UK–Commonwealth Trading Relationship

Viscount Younger of Leckie Excerpts

Thursday 8th July 2021 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I am very grateful to my noble friend Lord Howell of Guildford for initiating this debate and for his excellent opening speech. I know that this is a subject on which my noble friend is a considerable expert, as a former Minister in the Foreign and Commonwealth Office, a former chairman of the Foreign Affairs Committee and a former president of the Royal Commonwealth Society. I believe that he has served in three Governments, going back to the Heath Government, then the Thatcher and Cameron Governments. His really is quite a record, and therefore his contributions are greatly welcomed around the house. His views today on the Commonwealth and its future were a most valuable tour d’horizon.

I also know that the current chair of the Royal Commonwealth Society, Dr Linda Yueh, is one of the advisers to the Board of Trade. I trust that this will reassure my noble friend and others that this Government are taking concerns about the Commonwealth to heart. However, I agree with the noble Baroness, Lady Liddell, that we need to raise the profile of the Commonwealth more. I hope that this debate will be helpful to that end.

My noble friend Lord Grimstone is, unfortunately, unable to conclude this important debate because he is currently overseas, fulfilling his ministerial duties to further UK trade and investment. I am afraid that, in this place today, your Lordships have his trade department aide-de-camp.

Our enduring ties with the Commonwealth countries spring from friendship, history, culture and sport. In just a year’s time, Birmingham will host the Commonwealth Games. No noble Lord has mentioned this, but I do so now: that unique global sporting event, often referred to as the friendly games, that brings the peoples of the Commonwealth together like no other. My noble friend Lord Sarfraz put it rather well when he said that trade deals are a vision of an interconnected future.

As head of the Commonwealth, Her Majesty the Queen is hugely respected and during her remarkable reign she has undertaken more than 200 visits across the Commonwealth, to nearly every member country, to cement those bonds of friendship. The noble Viscount, Lord Waverley, reminded us that we must never forget her legacy and he is absolutely right. Her Majesty was also raised by my noble friend Lord Hannan during his speech. My noble friend Lord Marland spoke of the role of the Royal Family—I think it has a very important role—and quoted Her Majesty as saying that the Commonwealth is the face of the future, and of course I thoroughly agree.

From Mumbai to Melbourne, Calgary to Kuala Lumpur and Birmingham to Brunei, the 2.5 billion people living in the 54 Commonwealth states offer huge trade opportunities for British businesses from all sectors and of all sizes, across all regions of the United Kingdom. This provides a strong platform for prioritising trade-led growth with countries that account for well over a third of the world’s population, and have the potential to produce more than a quarter of global GDP by the middle of this century.

My noble friend Lord Risby asked whether we should capitalise on the Commonwealth advantage. I note that my noble friend Lord Marland also raised this; while I am on my feet, I thank him for his role as chairman of the Commonwealth Enterprise and Investment Council, as others have done. The Commonwealth advantage is the observation that trading between Commonwealth countries is estimated to be 19% easier. Trade is dictated by not just geography but shared history, as I said earlier, and language matters enormously. This is why all Commonwealth members want to see intra-Commonwealth trade and investment raised to $2 trillion.

In 2018, at the Commonwealth Heads of Government Meeting hosted by the UK in London, leaders adopted the Commonwealth Connectivity Agenda for Trade and Investment, with the ambition of enhancing co-operation. As your Lordships will be aware, and as raised this afternoon, we had hoped to have a Commonwealth Heads of Government Meeting in Rwanda last month. This, sadly, had to be postponed for a second time due to the continuing global impact of Covid-19, but we look forward to the Rwandan Government and the Commonwealth Secretariat being able to reschedule it. I am afraid that I am unable to give any dates to that effect this afternoon.

CHOGM is an opportunity for Commonwealth Governments to reaffirm their ambitions and shared vision of trade. In 2018, Commonwealth leaders used the CHOGM to underline the importance of resisting protectionism and reaffirmed their commitment to free trade. From such a large and varied group of countries, this is an important message for the world to hear. Free trade helped to build Britain. It created jobs, businesses and entire industries, bringing wealth and prosperity to the UK and transforming the country into an economic powerhouse. It is free and fair trade that has helped reduce poverty on a scale unprecedented in human history, and that will help our country bounce back from the coronavirus pandemic and realise the ambitions of global Britain.

I take this opportunity to turn to the subject of vaccines and to welcome the noble Baroness, Lady Chapman of Darlington, to her seat. She is most welcome to this House and to her Front-Bench role. The matter of vaccines was also raised by the noble Viscount, Lord Waverley, and the noble Lords, Lord Triesman, Lord Bilimoria and Lord Purvis. It is an important matter, and the UK is committed to rapid and equitable access to safe and effective vaccines. As part of the G7, we have undertaken to share 100 million doses, and 80% of our doses go to COVAX. As noble Lords will know, COVAX is the multilateral mechanism and it has so far helped to deliver 95 million doses to 134 countries, including 31 Commonwealth countries. Decisions on sharing vaccines will be based on the continued reliability of supply chains, which was mentioned in this debate, and advice from the JCVI.

However, today free and fair trade and the global trading system which supports it are under attack from the increased use of non-market policies and practices. This distorts competition and reduces fairness and trust in the system, as emphasised in the most recent G7 communiqué. Yet there can be few things more important than championing free and fair trade, as rooted in our values of sovereignty, democracy, the rule of law and a fierce commitment to high standards.

The title of this debate refers to renewing trading relationships, but I might argue that it is more of a reboot of those relationships. Today, as we chart a new course for ourselves as an independent trading nation, our determination to deepen the economic bonds we share with the Commonwealth is stronger than ever before. While we were an EU member, we successfully pushed for EU trade agreements with Common- wealth countries. Consequently, out of the 53 other Commonwealth members, 29 have trade agreements that were part of our Government’s efforts to secure trade continuity. I will need to check with Hansard to see whether these numbers correspond with those mentioned in the speech of my noble friend Lord Lansley.

For example, while we have already secured a trade continuity agreement with Canada, we have also set out a clear path to begin negotiating a new and more ambitious trade deal there. Furthermore, we have announced the launch of negotiations on a UK-Singapore digital economy agreement, which will build on the momentum of the UK-Singapore free trade agreement to address new and emerging issues in the fast-growing digital economy. I will touch upon this theme a little later.

We know that trade is a key driver of economic growth, which can help raise incomes, create jobs and lift people out of poverty. It is therefore excellent news that we have secured development-focused FTAs, known as economic partnership agreements, with 27 Commonwealth countries. These agreements provide immediate tariff-free access to the UK market and, in return, these countries gradually liberalise their markets, with protections for certain sensitive sectors. This encourages export-led growth, supporting and creating jobs in these countries. Of course, this also creates opportunities for the UK, and through these agreements our trade with Commonwealth countries can and will continue to flourish.

Our current focus is on implementing these trade agreements to their full extent, but this is not the limit of the Government’s ambition. In the future, we will look at how we can improve upon these trade arrangements. I hope that helps answer a question from my noble friend Lord Lansley, who asked how we were going to deepen these. This would be to our mutual advantage, through close discussion with our partner countries in the Commonwealth.

In addition to our development-focused agreements, a further 16 Commonwealth countries benefit from unilateral liberalisation by the UK because of their status as least-developed countries or lower or middle-income countries. This scheme reduces or removes tariffs to goods imported to the UK.

Although less so today, there have been some voices who call for a Commonwealth-wide trade agreement; in other words, to effect the Commonwealth into a trade bloc like the EU. While I can understand this temptation, we need to remember that such a proposal would not simply be about easing trade between Commonwealth members and the UK but between all Commonwealth members with each other. That would be an enormous undertaking, beset with numerous practical difficulties for members with a wide spectrum of views and interests. It would also be a new departure for the Commonwealth, which has typically been a forum for discussion, technical assistance and sharing best practice. But if the aim of those who call for a Commonwealth trade agreement is to improve UK trade relations with our fellow Commonwealth members, they should look at the Government’s record on negotiating trade agreements. We are committed to working with our friends and allies in the Commonwealth to remove barriers to trade, and we are using our unilateral schemes and trade negotiations to do just that.

I want to touch on taking our trade agenda to the next level. Building on our success so far, we will put the UK at the centre of a network of modern deals, encompassing many Commonwealth nations. As the noble Lord, Lord Bilimoria, mentioned, on 14 June, we reached agreement in principle for a deal with Australia, and negotiations are currently ongoing with New Zealand. These deals will create significant benefits for the whole of the UK. I will touch upon the Australia deal later in my speech.

We will shortly begin negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—so-called CPTPP, if I can pronounce that correctly—which includes six Commonwealth countries. We have also launched a consultation on a UK-India free trade agreement. This has been opened, as well as a call for input on a future agreement with Canada. I hope this answers the question from the noble Baroness, Lady Liddell, on how we are stepping up, as we should do.

In line with commitments made in the integrated review, the UK will be announcing the launch of a public consultation on its unilateral preferences scheme in the coming weeks. The Government will be keen to hear from stakeholders in the UK and overseas on how we can make our scheme even better.

I would now like to touch on a number of themes that were raised during this afternoon’s debate. One thing that came across loud and clear was the question of human rights, which was raised initially, I believe, by the right reverend Prelate the Bishop of St Albans, and also touched upon by the noble Baroness, Lady Chapman, my noble friend Lady Hooper, the noble Lord, Lord Grantchester, and the noble Lord, Lord Hussain —particularly in respect to Kashmir. They were all important speeches.

I hope that the noble Lord, Lord Grantchester, will forgive me, because I will be repeating some of the lines that he was repeating from what we have said. It is true that we are clear that more trade does not come at the expense of labour, environmental rights, human rights, or sustainable development. We want to ensure that economic growth, development and environmental protection go hand in hand. As an independent nation in control of our trading future, we will work with partners to support freedom, human rights and the environment, while boosting enterprise by lowering barriers to trade.

To take this theme further and to get into some detail, let me address the points raised by the noble Baroness, Lady Quin, who spoke in particular about Cameroon. The Government remain deeply concerned about the north-west and south-west crisis. We will continue to monitor the situation and raise our concerns directly with the Cameroonian Government and within multi-national fora, calling for inclusive dialogue and an end to the violence. Beneficial growth and support for democratic principles are not mutually exclusive. By encouraging trade we are helping those most in need, providing valuable employment and, as I said earlier, helping to lift people out of poverty.

Another theme raised quite rightly by the noble Viscount, Lord Waverley, the noble Baroness, Lady Prashar, and my noble friend Lord Risby, concerned the importance of promoting digital trade and the question of digital interconnectivity within the Commonwealth. The Commonwealth has members at all stages of development, as the House will know. The digital divide is a key issue that the Commonwealth faces. As part of the Commonwealth connectivity agenda, several connectivity clusters were established, including a digital cluster, which the UK co-leads with South Africa. This provides an opportunity for members to explore these vital issues and learn from each other’s experience.

I would now like to move on to the points raised by the noble Lord, Lord Wigley, backed up by the noble Lord, Lord Grantchester, on the Australia deal, with a focus on the concerns that Welsh farmers might feel. Some Peers have mentioned in support of the deal that the Australia deal is the first we have negotiated from scratch and it has a number of non-regression clauses in it. UK farmers are the best in the world—and that includes Welsh ones—and the Government are confident in their ability to adapt and prosper as global demand for high-quality sustainable food grows. We believe that a deal with Australia paves the way to membership of the CPTTP and the growing middle-class markets of the Pacific Rim. Those markets are already Australia’s focus, and it is unrealistic to think that large volumes of beef and sheep will be diverted to the UK from those lucrative nearby markets. In 2020, more than 75% of Australian beef exports and more than 70% of sheepmeat were imported to Asia-Pacific markets, where the cost of beef production can be twice as high as the UK in some markets.

We know that British customers have a preference for buying British, with Aldi, Budgens, the Co-op, Lidl, M&S, Morrisons and Waitrose all using 100% British beef. We expect any Australian imports to first displace EU production, the origin of 230,000 tonnes of our beef imports. The quotas and safeguards the Australians have set out provide protection and the ability to apply tariffs for the next 15 years, should volumes exceed specified triggers. I hope this gives some reassurance to concerns raised by noble Lords.

My noble friend Lady Hooper asked what the role of the Commonwealth Secretariat is. The secretariat supports members and this organisation is voluntary and member driven. On trade, the secretariat monitors how intra-Commonwealth trade is developing. This was expected at CHOGM this year, but we now expect the secretariat to publish its trade monitoring report this summer.

My noble friend Lord Lansley asked how we can deepen our goods continuity agreements with services chapters. This is a fair question, because services make up a growing share of global output and employment and now account for around half of global trade on a value-added basis. As the UK is a leading services economy, this has an important role to play in promoting services liberalisation worldwide, while helping to tackle the specific constraints holding back developing countries’ growth in this particular area.

I am nearly at my conclusion, but I would like to just refer to my noble friend Lord Howell. He spoke on a theme that was supported by the noble Lord, Lord Rooker, relating to the networks of the Commonwealth and what matters. It links also to the importance of the WTO. I would like to say something about the WTO and its new director-general, because we agree that Commonwealth networks are vitally important and reflect the shared history and values that underpin both the Commonwealth itself and the real business links that trade is built on. As the noble Lord, Lord Bilimoria, also noted, the new director-general of the WTO is a Nigerian, and therefore a Commonwealth national. Dr Ngozi Okonjo-Iweala has brought new energy to the WTO and we want to work closely with her. We are confident that the WTO will move forward under her direction and be helpful to us.

In conclusion, we share a rich and vibrant history with the Commonwealth, which is epitomised through a shared commitment to democracy, peace and prosperity, and a good degree of always good-natured, I am sure, sporting rivalry, to come back to Birmingham. As we begin to embrace the unprecedented opportunities that lie ahead as an independent trading nation, we must re-boost our bonds of prosperity with partners in dynamic markets. The Commonwealth was formed in 1949 with just eight countries. It now has 54 members and the combined GDP of Commonwealth countries reached $13 trillion in 2020. This is why our Commonwealth partners are central to our plans for the future. This Government intend to utilise this opportunity to work with our friends and allies in the Commonwealth, to deliver not just in the UK but around the world.