Lord Kerr of Kinlochard
Main Page: Lord Kerr of Kinlochard (Crossbench - Life peer)Australia Free Trade Agreement
Lord Kerr of Kinlochard Excerpts
Lord Kerr of Kinlochard (CB)
It is a pleasure to follow the noble Baroness, Lady Liddell. She is always trenchant and always expert and was extremely popular in Australia when she was high commissioner there; she is popular at this end too. I follow her part of the way. I certainly follow her in her tribute to the noble Baroness, Lady Hayter, for conducting our debates with such skill and style and, as usual, pinching all the points I was going to make today—although I am sorry to tell the House that I will make them all the same.
I pay tribute to the noble Lord, Lord Grimstone of Boscobel, whose dialogue with us, although it was not always very deep, was carried out with impeccable courtesy at all stages. I also had the feeling that he might know what he was talking about and that he might have liked to tell us a bit more than he was allowed. I hope that he will be back in order that I can test my theory.
If this report is a good one, and I think it is, that owes a great deal to the help that we in the committee had from our clerk, Jennifer Martin-Kohlmorgen, and our policy analyst, Andrea Ninomiya. My thanks to them.
I am less critical of this agreement than most of those who have spoken so far. The key point to make for perspective is that it is no big deal. The Government themselves maintain that its economic effects, although probably positive—trade liberalisation usually is—will be extremely marginal. In my view, it is not a bad deal; liberalising is generally a good thing to do, and there are genuine gains in this agreement for UK exporters of services.
On goods, of course, there is absolutely no doubt that the deal massively favours the Australians, principally because their own tariffs were already very low. It was hailed in Australia as splendidly asymmetrical, and their negotiators were congratulated on achieving the impossible. They believe that the greater market access that they have secured here for their agriculture producers will result in economic gains to them—so they share some of the views that the noble Duke, the Duke of Montrose, put forward. They would argue that the hill farmers in Scotland, Wales and Northern Ireland are right to be concerned about this deal. I think that the hill farmers are right to be surprised about it, because there was no attempt to prepare the ground—it came as a shock to them—but I do not believe that they will be hard hit in the end because, for Australia, the Asian market will always be the principal one for farm products. It is a pretty inexorable rule in trade in goods that trade halves as distance doubles. Overall, this deal is no big deal but no bad deal.
I would hope that the Minister in replying to this debate would be briefed to reply to some of the questions that we raised in our report. The two that I would particularly like to hear an answer to are the questions that we asked in paragraph 34 on data adequacy and in paragraph 42 on investor-state dispute settlement, where the policy of the Government simply is not clear to me. But my concern about the agreement was more about what it did not say than what it did say, and more about the unsatisfactory features of the process that produced it.
I shall make three points, one specific, one general and one purely about process. First, on the environment chapter, of course the noble Baronesses, Lady Hayter and Lady Liddell, and the noble Lord, Lord Oates, are right that the environment chapter is extremely disappointing. I agree with him that the contrast with the New Zealand deal is quite striking. The New Zealanders signed up to work with us on carbon pricing and reduction of fossil fuel emissions, but there is nothing comparable in the deal with Australia. Yet, as has been discussed, in other parts of the agreement we conceded quite a lot to the Australians; they are not necessarily very damaging, but those concessions were seen as considerable in Australia. I do not know what price we got for them, but it certainly does not look as though we got a price in the environment chapter.
I do not understand why we pressed ahead to do the deal with the Morrison Government, who had demonstrated at COP 26 that they did not attach a very high priority at all to reducing carbon emissions; they attached a higher priority to maintaining a massive coal export industry. As the noble Baroness, Lady Liddell, said, the polls showed that the Morrison Government were in trouble and an election was coming up, and the wildfires had caused the Australian public to be more concerned about global warming and emissions reduction. Maybe we did try to extract a price—but why did we give up? Why did we not wait to see whether the polls were correct and the Labor Party were going to come in with a very different approach to environmental policy? I do not know the answer to that; it looks like a mistake, but I hope that the Minister can elucidate.
Of course, it is not possible now to make our concessions in this agreement contingent on Australian action on the environment—the deal is the deal, it is written down and there is nothing we can do about it. One of the oddities of our scrutiny system is that we are allowed to debate it only when we can do nothing about it; still, that is where we are. I echo the noble Baronesses, Lady Hayter and Lady Liddell, and the noble Lord, Lord Oates, in saying that I hope we are, nevertheless, in discussions with the Albanese Government about whether, in addition to this agreement, there can be some new UK-Australian agreement to work together on climate change.
My general point springs directly from that specific one. I do not know—I do not think any of us knows—what view the Government take on linking trade deals to wider non-trade policy objectives. We do not know because the Government have not published a trade strategy or any hierarchy of priorities. We can deduce one or two things. We can deduce from what has been said in other contexts that the Government’s number one priority in trade deals is securing greater access for service exports. I do not disagree with that. We can also deduce from what has been said in other contexts that the Government would not do a trade deal with a country demonstrating egregious contempt for human rights—okay. That is about as far as we can go, I think.
I was puzzled to hear the outgoing Prime Minister saying in April that he wanted a full free trade agreement with India done and dusted by October—with remarkable speed. In other words, there was no question of any linkage with Prime Minister Modi’s policy on Ukraine. The Indian Government refused to criticise the invasion which happened in February or to join in any sanctions, yet our Prime Minister in Delhi in April was saying, “Let’s go steaming ahead and do as wide a free trade deal as we can by October.” I genuinely think that the Government need to tell us to what extent trade policy is to be joined up with foreign policy, environment policy, energy policy, human rights policy or development policy. I think, and I think the general view in this House is, that they need to be mutually supportive. I am a free trader, but I do not think that trade liberalisation can be ring-fenced overriding all else. Napoleon was wrong: we are not just a nation of shopkeepers, but we need to demonstrate that with a strategy that links our trade objectives to wider objectives and sets out a hierarchy of priorities.
My last point is that chapter 8 of this report points out that something is still not quite right in our trade negotiators’ relationship with the devolved Administrations. It is well illustrated by the alarm in Edinburgh, Cardiff and Belfast about the tariff reductions on farm products, which so alarmed the noble Duke, the Duke of Montrose. The Welsh Government told us that
“as the setting of tariffs is a reserved matter, limited information is shared with Devolved Governments and we were unable to have meaningful discussions with UK Government on this issue … This lack of discussion makes it difficult for us to ascertain whether our interests in this area are being protected as negotiations progress.”
That is a very fair point and I think the UK Government owe the Welsh—the Scots say much the same—an answer. The friction with the devolved Governments was clearly not a priority for the outgoing Prime Minister, but I hope it will get more attention from his successor and that the Government will drop the absurd objection, encapsulated in paragraph 147 of our report, where they say that
“sharing information on tariff liberalisation … could jeopardise overall negotiations.”
That is the reverse of the truth; it is not just wrong, it is absurd. It is extremely useful for a negotiator to be able to point out that a proposed concession could cause serious problems back home; it is extremely useful if one wants to reject it and even more useful if one aims to extract a higher price for it. Having an informed instructing constituency back home strengthens one’s negotiating position; it does not weaken it. It also avoids surprises of the kind that clearly struck the hill farming community when the deal with Australia took place.
I believe that the devolved Administrations should have been represented in the negotiating teams that negotiated with Australia, at least on farm products. They should be represented in the teams that negotiate—if such negotiations happen—on agriculture with Canada, Mexico, Uruguay, Brazil and, of course, the United States. These countries—which are much closer—will offer much greater competition to our farmers if tariffs come down. It would also make sense for wider reasons: to heal this running sore in Whitehall’s relationship with Belfast, Cardiff and, particularly, Edinburgh. I am sure that the noble Viscount, Lord Younger, will take this point on board more than most, and I very much hope that he will take it back to Whitehall.
Lord Robathan (Con)
Are the noble Lords sure? They should check where their shirts were made—or perhaps they are Jermyn Street only.
China is belching forth fumes from coal-fired power stations, yet we have the belt and road initiative pouring goods into our country from China. We do not very often hear people saying, “Well, we can’t possibly let those in because the Chinese are using so much coal”.
I am going to tell one illustrative story about the committee, which perhaps explains why I left. Tony Abbott seems to have fallen by the wayside, but he was touted as an adviser. At one meeting, this was mentioned, and he was roundly slagged off for not knowing anything and, even worse, for being conservative. I think it was the next week that George Brandis, the high commissioner, came to speak to us. I had done a bit of research and knew that George Brandis had been in his Cabinet, so I asked—innocently, as always— whether he thought that Tony Abbott’s advice could add anything to our free trade agreement. He said, “Tony Abbott? Fantastic guy; absolutely brilliant. He knows so much about trade”. If it is possible on Zoom to see crests falling, I can promise your Lordships that there were a lot of crestfallen faces around.
In summary, I found being on the committee a less than edifying experience. I am sorry about that, because I thought it would be really interesting. However, I think the report is fairly balanced and makes some very good points. It is a pity that there was not greater enthusiasm in the report, or on the committee, for a free trade agreement, however imperfect, because, like the noble Lord, Lord Kerr, I think that free trade benefits everybody. The agreement was reached quickly—perhaps too quickly, indeed—but it was for the benefit of this country and its people, and for the benefit of Australia as well.
Viscount Younger of Leckie (Con)
I shall look into it but I do not think that I agree with that point. As I said, I think the devolved Administrations have been kept on board with the negotiations that have been going on—I really do. I certainly would like to reassure noble Lords further on that point.
Lord Kerr of Kinlochard (CB)
I am sure that the devolved Administrations were informed in the sense that they were told that there had been a round and various things had been discussed, but it is clear that the result came as a surprise—that there should be such an asymmetrical deal on farm products. I do not myself believe that it is a disaster, but it certainly came as a surprise. Would the Minister agree that it would be better if the documents that the Government published at the start of a negotiation—the negotiating objectives documents—were a little more specific? They are cast in such broad-brush terms that it is very difficult to deduce from them what a likely outcome might be, so the risk of a surprise is quite high.
Viscount Younger of Leckie (Con)
I would like to park that—I am not going to be drawn into it—but I would like to move on to discuss scrutiny, which is probably along the lines of the noble Lord’s question. This is an important matter, raised by the noble Viscount, Lord Waverley, and the noble Lords, Lord Purvis and Lord McNicol. Again, I hope I can give some reassurance on this.
The Government have made extensive commitments to support robust scrutiny of the new free trade agreements. As the International Agreements Committee acknowledged in its report, we have upheld those commitments. In particular, the Government committed that we would ensure that there would be at least three months for Parliament to scrutinise the agreement and for Select Committees to produce reports before the formal scrutiny period under CRaG. In fact, there was six months of scrutiny time prior to commencing CRaG, and I was very pleased to receive the IAC’s report on 23 June. In addition, we published the advice of the Trade and Agriculture Commission on 13 April, two months before commencing CRaG, and our own Section 42 report on the impact of the agreement on relevant domestic regulatory standards on 6 June. Of course, I am delighted that we are here today taking the opportunity to debate the agreement as part of that scrutiny process. In total, by the end of the CRaG period, the agreement will have been under the scrutiny of Parliament for over seven months and benefited from the formal views of three Select Committees.