Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [Lords]

Ranil Jayawardena Excerpts

2nd reading
Monday 29th January 2024 Commons Chamber

[The Secretary of State for Business and Trade (Kemi Badenoch)]

I beg to move, That the Bill be now read a Second time.

This Government are proud to champion free trade at every opportunity. We recognise the power and potential of free and fair trade to ease the cost of living, lower prices and extend consumer choice, all of which drives growth across all four nations of our United Kingdom. As exemplified by the free trade agreements that we recently brought into force with Australia and New Zealand, it is UK businesses and UK consumers who benefit when burdensome red tape is cut, greater market access is secured, and trade flows more freely. The UK’s accession to the comprehensive and progressive agreement for trans-Pacific partnership will help us to realise these benefits with 11 countries spanning the Americas and Asia.

As Members will know, this partnership covers a vast area of the globe—500 million people—which already accounts for well over £100 billion-worth in UK trade. Our accession will boost this flow of goods and services even further, leaving more than 99% of UK products eligible for zero tariffs. This matters, because we sell more to CPTPP countries than we do to France and Italy combined. As we join, the partnership will have a combined GDP of roughly £12 trillion in 2022 figures, equivalent to nearly 15% of the world’s total. It will also provide a gateway to the wider Indo-Pacific region, which is set to account for the majority of global economic growth by 2050.

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

Does my right hon. Friend agree that our leaving the European Union has made it possible to secure these deeper economic and diplomatic ties with some of the fastest growing economies in the world, and that it is only because of the decisions made by this Government that we are now getting on with that job?

[Kemi Badenoch]

My right hon. Friend is correct. We would not have been able to sign this agreement had we not left the European Union, but we are now able to enjoy the benefits of this free trade agreement as well as the one that we have with the European Union.

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[Kemi Badenoch]

There are multiple advantages that will accrue to my hon. Friend’s constituency. I do not specifically have figures for the energy sector, but I do have good news relating to Yorkshire and the Humber: 465 businesses are already exporting to Malaysia from Yorkshire and the Humber, and CPTPP will help to boost that region’s economy by around £210 million in the long run. In 2022, Yorkshire and the Humber exported £1.3 billion-worth of goods to CPTPP. Within five years, tariffs of up to 30% will be eliminated on UK exports of machinery to Malaysia, cutting costs for businesses in Yorkshire and the Humber. We will reduce tariffs and non-tariff barriers, which could mean many more companies—such as the jukebox manufacturer Sound Leisure, which already exports to five CPTPP countries—being able to enter more dynamic markets.

The Chair of the Select Committee, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), raised questions about China, and I promised to address them. On China’s application to accede to the agreement, which I know many hon. Members are interested in, let me first say that there are six economies with applications to join the group—China, Taiwan, Ecuador, Costa Rica, Uruguay and Ukraine—and more may apply. Members have not yet made any decisions on which economies will accede in future.

Every applicant must fulfil three essential criteria, called the Auckland principles, to join the group. First, they must be able to meet the high standards of the agreement. Secondly, they must have a track record of compliance with existing trade commitments. Thirdly, and crucially, they must command a consensus of the whole group. These are strong criteria, and they make it clear that working as a bloc is vital. The purpose of this partnership is to be a growing trade bloc, and we share that ambition. We want this agreement to grow, but our accession has set a clear precedent for those that follow. The robust process that the UK has been through has only reinforced the high standards that the partnership seeks to promote, and it has proved that the bar is not easy to meet.

[Mr Jayawardena]

Does that not prove that by being positive and seeking to engage with partners around the world, we can shape this trade area in line with our geostrategic and trade interests?

[Kemi Badenoch]

Yes, it absolutely does. That is one of the ways that we are able to increase UK influence across the world, not just in Europe or near neighbouring countries. My right hon. Friend is absolutely right on that.

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[Gareth Thomas]

All I say to the hon. Gentleman is that I have recognised that there are benefits to accession, which is why we are not seeking to divide the House tonight, and that I will come on to the issue of potential new countries joining CPTPP in a bit.

The temptation for Ministers to exaggerate the significance of what this Bill ushers in—

[Mr Jayawardena]

Will the hon. Gentleman give way?

[Gareth Thomas]

Why not?

[Mr Jayawardena]

Given that the hon. Gentleman recognises that there are opportunities from this deal and that, thanks to the success of our continuity agreement programme, we have trade deals with many countries there already, does he not accept that the diagonal cumulation that is part of CPTPP is a huge boost to British businesses, in terms of supply chains?

[Gareth Thomas]

As I think the right hon. Gentleman may have heard—perhaps he was not listening—I did acknowledge that one of the benefits that will come from CPTPP accession is better rules of origin. However, I gently say to him that we should not exaggerate the benefits of those, because the benefits are not likely to be that huge. They are important to have, of course, given the economic mess he and other former Ministers helped to create, but those benefits are, none the less, modest.

As I said, the temptation for Ministers to exaggerate the significance of what this Bill ushers in is understandable, given that over the past 10 years Britain has had the worst export record of any member of the G7 apart from Japan. That partly explains why the British people have lower living standards now than they did when Labour left office. It is one reason why the British people have become, on average, £10,000 worse off since 2010 and it is key to why the UK is forecast to have the lowest growth in the G7 this year.

Ministers have published no trade strategy and provided no clarity about how the Bill fits in with wider trade ambitions. They have axed support for businesses to get to trade shows and cut funding for business groups to lead trade missions. There is little obvious planning to help businesses use the limited extra opportunities opened up through this Bill and other trade deals. Sensible policies to improve trade with Europe and cut red tape have been vetoed. Sadly, it is therefore not surprising that the independent OBR now expects our trade to grow by just 0.1% this year and in the next two years—that is a shameful record.