Trade Bill (First sitting)

Matt Western Excerpts

Tuesday 16th June 2020 Public Bill Committees

[Bill Esterson]

Q Turning to how the scrutiny of these agreements, and of agreements more generally, works, we have the expert trade advisory groups. I believe that your organisations are part of both the strategic and the sector-based groups; perhaps you could confirm that. Can you say how effective those groups have been so far on the continuity agreements, and on the new agreements as well? Do you have any comments on how you might like things to change to maximise the benefits of your involvement for scrutiny?

Jonathan Brenton: It is very important that I put on record, first, that the CBI is a member of both the Strategic Trade Advisory Group and the expert trade advisory groups, in terms of our personnel, and our members are also active on the ETAGs. We strongly welcomed the STAG and the ETAGs. As an organisation, we called for such a system in a letter to the previous Secretary of State, Liam Fox, in 2017. I think the first reaction of our members to any review of the ETAGs would be: “Keep them.” We have appreciated the insights that we have had through the ETAGs, on which a colleague of mine sits, regarding the continuity of trade deals.

Where could the system be made better? We have said to the Department for International Trade that we could have more transparency around membership. When we talk to members about ETAGs, one of the most common asks that we get is: “How can we be on one? Who is on the ETAGs?” An ask that we have had, which we hope will be fulfilled, is that the membership of the ETAGs should be published and there should be a transparent membership application process—as there has been for the STAG, the membership of which is published.

There also needs to be a clearer relationship between the STAG and the ETAGs. How does the STAG interlink? There could also be greater clarity about the role when it comes to negotiations. I should say, in terms of how the process is working, that when a negotiation has been launched, as is the case with the US and with Japan, there have been efforts by the DIT to brief the members of the STAG and the ETAGs. There have been short written records of the negotiations. We also know that there has been informal contact between business and DIT negotiators with specific questions related to the negotiations.

We welcome the system. It needs to be better, and it is really important that we understand that it is win-win. We see our role in business as giving negotiators the information that helps them to get the best possible deal for Britain. It should be possible to tweak the system to put the UK in the best possible position against its partners. If the US and the EU have a system in place, we should aim to match that.

Allie Renison: I will add briefly that the Institute of Directors is not part of the official main STAG, but it sits on several ETAGs. I echo much of what my counterpart said. I add one caveat: in respect of the continuity process, there are certainly lessons that we have drawn for the future. This does not just go to all the ETAGs and STAG. The DIT has done a fairly good job of setting them up and trying to ensure that business groups feel that they are part of the engagement process. We would like to have seen that to the same extent for the EU negotiations, because that is where there is the biggest potential for change coming out of trade agreements, compared with the other ones.

On the continuity process, we would have benefited from greater clarity early on about what was and was not going to be possible. If the Government had made it clear at the time that it was going to be impossible to roll over the Turkish customs agreement and why—keeping in mind that much of the roll-over, in so far as we can roll over what we have with Turkey, is linked to our relationship with the EU—we would have benefited all round from a lot more clarity early on in the process. The Government could have said that, based on the kind of relationship that the UK was seeking with the EU, it had not been possible to roll this over. Everyone understood that to be the case at the end of the process, but it could have been a lot clearer to businesses at the beginning, particularly for some of the fundamental ones.

From a preparation perspective—this goes to the heart of how ETAGs can certainly improve on what they have today—you need to make sure that you do not have a system whereby communication is so tightly controlled that you cannot go back and engage with members on the content of what you are discussing on policy. That is a very important addition to make one aware of: there is a balance to be struck between the Government having commercial sensitivities affected and making sure that, in this dialogue with business and stakeholders, we are able to actually have those conversations with members and that we are not overly restricted in doing that.

[Matt Western (Warwick and Leamington) (Lab)]

Q I just wanted to pick up on the Trade Remedies Authority and your views on the provisions in the Bill, the role of that body, how it is made up and how it represents the interests of various stakeholders, whether they are sectors, regions, civil liberties groups or whatever. Can you give us some thoughts on that, and on the appointment of its chief exec or chair?

Jonathan Brenton: Business and industry called for the Trade Remedies Authority. We welcome it; it is obviously essential. It is not an area that gets as much attention as perhaps it should do in trade policy. We have been told that the non-executive TRA board members will act to provide us with decisions that will be made in a fair manner. We have been told that they will be experts in trade, but they will not have any ideological bias. It is no surprise to you that some of our members would like to see provision for industry practitioners—not just business, but also trade unions, particularly for the manufacturing sector—to be involved in the TRA. First, they would bring their experience, and, secondly, it would be a matter of building confidence. Consensus is a really important principle in trade. It is a big, historic change for the UK to have its own independent trade policy, and we would like to think that it was built on a wide area of consultation, so that people feel involved.

Thinking about some of the other things that might be done to the TRA, it might be useful if the TRA was required, in its annual report, to review how it is acting compared with its peers: the EU and the US. That is a good principle for the UK and trade policy. There is no reason why the UK has to follow the EU and the US in everything; there is no reason why we cannot do better. As we embark on our own independent trade policy, we should be benchmarking ourselves against what others are doing, to check that we are in the right place.

Allie Renison: This is one of the areas in which, even with the trade-offs, there are many other questions when it comes to our relationship with the EU. This is certainly more in the opportunity basket of having a system that is more tailored to the UK’s needs. It is important to remember the context for the Trade Remedies Authority. It does not exist just to act for its own sake; it exists to undertake investigations. We should be careful not simply to assume that because every business has a concern about unfair competition or dumping, that is actually taking place.

Transparency is a very important part of what the TRA will be set up to do. Our broad support for the Bill is particularly because it is so linked to the creation of that. When I say transparency, if we think back to how it worked in the EU, the way decisions are taken on trade defence measures, anti-dumping measures, countervailing duties—the whole lot, so to speak—is probably one of the least transparent aspects of EU trade policy decision making. We should learn from that and make sure that it is not the case, because some decisions that are taken—rightly so, in the end—have come of that.

When we talk about the calculations and ratios needed, I think we should make that as transparent as possible, simply because once such a decision is taken, even if it is found to be justified in response to a case of dumping, it can have reverberations across supply chains. There are a lot of unintended consequences when it comes to defensive trade measures, and we should be careful to make sure that we understand that. That is not to say that producers do not have an absolute right to have their concerns taken up and redressed, but when it comes to action, because of the way supply chains work, there are often lots of unintended consequences, particularly for measures that are left in place for a longer period of time.

I close with another example of that. A small cluster of German solar panel producers decided to lobby the European Commission to put such measures in place. Please keep in mind that the UK, at that point in time and generally speaking, was more of a net importer, for efficiency and climate change purposes. In such a situation, it became quite difficult to get the UK’s voice heard. I call on that example to make sure that we understand that transparency is as important to the work of the TRA as the outcome itself. I do not know if you heard all that; I had something in my ear for most of it.

[The Chair]

Thank you. This will have to be the last question, given the constraints on time.

--- Later in debate ---

[Bill Esterson]

Q Is there anything that DIT could do differently to improve that support for you?

Konrad Shek: Given what is happening with the global economy in the light of covid, it is quite important for DIT to continue lobbying host Governments to keep their markets open and to refrain from trade protectionism—to keep the trade flowing as much as possible. It could also potentially do more work to get intelligence on the ground, understand new projects that might be coming into the pipeline, and feed that quickly to companies.

[Matt Western]

Q To pick up on a point about the competitiveness of the sector, you said, quite rightly, that London is a global leader, both in market research and advertising output. Are you happy with the protection through the TRA, whether it be for intellectual property or otherwise?

Konrad Shek: I do not have a particular view on the Trade Remedies Authority at the moment. As I say, a lot of these anti-dumping subsidies tends to fall on the exports of goods rather than services. It is very hard to understand what distortions might come into play. As services are delivered by people, they are generally affected more by migration and immigration policies than subsidies or specific duties. I cannot think of a particular example at the moment, but there is a possibility that a country may put a tax on digital trade.

[Gareth Thomas]

Q One of the areas of the Bill that we may discuss is future free trade agreements. Have you any particular offensive interests, in terms of future free trade agreements?

Konrad Shek: There is obviously a lot of interest in future free trade agreements. There seems to be a lot of discussion about moving away from the current structures of free trade agreements and looking for these lighter, more flexible types of free trade agreements, which can be negotiated in a shorter time. That is something we welcome, but there is obviously a trade-off; the lighter and more flexible type of agreements mean there is a lot better detail.

We would welcome having these agreements—[Inaudible.] Also, it has an important information aspect. If the UK signs a free trade agreement with a country, that disseminates the information that it is okay, or encouraged, to do business with that country. It sends a very good signal in terms of promoting trade investment links.

There probably needs to be some thought as well about the consultation process and the understanding of what companies require in terms of the wider economy and understanding the trade-offs. By opening or liberalising one particular sector, do we lose out in other sectors? There needs to be a balance, and a lot of political decisions need to be taken there.

There is scope for more consultation and perhaps a feedback process, hopefully for constructive criticism. One issue I have found with the DIT consultation is that it was good that we were able to feed in information, but there was perhaps less information being fed back to help in understanding about how issues lay or were being prioritised in the whole agreement.