CPTPP (International Agreements Committee Report)

Lord Lansley Excerpts

Tuesday 1st February 2022 Grand Committee

[Lord Lansley (Con)]

My Lords, I am very pleased to follow the chair of our committee, the noble Baroness, Lady Hayter, and thank her for so ably presenting the issues that are raised by our report. As the International Agreements Committee, we have taken on new responsibilities. This is a first example of where we have reported on negotiating objectives and the House has an opportunity to debate them. This forms part of a process by which, in due course, when the Government, one hopes, successfully negotiate an agreement and presents it under CRaG, we will be able to look back and say that we were very clear about the nature of what was being sought by way of this agreement and to measure the extent to which the Government have been able to achieve their objectives.

That is an essential part of our scrutiny processes. In my personal view, we are not at this stage debating whether accession to the CPTPP is a good thing or a bad thing; our starting point was simply that it was the Government’s policy, and it was essentially a good thing. The issue at this stage is whether we can be clear about what the Government are seeking to achieve. The noble Baroness, Lady Hayter, quite rightly raised a number of the issues on which we want clarity. I shall raise a couple more, and I know that colleagues from the committee will have others.

I want to say a word about the big picture. I should register an interest, as recorded in the register, that I am the UK chair of the UK-Japan 21st Century Group. The big picture seems extremely positive. Not only is the CPTPP one of the leading plurilateral trade agreements, but it is an immensely ambitious proposal on the part of government to accede to it. There was a degree of misplaced comment about why we were trying to join a Pacific agreement. The point is that that is where trade happens; it is where our prospects for growth in trade perhaps lie; it is where, when one looks at the shape of international trade growth and economic activity in the decades ahead, we need to be. Given that on current evidence we shall not have another multilateral round in the WTO, the ability of countries such as us to enter into a major regional agreement and increase the scope of it geographically and otherwise is a central way in which we can promote free trade generally across the globe and encourage others to do the same—perhaps even encourage America to do the same at some point.

Our chair raised the question of the impact assessment. I am somewhat sceptical about the value at this stage of such impact assessments. They rest essentially on the assumptions underlying them. An agreement of this kind, with the scale of growth in digital economies and in the provision of digital services and digital trade that it provides for, enables the UK to escape from the otherwise simple fact that we are very long way away from these markets and trade tends to diminish with distance. That may not necessarily be true to the same extent and in the same way for digital trade in the future, and it certainly is not the same in respect of services trade. We are an economy increasingly built on services and digital trade, so, for us, the CPTPP seems to create really serious opportunities.

As a remainer in the Brexit context, I obviously take the view that we should never think of the CPTPP as being, in some sense, a counterpart to reduced trade with the European Union. I want us to have both, and I am sure that we can and should aim to.

We should never underestimate the leverage that the United Kingdom is able to bring to the negotiations ahead. We are major importers. Maybe we would like it a different way, but we are net importers of goods, particularly agricultural goods. The European Union has benefited from that overwhelmingly in the past; many other countries might examine it and have ambitions on that agricultural trade. That is leverage in the negotiations. As we will debate at a different stage in relation to Australia, we should not let the opportunity for others to sell more agricultural goods to the United Kingdom pass without taking our opportunity to ensure that we can sell services and some of our leading manufacturing activities to them, and to have digital trade with them.

I have two points on our report and the Government’s response where more clarity is required. First, the Government have expressed their objective on medicines as being that their cost should not be “on the table”. The trouble is that their cost is on the table; the question is how the Government will manage to take it off. We heard from the British Generic Manufacturers Association that Article 18.53 of the treaty has a process requiring mandatory notification to the patent holder of a marketing authorisation application being submitted for a generic or biosimilar medicine. This would give scope and time for a legal challenge on the use of that intellectual property. That can delay the introduction of a generic or biosimilar medicine; we do not need to speculate about that, because you can see it happening in America and some other jurisdictions. That is important to the National Health Service. We are probably the most successful major health system in substituting generics for branded medicines at an early stage. The reduction in price at the point at which they come off patent is generally something of the order of 80%, so potentially it is of immense importance that this process works smoothly. We do not want delay. We share the concern of the generic manufacturers, as the Scottish Government clearly did, too.

The Government’s response is essentially to say, “Don’t worry. We’ll negotiate our way out of this”, and the implication is that there will be a set of comprehensive side letters. We are reaching the point where the Government should be very clear that this is what we should look for by way of the subsequent negotiation. Frankly, this is one of the areas where our negotiating partners in the CPTPP should not be surprised. They should expect and accept it, and our negotiators would find it easier if we were very clear that this was an absolute requirement.

The second issue is about the investor-state dispute settlement. We essentially asked the Government to tell us their negotiating objective, as it is not in their strategic approach. The implication of their response was simply, “Trust us; whatever we sign up to will, by definition, be in Britain’s best interests and therefore it will be okay”. But we do not know what it is. As a committee, we did not take a view on what the negotiating objective should be. Strictly from a personal view I know from my conversations with colleagues in Japan, who are much governed by the decades of investment activity in this country, that they want investor-state dispute settlement to be incorporated into the agreement. In fact, they may even require it for the agreement to go ahead.

We have been major investors around the globe for generations. We still have major investments, including in a number of CPTPP countries. I am not clear what we are frightened of. We have a right to regulate; there are already very clear provisions in the treaty about the ability to regulate our environmental, health, social and labour laws. As long as those are clear in the treaty, we should go down the path of a dispute settlement process like those being devised under UNCITRAL.

Those are the two issues on which the Government ought to give us greater clarity. Difficult though the ISDS debate is, this is the moment—and the agreement—where the Government need to get off the fence and start telling people what our approach in free trade agreements is to investor-state dispute resolution.

Finally, colleagues in the committee sought clarity in our report from the Government about China and Taiwan. Others may say more about that. Personally—I may need to apologise to members of the committee— I think it would probably not be in the Government’s or British interests for us to say much about China and Taiwan. I think our best interest is to accede to the CPTPP and be on the inside making decisions about this—hoping to do so before the other CPTPP members have made any progress whatever in considering the potential for China or Taiwan to accede. I would rather we were in there talking to the others than outside pontificating about it before we have entered, potentially making difficulties before we have joined the agreement.

This is the first debate of this kind. I hope it will be an opportunity. I encourage my noble friend the Minister to use it not only to restate the Government’s response to our report but perhaps to clarify some of these issues, which we will have to look at in a more challenging way when we see the agreement. I hope that we can say then that the Government have secured their negotiating objectives and that we can commend them under the CRaG process.