EU-Japan Economic Partnership Agreement

Marcus Fysh Excerpts

Tuesday 26th June 2018 Commons Chamber

[Mr Marcus Fysh (Yeovil) (Con)]

It is a pleasure to follow the hon. Member for Dundee East (Stewart Hosie) and to have heard a free trade speech from the Opposition Benches. I welcome my hon. Friend the Minister. Let me also praise my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) for his sterling work on these issues in the Department, and for his engagement with the various Committees of which I am a member.

This agreement is very important to the UK, and I support it. The total trade between Japan and the UK is worth £127 billion, and Leonardo, in my constituency, has a relationship with Kawasaki, producing helicopters, which it would like to expand. As my hon. Friend the Minister said, the Government’s impact assessment forecasts gains amounting to no less than £3 billion from the new agreement, partly as a result of increases in both imports and exports. Cheaper imports help our economy, which is one of the main reasons why we voted to leave the EU and its customs union.

After we leave the EU there will be great opportunities to improve on the Japan agreement, especially in respect of services, in which our economy has a strong interest. The Japan EPA states that world standards should be followed, and demonstrates how we can use methods of regulatory co-operation in the agreement that we make with the EU to guide, smooth and facilitate the handling of goods at our borders with it.

[Angus Brendan MacNeil]

Given the high praise that the hon. Gentleman is heaping on the European Union, might it not be important to have some bits of paper from both the European Union and Japan saying that this relationship could continue—as he has suggested that he would like it to—following the UK’s departure from the European Union? We would not want to find ourselves in a less advantageous position.

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[Mr Fysh]

The hon. Gentleman has made a good point. I shall come on to those matters—by which, as he knows, I am exercised—a little later. I will say, however, that we want a good relationship with the European Union. The fact that we are leaving it does not mean that we should not have that relationship and nurture it.

The Minister rightly pointed out that the Japan deal is an “EU competence only” agreement because of the exclusion of investor-related matters. I noted his statement that the UK would seek a stand-alone investor agreement, and I should like to know a bit more about that. One of the things that concern me slightly is the legal basis that will apply as we leave the EU and, potentially, enter a transition period. In particular, I should like to know what access third parties would have to our markets under EU free trade agreements, potentially without reciprocation.

I understand that the Department has been undertaking bilateral discussions with the third parties on these matters. It is positive to hear about the bilateral agreement that we are negotiating with Japan for after we leave the EU, but I think that during the transition we shall need more clarity. Article 124 of the withdrawal agreement relies on a notification to be given by the EU that the third parties would somehow abide by the arrangement, but it is unclear to me whether that means that we will seek formal third-party confirmation, and, if that is the case, I should like to know what legal basis will apply to enforce it.

We need to caution against the uncertainty that could be extended during this process. We have article 50 running now, we have a potential transition period, and there is talk of potential backstop extensions. During all this, it is proposed that we should be effectively in the customs union and large parts of the single market, but it is unclear what the underlying legal basis would be. Clarity would be much appreciated by business. It is clear to me that no countries will want to conclude deals with us, or even start to negotiate seriously, while they think there is any chance that we will stay in a customs union with the EU, and the Government need to stand firm against any such suggestion. In my view, Labour has cynically undermined business certainty in this regard. Both importers and exporters need clarity on how this process will work.

In a customs union, not only would it no longer be possible for us to improve JEEPA, but we would have no say on our trade policy and no say on our trade defences, and the EU would be able to sell third parties access to our markets.