Draft European Union (Definition of Treaties) (Economic Partnership Agreements and Trade Agreement) (Eastern and Southern Africa States, Southern African Development Community States, Ghana and Ecuador) Order 2018

Hannah Bardell Excerpts

Wednesday 31st October 2018 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Betts.

The four agreements that we are discussing will form the basis for future UK deals with the countries covered by the four agreements. The Trade Bill, which is still going through the Lords, prevents us from discussing the contents of the agreements after today’s debate. Having further parliamentary scrutiny, including of any amendments, once those agreements are rolled over or renegotiated—whichever happens after we leave the European Union—will be entirely for the Secretary of State to decide, so we need to take advantage of today’s proceedings and challenge the Government, because there will not be another opportunity.

Reports suggest that the three economic partnership agreements that we are discussing were agreed under significant pressure. It is therefore highly likely—notwithstanding what the Minister said when he quoted one of his counterparts saying that they are ready to roll the agreements over—that there may be a desire to renegotiate. South Africa’s deputy Trade and Industry Minister when the agreements were signed, Dr Rob Davies, said that they were signed “under duress”, at the risk of having tariff-free access to the EU withdrawn. For those reasons, it seems highly likely that these partners will try to renegotiate, so today’s debate is extremely important.

The statutory instrument relates to four multi-country trade agreements, as the Minister said, which we are party to as a result of being members of the EU. There is one free trade agreement and three EPAs, which relate to trade with developing countries. The objective of the agreements is to increase trade and investment opportunities. The explanatory memorandum lists the advantages of developing nation partners as

“providing duty and quota-free access for exports to the EU; more integrated regional markets; more flexible, simpler rules of origin; no undue competition and a context of wider reforms and helping to address broader trade issues such as technical barriers to trade and labour rights.”

Could the Minister let us know what is meant by technical barriers to trade and labour rights? I could not find any further detail on that point. The explanatory memorandum then moves on to the benefits to

“consumers and workers in Europe by the removal of trade barriers, the promotion of exports from developing countries resulting in wider choice, lower prices, better value and wider ethical choice options.”

The benefits to UK businesses are listed in the impact section of the explanatory memorandum. The estimated increase to UK GDP of £24 million as a result of Ecuador’s accession to the EU-Andean EPA is given as an example of the opportunities presented by removing barriers to trade. The Ecuador protocol of accession includes a chapter on public procurement, and the explanatory memorandum suggests that there may be an impact on UK public services as a result. Can the Minister tell us what that impact is likely to be?

The impact assessment of Ecuador’s accession refers to the relationship between trade openness and economic growth. It then quotes the fall in the poverty rate since China opened up its economy as a “striking example”. China may well be a striking example, but it is also strikingly different from Ghana, Ecuador and the Eastern and Southern Africa states, and the Southern African development community states. They do not have the opportunity of modernising their industries by keeping their borders closed, as happened in China, nor do they have the economic power of China.

The impact assessments each make the point that trade is beneficial. Indeed, paragraph 1.3 of the Ecuador impact assessment states:

“Free and fair trade is fundamental to the prosperity of the EU, the UK and the world economy.”

The key point is that it needs to be fair, not just free.

The impact assessments also demonstrate the benefits of free trade agreements. As my right hon. Friend the Member for Wolverhampton South East said, we are of course a member of a free trade agreement, in a market with 500 million consumers—the European Union. It covers 60% of our trade, either directly with the other 27 countries of the EU, or indirectly through agreements that the EU has with other countries, including those we are discussing today. The EPAs under discussion have already been provisionally applied, of course.

The Ecuador impact assessment says:

“the evidence suggests that FTAs enhance trade flows”,

as our membership of the EU has proved. Significantly, the Ghana impact assessment admits:

“There is very little quantitative evidence on the impact of EPAs.”

We support the objectives of supporting trade with the developing nations, boosting their economies and prosperities, and doing so while boosting our own economy, but we must explore whether these agreements will deliver the proposed objectives. It is telling that the Government acknowledge in paragraph 10.1 of the explanatory notes that there had been criticism of the agreements, but that reference is all they have to say about the criticism. There is the slight exception in that three of the four impact assessments contain an index that refers to section 8—“Sensitivity analysis & risks”. Curiously, in each of the three impact assessments that list section 8 in the index, after section 7, “Impact Tests”, the next items are annex A and annex B—“estimated one-off costs” and “most-traded product lines”—followed by a blank page. There is no content for the “Sensitivity analysis & risks” sections in any of them. The fourth, by the way, does not have a section 8.

Will the Minister explain those omissions and tell us what was meant to be in those section 8s? Failing that—or perhaps in addition—will he tell us what the criticisms of the agreements, which are referred to in the explanatory notes, are? I am afraid I was unable to find any reference to them anywhere in what the Government have written.

To give the Minister time to find answers to those questions, I thought it would be sensible to go through some of the concerns that have been raised. Perhaps he might want to say something about that when he responds. Concerns have been raised about the impact on developing nations and about the regional impact of economic partnership agreements. A common criticism is that “most favoured nation” clauses restrict the ability of developing nations to reach trade agreements with their neighbours, as the same benefits, or better, in such agreements have to go to the EU. Instead of opening up trade for developing nations, the concern is that economic partnership agreements risk restricting trade.

I said earlier that the Government admitted in the impact assessments that there is a lack of quantitative evidence about the benefits. The longest-running economic partnership agreement is in the Caribbean. It started in 2008, but according to the European Commission’s impact assessment from 2014, there has been minimal domestic growth in the Caribbean since the EPA was implemented.

According to the International Monetary Fund, the uncompetitive nature of poultry farming in Ghana has left Ghanaian producers unable to deal with the lower cost of imported food following trade liberalisation. Those are the IMF’s words, not mine. The IMF’s Independent Evaluation Office report on international trade policy from 2009 says that the poultry sector in Ghana was much more vulnerable to competition from imports than IMF staff believed. The IMF forced the Ghanaian Government to reverse the Ghanaian parliamentary decision to raise tariffs to protect the poultry industry, with disastrous consequences for poultry farming in Ghana and for the communities that depended on that farming and its economic benefits.

The experience in a number of African countries has been of moving from self-sufficiency, or near self-sufficiency, in food to reliance on imports. Economies have moved from domestic production of food to foreign-owned production of cash crops such as cocoa, coffee, peanuts, sugar, cotton, rubber, palm oil and tobacco. They have moved away from the production of food and towards a reliance on imports of food.

Let us look at the experience of countries such as Tanzania, where the EU already has an agreement. Fish prices have gone up to such an extent that locals are unable to afford fish that has been caught in Lake Victoria; such fish are now almost exclusively caught for export. Some 49% of fish from Tanzania goes to the EU, and most of the rest is exported elsewhere. Locals have to rely on so-called fish skeletons—the remnants from fish that are caught in the Nile or in the lake and exported. The experience in east Africa is of produce being exported to the EU, driving up prices and undermining food security. In this case, the suggestion is that far from helping trade from developing nations, the east Africa economic partnership agreement has restricted it and made industrialisation and growth harder to achieve. The case of Tanzania and the east Africa EPA is a cautionary tale of what can happen if these agreements are not applied with care.

As we leave the EU, we will, as a result of our EU membership, be party to 70 or so trade agreements that we will need to renegotiate. The four agreements covered by this statutory instrument will need to be agreed again. The Trade Bill, which is slowly making its way through the Lords, makes provision for what the Government call the roll-over of these agreements, but the roll-over depends on whether the third-party countries to the agreements want to sign the same agreement or take the opportunity to revisit it. Given the concerns that I voiced at the start of my remarks, we should not be surprised if that happens with some or all of the agreement we are considering.

[Hannah Bardell (Livingston) (SNP)]

The hon. Gentleman will know that significant concerns have been raised by the devolved nations, particularly Scotland, about the lack of transparency, consent and consultation on trade agreements. I have no doubt that the Government will have to face up to and think about that carefully.