Trade Bill (Fifth sitting)

Matt Western Excerpts

Committee stage & Committee Debate: 5th sitting: House of Commons
Tuesday 23rd June 2020 Public Bill Committees

[Gareth Thomas]

With due respect, the coffee that the hon. Gentleman had this morning may not have quite kicked in at the beginning of my remarks, when I set out what the Queen’s Speech defined as the purpose of the Trade Bill. As I said, it made clear that the Bill was designed to set the tone for the future of UK trade policy post Brexit, which it quite clearly does not if all the Bill serves to do is to explore the scrutiny of roll-over agreements. Our contention is that we need a proper parliamentary scrutiny process for future trade deals that we negotiate, including with the US and the Trans-Pacific Partnership—on which more anon.

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

My hon. Friend makes some powerful points. To broaden this a little, because it would be easy to become extremely focused on the US-UK trade deal, he knows very well that these sort of issues—food standards and production, and safeguards for consumers—apply to other countries, such as Australia. Any UK-Australia trade deal will face exactly the same issues as those we are talking about between the UK and the US.

[Gareth Thomas]

My hon. Friend is absolutely right. There is not the option at the moment for proper parliamentary scrutiny of a trade deal with Australia. If the Government were to bring forward a trade deal with China, there is as yet no scope in Parliament for proper scrutiny of such a deal. That is why amendments 4 and 5 and those linked to them are so important.

[Matt Western]

I just want to elaborate on that point. It is really important that the public are fully aware of what we are talking about. Hormone-fed beef applies to Australian-produced beef as much as to US beef. When it comes to egg production in Australia, they use battery hens, caged hens and so on. It is really important that consumers are made fully aware of what will happen with these trade deals if they are opened up in the way that the Government would like.

[Gareth Thomas]

My hon. Friend remakes my point for me. We need to have proper parliamentary scrutiny locked into the Bill. As we have been told, this the only trade legislation that is likely to come before this Parliament. There has been no hint of any other legislation to improve the parliamentary scrutiny of future trade agreements. That is why this group of amendments is so important.

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[Gareth Thomas]

Not surprisingly, my hon. Friend is ahead of me in making that concern clear. I underline the issues about negative listing that he sets out, which I will come to. To finish the point about medicine pricing, Donald Trump’s chief negotiator has made it clear that they wish to use a trade deal to challenge the NHS’s current purchasing model for NHS drugs. That could be done through them securing specific market access provisions or other clauses aimed at helping the US pharmaceutical industry. Again, surely it is the responsibility of the House, and indeed the other place, to have in place the scrutiny mechanisms to check whether that concern is justified.

My hon. Friend set out the concerns about standstill clauses and ratchet clauses in trade agreements, which can lock in levels of privatisation and other forms of liberalisation and accelerate them, which will limit the scope of future Governments to take sensible steps, when services are not being properly provided, to bring them back into the public sector. He rightly set out concerns about negative listing, which emerged in particular in the EU-Canada deal, which we will explore in more detail in the debate on amendment 9. There are concerns that NHS management data services could be opened up to US corporate giants as a result of a UK-US trade deal. Surely it is Parliament’s responsibility to explore those concerns.

If a UK-US deal were concluded by the Government, MPs would not be guaranteed a vote or a debate on the signed deal. The proposals in the Command Paper, which Ministers were forced to publish in February last year, allow a scrutiny Committee to recommend one, but leave it at the Government’s discretion whether to hold one.

The deal is being negotiated in secret, even though it could have huge implications for Britain’s post-Brexit future. Negotiations with the US are particularly controversial, yet after six rounds of preparatory talks and one round of formal negotiations, we still are in the dark, at least from a UK perspective, about the substance of what is being debated. It is true that the Secretary of State made a statement to the House. However, apart from listing the major areas of the talks, which were hardly revealing, and reassuring us all that the meetings were positive and constructive, again, no substance was offered on the real concerns that members of the public and organisations outside this House have set out on food, import standards and medicine prices. As Mr Lawrence from Trade Justice Movement reminded us all in last Thursday morning’s witness session, there will have been more scrutiny of the decision to proceed with High Speed 2 than there will be, as things stand, of a UK-US deal. Our amendments would help put that situation right.

[Matt Western]

When those of us on the International Trade Committee were hearing evidence about potential trade agreements with Japan and South Korea and the Government’s failure to be transparent, to be open, to set objectives and to consult, we discovered in that process, online, that the Koreans had already shared publicly what was going on and where they were in the negotiation. It was secret from our side but open on theirs. It was not until we discovered that information online and Google Translated it that we knew what the Government were up to. Isn’t that extraordinary?

[Gareth Thomas]

That is an extraordinary position, but sadly, it is becoming clear that that is how Members of Parliament are likely to find out about the substance of these trade negotiations. Let us again take the US as an example. We are finding out through evidence to Congress what many of the concerns of UK business organisations are in terms of the desire to secure access to UK markets, which is surely an entirely outrageous situation for the House of Commons. We were promised we would be taking back control after Brexit, yet the Houses of Parliament and the British public are being left in the dark.

There are real concerns from a UK-US deal about the potential for ISDS.

[Gareth Thomas]

We should thank the TUC for its work with American trade unions to help inform British workers and the British House of Commons, and for that little bit more of an insight into what is really going on in the UK-US negotiations. I hope Ministers will be sufficiently embarrassed by the British people’s reliance on what is being told to Congress to open up more scrutiny opportunities for this Parliament.

ISDS clauses have been favoured by the US in many of its existing trade deals. They potentially allow new investors, if included in a UK deal, to sue our Government over measures that harm their profits. We know that ISDS lawyers are already talking up the possibility of compensation for corporate giants whose profits have been hit by Governments taking lockdown measures to tackle the covid pandemic. In case Government Members think that is not a real threat, the American firm Cargill won more than $77 million from the Mexican Government after they introduced a tax to deter high-fructose syrup to tackle serious health issues in Mexico.

ISDS provisions create regulatory chill—the temptation for Governments not to introduce necessary public health or, indeed, other environmental measures, for fear of being taken to an ISDS tribunal by a big overseas investor. They create a two-tier system, since it is rarely small and medium-sized enterprises that are able to access these secret courts. There is normally no appeals system for the Government to access, and there is extraordinary secrecy around the nature of the settlements.

The irony is that there is little obvious benefit to businesses from those clauses being included in trade agreements. Indeed, the Government under David Cameron published an analysis of the pros and cons of ISDS clauses and could not find any great pros to champion. Business organisations tell us—although this tends to be in private—that ISDS clauses do not matter much to them; what they take serious notice of is the business environments.

There are real concerns about the labelling of geographical indicators, where products in the UK have a geographic indicator that prevents their being imitated: one thinks of Welsh lamb, Scottish salmon and Armagh Bramley apples, for example. The American negotiators do not like those types of food label and will seek to get rid of them. Surely it is the responsibility of this House of Commons to explore whether those concerns have merit and to push the Government to protect those labels.

[Matt Western]

That labelling is so important because throughout this process the public have been led to believe, because the Government have insisted on this point, that they as consumers will always be informed about what it is that they are buying. The only way they can be informed of that is by labelling, but that is not going to happen because, as my hon. Friend says, the US negotiators will not allow it to. When I approached KFC—other leading fast-food outlets are of course available—and asked, “Will you be informing the consumer where the chicken has come from that has gone into those nuggets or whatever the product is?” there was no reply, but clearly it will not be doing so, which must be a profound concern.

[Gareth Thomas]

I have made my point already about chlorinated chicken, and my hon. Friend raises that concern again.

The point that I was specifically referring to is the significance of GIs for many British products, and I think particularly of Welsh lamb and Welsh beef, where the Welsh Government have concentrated much of their promotional effort around the agriculture industry in Wales on talking up the benefits of those GI-protected products. There is real concern that that is at stake in some of the trade negotiations that the Government are taking part in.

It is surely right that this House have the opportunity to scrutinise whether such concerns would be appropriate with respect to a UK-US deal, a UK-Australia deal or a UK-Japan deal. At the moment, we, as the House of Commons, will not have the chance to explore in detail whether that is a concern, or have the opportunity to force Ministers to take action. Our amendments would put that right.

One last concern to flag about a UK-US deal is Donald Trump’s hostility to action on climate, and therefore the possible lack of potential for Ministers to make progress on bringing carbon dioxide emissions down and helping to tackle the climate and nature emergencies that the world and our country face. Those are the potential concerns being talked about around the headline free trade agreement being negotiated by Ministers, which merit proper parliamentary scrutiny.

Amendment 4 would put in place a structure for proper parliamentary scrutiny of free trade agreements. New clause 5 sets out the process for scrutiny of those free trade agreements before they could be signed, including giving parliamentarians a vote on whether to approve the start of negotiations. That would help to lock in scrutiny of trade negotiations from the very beginning of the process.

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[Gareth Thomas]

My hon. Friend is right. I fear that if Ministers persist with their refusal to give the House of Commons greater opportunities to scrutinise and vote on trade deals, her membership of this Committee may be her only opportunity to vote on concerns about a future UK-US deal. She rightly also opens up a concern about immigration. One of the trade-offs in trade deals, under so-called mode 4 agreements, is often the requirement for Governments to give ground on immigration requirements, yet we hear no mention of that from Ministers.

Ministers give the impression that it is a win-win-win and there are no trade-offs, but trade agreements are not benevolent arrangements in which our negotiators can simply rock up to another country’s trade ministry and pick up some wonderful new bargain deals. We cannot just take what we want. That is the nature of negotiations.

Another analogy might be that Ministers talk about trade agreements as if they were the Christmas sales; they only have to turn up and there are amazing bargains to be had. They have not bothered to explain that the negotiator sitting opposite them will want something in return, which will not necessarily be a comfortable choice for us as a country. All the more reason, therefore, for us to have proper scrutiny to consider whether the downsides of a potential trade agreement are not as significant as the gains.

To listen to some sceptics about a UK-US deal with Donald Trump’s Administration, our farmers will be undercut, standards of food production will be lowered, the NHS will be on the table, climate change will not feature, big corporates will be even more powerful and labour rights will be undermined. Ministers will say that is an outrageous and scurrilous description of the likely benefits of a UK-US trade deal. Those are the potential downsides, however, so we should be able to consider whether the trade-offs of a UK-US deal, or indeed any deal with any other country, outweigh the benefits and therefore should not be approved, or whether, in fact, the benefits outweigh the downsides.

It is certainly the job of the Government to try to negotiate the best possible terms for a free trade agreement with another country, but surely it is for the people of this country to decide in the round, through their Members of Parliament, whether, on balance, it is the great deal that it has been set out to be. I ask the Committee why Ministers are apparently desperate to exclude the British people from having the final say, through their MPs, on whether a trade deal goes ahead.

Trade agreements can take a long time to negotiate and can seem like great prizes to have. I recognise the potential desperation of the Secretary of State to rock up to the signing ceremony for a new free trade agreement and bask in the positive glow from newspapers such as The Daily Telegraph and the Daily Mail, and maybe even the Daily Mirror and The Guardian, which will provide all sorts of photo opportunities for Members of Parliament. That desperation to get a deal, however, might sometimes take ministerial eyes off the downsides of a deal. It is surely the job of the House to look in the round at whether a trade agreement is genuinely in the interests of the country.

Surely Ministers having to work a bit harder to convince us that they have a genuinely good deal can be only a good thing in law. Giving the British people back control through a series of votes in this House and the other place on future free trade agreements will help to lock in high standards of deal making. Ministers seem to be taking the George Bush approach—the “Read my lips: taxes won’t rise” approach to trade. They are saying, “Trust us, we won’t reduce standards; we will protect the NHS and we will deliver the most amazing opportunities for British business.”

Let us pretend for a minute that I am willing to believe such a message from this particular Minister and this particular Secretary of State. The trouble is, Ministers change. Governments change. A commitment may not outlast the next Minister or Secretary of State who comes along. That is why it is essential to underpin in law a right for the British people, through the people they have chosen to represent them in the House of Commons, to agree to start negotiations and to vote on the final result of those negotiations.

Even over the last three years, ministerial attitudes to trade have shifted back and forth, as we shall discuss in debates on other amendments. One moment, the Government are opposing the idea that they should produce a report on a proposed free trade agreement, then they agree to do it voluntarily but oppose the idea of having that written into law; and then they agree, on Report on the 2017-2019 Trade Bill, to write it into the Bill. Today, we are back to a voluntary process—a commitment given by a Minister who is no longer Trade Minister. If the Executive’s line can change on such a simple point in so short a time, it is essential that the interests of the British people are protected by a lasting lock in law on a clear and sensible process to give the people through their representatives in the House of Commons a direct say on trade agreements that will have a lasting significance for their lives.

Ministers have a record of promising the earth on trade deals. Who can forget the last Secretary of State, who said in October 2017:

“I hear people saying, ‘Oh we won't have any free trade agreements before we leave’. Well believe me we’ll have up to 40 ready for one second after midnight in March 2019”?

Sadly, as the Minister knows only too well, the reality is very different. One of my favourite trade quotes has to be from the Chancellor of the Duchy of Lancaster, then the Secretary of State for Agriculture I think, who said:

“There is a free trade zone stretching from Iceland to Turkey that all European nations have access to, regardless of whether they are in or out of the euro or EU. After we vote to leave we will remain in this zone. The suggestion that Bosnia, Serbia, Albania and the Ukraine would remain part of this free trade area—and Britain would be on the outside with just Belarus—is as credible as Jean-Claude Juncker joining UKIP.”

We all know what has happened since.

My final quote demonstrating what Ministers have said on free trade agreements is from the now Foreign Secretary, who said:

“I hadn’t quite understood the full extent of this, but…we are particularly reliant…on the Dover-Calais crossing”.

If Ministers do not understand the basics about the nature of British trade, it is even more essential that we lock into law a process for giving Parliament the right to scrutinise free trade agreements.

Governments make mistakes. Ministers make mistakes. Let us think about this Government: too late to the lockdown, a failure to protect care homes, a failure to stockpile personal protective equipment, the chaos over schools reopening and now the test-and-trace app fiasco. Ministers make mistakes. Scrutiny in the House of Commons helps to minimise the damage that those mistakes can have. Given the long-term significance of trade agreements, and to help to prevent mistakes being made, we need to lock in a tighter, stronger process of parliamentary scrutiny.

[Matt Western]

To amplify that point, irrespective of where we currently sit in the House—whether on the Front Bench or the Back Bench, or on the Government or Opposition Benches—it is important that we have some say. That is not simply about scrutiny and holding the Government to account; it is about asking the questions that ultimately lead to better governance. Surely that is what this place is all about.

[Gareth Thomas]

My hon. Friend is right. I recognise the temptation, having been a Minister for Trade, to fear scrutiny—to fear being asked detailed questions about rules of origin and things like that. However, that fear helps to make Ministers and officials get over the detail of those hugely important technical questions on trade agreements, which as a result helps to make government better, helping to make trade deals much better as a result.

As I indicated, Ministers had to be dragged kicking and screaming to publish the February 2019 Command Paper on future scrutiny of free trade agreements. A series of commitments were implicit in that Command Paper, but we have heard in recent times that some of those commitments may no longer enjoy ministerial support. Indeed, there seems to be some suggestion that Ministers will no longer publish reports at the end of negotiating rounds. Perhaps the Minister can clarify that point in his wind-up remarks.

Certainly, there has been zero progress on agreeing to give a Committee of this House access to confidential information and briefing from negotiators. If ministerial views on parliamentary scrutiny of new FTAs have changed since the publication of that Command Paper, surely the British people have a further justified claim for ensuring that a process for scrutinising all trade agreements be locked in to law. If Ministers are determined to row back on that commitment to work with a dedicated Committee in both Houses, providing confidential information and private briefings from the negotiating teams, there is even more need to lock into law new powers for Parliament to have more leverage over Ministers regarding those trade agreements.

The amendments would also widen the scrutiny requirements for continuity trade agreements that Ministers are negotiating with countries that already have a trade agreement with the European Union. Many agreements already notionally negotiated have small but significant differences from the original EU agreement on which they are based. At the moment, the British people do not have a say, through their representatives in the House, on whether those changes were appropriate.

It is slowly becoming clear, from the little we are able to glean from those negotiations on continuity trade agreements, that the agreements that have been signed, and indeed being negotiated, are slowly making the terms of trade for British businesses and our existing partners and allies worse. As Professor Winters made clear in his evidence last Tuesday, in conversations about how negotiations on the so-called roll-over agreement with Japan were going, Ministers and negotiators were being studiously vague about what was really going on.

The detail of concerns expressed about what has been negotiated only underlines the need for increased scrutiny—not only of all future FTAs but, crucially, of existing continuity deals. Nick Ashton-Hart of the Digital Trade Network noted that the UK-Swiss deal that has been negotiated has only three mutual recognition chapters, compared with the EU-Swiss deal, which has some 20. It will be interesting to know from Ministers why the UK-Swiss deal had just three mutual recognition chapters whereas its predecessor, the EU-Swiss deal, had 20. Apparently, there are similar problems with customs arrangements. In the case of Norway, only a goods arrangement was rolled over, so British companies have no idea at the moment what they will be able to access in terms of services markets in Norway from 1 January next year. There is a similar position with Switzerland—much has not been rolled over. Companies operating in services markets will have little idea at the moment what access to those markets in Switzerland they will have from 1 January.

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Let us also look at the details of the trade agreement that many want to see with Japan. The Society of Motor Manufacturers and Traders is pressing hard for rules of origin to allow for parts of the finished car to include products from EU countries, so that they can still qualify for low tariffs. It is concerned that a UK-Japan deal may lead to further reductions in the number of jobs in the UK automotive sector and wants Ministers to establish an adjustment for those made redundant from the sector. Again, surely that is something that, as part of proper negotiations and proper scrutiny, Members of this House would be able to probe Ministers on.

[Matt Western]

My hon. Friend is quite right to highlight the vulnerability of UK automotive manufacturing, particularly with Japanese plants, and the consequences of that throughout the entire sector. The Japanese clearly want to hold off on any negotiation with the UK until there is clarity on our future position with the EU. I recall attending a Japanese ambassador’s event two and a half years ago, at which the Japanese chamber of commerce said, “We will be watching you very closely to see what you decide to do, particularly in relation to your arrangements with the EU. If you get it wrong, watch this space.” The UK is incredibly vulnerable. That is why the Japanese are treading very carefully around any trade deal with us and why they will only come to high-line arrangements; they are going to hold off until they can see what happens with the EU.

[Gareth Thomas]

That is a very good point. Specific Japanese automotive manufacturers such as Nissan have been very public with their concerns about the way trade negotiations are going. In that sense, they amplify the case for proper parliamentary scrutiny of our future trade agreements.

A series of witnesses, as my hon. Friend the Member for Putney mentioned, made clear the lack of proper parliamentary scrutiny of trade agreements. Indeed, it would be fair to say that a majority of the witnesses who appeared before us in the three evidence sessions we had last week noted the lack of proper parliamentary scrutiny for free trade agreements and expressed serious concerns about it.

I remember that Sam Lowe from the Centre for European Reform suggested that our scrutiny of trade is very poor and not particularly democratic when compared with the US and the European Union, and he gave the UK parliamentary process for trade treaty scrutiny less than five out of 10. He made it clear that some agreements that Ministers have negotiated are purely continuity agreements and alluded to those with the Faroe Islands, Chile and Jordan. He thought there would be substantially different trade agreements with Turkey, Norway, Switzerland and Ukraine, and in effect fundamentally new agreements—surely they are not within the terms of the Bill, if it is limited merely to agreements we have through the EU with existing trade allies—with Japan, Canada and the stage 2 deal with South Korea, which will merit a different, more robust parliamentary process.

David Lawrence from Trade Justice Movement said he has heard “nothing new” billed by Ministers on scrutiny of trade agreements. He described the process as archaic, dating back to the first world war when it was used for secret defence treaties. It has not changed in about 100 years. Trade Justice Movement made clear that it has relied on reports from Washington and Brussels to find out what is going on in trade talks that the UK is a part of, which again underlines the point that surely the British people, through their representatives in the House of Commons, should have access to much more detail.

The principal justification that Ministers have deployed and hidden behind to resist giving the British people more control over such agreements is a decades-old convention first articulated, I believe, by Arthur Ponsonby in 1924. One can understand why Ministers look to Mr Ponsonby for inspiration as he was a Labour Member of Parliament, from whom Ministers get their best advice. Trade then was very much with the different parts of the empire; it looks completely different now, with the drastic changes we have seen to world trade and, of course, our exit from the European Union.

That convention was formalised in part 2 of the Constitutional Reform and Governance Act 2010, which no one conceived would still be in use should Britain exit from the European Union and need to negotiate all sorts of future free trade agreements on our own, without our EU allies. CRAG does not require Parliament’s approval for the Government to ratify treaties. Indeed, as a House of Commons Library briefing helps to make painfully clear,

“it gives any parliamentary objection to ratification (or similar processes like accession) a limited”—

limited is crucial—“statutory effect”. There is a theoretical power for the House of Commons to block ratification, but in practice that power does not amount to much. The briefing continues:

“Parliament does not have to debate or vote on the treaty, and indeed time to do so is hard to secure given the Government’s control over the timetable of the House of Commons.”

That the Conservative Government have a large majority underlines how it is entirely in No. 10’s gift whether a debate and a vote takes place on a UK-US deal, a UK-China deal, UK membership of the transatlantic partnership or on a deal with Australia or New Zealand. Why should not Members of Parliament have a vote on those free trade agreements?

It is worth underlining that Parliament cannot make amendments to a trade treaty under the CRAG process as the treaty will have already been signed. Parliament can only object to ratification of an entire treaty, and that is very much a theoretical power—it is fantasy. There is also the slightly less than theoretical option of Parliament refusing to put into domestic law the different elements of a new trade agreement. Again, with a Government with an 80-seat majority, it is difficult to see how that, in any way, could be anything other than a fantastical possibility.