EU-US Trade and Investment Agreement

John Healey Excerpts

Thursday 18th July 2013 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

I beg to move,

That this House has considered the economic implications for the UK of an EU-US Trade and Investment Agreement.

I was glad to secure this debate, with the support of the hon. Members for Aberconwy (Guto Bebb) and for Carmarthen East and Dinefwr (Jonathan Edwards), and I am glad to open it within a week of formal negotiations starting in Washington on a comprehensive trade deal between the European Union and the US or, as we have been led to refer to it, a transatlantic trade and investment partnership. It is fitting that the debate should be taking place in Back-Bench business time, because I think that underlines the strong cross-party support for a full and fair trade deal, so long as it is clear that there will be benefits to British consumers and workers as well as British businesses.

[Julian Smith (Skipton and Ripon) (Con)]

I pay tribute to the right hon. Gentleman for his work in setting up the all-party group on European Union-United States trade and investment and ensuring that this activity has been cross-party. The Prime Minister played a major role in making the agreement a major part of EU-US negotiations, but the right hon. Gentleman really put the cross-party approach front and centre.

[John Healey]

I am grateful to the hon. Gentleman. He is right that the UK has for some time been one of the prime movers in the argument for a comprehensive transatlantic trade deal, which is a point I will return to later.

The fact that this debate has been initiated by Back Benchers from both sides of the House does not absolve the Government from the responsibility to ensure that the public are properly informed about the negotiations and the potential for this deal, or that the House has a regular opportunity to debate progress and scrutinise the actions the Government are taking to secure a successful agreement. That cross-party, and indeed all-party, support and interest was evident two months ago when, as the hon. Member for Skipton and Ripon (Julian Smith) mentioned, we set up the all-party group, which I am fortunate enough to chair. We are working closely with the well-established and well-regarded British-American Parliamentary Group, of which Mr Speaker is the distinguished chair. We have set up working relations with the TUC, the CBI and Which?, and we have now been offered welcome administrative and policy support from BritishAmerican Business, which of course is the joint US-UK chamber of commerce.

The aims of the all-party group are: first, to provide a focus for UK parliamentary cross-party support for a comprehensive trade and investment agreement; secondly, to contribute to better public understanding of the potential benefits that such a deal could bring to consumers, workers and businesses across Britain; and thirdly, to strengthen the scrutiny that Parliament can exercise over Government actions towards securing such a successful agreement.

[Mr William Cash (Stone) (Con)]

The right hon. Gentleman may know that the European Scrutiny Committee is looking at the whole question of the scrutiny of this agreement and, indeed, other free trade agreements. One of the problems is that the negotiating mandate is not available to Parliament on the conventional basis until the conclusion of the agreement. We are pursuing that matter with the Prime Minister, and I have just received a letter from him about it. I shall refer to that in my speech.

[John Healey]

I am grateful for and interested by that intervention. I will come to the general questions of the relationship between the UK Parliament and the UK Government and the requirement for a better and more formal system of scrutiny of decisions and involvement in the European Union. I will be interested to hear the hon. Gentleman’s remarks when he contributes to the debate.

Finally on the all-party group, we see this as active but time limited to the period of negotiations towards what we hope is a successful conclusion of the deal. Personally, I hope that Presidents Obama, Van Rompuy and Barroso are right when they declare that they want this deal done within two years.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

Does the right hon. Gentleman agree with the Ifo Institute that the UK has the most to gain from a transatlantic free trade agreement, but the problem is that we are likely to be hampered by the foot-dragging and protectionism of other EU member states? Given that non-EU member states in Europe already have free trade agreements with the United States, it remains an option for us to leave the EU and enjoy our own free trade agreement with the United States. Can he think of one reason why we do not have a free trade agreement with the United States like that of Switzerland? Is it because we are in the EU?

[John Healey]

If the hon. Gentleman looks, for instance, at the Bertelsmann Institute’s report, he will see some interesting evidence on the assessment of the potential impact of a comprehensive deal. It points out that the countries that are in Europe but not part of the European Union are likely to lose out the most. Britain could gain tens or even hundreds of thousands of new jobs in the long term through an agreement. In contrast, countries such as Iceland are set to lose at least 1,000 jobs, while Norway is set to lose about 11,000 jobs. In other words, the countries in Europe that are not party to the agreement are likely to lose out in future. The evidence is rather different from that which the hon. Gentleman cites.

[Mike Gapes (Ilford South) (Lab/Co-op)]

Will my right hon. Friend give way?

[John Healey]

I will, and then I will make some progress, because I am conscious that the Deputy Speaker might want me not to delay the House for too long.

[Mike Gapes]

I must declare that I went to Korea last month, and my entry will be in the Register of Members’ Financial Interests. Is my right hon. Friend aware that as a result of the EU-Korea free trade agreement there has been a significant increase in British trade with and exports to South Korea in the past year? We will therefore clearly benefit from being part of the European Union negotiation with the United States.

--- Later in debate ---

[John Healey]

My hon. Friend has a great deal of expertise and experience in this area, and he makes a strong case. I think that there is a cross-party view, irrespective of views on the British place within Europe, behind the value of well-negotiated and fair trade deals. The example of the Korean deal demonstrates that a deal negotiated through the European Union has particular benefits to Britain.

This debate is welcome though somewhat overdue. About three months, ago I contacted the House of Commons Library to ask for a briefing on the EU trade and investment deal. I said to the researcher, “I’m sure you’ve got something on the stocks; perhaps you could just update the standard briefing that you’ve got.” The response was, “We don’t have one. No one’s asked about this before.” The Library subsequently produced a very good briefing, as well as a very good briefing for hon. Members for this debate. That briefing, combined with the research that the Centre for Economic Policy Research has produced for the European Commission and the impact assessment produced by the Department for Business, Innovation and Skills, underlines just how important and ground-breaking this deal could be. Simply put, these are the biggest, most ambitious, best prepared bilateral trade negotiations ever. This would be the first ever such deal between economic equals. In other words, the partners have no significant imbalances in power or wealth.

Why do I say that these are the biggest negotiations? Together, the European Union and the US account for about 30% of global trade and almost half the world’s output. The more reliable of the studies and assessments suggest that if the deal is done, it could bring a boost to the UK’s national income of between £4 billion and £10 billion, and a boost to our exports of between 1% and 3% a year.

Why are they the most ambitious negotiations? The transatlantic trade and investment partnership aims not just to remove the remaining tariff barriers to trade between the EU and the US, but to reduce the non-tariff barriers by aligning the regulations, rules and standards to which we operate. It also aims to open the markets in services and public procurement.

Finally, why are they the best prepared negotiations? Really serious work has been going on for almost two years since the high-level working group on jobs and growth was set up between the EU and the US in November 2011.

It is important to remember that this is potentially a deal on trade and investment. Although the two-way trade between the EU and the US is worth about $1 trillion a year, the two-way investment flow is worth about $3.5 trillion each year. Of course, trade and investment have both been sole competences of the EU since the 2009 Lisbon treaty.

[Mr Jenkin]

I am interested in that aspect of the agreement. Historically, the UK has been able to access foreign direct investment free of EU interference. If such investment becomes subject to an international agreement, it will effectively become an exclusive EU competence. The other member states have been very jealous that we get so much foreign direct investment. How can the right hon. Gentleman be so sure that the deal will not be used to hamper flows of foreign direct investment into our country, because that would affect us far more than our fellow member states?

--- Later in debate ---

[John Healey]

Investment is already an EU competence. The deal is not about controlling the flow of investment, but about creating the conditions in which greater investment can flow across the European Union, including to Britain. All the impact assessments, including the one that the hon. Gentleman cited earlier, suggest that that would happen if we secured a comprehensive agreement.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

Does my right hon. Friend agree that the UK economy would benefit from an opening up of the US economy, and that the Government should seek to gain access to that marketplace for our small and medium-sized enterprises to provide a stimulus to the UK economy?

[John Healey]

I suspect that in my hon. Friend’s area, as in mine, many of the important and good small and medium-sized companies depend on trade and export for their success. The agreement certainly has the potential that he mentions, but realising it requires the Government to ensure that it does benefit small and medium-sized firms.

One or two of my friends have said to me recently, “Look, you are a Labour politician on the centre left. Why on earth are you supporting a deal that looks set to reinforce the cause of global capitalism?” I have three answers to that. The first, quite simply, is jobs. The success of many good south Yorkshire firms depends on increasing opportunities for export and trade. This deal could bring that boost to jobs and the economy in south Yorkshire, as well as the whole of Britain.

Secondly—this may break the sense of cross-party unity—I see the deal as a way of regulating global capitalism. It is indisputable that the EU and the US have some of the highest standards of consumer safeguards, environmental protection, employment rights, legal process, trade rules and regulations. Together, as the two biggest economies, we have the opportunity to set standards and regulations that could become the benchmark, or gold standard, of any bilateral and multilateral deals.

[Julian Smith]

Will the right hon. Gentleman confirm that he is not talking about formal regulation? There is a huge opportunity for mutual recognition of standards, but we are not looking for Marxist-style overarching regulation of the world.

[John Healey]

The hon. Member for Stone (Mr Cash) mentioned the negotiating mandate that has not been formally published, but has, in an unorthodox way, been made available. That certainly does not talk about a Marxist global system. However, given the size of the economies and the potential scale of the agreement, setting mutual recognition standards on workers’ rights, environmental protection, consumer safeguards, trade rules and legal process can set the standard we expect, and lead other parts of the world on, in future deals.

[Mr John Spellar (Warley) (Lab)]

Does my right hon. Friend not agree that that last exchange was enormously revealing? There is a tendency in part of the Conservative party to follow the Tea party Republicans: the sort of 19th century Republicans that let the robber barons run loose. They even step back from that great Republican President Teddy Roosevelt, who took pride in being a trust buster. They are the party of the robber barons. They are the party that supports the tax evaders. They do not want to regulate at all.

[John Healey]

My right hon. Friend makes a strong and vivid point. It will be interesting to see the degree of unified purpose and support on the Opposition Benches, and the divergent, not to say conflicting, views on the Government Benches.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I intervene not necessarily to score a political point, but to make the point that between the World Trade Organisation, the International Labour Organisation and UN conventions, the EU and the US are already signed up—and are trying to sign up other countries, such as China—to raising important standards. Is that not what we want the treaty to advance?

[John Healey]

Indeed. In this post-global financial crisis period, and the global downturn in trade that followed, there is a crisis in citizen and consumer confidence in business. Reasserting that confidence will require standards and agreements that people believe will benefit them, their families and their areas, and are not just deals done by politicians and big business in the backrooms of Brussels.

[John Hemming (Birmingham, Yardley) (LD)]

Will the right hon. Gentleman give way?

[John Healey]

The hon. Gentleman is the only Liberal Democrat in the Chamber, so I am delighted to give way.

[John Hemming]

I thank the right hon. Gentleman for giving way and congratulate him on his all-party work, which he is very good at. I agree that the views on the Government Benches are not united. I have a lot of sympathy with the idea of maintaining minimum standards.

[John Healey]

I am grateful for that continuing cross-party support at least. [Interruption.] The Minister is chuckling away; I look forward to hearing what he has to say a little later.

I have a third answer to my friends who ask why I am backing the deal, and it is this. I am pro-European and pro-internationalist, and I think this potential agreement underlines more clearly than anything the benefits for Britain of being part of the European Union. Those benefits would be simply unavailable if Britain left the European Union and tried to go it alone.

[Neil Parish (Tiverton and Honiton) (Con)]

rose—

[John Healey]

I will give way to the hon. Gentleman; then I would like to quote President Obama to him.

[Neil Parish]

Does the right hon. Gentleman not see that there is sometimes a conflict between international trade and the situation in Europe? My experience is that sometimes the way in which Europe organises trade is far too prescriptive and can be a barrier to greater international trade, rather than progressing it.

[John Healey]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the right hon. Gentleman quotes President Obama, I would gently remind him that he has been speaking for 20 minutes and I will have to set a time limit on Back-Bench contributions in this debate, so I would be grateful if he began to bring his comments to a conclusion.

[John Healey]

Thank you, Madam Deputy Speaker; I will indeed. I think I have spoken for probably not quite 15 minutes, given the interventions I have taken, but I am conscious of what you have said.

When President Obama was with our Prime Minister in Washington in mid-May, he put it very delicately:

“I think the UK’s participation in the EU is an expression of its influence and its role in the world, as well as, obviously, a very important economic partnership.”

However, his officials were much blunter. They made it clear that there would be little appetite in Washington and no deal for Britain if it left the European Union. I have already said to the hon. Member for Harwich and North Essex (Mr Jenkin) that some of the research suggests that European countries that are not part of the European Union would lose out most in the event of such an agreement.

However, this agreement must be well regulated and command public confidence. It will not and cannot be a deal done in the diplomatic backrooms, because Congress and, now, the European Parliament must approve the terms of any agreement. The European Parliament has already shown its mettle in rejecting the anti-counterfeiting trade agreement that was recently negotiated, including with Japan, Australia, Canada and the US. Unanimity, and not just a qualified majority, may well be needed in the Council of Ministers to approve some parts of any future agreement in, say trade in services, intellectual property, foreign direct investment and anything to do with social, education or health services. There is also a case for expecting any agreement to involve mixed competences. In other words, there could be a contestable case that member states, rather than the European Parliament and the Council of Ministers, will have to ratify any elements of such an agreement dealing with, for instance, intellectual property, transport or investor-state dispute mechanisms.

Let me begin to wind up. There are four things that the Government could do to help to secure a successful, well negotiated agreement that commands wide support. First, they should swallow hard, accept that we are in the hands of the European Union and throw their weight behind the Commission’s negotiators. That means—I say this to the Minister—no public criticism, no freelance discussions with the US and no distancing ourselves from the deal while it is being negotiated.

Secondly, the Government should map and publish the jobs linked to foreign direct investment and exports in every area of Britain. The US does that on a state-by-state basis for every member of Congress and every Senator. Even the British embassy in Washington, together with the CBI, has produced a state-by-state analysis of the jobs there that are linked to exports to the UK. Surely we can do that for ourselves in Britain as well.

Thirdly, the Government should deal with the fears that will arise during negotiations that could derail public or parliamentary support for the agreement. These include concerns about the NHS being opened up to big US health care companies and concerns about employment, consumer or environmental standards being weakened. There might also be concerns about the investor-state dispute system—even though the EU and the US have long established traditions and well proven systems of due process, the rule of law and respect for property rights—particularly when an ISDS is being abused in the way that Veolia, the French company, is abusing the system in trying to sue the Egyptian Government for raising the national minimum wage.

Fourthly, the Government should make the process open and transparent to the public and Parliament. In the US and the European Parliament, the negotiators are holding briefing sessions—in the Parliament and with the Parliament—before and after each set of negotiations. They are also doing that with wider interest groups and making public some of the position papers as they go into the negotiations. I would like much more formal reporting and accountability of the UK Government to Parliament on EU matters. Other countries, such as Germany, Portugal and Denmark, have formal legal agreements with their Governments and Parliaments covering negotiation mandates, the provision of documents, and notification and reporting arrangements. It would help to build wider confidence in, and strong democratic influence on, our involvement in the European Union if we followed that sort of model. We can start on this European trade and investment agreement.

Today we are at the start of the negotiations on what could be a groundbreaking US-EU trade deal. We are at the start of the debates that this House will have and the scrutiny that we must offer of the Government’s contribution to those debates. This is the first such debate but—I hope and expect—certainly not the last.

[Several hon. Members]

rose—

--- Later in debate ---

[John Healey]

This debate has confirmed a strong cross-party interest in the negotiations—specifically, in the areas that will loom large in any deal, in how we make sure that we get the strongest benefits for Britain, in the historical and political background to free trade, and in Government reporting and accountability to Parliament during the process. It is clear that these negotiations will be tough, that an agreement is not certain, and that the benefits will depend on the content of any agreement. That is all the more reason for Parliament getting behind the negotiations and following them closely.

We have heard 13 Back-Bench speakers. I apologise to those who were unable to give us the full benefit of their expertise because of the time limit. As the hon. Member for Aberconwy (Guto Bebb) said, it is clear that scrutiny starts with this debate. As we heard from the hon. Member for Stone (Mr Cash) and my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty), these negotiations are a stage-by-stage process that require in this House stage-by-stage reporting from the Government and scrutiny. This debate is a marker for the months ahead, and this subject is one to which we must return.

Question put and agreed to

Resolved,

That this House has considered the economic implications for the UK of an EU-US Trade and Investment Agreement.