Free Trade Agreement: New Zealand

Debate between Lord Purvis of Tweed and Lord Grantchester

Monday 25th October 2021 Lords Chamber

[Lord Grantchester (Lab)]

I am grateful to the Minister for presenting to your Lordships’ House the Government’s Statement from last Thursday on the agreement in principle reached between the UK and New Zealand on the proposed trade agreement. I declare my interest as stated in the register that I have a dairy farm.

On its own merits, this trade agreement adds a further 0.19% of UK trade towards the 80% threshold the Government committed to in their election manifesto. This is not that magnificent but it contains some sensitive elements that are a major concern to our important agriculture industry; these give widespread access to huge quantities of food of varying quality to the UK’s 60 million population in return for some potential opportunities for exports to a population of a mere 4.8 million New Zealanders—somewhat fewer than Scotland’s 5.5 million population. New Zealand ranks 53rd in size in terms of the trade it conducts against the UK’s other trading partners; this was worth £2.3 billion last year. The Statement says that tariffs as high as 10% will be removed. Can the Minister clarify whether the Government expect both imports and exports to grow by 30% in tandem by 2030 as stated in the Statement, or is this figure merely a reflection of the growth the Government expect the New Zealand economy to achieve? What figures have the Government estimated for the beneficial growth for the UK from this trade deal?

The Government try immediately in the Statement to play up the strategic importance of this deal as a significant step towards their aim to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—CPTPP. Somehow it is meant to add momentum for accession to a partnership fraught with doubt at the moment since the USA pulled out of the deal as to whether it might rejoin and on what terms. There is also the question surrounding China: whether it may be invited to join and on what terms. Does the Minister expect the UK’s accession to take precedence over these two important trading nations?

The Government state that they believe that this region will form the basis for massive economic growth, with trading opportunities to a growing middle class of the future. While this may prove to be correct, does the Minister recognise that the region will become ever more dominated by China and how it will operate throughout the region? Are the Government prepared to change their stated position of not entering into a trading relationship with China?

Returning to the specifics of this agreement in principle, its main effects could be severely felt throughout the agricultural industry, especially sheepmeat and dairy. New Zealand has a climate much like the United Kingdom’s. This agreement seems to be a cut and paste from the Australian agreement in principle in that it opens wide the UK food market to huge increases in volumes without any quota restrictions to immediate access. New Zealand can on agreement export four times the quantity of lamb to the UK than it did last year, as much butter next year as it exported to the UK over the last six years, and 25 times more beef, all in year one. What effect does the Minister expect this to have on the UK market and its prices? The National Farmers’ Union commented that the UK will be made available for

“significant extra volumes of imported food—whether or not produced to our own high standards—while securing almost nothing in return for UK farmers.”

Although it may be said to be of huge benefit to consumers, and I do not doubt that it is a great opportunity, there is huge doubt over the standard of food in relation to the high standards currently in operation here. To allay the deep concern expressed far and wide by many organisations towards the Government’s lack of commitment to high standards, shown by their not enacting them on a statutory basis during the passage of the then Agriculture Bill last year and the then Trade Bill this year, the Government have set up the Trade and Agriculture Commission to report on setting up a framework for government trade policy. The noble Lord, Lord Grimstone, announced last Thursday that, at long last, the Government’s response to the report has now been published. Although I have not been able to study it in depth for tonight’s Statement, I welcome that the Government have now finally published this response. My quick reading of it is that the Government do not spell out how these two agreements in principle and how future new trade deals will be assessed by the TAC regarding checks on the standards of imported food.

Are the Government committed through their response to take on board the depth of concern regarding the quantities being imported that might be below the level of UK standards, which it would be illegal for farmers in this country to market? How will the 50% of food sold through catering, restaurants and food services be assessed? Does being consistent with the UK statutory protections mentioned in the Statement really measure up to being equivalent to the standards put on the table by UK producers? Can the Minister confirm that the new statutory TAC, which was also set up last week, will see the texts of these two new agreements in principle from Australia and New Zealand, and be able to report to your Lordships’ International Agreements Committee in time for the deals to be reported to Parliament?

The Government’s response also mentioned that they would respond in due course to the Dimbleby report and set up a White Paper for a future food strategy. Although this is ongoing, I very much welcome the stance the Government have taken on this and look forward to further developments.

[Lord Purvis of Tweed (LD)]

My Lords, I also welcome the Statement. The Minister’s noble friend Lord Grimstone is assiduous in maintaining contact with the Front Benches and keeping us informed. That is great, and I am grateful for it. I would be grateful if the Minister passed that on.

I also welcome an agreement that will reduce tariff barriers on trade with one of our closest allies, and which will allow those delivering services easier recognition of their qualifications and their ability to work across the two friendly countries, making it easier for businesses to invest in new technologies and recognise intellectual property, investment and digital. But, as the noble Lord, Lord Grantchester, indicated, there are elements of concern, some of which are in the agricultural sector. Can the Minister confirm that the statutory TAC will see the texts of these agreements before the conclusion of the legal scrubbing and the formal approval, and before they are presented to Parliament for ratification? There are important consequences for our agriculture sectors that need deep scrutiny.

Although I welcome some of these elements, there is little doubt that the New Zealand Government have welcomed them even more. The Government have negotiated an agreement that provides very considerably greater competitive advantage to our friends. On their own assessment of the economic impact, the Government suggest that the agreement could actually reduce UK GDP over 15 years. The Prime Minister of Australia called this an “All-Black victory”. Coming from a rugby-mad area of the Scottish Borders, it is painful to hear our competitors say that it is yet another All-Black victory.

Over the weekend I looked at the New Zealand negotiating objectives for the UK and the EU. The EU completed its 11th round of negotiations in July. The New Zealanders were asking the same of the EU as they have asked for us. It seems we have given them all that they wanted and the EU is holding out on certain areas. The assessment from this Government suggests that, over 15 years, this agreement could represent a mid-range of 0.00% for UK GDP. For the EU, the mid-range was 0.01%. I would be very interested if the Minister could answer this question: what and where is the Brexit dividend for our trade with Australia and New Zealand if we are negotiating agreements that have resulted in the UK potentially benefiting less than we would have done if we were still part of the customs union and the single market?

It might be that the Government’s position is a cunning loss leader. As the noble Lord, Lord Grantchester, indicated, the Government seem to see this a gateway to the CPTPP. Can the Minister state what the Government’s position is with regard to China’s application? Does the UK support China acceding to the CPTPP?

I see the noble Lord, Lord Deben, in his seat, which has prompted me to ask a question regarding the Agreement on Climate Change, Trade and Sustainability, which New Zealand launched with Costa Rica, Fiji, Iceland, Norway and Switzerland. Will elements of this agreement allow for that agreement on trade and stability to be widened? The UK now has an agreement with four of those six countries, so what is the Government’s position on these negotiations?

We recently debated the UK’s significant trading power with Norway, which represents 10 times the size of trade with New Zealand. In that debate it was startling to find out that the UK had not secured any protection for geographical indicators for our produce. Can the Minister confirm, because it is hard to see it in the documentation that been presented, that the UK has secured protection of geographical indicators with New Zealand? This is one of the sticking points I referred to. It would be very interesting to know whether we have given way on this or whether we have asked for it.

My final question relates to the fact that we now have agreements in principle with Australia and with New Zealand, and we have a continuity agreement with Canada and negotiations advanced for discussion with it, but at no stage in any of those discussions have the Government suggested trade with the Commonwealth as an opportunity we could expand. Our relationship with Australia, Canada and New Zealand—the richest countries in the Commonwealth—is a platform for wider intra-Commonwealth trade. This is very close to my heart, having chaired a commission on Commonwealth trade with the Nigerian Trade Minister. It is a continuing disappointment that before the referendum we heard that Brexit would be an opportunity to widen Commonwealth trade, but in these key agreements with the richest countries in the Commonwealth we have heard nothing. What is the Brexit dividend for trade in the Commonwealth? Will we see a chapter in the New Zealand agreement looking at the expansion of wider Commonwealth trade?

Free Trade Agreement Negotiations: Australia

Debate between Lord Purvis of Tweed and Lord Grantchester

Thursday 24th June 2021 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for his letter and the Government for their update on the progress of the UK’s trading relationship with Australia. I had been waiting for the detail, following the announcement at the end of the G7 conference, as it seemed from reports that nothing had been signed and was unlikely to be before October or November this year. The information was released under the cover of darkness, on the night of 17 June. I imagine this was the time that Tony Abbott, on behalf of the Secretary of State, signalled agreement with the Australian counterpart, Dan Tehan. The information reveals it to be a series of commitments that the Government have entered into to agree many details yet to be worked up. Can this be described as “historic”, as claimed in the Statement?

These commitments were translated into negotiating wins for the Government: tariff reductions for UK exports of food, drink, clothing and cars; provisions for the under-30s to work in Australia to be extended to those under 35; and reductions in barriers for services exports, and data and digital exports. I certainly congratulate the Government on them, but none of these so-called wins has ever been controversial or problematic for Australia. Its tariffs on UK goods were already very low, and making it easier for young people to work in Australia is a positive boost to the Australian economy, particularly its farming industry, which relies on casual labour from British backpackers.

What do the Australians make of these commitments? Would the meaning of “historic” be revealed on their website? Indeed, yes, as the Australians could not believe what they had achieved. Yes, it was only, as they put it, an agreement in principle—AIP—but, to them, these commitments are locked in to benefit Australian farmers and workers, as well as their consumers. We begin to see a different perspective: one that highlights the fears of the farming industry throughout all parts of the UK, and perhaps suggests why the Secretary of State for Defra was so alarmed in Cabinet.

The Government describe the agreement on beef and sheep as securing 15 years of capped, tariff-free imports, while the Australians state it as 10 years, as the subsequent five years include enough significant extra volumes as to be pretty meaningless. But the cap on volumes rises in significant leaps, all without tariffs, in complete contrast to the agreements the Australians had achieved in recent deals with Japan, China, the USA and South Korea, where tariffs on their beef were reduced gradually in the various deals between 10 and 18 years, with additional safeguard triggers.

This deal has historic elements for Australia. The trade expert and former Australian negotiator, Dmitry Grozoubinski, described it as follows:

“I don’t think we have ever done as well as this. Getting rid of all tariffs and quotas forever is virtually an unprecedented result.”


Has the Minister worked out what this means for the UK? We await the impact assessment and the reconstitution of the Trade and Agriculture Commission to assess the AIP, as required in the Agriculture Act and Trade Act, as secured by your Lordships’ House last year. In the meantime, it seems to mean that Australia would be able to increase its beef exports to the UK to more than 60 times their 2020 levels in the first year before any quota would apply. Australia could export four times more beef to the UK in the first year of the deal than it did to the whole of Europe in 2020 before any quota would apply. Indeed, the UK would leap from 27th place to sixth in the global ranking of Australia’s biggest beef exports markets if Australia were to use its full quota in the very first year.

This commitment offered to the Australians has triggered an array of angry responses from agriculture in all corners of the UK, especially the devolved Administrations, where agriculture is such an important part of their economies. The Welsh have particular concerns for their lamb, and Northern Ireland for its dairy trade. While Scottish whisky producers will be pleased, Scotland’s agricultural input suppliers will be concerned, along with its beef producers.

Environmental groups, animal welfare groups, consumer groups on food and nutrition, and trading bodies are all concerned: Greenpeace, the World Wildlife Fund, Compassion in World Farming, and the National Trust are all alarmed. Sustain points out that Australia has no model conditions for animal welfare and no federal animal welfare legislation, opting instead to devolve responsibilities to states and territories. The world animal protection index, which ranks 50 countries according to their legislation and policy commitments to protect animals, has awarded Australia a D mark, versus a B for the UK. Being the first deal that the Government have signed after leaving the EU, even if only in principle, how will they negotiate their further ambitions to achieve deals with other countries, such as America and India? The Statement proclaims that this deal is only a precursor to the CPTPP deal that the Government have set their ambitions on next. Australia is committed to helping the UK sign up to this existing CPTPP deal without any changes or protections, as a deal taker not a deal maker. Do the Government see UK agriculture as a sacrifice worth giving up on the way to this further agreement?

The Government are truly making a hash of Brexit. The UK has left the EU, to be sure, but so far the Government see more mileage in being anti-EU than in being pro-British. The Secretary of State compared this deal to trade with the EU in her replies last week in the Commons, but our neighbours in Australia are not 20 miles away. First-quarter exports to Europe were down £2 billion during the first part of 2021. Sales of dairy products plummeted by 90% after the trade and co-operation agreement was signed at the last minute in December. As far as Europe is concerned, it seems that nothing is agreed until everything is agreed. As far as Australia is concerned, everything is agreed while nothing is detailed.

The Government are hopeless on trade after Brexit. Northern Ireland is in turmoil. The fishing industry, whose voice was so strongly for Brexit, has already been sacrificed. The steel industry is collapsing and farmers who also wanted Brexit to be successful for them have already had £255 million slashed from their budgets this year in reductions to BPS payments. The Welsh football fans are certainly unhappy that they cannot visit Amsterdam to support their team this weekend.

Many important questions remain. I finish by asking just a few. The interim Trade and Agriculture Commission made a series of important recommendations, including for the establishment of a new national framework of food and farming standards, against which all future trade deals could be judged. Can the Minister explain why there has not been a formal response to the commission’s report and why that national framework of standards is not yet in place? Have the Government made plans regarding a proper labelling of Australian beef, so that consumers can identify it clearly on menus and supermarket shelves? Have the Government demanded that the Australians raise their standards in correspondingly high leaps over the years in tandem with the increase in their agricultural supplies? Finally, what will be the cumulative impacts from all the deals that the Government plan if these follow the precedent of the Australian deal, or do the Government have plans to rescue the farming industry from the disaster that it sees ahead?

[Lord Purvis of Tweed (LD)]

My Lords, I thank the Minister for his letter of 18 June with a copy of the agreement in principle and an explainer. He is very good at keeping the Front Benches informed in the House, which is appreciated.

These Benches that I speak for want more free, fair and open trade, for the UK to export more and for UK consumers to have a wider choice of higher-standard goods at globally competitive prices. We want trade deals to reflect growth in UK export potential, but we want them strategically used for wider social, climate, human rights, labour and environmental standards. We do not want them to be an opportunity for the UK to miss, to provide market access for other countries without commensurate or better gains for us.

The desperation of this Government to have any deal, no matter what, is noted among our trading partners, and they take advantage. A bad deal is better than no deal, it seems. On the much-heralded £15 billion Japan deal, £13 billion was for Japan and £2 billion for the UK. On this deal and the agreement in principle, UK exports to Australia will go up over 15 years by £500 million, the Government say, while Australian exports to the UK will go up by £700 million. That is about three royal yachts. The telling point on market access was in the bullet point that

“both sides formalise their agreement on splits of TRQs at the WTO and Australia withdraws its objections to the UK’s goods schedule.”

That was the giveaway. Australia has got exactly what it wants. It has withdrawn its objections at the WTO—objections which, I remind the House, this Government said had no foundation. It turns out that our negotiation had rather weak foundations. I co-chaired, with the Nigerian Trade Minister, a commission of inquiry looking at areas where we can expand Commonwealth trade. Why is there no reference to the Commonwealth in this agreement?

However, let me quote positively from the website of the Australian Department of Foreign Affairs and Trade:

“an ambitious and comprehensive FTA will assist with post-pandemic economic recovery by providing new opportunities in a highly significant market for Australian goods and services. It will provide Australian exporters with a competitive edge and more choices about where they do business. Australian consumers and companies stand to benefit through greater choice in goods and services at lower prices.”

That is the headline of the Australian Government of the agreement with the European Union, now in its 11th round. The Australian Government go on to say:

“We want an FTA with the EU to set the benchmark for what can be achieved between like-minded partners.”


The narratives for the EU and the UK are remarkably similar. The UK scoping exercise for this, an ambitious and comprehensive FTA for Australia, said that it would bring GDP growth ranging from 0.01% and 0.02% over 15 years. The EU scoping exercise in 2018 said that

“an ambitious and comprehensive FTA will bring about GDP growth ranging from 0.01% to 0.02% over 15 years.”

Why has a Brexit agreement no greater benefit than we would have had anyway? On goods, we are expecting an increase in exports of up to 7.4%, which is of course positive. In the Government’s own document, Australia is looking for exports to the UK to increase up to 83.2%. Why is there such a difference? It is estimated for the EU scoping exercise that EU exports to Australia could go up under their agreement by one-third. Why are UK exports up by 3.6% and European exports up by 36%?

On legal services, the Minister said to me on Tuesday that:

“It will contain provisions on legal services, as we have heard, but it will not confer the automatic ability for Australian lawyers to practise law in the UK.”—[Official Report, 22/6/21; col. 163.]


The fourth bullet point of the agreement in principle mentions:

“Legal services provisions which will both guarantee that UK and Australian lawyers can advise clients and provide arbitration, mediation and conciliation services in the other country’s territory using their original qualifications”.


I regret to say this, but I believe that the Minister misled the House. I hope that he has an opportunity to correct that at the Dispatch Box today.

Can the Minister explain why in the agreement there will be a chapter on mobility, which could well be positive, about companies sponsoring

“visas committed in the FTA without first having to prove that a national of the country in question could not be hired to do the job, through the reciprocal removal of economic needs”?

Is this now a direct repudiation of the points system that the Home Office has put in place, and, which will be the case—the UK Home Office points system for Australia or this trade agreement? On goods, during the trade negotiations the Government’s press release in November said that the Government had a suite of tools including tariffs, tariff quotas and safeguards to ensure that British farmers, with their high standards, were not unfairly undercut in any trade deal. However, the NFU said that it was not consulted, and none of these methods seems to have been used.

We know that, according to Food Standards Australia New Zealand—FSANZ—around 40% of cattle are given hormone treatment, but the quotas for imports are currently for accredited hormone-free cattle. There is no differential quota guarantee in this outline agreement; will it be in the final agreement? Neonicotinoids are used on Australian crops—cotton, canola, cereals and sunflowers—but their use in the United Kingdom is banned. What guarantees are there that we will not import goods for which illegal pesticides have been used as part of their production? What guarantees are there that we will not import sows that have been reared in sow stalls, which have been banned in the UK since 1999? What guarantees are there that pigs raised by intensive farming methods and chickens reared in battery cages, which we have banned, will not be imported?

Finally, it is of course a fallacy to suggest that, if we are critical of this agreement, we are critical of free trade. We are critical of the Government’s ability to negotiate good trade agreements. If imported goods are cheaper, the Government say that they will safeguard against undercutting—but that is not in this agreement. Workers with skills having to get a visa because of economic need is not mentioned in this agreement. The continuing protection against hormones and pesticides that Defra has indicated is also not in this agreement. Who is in charge of our agriculture, immigration and economic policy?