Draft Asian Infrastructure Investment Bank (Immunities and Privileges) Order 2015

James Duddridge Excerpts

Monday 2nd November 2015 General Committees

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)]

I beg to move,

That the Committee has considered the draft Asian Infrastructure Investment Bank (Immunities and Privileges) Order 2015.

It is a pleasure to serve under your chairmanship, Mr Gapes. The order was laid before the House on 12 October 2015. It gives authority for immunities, privileges, reliefs and exemptions to the new international organisation—the Asian Infrastructure Investment Bank—under the International Organisations Act 1968. Before I go into the detail of the order, I will set out some context with a few words about the bank and its links with the Government’s prosperity objectives.

The fast-growing markets of the emerging economies are becoming increasingly important to global trade, to British businesses generally, and to our values in the United Kingdom. The United Kingdom must, therefore, continue to play a significant role in developing the markets, as well as the global economy. Equally, we must expand into areas where we are economically under-represented. China is at the heart of some of that activity. The recent state visit by the Chinese President demonstrated the scale of the opportunities that lie in deeper co-operation between our two nations, and a key component of opportunity and growth in Asia is, and will continue to be, infrastructure. Satisfying that need is vital not only for driving growth but for increasing living standards across the region. It will benefit the whole global economy, creating new jobs, including for British business.

The UK has expertise in areas ranging from green investment, infrastructure and engineering to accountancy, finance and project management. Key to enabling effective support for infrastructure development in the region is ensuring that the Asian Infrastructure Investment Bank is well established as a high-quality and functioning international organisation, and that is why the UK has taken on such a strong role in supporting it. Our announcement in March of our desire to become a founding member was the first of any major western country. Germany, France and many others have now followed.

[Richard Graham (Gloucester) (Con)]

Does my hon. Friend agree that our early decision to become a member of the bank shows that our commitment to contributing to the economic development of more than 50 countries across Asia is strong? Does he also agree that that can only be good for British business in Asia, supports engagement with China, allows us to share our considerable experience across the region and is widely supported by business here?

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[James Duddridge]

I could not agree more. Before coming to this place, my hon. Friend established a great tradition of working in that area, and he continues to leverage his expertise as a member of all-party parliamentary groups. I urge him to continue to do that, through his involvement with the fledgling development bank.

The order is part of the UK’s ratification process, and provides the privileges and immunities that will enable the bank to function as an international organisation in this country. It is part of the requirements laid out in the articles of agreement signed by the UK Treasury’s Commercial Secretary in June and is in line with the requirements of other international organisations of which we are a member.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I apologise for the discourtesy of missing the Minister’s opening remarks. He mentioned other multilateral development banks. How does he see the new bank operating with the Asian Development Bank? One would think, instinctively, that there was some overlap or, if not, that there would be some sort of memorandum of understanding between the two. Does the Minister envisage that?

[James Duddridge]

I certainly envisage their working closely together, but equally closely with other international development banks, such as the European Bank for Reconstruction and Development, the African Development Bank and, to a lesser degree, the World Bank, which has a slightly different context and structure in relation to the order. There are plenty of development opportunities in the region and beyond, and I encourage all development banks and all Development Ministers across the world to work together. That is where the greatest rewards are, rather than in operating solely individually. Fundamentally, it is about operating collectively.

[Mr Thomas]

The Minister is aware that Mr Jin Liqun was appointed as the secretary-general of the multilateral interim secretariat of the new bank. Was Britain consulted on the appointment? Is it a genuinely interim one and, if so, will Britain be involved in the interviews for the permanent head of the bank?

[James Duddridge]

I cannot speak for the appointment process as part of the draft order. I am just setting out the basis on which those people will be employed. However, I am more than happy to look at the matter, if it is exercising the hon. Gentleman—as it appears to be doing. In relation to the draft order, I have made the comments that I wish to make and I therefore commend it to the Committee.

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[James Duddridge]

First, in summarising the debate, I thank my hon. Friend the Member for Sutton Coldfield for his comments.

[Mr Mitchell]

Right hon.

[James Duddridge]

I am terribly sorry to have insulted my right hon. Friend so early in my speech. I apologise profusely. He suggested that I should be working closely with the Department for International Development, which I certainly am. Today I stand here as a Foreign Office Minister with responsibility for protocol. However, I would like to work much more closely across a number of subjects with my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), who kindly deputised for me when I was ill for much of the last year.

I will try to deal with all the points that have been raised in this debate in broad themes. I will touch on individual points, mentioning individual Members, as and when. A number of Members brought up social and environmental issues, and the UK has been involved in discussions on those subjects from an early stage. The UK has encouraged the bank, and members of the bank, to consult widely, and Her Majesty’s Government have specifically had discussions with NGOs—those discussions will continue—on how the bank will operate and on the bank’s standards on social and environmental issues. There have not been specific discussions on the projects that the right hon. Member for Cynon Valley mentioned, but there are wide-ranging discussions encompassing all the issues, including human rights.

The hon. Member for Harrow West asked about the interim appointment. I confirm that Britain was consulted on that, and an election is expected for the full-time appointment. He probed me further on governance more generally, and I confirm that there will be 12 non- resident board members. How they will fit geographically, and the areas they will cover, are still being negotiated. Additionally, there will be a number of vice-presidents, but I remind him that a lot of these development banks have many members—in this case, there are already 57 members. However, Britain is well placed, given the Chancellor of the Exchequer’s early entry.

The policy lead will be through Her Majesty’s Treasury—this issue has been raised by a number of Members—and we will maintain a strong influence, but the exact positions both of the non-executive board and of the vice-presidents are still to be negotiated. However, I note that both in the time of the hon. Member for Harrow West and in current times we have strong experience of multilateral development, and we are well placed to assist the bank.

[Mr Thomas]

Is the Minister aware of any non-Chinese candidates for the permanent position heading the bank? Why does the Treasury have the policy lead? Given that DFID has responsibility for multilateral development banks, why has this particular bank been taken out of its control?

[James Duddridge]

The bank has not been taken out of anyone’s control. The Chancellor has been close to this work, which is perhaps why it is a Treasury lead. I have not been involved, so I am not aware of specific candidates in the longer term. As Minister with responsibility for protocol, I have looked at the governance issue in relation to immunities, privileges, reliefs and exemptions and what that might mean for different individuals.

The question of shareholding gives me an opportunity to address the super-majority. China will have the largest share capital, which translates to a voter shareholding of 26.1%, so the hon. Gentleman is right in his assertion that there is a blocking super-majority. However, the combined shareholding of non-regional members is higher than the Chinese holding, at 26.7%. In relation to the Asian Development Bank, I understand that there is an ongoing discussion about a memorandum of understanding between the two banks.

The hon. Member for East Lothian raised some concerns about the Japanese, and subsequently the hon. Member for Nottingham North raised similar issues about the US position in relation to this bank. The US was initially sceptical but it would be fair to say that its tone has softened over recent months, particularly after the recent Chinese state visit. The US acknowledged the contribution that this new bank could make. It is very much not a zero-sum arrangement. This will be a beneficial addition to the piece.

[Richard Graham]

The Minister makes a number of important points about the governance of the new AIIB. Is there an opportunity for this new bank to be headquartered in Hong Kong, which has the advantage of Chinese sovereignty and the strong rule of law that might give it the credentials needed to play an important part in infrastructure developments across Asia?

[James Duddridge]

The point of the order is to lay the foundations for the bank to operate across our jurisdiction in the UK, rather than to draw reference to where it might have other headquarters or regional headquarters.

[Mr Thomas]

With respect, the question of the hon. Member for Gloucester is perfectly reasonable. Where will the bank be headquartered? The Minister must know that. The Chancellor of the Exchequer must have agreed that as part of the agreement on our contribution.

[James Duddridge]

I cannot immediately confirm the location. However, if I am inspired later in my speech, I will clarify that point for the hon. Gentleman. Other hon. Members raised the issue of trade unions and the exploitation of workers. Specifically, labour rights have been and continue to be considered as part of the environmental and social standards that are being negotiated.

In relation to questions from the hon. Member for Nottingham North about the man in the street—clearly the people of west Harrow are better educated on multilaterals than those elsewhere—I gently suggest that perhaps the man on the street or the man on the Clapham omnibus would not know about the intricate workings of the European Bank for Reconstruction and Development or the African Development Bank, which are two similar institutions that do great work.

I said that I would return to the hon. Member for Harrow West on the location of the headquarters. Evidently, the location has already been decided to be Beijing.

The hon. Member for Nottingham North asked about the speed at which we should move. We have moved quickly and we did that deliberately to co-ordinate with an opportunity. The Chancellor has been a visionary in that regard, which will be good for the region and for the UK.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Asian Infrastructure Investment Bank (Immunities and Privileges) Order 2015.