Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [HL]

Lord Livingston of Parkhead Excerpts

2nd reading
Tuesday 21st November 2023 Lords Chamber

[Lord Livingston of Parkhead (Con)]

My Lords, I would like to join others in welcoming my noble friend Lord Cameron of Chipping Norton to this House. Like many others, I am here due to him. I had the great honour of being appointed as Trade Minister, so it is very appropriate we are talking about trade, particularly as my noble friend Lord Cameron was such a great proponent of trade. I joined him on many export missions around the world. Also, if there was ever somebody considering investing in the UK, the Prime Minister, as he then was, would always make time to see them. The UK during that time was the number one by a very long distance for FDI in Europe. I thank him and I welcome him. I would also like to congratulate him on his outstanding maiden speech; it is not a surprise—it is almost as if he has done this sort of thing before.

Turning now to this Bill, it is, as many noble Lords have commented, an unusual Bill, as it relates to technical implementation and there is a lot of scrutiny that still has not happened. However, I think it is important to look at the agreement as a whole and ask: why does it matter? First of all, as my noble friend Lord Lamont referred to, it matters because free trade is being pushed back upon. We have to speak up for free trade in the UK.

Why is free trade important? First, it is good for consumers—the people who seem to be forgotten so often—who get more choice and cheaper products. Competition is good for consumers. Free trade has been, is, will and would be good for consumers.

Of course, free trade is good for our exporters, giving them access to fast-growing markets and inward investment. It also raises the quality of our own industry. Exporters produce better products; they are more competitive. When they compete against other products coming from around the world, they improve their own standards, again, to the benefit of UK productivity —something which we clearly need.

Another area that often gets forgotten is that free trade is important for the development of countries. While most countries in this agreement—though not all of them—are pretty advanced, any trade agreements we do around the world, particularly the number we have in Africa, will raise standards in these countries and also help with their development. This may be even better than straightforward aid. Trade and aid together make a big difference to countries.

The President of South Korea will be speaking here; we can see what this country has done over the last five decades as a result of becoming a trading powerhouse. This agreement is also important for international relations. We will be getting closer to many countries with which we have shared and similar interests in a very important part of the world.

This particular agreement—I will probably it call “this agreement”, rather than CPTPP, as most people seem to be struggling over it no matter how many times we try and say it; it is not the best marketing brand, I have to grant you—is a good agreement. One of the things we forget is that we are acceding to this agreement; we were not part of creating it. To get such a good agreement is a great credit to the Department for Business and Trade and to the civil servants and the Ministers involved in it. I think it is an excellent agreement. We know, of course, that it gets a big reduction in tariffs on goods. It covers data and critically, services, for the UK. The UK, as has been said before, is the second-largest exporter of services in the world. It is a strength, and this, excellently, covers it.

On government procurement, UK government procurement has been reasonably open for some time, but not all other countries are the same. One of the things I agree with the noble Lord, Lord Frost, on—there were not many—is rules of origin. The rules of origin are very helpful, particularly in building up supply chains through various countries, as it can be seen would happen with this trade agreement. It is very helpful to have cumulative rules of origin.

Technical barriers to trade are also being dealt with as part of this agreement. One thing that is often not understood with trade is that tariffs are, frankly, only part of the story. The barriers to trade in areas of conformity are very important as well, and it is excellent that this is being dealt with and will hopefully be taken further from here.

The agreement also protects UK standards. One thing we should remember is that other countries look at the UK and are not happy about certain things that the UK produces. Haggis is banned in the US; they think, for some reason, that it contains things that are not healthy. It is remarkable. Marmite is banned in many countries. So, while we will be able to maintain our own standards, it is important to understand that it is not only the UK that looks at standards. As we are doing a trade deal with countries like Australia, New Zealand and Japan, I would much prefer that we are looking at maintaining standards together with them, rather than, for instance, with China, or others doing it with China. Perhaps we will set a higher world standard than we might otherwise.

The NHS is also being protected. The accusation that the NHS is going to be privatised is a bugbear that always comes around. We have had it with every single agreement. In every agreement that the UK Government have been involved in, it has been front and centre that the NHS is not an area in which privatisation would form any part of the agreement. In fact, I remember in negotiating TTIP, as it was then, the US Government said that they did not want the NHS to be part of it, the EU said the NHS would not be part of it and the UK Government said the same. Yet in every single discussion we heard, “The NHS is going to be part of it”. The NHS is not going to be part of this agreement either.

I would also like to say something about ISDS, because this is something that gets a lot of criticism, like it is just a bad thing. Why do we have ISDS at all? It is because companies invest in a country in the knowledge that, should that country’s domestic legislation attack them or their country in particular, they cannot always, particularly in certain types of countries, rely on domestic courts to protect them. That is why you have some supranational panel.

The UK has about 90 ISDS agreements already. According to the review from the UN’s trade body, UNCTAD, between 1987 and 2020, 90 UK companies took action under ISDS clauses against countries outside the UK. How many were taken against the UK? One. How many has the UK lost? None. The reason why we do not lose these is that we respect laws and treat countries favourably. That is why we should not be that bothered about Australia and New Zealand—but there are other countries where it is more problematic.

Under that UNCTAD review, Argentina has had 62 cases against it. It has been involved in expropriating without compensation, and that is the sort of thing on which people win cases under ISDS. There are some spurious cases under ISDS that people tend not to win, so just quoting cases where people have tried to take action and not won is not sufficient. I am a big supporter of ISDS and it is good that we have access to it, particularly through a modern ISDS clause.

We know that this not a replacement for the single market, so this is a bit of a spurious discussion. Of course, it is not as big or as good, but it is pointless repeating that. If you look at the countries with which we might want to do trade agreements, the US has put up the “closed” sign on trade deals with anyone. That is a great pity and a great failure of the US. It is about the one bipartisan thing you will see in the US; it does not want to do trade agreements. We will talk about China later; it has particular issues. India will be a slow process; of course we would like one with it. Basically, we are hitting most of the next tier of countries: Japan and Canada, for example.

We may be forecasting only a relatively small enhancement to GDP, but if noble Lords use the word “only” followed by a number involving billions, they have to be a bit careful—it is worth billions. These forecasts are based on relatively static assumptions. Their real focus should be on how we can get more from this agreement than these static assumptions would say. The President of South Korea was not far from here earlier, so it is worth reflecting on the agreement with his country. There was trade agreement between the EU and South Korea in 2011, when my noble friend the Foreign Secretary was the Prime Minister. Since then, our trade with South Korea has gone up by a factor of roughly three times, so trade agreements can make an enormous difference.

What the Government need to do is focus on more than this agreement, with all its perfections and imperfections; however you debate it, it is only a very small part. We need two things. First, we need a proper activation programme for the Government. That is what you would do in business: you would say, “I have an agreement; now, how do we take advantage of it?” Secondly, we need a UK education programme. The FSB, in giving evidence to the International Agreements Select Committee, highlighted that small companies do not know about trade agreements and the opportunities arising from them. We have to get out to see them.

UK middle-sized companies are also laggards. When I was Trade Minister, only one in six UK middle-sized companies exported outside the EU. You may say that that was something to do with the EU, but the figure was one in four in Germany and, even more shockingly, one in three in Italy. UK middle-sized companies need to be helped; the big companies can generally do their own thing.

Generally, businesses are also not aware of what is on offer from the Government. The Government provide a lot of help and support, but they do not make businesses aware of it. It was a failure in my time, and it remains a failure. We need to ensure that there are sufficient trade staff at our embassies and consulates. We need to ensure that there are government-supported trade trips to those countries in the sectors that are important: decide what they are and have a focus there. I would like to hear my noble friend the Minister talk about that later. We need support for trade shows, and year after year, not just once. My noble friend Lord Marland talked about trade envoys; they have done a tremendous job, so we need to reinforce their work in these countries.

Remember that trade is not just for the Department for Business and Trade; it is a pan-government effort, so we need, for example, the Ministry of Justice to push legal services, the Treasury to push financial services and Defra to push food exports—although, perhaps we should steer clear of too many speeches about cheese, as they have not always gone well. We also have to ensure that we put a lot of effort into attracting inward investment from these countries. Canadian and Australian pension funds are two of our biggest inward investors; we have to do more. This is a multi-year effort, and we need to move forward with consistency. I would like my noble friend the Minister to talk about whether the Government will set targets for how much we can do for both FDI and exports.

I know I have taken up too much time, but, finally, we also need to strive to make this agreement wider and deeper. We need to work with more countries. China has been talked about, but it should be remembered that this agreement has four of the Five Eyes countries—or eight of the 10 eyes, as you might call them. I suspect that we, along with Japan, will have similar interests regarding the role of China. Many other countries are interested in joining.

We have to work more on services, and we have to do more on product conformity, so I hope that this enabling Bill will move swiftly through the House and that we can move on to the important things. We do not know what the ceiling is on what can be achieved, but we will be better as a country if we look outwards and upwards, rather than downwards, backwards and inwards.