Trade Bill (Second sitting)

Matt Western Excerpts

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 16th June 2020 Public Bill Committees

[The Chair]

We have to conclude by 2.40 pm, so I think this will be the last question.

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

Q I want to pick up those points with both of you. You were referring, Professor Winters, to the US trade rep approach, whereby they go out, engage and consult and then set the parameters of what the negotiation objectives should be. For the purposes of clarity, do you think that setting that up is a massive missing piece in this legislation, as it would enable visible parliamentary involvement and the involvement of relative organisations, such as trade unions, sectors and devolved powers, to establish buy-in and engagement? If it is missing, should it now be put back in?

Professor Winters: For the Trade Bill, which is presented as a piece of legislation to make it feasible to roll over the continuity agreements that we are trying only to roll over and not to change—we have already joined the GPA and are not trying to change our schedule—you do not necessarily need a huge apparatus. If we get into a situation where the Trade Bill is used to make quite dramatic differences to the arrangement with Korea or to make essentially a new agreement with Japan, it is unfortunate that there would be less of an obligation to consult the devolved Administrations, parts of the legislature and stakeholders. The solution is not so much to nail those processes on to the side of the Trade Bill, as to try to find a way to ensure that the Trade Bill is not used for purposes that involve a major change relative to the status quo.

George Riddell: I agree with many of the comments made by Professor Winters and would add two additional points. The first is on consultation and its importance. Not only does it help the UK to identify what its offensive and defensive interests are and how best to achieve them through negotiations; it also helps to build political support. The thing that businesses want when they are looking to use trade agreements is the certainty that, when they make an investment under the provisions, in five, 10 or 15 years they will continue to be able to trade under the terms of that trade agreement. By not having wide consultation and the necessary support, it calls into question that certainty. The question of scrutiny and everything else is for this House and this Committee, but from a business perspective, we want widespread support for the trade agreements so that they can continue into the future.

[Matt Western]

Can I ask a 20-second supplementary, Chair?

[The Chair]

You can try.

[Matt Western]

Q In your view, both of you, would UK-US negotiations be covered by this Bill?

George Riddell: My understanding from reading the Bill is that it covers the continuity agreements that existed between the EU and third countries.

[Matt Western]

Professor Winters?

Professor Winters: Is somebody trying to get my attention? I am afraid you all faded away.

[Matt Western]

Sorry, I was just asking whether you feel that the Bill covers the current UK-US negotiations.

Professor Winters: As I understand it, the Bill does not cover current negotiations with the US. It is restricted to those countries that had agreements with the European Union on 31 January this year.

[The Chair]

That brings us neatly to the end of the time allotted for questions to these witnesses. I thank both of the witnesses, Mr Riddell here in person and Professor Winters struggling with technology to join us. It is very kind of you both to assist. Thank you very much.

We will have a brief suspension while we engineer the next session.

--- Later in debate ---

[David Johnston]

Q Nick, in your first answer you said that even continuity agreements provide opportunities. I wonder what opportunities for farmers these continuity agreements create.

Nick von Westenholz: I guess I am thinking about some of the continuity agreements that are not quite continuity agreements—for example, the Japan agreement, which is being renegotiated. Certainly, we would hope that there is the opportunity for UK farmers to open up more markets in the far east.

Really what I was saying was that, as farmers, we want to be ambitious about increasing the markets, whether at home or overseas, for our produce. If we are going to increase them overseas, we have to recognise that that assumes a degree of free trade, international trade and imports. We certainly want to expand those overseas opportunities, and it may be that some of those continuity agreements, which are being looked at again, provide particular opportunities.

[Matt Western]

Q Hi, Nick. Good to hear from you again. I just want to pick up the point about standards and get your views on mutual recognition agreements and how they will play for the farming sector. Do you have concerns about them? Can they hide a multitude of sins? On the Trade Remedies Authority, do you have any concerns about the Bill? Are there any omissions that might leave the farming and agri-food sector exposed?

Nick von Westenholz: I got the second question. Could you repeat the first question, sorry?

[Matt Western]

Q I was just asking about standards and mutual recognition agreements, and whether you have concerns that MRAs could potentially hide a multitude of sins.

Nick von Westenholz: In principle, the idea of mutual recognition agreements can work. There is nothing that we would object to in an MRA in principle. An important aspect of this is that, if we simply try to hold overseas producers to precisely the same standards as UK producers, that might create as many problems as it solves. We need to develop a mechanism for comparing standards as easily as possible to certify, accredit or whatever it might be a degree or level of production standards that we accept as equivalent to our own.

A lot of the things I have mentioned already demonstrate the complexity and difficulty with some of these issues. That is one of the reasons why we have suggested the establishment of a trade and food and farming standards commission to get under the skin of all these pretty tricky policy areas and set out a road map for Government of the sort of policies and legislation needed to tackle the issues properly. We would like that to be established in law, under the Trade Bill or any other legislation, so that it reports to Parliament and contributes to some of the shortfalls in parliamentary accountability and scrutiny that have already been flagged to the Committee. We think that that is a very good and sensible idea. That commission would absolutely look at such things as MRAs and broader issues of how you manage and measure equivalence.

On the Trade Remedies Authority, we have not flagged any specific concerns other than to acknowledge that the constitution of the committee is very broad, and quite a lot of leeway is provided to the Secretary of State in the formation of that committee. We would like to explore further the possibility of ensuring specific representation for specific sectors if necessary. Having said that, we would hope that the TRA, even in its current format as set out by the Bill, would consult fully and take into account all parts of the economy when advising on trade remedies.

[Bill Esterson]

Q Coming back to what you were saying about the negotiation of the new Japan agreement, my understanding is that the existing EU-Japan agreement does not include animal welfare provisions. When it is renegotiated, are there implications for animal welfare and food standard provisions in the renegotiation of the new UK-Japan deal?

Nick von Westenholz: There is the prospect of including those sorts of provisions in any of the deals that the UK Government are either currently negotiating or imminently going to negotiate. I am not sure that that is an issue specific to the continuity agreements. Countries all around the world are increasingly considering how such issues can be better accommodated in trade deals. Traditionally, they have not been part of trade agreements, although we have seen in the draft text between the EU and Mercosur, for example, provisions for preferential access to Mercosur for eggs where the production standards have been equivalent to animal welfare requirements in the EU, which is interesting.

This is a really important point: the UK Government should be seizing this moment to be a global leader in negotiating trade agreements that accommodate some of these sorts of policy areas, such as animal welfare, environmental impacts and climate change, and being creative and imaginative in how future trade agreements ought to look—not looking backwards and seeing how trade agreements have been done in the past, and merely looking to replicate those.

--- Later in debate ---

[Katherine Fletcher]

Understood; that is something to avoid.

[Matt Western]

Q May I delve a bit further into the Trade Remedies Investigations Directorate? You were explaining, Mr Warren, about the one case going through, and some of the challenges in terms of expertise—that is, resource ability and capacity. To what extent do you think the Bill should be defining the scale of what a TRA should look like, recognising that, post this crisis, and given the economic headwinds globally prior to the crisis, there is a huge amount of pressure on Governments to reshore, with all that that will mean in terms of how Governments adhere to certain agreements? Maybe we can start with steel and go on to chemicals.

Richard Warren: Certainly. As I said, the vast majority of how the trade remedies regime will operate—the responsibilities of the organisation itself, how it reports to the Secretary of State and so on—are dealt with within the Taxation (Cross-border Trade) Bill and the secondary legislation. There were still outstanding issues that we had with that legislation. Obviously, it has passed now, and we are working with the regime as it has been established. If we had an opportunity as an industry—we are talking about a hypothetical now—to strengthen the trade remedies regime, change elements of how it was operated, perhaps be more explicit in legislation about how those investigations are conducted, and change certain elements of the methodology, like dumping and how we treat certain non-market economies, that would be fundamentally best be dealt with in the Taxation (Cross-border Trade) Bill and the secondary legislation that supports it.

This Bill is fairly cursory in what it establishes in the trade remedies regime. Our key request at this point remains the make-up of the non-executive membership, rather than dealing with precisely how that regime operates. It really is the customs Bill that we would look to if we were making changes.

--- Later in debate ---

[Fleur Anderson]

Q My second question is about the impact on developing countries. What is your assessment of the impact on developing countries of creating the TRA and the new negotiations it will have, and the impact on our poverty reduction commitment as a country? How will you be able to uphold that within the TRA?

Simon Walker: I am not sure that is really in our domain. I am very sympathetic to your point, but I am not sure how much that is in the remit of the TRA as such. Our professional teams will be trying to establish whether there is dumping, for example, from a particular country, and the sale of a product below its cost in that other country. If that is contrary to the economic interests of the UK, the TRA will try to assess that as objectively as possible. It is conceivable—I do not think it likely, but it is conceivable—that that might be from a developing country. There are shields for developing countries against an awful lot of tariffs—that is an element of exports that I hope will help them—and I certainly do not see developing countries being a big part of our focus, but I do not think that our remit is to look specifically at that.

[Matt Western]

Q Mr Walker, some of your opening comments were about just how expensive those sorts of interventions are, because of the amount of legal work involved. What sort of budget will you be working to? Do you think that the scale of the operation needs to be established in terms of the financial basis and the purpose and remit of the organisation? How is that funded and have you looked at relative nations, such as South Korea, to see the scale of their operations and how we compare?

Simon Walker: I have not looked at other nations in that sort of competitive way. I suppose that what I have looked at is, as an organisation of not quite 100 people that might grow to 140 or 150 people—that sort of size—what it will take to run an organisation like that in terms of personnel with professional qualifications. It is not that hard to arrive at a budget for that kind of organisation, because it is not as if we are going to be paying for the submissions that are made to us. We are obviously taxpayer funded and our proposed budget—we are not in existence until the legislation is passed—is laid down by the Department. I think it is pretty much what anyone would expect, within a relatively modest scale, for an arm’s length body. Does that answer your question?

[Matt Western]

Q Probably enough for today. In the event that a particular country says, “We may have a trade agreement with you, but with immediate effect, this sector is now protected in the interests of national security,” what powers do we have?

Simon Walker: I do not think, I am afraid, that we have powers in that situation. Our mandate is very strict: it is about dumping, unfair subsidies and—this is very rarely used—safeguards in the event of unforeseen exports from another country that swamp the market. As I say, that is very rarely used. I take your point completely; that is a serious problem for the UK if that situation happens. I do not think it is one that the TRA can address.

[Matt Western]

Q Who should?

Simon Walker: The Department for International Trade and the Government as a whole. It is a matter for the Department and the Government as a whole rather than for us as an independent arm’s length body that will then be completely separate.

[The Chair]

That brings us to the end of our allotted time. I thank our witness very much. We are very grateful for your assistance.

Ordered, That further consideration be now adjourned. —(Maria Caulfield.)