Trade Deals and Fair Trade

Stewart Hosie Excerpts

Wednesday 11th March 2020 Westminster Hall

[Stewart Hosie (Dundee East) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for Swansea West (Geraint Davies) on securing this important debate.

I do not think anyone in this room would disagree that trade needs to be free, or that trade needs to be fair. I thank the hon. Gentleman for expanding what we mean by fairness. We are not just talking about ensuring that there is fairness between an investor and the state, or fairness for developing countries—by, for example, stopping the illegal dumping of excess goods to the detriment of their own economies. We need to ensure that there is fairness in subsidies and state aid, fairness in competition and fairness for Governments. That can be done by ensuring that businesses pay their taxes and that Governments are not restricted, or perceived to be restricted, in legislating for the common good. Fairness for citizens involves ensuring that corners are not cut and that standards—be they social or employment standards, product safety or food standards, or environmental standards—are upheld, so that we all play fair with the environment and do what we can to combat climate change.

To ensure there is a level playing field and fairness in all these areas, the Scottish National party’s view is that trade deals need arbitration and dispute resolution mechanisms that work not simply for investors, but for all of us. It is instructive that in its negotiating mandate for the UK-EU free trade agreement, the European Union has said that each of the areas I have mentioned should be subject to a dispute resolution mechanism. It is equally instructive to note that the UK Government—certainly at this stage in the negotiations—are trying to exclude subsidies, competition policy, labour laws, the environment and tax from any dispute resolution mechanism. If the UK’s Government’s intention is to exclude those important matters from arbitration, I am not convinced that it will fill the public with confidence that the Government are serious about fairness and a level playing field.

[John Howell]

The hon. Member mentions dispute resolution. I declare an interest: after recent training, I am a mediator. Dispute resolution is an integral part of all current commercial negotiations, so I am not surprised to see it in these agreements.

[Stewart Hosie]

Nor am I, but I am surprised and slightly disappointed that the UK Government’s stated intention is to exclude certain important matters from dispute resolution or arbitration. But—and this is a big but—not all arbitration and dispute resolution mechanisms are the same. Although the SNP will continue to support the inclusion of all the aspects of modern trade deals that I have mentioned, we would be deeply concerned if other future trade deals implemented the one-sided ISDS-type mechanisms that the hon. Member for Swansea West mentioned.

[Geraint Davies]

I am following the hon. Gentleman’s speech closely, and I agree with what he is saying. Does he agree that it is imperative that the UK stands up for dispute resolution mechanisms that include social and environmental matters and other areas beyond investment, as a precedent for when the EU—and indeed the UK, which is in a much weaker position—talks to the US or China? The EU will be the future of fair trade globally.

[Stewart Hosie]

Of course I agree with that. It is important that the wide range of issues that form the basis of modern trade deals—not simply tariffs and quotas—are included. As I have said, however, not all arbitration mechanisms are the same, and I would not want one that operated on the basis of the secret ISDS-type schemes that we have seen.

That is primarily because of the potential restrictions that such mechanisms could place on Governments, including the UK Government, in legislating even on public health, for example. To demonstrate, I will give two brief examples of how ISDS-type arrangements are unfair and limit the Government’s ability to act in the interests of citizens. The examples are not new and the information has been around for some time.

In the first case, between 1995 and 1997, the Canadian Government banned the export of toxic polychlorinated biphenyl waste to comply with their obligations under the Basel convention, to which the United States was not a party. Waste treatment company SDMyers sued the Canadian Government for $20 million in damages under chapter 11 of the North American free trade agreement, which included an ISDS-type arbitration scheme. The claim was upheld by a NAFTA tribunal even though Canada had acted to comply with an international treaty—that is quite extraordinary.

In the second case, in April 1997, the Canadian Parliament banned the import and transportation of the petrol additive methylcyclopentadienyl manganese tricarbonyl, because of concerns that it posed a significant public health risk. Ethyl Corporation, the additive’s manufacturer, sued the Canadian Government—again under NAFTA chapter 11—for $251 million, to cover losses resulting from the “expropriation” both of its plant and its “good reputation”. The claim was upheld by the Canadian dispute settlement panel, and the Canadian Government repealed the ban and paid Ethyl Corporation $15 million in compensation.

Those cases involved toxic PCB waste and a petrol additive that was deemed to have an impact on public health. In my view, it is quite wrong and unfair for large corporations to be able to sue Governments simply for taking steps to protect the wellbeing of their citizens, or for enacting public health measures that they believe to be right and fair, and for which they may well have an electoral mandate.

Although we welcome new trade deals, they need to be fair. As has been said, the process of agreeing them needs to be transparent and inclusive. For example, it must formally involve, at all stages, the Scottish Government and other devolved Administrations; and approval must be sought from and granted by Members of Parliament. That mirrors the point about democracy that the hon. Member for Swansea West made.

A clear understanding is required that although genuine dispute resolution mechanisms are vital for delivering fairness, free-trade agreements that include secret ISDS-type courts that limit, or appear to limit, the ability of Governments at any level to act in the best interests of their citizens are wrong, unfair and profoundly unacceptable.

Oral Answers to Questions

Stewart Hosie Excerpts

Thursday 5th March 2020 Commons Chamber

[The Minister of State, Department for International Trade (Greg Hands)]

I thank my hon. Friend for that question. When I was previously in this job, I visited the sector in Cambridgeshire. We know that the life sciences industry contributes £74 billion a year to the economy, creating 250,000 jobs and developing life-saving medicines for UK patients. Annually, the east of England exports £711 million of medical and pharmaceutical products to the US. Estimates show that a UK-US FTA could boost the whole region’s economy by £345 million in the long run.

[Stewart Hosie (Dundee East) (SNP)]

Will the Secretary of State update the House on the progress being made to ensure that the legal services trade between the UK and the European Union can be maintained after the end of this year?

[Greg Hands]

That is properly a question for a different Question Time, because it is Taskforce Europe that is responsible for our future trading relations with the European Union. What I can say to the hon. Member is that the mutual recognition of professional qualifications is one of the key aspects we are looking at in free trade agreements with counterparties across the world.

[Stewart Hosie]

I am glad that that is being looked at because, right now, if an agreement is not reached between the UK and the European Union, UK legal practitioners—lawyers—will no longer be protected by legal or professional privilege inside the European Union. May we have a specific focus on that to ensure that jeopardy is removed, but also, more importantly, to ensure that the associated disincentive to trade in legal services is removed?

[Greg Hands]

Again, this is really a matter for Taskforce Europe, but I will pass on the hon. Member’s question to it to give him a more detailed response. What I can say is that the DIT team promote trade in legal services, particularly the mutual recognition of qualifications, in all our talks. I have done that personally in this role, and the Secretary of State is committed to doing so. We make sure that this is promoted, particularly regulator to regulator, including for legal services, accountancy, architecture and all our professional services.

UK-US Trade Deal

Stewart Hosie Excerpts

Monday 2nd March 2020 Commons Chamber

[Elizabeth Truss]

My right hon. Friend is absolutely right. May I thank him for the work that he put in as Trade Secretary, which has got us to this point where we are able to launch these negotiating objectives, and for doing all the fantastic work that he did with our colleagues in the United States? I know the Labour party does not seem to think that tariffs are important, but that is not so for a pottery manufacturer in Stoke-on-Trent who is facing 28% tariffs on their dinnerware going into the US. If we get those tariffs removed, that will mean that that factory is able to employ more people, grow its business and invest. Yet again, that is the Labour party refusing to understand how enterprise works and where wealth comes from in this country.

My right hon. Friend is right about the steel industry. It is currently facing £300 million-worth of tariffs a year. If we can get those tariffs removed, that provides a brilliant opportunity for our steel industry to sell more products in the United States.

[Stewart Hosie (Dundee East) (SNP)]

I thank the Minister for her statement and early sight of it. It is true that the analysis published today, which forms part of these documents, does provide some very useful information. It tells us that the maximum tariff reduction will be less than half a billion pounds, that the maximum increase in UK GDP would be 0.16%, that the maximum increase in gross value added for Scotland would be less than half a per cent—0.4%—and that, in the long-run, financial services GVA might actually go down. Yet in order to achieve these decidedly underwhelming targets, the UK will have to leave the European Union, surrender around 5% of GDP growth, and risk around 20% of UK global trade.

More worryingly, a pattern is emerging in the UK’s approach to trade negotiations. In the document on the future relationship with the EU, the UK seeks to exclude subsidies, competition policy, and environmental, tax and labour provisions from any dispute resolution mechanism. In today’s UK-US public negotiating objectives —only four pages of the total published today—there is limited reference to competition, labour and environment provision, nothing on subsidy or tax, and a single vague bullet point on dispute resolution that would enforce the level playing field and avoid the race to the bottom.

Apart from the environment, the Secretary of State mentioned none of those things in her statement. Let me ask her this: why are the UK Government giving the impression of abandoning level playing field provisions across so many aspects of modern trade deals? Why are they giving the impression that they are in favour of a wild west free-for-all in trade rather than a comprehensive rules-based system with a comprehensive dispute resolution mechanism? Why are they prepared to sacrifice so much in terms of global UK trade and GDP growth to secure what, by their own admission, are very, very modest gains indeed?

[Elizabeth Truss]

I have news for the hon. Gentleman: we have already left the European Union, although the news might not have reached him.

Scotland is one of the largest potential beneficiaries of a US-UK free trade agreement. The hon. Gentleman sniffs at the half a billion pound extra value added to the Scottish economy that is analysed, but a number of Scottish businesses are supportive, including the Scottish chamber of commerce. I suggest that he listens, as we have been doing, to businesses in Scotland about how they can see their businesses grow.

The hon. Gentleman specifically mentioned standards. In free trade agreements, including in the comprehensive and economic trade agreement, or CETA, there are often clauses saying that the parties will not deliberately lower standards for competitive advantage. That is what we are referring to in our US negotiating objectives and it is a perfectly proper and regular part of free trade agreements that we are happy to sign up to.

Oral Answers to Questions

Stewart Hosie Excerpts

Thursday 23rd January 2020 Commons Chamber

[Elizabeth Truss]

Lowering barriers will mean lower costs for businesses and more choice for consumers. In Wolverhampton and the west midlands overall, we send one in five of all exports to the United States. Getting a trade deal with the US would mean a removal of tariffs on products such as cars, textiles and steel, so there are huge opportunities there for those businesses to grow.

[Stewart Hosie (Dundee East) (SNP)]

I am glad that the Secretary of State expects us to cut lots of free trade deals, but they do not happen by chance; they happen by detailed analysis and tough negotiations. How does she believe we can succeed in those negotiations when the number of expert trade negotiators she has is a fraction of the 600 the EU has? More importantly, is she not setting herself up for a fall by rather foolishly, in my opinion, embarking on parallel trade negotiations with such limited resources with both the European Union and the USA?

[Elizabeth Truss]

I am afraid I am not surprised to hear the SNP talking our country down. The fact is that we have scaled up our trade negotiation expertise. We now have approximately the same number as the US Trade Representative, which is one of the leading trade negotiators in the world. Our trade negotiators have already secured £110 billion of trade continuity deals, even though people such as the hon. Gentleman said it could not be done. Those negotiators have a wide experience in trade law from the private sector, and we have also recruited people from other Commonwealth nations with experience from the WTO. We have an excellent team at the Department for International Trade, and we have the staff in place ready to conduct the negotiations with the US, Australia, New Zealand and Japan.