Transatlantic Trade and Investment Partnership (EUC Report)

Lord Tugendhat Excerpts

Tuesday 17th June 2014 Lords Chamber

Moved by

[Lord Tugendhat]

That this House takes note of the Report of the European Union Committee on The Transatlantic Trade and Investment Partnership (14th Report, Session 2013-14, HL Paper 179).

[Lord Tugendhat (Con)]

My Lords, it is customary on these occasions to begin with thanks, and on this occasion I do so in a very warm manner. It is no formality. The committee has been exceptionally well served by its staff and its specialist adviser. I should also like to thank all in Brussels and Washington as well as those in this country who gave evidence, especially those who came from a long way to do so. Last, but above all, I thank my colleagues on the committee for their constructive contributions, their diligent attendance, their support and good company.

Normally, on these occasions, the chairman would talk about the Government’s response to a report but, as this debate is happily being held so soon after publication, the Government have not yet had an opportunity to reply. We shall therefore look forward with heightened anticipation to the Minister’s response to the debate. For my part, I will highlight certain aspects of the report on which I should particularly like to hear from him and which I regard as particularly important. My colleagues on the committee and others who have put down their names to speak will no doubt weigh in on the issues that they consider to be of particular importance.

I begin by reminding the House that today is the first anniversary of the 2013 Lough Erne G8 meeting which, under our Prime Minister’s chairmanship, launched the TTIP negotiations. Mr Cameron described them then as,

“a once-in-a-generation prize”,

that could be,

“the biggest bilateral trade deal in history, a deal that will have a greater impact than all the other trade deals on the table put together”.

Our central finding supports that view, and not just because of the massive figures for the potential economic benefits quoted by the Prime Minister—£100 billion for the EU and £80 billion for the US, figures which we suggest should be treated with a certain amount of caution. There are other reasons as well. One is that TTIP provides the European Union and the United States, while they still account for some 50% of world GDP, with an opportunity to set the template for international trade for a generation to come. In our view, this will encourage China to adopt a more co-operative stance to international trade negotiations, and we think that there is evidence of that already. We also believe that the deal should be structured to enable third parties, including developing economies, to join and to take advantage of the benefits. As I said, this is an opportunity to set the template at a time when the United States and the European Union account for 50% of world GDP. That is not going to last very long and if we lose this opportunity it will not recur.

Another reason why we attach so much importance to a TTIP agreement is that we believe that it could revitalise the transatlantic partnership by adding an economic dimension to the security link that already exists. Then there is the emphasis which is being placed in the negotiations on removing non-tariff barriers and building for the future. Tariff barriers are important, but in transatlantic trade non-tariff barriers are much more so. Their removal could provide a level playing field for manufacturing and service companies on both sides of the Atlantic that would lower costs and open up huge new opportunities for small and medium-sized enterprises as well as for large companies. Large companies know how to get round non-tariff barriers, but for small and medium-sized enterprises non-tariff barriers are often in effect an impregnable wall that is impossible for them to penetrate. Therefore, the emphasis being placed in these negotiations on the removal of NTBs could have very far-reaching effects.

By “building for the future”, I mean establishing a structured dialogue on regulatory matters within which barriers can be progressively removed by agreement over a period of years. This is what is meant in this context by a living agreement, and it is somewhat analogous to the construction of the European single market. I ask noble Lords to imagine a single market, or something analogous to it, that would comprise not just the European Union but the whole north Atlantic area: the United States and also Canada, with which an agreement was reached a short time ago. We believe that TTIP has massive potential of very great significance, both politically, in terms of the European Union and transatlantic relations, and economically, in terms of boosting growth and freeing world trade.

I now turn to some of our recommendations directed at the United Kingdom Government and at others. The first one I shall mention concerns the continued exclusion of financial services regulation from these negotiations by the United States. We say in our report that there is an issue of principle at stake here. In a negotiation between equals it is unacceptable for one party unilaterally to exclude a chapter proposed by another. Of course, there can be hard and difficult negotiations and there is no bounden duty on either side beforehand to reach an agreement. However, for one side at the outset to exclude a chapter of importance to the other is contrary to the spirit in which these negotiations are supposed to be taking place.

That said, and given the weight which the United Kingdom attaches to this issue, the committee does not think that either the United Kingdom Government or the European Commission has as yet made a compelling case for the inclusion of financial services regulation. We look forward to hearing from the Minister today and on other occasions stronger arguments than have been put forward hitherto. I should also like to draw the Minister’s attention to the story in today’s Financial Times on this subject, although I am sure that it has been already. Can he cast any light on that and say whether the FT has it right, as it generally does, or whether, on this occasion, it has it wrong?

My next point relates to agricultural issues, which do not get much coverage in the UK media. Our view is that there will not be an overall agreement unless understandings can be reached on such matters as genetically modified organisms and geographical indicators. These matters are also likely to engage considerable attention in Congress and the European Parliament during the ratification process once an agreement has been reached.

A flagship issue on which the Minister might also be able to report is procurement. This is likely to be a particularly hard fought issue as the European Union hopes to obtain commitments from the various states of the United States as well as from the federal Government. That has been achieved in the Canadian agreement to which I referred earlier—the provinces have signed up. I would be interested to know what price the Minister would give on whether the states of the United States will be as amenable in this matter as the provinces of Canada. As not all European Union member states apply European Union procurement rules as diligently as they should, does the Minister agree with our view that it would be very good for the single market and for this country if TTIP put pressure on them to do so, which would lead to a further development of the single market?

I turn to the industrial and service sectors that stand to gain from an agreement. We were very impressed by the way in which the automotive industry on this side of the Atlantic and in the United States put its case to us. It demonstrated the practical and public benefits that it believes will flow from the agreement and eloquently explained why some of the fears that opponents of the agreement have expressed are unfounded. We came across nothing remotely comparable in any other sector. I urge other sectors of the economy in this country, elsewhere in the European Union and in the United States that hope to gain from a TTIP agreement to look at what the automotive industry is doing and to follow its example.

I conclude with some political points, bearing in mind the fact that the key period for reaching a TTIP agreement, or at least for breaking the back of the negotiations, will be once the European Parliament elections are over, as they are, once the new Commission is installed, after the US mid-terms and before the US presidential election. In that connection, we express concern about the lack of progress in Washington on securing a trade promotion authority. Unless a trade promotion authority is secured, the negotiations are in danger of being kicked into touch before they even start. On this issue, the US Administration certainly talk the talk but have yet to walk the walk. We came across no sense of urgency in Washington on this matter and the impression one gains from a distance is that that sense of urgency is still lacking. I should be grateful if the Minister could cast any light on that.

What is happening on this side of the Atlantic is also somewhat disturbing. In Germany, TTIP has been caught up in the fallout from the Snowden affair. The two obviously bear no relation to each other. Germany would be a big net beneficiary of TTIP but the view has taken hold that resentment over Snowden is a good reason for creating difficulties on TTIP. In France, I understand that there are threats that TTIP will be held hostage to the completely unconnected affair of BNP Paribas’s problems with the financial regulators in the United States. I do not know whether the Minister can cast any light on that.

Meanwhile, in the European Parliament, many of the new populist MEPs are said to be hostile to a deal. Indeed, I read in the media that even the group that includes Conservative Members of the European Parliament will, if the Alternative für Deutschland MEPs join that group, have a majority against the TTIP agreement. I find it barely believable that Conservative MEPs should be in a group that is hostile to an agreement of this sort—an initiative launched by the Prime Minister. I should be grateful if the Minister could tell us something about that.

Against this background, the committee’s recommendations that the Government should put more weight behind their communications and diplomatic efforts in support of TTIP take on additional urgency. Within the United Kingdom, they should formulate a communications strategy around the promotion of TTIP that involves Ministers with sectoral responsibilities, not just Trade Ministers. They should include Treasury, Agriculture and Environment Ministers. All the rest should be involved. In the European Union and the US, it must mean the redoubling of the Government’s efforts to secure the agreement of others. I pay tribute to the efforts that have already been made. I was impressed with the work that our embassy in Washington has been doing, but I had the feeling—I think that my colleagues shared this view—that much of the heavy lifting is being left to the Commission and that the British Government, who have such a stake in the success of these negotiations, could do more.

A successful TTIP would be of great benefit to the United States and Europe as a whole, but to no one more than this country. It is a great international initiative, launched under British auspices and with all-party support in this country. Can the Minister convince us that the Government are putting the weight behind it commensurate with the Prime Minister’s words when he launched the initiative at Lough Erne? I beg to move.

--- Later in debate ---

[Lord Tugendhat]

My Lords, this debate has taken very much the course that I had hoped. Each speaker has approached the issue from an individual standpoint and has emphasised particular aspects of the report and the TTIP negotiations, yet all have cleaved to the central proposition that a TTIP agreement is both very important and highly desirable. I will mention only one of the speeches, that of the noble Lord, Lord Jopling, because of the optimistic tone he took, the way in which he positioned the pace at which this race is run, and how difficult it is to judge in the early stages how it might be in the later stages. He added to our debate a tone that was both optimistic and realistic.

Taken together, however, we confronted the Minister with the full range of issues and questions that were raised in the report. I thank him for his positive and comprehensive response. Both his manner and his content inspire a good deal of confidence in the way that this dossier will be handled by the British Government. He said that other Ministers would also become involved and mentioned my old friend Ken Clarke, whose contribution has been very great. I will press him a little further to say that we also need to hear from the sectoral Ministers—those responsible for the environment and agriculture, Treasury Ministers and the rest. I also remind him that a year ago the Prime Minister launched this initiative at Lough Erne and made it clear that this was a major issue for the United Kingdom and for the European Union. When the Prime Minister attends European Councils and bilateral meetings with other European leaders I hope that he, too, will be able to make it clear that this remains, as he said at Lough Erne, a once-in-a-generation opportunity. I beg to move.

Motion agreed.