Japan Free Trade Agreement

Lord Stevenson of Balmacara Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I congratulate the department and its officials on reaching this agreement in principle with Japan. It is a much-needed relief for all those UK companies that would have seen their trade with Japan reverted to WTO terms if the agreement had not been reached by the end of the transition period.

It is also a welcome benefit at a time of great economic uncertainty for the UK’s digital and tech sectors and for other key exporters which, we assume, will benefit from greater access, faster tariff reductions and stronger GI protections under this agreement than they enjoyed under the previous EU-Japan agreement. However, I hope the Minister will accept that in the absence of sight of the actual treaty text, and a full updated impact assessment, there is much about the UK-Japan agreement that we still do not know until these documents are published.

I welcome what is said in the Statement about the extensive scrutiny of the deal itself that will be offered to the International Trade Committee. I also note that there is a reference to an independently scrutinised impact assessment that the department will produce, so that

“parliamentarians are able to interrogate the deal and prepare a report that is debated in Parliament.”

I ask the Minister to confirm that this offer is also available to the International Agreements Committee of your Lordships’ House, and to confirm also that the timing of these releases of documentation will be such that the necessary scrutiny can be done well before the ratification processes of the CRaG Act are triggered—as of course will be the case in Japan, whose Parliament has to ratify the deal before it can be signed.

I have four other questions. The Statement says there will be a tariff reduction on British exports of food and agriculture, which is welcome. However, presumably this is contingent on sorting out the shared quotas we currently have under the existing EU FTA. For example, does this mean that exports will continue to be restricted unless and until other EU countries fail to use them?

The Statement talks up a new area of co-operation with Japan in the automotive and electronic sectors and suggests there will be considerable growth in new areas such as aeronautics. But, as we discussed in an Oral Question earlier this week, is this not likely to be heavily contingent on final decisions on accumulation and rules of origin after the transition period ends? Can the Minister update us on progress in this area?

I ask the Minister what ISDS clauses are contained in the final agreement. If there are any, how can the Minister justify such secretive and unwelcome provisions when there are ample opportunities for agreed parties to use the normal legal processes operating in both our countries?

Finally, can we get behind the headline comparisons that were fed to the press about the benefits this agreement will produce for the UK? Would the Minister agree with me that the correct comparison is what would have happened if we had simply rolled over the existing EU-Japan deal? To put it another way, can the Minister say what we will be able to do after this FTA is ratified that we cannot do now under the existing EU-Japan FTA—and can he quantify that?

As welcome and necessary as this deal with Japan is, it is still nothing like as important, in terms of our global trade, as reaching a deal to maintain free trade with the European Union. Our trade with Japan is worth 2.2% of our current global trade, which does not come anywhere near the 47% that we have with Europe. That is why commentary on this deal from Japan suggests that the deal that will determine the future of the investment and jobs that Japanese companies bring to UK communities is not the FTA we have just signed, but the one we hope to sign shortly with Europe.

[Lord Purvis of Tweed (LD)]

My Lords, because these Benches want the UK to prosper, we welcome the agreement. However, rather like industry groups, we do so not by hailing it but by sighing a collective sigh of relief that we have secured simple continuity of the benefits we secured as part of the EU. It has come to this—simply securing the trading terms that we had as a member of the EU now that we are out of it was described as “heroic” by a Conservative MP in the Commons on Monday.

It is customary to thank the Government for advance notice of a Statement’s accompanying published documents. However, as referred to, in this case it would have been good to have notice of the text of the agreement—which has yet to be signed—so that we could offer proper scrutiny. In Japan, both Houses of the Diet will need to approve the Cabinet’s decision to endorse the treaty. That is not afforded to our Parliament; we will not have an opportunity to do so. British parliamentarians did with the EU agreement. However, as I said last week on the Trade Bill, the Government seek continuity on most things but not on parliamentary accountability. Can the Government Whips indicate that we will have a substantive debate on this agreement in this House before the Government indicate that they seek ratification?

The Minister gave specific details of the agreement when answering questions on Monday, but we have had no sight of the agreement in order to consider the context and scale of what the Minister said. Like the noble Lord, Lord Stevenson, I welcome what Liz Truss said on Monday in the House of Commons, with regard to a copy being given to the International Trade Committee. I also would like to know whether that will be afforded to our committee, the International Agreements Committee, and when this will be done. Will the text also be made available, as is common in other Parliaments, to Front-Bench spokespeople on a private briefing basis at the same time as it is sent to the committees? What will be the timeframe between it being sent to the committees and a debate in this House?

We have to reserve judgment on the wider benefits the Government claim for the agreement until we have seen them. Over recent months, we have seen the enormous capacity of the Government to oversell and then underdeliver. For example, there was massive fanfare over securing tariff-rate quotas for British agricultural products in this agreement, but then reports suggest that we have actually secured access to any non-utilised quota for EU goods.

With even greater heralding activity, the press release announced:

“New protection for more iconic UK goods … from just seven … to potentially over 70 under our new agreement”.


Understandably, MPs in the Commons lined up to welcome this, but can the Minister confirm that the agreement has no new protections creating GIs, as Japan is under no obligation to expand further its recognition in the future to beyond what we have in the EU deal? Rather, it will simply be able to consider further requests from the EU to a limit of 70.

If it transpires that this spin—which has also described the agreement as “gold standard”—is actually just a commitment to talk about further potential agreements, such as geographical indicators, the Government are building up a huge amount of expectation for very limited benefit. Given the fact that Japanese company Hitachi’s agreement for nuclear power on Anglesey is likely to have a bigger negative economic impact on the United Kingdom than any benefits of this trade agreement, context is all.

On state aid, the Minister referred to a Question I asked on Monday, and he said clearly that this a perpetuation of EU rules which we will be bound by. Can the Minister be clear and tell the House whether it will require domestic state aid legislation to implement this and, if so, will it be a continuation of the EU regime? When will that be brought forward? On tariffs, what will the overall average Japanese import tariff on UK goods be under this agreement, compared to what we have at the moment?

Finally, the Government said that the benefits are likely to yield £15 billion to the UK economy, but they have not given a timeframe. I looked at the Government’s scoping paper, and it said that that source simply stated over “the long term”. The source for that, in the footnote, was internal DIT analysis from 2018. Will the Government publish that? What is the timeframe for that £15 billion—with no caveat—the Government have announced, overselling and underdelivering again? What is the figure? The Government did not quote from that scoping exercise that that figure does not take into consideration the economic impacts of Covid-19, so what is the real likely benefit?

If we are to see the benefits from this agreement, which we wish to, the Government have to be open and transparent. So far, that transparency is lacking. I hope that the Government will be far more open in the coming weeks.