Draft Asian Infrastructure Investment Bank (Immunities and Privileges) Order 2015

Richard Graham Excerpts

Monday 2nd November 2015 General Committees

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)]

I beg to move,

That the Committee has considered the draft Asian Infrastructure Investment Bank (Immunities and Privileges) Order 2015.

It is a pleasure to serve under your chairmanship, Mr Gapes. The order was laid before the House on 12 October 2015. It gives authority for immunities, privileges, reliefs and exemptions to the new international organisation—the Asian Infrastructure Investment Bank—under the International Organisations Act 1968. Before I go into the detail of the order, I will set out some context with a few words about the bank and its links with the Government’s prosperity objectives.

The fast-growing markets of the emerging economies are becoming increasingly important to global trade, to British businesses generally, and to our values in the United Kingdom. The United Kingdom must, therefore, continue to play a significant role in developing the markets, as well as the global economy. Equally, we must expand into areas where we are economically under-represented. China is at the heart of some of that activity. The recent state visit by the Chinese President demonstrated the scale of the opportunities that lie in deeper co-operation between our two nations, and a key component of opportunity and growth in Asia is, and will continue to be, infrastructure. Satisfying that need is vital not only for driving growth but for increasing living standards across the region. It will benefit the whole global economy, creating new jobs, including for British business.

The UK has expertise in areas ranging from green investment, infrastructure and engineering to accountancy, finance and project management. Key to enabling effective support for infrastructure development in the region is ensuring that the Asian Infrastructure Investment Bank is well established as a high-quality and functioning international organisation, and that is why the UK has taken on such a strong role in supporting it. Our announcement in March of our desire to become a founding member was the first of any major western country. Germany, France and many others have now followed.

[Richard Graham (Gloucester) (Con)]

Does my hon. Friend agree that our early decision to become a member of the bank shows that our commitment to contributing to the economic development of more than 50 countries across Asia is strong? Does he also agree that that can only be good for British business in Asia, supports engagement with China, allows us to share our considerable experience across the region and is widely supported by business here?

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[Mr Allen]

That is why this particular statutory instrument is very important. The shareholders, stakeholders and staff of this institution who are going to enjoy the immunities and privileges being granted to them by this statutory instrument need to be on full alert that this is not an attempt to just co-operate and to maximise the exploitation of the people working in various parts of Asia covered by the institution.

[Richard Graham]

Does the hon. Gentleman agree that the concerns he and the hon. Member for Harrow West have raised actually form part of the rationale as to why the United Kingdom should be involved? This is effectively a membership club, and the more members there are in the club who are like ourselves, France or Germany, the more likely we are to be able to exercise influence in how this infrastructure is invested to the benefit of the countries and the populations of those countries.

[Mr Allen]

The hon. Gentleman makes a wise point. There is always a balance between engagement and, in a sense, pushing away from countries in an attempt to penalise them for particular practices. We have all been through this in so many different fields with so many different nations, but here we have the chance for a lever. I am arguing, and my hon. Friend the Member for Harrow West argued very clearly, that we need to use those levers. We can still do that now because, as we have seen, China has retreated from its position of having a majority shareholding in this institution. It said at one point that no other non-Asian nations should be involved in this.

There is still flex and there is still time to manoeuvre. If we are too aggressive in our amorous approaches to China, they could take us for granted. They need a negotiating partner with a harder edge to move some of the broader ideas that we all share across the House on international development. We should not waste this opportunity by rushing too hastily to a conclusion. The hon. Member for Gloucester makes an excellent point: this could set a precedent for how we negotiate other things internationally. I do not want to go too far—

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[James Duddridge]

The bank has not been taken out of anyone’s control. The Chancellor has been close to this work, which is perhaps why it is a Treasury lead. I have not been involved, so I am not aware of specific candidates in the longer term. As Minister with responsibility for protocol, I have looked at the governance issue in relation to immunities, privileges, reliefs and exemptions and what that might mean for different individuals.

The question of shareholding gives me an opportunity to address the super-majority. China will have the largest share capital, which translates to a voter shareholding of 26.1%, so the hon. Gentleman is right in his assertion that there is a blocking super-majority. However, the combined shareholding of non-regional members is higher than the Chinese holding, at 26.7%. In relation to the Asian Development Bank, I understand that there is an ongoing discussion about a memorandum of understanding between the two banks.

The hon. Member for East Lothian raised some concerns about the Japanese, and subsequently the hon. Member for Nottingham North raised similar issues about the US position in relation to this bank. The US was initially sceptical but it would be fair to say that its tone has softened over recent months, particularly after the recent Chinese state visit. The US acknowledged the contribution that this new bank could make. It is very much not a zero-sum arrangement. This will be a beneficial addition to the piece.

[Richard Graham]

The Minister makes a number of important points about the governance of the new AIIB. Is there an opportunity for this new bank to be headquartered in Hong Kong, which has the advantage of Chinese sovereignty and the strong rule of law that might give it the credentials needed to play an important part in infrastructure developments across Asia?

[James Duddridge]

The point of the order is to lay the foundations for the bank to operate across our jurisdiction in the UK, rather than to draw reference to where it might have other headquarters or regional headquarters.