Transatlantic Trade and Investment Partnership

Lord Lilley Excerpts

Thursday 10th December 2015 Commons Chamber

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

I congratulate the hon. Member for Swansea West (Geraint Davies) on securing the debate and on raising some very important points that this House should consider seriously.

As the last Member in this House, I think, who was involved in negotiating a successful international trade round—the Uruguay round, when I was Secretary of State for Trade and Industry—I am extremely in favour of free trade. I believe there is a strong case for unilateral free trade, although that is not easy to sell to the electorate. A priori, therefore, I approach the TTIP agreement from a position of strong support. I am very suspicious of critics of TTIP who are often simply against trade, simply against markets, simply against choice, simply against business and simply against America.

[Kelvin Hopkins (Luton North) (Lab)]

Will the right hon. Gentleman give way?

[Mr Lilley]

I will not, because the hon. Gentleman may find in a minute that I have answered his question.

I am especially hostile to all those people who press the button on 38 Degrees campaigns that relate to anything against trade and business. I was rather surprised, therefore, to find myself sympathising with four people who appeared in my surgery and announced, to a groan from me, that they were members of 38 Degrees and had concerns about TTIP. They actually raised some very important points that resonated with me from my experience of past negotiations.

I am, of course, totally in favour of removing tariffs, but that is a relatively minor aspect of what TTIP is about. Over the years, we have been hugely successful in removing tariffs and straightforward barriers to trade. They averaged 40% back when the general agreement on tariffs and trade was set up. They were still around 15% when I was negotiating. The tariffs now between the United States and Europe average less than 2%. Half of all goods traded between the two continents are entirely tariff-free. That means, of course, that those that are subject to tariffs can be higher. On clothing, the tariffs are up to 30% and on cars the US levies a tariff of 2.5%. The EU, under the influence no doubt of German car manufacturers, levies a tariff of 10% on imports of cars from America.

Abolition of the remaining tariffs is worth having and would be the final success of GATT. TTIP goes far beyond that, however, and into harmonisation of regulation, rules on investment and rules on procurement. It is true that those sorts of rules can, either by intent or by accident, be used to inhibit trade. We should avoid using them in that way and we should seek, if we can, agreements to anti-discrimination rules so that neither in the business of investment nor procurement would either the United States or the EU be allowed to discriminate against firms from the other side.

My concern, and the concern of my constituents who declare themselves to be members of 38 Degrees, is that we may be creating a bureaucratic and legal process that may escape proper democratic control and may be subject to improper corporate influence. It is also symptomatic, although this is the least important point, of bureaucracies that perpetuate their existence even when the task they were established to do is largely complete. Literate Members of this House—we are all literate—will remember Dickens describing the circumlocution office, whose chief, Lord Tite Barnacle

“had died at his post with his drawn salary in his hand”

defending the existence of an organisation that no longer had any need to exist. Actually, because we have succeeded on tariff negotiations, we should be scaling down, not up, the international bureaucracy and not giving it far more undemocratic powers.

Even during the Uruguay round, I had my concerns. First, I was concerned about accountability to this House. The negotiations were so complex that it was difficult for the House to hold Ministers to account, and it was easy for Ministers to present a fait accompli to this House and say they had achieved the best compromise.

[Jeremy Lefroy (Stafford) (Con)]

Does my right hon. Friend agree that one of the bodies scrutinising TTIP very assiduously will be the US Congress? It would not let things go that it felt put their own people at a disadvantage.

[Mr Lilley]

I would like to hear my hon. Friend say that this House is going to exercise democratic control rather than relying on the American Congress.

Partly because Ministers were so little accountable to this House on this issue—I cannot remember having to respond to any debates on it—officials were very reluctant to be accountable to Ministers. In almost every other area where I was in Government, I thought that British officials were wonderful and that the caricature of them in “Yes Minister” was false, but where an international bureaucracy was involved and there was limited democratic control, they were extremely reluctant to respond to Ministers’ requests about what they were up to or to explain the compromises they were making. I had to argue very hard and strongly to reassert my control over officials. Ultimately, of course, it is up to Ministers to do that.

[Bob Stewart (Beckenham) (Con)]

Does my right hon. Friend think that TTIP will be in any way accountable to this House? It does not look as though it will be.

[Mr Lilley]

There are aspects where I think we are in danger of unnecessarily handing over unaccountable powers, and we should be very careful about doing so.

Negotiations, then and now, are aggravated by the fact that we are negotiating at second hand through the EU and at arm’s length. I campaigned for continued membership of the EU in 1975, and I have accepted that we have to make some sacrifices to have a common market, but we should be aware that we have only second-hand control. My hon. Friend the Member for Stafford (Jeremy Lefroy) thinks that we should probably rely more on the American Congress.

[Jeremy Lefroy]

Will my right hon. Friend give way?

[Mr Lilley]

No, I am sorry. I know that I am sadly misrepresenting my hon. Friend.

All these problems are comparatively easy when we are just dealing with the abolition of tariffs. When we are handing to international bureaucracies and legal tribunals wide areas of regulation, investment rules and procurement, the problems may be greater.

My other concern about bureaucracies is that they may be unduly influenced by corporate lobbying. The less responsive they are to elected Members of this House, the more likely they are to be responsive to corporate lobbying. I am not one of those who believes in the dogmatic Marxist view that the world is run by a conspiracy of corporations and big business, nor that big business always wants to deregulate. In truth, the people in bureaucracies and big business have a common world view and believe that they should run things collectively with as little interference from democratically elected politicians as possible.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Will the right hon. Gentleman take an intervention?

[Mr Lilley]

I will not, I am afraid.

Moreover, big business has a natural interest in regulation being used as a barrier against small businesses trying to enter the market or new businesses trying to innovate.

We should be very careful about creating international bureaucracies outside the control of democrats that may prove less responsive to elected Governments but more vulnerable to corporate regulation. The hon. Member for Swansea West raised the specific issues of fracking and genetically modified foods. I am very strongly in favour of fracking, and very strongly in favour of allowing GM to be used; I happen to have the main research institute on that front in my constituency. Ultimately, these decisions should be made democratically. To me, it is far more important that democracy should prevail than that some international bureaucracy should support my prejudices on fracking and GM, as it probably would. It is up me and people like me in this House to persuade the majority of Members and the majority of the public that something is right, and not to say, “Let’s support an international bureaucracy because it is going to take the decision out of our hands and reach what we think is the right view.”

I am unequivocally in favour of removing tariffs. I would welcome agreement under TTIP to anti-discrimination rules whereby Europe and America agree that they will not discriminate against foreign companies in procurement and investment. However, I would be very careful about creating a self-perpetuating international bureaucracy and handing to it powers that are largely out of the control of elected representatives and too much under the influence of corporate lobbying. At the end of the day, democracy is more important even than free trade.

--- Later in debate ---

[Helen Goodman]

My hon. Friend makes a fair point, but I just want to say that I think that Ministers are inhibited from taking policy action by fear of court and legal proceedings. When I was a Minister at the Department for Work and Pensions, albeit a very junior one, I was interested in considering the entitlements to benefits of migrants from eastern Europe. My officials not only would not make the changes I was asking them to make, but would not even give me advice on the matter. They said, “Minister, to advise you on that would be to advise you on an illegal action.” That is exactly the kind of conversation Ministers will get into with the ISDS.

[Mr Lilley]

indicated assent.

[Helen Goodman]

I am pleased to see the right hon. Gentleman nodding in agreement.