Draft EU-Canada Trade Agreement Order

Tom Brake Excerpts

Tuesday 26th June 2018 Commons Chamber

[Dr Fox]

I am grateful to my hon. Friend. Of course, our ability to take full advantage of what we have already agreed depends on our passing both the Trade Bill and the customs Bill in this House. If we are unable to do so, we will be unable to provide that continuity for businesses and workers in the United Kingdom, which would be hugely to their disadvantage. I hope that the Opposition will think again about their vote against the Trade Bill on Second Reading, and will give it the fair wind that it deserves during its subsequent stages.

It is important for the UK that CETA is ratified successfully by all EU member states, because ratification by all member states is required for the treaty to enter fully into force. This will give Canadian and EU businesses greater certainty that the agreement will continue into the future.

Areas that were not provisionally applied include a large part of the chapter on investment, including the new investment court system, about which there has been extensive discussion in Parliament and in wider civil society. The UK supports the principle of investment protection, and looks forward to engaging further with the Commission on the technical detail of the investment court system. We support the objectives of obtaining fair outcomes for claims, high ethical standards for arbitrators and increased transparency of tribunal hearings.

I also want to be clear that investment protection provisions protect investors from discriminatory or unfair treatment by a state. This includes protection of UK institutional investors—for example, pension funds—where we have a duty to ensure that individual investments are protected. We have over 90 such agreements in place with other countries. There has never been a successful investor-state dispute settlement claim brought against the United Kingdom, nor has the threat of potential claims affected any Government’s legislative programme.

[Tom Brake (Carshalton and Wallington) (LD)]

Will the Secretary of State confirm that any investment court system is in fact a pooling of sovereignty? He will be aware that Canada and the EU have agreed that they want to transform the investment court system into something more open, transparent and global. Will he confirm that the UK Government will also undertake to do that after Brexit?

[Dr Fox]

I have set out what I believe are the principles, but the mechanism may well be different. The Commission has not yet finished its work on the technical detail of the ICS. We have reservations about the ICS as a system, but, as I have set out, we believe that there needs to be protection for investors. What we cannot do as a country is say that our investors should be protected overseas when they make investments of UK money, but a reciprocal agreement should not be in place for others. We have to ensure that this is fair and equitable, and that is what we seek to do. I have to say to the right hon. Gentleman in all candour that I am not terribly attracted by the ICS, but we want to see the detail that the European Commission comes to and, when we leave the European Union, we will want to discuss with Canada what we think, on a bilateral basis, the best disputes resolution system might be.

It is also important to note that the customary international right to regulate has been re-emphasised in this agreement. Moreover, the agreement explicitly provides that member states should not reduce their labour or environmental standards to encourage trade and investment, ensuring that our high standards are not affected by this agreement. Let me say that nothing in CETA prevents the UK from regulating in the pursuit of legitimate public policy objectives.

Such objectives include the national health service. This Government have been absolutely clear that protecting the NHS is of the utmost importance for the UK. The delivery of public health services is safeguarded in the trade in services aspects of all EU free trade agreements, including CETA. Neither will anything in CETA prevent future Governments from taking back into public ownership—should they be crazy enough to do so—any services currently run by the private sector. The legal text makes this clear, if Labour Members would like to read it, although I have to say that the fear of nationalisation is the No. 1 issue that potential investors currently give for thinking twice about the UK as a foreign direct investment destination.

In fact, robust protections in CETA are covered in a number of related articles and reservations in the text. A key article is article 9.2, in chapter 9 on cross-border trade in services, which excludes services supplied in the exercise of governmental authority from measures affecting trade in services. In addition, in annex II on reservations applicable in the European Union, the UK has gone beyond the EU-wide reservations and has included additional national reservations for doctors, privately funded ambulances and residential health facilities, and the majority of privately funded social services. The UK Government will continue to ensure that decisions about public services are made by the United Kingdom, not by our trade partners. This is a fundamental principle of our current and future trade policy.