EU-US Trade and Investment Agreement

Julian Smith 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.

--- Later in debate ---

[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.

--- Later in debate ---

[Mr William Cash (Stone) (Con)]

It is quite a big ask to do it in seven minutes, Madam Deputy Speaker, although I will not attempt to go through all the issues for that reason. I am extremely aware of the time constraints, so I will try to concentrate on the main issues and set out some headline points that are worth bearing in mind.

Curiously enough, I approach this issue in line with the EU constitution, by applying the precautionary principle. I would not want to be over-enthusiastic about something until I knew what the terms were. There has been a great deal of hype about this issue and some exaggerated views expressed. I would be cautious, for a variety of reasons, about making any assumptions that such an agreement will ever happen, given the Doha round and all that happened there. Nor would I wish to become over-excited about it necessarily bringing the benefits that have been described, because nobody knows.

Part of the reason for that is that the negotiating mandate is not available, as I said in an intervention. As Chairman of the European Scrutiny Committee, I have correspondence with the Prime Minister and the Minister for Trade, Lord Green. At the moment, the whole thing is under discussion. Let me quote from a letter I received on 10 July from the Prime Minister, in which he said:

“Both the EU and the US are aiming for the maximum level of ambition”—

I am always keen on ambition, as long as it does not vaunt itself—

“in these trade negotiations.”

The letter continues:

“This means that all sectors are within scope, except, as I mentioned, the audiovisual sector”—

that was in reply to a point I made the other day in response to a European summit statement—

“although there is the option to include the sector at a later stage in the negotiations.”

The letter continues:

“The areas normally covered in a trade agreement with a developed nation will be included. This ranges from trade in goods, services, public procurement, to regulatory issues and rules in intellectual property rights, sustainable development and customs. Some of the issues covered are areas of Member State competence or shared competence; the EU’s negotiating mandate was therefore agreed by consensus.”

Whenever I hear the word “consensus” in the context of EU administrative arrangements, I get slightly concerned, to say the least, because it means that a deal has been done behind closed doors. We know that the negotiating mandate is being discussed behind closed doors, and we need to know who is going to benefit most from these arrangements, and in which sectors.

We have only 12% of the votes in the qualified majority voting arrangements. This is an exclusive competence of the Commission, which drives the entire operation. It has no particular interest in what goes on in the United Kingdom, and I am entirely dubious about the claims that this agreement would generate £10 billion-worth of advantage to the UK. I do not know whether it will, and I do not think that the people who are saying that know. As Chairman of the European Scrutiny Committee, I would like to insist—so far as I can—that we be given all the necessary information.

[Julian Smith]

Does my hon. Friend agree that the 12 or 13-person team from the Department for Business, Innovation and Skills and the Foreign Office that focuses on trade should try to achieve some of the things that he is looking for when influencing the UK’s position in this deal?

[Mr Cash]

I am sure that they will do their best, but whether they will do well enough has yet to be established. If we do not know what is going on during the negotiations —and if we do not even know what the mandate is—I must express my concern on that count alone.

I shall continue to quote from the Prime Minister’s letter:

“As David Lidington told your Committee when he appeared before it on 4 July, while the confidential nature of such negotiations means that formally depositing documents is not possible”—

which I have to say concerns me greatly—

“Ministers will keep the Committee abreast of significant developments in writing and we are happy to offer the Committee informal, private briefings on the progress of negotiations.”

We will be monitoring all this. I see that the Chairman of the Business, Innovations and Skills Select Committee, the hon. Member for West Bromwich West (Mr Bailey), is in the Chamber, and I would be happy to exchange ideas and thoughts with him on this. He was a member of the European Scrutiny Committee with me for many years.

--- Later in debate ---

[Guto Bebb]

That comment has indeed been made, and the all-party group could have a good debate on these issues. I am happy to have this argument. That is why we wanted to establish the all-party group and to have this debate. We need to ensure all the views in this House are heard.

I am a believer in free trade as I think it is beneficial. The concerns raised by some Members on the Government Benches are not about free trade, however: they are about whether the agreements would enhance free trade. That is a reasonable concern to have, and it needs to be scrutinised by this House. If we are to negotiate a free trade agreement between the EU and the US, we need to make sure it is a genuine free trade agreement.

The main town in my constituency is Llandudno, and the largest secondary school in Llandudno is Ysgol John Bright, which is named after an individual who believed strongly in free trade. To have concerns about whether this agreement would enhance free trade is not to oppose the treaty; it is more about making sure that what we create will benefit not just the economy of the UK, but the global economy. I say that because I agree that a genuine free trade agreement between the EU and the US will not just have an impact on the states in Europe and the United States; it will have a global impact as well. These issues are worth discussing, therefore, and that is why it is important that we have this debate at this point in time.

I have concerns about the time scale of two years for this agreement. I had the good fortune last night to be in discussions with one of the Canadian Prime Minister’s advisers, because one concern that must be expressed is that for a long period—certainly since I have been elected to this place—we have been involved in discussions between the EU and Canada in an attempt to reach a satisfactory trade agreement between those two trading blocs. Unfortunately, as yet, despite promises on numerous occasions that we were very close to an agreement, no agreement has been reached. We are being told by some individuals involved on this side of the pond that the issues are all to do with concerns about Canadian farmers and agriculture, yet when I was discussing this issue last night with that representative of the Canadian Prime Minister the concerns were all about the demands of the EU in terms of our agriculture. This two-year time frame presents a real challenge for us, therefore. If an agreement cannot be secured after so much time between the EU and Canada, there is a real question about whether the EU-US agreement can be secured within two years.

The two-year time frame should be applauded for its ambition, however. We should go into all negotiations with an ambitious timetable, but we also need to be realistic and acknowledge that that agreement with Canada is not yet in place. It would be a great achievement if we could have that agreement in place to show the way forward for a genuine free trade agreement between the EU and the US.

[Julian Smith]

Does my hon. Friend agree that pace is important, however, lest lobby groups and trade groups—especially very dynamic ones in America—get their act together and start slowing things down to the point of halting progress?

[Guto Bebb]

I thank my hon. Friend for making that excellent point. It is one of the key concerns in relation to the fact that we are still waiting for a Canada-EU agreement, because the more the issue is highlighted, the more it seems that the opponents come forward with further concerns about why the agreement should not go ahead. As I have said, I do believe we should support this ambitious target, but I highlight the fact that the experience in relation to Canada has not as yet been particularly positive.

I also think we should express concern at the ability of some countries in Europe to highlight their protectionist views in relation to this proposed agreement. It is a concern that the audio-visual sector has been excluded from negotiations. That is also a positive issue in many ways, however, because the decision to move ahead with talks has been made despite the fact that the European side has excluded that sector. We are aware of why that specific area has been excluded, but it is encouraging to see that one problem has not necessarily resulted in a decision that the whole negotiations should be stopped.

That shows a pragmatic attitude, which we saw when I was in Washington last year. People on the Hill felt that this was an opportunity to create a genuine agreement between the EU and the US. That is noticeable, because there was a feeling when we were there that the time to strike on such an important issue is when people can see the advantages. When the economies of the western world are doing well, the need for such an agreement is perhaps less.

Last summer in Washington, it was very apparent that people felt that the States still required fundamental changes to their economy. They saw the opportunity for freer trade with the EU as important and thought that it would lead to a much better agreement on much better global trading. An important point about free trade between the EU and US that has not been made this afternoon is that we would end up with an agreement on regulations, for example, that would be acceptable in many parts of the global economy. If the EU and the US were to agree on certain consumer protection standards that were acceptable to those two large trading blocs, they could be the basis for agreements on a raft of other issues that would allow other parts of the global economy to aspire to enjoy the benefit of global free trade and of an EU-US trade agreement by working to the same standards rather than undercutting them.

--- Later in debate ---

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

I always come to debates about the EU with a copy of the consolidated texts of the EU treaties, as amended by the treaty of Lisbon in January 2008. That usually stops people talking a lot of hot air because they have not taken the trouble to read the treaties.

The question of competence is settled. The treaty on the functioning of the European Union states in article 3(2):

“The Union shall also have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union”.

It is clear from that where competence lies. We should therefore get behind the EU because, whether we like it or not, since Lisbon the EU has been given this responsibility. If it did not carry out its responsibility or if it did not seek those agreements, we would be right to criticise the EU for not using the strength that it has to benefit members of the Union.

There are remarkable opportunities available and I am grateful to my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the hon. Member for Aberconwy (Guto Bebb) for securing the debate and setting up the all-party group. A trade agreement will run on for a number of years and must be studied in detail as it does. There are important opportunities for jobs and growth, and I can give examples from my constituency. Syngenta is a Swiss company that does its research in England and develops products that are made in factories in my constituency. It sells $1.5 billion worth of one product to the world, mostly used in the US to prevent soya rust, which is very important. We also have Ineos, made up of former parts of BP, which is seeking to buy ethane from the US, where it is now one tenth of the price of ethane from the North sea, to produce the chemicals required for industry.

Those firms would be helped massively by a tariff agreement, but, as my right hon. Friend the Member for Wentworth and Dearne said, a trade agreement is not just about tariffs; it is about standards. The standards of the EU are set out in the treaty on the European Union in article 3(5):

“In its relations with the wider world, the Union shall uphold and promote its values and interests and contribute to the protection of its citizens. It shall contribute to peace, security, the sustainable development of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the protection of human rights, in particular the rights of the child, as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter.”

What could be opposed in setting out to establish a free trade agreement with another massive nation that has similar values? If we think that is not the way to go, perhaps we are talking about having the type of agreement used by companies in Bangladesh, where the Rana plaza collapse revealed the use of buildings that were utterly unacceptable. That is the reality. If companies are not bound by trade agreements that contain priorities and strictures, then, as has been said, the result is a race to the bottom—the lowest standards, the greatest abuse of labour, and the least protection for the people who produce the goods that we use in our country.

Combining the EU article with the standards of the International Labour Organisation and the World Trade Organisation and with the conventions of the UN would result in an ethical trading alliance, and what a massively strong ethical trading alliance the EU and the US would be if we could bring that about. President Obama has declared that he intends to eradicate modern-day slavery, and already California has a transparency of supply chains Bill that makes firms audit for supply chain abuses and ILO labour abuses. Apple recently admitted that it had found child labour in part of the manufacturing process of the iPad in China, which it must now eradicate because of US law. It would be wonderful if we could spread that across the rest of the trading nations that we deal with.

There are many things to be gained from a trade agreement, apart from jobs and prosperity. However, concerns were expressed by the Labour Government during the negotiations on the Lisbon treaty, when we got a derogation on the provision of services of special interest. The health service was specifically named in the Lisbon treaty as something that would be controlled by the Government. Sadly, it is the Government here who are abusing the health service by bringing in not just free trade, but a Hayekian free-for-all in the provision of services in the health services.

[Julian Smith]

Does the hon. Gentleman accept that Labour allowed the private sector into the health service in Britain, which had positive effects in many cases?

[Michael Connarty]

I do not think the hon. Gentleman was in the House at the time. The Labour Government said that we would use private services when they were available for people who needed public health services. It was not a case of giving provision over to the private sector. Now there is an open door for the private sector. It is a Hayekian model. Hayek was the driver for Mrs Thatcher’s advisers—the idea that there was no need for a state and that any service that was required could be brought in from the free market. If one reads Hayek—I am an economist—he even went as far as saying that armies should be hired, instead of a state having an army of its own. He also advocated private prisons, and sadly we moved down that road under a Labour Government.

The free trade agreement is regulated. Under the EU treaty, the EU will have to provide for the protection of services of special interest. Every Government in the EU will then be allowed to decide whether to have private sector involvement in their health service. It is interesting to note that in the EU-Canadian trade agreement which has just been accepted, the health service is not part of the agreement. That is a decision of the Canadian Government rather than of the EU, but it may have been influenced by the fact that the EU has that provision for protecting services of special interest.

For me there must be conditions, and I liked the four conditions set out by my right hon. Friend the Member for Wentworth and Dearne—putting our weight behind the EU team, not being a drag on the process, and so on. I have three conditions. One is transparency. The hon. Member for Stone (Mr Cash), in his role as Chair of the European Scrutiny Committee, is quite correct to say that the Committee should be able to see the process stage by stage, but that alone is not adequate. Parliament must hear about it. There should be special reports from the Minister for Europe, the Foreign Secretary and even the Business Secretary to tell Parliament what is happening, what has been negotiated at any stage and what the potential decisions are. We do not want a secret process.

There must be accountability. Instead of one proposal at the end of the process, perhaps there should be staged proposals coming back to Parliament, where certain sections of the trade agreement are taken before the House and debated by a Select Committee or on the Floor of the House. For me, there should be conditionality. Everything that happens in the European Union should be conditional, the condition being that we do not end up with an agreement that subverts what we signed up to in our last treaty. It cannot be an attempt to rewrite the treaties by the back door, so we must always ascertain whether the conditionality of any trade agreement or any other agreement will undermine the rights contained in the documents to which I referred.

We want a more prosperous world, but one that is based on fairness and on the improvement of the conditions of the people who supply us with our goods and services and those who work in industries and enterprises in the EU and in this country.

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

I shall not speak for long, as I am still reeling from the accusation that I am sympathetic to the Tea party.

It is important that I start by paying tribute to the Prime Minister, the Chancellor and the Government as a whole for putting an EU-US trade agreement and talks at the centre of the strategy for the EU and for growth, which this Government are so relentlessly pursuing. All of us in the House understand the importance of America, and we need to make the case to the country and to British business that although there is rightly a pivot east in trade and activity—to the BRIC countries and other emerging economies—the American economy, with 310 million people with a per capita income of $48,000, and an energy sector that looks as though it is going to get incredibly competitive over the coming years, is a phenomenal opportunity for Britain. It would be wrong just to accept that we already have a relationship which is established and going quite well.

Companies in my constituency, such as Silver Cross Prams which produces traditional prams that hon. Members may have used or been in in the past, sell across the world, but in America they have to go through pages and pages of health and safety and other procedures in order to sell their already safe and already EU-recognised product in America. If Jet2, which flies out of Leeds Bradford airport, wants to fly to an American city and then on to another American city, it is unable to sell seats on the domestic US side, which has an impact on its business. Principle Healthcare sells drugs, vitamins and other products that are perfectly safe and have been rigorously tested here in the UK and in Europe, but when it tries to sell to America, it must start the whole procedure yet again.

I have great respect for the right hon. Member for Wentworth and Dearne (John Healey), but I was worried by some of his remarks. The idea that this agreement should try to have top-down formal regulation of all these things is quite wrong because to get the pace we have been talking about, we need to think much more about mutual recognition. If we have safe drug products in America and safe drug products in the EU, how do we recognise those regulatory processes? That is not to say that we should have a free for all but that we should recognise and be pragmatic about what we do. One of the strongest messages I have for the Minister is a request that he utilise his innate pragmatism to influence these negotiations.

The second push I would make is on something we have talked about: pace. There are moves afoot already in America—we have seen the French examples and there will be others from all interested parties—to slow things down and to have carve-ups and opt-outs. We must make the case for pace and ensure that we stick to the rigorous timetable set in place by the negotiators. I also think that the point made by the right hon. Gentleman is key: this debate cannot be a closed shop in this place or in Brussels or in America. We must take the argument to our citizens and businesses and explain to them the importance of the jobs that will be created by the agreement and by enhancing our relationship. The benefit for EU supporters is that if we can do that for this agreement, we can use that information and build on that argument as we make the case for Britain continuing to be an active member of the EU.

Finally, although we have a number of Ministers who are active in this negotiation on the British side, I hope that my hon. Friend the Minister answering today’s debate will be at the forefront of some of these discussions as they take place over the next couple of years.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Just to say we are overshooting on time. The other debate is well over-subscribed, so there will be a six minute limit.

--- Later in debate ---

[Paul Blomfield (Sheffield Central) (Lab)]

I add to the congratulations to my right hon. Friend the Member for Wentworth and Dearne (John Healey) and to the hon. Member for Aberconwy (Guto Bebb) on securing this debate. What a difference a week makes, or maybe two weeks. Here we are today debating something of importance in relation to our membership of the European Union, focusing on the benefits of our membership, and the Government Benches are empty, in such contrast with the excitable packed Benches we saw—[Interruption.] Practically empty. I apologise to those few Members who are there. The contrast, however, is not with the Opposition Benches today but with the Government Benches two weeks ago. Today we are debating a serious and important issue to do with our membership of the European Union.

[Julian Smith]

The hon. Gentleman says this is a serious and important matter, but does he agree that giving the British people a say on Europe is also serious and important?

[Paul Blomfield]

I thought the debate a couple of weeks ago was more about resolving internal differences in the Conservative party than a wider concern for the views of British people.

What an irony it is that too many Government Members want to lead us out of Europe, just at the moment that the already substantial benefits from our membership of the EU are set to become even better. I might even feel sorry for the Prime Minister if these problems were not of his own making. He knows that our future lies in Europe, just as our past always has done, and he wants this country to be at the heart of the European Union and his party to stop banging on about Europe. He knows the importance of this trade deal, but he made an early mistake back in 2005 when, lagging behind in the leadership contest for his party, he threw red meat to Conservative Members who would take us out of the EU with a promise to leave the European People’s party. He was warned by his Conservative allies in Europe—

--- Later in debate ---

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

It is a pleasure to follow my hon. Friend the Member for Sheffield Central (Paul Blomfield). I agree entirely with what he said and I particularly endorse his remarks about public procurement and the importance of the national health service. It is vital that debates on this issue make it clear that the trade agreement will not be used as a way of justifying the privatisation policies of the Conservative and Liberal Democrat coalition, by blaming it on the requirements of some European-US deal.

[Julian Smith]

I reiterate the question I asked earlier. Does the hon. Gentleman accept that the Labour party in government regularly used the private sector to deliver better services, where necessary, in the NHS?

[Mike Gapes]

I accept that because of the problems we had when we came to office, we had to get extra capacity. My constituents in Ilford benefited from the independent treatment centre that was established on the site of King George hospital. They had operations on their knees and noses that would not have been available previously because of the lack of capacity in the NHS. I make no apology for the fact that my constituents benefited from the investment and policies of the Labour Government, but that is not what this debate is about.

I want to make three points. First, in an earlier intervention I referred to the European Union-South Korea free trade agreement which, as the Foreign Secretary recognised in the House a few months ago, has not just been of great benefit to the European Union as a whole, but the removal of 97% of the tariffs that existed between Korea and the European Union led to a significant increase in British exports to Korea.