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.

--- Later in debate ---

[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.