EU-US Trade and Investment Agreement

Debate between William Cash and Iain Wright

Thursday 18th July 2013 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the hon. Member for Aberconwy (Guto Bebb) on using their strong persuasive abilities to convince the Backbench Business Committee to agree to this important debate. This issue has not had the prominence it deserves, and I pay tribute to right hon. and hon. Members for redressing that situation. Given the potential of this agreement, this is an important discussion.

This has been an important and, on the whole, positive debate. The sheer size of the American and European economies means that the potential prize of a significant free trade agreement is huge. As my right hon. Friend the Member for Wentworth and Dearne said, together the EU and the US account for just under half of global GDP and about a third of world trade. About $2.7 billion of goods and services cross the two continents every single day—a trillion dollars every year. The proposed free trade agreement could be the biggest bilateral trade deal in world history, both in terms of its value and in the range of subjects, sectors and markets covered. Given the size of the sums involved, even modest reductions in barriers would lead to huge amounts of money—$325 billion—that could be ploughed into extra jobs, more investment and higher economic growth.

As has been said, a potential trade and investment agreement would yield an estimated increase in UK national income of between £4 billion and £10 billion a year over the next decade. That is huge and worth fighting for.

[Mr Cash]

Lord Mandelson said that when he was trade commissioner the over-regulation of business cost 4% of Europe’s GDP and about £6 billion a year to the British economy. Is that not something we should be tackling, and does the hon. Gentleman agree that some of his figures are based on estimates?

[Mr Wright]

The hon. Gentleman makes an important point. I was about to say that, as mentioned several times, the nature and structure of trade between the EU and the US is such that we do not have substantial or excessive trade barriers between the two blocs. Most of the gains would come from a reduction in non-tariff barriers. In response to his point, I would add that I am keen to see regulatory convergence.

Reductions in non-tariff barriers would result in reduced costs for producers and traders and so increase productivity, leading to greater investment and higher gains per worker. Forecasts predict that increased trade would lead to higher wage rates of between 0.2% and 0.5% for workers in this country. Again, that is a prize worth fighting for. If the free trade agreement were to focus more on tariffs than non-tariff barriers, the gains for the UK would be substantially less, as the Chair of the Business, Innovation and Skills Committee said.

What has been clear from today’s debate is that there is a huge amount of ambition in this House for this agreement, so will the Minister confirm that the scope and ambition of the agreement that will be negotiated will be as wide-ranging and comprehensive as possible, in order to ensure the maximum gains for British companies? Will he ensure that Britain is pushing for negotiations to be focused on where that maximum gain will be, which, as I have said, is on the elimination of non-tariff barriers? Will he give us an idea of the scope and scale of agreement he hopes to achieve?

Right hon. and hon. Members have rightly been talking about how the House can be involved in this process. Will the Minister tell us how he hopes to keep the House informed of progress on the agreement? My right hon. Friend the Member for Wentworth and Dearne talked about this, but will the Minister tell us a bit about what he has planned for the scrutiny of the negotiations by this House? How can we debate this matter on a periodic and, we hope, positive basis?

Will the Minister also give the House a sense, wherever possible, on when he expects the talks to be concluded? I know that that is difficult, but it has been mentioned several times in the debate, and the US vice-president has said that he hopes talks can be agreed on “one tank of gas”, which means the completion of negotiations within 18 to 24 months. This is obviously a big priority for the Obama Administration, as I think it is for the British Government, but will the Minister give us a sense of when he thinks the process will be concluded? My hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) asked about this directly, but how will this House ratify the deal? Will that be done by a full, substantial debate in Government time on the Floor of the House so that we can question and scrutinise the deal carefully?

I wish to focus on a few specific industries that could benefit enormously from a comprehensive and ambitious free trade agreement. The motor vehicles sector, which has been mentioned, is forecast to see considerable growth as a result of an ambitious transatlantic trade and investment partnership—TTIP. Estimates predict a rise in exports of between 15% and 26%. That will obviously help the German manufacturers, but we certainly should not discount the impact it will have on our important and growing automotives sector, where we are producing great-quality, high-premium cars that the rest of the world are keen to buy. That was mentioned by my hon. Friend the Member for West Bromwich West (Mr Bailey).

In that regard, I hope the Minister will reassure us that regulatory convergence to ensure great export growth will be at the top of the agenda in the negotiations. I hope he will agree that a vehicle considered safe to drive in Europe should also be considered safe to drive in the US. Will he ensure that duplication of safety and environmental standards is dealt with and that negotiations prioritise mutual recognition agreements and equivalence standards? Will he also address the point, not entirely confined to the automotive sector, that differing regulatory arrangements apply at a state, federal level? Will negotiations ensure that state differences are dealt with, too? That point will apply to many industries, such as those producing electrical goods, chemicals and cosmetics. My area has the highest concentration of chemical engineering in western Europe, and if Europe and the US had mutually accepted standards, the potential for the chemicals industry in the north-east would be enormous.

The global aerospace industry is dominated by Europe and the United States, and particularly by Airbus and Boeing, as was seen in the recent sales at the successful Paris air show. Britain is the largest player in this industry in Europe and is second only to the US in the world. The European aerospace industry generates a third of the EU’s manufacturing exports, and we in this country are at the heart of it. We have to maintain our competitive advantage. The industry is subject to fierce competition from other nations. China is particularly ambitious about launching an aerospace company—COMAC—to rival Boeing and Airbus. Does the Minister accept—this is an important point—that an ambitious free trade agreement between the US and the EU would actually help to maintain our competitive advantage in this field, as consistency of international regulatory standards should give existing firms and their supply chains an important lever to use? That was certainly the conclusion of an important Chatham House report on manufacturing published this week.

Services are a key part of the British economy; we are the best in Europe on services. Will the Minister comment on the nature of the agreement in that area? For example, a UK lawyers’ qualification is not fully recognised in the US, which is an impediment to UK lawyers’ practising. If the EU and US recognised each other’s professional qualifications, a great boost would be given to trade, which would particularly benefit the British economy. Will he discuss that a little?

The scale of the prize indicates how important it is that Britain has a leading role to play in Europe, as my hon. Friend the Member for Glasgow North East (Mr Bain) said. Does the Minister agree with Sir Mike Rake of the CBI, who said that there is an overwhelming case for Britain being at the heart of Europe for the sake of our businesses? Does he agree with my hon. Friend the Member for Ochil and South Perthshire, who indicated that he agreed with the Minister without Portfolio that it would be curtains for our ability to play any leadership role if we exited the EU? The right hon. and learned Gentleman said in a recent article:

“Irony of ironies, it is of course the EU that is making deals with the United States and Canada possible. It should come as no surprise that Obama’s officials have commented that they would have ‘very little confidence’ for a deal with the British alone.”

Does this Minister agree?

Will the Minister also address the warnings from the Obama Administration that if the UK leaves Europe, we will exclude ourselves from a EU-US trade deal worth billions and that it would be unlikely that Washington would try to negotiate a separate trade agreement with Britain? A senior White House official is quoted as stating:

“Having Britain in the EU...is going to strengthen the possibility that we succeed in a very difficult negotiation, as it involves so many different interests and having Britain as a key player and pushing for this will be important...We have expressed our views of Britain’s role in the EU and they haven’t changed…TTIP negotiations underscore why we think it’s important that it continues.”

Is it not clear from White House officials that the United States believes that one of the key reasons for the special relationship is that we are in the EU, and that it would be naive and impractical to suggest that we could negotiate a separate trade deal that could have the same potential positive effect on jobs and growth?

[Mr Cash]

rose—