Trade Deals and Fair Trade

Jim McMahon Excerpts

Wednesday 11th March 2020 Westminster Hall

[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.

--- Later in debate ---

[John Howell (Henley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to the hon. Member for Swansea West (Geraint Davies) for securing this debate in Fairtrade fortnight. I will make four short points.

First, it would be wrong of us not to acknowledge that the Fairtrade establishment needs a considerable amount of reform. The poorest countries in the world, which are trying their hardest to participate in it, find it difficult to get Fairtrade certification, because they are poor and simply cannot meet its regulatory requirements. If we are trying to ensure an even spread across the world, we need to look at that so that we can access Fairtrade products.

[Jim McMahon]

To be clear, is the hon. Gentleman suggesting that Fairtrade should be reformed so that ethical and other standards are reduced, rather than maintained, to allow a level playing field? Surely we should invest further in international development to make sure that we level up.

[John Howell]

The hon. Gentleman misquotes me. I am not saying that standards should be reduced, but there is a definite difficulty with the Fairtrade method when the poorest cannot afford the Fairtrade certification that is required to get their products to the rest of the world.

Secondly, on the human rights question, I am fully committed to the human rights that we have and to the European Court of Human Rights. As the hon. Member for Swansea West knows from our common membership for some time of the Council of Europe, I am absolutely committed to the Council and the ECHR. Recently, a Member in the other place asked about the future of the ECHR and the UK Government’s commitment to it, and I was pleased to note that the Minister responsible gave a firm commitment to the ECHR. There is, however, a serious corruption problem in the ECHR, which we need to acknowledge and do something about. The petition about it has already reached something like 13,000 signatures, including mine. It is apparent that several of the judges whom we elect—I reiterate that we as members of the Council of Europe elect the judges of the ECHR—come not from legal practice but from non-governmental organisations. They are the very NGOs that bring cases before the judges without a declaration of interest. That undermines the credibility of the ECHR in taking great strides forward on our human rights.

If the hon. Gentleman would like a defence of the ECHR, I am happy to provide that, but this is probably not the occasion. I point out, however, that about 96% of cases that are brought before the ECHR are dismissed by its secretariat as worthless and having no legal merit and do not get to a judge. In the few cases that are brought before a judge, we are by far the winners in the way that we defend them and that they are taken forward. I share his commitment to the ECHR and will do all I can to ensure that we stay part of it.

Thirdly, the hon. Gentleman mentioned the agreement with Africa. As he knows, I have been and still am the Prime Minister’s trade envoy to Nigeria. The UK’s involvement with the Nigerian economy is productive. The UK has gone out of its way to try to achieve good things for the Nigerian state and the UK, one of which is the abolition of modern slavery. Agriculture is a sector full of opportunities for modern slavery. When I went to see Unilever and its operations, I was pleased that it and its entire supply chain are working with organisations to eradicate modern slavery. There is an enormous opportunity for British companies to get into Nigeria and to work constructively with Nigerian companies. That is why a year and a half ago I was pleased to invite the Nigerian Federal Minister of Agriculture and Rural Development to see the entire supply chain of the agricultural sector, from growing to packaging and selling, and everything along the way.

Fourthly, on the standards of health foods, we have heard a considerable amount from the Prime Minister and the Government about the standards of our health foods not being open to trade discussion. I have discussed it with my farmers on numerous occasions and given that commitment to them. I am sure that that will remain something that we will take forward in our negotiations.