Trade (Australia and New Zealand) Bill (First sitting)

Nia Griffith Excerpts

Committee stage
Wednesday 12th October 2022 Public Bill Committees

[Drew Hendry]

Q I have one final question on that subject. You said you have had extensive engagement. Do you think it is right that it has come to this stage without the parliamentary scrutiny I have mentioned?

Lucy Monks: I think the process issue is one for you to take up with your colleagues. It is obviously critical because this is new and, as I said, there has to be a feedback process. However, the way in which you and your colleagues across Government and Parliament interact is one for you, I think.

[Dame Nia Griffith (Llanelli) (Lab)]

Q In the past, there has been criticism from some in your organisation that there was no SME chapter in the treaties. Do you feel that the Bill provides sufficient protections and the mechanisms that you would wish to see to give that ongoing support to small businesses?

Lucy Monks: Yes. There are SME chapters in the Australia and New Zealand agreements. If we had a concern with the Bill and the issue around procurement, it would be that, as I said, small businesses tend to be cut out of the procurement process even in our own country, so both the FTA and anything that impacts procurement legislation need to be done in a way that supports small businesses. I am not as concerned about competition from Australian and New Zealand small businesses as I am about the ability for larger businesses to take opportunities that could be sitting there for smaller businesses.

Separate from that, for a long time there was a conversation between various Government Departments about trying to improve the central Government procurement system, not only for small businesses, but generally in its ability to encourage greater social value through public spending, basically. A couple of years ago, the Government finally published a social value model, part of which is supposed to be about encouraging engagement of small businesses both in the direct procurement system and as part of that supply chain. Obviously, larger businesses can go and bid for contracts, but they kind of have to promise that they will engage with x, y, z number of small businesses in delivering bits and pieces.

The Government have promised to keep monitoring how that model is implemented. I would ask that we keep monitoring how these measures are implemented in terms of both the ability for small businesses to actually access those procurement markets in Australia and New Zealand, and the impact of larger businesses that are going forward and trying to procure those projects and their ability to bring along UK small businesses as part of the process.

[Bill Esterson (Sefton Central) (Lab)]

Good morning, Lucy. You talked about the potential challenge of larger Australian and New Zealand businesses winning UK Government contracts. Is there anything in the legislation you would like to see amended to support small UK businesses in winning Government contracts when facing that international competition?

Trade (Australia and New Zealand) Bill (Second sitting)

Nia Griffith Excerpts

Committee stage
Wednesday 12th October 2022 Public Bill Committees

[The Chair]

Thank you. Some might ask why we are doing that twice, but it is because we do not know who you are even though I am reading out the names. Now we do, so we are very grateful. We now have questions from colleagues.

[Dame Nia Griffith (Llanelli) (Lab)]

Q As I am sure you are all well aware, the Bill is about procurement. Do you feel that it will enable UK farmers and food producers to benefit from procurement by Australian and New Zealand public bodies, as much as it enables Australian and New Zealand farmers and processors to benefit from UK public sector contracts? Will you elaborate a little on the reasons you have your views?

[The Chair]

For those of you joining us via Zoom, I can see all of you clearly, so if you raise your physical hand, we can go from there. Nick.

Nick von Westenholz: Generally, the position of the NFU on procurement—this will not surprise you—is that we are keen to encourage it, perhaps as in the UK guidelines, which encourage the purchase of locally produced food. That is broadly shared by many MPs, that our schools, hospitals and other things should as much as possible be able to provide British food on the menu. Agreements such as those found in the trade deals, as well as the Government procurement agreement that the UK is a signatory to, put some restrictions on that. The potential quid pro quo, of course, is that we might be able to benefit from greater procurement access to overseas markets.

First, it is not clear to us exactly the extent to which food procurement will be central to the chapters in this sort of agreement; it might be other, much bigger procurements that are more likely to benefit from the arrangements, whether in the trade deals or the GPA, to a large degree because we are very far away from each other. If we are looking at a total service contract, it is not necessarily straightforward for businesses in Australia to provide that to schools or hospitals in the UK, and vice versa. Nevertheless, this potentially captures those kinds of contracts.

I am not sure that I am at the moment aware of UK businesses that are looking and eager to capitalise on this or to provide UK food directly to Australian public procurement markets. It is obviously a long way away to be doing that. I suggest that the opportunities are modest, probably both ways. Nevertheless, there is some concern that these sorts of arrangements do restrict the ability of the UK Government in future to look at ways of increasing the amount of British food subject to UK public procurement guidelines.

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[The Chair]

Before I call Anum Qaisar, I think Nia Griffith has a supplementary, or another question.

[Dame Nia Griffith]

Q Yes, if I may, I will follow up with a couple of questions. Am I to understand from your answers to my question that you are in agreement with the Government’s own impact assessment that we will actually take a hit on GVA on agriculture and processed food products?

Nick von Westenholz: We take the Government’s impact assessment at face value. It is not surprising, if you look at the basics of the trade deals, that the deals themselves change very little for UK exporters to Australia or New Zealand. They are open, liberalised economies already, with tariffs generally at zero, although there are some tariffs on some products. Of course, coming the other way, the deals are very liberalising—over a period of years, admittedly, but eventually we will liberalise our markets in a way that they are not for other countries that we do not have trade deals with. It makes sense that there would potentially be a negative impact in those sectors of the economy where Australia and New Zealand are particularly strong, such as agrifood. So, yes, those impact assessments sound right to us.

Jonnie Hall: To complement what Nick has just said, for agriculture and agrifood as a whole, it looks like a potentially damaging impact, but I think we need to be a bit more nuanced about it, and look at it in terms of particular sectors in agriculture. New Zealand is very strong in terms of red meat—beef and lamb—but also dairy and horticultural production. Australia is likewise, and you can add grain to that. There are clear potential impacts for particular sectors that are already really quite vulnerable in large parts of the United Kingdom, not least in Scotland. I am thinking particularly of the red meat sector and how important that is to the rural economy of Scotland and, indeed, the whole economy. Scotch beef and Scotch lamb are iconic products, but we are not in a situation whereby we can stack it high and sell it low, as it were. Anything that comes along and undermines our position in that respect is clearly going to be a considerable threat—I use that word advisedly—to the viability of agricultural businesses here in Scotland.

Donald MacKinnon: I agree with everything that Jonnie said there. I think of the impact, particularly on the red meat sector, which, we cannot forget, operates in some of the most fragile areas of the country and really underpins the rural economy in these areas, particularly in the highlands and islands, where my members are crofters.

I just want to add another point about timescales. Often the argument is put to us that New Zealand is not ready to flood us with lamb on day one—I am sure we will get on to the safeguards that have been put in around the 15-year transition—but that was never something that we were concerned about. This is about changes that can happen over a much longer period of time. Agriculture does not operate on year-to-year, short lifecycles. We operate in generational terms in our businesses, and 15 years is a relatively short period of time in that sense. So it is not that we are concerned that the negative impacts are going to happen straightaway. This is about the long-term future of our industry. That is what my members are concerned about.

Gareth Parry: I would take that a step further, from a Wales perspective at least. Without going into too many details of the figures from the UK Government and the impact assessments of all the different sectors and the different nations across the UK, I think it is worth highlighting how much more Wales relies on agriculture when it comes to rural economies, rural communities, our Welsh language, and a number of other, tertiary businesses that rely on agriculture. We believe that those impacts would be much more significant in Wales.

[Dame Nia Griffith]

Q You have mentioned good food and wanting to buy British. Obviously, the public are now very interested in ethical purchasing, including having high animal welfare standards. Do you think that the Bill will allow a UK public body to insist on procuring products produced to higher animal welfare standards, and thus favour UK produce? Would you suggest any ways in which the Bill could be improved or amended?

Nick von Westenholz: I am not sure it could be done via the Bill, because I guess the Bill is simply legislating domestically for what has been agreed under the Government procurement chapters in the FTAs themselves. My understanding is that if they were to do that, they would have to go back and open up the negotiations, which are obviously completed. I think the Bill either stands or falls. I am not sure an amendment would be possible in that sense.

I would have to examine the text closely, but under the relevant chapters in the agreements and, indeed, in the wider Government procurement agreement, there are provisions that allow Governments to stipulate provisions around environmental protection and so on, and environmental standards for procurement contracts, as long as those are not discriminatory between domestic and overseas potential bidders. I am not sure that that would extend to, for example, animal welfare and those kinds of production standards, but I could not be absolutely sure about that. I would suggest that there is some degree of flexibility for Governments to stipulate certain requirements in the contracts for these public procurement arrangements, but on the question whether that extends to specific animal welfare requirements, I do not believe it would.

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[The Chair]

We will now hear oral evidence from Michael Gasiorek, director of the UK Trade Policy Observatory, who is joining us via Zoom. This session will end at 3.45 pm. Will the witness please introduce himself?

Michael Gasiorek: Yes. Good afternoon and thank you very much for inviting me to give evidence. My name is Professor Michael Gasiorek. I am a trade economist. I am director of the UK Trade Policy Observatory and co-director of the Centre for Inclusive Trade Policy, and I am based at the University of Sussex.

[Dame Nia Griffith]

Q Good afternoon. I will pick up on some of the issues that have been noted in your written evidence. In the context of the Bill, which, as we know, is about procurement, you say that there are “unclear” technical and legal mechanisms to ensure compatibility of data privacy between the UK and Australia, and that

“This may endanger…the EU’s…adequacy decision to the UK”,

and public trust, which would obviously be a very serious issue. Is there any way that we could remedy your concerns through the Bill?

Michael Gasiorek: The short answer is that I do not know. The issue that arises is to do with the agreements in the UK-Australia and UK-New Zealand deals on transmission of data across countries, and whether they accord with the EU’s data adequacy decisions. I am not a legal scholar, so I would not be able to tell you with regard to the specific terms of this Bill. My understanding was that I was coming to the Committee to address questions about the economics of the agreement, not the legal technicalities; I am afraid that I am not a lawyer.

[Dame Nia Griffith]

Q Let us turn to the economic side, then. You say that the economic impact of the agreement is very limited. Again, are there any ways in which the Bill could be improved that would give better opportunities and ensure a greater economic impact?

Michael Gasiorek: I think the reason that the economic impact is limited is largely driven by the fact that we trade very little with both Australia and New Zealand. In each case, it is not much more than 1% or 2% of our trade—less with New Zealand than with Australia—and they are both very far away. There is very little that could be done to increase the aggregate economic impact of the agreement. Logically, these are countries that we do not trade very much with, and that are very far away—that is one of the reasons why we do not trade very much with them; another is that their GDP is smaller than that of larger trading partners. There is little that could be done in the Bill to change that outcome.

[Dame Nia Griffith]

Q On the advantages and disadvantages in procurement processes, does the Bill deliver well for UK companies, or could there be ways of improving it?

Michael Gasiorek: Once again, I will pass on that question. As I informed the Committee’s secretary, I am not a specialist on procurement processes; I am a specialist on the economics of the agreement.

[The Chair]

Okay. If there are no further questions from Members, I thank the witness for his time.

Michael Gasiorek: Thank you very much.

Examination of Witness

Rosa Crawford gave evidence.

Trade (Australia and New Zealand) Bill (Third sitting)

Nia Griffith Excerpts

Committee stage
Tuesday 18th October 2022 Public Bill Committees

[Ms Qaisar]

I thank my colleague for his intervention. He is correct that the challenges that Scottish farmers face are the same as those faced by Welsh farmers and farmers from across the four nations. A key point that he failed to mention, however, is that in Scotland over 60% of people voted to remain in the EU, and there is still a lot of anger from Scottish farmers in that regard.

Last week, we also heard from Jonnie Hall from NFU Scotland. He said something that struck me:

“There are clear potential impacts for particular sectors that are already really quite vulnerable in large parts of the United Kingdom, not least in Scotland. I am thinking particularly of the red meat sector and how important that is to the rural economy of Scotland and, indeed, the whole economy. Scotch beef and Scotch lamb are iconic products, but we are not in a situation whereby we can stack it high and sell it low, as it were. Anything that comes along and undermines our position in that respect is clearly going to be a considerable threat—I use that word advisedly—to the viability of agricultural businesses here in Scotland.”––[Official Report, Trade (Australia and New Zealand) Public Bill Committee, 12 October 2022; c. 32, Q40.]

Concerns have also been raised by the Scottish Cabinet Secretary for Finance and the Economy, Kate Forbes, and the Minister for Business, Trade, Tourism and Enterprise, Ivan McKee. They recommended that the Scottish Government do not give consent for the Bill in its current form. We need to be really careful. The UK Government must not continue on the path of creating delegated powers to implement the Bill.

Amendments 3 and 4 seek to ensure that there are high levels of dialogue and discussion between Scottish and UK Government Ministers. That dialogue would ensure that matters of procurement in Scotland are at the heart of this legislation, crucially protecting the interests of Scottish farmers. In order to support Scottish interests and farmers, I ask Members to please support the amendments.

[Dame Nia Griffith (Llanelli) (Lab)]

I rise to speak in particular to amendments 5, 20 and 22. I am sure that the Committee will be pleased to hear that in talking about amendment 5 and consultation, which is vital, I will also refer to amendment 22 and the issue of impact assessments, so as not to repeat myself. To avoid excessive repetition, I will give examples based on the Welsh Government, but that will certainly apply to Scottish Ministers, to the Northern Ireland Administration and to regions across England. The issue for us is that here we have a clause that will implement part of a trade agreement in which we would have liked to have seen better consultation and a more nation-specific impact assessment. What we can do here is try to put in appropriate consultation before the legislation that clause 1 will allow is finalised.

It is essential that there should be consultation specific to the nations and regions of the UK for a number of reasons. In the case of Scotland, Wales and Northern Ireland, devolution means that within areas of devolved competence, such as agriculture and economic development, there is increasing divergence in the way that things are done. Indeed, public procurement policies are different, and it is important to see the impact of the implementation of the Bill on each nation.

There may be very different economic profiles for the different nations and regions. In the case of the Bill, what is of particular significance is the relatively greater importance that the production of beef, sheep meat and dairy products has in certain nations compared with the UK as a whole. The same may be said for specific regions of England, for example, the relative importance in Cumbria of the beef and sheep meat sectors. Equally, there can be concerns for a particular region because of its reliance on fishing or a specific industry. To give an example, 70% of agricultural output in Wales is beef, sheep meat or dairy, and 70% of the farmland in Cumbria is for beef and sheep livestock farming, with a further 16% for dairy. The importance of livestock farming in Scotland has just been mentioned by the hon. Member for Airdrie and Shotts.

It is no secret that the farming and food processing sectors are most concerned about the treaties; those are the sectors for which ongoing consultation on the implementation of the treaties and their impact on public procurement is absolutely vital. The Government’s impact assessment singled out agriculture, food and fishing, and food processing, as the sectors that lose out in both the Australian deal and the New Zealand deal, with gross value added down in the Australia deal by £94 million, and in the New Zealand deal by £48 million. Food processing is down in the Australia deal by £225 million, and in the New Zealand deal by £97 million. Obviously, there is real worry about what will happen to our farming industry because that has a massive impact on the guardianship of the local rural community, the family farms, and affects our culture—the Welsh and Gaelic languages.

Regarding the markets, let us take the example that 85% of the beef produced in Wales is consumed in the UK, as is 60% to 65% of sheep meat. There is a question about the impact that the huge and rapidly increasing tariff-free quotas of meat from Australia and New Zealand will have on our own farmer’s ability to sell into the UK markets. While we have mentioned the issue of school meals, it is not necessarily in the public procurement of the finished product, but in the supply chains of ingredients, where we will potentially see Australian and New Zealand products—cheese or meat—displacing UK produce. That is in conflict with some of the devolved nations’ procurement policies, where there is a wish to support the local and circular economy.

Further concerns have been raised. In the New Zealand deal the weights allowed in under the tariff rate quotas refer to the carcase weight equivalent, whereas in the Australia deal the volumes are shipped product weight, which means that they could be used disproportionately for the Australians to send their most expensive cuts, thus challenging the most lucrative part of the market for our farmers. We saw something similar to this during covid: when restaurants were not allowed to open, there was a drop in demand for steaks and higher end meat products, while supermarkets continued to demand the lower value products, and that had repercussions for our farmers and food processing industry.

--- Later in debate ---

[Bill Esterson]

My hon. Friend is making the case very well about the need to involve the farming and agriculture industry in trade agreement scrutiny. Was she struck, like I was, by the comments from Jonnie Hall of NFU Scotland about “retrospective scrutiny” and the fact that this weakened the role of the Trade and Agriculture Commission? Does she share my view that the evidence we heard is exactly why we need the kind of analysis referred to in amendment 7 before the regulations are implemented?

[Dame Nia Griffith]

I absolutely agree with my hon. Friend. The whole point is that there should have been much better consultation, either directly with the farming unions or by their representatives in the Scottish and Welsh Governments who have raised these points and have very good, close relations with the stakeholder groups in their respective nations. As my hon. Friend rightly says, a number of concerns were raised by the NFU. The whole point of having consultation and impact assessments is that those concerns can be properly documented and we do not rush into the legislation produced by clause 1 and leave people in a more difficult predicament.

[Gareth Thomas]

Does my hon. Friend agree that one reason why the Minister ought to be tempted by amendment 5 and amendment 22 is that they would give Essex County Council—which is currently Conservative-run but probably not for much longer, given the mess the Conservative party is leaving our country in—the chance to consult directly with small and medium-sized businesses about the procurement chapter deals that have been done in the UK-Australia and UK-New Zealand free trade agreements? As a representative of the people of Essex, he would surely think that that sort of consultation is a good thing that might remedy some of the mistakes that his predecessors have made in this area.

[Dame Nia Griffith]

I absolutely agree with my hon. Friend. The point is that locally based devolved authorities have much closer contact with the people they represent, so the consultation on how this is working out, what we are going to do next and what the next part of the implementation is must be able to take account of the feelings of those stakeholders on the ground who perhaps feel that they have not had a voice until now.

I pay tribute to officials in the Department for International Trade and the Welsh Government for their very positive and professional engagement. Indeed, the Welsh Minister for the Economy, Vaughan Gething, notes that there has been some improvement between the Australia deal and the later New Zealand deal, and I hope that the experience has been similar for colleagues in Scotland and Northern Ireland, and indeed for representatives of local government across the regions of England.

On procurement, the Welsh Government go as far as to say that there may be scope for businesses in Wales to take advantage of the provisions included in the UK Government procurement agreement, and that some Welsh interests in procurement were protected during the engagement with the Department for International Trade. However, Vaughan Gething says:

“I hope we continue to see improvements in the engagement we have with the UK government, and that future deals provide opportunities and benefits for producers and consumers in Wales.”

It should not be a matter of hoping or relying on good will, which is why the concept of consultation should be enshrined in the wording of the Bill and a meaningful consultation should take place before the clause allows for the implementation of the procurement chapters of the FTAs. Of course, there are certain powers that the Welsh Government have already. Under section 62 of the Government of Wales Act 2006, they have the power to make representations about any matter affecting Wales, but we still feel that this needs to be stated explicitly in relation to the Bill.

One of the issues that relates to procurement is the gradual elimination of tariffs on beef and lamb. Under the New Zealand treaty, for example, the UK or New Zealand can unilaterally accelerate the elimination of tariffs. This is clearly of huge importance to Welsh farmers, so the Welsh Government want to know that they will be fully consulted by the UK Government on any possible acceleration of the elimination of tariffs on goods from New Zealand well before any decisions are made, because secondary legislation could emanate from the clause to put that into action. Clearly, we need that consultation beforehand. Why? Because if we had had better parliamentary scrutiny of the trade deal, we might not be in this position in the first place.

[Gareth Thomas]

Given the comments that my hon. Friend has just made, perhaps the Minister will take advantage of this debate and reflect on whether his ministerial colleague, the right hon. Member for Chelsea and Fulham, was wrong to reject amendments to the Trade Act 2021 that would have increased scrutiny. As many suggested at the time, perhaps we should have a debate on each free trade deal as the negotiations are just beginning to get under way, so that interested bodies can set out their concerns and Ministers can properly understand the depth of concerns that particular sectors might have—especially on procurement, given that that is what we are debating at the moment, but more generally as well. We are only having to oppose the amendment because Ministers will not do the sensible thing and have proper parliamentary scrutiny much earlier and at the end of things.

[Dame Nia Griffith]

Indeed. As I said, there are a number of unanswered questions. For example, it would have been nice to have had some analysis from the UK Government to understand why such huge increases were agreed in the quotas of tariff-free beef and sheep meat. Indeed, the Welsh Government requested that but have not had an answer. During the negotiations, the Welsh Government also made calls for market access offers that recognise the risks that large increases in imports could pose to Welsh producers, who have to meet high animal welfare standards. All of this points to why consultation is so important from the very outset and all the way through to the stage we are at now and beyond.

This is not just about the things that have been done by the Bill; it is also about areas where the free trade agreements could have been made better. Let me take the example of antimicrobial resistance. It is okay to stay where we are at the moment, but it would have been useful to work towards a better situation and to use procurement to do that. We do not want just to say, “Well, we don’t want any more use of antibiotics.” Actually, we want to look to reduce their use, although we seem to have missed that opportunity in the trade deals.

We welcome the commitment in the free trade deal to regulate our own standards, as well as the commitment to non-derogation with respect to welfare standards, but the point is that we need the consultation. We want the statutory basis for consultation to extend much further to the point of having some form of concordat with the Welsh Government, the Scottish Government and the Northern Ireland Administration that set out exactly what the consultation would be throughout the process. Indeed, we have a similar concordat on justice between the Welsh Government and the UK Government.

The point is to try to give some shape to the framework, and some certainty, and such a concordat would have so much to contribute. I made a point earlier about the fact that the devolved Administrations are in many ways much more able to engage with stakeholders to represent their views. Going forward, we need to think about issues that might cause problems, such as rules of origin and the fact that small and medium-sized enterprises might struggle and need support in that respect—consultation, impact assessment and feedback are so important to getting this right.

[Gareth Thomas]

Surely one of the other benefits of consultation is that it might start the Welsh Government and the Department for International Trade thinking about how, together, they might help businesses in Wales to capitalise on a free trade agreement. My hon. Friend will remember that a previous trade Minister criticised the Department for not doing enough to support businesses trying to export. Early consultation with the Welsh Government presumably might help to address some of those failings and enable businesses, together with the Welsh Government and the Department, to begin to think more quickly about how they might take advantage of the benefits of an FTA.

[Dame Nia Griffith]

Indeed. Not only might there be a benefit, but the high penalties that can be incurred by the respective parties if, for example, they do not understand rules such as the rules of origin might be avoided. Such fears could be fed back through proper consultation and support put in place to ensure that we were able to take advantage of the free trade deals.

Another pertinent issue is the fact that we are debating legislation that overlaps with areas of devolved competence —for example, procurement policy, agriculture and economic development. We do not want the situation that arose with respect to the United Kingdom Internal Market Act 2020 whereby instead of a proper negotiation on where we should end up and what we wanted and required, we were frightened by the thought of being driven to the lowest possible common denominator on standards by the over-powerful influence of a UK Government purporting to represent the whole UK, but in fact listening only to themselves and not taking into account the views of the devolved Governments.

It is important that we recognise the powers that we have, and that the way forward is through consultation and negotiation, rather than riding roughshod over the issues. For example, the Welsh Government have devolved responsibility for setting domestic sanitary and phytosanitary strategy and policy. Clearly, that is of direct relevance to procurement and the way the FTAs were drawn up.

--- Later in debate ---

[The Chair]

I reassure the shadow Minister that he will always catch my eye as long as his comments are—as they are always are—in the scope of the Bill.

[Dame Nia Griffith]

My hon. Friend raises the importance of consultation, working together and wanting to make things better by negotiation, rather than by imposing a view by one central Government Department on areas that are actually within the devolved competence of other Governments.

I will move on to speak more specifically about the issue of impact assessment. There are various reasons for wanting a proper impact assessment of the effects on Scotland, Wales and Northern Ireland and on regions of England. Clearly, there is the levelling-up agenda. There is the fact that different sectors are of different importance to different areas. There is also the fact that the Government’s impact assessment in respect of the FTAs is literally just a table. This is the sop we have to anything to do with the individual nations or regions. We do not have a real study of the impacts of the FTAs on those areas.

As we go forward with the Bill and clause 1, with the powers it provides, it is absolutely essential that it should include a clause for proper impact assessment. The Welsh Affairs Committee was very critical of the lack of detail in that respect. The Committee referenced the Japan comprehensive economic partnership agreement, which includes a better attempt at regional impact assessment—of Wales, for example—but that again did not go far enough. There is a real need for proper impact assessment.

We have mentioned already the impact on agricultural producers and, as I have mentioned, the wellbeing of future generations. The importance of that is of course that FTAs have obligations that bind future generations. They are not things that we can go back on. That is why it would have been nicer to have had impact assessments earlier. If we had them now we could at least prevent mistakes going forward and not have negative impacts on our agricultural sector in the surrounding communities. Given that we already start with negative figures, there is clearly some work that needs to be done. The risk has been exposed. That has been detailed, yet the impact of what that means for farming families and our communities has not been thoroughly explored.

[Gareth Thomas]

The beauty of having a consultation before regulations are introduced as well as an impact assessment once regulations are about to be brought forward is that we can try to prevent mistakes and understand what might happen as a result of procurement regulations. An impact assessment can highlight to the Welsh Government and other Government agencies what ameliorative support might be needed to help businesses adjust to the impact of new procurement regulations as a result of the procurement chapters. That is an advantage of two of our four amendments as well.

[Dame Nia Griffith]

Indeed. In respect of support for businesses, there is a real concern about the cumulative impact. That, again, refers to the first amendment we debated today—the issue of what other FTAs with other countries might be included in the legislation. Also, we need to see what the situation would be if the agreement has a negative impact—for example, unfair subsidies made by New Zealand or Australia to help their businesses, or if there is a particularly high volume of imported goods. It is important that Welsh businesses can report and escalate any concerns to the relevant trade bodies and authorities. Again, the proper relationship with devolved Governments can facilitate that.

To sum up on the issue of impact assessments, the impact on sectors is very important. That dovetails with the question of the different regions in England and the different nations of the UK because different sectors can be affected by trade agreements in very different ways, particularly regarding the output and the employment in the different areas. What is the GVA in those areas? Those are all reasons why we want an absolute commitment from the UK Government to a proper consultation procedure and a proper impact assessment before the implementation of clause 1.

I want to sum up with the question of rights and the rights that we are concerned about. The Joint Committee on Human Rights did not give exactly give the ETAs a clean bill of health as they went through. We have had concerns from the trade unions. The Joint Committee on Human Rights raised the fact that in the Australia deal there is no language about the protection of human rights. I note that in the response to the International Trade Committee, the Minister at the time, the right hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), rather brushed that off as “Oh, there are other ways we can deal with that.” However, as we know, it has become more common for trade deals to have a wider focus.

Whereas historically trade deals would just have focused on the economic benefits of trading relationships, they have now expanded to address a wider set of cross-cutting areas, such as small and medium-sized businesses and gender, labour and environmental policy, including climate change. Those wider considerations are particularly relevant to public procurement implementation because of the role of procurement policies in protecting the environment and fair work.

The Joint Committee on Human Rights was not exactly happy—[Interruption.] It was pleased to see provisions on forced labour, modern slavery and human trafficking, but noted the limitations on enforcement and supply chains, limitations that the trade unions also raised. The trade unions also pointed out that they were not part of the stakeholder consultation and did not have their rightful place at the table. Again, consultation through the devolved Governments could give them a better voice, because there tends to be a better relationship, but trade unions should be at the table, full stop.

I will not go into more detail on climate change, apart from to say that at the time of the negotiation of the Australia deal, Australia had a terrible reputation on climate change, ranking very low in the world, with a terrible record on emissions. This might have been an opportunity, perhaps, to do rather more.

[Gareth Thomas]

It was a Conservative Government.

[Dame Nia Griffith]

It was indeed. I hope that the new Government in Australia may do something of their own accord, but we should not be leaving it to them to act of their own accord, and hoping. That is the point of the amendment. It is not enough to leave things just to happen, because they do not. Unless we put positive steps in to make something happen, it does not happen.

[Gareth Thomas]

My hon. Friend is making a very good point about climate. Is that not one of the differences between the New Zealand FTA and the Australian FTA? Negotiating with a conservative Administration in Australia led to a deal that does not reference climate. Negotiating with a Labour Administration in New Zealand led to substantial provisions on climate—[Interruption.] Would it not be good to hear the Minister explain how he has been talking to the new Labor Administration in Australia about how they might perhaps insert some more climate provisions into the trade relationship between the UK and Australia as a result of some of the joint committees that have been set up under the FTA?

[Dame Nia Griffith]

Indeed, absolutely. One rather suspects that it was not thanks to the UK Government, but thanks to the New Zealand Government that the climate provisions found their way into the trade agreement; they somehow got completely lost in the Australian FTA.

All these points are reasons why we have tabled the amendments. These issues are too important to be left to chance. They should be fundamental to any form of procurement policy, which should be based on a full impact assessment, full consultation and full respect for human rights and employment rights, and our goal of getting to net zero. Those are all very important points.

[The Chair]

After that big bang, I am very tempted to call the ghost of Christmas past, but instead I call the very living and very present, Lloyd Russell Moyle.

Trade (Australia and New Zealand) Bill (Fourth sitting)

Nia Griffith Excerpts

Committee stage
Tuesday 18th October 2022 Public Bill Committees

[Sir James Duddridge]

I have absolutely no idea. As the hon. Gentleman said early on, procurement is a very small section of these matters. Most, if not all, of these meetings were probably open, so I could check the minutes, but I suspect that not every nuance is captured in them. Also, sometimes trade issues can be looked at through lots of lenses. For example, one issue might relate to the motor industry, procurement and Wales.

There are bilateral meetings with counterparts from the devolved Administrations, and there is weekly engagement by UK Government officials. That all helps to build a better relationship. The hon. Member for Llanelli asked whether the relationship could be better. I am unsure of how well sighted she and the Committee can be of the details of that—I think that is what the hon. Member for Harrow West is alluding to—but it would be interesting to look at the Welsh example, in particular; there have been a lot of compliments, with people saying that engagement has increased and is better. That is not to say that it cannot be even better, but let us give credit where credit is due—not to Ministers, but to the Department.

[Dame Nia Griffith]

Absolutely, and I made that point clearly. Large questions remain unanswered, including why the quotas were set so high. Those sorts of things could have been sorted out if consultation had gone back a bit further and had been more timely.

[Sir James Duddridge]

I will focus my comments on the devolved Administrations, and I will come back to meat later, in the meaty bit of my speech. We have been discussing the necessary changes to procurement regulations with devolved officials since they were first raised in negotiations. I hope that our level of engagement demonstrates that consultation is already integral to what we do. The remit of the Trade and Agriculture Commission, in which there has been some interest, focuses on a critical issue for Government, the public and farmers: agricultural standards. Its analysis is an absolutely critical part of the scrutiny framework for new free trade agreements, and it supports the Government’s clear commitment to upholding the United Kingdom’s high agricultural standards.

The commission’s remit is very specific, so that it can produce high-quality advice that speaks to its collective expertise. The Government would not want to dilute its important work by widening its remit; that would weaken its focus on its core mission. If amendment 3 is intended to allow the commission to consider the impact of the procurement chapter on agricultural standards, it is unnecessary; the commission can already consider any part of an agreement that it thinks is relevant to the issue of domestic standards—specifically to animal and plant health, animal welfare or the environment. The amendment would widen the commission’s focus beyond what we want it to focus on. I respectfully suggest that that would have unintended consequences.

The Department committed to including in the impact assessments, every two years, a monitoring report on the deal. Furthermore, within five years of the agreements entering into force, there will be a comprehensive evaluation report on both deals. These evaluations will do exactly what I think hon. Members want and seek Government assurances on, because they will aim to show how and why the agreements were made, whom they benefited, what the outcomes are, and how they could be better. I am happy to assure the Committee that those reports will look at all the regions—Northern Ireland, Wales, Scotland and England—and, if necessary, consider the regional picture if that is still a concern, notwithstanding my comments and the evidence over that period.

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[Sir James Duddridge]

I certainly want us to make progress.

Let me turn to the meat of my speech—the lamb and beef. We have secured a large range of measures to safeguard farmers generally within the tariff quota with respect to a number of products, but specifically, on the New Zealand side, I would point out that UK sheep imports from New Zealand have fallen over the past decade, so I do not think the idea that these measures will radically change the relationship is right. On Australia, increases in beef imports are likely to happen, but rather than displacing our domestic farmers, those imports are more likely to displace slightly more expensive beef from the EU. That means that beef will be coming from Australia, not France, for argument’s sake, and it will be cheaper for my constituents—my Sunday roast, their Sunday roast. That is part of levelling up and getting on with tackling the cost of living.

More broadly, there is a strong case for free trade. Earlier, the hon. Member for Brighton, Kemptown made the case for not unilaterally making moves and to hold back the negotiating power. That is a valid argument, because some of these things could be traded off for something else. However, there is actual underlying value in reducing tariffs and minimising systems; it makes products cheaper. That is what we are trying to do as a Government and I do not think that anyone would disagree with that. So, it is a third balancing act within that arena.

[Dame Nia Griffith]

Would the Minister accept that there really is a need for consultation and that there is also a need for an ongoing impact assessment, because the situation for Welsh farmers is so different from that of farmers in Australia and New Zealand, where the quantities involved and the farms themselves are absolutely huge? We are obviously very aware here that our hill farms are in some of the areas that are hardest to farm and that really there is no straightforward comparison with Australian and New Zealand farms. Then add to that the other costs of production, such as the costs arising from the higher standards that we have. Again, it seems that the cards are already stacked, and that consultation and a continued impact assessment are absolutely essential in trying to protect our farmers.

[Sir James Duddridge]

Fundamentally, I agree with the hon. Lady that that needs to be done. However, I think there is a question of frequency. We talked about the evaluation at the five-year point; we have talked about a two-year evaluation. Should there be consistent—I am trying to find the words that she used—or repeated evaluation? Well, there might be some value in that, but there is also a big cost in that, and if you produce annual report after annual report, sometimes they just go on the shelf. So, there is the right point to do the evaluation rather than doing it too frequently.

The other point that I would make is that we cannot flick a switch overnight and suddenly go from one trading situation to a new one, with a whole different array of goods and services being traded. It happens over time. So, over the first year, I will take on the responsibility for both implementing the deal and for what we call within the Department utilisation, which is basically taking advantage, because there is no point in this pile of new trade deals just sitting on my desk. They need to be explained to British businesses; we want to take them out to Australia. Only a few weeks ago, I went to Ipswich, where there is a company producing recyclable bottles. I hope that I have got this in the Register of Members’ Financial Interests—they gave me a bottle of gin and the bottle was a reusable paper container. That company will want to export to Australia, I think, one of their machines; the New Zealanders will no doubt want a similar thing; and we will then import lighter weight, lower cost wine, which I think benefits everyone.

I will return a bit more forensically to some of the points that have been raised, while being conscious of time. The issue was raised of farming and discussions with Ministers in devolved Governments about procurement. While there would have been the overall discussion, I am not aware of the specifics on procurement in farming, because that is more about the consultation for the deal and not about the consultation for the Bill, which is more narrowly focused.

I think that I have covered off the issue of impact assessments. What I would say is that they are not forecasts; they are indicative. But in many ways my criticism of some of the forecasts is that they are not dynamic enough—that is, we are underrating the potential value of some of these deals. However, the process allows for a level playing field and a comparison between different things.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey talked about the Scottish Minister for Trade. In respect of the content of the Bill, the procurement policy teams met with officials from the devolved Administration for roundtables on the text of the procurement chapters in both negotiations: for this Bill; and for the procurement regulations that are consequently developed from the Bill. We have been discussing the necessary procurement regulations that will follow on. So I can reassure the hon. Gentleman that that is happening.

There was some discussion around trade remedies. The hon. Gentleman said that I am blessed with a box full of wonderful officials and no doubt behind the scenes they are texting backwards and forwards. The resources are slightly less. I think there has been some misunderstanding, effectively, on what happens.

The same exclusion of trade remedies in the Bill applies to GPA, but the exclusion on remedies only applies to temporary measures to suspend a supplier from the procurement process. Crucially, it does not prohibit them from bringing a claim, so they can still do that.

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This new clause is key, because it is not just about geographical indicators in Scotland; it is about identity. To protect world-renowned produce such as Scotch whisky or even Cornish pasties, Stilton cheese, Gloucester Old Spots and Jersey Royal potatoes, it is vital that we back the new clause, and I urge colleagues to vote for it.

[Dame Nia Griffith]

I rise to speak about new clause 4, but I will briefly mention new clauses 1, 2 and 3. I commend the SNP for laying them, but I gently suggest that the issues in them could be covered in new clause 4, which proposes having a proper impact assessment that takes account of the interests of the four nations.

I will not repeat everything I said this morning, which I am sure the Committee will be glad to hear, but the reasons for wanting country-specific impact assessments—and region-specific impact assessments in England—of the ongoing implementation of the Bill, its effect on procurement and the economic effects of the procurement clauses of the FTAs are very much to do the different characteristics and the different proportions of GVA that are countable by different sectors, as mentioned by the hon. Member for Airdrie and Shotts. Within the devolution settlement there are powers regarding agriculture, economic development and procurement policies that the different nations have, which all overlap with what is in the Bill.

There are particular areas that are of great concern. Earlier I mentioned—I do not think the Minister has quite answered this—the power to unilaterally accelerate the elimination of tariffs. Clearly, it would be of huge importance if the UK Government wished to do that and allow in more meat from Australia and New Zealand. We would clearly want consultation on that, but we would also need proper impact assessments to evaluate the situation, and those need to be country-specific impact assessments. As I mentioned earlier, we have is just a group of figures that are region and nation-based.

The other issue—the Minister looked rather quizzically at me before—is the massive use of antibiotics by certain farmers in Australia and New Zealand and the cumulative impact that that will have on the food chain. Again, that needs to be looked at in detail from the perspective of not only the potential commercial advantage it could give over Welsh, Scottish and Cumbrian farmers but what it is doing to our food chain. Linked to that, of course, are pesticides and the sad fact that the Government have accepted the use of pesticides that we would not use in this country. None of these things is going to go away—they will be there for some considerable time and could be in our systems permanently.

On geographical indications, it is an immense disappointment that neither the Australian nor the New Zealand trade agreements include geographical indications. It is a complete failure by the UK Government. The EU made an agreement with New Zealand that did include geographical indications. There will clearly be a competitive advantage for goods from the EU being able to fly their flag and show geographical indications that our goods and our exports will not have. That is a great pity.

I return to the impact on the different nations of the procurement parts of the Bill. The New Zealand agreement contains a general bilateral safeguard mechanism, which is available if the elimination of customs duty causes an increase in imports that threatens or results in serious injury to domestic industries for any given good or products. The Welsh Government does not have that power, because it is not regionally or nationally based—a challenge on those grounds has to be put forward by the UK. We need to have information from the nations about the impact on the particular sectors, which will inform whether there is a danger and whether to flag it up and invoke that bilateral safety mechanism.

It is extremely important that we should not let negative impacts accumulate. That is why we propose an impact assessment within 12 months, and repeated assessments every three years. We know there is a 15-year gap until the full free tariffs come in, on meat, for example, but it is no good waiting 15 years and then finding we have no industry. We should be flagging up and knowing exactly what is happening. As the Minister said, it will not happen on day one; it will be gradual. We need a very specific impact assessment so that we know what is happening.

It may surprise people to know that New Zealand has only ratified six of the eight core International Labour Organisation conventions, which we touched on briefly this morning. It does not have a minimum age for starting work, as long as the work does not interfere with school or is not a matter of concern for health and safety. The Welsh Government have asked for clarification from the UK Government on whether not adhering to the same labour standards as the UK will give New Zealand an advantage. In addition, New Zealand does not protect strikes on economic and social grounds, only on collective bargaining and health and safety. These are important issues and we must keep an eye on exactly what is going on with the procurement and what opportunities and challenges there are, and ensure that the Minister takes action sooner rather than later if we find there are difficulties.

Finally, I would reiterate that there are huge differences between different parts of England and different nations of the UK in terms of the sectors they are dependent on and the impact that anything injurious to any of those sectors might have for their populations.

[Sir James Duddridge]

May I clarify, Mr Twigg, that we are considering all the new clauses together?

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The hon. Member for Llanelli mentioned antibiotics. I was quizzical because I thought she was talking about their procurement rather than the issue of antibiotics in meat that is then exported. I assure her that all agri-food products imported into the UK under existing or future trade agreements will, as now, have to comply with the important requirements, which include clear controls on limits for veterinary medicine residues in meat and other animals.

[Dame Nia Griffith]

Will the Minister give way?

[Sir James Duddridge]

I may just be coming to the point that the hon. Lady wishes to make. The UK prohibits the use of artificial growth hormones in both domestic production and imported meats. Nothing in the deal changes that important issue. The Trade and Agriculture Commission found that there was

“no reason to believe the scheme is not reliable and robust.”