Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [HL]

Lord Davies of Brixton Excerpts

Committee stage
Thursday 14th December 2023 Grand Committee

[Lord Ashcombe (Con)]

My Lords, I wish to return to our invisible trade and speak in support of Amendment 13, on inward investment, and Amendment 14, on financial services trade, tabled by my noble friend Lord Holmes. I declare my interests as an employee of Marsh Ltd, the insurance broker.

There are significant advantages of being part of CPTPP in its early stages and being able to influence the shape and development of many aspects of the treaty, in particular financial services. To get the most from membership, we need to develop trade strategies that play to our economic strengths and ensure that we are working to remove barriers to cross-border trade that could benefit the UK.

I will take the two amendments in reverse order—it may be my upbringing in Ireland. The assessment proposed in Amendment 14 would inform a strategy about how the UK Government, working with our regulators, could seek to expand partnerships with CPTPP markets and address market access barriers, which would expand growth opportunities for UK financial services. In particular, the assessment should look closely at the regulatory barriers within certain CPTPP countries. They are set out within Annex III of the treaty, which lists the domestic barriers to cross-border financial services trade.

We need to consider how we can reduce those barriers, to the benefit of both the UK and our new partners. For example, the Government have rightly identified Malaysia as a crucial trading partner. Malaysia is much in need of the kind of support our world-class financial services businesses can offer. The London insurance market could play a major role in helping the country to protect itself against the increasing threat of cyberattacks. Malaysia has fallen victim to an increasing number of such attacks. Indeed, 62% of Malaysian businesses have put off digital transformation efforts due to fear of cyberattacks.

The UK’s commercial insurance industry is made up of global innovators when it comes to protections against these risks. However, Malaysia has an extremely protective, complex and restrictive insurance regime to be navigated before permitting offshore reinsurers to be offered a risk. Many other CPTPP countries operate with differing restrictions, making it hard for UK markets to trade. Reducing these barriers would help treaty countries such as Malaysia to reinsure their risks through London and out of the country, taking advantage of the global insurance capital that London can access and thereby gaining better protection by spread of risk. It is not just cyber risk; we can help protect from a myriad of other exposures as well. These are the opportunities that are on offer, and Amendment 14 would give us a plan and a set of priorities to consistently pursue.

I turn to Amendment 13. Growing cross-border trade and encouraging inward investment are two sides of the same coin. We must ensure that the UK is a welcoming, agile, easily navigable place to do business, and use the opportunities that agreements such as CPTTP bring to really sell what the UK has to offer to our trading partners.

My noble friend Lord Harrington’s review of foreign direct investment is a very welcome addition to this debate. His recommendations for a business investment strategy, for our regulators to be much more focused on inward investment, and for a consistent government strategy towards encouraging investment are all applicable to financial services and would greatly enhance our offer to CPTPP investors.

This is an approach that other CPTPP members are actively pursuing. As my noble friend Lord Holmes mentioned, the Monetary Authority of Singapore has a team dedicated to growing Singapore’s share of global industry, separate and distinct from regulatory colleagues but providing a joined-up and seamless service to those seeking to invest, create jobs and support growth. Another example is the Singapore College of Insurance, which is regarded as the most powerful insurance qualification in the Asia Pacific region, extending Singapore’s influence and shaping markets. Ours are extremely well thought of as well and should meld in. Australia is also looking ahead and has been growing its influence in the region, having signed a free trade agreement with Indonesia in 2020—a potential future and very significant member of the CPTPP.

Both these amendments would therefore help to ensure that we can take full advantage of being part of this living agreement, which is likely to be significantly developed in the years ahead. We need to prioritise the areas where we are economically strong and use our expertise to the benefit of our economy.

[Lord Davies of Brixton (Lab)]

My Lords, I have a quick question for the Minister arising from Amendment 14. I need to declare an interest in the context of professional qualifications, and as a fellow of the Institute and Faculty of Actuaries. I heard what the noble Lords, Lord Holmes and Lord Ashcombe, said about the potential for financial services. There is a very big debate to be had on that, but at table 5, on page 46 of the impact assessment, the percentage change in trade shows a decline in the UK’s financial services and an increase in imports of financial services. Maybe the Minister could help the Committee by reconciling what the noble Lords said and what the impact assessment is telling us.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register as chair of Peers for the Planet and director of the associated company. I will speak very briefly, broadly on the environmental issues that have been raised in this debate and particularly to give my support to the general principle of impact assessments. The case has been made very clearly that we need in particular to understand issues such as farming and the environment, which I am sure the noble Lord, Lord McNicol, will speak to later. This is a complex area and unintended consequences are possible.

I want in particular to support Amendment 15 and the amendment from the noble Baroness, Lady Willis of Summertown. Amendment 15 relates to the very important commitments the Government made on preventing the use of forest risk commodities. We really do need clarity on this, and particularly when the Schedule 17 regulations will be laid. I hope the Minister can confirm that the regulations will be in force before we accede to the CPTPP. Although the agreement does not impact the UK’s ability to put these regulations in place, given that we do not otherwise have environmental requirements for what is imported, we should not enter into trade agreements that increase the likelihood of forest risk commodities being imported into the UK without those standards being in place.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

Yes, I will reply on that point. As I said, there will be differences in food production standards, production capabilities and so on because we are looking at having trade agreements with countries in different parts of the world which have different weather patterns. In many respects, the whole principle is to complement our production. We are talking here about ensuring that the safety of the British consumer is not jeopardised through FTAs, and I am comfortable expressing that very important point.

My final point is on deforestation and other standards and relates to production standards rather than simply importing goods, particularly agricultural goods. As noble Lords will know, as a result of the Environment Act, we are bringing in further protections such that companies above a certain level are obliged to ensure that their supply chain is compatible with the legal framework. I understand that that will include illegally occupied territories that have been deforested.

I am afraid that I do not have an update on the timing of that legislation. As I believe my noble friend Lord Benyon said recently, it will be taken through when parliamentary time allows. I know from my conversations with my noble friend that this is an area of great interest for him. That was not a light-hearted comment meant to play for time. Noble Lords understand that we have a parliamentary calendar and have to make sure that this is done appropriately. I cannot comment on that, but I can say that the Government are committed to ensuring that these things run in sequence as closely as possible. As I said, we are already doing business with many of these countries and, in my view, a delay of a relatively short or reasonable period would not make a significant difference to the timing. They do not have to run concurrently, as they are not linked together.

I hope I have covered all the points. I am very comfortable coming back to noble Lords—I see I have not so I shall take some interventions.

[Lord Davies of Brixton (Lab)]

I just press the Minister for some reaction to the fact that his department’s impact assessment shows a deleterious effect on our financial services sector. What is the department’s approach to those figures in its report?

[Lord McNicol of West Kilbride (Lab)]

On my Amendment 25, I am more than happy for the Minister to write to me and the rest of the Committee on labour standards and ILO conventions and adherence to them.

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There are some inconsistencies, so I seek clarification from the Minister on the Government’s position on ISDS. As we know, the UK has negotiated side letters with Australia and New Zealand to exclude ISDS provisions bilaterally. Though the UK Government have not confirmed that such exclusions will have been negotiated—I presume at the request of both those Governments and not of the UK Government—it would be interesting to know why we agreed to those side letters in those cases if the Government’s preferred position is to include ISDS provisions. The UK Government are clearly happy to accede to those requests, as these side letters mean there is clear precedent for agreements to be made with CPTPP members and other states. As we progress the FTA with Canada, will there be there any willingness from our Government or the Canadian Government to look at bringing in any ISDS measures or remedies?

[Lord Davies of Brixton (Lab)]

My Lords, I speak in favour of Amendment 26 and my Amendment 33. As my noble friend has clearly explained, this is about investor-state dispute settlement mechanisms. This is a very important issue, so I make no apology for exploring it in further detail, even at this late hour for a Committee.

For the benefit of new readers of Hansard—I am aware that everyone here is by now more than aware of what we are talking about—the investment chapter of the CPTPP contains the ISDS mechanism. The provision allows companies to sue Governments over decisions that impact their corporate profits, even if those decisions are made in the public interest. That is the key point. In simple terms, ISDS allows firms to sue the Government for legislation that they have introduced for the general public good, where those decisions impact on company profits. This can have disastrous effects across the board of social and public policies, but particularly on policies on the environment and health and measures to combat climate change.

These concerns are widely shared and this is a big issue, which is why I wanted it to be discussed in a separate group. The noble Baroness, Lady Hayman, mentioned it, and she apologised for being unable to be here to support the arguments being made. ISDS has been used to challenge important environmental regulations under separate arrangements: water pollution controls in Germany, a ban on fracking in Canada and various regulations on mining in east Asia and South America.

I am a bit hesitant to mention the impact assessment because, effectively, the Minister suggested earlier that although I have read all 142 pages of it, I need not really have bothered. He did not seem to feel that what was in it should be taken seriously—but it does touch on this. There is one bullet point of 26 words, which covers the issue, and it says:

“A modern and transparent investor-state dispute settlement mechanism will ensure that UK investors can access an independent international tribunal should they not receive such treatment”.


Well, that is only half of what the mechanism achieves. The other half is foreign companies suing this Government for measures that they take. My view is that is the more important part, yet we have no assessment of its impact, which I would have thought is essential. The truth is there is a real proximate risk that ISDS would be used to challenge new regulations which are essential for fighting climate change.

There is also evidence that ISDS in recent trade agreements would be used to challenge health provision, labour rights and other important legislation. Here are some further examples. ISDS was used in Egypt to challenge an increase in the minimum wage. Philip Morris sued Australia for attempting to introduce plain-packaged cigarettes—albeit it lost, as was explained. However, it is the threat that is the real problem. Then Slovakia was sued for attempting to nationalise part of the health service.

I am not given to quoting the CBI—it is not my usual source—but it has expressed concerns. It stated in 2021 that there was,

“a risk of the UK becoming disproportionately targeted through ISDS”

and that

“there could also be environmental implications of the UK being exposed to the ISDS mechanism”.

That is the CBI expressing its concern. The UK did not include ISDS in its recent trade agreements with Australia, New Zealand and Japan, and the provisions were suspended in the rollover agreement with Canada. The Government could have sought explicit side-letters in CPTPP to be exempt but has chosen not to do this, which means that, if this treaty is passed, the UK will now, de facto, have ISDS agreements with Canada and Japan. This contract would effectively import these settlement mechanisms into the existing agreements, which the Minister has referred to.

In my view, the ISDS process is suspect in and of itself. Arbitrators appointed to reach a settlement are paid on a case-by-case basis and benefit from an increase in claims. Governments cannot do it the other way; they cannot use the ISDS system to sue investors, so arbitrators naturally have a bias towards companies or investors so that they encourage further investor claims and thereby benefit commercially.

There is a code of conduct for ISDS proceedings. It was established under the partnership to address legitimacy concerns that arise when a system allows adjudicators to act as an arbitrator in one case and legal counsel in another—so-called double-hatting. This provides some objectivity in the process, which other agreements lack.

However, if we look at the recent record, we find that the most utilised treaty for challenging climate action is the Energy Charter Treaty, under which many cases have been brought by western-based companies against Governments taking action to limit their expanded use of fossil fuels. So problematic has this flood of cases become that the largest European countries have now all signalled their exit from the treaty. The Government themselves have said that they are reviewing their Energy Charter Treaty membership and will

“carefully consider the views of stakeholders in business, civil society and Parliament”.

In this context, we are not really having a debate about the ISDS process in general—that is a big debate, and one we need to have—but there is a growing realisation that these clauses are an impediment to social policies and to climate action in particular. It seems perverse to sign us up to another ISDS clause in the partnership, exposing us to potential future lawsuits from companies with tens of billions of pounds invested in the UK.

I have two questions for the Minister. First, the impact assessment says that it is a “modern and transparent” mechanism, but what is modern and transparent about it? Secondly, should we not have an assessment of the likely impact of the mechanism where foreign commercial interests can require limits? In effect, they have a veto on our domestic policies. We are told that the whole point of leaving of the European Union was to take back control, as my noble friend mentioned, but these mechanisms reduce our control, taking it away from intergovernmental bodies and handing it over to people totally outside any sort of responsibility to the public.

[Lord Purvis of Tweed (LD)]

My Lords, I thank noble Lords for allowing us to raise very important issues relating to ISDS. We have previously debated these in considering trade Bills and particular FTAs, and I have a great deal of sympathy for the arguments that have been made. My party supports a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes. I have been studying the European Union’s recent proposals on moving towards a more global, multilateral element, and that is my party’s position.

As we have heard, these amendments are important because it is vital that the Government state their view. We knew that the noble Lord, Lord Grimstone, was a strong supporter of ISDS mechanisms because he said so during consideration of the Trade Bill, but, as has been mentioned, we then had FTAs that excluded them. There is now uncertainty regarding those who were excluded but who are now also members of the CPTPP.

Like other noble Lords, I have questions to ask the Minister. Does the UK support an appellate mechanism within the CPTPP? Will the UK, as an acceded member, seek to implement the mechanism through the CPTPP in our relationships with Canada and Japan? Without the side letter, there is uncertainty. Will a company or a member be able to choose to resolve disputes through the CPTPP process or the FTA process? I am not aware of how that would operate, so some clarity from the Government will be important.

Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [HL]

Lord Davies of Brixton Excerpts

Committee stage
Thursday 7th December 2023 Grand Committee

[Lord Davies of Brixton (Lab)]

My Lords, Amendment 34 is in my name. I first have to repeat what I discover is true of quite a few participants in today’s debate: I did not speak at Second Reading. I am afraid my excuse is not quite as good as those of some Members, as I was on holiday, so I ask noble Lords to forgive me for that. It was arranged some time before.

I understand that it is not in order to give a Second Reading speech and I do not intend to do so. However, I will say that I am in favour of free trade—of ever loosening-up trade—and I recognise the remarks that the Minister made at Second Reading and has repeated in today’s discussions. I could chase that issue but I will resist the temptation, except to say that free trade comes with conditions. The “free” aspect has limits, which have regard to wider policies, most obviously climate change but there is also food safety—the whole range. They are part of the process of agreeing free trade, and the objective of free trade should not supersede those other objectives. They have to work together; we have to find a balance between them and I accept that. In addition, I point out that this is an advance in free trade. The biggest blow that we have had to widening free trade over the last 10 years is of course, Brexit—I will leave that one there.

My amendment introduces some requirements on the Secretary of State. On reflection, it does not fit all that well with the first amendment in this group. However, we are where we are, and the common theme is placing a requirement on the Secretary of State to report. This is one of the shortcomings of the Bill. It is of course only narrowly focused on the technical aspects that require changes in domestic legislation, the treaty having been decided and promulgated on the royal prerogative, hence the involvement of Parliament in drawing up what is, effectively, a form of legislation has been limited. We have two committees which look at these sorts of issues, and I understand that we are still waiting to hear their views on the overall structure; here we are just looking at these technical aspects. Having said that, it is reasonable to introduce these obligations on the Secretary of State. They are broadly self-explanatory; it does not need me to explain to your Lordships the importance of these requirements of policy that have to fit with freer trade.

I will say just a bit more about proposed new subsection (1)(b), on the importance of the precautionary principle. As ever, it is a question of balance. You can carry the precautionary principle too far but it comes into this discussion. My understanding is that the CPTPP preferences the science-based approach to regulation over and above the precautionary principle in what is acceptable in limitations. The science-based approach requires parties to demonstrate a scientific basis for regulation, which could of course be a problem where there is no such basis, there are no means to develop it, or scientific papers have been published by an industry which has a vested interest in avoiding the difficult questions of supporting a particular outcome. Therefore, I stress that it is important that we understand the extent to which the precautionary principle has been superseded by vested interests in particular approaches. This is not a new principle; it is there in the Environment Act 2021. I should like the Minister to say in reply that he understands that issue, and perhaps it could be discussed in more detail prior to Report.

[Lord Kerr of Kinlochard (CB)]

I will say a brief word on Amendment 8A. Contrary to the habit of a lifetime, I played by the rules and did speak at Second Reading. I made clear that I warmly welcome our accession to the CPTPP and that I have no difficulty with the main points in this Bill.

On Amendment 8A, I am sympathetic, but I think that one needs to think quite hard about the timing. Within 12 months of the passing of this Act, the Government would be required to submit reports on two important areas of performance: how the—very welcome—rules of origin provisions are working out, and how respect for geographical indications is being honoured.

I do not know when our accession will take effect—none of us does—because it will depend on who is last to ratify our accession. It is conceivable that it might take all of 12 months or more than 12 months before this happens. To say that the report will be required within 12 months of our passing the Act is slightly odd. If the report is going to be useful, it needs to take account of what has actually gone on—the experience—with regard to how the rules of origin are being respected and how self-certification of rules of origin is working out.

Although I support the principle of the report—because these are both extremely important provisions within the CPTPP, and a report to see how they are working out seems a good idea—I really do not think that it is a good idea to ask the Government to do so within 12 months of the passing of the Act.

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[Lord Johnson of Lainston (Con)]

I thank everyone who attended Second Reading. It seems a very few did; I do not know where everyone has come from since then. I was there. I believe it was the noble Lord, Lord Purvis, who recommended that I read the Hansard of the Second Reading, which I thought was peculiar, since I definitely remember being there, but maybe it was an avatar or a creation. None the less, it is important that people feel that they can come into and out of these different discussions to add value where they can.

I shall try to answer these very important points in order, but please forgive me if I miss anything because I want to make sure that we have a chance to go through them. I shall begin by addressing the comments of the noble Lord, Lord Purvis, as much as the amendment itself. The noble Baroness, Lady McIntosh, raised the same point slightly earlier, which I did not cover, about our agricultural attachés and the importance of making the most of our free trade agreements. I completely agree that there is an unlimited amount that any Government can do to promote the advantages of free trade and the free trade agreements, so I am keen and open, as is the department, to hear any views or suggestions that we can deploy effectively and cost-effectively to spread the word. It is why these debates are so important.

It is also why the initiatives we have taken are very relevant. We are assessing a range of different options, including using AI to feed into information we get from HMRC on what companies are engaged in or where they are already exporting to. Where there may be overlaps, we can then contact the companies and promote the different free trade options. It is complicated, but essential because if we do not promote the free trade options, what are we doing having these lengthy debates about free trade agreements? I am happy to be pressed on that. Clearly, it is important that the department reports on the assistance it gives to exporters, and it does. For example, earlier today I was talking to one of our IT staff who was presenting to me the effects that their specific system is having on exports. He listed a very significant total which he said was growing continually. These sorts of areas are reported on, and they should be. We should be held to account on that.

When it comes to specific reports on the effect on GIs, the noble Lord is trying to approach two concepts, as I understand it. First, there will be derogative elements on GIs, so have we protected our GIs and is there a protection regime being effectively deployed on account of us joining the CPTPP? That is difficult to do because not all countries have a multilateral agreement rather than a single country-to-country free trade agreement, and not all countries—I am afraid I cannot recall which ones but Australia and New Zealand in relation to our relationship via the EU is a good example—have geographical indications regimes, so it would not count; they could not police it. However, by having these stated relationships and highlighting these principles, we already go a long way to effectively protecting our GIs in CPTPP countries because we have a forum in which we can have open and frank discussions. It is clearly not in any country’s interest to derogate another country’s trademark policies, GIs or whatever. It would be difficult to apply this piece, but I am fully aware of the importance of making sure that this is clearly monitored.

The second part goes back to my first answer, which was about how we make the most of our GIs, such as cheddar cheese or whatever. We continue to invest particularly in the area of agriculture. I think we have one dozen—it may be nine, but between nine and 12—agricultural attachés placed around the world, funded by Defra and supported by the Department for Business and Trade and the Foreign, Commonwealth and Development Office. It is a multistrand initiative, which we think is very important in order to promote these products. Scotch whisky has been mentioned. As we are aware, tariffs into Malaysia will be reduced in gradations from 80%—a rate which effectively doubles the price of a bottle of whisky—to effectively zero over the next 10 years. These are important changes. I see them as agricultural products—food, drink and agricultural products linking together to be supported.

A number of noble Peers rightly raised the point about reporting. I will not go into all the different details, but I will try to touch on them. I would be reluctant—we will have this debate in the next Committee session on 14 December—statutorily to oblige the Secretary of State to undertake significant, specific levels of reporting. Noble Lords might say that that is because I am a government Minister, and officials always tell Ministers to avoid producing statutory reports. As a civilian, before I entered this job, I asked, “Why are we not producing more reports?” Having gone into the Government, I now realise that you can produce a lot of reports, but the problem is that if they are statutory government reports, the principles behind them can often become outdated very fast, so you lose flexibility. They are also enormously costly to produce. I see how the government machine functions: it rightly respects Parliament and its writ and so wants to dot the “i”s and cross the “t”s, so you often end up producing supposedly very comprehensive reports that do not really tell us what we are looking for.

What we have agreed to and will see over the next period is much more useful. In 2024, CPTPP countries will do a review of CPTPP and how it has worked. Two years after our accession to the treaty we will produce a summary report on the effects of CPTPP, and after five years we will produce a full report. It would be more useful to clarify the sorts of areas we wish to cover in those reports. We had this debate with Australia and New Zealand, and we came to some sensible conclusions. I was very happy giving Dispatch Box commitments, as a government Minister, that these will be the so-called obvious areas that we will want to investigate. Clearly one of them will be whether we have protected our intellectual property of whatever type, and others will be the effect on the environment and on standards, if any.

On that, to go to my next point, which the noble Lord, Lord Davies, raised in association with his amendment, I think there has been some misunderstanding as to what a free trade agreement is. A free trade agreement does not change anything about UK standards. We already trade with all those countries significantly, such as with Malaysia. Perhaps I should raise my interests so they are on record: I have done a huge amount of business in the past with all those countries, and I still have interests in companies that operate in them—maybe I should have said it at the beginning, although I do not think it is relevant to this debate. However, I was doing business there when we did not have the CPTPP, so it does not make any difference to the standards employed in this country—there is no derogation from our standards.

If my officials agree, I will read from the excellent report from the Trade and Agriculture Commission, which your Lordships will all have read and which I think came out today—I am never quite sure what is in the public domain or not, but this is. I shall read out only two questions. Question 1 is:

“Does CPTPP require the UK to change its levels of statutory protection in relation to (a) animal or plant life or health, (b) animal welfare, and (c) environmental protection? Answer: No”.


Question 2 is:

“Does CPTPP reinforce the UK’s levels of statutory protection in these areas? Answer: Yes”.


That is pretty relevant for me—I hope your Lordships do not think I am being glib, because clearly the report says more than that. However, that is an important assessment—I think some noble Lords sit on the TAC, but maybe not those in the Room today. It is not about derogating our standards in any way but is particularly about making sure that our businesses can deploy their skill sets and expertise more effectively, with less friction and with lower tariffs, which is good for the consumer and for our businesses. However, it does not change our standards, or, by the way, the standards of the countries to which we are exporting.

I will roll on to the other points, which are on the rules of origin. It is perfectly normal for traders to self-certify, and in fact, that is what we want. I have visited freeports recently, another great initiative of this Government, so I have seen a number of port activities. Efficient port activities rely on ad hoc inspections, therefore risk-based approaches to customs clearances for most things, and that is absolutely right. Although the rules of origin are complicated, and there are varying channels of rules of origin, as the noble Lord, Lord Foster, so rightly pointed out, it is up to the company to choose the avenue that it uses. I believe that we have the right resources to make sure that our rules of origin processes are properly checked, and I have continued to check that. However, there is also a committee in CPTPP on the rules of origin so this can be further discussed and clarified. It met last month and we attended it as an acceding member, so we are already participating in this, which is important.

The noble Lord, Lord Kerr, rightly raised the principle around the timing of the report; I think I covered that point in the sense that certainly after 12 months it would be unhelpful to produce a report on anything, frankly. However, if we are going to produce a report after two years, which we have committed to do, I am very happy to have further discussions about what will be in that report and what will be in the five-year report.

I was delighted that the noble Lord, Lord Alton, raised the extremely close relationship that we have with Korea— rather than attend the Second Reading, he and the noble Viscount, Lord Trenchard, attended the address by President Yoon. That is a good example in that although South Korea is not a member of CPTPP, we celebrated, thanks to the good works of the investment team, over £20 billion-worth of investment in the UK. That was a significant celebration of the depth of our relationship with Korea—if I may say that as an aside and champion the investment department at the Department for Business and Trade.

I will cover two points on the precautionary principle, which the noble Viscount, Lord Trenchard, raised, which is important, and it is clearly in this amendment. The precautionary principle already exists in the Environment Act 2021, so I think the Secretary of State has to have an eye to it in her activities, as do all Secretaries of State. To add it into this free trade agreement would create unnecessary duplication and parallel obligations, which causes confusion for businesses and countries.

[Lord Davies of Brixton (Lab)]

The Minister is quite correct. It is in a statement associated with the Act, but it applies only to the environment. Of course, the trade under this Bill goes somewhat wider, and there is just the thought that it should apply more broadly across the potential changes in protections.

Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [HL]

Lord Davies of Brixton Excerpts

Report stage
Tuesday 16th January 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I support all the amendments in this group. I happily added my name to Amendment 11, but I will focus on my Amendment 9. The common theme through these amendments is of raising concerns about possible issues arising from a trade agreement. We are all free- traders now, but there is a recognition that free trade should be respectful of the limits that we and other countries set to protect labour standards, the environment, food quality and so on. There is a balance to be achieved and this series of amendments raises issues of concern.

These amendments are all limited, because the Bill is limited. It is not the treaty, but just the administrative arrangements required to implement it, so it could not achieve a lot anyway. We are asking the Government to review these issues. I hope that they are of sufficient importance that they would be studied, in any event. It is possible that we do not need these amendments, as a good Government would review these issues, but they provide us with the opportunity to point out areas of concern.

My Amendment 9 concerns investor-state dispute settlement mechanisms. The investment chapter of the CPTPP contains these arrangements and allows companies to sue Governments over decisions to implement policies that impact their corporate profits, even when these decisions were made in the public interest. We debated this in Committee, and I am sorry to say that I found the Minister’s reply to our concerns less than reassuring. Referring to these arrangements, he said that that they do not

“derogate or hinder our right to regulate in the public interest, including in areas such as the environment and labour standards”.

Referring explicitly to the CPTPP, he also said that it

“preserves states’ rights to regulate proportionately, fairly and in the public interest”.—[Official Report, 14/12/23; col. GC 375.]

That sounds fine.

The International Bar Association has a similar view, stating that,

“while investment treaties limit states’ ability to inflict arbitrary or discriminatory treatment, they do not limit (and, in fact, expressly safeguard) a state’s sovereign right to regulate in the public interest in a fair, reasonable, and non-discriminatory manner”.

The problem is that these phrases, “arbitrary or discriminatory treatment” and a

“fair, reasonable, and non-discriminatory manner”,

are doing a lot of heavy lifting. They are all subject to interpretation. There have been real concerns that, in practice, commercial interests will be elevated above those of the public. There is so much there that needs to be taken on trust. The key point is that this clearly—and, I suggest, inarguably—is an issue that needs to be kept under close review, which my amendment does.

The problem we face is that ISDS arrangements have been used to challenge health provision, labour rights and other important regulations. This is not a theoretical possibility; there have been enough examples in practice to give rise to this concern. I quoted the CBI in Committee and it is worth expressing its views again—that there is

“a risk of the UK becoming disproportionately targeted through ISDS”,

and that

“there could also be environmental implications of the UK being exposed to the ISDS mechanism”.

These are not fringe concerns but concerns of different interest groups.

In simple terms, the ISDS arrangements make it possible for firms to sue Governments for measures that harm their profits. The existence of this power has a chilling effect on regulations, particularly those designed to combat climate change.

A specific example, of which we need some account, is the attitude to the energy charter treaty, under which many cases have been brought by western companies taking action against Governments to limit their use and expansion of fossil fuels. So problematic has this become that large European countries have signalled their intention to exit from this treaty. The Government themselves have said that they are reviewing their energy charter treaty membership and

“will carefully consider the views of stakeholders”.—[Official Report, Commons, 4/9/23; col. 4WS.]

Given the dawning realisation that these sorts of clauses are an impediment to climate action and to sovereign policy-making in general, it seems wrong for us to sign up to further restrictions through this treaty. I am amazed by the modesty of the demand that this aspect of the CPTPP should be subject to a formal review so that we can see what impact it is having on government corporate relations.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to speak to Amendment 10 in my name, which is in similar terms to the amendment I tabled in Committee and requests

“an assessment of the impact of the implementation of the CPTPP Chapter on government procurement on environmental protection and animal welfare, health and hygiene”.

I am grateful to my noble friend for trying to seek me out. I missed him yesterday and he missed me today. Along with the noble Lord, Lord Alton, and a number of others, we were paying tribute at the memorial to an outstanding parliamentarian, Baroness Boothroyd. I am sorry that I missed my noble friend’s attempt to speak to me, but I am grateful for the opportunity to speak to him in the confines of these deliberations.

What has changed very clearly since Committee stage is that an announcement was made by the Environment Secretary at the Oxford Farming Conference that the Government are committing to consult on new food labelling—plans that will ensure that British produce will, as he put it,

“stand out from the crowd”.

The idea is to allow changes to food labelling entitling consumers to make better decisions at the supermarket in particular, while also highlighting high-quality British produce to the public. I quote from the press release issued by the NFU, which quotes what my right honourable friend Steve Barclay said:

“New food labelling would also make it clearer when imported products do not meet the same UK welfare standards”.


I put it to my noble friend: would it not be better if we did not import food that does not meet the high UK animal welfare and environmental standards that consumers demand and our domestic producers are honoured and delighted to meet? What is the relationship between this new labelling scheme and the Red Tractor scheme, which already demonstrates compliance with all the food requirements by domestic producers?

Is it not a fact, and does my noble friend not agree, that domestic producers meet the highest standards of animal welfare and environmental protection in their production? This means they are meeting a higher standard and it is therefore more expensive to produce. This is exactly what happened in the 1990s with the decision to unilaterally ban sow stalls and tethers in the production of pigmeat while we continued to import pork produced by sow stalls and tethers for an interim period of seven years. This meant the consumer swapped high-end, high-quality, high-animal-welfare-standard UK pig production with lower, cheaper, substandard imports. After seven years, this put our pig producers out of business.

I hope my noble friend will give me his assurance today that after six months—or 12 months in the terms of my Amendment 10—an assessment will be undertaken by his department, jointly with Defra, to ensure that the trade Bill before us this evening does not discriminate against UK domestic production, particularly of meat and dairy. In addition, can he give an assurance that the food labelling provisions that Defra is proposing to consult on, and which I support, will apply not just to supermarket labelling but will somehow translate on to the food menus for food sourced from third countries in our restaurants, bars and cafés in this country? That is the main purport lying behind Amendment 10.