agreement Order

Geraint Davies Excerpts

Tuesday 26th June 2018 Commons Chamber

[The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)]

I beg to move,

That the draft European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018, which was laid before this House on 21 May, be approved.

I am delighted that we have the opportunity once again to debate the comprehensive economic and trade agreement between the EU and Canada, known as CETA, and that this is taking place on the Floor of this House. This follows on from the thorough and constructive debate last year and the overwhelming support shown by the full House in a subsequent deferred Division. I note that a majority of those on the Labour Benches who voted in that Division chose rightly to vote in favour of the agreement, and I hope they will continue to do so, because this debate comes at a crucial point in world trade, with the potentially destructive rise in protectionist sentiments.

Free trade is the means by which we have collectively taken millions of people out of abject poverty in the last generation, and we must not put that progress into reverse. We should also realise that trade is not an end in itself, but a means to widen shared prosperity. That prosperity underpins social cohesion and, in turn, political stability. That political stability, in turn, is the building block of our collective security. To interrupt the flow of prosperity is to risk creating a torrent of instability. We have an opportunity today to reaffirm Britain’s commitment to the principles of free trade and the application of an international rules-based system.

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

Does the Secretary of State accept that after exit day, we will be bound by these treaties with Canada and hopefully Japan, but that there is no legal obligation for Canada and Japan to honour their obligations to us, because we will be out of the EU? That is the big problem with leaving the customs union.

[Dr Fox]

We already have had substantial bilateral discussions with Canada, and it agrees with the United Kingdom that CETA should form the basis of a bilateral agreement between the UK and Canada as we leave. However, we will have greater leeway to look at what additional elements we might want to include when we are no longer tied to the European Union.

--- Later in debate ---

[Barry Gardiner]

The hon. Lady makes a false premise. Many parts of this deal would be welcomed, but there are essential parts of it that cannot be welcomed and which would stop us, therefore, being able to ratify it in the way she suggests.

The ISDS mechanisms give superior legal rights only to foreign investors to raise disputes against our Government to petition for compensation when their profits, or even their potential profits, are impacted by legislative or public policy decisions. This effectively allows companies to sue Governments when they are legislating in the public interest; for example, by introducing plain packaging for cigarettes, national insurance, minimum wages or even banning fracking. These provisions have become increasingly commonplace in new-generation trade agreements and this is what has resulted in such widespread international public outcry against deals such as the Transatlantic Trade and Investment Partnership, the Trans-Pacific Partnership and CETA.

The proliferation of investor-state dispute settlements can encourage treaty shopping, whereby investors restructure their activities to establish in countries where they may benefit from ISDS mechanisms, should they seek to effect policy change or petition for compensation. While the Government have previously argued that the UK has only ever been subject to four such dispute cases, and that the UK never lost such a case, it begs the question: why does the Secretary of State feel that this mechanism needs to be incorporated in a deal with a country such as Canada?

[Geraint Davies]

Will my hon. Friend give way?

[Barry Gardiner]

I will give way to my hon. Friend in just a second.

The Secretary of State spoke about the need to give investors protection and security and he has boasted many times in the past 12 months about the record number of FDI deals that he has been able to achieve. Unaccountably, he failed to report that those deals, though record in number, showed a 92% drop in value. Today’s figures also reveal a drop in the number of deals, and the number of jobs saved by such investments is down by 54% year on year, according to his website.

Indeed, many Canadian companies have used investor-state dispute provisions in trade agreements to challenge foreign Governments, whether it has been the closing down of mines in El Salvador following a moratorium to protect unpolluted drinking water, or the Obama Administration’s decision to suspend the Keystone pipeline over concerns about potential damage to the environment. The very threat of facing such a case, even when the chance of winning is in the Government’s favour, can clearly act as a deterrent to Governments from pursuing actions in the public interest—a regulatory chilling effect. This may well have been President Trump’s view when he reversed his predecessor’s decision and greenlighted the Keystone pipeline, thus avoiding costly legal action and the chance of a substantial payout.

Having watched cases taken against the Uruguayan and Australian Governments by the tobacco giant, Philip Morris, many countries are cautious about introducing plain packaging in tobacco product laws. It is not just European Governments who have expressed concerns about ISDS.

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[Greg Hands (Chelsea and Fulham) (Con)]

I rise to speak very much in favour of ratifying this agreement, and I welcome the opportunity to support my right hon. Friend the Secretary of State for International Trade and President of the Board of Trade, and to record my thanks to him for doing so much good work in the last two years to establish the Department for International Trade. I also thank the superb officials at the Department, who have worked tirelessly to get our independent trade policy up and running and heading in a successful direction. I also congratulate my successor as Minister for Trade Policy, my hon. Friend the Member for Meon Valley (George Hollingbery), who I think will be leading the next debate. I welcome him to his position and wish him every good fortune in his important role, in which he has a lot coming up in the next couple of weeks.

I want to reflect on the extraordinary contribution by the shadow Secretary of State. It was an abuse of procedure to speak for 35 minutes in a 90-minute statutory instrument debate and to leave others, who actually want to speak about the content of the agreement and its implications, with just four minutes each. I listened to his explanation of what happened, or did not happen, in 2016, and I thought it not really in his interests, as we could also go back to his position in 2016 and 2017, when I think he said that staying in the customs union, which I believe is now his party’s policy, would be a disaster for the country. I should have thought he was the last person to want to draw attention to what people said two years ago.

Most importantly, we heard the shadow Secretary of State speak for 35 minutes but never got a straight answer as to what his position on the agreement actually is. I think he said he would like to renegotiate it. Now, not only would that have implications for an agreement that is already in place—the provisions have been in place since September—but is he also saying he would renegotiate all the other 40-plus EU agreements, rather than seek their transition into UK agreements? [Interruption.] I think he is saying from a sedentary position that he would like to renegotiate the whole lot.

[Geraint Davies]

rose—

[Greg Hands]

I will not take any interventions because there is no time.

I want to say three things. First, CETA itself, on its own merits, is a very good deal. It could be worth as much as £1.3 billion per annum to the UK economy. It removes all tariffs on industrial products and wines and spirits, and eliminates customs duties on ciders, wines and spirits. On the investment provisions, we must remember, as the Secretary of State laid out, that the UK is the fourth-largest source of investment into Canada and the UK is the second most popular destination for Canadian investment. It is also important for the EU’s trade agenda, as it will be the first EU trade agreement to be ratified since that with South Korea some six years ago. The UK is supportive of the EU’s trade agenda, partly because we believe in breaking down barriers ourselves, and partly because the UK will seek to maintain the substance of these agreements as we go forward after Brexit.

Last time around on CETA the official Opposition split three ways. We look forward to seeing what the official position of the Opposition is and what the practical position is of their various MPs.

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[James Cleverly (Braintree) (Con)]

I apologise in advance if my speech is rather chopped up. Unfortunately, due to the huge discourtesy that the shadow Front-Bench spokesman displayed to the House, I shall have to heavily curtail the points that I wished to make. In a paper that I co-wrote with Tim Hewish entitled “Reconnecting with the Commonwealth: the UK’s free trade opportunities”, I made the point that because of our shared history, our common language, our basis in common law, our shared recognition of professional standards and our shared attitude towards human rights and standards in general, a trade agreement with Canada should be one of this country’s priorities, post-Brexit. I am therefore pleased to hear from both sides of the Atlantic that CETA will be the foundation stone for a UK-Canada trade agreement, post-Brexit, and it is appropriate and welcome that this House should be debating this issue today.

The hon. Member for Swansea West (Geraint Davies) suggested earlier from a sedentary position that the UK was a minnow. I think that that was the word he used. Well, I have news for him. In 2016, this particular minnow had exports combined to a value of £8.3 billion—up by £2.1 billion on the preceding decade. In 2016-17, there were 72 foreign direct investment projects from Canada to the UK, accounting for something in the region of 1,700 jobs.

[Geraint Davies]

Will the hon. Gentleman give way?

[James Cleverly]

No, I am not giving way—

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[Geraint Davies]

But the hon. Gentleman mentioned me—

[James Cleverly]

I am not giving way. We have so little time.

CETA is the first major trade agreement signed by the EU since the one with South Korea in 2011. It is therefore entirely appropriate to welcome its arrival. This morning, I had breakfast with Stephen Harper, the former Prime Minister of Canada. He reinforced the point made by Canada’s current Prime Minister, who has said that a UK-Canada trade agreement would allow a larger and—this is a Canadianism rather than a British turn of phrase—“more impactful” trade relationship than the current EU agreement. Just this week, we have heard reports that Italy is now expressing concerns about the ratification of CETA.

This debate provides us with an opportunity to welcome CETA and the work that our own Department for International Trade, led by my right hon. Friend the Secretary of State for International Trade and President of the Board of Trade, has done to forge relationships between the UK and Canada, and more widely. Most importantly, it gives us the opportunity to be vocal and passionate proponents of free trade and the good work that it does. We must not be tempted by the siren song of protectionism. We remember from Greek mythology what happened to those who were seduced by the song of the sirens: they sailed on to the rocks and their ships were dashed to pieces. They floundered and drowned. We must not let that happen to us. We must embrace free trade and we must welcome the CETA agreement.

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

What these trade deals show is that we are stronger in team EU, negotiating big deals, than alone. What will happen is that those on both sides of the House will say that they will do their own deal afterwards in different ways. We will be in a weaker position and subject to all sorts of problems. Finally, on the court system, the EU and Canada are both mature democracies, judiciaries and economies. We do not need an investor court system; the investors are already protected. Things could be improved, but there is a lot in CETA and we need to keep trading.