Turkey: Free Trade Agreement

Lord Grimstone of Boscobel Excerpts

Tuesday 27th April 2021 Grand Committee

[The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)]

My Lords, I am pleased to be here today to discuss the UK-Turkey free trade agreement and respond to this debate. I very much welcome the fact that the business managers found time for this debate today, and I hope that it illustrates to noble Lords our commitment to parliamentary scrutiny of free trade agreements.

As ever, I thank noble Lords for their contributions, which were, as always, erudite and perceptive, and I extend my thanks to the noble Lord, Lord Purvis of Tweed, for tabling today’s Motion. I also thank the noble and learned Lord, Lord Goldsmith, and the International Agreements Committee not just for their work in general but for drawing special attention to the UK-Turkey FTA. It would be remiss of me not to make a point of thanking the noble Lord, Lord Janvrin, for his contributions today, because of his work, which we value very much, as the Prime Minister’s trade envoy to Turkey, for which we are very grateful.

Noble Lords have raised a number of detailed questions, and I suspect that I shall not have time to deal with them all. Those I am unable to answer during this short debate I shall of course deal with by writing to noble Lords and placing a copy of the letter in the Library.

The UK-Turkey free trade agreement plays a vital role in providing continuity of effect of our trading arrangements as far as is possible and, through doing so, helping to benefit a range of sectors. It is gratifying that this agreement is already having a tangible impact. For instance, Ford has said that the UK-Turkey FTA is “extremely significant” for its business, following the very good news that engines for a new Transit van model will be built at the Dagenham plant and exported for vehicle assembly in Turkey. Of course, it is business such as that which is at the essence of why we have trade agreements.

Ratification of the agreement has now been completed by the UK and Turkey, and the agreement entered into force on 20 April 2021, thereby ending uncertainty for business. A new rules of origin protocol was implemented in domestic regulation on 14 April—I completely understand that some noble Lords may not have been completely familiar with that. It will bring the agreement in line with the rules of origin under the UK-EU TCA, which will help to streamline the operation and implementation of the FTA. In answer to noble Lords’ concerns, which I completely understand, I hope that these new rules of origin address the teething issues experienced by some businesses during provisional application of the FTA.

I can confirm for the noble Lord, Lord Lennie, that updated and detailed guidance for business on the new rules of origin protocol has been issued on GOV.UK. I am confident and hopeful that this extensive guidance and the FTA as a whole will serve small and medium-sized enterprises and large businesses alike.

In answer to the points made by my noble friend Lord Lansley and others, I note that subsidies could not be adopted in our FTA with Turkey under our continuity mandate as this would have required the UK to continue to follow EU state aid rules after Brexit. This would not have been consistent with the UK’s policy direction in leaving the EU, and would limit our ability to set our own rules. As I will touch on further in a moment—I hope that this answers the question from my noble friend Lord Lansley—we have the opportunity to agree more bespoke terms on subsidies with Turkey in due course. In the meantime, as has been noted, subsidy issues between the UK and Turkey are governed by the WTO Agreement on Subsidies and Countervailing Measures, providing obligations to notify goods-related subsidies. Of course, it is important that countries respond to their obligations under these rules.

With the news that the European Parliament will be voting on the UK-EU TCA today, and in answer to my noble friend Lady McIntosh, the Government look forward to commencing a review of the “Technical Barriers to Trade” chapter of the UK-Turkey FTA. It was agreed with our Turkish friends that this review will occur within three months of entry into force of the UK-EU agreement, as per the agreement text.

As we have heard, the UK-Turkey FTA includes a broad review clause that commits both parties to commencing, within two years of entry into force, a review of the agreement with a view to modernising and expanding it. This is highly important because, of course, the agreement that we rolled over to form this present agreement was a customs union agreement. As such, it dealt only with goods, which is why it does not have in it the wide range of topics that we would expect to find in a comprehensive FTA and why our negotiators did not cover this area. It would have been impractical to do so under our mandate.

This is why it is important that, as per the review clause—I hope that this answers a number of noble Lords’ fears—the UK and Turkey have committed to considering trade in agricultural goods, trade in services, investment, subsidies, sustainable development, the environment, climate change, labour, anti-corruption, the digital economy, small and medium-sized enterprises and intellectual property as part of the review. I am pleased to say that this is not an exhaustive list and absolutely does not preclude other areas being discussed.

Perhaps I may make a special reference to climate change in the review clause. I suggest that noble Lords note that the preamble of the UK-Turkey FTA recognises the importance of urgent action to protect the environment and combat climate change and its impacts, and the role of trade in pursuing those objectives.

It would be premature for me at this stage to predict the ultimate scope or outcome of negotiations on the comprehensive agreement, but I assure noble Lords that my department will at the appropriate time, as we have done before and as we have committed to do again, undertake wide stakeholder engagement to ensure that views are properly gathered and represented. Of course, I will make sure that noble Lords have a full opportunity to participate in that.

The Government will at the appropriate time make it clear how the publication of negotiation objectives will be handled in the case of enhancing our existing FTA with Turkey. I am happy to reassure the noble and learned Lord, Lord Goldsmith, that the Government will keep Parliament and, most importantly, the IAC updated on these developments. I look forward to discussing with him nearer the time how the appropriate scrutiny and transparency will be maintained in respect of this agreement. I can also confirm that we will of course engage with the devolved Administrations, as we always do, throughout this process on areas of devolved interest. Naturally, once negotiations are concluded, the usual scrutiny and ratification process will be followed. It would not surprise me if we were here again in a couple of years’ time redebating the new agreement.

As a final point of reflection, a number of noble Lords have raised the important matter of human rights and labour rights. Given the huge importance that we mutually attach to these issues, I am happy to deal with them now.

As noble Lords have heard me say many times before—but there is no harm in reiterating it—the UK has long supported the promotion of our values globally. The Government are clear—and I make it clear again today—that more trade does not have to come at the expense of human rights. It is not a binary choice.

Our experience is that political freedom and the rule of law are vital underpinnings for prosperity and stability, and that, by having strong economic relationships with partners, we are able to have open discussions on a range of issues, including—I stress this—human rights and labour rights. On this basis, these matters will remain an important issue in our relationship with Turkey and we will continue to raise human rights and labour rights where necessary with the Turkish Government at a senior level.

It should be noted that EU-Turkey trade arrangements, as underpinned by the 1963 association agreement between the EU and Turkey, did not contain human rights clauses. As I explained previously, it was essentially a customs union matter, so there were no human rights clauses to carry over into a UK-Turkey FTA at this stage. I should make it absolutely clear that this should in no way be taken as an indication that we do not take extremely seriously the question of human rights.

In conclusion, the UK-Turkey free trade agreement provides continuity of our trade arrangements with Turkey post Brexit so far as is possible at this stage. I believe that we have achieved a successful outcome that has been welcomed by business. Most importantly, we have secured a strong commitment from Turkey to engage before the end of next year in a further enhancement of the agreement which, I am happy to re-emphasise, the Government will consult further on in due course.

I assure the noble Lord, Lord Kerr, that it is always substance, not the clock, that determines our trade negotiation strategy.

I thank all noble Lords for their contributions to this important debate. As I said at the beginning, I will of course write to noble Lords, including the noble Lord, Lord Purvis, on some of the detailed points that were raised. I look forward to engaging with noble Lords on UK-Turkey trade relationships in the future.