Negotiating Objectives for a Free Trade Agreement with India

Lord Kerr of Kinlochard Excerpts

Tuesday 6th September 2022 Grand Committee

[Lord Kerr of Kinlochard (CB)]

Despite the undoubted quality of the report so ably introduced by the noble Baroness, Lady Hayter, and despite the expertise available in the Room, I have the feeling that the eyes of the nation are not on us. I think we now know how Rosencrantz and Guildenstern must have felt.

In another sense, this is an oddly timed debate. Here we are, looking at the Government’s objectives in a negotiation that has been going on for eight months and is due to finish in seven weeks. The document in which those objectives are set out is drafted in such general, unspecific terms as to make it clear that its objective is to tick every lobbyist’s box so that the Government can say at the end of the day, “Well, at least we tried.” It is not the basis for a serious debate. It should be possible—I look for support on this from my old colleague, the noble Lord, Lord Frost—to devise a more grown-up relationship between Parliament and the Government on trade negotiations.

However, this is the only document we have, so debate it we must. If we do not, the next thing to happen will be a fait accompli: an agreement that we then cannot change. I hope that, with the help of the noble Lord, Lord Frost, and possibly with that of the noble Lord, Lord Grimstone, we may be able to establish something a little more meaningful. Like the noble Baroness, Lady Hayter, I have never understood why taking back control means Parliament cannot be as well informed as it was when our trade negotiators were Brussels based, or as the European Parliament then was and now is. It would be in everybody’s interest that we be as well informed. As an ex-negotiator myself, I know from Washington and Brussels experience how the oversight of an informed legislature strengthens the hand of the negotiator. Therefore, the Johnson Government’s policy of concealment, highlighted in the ludicrously contrasting texts at appendix 5 in the committee’s report, seems to constitute a severe case of self-harm.

However, a new Prime Minister means a new Foreign Secretary. Perhaps we can turn over a new leaf and have a new start on this relationship. Meeting during the changing of the guard means that we can offer a bit of advice to the next occupant of the great office where Lord Grey watched the lights go out over Europe, Johnson penned his pieces for the Telegraph and Truss put up more flags.

I have three quick tips for the incoming Foreign Secretary, whoever he is; sadly, the forecast is not for frost. First, pay attention to the office experts on international law. They are very good. Defending the international system, as we must, means not just opposing people who scorn and subvert it, such as President Putin, but not breaking our international agreements, such as the 2019 treaty of the noble Lord, Lord Frost, or the 1951 refugee convention. The Foreign Secretary’s job is to remind Cabinet colleagues that our word is our bond and insist that pacta sunt servanda.

Secondly, respect my old service’s understanding of other countries’ attitudes and interests. In international relations, there are few symmetrical, zero-sum games. Widening the parameters in a negotiation and bringing in areas of interest to the other side are usually more effective than pouting and shouting. Use the expertise of the embassies—and not just for arranging photo ops.

Thirdly, believing in alliances means not disparaging allies. France is a friend, not a foe. There are only two types of European state: middle-sized countries and those that have yet to realise that they are now only middle-sized. Like it or not, we are Europeans too. We depend on their co-operation and custom. Naturally, our biggest market is our closest market. It is a pretty inexorable rule that trade halves as distance doubles. Global trade is now 20% above pre-Covid levels; ours has flatlined. We are not going to put that right until we rebuild a productive trading relationship with the rest of Europe. That must be the number one trade policy aim.

So let us get the India deal into perspective. According to the Government’s own analysis, by 2035, it might add between 0.12% and 0.22% to our GNP—not exactly game-changing. Incidentally, I hope that the new Government will tone down the boosterism. I am much less critical than some—including some in this Room—of the new trade agreements with Japan, Australia and New Zealand, but their economic effects will also be pretty marginal. It does not help those ready to defend them when government spokesmen systematically insist that what seem to be perfectly respectable geese are actually stupendous swans.

That brings me to my last, and very serious, point about the negotiation with India. Why the rush? Today’s top geopolitical priority must be the survival of a free and sovereign Ukraine. National Governments tend to be against invasions lest they prove habit-forming. The 1982 attack on the Falklands and Saddam Hussein’s 1990 occupation of Kuwait were condemned; with UNSCRs 502 and 678, sanctions followed. Russia’s veto rules out any similar UN action now, but I am struck by our apparent inability to orchestrate any similar worldwide condemnation of Putin’s aggression and Russia’s blatant breaches of the Geneva conventions. If we have been trying—if we have been calling the Commonwealth from Chequers—we have been keeping quiet about it.

We have not been doing very well in Delhi. Mr Modi’s Government have raised no objections to the invasion of Ukraine or the barbaric methods employed. His Government have refused to join any sanctions. Indian exports to Russia are rising steeply: India bought no Russian oil before February but is now taking close to 1 million barrels a day. Indian forces are, as we speak, taking part in the Russian Vostok military exercise. Are we sure that now is the time to reward Mr Modi with new trade concessions? Are we bringing any Ukraine conditionality into this deal? If not, should we not? If the conditionality is resisted and rejected, should we not go slow?

If Putin eliminates Ukraine, as he said he aims to, there goes the post-World War II international settlement. There goes the rules-based system. There, incidentally, goes the reputation of the new Foreign Secretary, whoever he is, and the new Prime Minister. Trade policy cannot be ring-fenced and immune from geopolitics, so my key advice is to get our priorities right, which, in this case, means not being driven by a vacuous Diwali deadline. I say to the noble Lord, Lord Hannan, that I do not think it is enough to be disappointed at the Indian attitude. We have to use all the means at our disposal and all the skills of our diplomacy, including our trade diplomacy, to try to get the Indians to think again.