EU-Japan Economic Partnership Agreement

Debate between Kevin Hollinrake and Geraint Davies

Tuesday 26th June 2018 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Yeovil (Mr Fysh), who made a number of interesting points about the uncertainties we face. In particular, we have Brexit day in March and then a transition period, and our status within this very welcome EU-Japan deal is very uncertain.

The first key point I want to make is that we should relish the fact, as the right hon. Member for Chelsea and Fulham (Greg Hands) essentially did, that we have been part of the EU and have had the strength of the EU to enable us to negotiate a good deal. The real fear is that, after Brexit, we will be a stand-alone country facing big opportunities but also big challenges—whether with Japan, China or Trump’s United States. That is something I very much regret.

It is good to see that we do not have an investor court system in the Japan deal. That underlines the point that such a system is simply unnecessary for trading between two mature economies in democracies with established judiciaries, because there is already protection for investors. That is the case for Canada, and also for trade with the United States, in which investors are protected. The problem with investor court systems is that they put the investor first, above the environment or the public interest. There is an endless list of examples, but—[Interruption.] The Under-Secretary of State is chuntering from the Front Bench. By way of example, let us take George Osborne’s sugar tax. When such a tax was introduced in Mexico, such a system was used to sue Mexico for the profits lost by protecting people from diabetes, so these things do happen.

[Kevin Hollinrake]

The hon. Gentleman is citing the Cargill case, in which Mexico was actually fined by the World Trade Organisation for inappropriately applying tariffs that were contrary to a free trade agreement. In that case, it was ruled against not just under the investor-state dispute settlement process, but in the WTO itself.

[Geraint Davies]

The WTO did get involved, but the essential point—[Interruption.] No, let us get this clear. The essential point of these arbitration courts is that investors invest, and if Governments change the rules and doing so changes their future profits, investors can sue for compensation, as was the case with the sugar tax. That would be the case if there was a plastics tax, for example, or if there was a diesel tax, and so on. That is why people are very worried, and the Government must not trade off the environment, the public interest and wider considerations of public law. Thankfully, there has been concern about this in Europe, which is why such an unnecessary system has not been applied in the Japan deal.

On Japan, 40% of its inward investment into Europe is to Britain. Why? Is it because the Japanese love British people? We do speak English, which is their second language, but it is basically because we are a platform, through the customs union and the single market, into the biggest market in the world. These are the facts. If we are not in the single market and the customs union, which we will not be after the transition period—if we go ahead with the barmy negotiation that is being suggested—that foreign direct investment will go to mainland Europe, and we may just be left on our own.

This is the situation we face. In particular, as has been said, President Trump basically has an America first policy. He does not recognise anything except a zero-sum game. We have had a conversation about imports and exports.