CPTPP

Steve Baker Excerpts

Wednesday 21st April 2021 Westminster Hall

[Mr Steve Baker (Wycombe) (Con)]

I beg to move,

That this House has considered the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. 

I am absolutely delighted to serve under your chairmanship, Mr Hollobone, and delighted that the Government are seeking to accede to the comprehensive and progressive agreement for trans-Pacific partnership—something I proposed while I was a Minister. At the time there was very little interest from officials or from other Ministers. It is a shame we had to change the Government and then have a general election to get here, but least said, soonest mended.

I am personally invested in this accession, I am glad to say. CPTPP can provide a better standard of living for people in the UK and across the original member countries. It can deliver free trade plus self-government in this great age of interventionism. By preserving the right to regulate, it can allow democracies to function while delivering free trade—a point I hope to elaborate on before I finish. It is a high-standards agreement, as I will flesh out, and it can facilitate greater international co-operation, which those of us who are free market liberals should aim for.

I want to start by landing the central point: how important this debate is and how important the agreement could be. If we take the current members of CPTPP, and if the United States chose to return to the agreement, plus the United Kingdom, plus other potential accession countries such as Taiwan, it could result in a new platform free trade agreement for the world, covering more than half the global economy. CPTPP is therefore a major geostrategic agreement of relevance to the whole world, so I am really delighted to be here for this debate. It is absolutely vital that the United Kingdom is there at the start.

Colleagues will know the Prime Minister’s speech in Greenwich on free trade. It was an admirable articulation of the principles of free trade, and I wholeheartedly support the policy, which it is refreshing to be able to say.

I want to turn to the Government’s own document, “UK applies to join huge Pacific free trade area CPTPP”. It was issued when the Government formally applied. It explains:

“Joining the £9 trillion partnership will cut tariffs for UK industries including food and drink, and cars, while also creating new opportunities for modern industries like tech and services, ultimately supporting and creating high-value jobs across the UK. Unlike EU membership, joining does not require the UK to cede control over our laws, borders, or money.”

That part, of course, has now run on to the rocks. As the Government explain, it has:

“Modern digital trade rules that allow data to flow freely between members”.

It eliminates tariffs more quickly on UK exports than, for example, the deal that we have with Canada. The rules of origin are extremely important. I will not get into the detail, but they

“allow content from any country within CPTPP to count as ‘originating’.

That is extremely important in a world of free trade areas.

The Prime Minister was very proud to support the agreement. The Secretary of State put out an excellent statement. Our accession was supported by techUK, the Federation of Small Businesses and the CBI. I was very pleased to see such a wide range of support.

The reason why I originally came across the CPTPP was that when I re-founded the European Research Group, which seems a long time ago now, it was to unite the various wings of the Conservative party—ironically—and of course, crucially, to do research. We therefore sought the best expertise from outside Parliament, and one of the documents produced was by the Legatum Institute Special Trade Commission, as it then was. It was a group of visionaries led by Shanker Singham, who is now a personal friend of mine. In April 2017, it produced “A Blueprint for UK Trade Policy”, which in particular described the importance of what was then known as the TPP. It states:

“The TPP is probably the most advanced trade agreement that has been agreed by any group of countries. It is a high-standards, platform agreement that attempts to make progress on the most difficult aspects of international trade—especially behind-the-border barriers, regulatory protection, the impact of state-owned business on trade, and distortions more generally.”

It goes through some of the key factors in the agreement; possibly I will come back to those in passing.

I cannot possibly go through all the detail of the agreement and I hope that hon. Members will not test my capacity to recall and interpret the text, although I did wade through the original TPP in detail. There is a very helpful explainer on the New Zealand Government website, and I very much hope that in due course our own Government will explain the agreement, but I will just cover the key features.

The agreement covers goods and market access, including for agriculture, an issue that I wish I had enough time to get into—I hope that other Members will mention it —and services’ market access, which is of course crucial for the UK. We have a comparative advantage in financial services. We should be looking to work with like-minded countries around the world not only to participate in but to define a new global standard for financial services in particular and services in general; and the CPTPP is a great basis on which to start.

The agreement makes provision for easier travel under business visas. It raises labour standards for the region. That is of course a matter of acute interest to all Members of this House. It raises them in the region; that needs to be understood. It has environmental provisions, including ensuring that there can be no waivers or derogations, for trade advantage, from any environmental standards.

The agreement protects individual nations’ right to regulate. Of course, it does not need to be elaborated on—well, perhaps it does—that in this country the idea of using political vertical integration to deliver trade policy within customs unions with harmonised regulation has, whether people like it or not, run on to the rocks of lacking democratic consent. Now, as we come together in a spirit of good will, seeking to unite, move forward and be prosperous, that is something that we need to deal with. The CPTPP is really important because it preserves that right to regulate and preserves the independence of the member countries, while delivering free trade.

There are provisions for pharmaceuticals, investment, disputes and Government procurement, because of course Governments everywhere buy a great deal. There are provisions for intellectual property, geographical indications, trade facilitation, which I will come back to later, and state-owned enterprises, at which point I will say a word about market distortions.

One key feature of Governments’ highly regulating and, indeed, spending a large proportion of GDP is the effect that they have on market economies. It is really important as we go forward, if we are seeking to promote the maximum human welfare—I hope that, despite our disagreements, everyone in the House is seeking to maximise human welfare—that we minimise unhelpful distortions. We are not trying to create the wild west here, not under this agreement and not in any reasonable future. What we are trying to do is to have pro-competitive, welfare-enhancing regulation. Of course I am in favour of doing it under an English common law tradition; there will be Members in this debate who would like to use the Scottish tradition or whichever. But the British tradition of regulation has in some ways, I think, been suppressed by our EU membership and now needs to be rediscovered. Regulation has become altogether too prescriptive. We need to rediscover people’s capacity to co-operate to deliver high quality standards within a framework that is provided by the Government but is not too prescriptive.

As an example of how things could be done better, I refer in passing to how we regulate autonomous vehicles; I remember serving on the Vehicle Technology and Aviation Bill Committee. Our regulation sets out a framework of liability, but does not end up with the Government prescribing software standards, which personally I think would be a disaster. That is just one example of how, using the common law tradition, we can provide high-standards regulation that protects the public and is conducive not only to the enhancement of welfare, but to social progress through innovation—goodness knows we will need that if we are to drive up productivity. Those are just a few thoughts on regulation.

The Government’s document on accession sets out three reasons why we would wish to accede to TPP: first, to

“secure increased trade and investment opportunities that help the UK economy…overcome the unprecedented challenge posed by coronavirus”;

secondly, to

“help us diversify our trading links and supply chains, and in doing increase our economic security”;

and thirdly to

“help us secure our future place in the world and advance our longer-term interests.”

The Government explain that

“CPTPP membership is an important part of our strategy to place the UK at the centre of a modern, progressive network of free trade agreements with dynamic economies. In doing so we aim to turn the UK into a global hub for businesses and investors wanting to trade with the rest of the world.”

That should be a really exciting prospect for everyone in the House and across the country who understands the trajectory. It will help the UK to forge a leadership position, as the Government have set out. So the Government’s strategic vision is excellent.

The agreement also leans into a really important set of current global trends. People will complain that the idealists seek to replace our EU membership, but I do not know of any credible proposition to replace EU trade with CPTPP trade—that is not a practical proposition, and I do not think that anyone is seeking to do it. I am very pleased that the Government have a high-quality agreement in place with the European Union. It is not an either/or; it is a complementary proposition. I am very pleased that the agreement that we finally struck with the European Union facilitates the accession to CPTPP.

I draw on a Bain & Company report, which is a few years old now, on the declining cost of distance. This is not about the momentary cost of containers, but about the great global trends that have taken place in our world, driving down the cost of geographical separation. The Bain paper states:

“The catalyst for this historic shift is an array of new platform technologies that have pushed the cost of distance to the tipping point. Multibillion-dollar investments in robotics, 3-D printing, delivery drones, logistics technology, autonomous vehicles and low-Earth-orbit (LEO) satellites are giving rise to new products and services that sharply erode the cost of moving people, goods and information. As these technologies combine and converge, change will accelerate…A significant change in the cost of distance would prompt millions of economic actors to rethink their strategies and investments, and cause individuals to reassess where they work, live and raise their families.”

If the coronavirus crisis has done anything on that point, it is to accelerate the trend—here we are, debating the matter in Parliament, with hon. Members about to contribute virtually. Bain was visionary in seeing the declining cost of distance as technology advances, which plays into the accession to CPTPP.

I turn briefly to two final matters. The first is geopolitics. The world can be seen now to be polarising between the Asian authoritarians—Russia and China—and the liberal maritime democracies that believe in free trade. In a speech given to Policy Exchange, the former Canadian Prime Minister Stephen Harper said that the CPTPP would go

“from being a purely regional pact to now being the beginning of an alternative global order”.

It is a huge and extremely important vision, and the UK’s acceding to the agreement will be a key part.

Let us not forget what is at stake. We see the behaviour of China and we know that the rest of the world’s nations will need to set a better example to their people than this tendency to so control the lives of ordinary people, including persecuting some of them. That is an important illustration, in the little time that remains, of how trade is strategy today, and our accession to CPTPP is about that strategy for not merely the short run but the long run, to position the UK for success and as a global leader. I do not mean “global leader” in any unhelpful way, but in a way that says, “We are your friends and partners in a very open and equal way,” to great nations such as Japan, Australia, New Zealand, Singapore, Vietnam, Canada, Mexico, Chile and Peru.

All that grand talk of geostrategy will not mean much to many of the small businesses in Wycombe, and across the country, which are perhaps still struggling with working out which incoterms they should use to help to facilitate their trade with the EU. That leads to a wider issue of trade facilitation, which I hope my right hon. Friend the Minister will touch on. It is important that we help firms that are used to trading and exporting only within a customs union to understand that it can be relatively straightforward to export across the world. It is also important to help firms to get set up to do that. I hope that my right hon. Friend will bring his great expertise on those matters to bear through the Government, to help the firms in my constituency and across the country. There will be a huge task of simplification and explanation. The agreements are complex and their interpretation is difficult. It will be for the Government to show small firms how to take the best advantage of them.

I hope that my right hon. Friend will touch on the issue of when the Government will be able to set out their approach to formal negotiations, and that they will say more about their hopes, and what safeguards they will be looking to maintain. Perhaps there can be more about our right to continue to regulate ourselves when entering into such a large agreement. A great deal has been said about our being a small nation, but when I talk to people in Japan or, indeed, when I am inspired, Mr Brandis, the high commissioner of Australia to the United Kingdom, I find that the rest of the world does not see us as we have been encouraged to see ourselves, but as a potentially important catalyst in the new order. I should be grateful if the Minister would say something about major geopolitics, but I appreciate that that might be out of scope. However, perhaps he could emphasise how the issue is really about—I do not like to say “ordinary”—normal men and women trading in the UK, taking advantage of new arrangements around the world, the better to innovate, improve our lives, develop productivity and create a greater spirit of global co-operation around the world.

As I finish my speech, I think I should wave this great doorstop of a document that Business for Britain produced before the referendum, on the back of which is a poster, with a vision of Britain having a future with the world. The accession to CPTPP is central to that bright, hopeful future of trade and co-operation with the world, and I am delighted that my right hon. Friend the Minister is here to respond to what I am sure will be an interesting debate.

[Mr Philip Hollobone (in the Chair)]

The debate can last until 10.55. I am obliged to call the Front-Bench spokespeople no later than 10.22. That will be Drew Hendry first. The guideline limits are 10 minutes each for the Scottish National party and Labour spokesmen and the Minister; and Steve Baker will have three minutes to sum up the debate at the end. There are nine Back Benchers who seek to contribute before 10.22, and my aim is to get everyone in. If everyone is going to speak for the same length of time, Members will not want to speak for more than four and a half minutes. I know that Angus Brendan MacNeil, who is first, will want to show us how it is done within the time available.

--- Later in debate ---

[Mr Steve Baker]

I completely agree with my right hon. Friend the Minister. Like him, I have hugely enjoyed this debate. He enjoys my unqualified support, so I will turn my remarks to some other aspects of the debate.

I thought that the best part of the contributions from the Front-Bench spokesmen for the SNP and the Labour party was their vivid illustration of the shortcomings of virtual proceedings, because we were not able to intervene on them to explode the fallacies in their speeches. I regret that they are not able to intervene on me now, and I look forward to them supporting the full resumption of proceedings in the main Chamber and in Westminster Hall, so that we can resume our normal to and fro.

I thought the Labour party were progressive, and yet this progressive agreement is one that they do not wish to support. Of course there are problems with labour standards among the Pacific rim countries, and I would very much like to see those problems addressed and standards driven up. Of course we want to get children out of child labour, and that is why I support a progressive agreement that improves labour standards in the region. If we were to listen to the Labour party, they would have us do a deal with no one who had not already met the standards of the western world, the United Kingdom and the European Union. We can see why they want to be in the EU.

The SNP, of course, is speaking entirely from its own hymn sheet. It wishes to leave the UK and rejoin the EU—that is perfectly plain from what it has said. I refer the SNP, in its pinched and miserable assessment of our economic prospects, to an article by the well-known pro-EU commentator Wolfgang Münchau—he often, of course, writes for the Financial Times—in his own Eurointelligence:

“So much for the Brexit scare stories”—

he writes—

“Apart from a short-lived disruption of trade flows Brexit has been a macroeconomic non-event…If you look at the latest IMF data and projections in the graphic above, you don't find a discernible macroeconomic effect of Brexit in the first ten years after the referendum.”

[Bill Esterson]

Tell that to the people who are losing their livelihoods—

--- Later in debate ---

[Mr Steve Baker]

Thank you, Mr Hollobone. It is only because of the manner of the speeches by the Opposition spokesmen that I am choosing to attack what they said. I look forward to them supporting the resumption of proceedings.

I have previously critiqued the computable general equilibrium modelling that is used, and I think that Opposition Members’ simplistic analysis and arithmetic shows that they, too, should look at the shortcomings of CGE models and at what can be done in the UK. Lord Lawson of Blaby has said that UK domestic settings will be dominant in our future, and that is something that Wolfgang Münchau turns out to agree with.

Turning to other colleagues, I enjoyed their speeches enormously—

[Mr Philip Hollobone (in the Chair)]

Order. I am afraid the hon. Gentleman will not be able to do that.

Motion lapsed (Standing Order No. 10(6)).