Draft European Union (Definition of Treaties) (Economic Partnership Agreements and Trade Agreement) (Eastern and Southern Africa States, Southern African Development Community States, Ghana and Ecuador) Order 2018

Mark Menzies Excerpts

Wednesday 31st October 2018 General Committees

[George Hollingbery]

The right hon. Gentleman will know perfectly well that there are many motivations for leaving the EU, although we do not need to discuss those today. The Government are very keen that the free trade agreements that exist between the EU and third-party countries should be continued with as little change as possible. That is good for us, good for business and good for consumers.

By championing global free trade, we support economic development, which helps drive growth and jobs in a way that aid spending alone cannot. While the UK remains an EU member state, the Government remain committed to working with Parliament to ensure that is facilitated through scrutiny of EU trade agreements. This debate ensures that Parliament has the fullest opportunity to scrutinise the agreements.

I will first address the economic partnership agreements. The UK is a long-standing supporter of the EU’s EPA programme. EPAs are trade agreements with a development focus, which is not found in conventional free trade agreements. This House has already scrutinised and passed several other EPAs. EPAs take into account the socioeconomic circumstances of partner countries and provide for development co-operation and assistance. EPAs secure immediate, duty-free access to the EU for developing country products. In return, those countries liberalise their markets gradually by reducing duties on around 75% to 80% of imports over a period of up to 25 years. Trade liberalisation is therefore strongly asymmetric in favour of developing countries.

EPAs are of course negotiated agreements. They promote increased trade and investment by putting our trading relationships with African partners and others on a more equitable, mature and businesslike footing, supporting sustainable growth and poverty reduction. The EPAs we are considering today can deliver real benefits for manufacturers and farmers in developing countries and in the communities in which they operate. Specifically, the EPAs eliminate tariffs on processed and manufactured goods, allowing more of the product value chain in developing countries, and providing more opportunities for growth and skilled jobs where they are most needed.

The EPAs offer a more flexible and simpler set of rules of origin, so that in most cases, when a producer in one African, Caribbean and Pacific country uses inputs from another, they do not have to pay customs duties when they export their final product to the EU. Both the Southern African and the Eastern and Southern Africa EPAs contribute towards regional economic integration by joining up smaller markets, benefiting African exporters by boosting trade between neighbouring countries and regions. The EPAs provide development co-operation to help our African partners to address broader issues affecting trade, such as technical barriers to trade, labour rights, the environment and poor infrastructure or inefficient customs and border controls.

EPAs also bring advantages to EU businesses and consumers. They can help to promote the export of new products from African countries by providing EU businesses with key inputs and consumers with more choice, better quality and lower prices, including for beef from Botswana, wine from South Africa, bananas and cocoa from Ghana, and fish from Mauritius. Over their lifetime, the agreements will bring new opportunities for UK exporters as EPA partners gradually liberalise their economies. We estimate that UK exports to the Southern African EPA states will increase by £35 million by 2035 and that imports will increase by £37 million.

Let me turn to South America. Ecuador’s accession to the EU-Andean agreement is estimated to be worth £37 million annually to UK GDP in the long run. UK imports are due to grow, especially in important commodities such as fruit and vegetables, which could mean that consumers benefit from lower prices and businesses benefit from reduced input costs. UK exports will also increase; indeed, the impact assessment suggests that they have already increased since the agreement’s provisional application to Ecuador in early 2017.

The EU-Andean agreement covering Peru and Colombia has delivered demonstrable benefits to businesses and consumers, as outlined in the EU’s annual reports. I am confident that the benefits of the FTA can be enjoyed by importers and exporters of any size. British business will be free to tap into the Ecuadorian market with even greater ease, benefiting from greater access across a range of service sectors and the Government procurement market, and from the removal of remaining tariffs in key industries, including chemicals, textiles and telecoms.

Although it is not the subject of this debate, it is important to say that as well as ratifying the agreements, the Government seek a seamless transition to replicate their effects and ensure continuity when we leave the EU. Under the terms of the draft withdrawal agreement, the UK is to be treated as a member state for the purposes of international agreements for the duration of the intended implementation period. That would provide certainty and confidence that, as we move into the implementation period, there will be no disruption to existing relationships underpinned by international agreements. However, the Government continue to plan for a range of possible scenarios to maintain existing trade relationships after our exit from the EU. We therefore continue to work towards bilateral agreements to ensure continuity in all circumstances.

We are making good progress on ensuring continuity for the SADC, ESA and Ghana EPAs. The process involves making only those technical changes that are necessary to ensure that our new agreements are operable after we leave the EU. That will include replicating the effects of provisions within the EPAs that refer to the EU-ACP Cotonou agreement, but it will not mean replicating the whole Cotonou agreement.

Our partners have broadly welcomed our approach and are keen to work towards a lasting set of agreements with the United Kingdom. For example, on 28 August in Cape Town, I signed a joint statement with Botswana’s trade Minister, Ms Kenewendo, to confirm that trade agreements between the UK, the five Southern African Customs Union countries and Mozambique will be ready to come into force as soon as the EU EPA ceases to apply to the UK.

Likewise, the EU-Andean agreement, now including Ecuador, will apply to the UK during the implementation period. Of course, the Government continue to work towards new bilateral arrangements with the Andean community that would ensure continuity of the effects of the EU-Andean FTA in any event, via a straightforward technical process.

I further note the successful visit of my colleague Baroness Fairhead to Peru and Colombia over the summer, and the UK’s presence—in the form of the Prime Minister’s trade envoy, my hon. Friend the Member for Fylde—at the inauguration of the new Colombian President, President Duque. I hope my pronunciation is correct.

[Mark Menzies (Fylde) (Con)]

It is perfect, Minister.

[George Hollingbery]

I thank my hon. Friend. We look forward to strengthening our ties to those nations through our independent trade policy.

Our consideration of the EU EPAs gives us the opportunity to demonstrate the UK’s strong commitment to ensuring that developing countries can reduce poverty through trade. Agreement to the draft order will also ensure that the benefits of the EU-Andean free trade agreement continue to be enjoyed by importers, exporters and consumers in Ecuador and the UK. These agreements are in the interest of the UK, the wider EU and our partner countries in Africa and South America. I urge hon. Members to support the motion, in order to move those agreements one step further towards ratification.