Australia Free Trade Agreement

Lord Oates Excerpts

Monday 11th July 2022 Lords Chamber

[Lord Oates (LD)]

My Lords, I declare my interest as a member of the UK hydrogen commission. It is a pleasure to speak in this debate and, as a member of the International Agreements Committee, I pay particular tribute to our chair, the noble Baroness, Lady Hayter, and to our committee clerk Jennifer Martin-Kohlmorgen and her team for producing such an informative report.

I regret that the noble Lord, Lord Grimstone, has stood down from his ministerial post, although, like the noble Baroness, Lady Hayter, I am surprised that it was because Boris Johnson was leaving rather than because he was staying—a decision entirely beyond my comprehension, I have to admit. Nevertheless, the noble Lord was a capable Minister who engaged constructively with our committee, and we will miss him in our deliberations.

I intend to focus most of my remarks on the environment chapter of the Australia FTA but, before I do so, I want to touch briefly on the wider context of the deal and the circumstances in which it was concluded. We are debating this free trade agreement against the backdrop of a catastrophic decline in the UK’s trade performance. Just last month, we learned that the current account deficit stood at a staggering 8.3% of GDP in the first quarter of 2022—the worst figures ever recorded. This has further weakened sterling and added to upward pressures on inflation.

As Howard Dean, the former candidate for the Democratic presidential nomination, once remarked:

“Unfortunately, ‘I told you so,’ is an incredibly unsuccessful campaign slogan”.


Of course, he is correct, yet the Brexiteers in this House and the other place cannot be allowed simply to slip away from the devastating consequences they have inflicted on our country and its economy; nor is it any good for them to try to blame Covid for our woes, because our trade performance is shocking not only in absolute terms, it is even more so in comparative terms. The Government’s own assessment predicts that the UK-Australia FTA will have a positive impact on GDP, as we heard from the noble Baroness, Lady Hayter, of 0.08%. This is a welcome, albeit modest, contribution to our national wealth but it hardly lives up to the deluded imperial nostalgia of the Brexiteers, who seem to think that the old empire was just waiting to fill the trade gap left by Brexit.

The biggest impact of the FTA, as we heard from the noble Duke, the Duke of Montrose, will be found in agriculture, where tariffs will, in effect, be removed altogether, albeit with some emergency brake safeguards. The clear beneficiary of this part of the deal is Australia because it is a major agricultural producer gaining access to a much bigger market, and because UK farmers already had tariff-free access to the Australian market. Of course, all trade deals are trade-offs and, I hope, mutually beneficial ones. But with such a major concession on offer to Australia, it is regrettable that the UK conceded a potentially strong negotiating position by making its desperation for a deal so glaringly evident.

One area where we could and should have insisted on more progress is in relation to the environment chapter. There were certainly positive aspects to this chapter—for example, as the report notes, the RSPCA’s evidence to our committee stated that the language on the conservation of marine ecosystems was particularly good—but, none the less, stakeholders viewed the chapter overall as, at best, a missed opportunity.

Certainly, the contrast between the respective chapters in the New Zealand and Australia FTAs, which is highlighted in our report, is stark, particularly in respect of fossil fuel subsidies, carbon pricing and trade in environmental goods. Notably, the Australia chapter does not include specific reference to the temperature goals of the Paris Agreement, which, it is reported, were taken out on the insistence of the then Australian Government.

Although the UK’s impact assessment finds that UK-based production emissions should remain largely unchanged, our Government do not seem to have taken enough account of the dangers of carbon leakage and the reliance of the Australian power sector on dirty coal. As the noble Baroness, Lady Hayter, has said, we urged the Government in our report to take advantage of the election of the new Australian Government to look at this chapter again.

The evidence we received from a range of stakeholders indicated concerns about the precedents that this FTA could set in future trade agreements with trade partners with low environmental standards, such as the United States and Brazil. The lack of an overall trade policy means that the Government do not seem to be gaming the impacts that concessions to achieve quick-fix FTAs such as this one will have on our future negotiating position. It is hard to imagine the US, for example, agreeing to a future trade deal that had more onerous environmental demands that those agreed with Australia.

In addition, the Government did not take advantage of the opportunity to conclude agreements on green technology and on green energy co-operation. One area we might have looked at is green hydrogen. This is an area where mutually beneficial agreements might have been arrived at, given that the UK is the home to cutting-edge technology—we have in Sheffield ITM Power, which is one of the world’s leading manufacturers of electrolysers used in hydrogen production—and Australia has huge interests in hydrogen production through solar and wind. But these sorts of opportunities seem to have fallen victim to the desire for a quick deal, rather than a comprehensive deal.

Given that the UK’s net zero commitment is a legally binding obligation on our Government, it follows that it must be their central policy objective over the years to 2050. But somebody needs to inform the trade department of this fact, so that environmental objectives are not seen as a “nice to have” but are regarded as central to our trade policy.

As a liberal free trader, I conclude by welcoming this trade agreement, despite its flaws. However, I hope that as this is our first full trade deal post Brexit, the Government will take the time to absorb the negotiating lessons they have learned, and in particular that they will recognise the need in future not to appear such an eager, if not desperate, suitor. I hope that in his reply, the Minister will reflect on which lessons the trade department intends to take on board as a result of these negotiations—the first, as the noble Baroness, Lady Hayter, said, conducted by a British Government since 1973.

I hope the Government will also recognise that improving our trade position will require much more than a flurry of quick-fix trade deals. It requires an overarching policy—as the noble Baroness, Lady Hayter, stressed—that has a strong focus not just on concluding trade agreements but on trade promotion and building the enduring relationships with business and with countries around the world that help sustain and nurture trade and investment. At the moment, too many nations regard us as an unreliable partner, unwilling to enter into real partnerships or engage on equal terms.

Our country and economy are in deep, long-term trouble: productivity is stagnant, GDP growth is anaemic and in the G20, only Russia’s economy is predicted to fare worse than ours. Our trade position has deeply deteriorated. None of this will be fixed by the fantasy economics that most of the Tory leadership candidates seem determined to peddle. Unless we are able to restore our trade position and provide a concerted solution to the structural problem of low productivity, we will find ourselves an ever-poorer and more unhappy country.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

Okay, so that is a series of questions. I am going to agree to write to the noble Lord on that point because time is running out and I want to cover a number of other issues.

When it comes to animal welfare standards, I particularly want to address remarks made by the noble Duke, the Duke of Montrose, and the noble Baroness, Lady Liddell, because I want to quote from the agreement:

“Each Party shall endeavour to ensure that its laws, regulations and policies provide for and encourage high levels of animal welfare protection and shall endeavour to continue to improve their respective levels of animal welfare protection, including through their laws”.


Therefore, I hope that we have given reassurances on animal protection, in not just this debate but others.

On ISDS, in response to the point made by the noble Lord, Lord Kerr, I note the committee’s recommendation that we clarify our position on ISDS and I am happy to confirm that in light of our investment relationship, the UK and Australia decided it was not necessary to include ISDS in this new agreement. What we did do is negotiate a dedicated state-to-state dispute settlement chapter; this is the central pillar of our agreement that will provide an effective method for enforcing commitments made in the deal.

Very quickly on CPTPP, there is a lot I could say about that, but I do believe that this is a historic deal, a very important deal, and will lead into this, as the noble Lord, Lord Bilimoria, has also said. I think I should conclude on that; I feel that there is a letter that the House is due from quite a few questions that have not been answered. I think I should finish, if I may do this, so—

[Lord Oates (LD)]

On the specific point of the letters, could the Minister give an assurance to the House that all these letters will be received by Members of this House before the end of the scrutiny period?

[Viscount Younger of Leckie (Con)]

I will guarantee to write a letter—I will write one letter—on the basis of this debate but I cannot guarantee when it will come, if that is the question that the noble Lord is asking; as soon as possible, I will write a letter.

Just to conclude, this is a bold and ambitious FTA that will carry both the UK and Australia forward into a bright new future, and we all look forward to it being brought into force.