European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018

Baroness Fairhead Excerpts

Monday 25th June 2018 Lords Chamber

Moved by

[Baroness Fairhead]

That the draft Order laid before the House on 21 May be approved.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, this order designates the EU-Canada Comprehensive Economic and Trade Agreement, or CETA, as an EU treaty pursuant to Section 1(3) of the European Communities Act 1972. This is a necessary step towards UK ratification of the agreement and part of the process to be followed in laying the treaty before Parliament for 21 days as set out in CRaG, the Constitutional Reform and Governance Act 2010. I am delighted that we have the opportunity to debate this agreement. It follows on from the thorough and constructive debate last year in the other place and the overwhelming support shown in a deferred Division. I very much hope that your Lordships will also agree to support this ambitious and progressive FTA today, and that the other place will again support the agreement when it is debated there tomorrow.

This Government are clear that CETA is a good deal for Europe and a good deal for the UK. Our total trade with Canada stood at £16.5 billion last year, up 6.4% on the previous year, and with a services surplus of £1.9 billion. CETA will improve on this already strong economic partnership. The agreement has the potential to boost our GDP by hundreds of millions of pounds a year: it will bring down trade costs by reducing burdens in the form of both tariffs and procedures; it will boost trade and investment; it will promote jobs and growth; and it will increase our ability to access Canadian goods, services and procurement markets to the benefit of a wide range of UK businesses and consumers. Canada is an important strategic partner too: as one of the Five Eyes group and a member of NATO, the Commonwealth, the G7 and the G20, we have bonds that go far beyond just our trading relationship.

As this House will know, CETA was provisionally applied in September last year, removing 98% of the tariffs previously faced by UK businesses at the Canadian border. Already, UK firms are benefiting from this. We have seen drinks exporters such as Dorset’s Black Cow Vodka and Kent-based sparkling wine producer Hush Heath Estate improve their market access and profitability following the reductions in tariff and non-tariff barriers. We are seeing new UK exporters to Canada, including Seedlip, the world’s first distilled non-alcoholic spirit. Under the agreement, Seedlip does not pay the 11% pre-CETA tariff on its product. Yorkshire-based Moordale Foods entered the Canadian market in March 2017, helped by CETA duty elimination. In services, the UK and Canadian architect bodies, ACE and CALA, have notified the EU Commission that they are in discussions on future mutual recognition.

In September last year, during her visit to Canada, my right honourable friend the Prime Minister and Prime Minister Trudeau reiterated their intention to seek to swiftly and seamlessly transition CETA to a UK-Canada deal once the UK has left the EU. To ensure as seamless a transition as possible, they formally announced a working group to take this forward. Officials from our two countries have already begun to meet to discuss transitioning CETA. It is important as a first step that we prevent a cliff edge for British and Canadian businesses. Of course, while we remain in the EU we continue to support the EU’s ambitious trade agenda. Free trade is not a zero-sum game, but rather a win-win. Ratifying CETA will send a strong message about our determination to champion the cause of free trade. This is a key part of the Government’s vision of delivering a prosperous and truly global Britain as we leave the EU. It is important to the UK that CETA is ratified successfully by all EU member states.

During the implementation period, the United Kingdom will retain access to EU free trade agreements but we will also be able to negotiate, sign and ratify new UK-only free trade agreements for the first time in more than 40 years. In doing so, we will safeguard the benefits already achieved in CETA for UK businesses and consumers and lay a foundation for an even stronger relationship.

Those areas of the agreement that were not provisionally applied in 2017 include a large part of the chapter on investment, including the new investment court system, on which there has been extensive discussion both 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 of claims, high ethical standards for arbitrators and increased transparency of tribunal hearings. Investment protection provisions protect investors from discriminatory or unfair treatment by a state. They apply only to investments in place, not to speculative future investments. We have more than 90 such agreements in place with other countries and there has never been a successful investor-state dispute settlement claim brought against the UK, nor has the threat of potential claims affected the Government’s legislative programme. Moreover, the agreement provides that member states should not reduce their labour and environmental standards to encourage trade and investment, ensuring that our high standards are not affected by this agreement.

Nothing in CETA prevents the UK regulating in the pursuit of legitimate public policy objectives—and that, of course, includes the NHS. The 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 FTAs, including CETA. The UK Government will continue to ensure that decisions about public services are made by the UK and not our trading partners. This is a fundamental principle of our current and future trade policy.

On scrutiny, we have committed, through our White Paper published last year, that we will ensure appropriate parliamentary scrutiny of trade agreements as we move ahead with our independent trade policy. The Government can guarantee that Parliament will have a crucial role to play in the scrutiny and ratification of the UK’s future trade agreements and we will bring forward proposals in due course.

I welcome the opportunity to make the case for CETA today and to give the opportunity for full scrutiny of this important agreement, as the Government have done for previous EU free trade agreements. I look forward to hearing noble Lords’ contributions. I beg to move.

[Lord Whitty (Lab)]

My Lords, I certainly do not wish to oppose an agreement with Canada in this way but I have a number of questions—to some extent the noble Baroness has anticipated me—for two reasons. First, the Government have made it clear that on the one hand they regard CETA as a template for future UK-third party agreements around the world post Brexit and, on the other, they intend that CETA will be rolled over post Brexit into a UK-Canada free trade agreement. Both of those may or may not happen, but two slightly troubling points arise.

My second reason for raising this is the same as I gave in a slightly rambling intervention in a debate initiated last Thursday by the noble Baroness, Lady McIntosh of Pickering. The proponents of free trade, among whom I include myself, need to recognise that there is a negative political reaction in many countries around the world to the prospect of greater free trade. We have seen this in Britain in terms of the Brexit vote, in my opinion, and of course very strongly in America, which has effectively stymied the G7 from making a step change in terms of multilateral free trade around the world. Given that political difficulty, it is important that key sections of our population do not regard the extension of free trade as a threat to their security or to their position.

--- Later in debate ---

[Baroness Fairhead]

I thank noble Lords for their contributions today in what has been an interesting debate on CETA. They have talked about the benefits of CETA and free trade agreements. I recognise the concerns, which I shall come on to, but I am happy to hear the enthusiasm about there being shares for free trade based on rules, with some of the requirements to uphold standards that the noble Lords, Lord Fox and Lord Stevenson, focused on. I will touch on as many of these points as I can in the moments that I have.

The numbers that I have on our current trade and investment are that our exports are £9 billion and our imports are £7.5 billion. From my information, we have a slight deficit of £265 million on the goods side but a trade surplus of £1.9 billion on our services side. I am also happy to say that CETA includes services but possibly not as many as we had hoped at the beginning of the process. However, there are new opportunities in areas such as telecoms, finance, professional and environmental services. It will also allow UK firms to bid for a much broader range of Canadian public services, once Canada decides to open them up for such bids. Except of course for the public services, we will try to ensure that CETA guarantees the existing services’ liberalisation. There are some ways of helping SMEs, particularly on the processes. There are rapid ways of processing below €6,000. There is also a certification where you just have to put your name forward, and HMRC has pre-certified around 12,000 of those.

I turn to the future trading relationship with Canada. As I said, we will begin to transition CETA into a UK deal once the UK has left the EU, following a clear commitment. We believe that is important because it will prevent the cliff edge and, while we remain in the EU, we will continue to support the ambitious trade agenda of the EU. This provision was undertaken within that agenda, so it will ensure that during the implementation period we retain full access to CETA and other EU FTAs. An independent trade policy will allow us to be more ambitious, particularly in services.

I believe it was the noble Lord, Lord Fox, who asked me what would happen if the treaty was not ratified by all member states. I apologise; it was the noble Lord, Lord Stevenson. We expect ratification to take a number of years. We have noted Italy’s current position and will seek to ensure that everybody ratifies it. As it is currently provisionally applied, that will continue and we will be able to transition on that basis. It does not require such ratification for us to ratify it ourselves and transition that deal.

A number of noble Lords discussed ICS. Let me be clear that neither ICS nor any other investors’ dispute resolution can force the privatisation of public services. We alone retain the right to regulate. None of these tribunals can overturn Parliament or laws, as has sometimes been claimed. If I may deal with ICS first, there was a question about whether we are in front of the ECJ tomorrow. The answer I have is that we are not on that issue. However, we are aware of the concerns that some parties have with the proposed ICS. We believe in investor protection only where they are treated unfairly or with discrimination. ICS is part of this CETA but in looking at the future, we will look at a number of options of which ICS is one. There are others, which we will bring forward to the House. To be clear, the practical details of ICS have not currently been fully worked through by the Commission but it has committed to consult fully when that has happened.

The noble Lord, Lord Stevenson, and my noble friend Lady McIntosh asked about the scrutiny process. There is an impact assessment that we have made public, and I will write to noble Lords to give them exact details of how to access it. We are working to make sure that in future the process of negotiating and implementing new trade deals is transparent, efficient and effective because we want a legislative framework that will enable future trade agreements to move quickly from agreement to ratification while supporting due processes for full parliamentary scrutiny. We are currently considering the legislative framework, but Parliament will have a crucial role to play in the scrutiny and ratification of future trade agreements and deals. The Government will bring forward those proposals in due course.

The EU has high labour and environmental standards. They are not affected by CETA, and we sign up to them with CETA. The agreements provide that member states should not reduce their standards to encourage trade and investment. I think that is important. We are determined not to compromise food safety or the environment or to reduce labour standards in pursuit of trade agreements. We will be rolling over all the current agreements when we transition CETA into a direct UK-Canada deal. The noble Lord, Lord Whitty, made a serious point about enforcement. We are looking at ways to improve compliance and enforcement. That remains something we are actively working on.

On the economic benefit figures, I referred noble Lords to the impact assessment. We have looked at impacts in a number of sectors. The total benefit to the UK is expected to be more than £730 million. The sectors that are likely to benefit the most are motor services and financial services. We see increases of £280 million and £70 million respectively. Detailed work has been done, so I would not like to believe it does not exist.

The noble Lord, Lord Stevenson, referred to geographical indicators. We expect CETA to be positive for UK agriculture. We have been in consultation and were in consultation when the geographical indicators were discussed. We think CETA is positive. It gives access to a market of 35 million people. The protected food names scheme remains in place in the EU. It is true that no UK GIs were included in CETA. That was because there was a process within the EU that it had to reach a certain hurdle. We consulted widely with groups and none of them at the time went above the hurdle that was eventually decided upon by the Commission. However, there is a mechanism to add new GIs in future, which I think will be actively pursued by a number of states. I know that a number of people have raised the question of Scotch whisky outside this House. It is not included because it is already protected. It has been formally registered in Canada since 1998, and it is also protected by the EU-Canada wine and spirits agreement.

I have tried to answer as many of noble Lords’ questions as I could in the time available. I recognise their concerns; we are working on a number of them and developing our strategy for the future. I realise that their concerns are heartfelt, and we will be working with noble Lords on that. However, I believe that this is a good deal for UK businesses—SMEs as well as larger businesses—and for consumers, and in our national interest to ratify this agreement.

I thank noble Lords for our debate today and hope that they will feel able to support the ratification and the positive signs that it will send to our future trading partners. I commend the order.

Motion agreed.

G7 Summit and Future Trade Relations

Baroness Fairhead Excerpts

Thursday 21st June 2018 Lords Chamber

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I, too, thank my noble friend Lady McIntosh of Pickering for her Question. I thank her and other noble Lords for their rich and probing challenges. The noble Lords, Lord Whitty, Lord Stevenson and Lord Purvis, raised the challenges of the multilateral trading system, and I think we can all see that those challenges are there. As we said, the G7 was one of the most tense of recent years. My right honourable friend the Prime Minister made it clear that the discussions were difficult. But we also have to see that these meetings provide opportunities for close allies to discuss many things apart from trade, such as empowering women, security and sustainability, in particular of the ocean environment. It should be recognised that they have that purpose as well.

However, the debate today is on trade and that is where I will focus. I shall touch on the summit at the beginning. The agreed communiqué had two parts. The first was, indeed, about the importance of a rules-based international trading system and the continued fight against protectionism. The second strand was a trilateral discussion between the US, the EU and Japan, talking about level playing fields, industrial subsidies, inadequate protection of IP and non-market oriented policies. As noble Lords have highlighted, the communiqué was later dismissed by the President of the United States, but let me be very clear that the commitment of the UK to the contents of the communiqué and to the other non-US members of the G7 remains unchanged. Furthermore, there is a determination to work constructively with all parties, including the US, on that trilateral dialogue between the US, the EU and Japan.

As the noble Baroness, Lady McIntosh, pointed out, the summit took place against the backdrop of the US decision to raise tariffs on steel. We are allies—close allies—but where we disagree, we will say so. We disagree with these tariffs. We have made clear, and continue to make clear to the US Government at the highest levels, the importance of UK steel products to US businesses and defence projects. We will continue to work with the EU and the US Administration to try to achieve a permanent exemption because, as the closest allies, we think we should be permanently and fully exempt.

That said, we have proceeded with our complaint at the WTO. The noble Baroness asked for some information about the timing of that and where we were. On 1 June, through the Commission, we launched the case at the WTO. These typically last around two to three years. However, we are able to impose countermeasures relatively immediately. Those countermeasures were announced on 18 May and can be applied 30 days after that. We can also conduct studies and investigations, one of which is under way on steel, to look at whether any safeguarding is needed to protect our industry. That is what we are doing.

We have been very clear that we do not want a tit-for-tat escalation. The important thing here is to focus on the global overproduction of steel, and a multilateral approach is the right way to do it. The noble Lord, Lord Purvis, spoke of his concern about a trade war. It is a real concern and we need to work multilaterally to find a solution. Free trade matters. I take the point made by the noble Lord, Lord Purvis, about his visit to the US. Free trade is challenged at the moment in the US and elsewhere but we should look at what it has achieved: 1 billion people taken out of poverty. In the 1990s per capita income in developing countries grew three times faster if they opened their borders. In the developed world, the OECD found that a 10 percentage point increase in trade exposure led to a 4% rise in income per capita. It is good for consumers and good for choice.

In addition, multilateral systems allow us to bring down the cost of trade. I take the point made by the noble Lord, Lord Whitty, about some stalling in multilateral capability in the WTO but there is progress; for example, the recent entry into force of the Trade Facilitation Agreement. Once fully implemented, it will improve global trade by £70 billion. Yes, it has stalled in many areas. The noble Lord, Lord Stevenson, also made the point that the CPTPP was signed recently. That was 11 disparate countries. So there is progress.

The challenge for us is that we need to have free trade and a multilateral system that works for all. There has been a sense that it works on a broad basis but the costs and impact are local and immediate. That requires a much more sophisticated, joined- up reaction, both domestically and internationally. Domestically, we are making sure that the industrial strategy focuses on bringing skills and people so that we have skilled jobs all around the country, bringing a future for the young people of this country. We are linking that up with the export strategy that is coming down the track. We are trying to look at regional development as well.

The noble Lord, Lord Stevenson, mentioned the importance of trade for development. I am absolutely clear that trade helps not just prosperity but security and sustainability. I hope the noble Lord will be pleased to hear that the DIT has recently taken responsibility in government for leading the Prosperity Fund, aimed at development but with trade as one of its focal points.

Concern was expressed about leaving the EU. I will touch on some of the general numbers on our export performance that the noble Baroness, Lady McIntosh, gave. I think she gave the monthly numbers. I tend to look at the annual numbers because there can be volatility. On an annualised basis, exports grew by 7% and the deficit reduced. Historically we have seen a reduction in the amount of exports to the EU. We are likely to see non-EU trade growing faster over the long term because that is where faster growth is expected. As we leave the EU, we are clear that we need to grow and build a strong and ambitious relationship with our EU allies as well as countries outside the EU.

The noble Baroness, Lady McIntosh, raised rules of origin. Clearly, those are part of the negotiations. I agree they have a particular effect on food and drink. It is too early to say exactly what those will be. It is part of the technical way that we will have to adjust some of the agreements that we have with third countries, but we recognise that this is an issue that needs to be given serious attention and that is what we are doing.

A number of noble Lords raised concerns about the WTO and how it is working. We know it is not perfect but we believe the best way to manage it is from within. That is why I am happy to say that my right honourable friend the Secretary of State is in Geneva today with the WTO, meeting ambassadors there, including our ambassador to the WTO, making the case for free trade and a multilateralism that works for all.

As we exit the EU, our primary focus is on continuity, to make sure that there is no cliff edge for our businesses and the businesses of the EU. We are also working in parallel with the other parties that we are party to agreements with because of our membership with the EU. We fully understand the importance of EPAs with developing countries, which the noble Lord, Lord Purvis, talked about. I agree that non-tariff barriers are as much of an impediment as tariff barriers to their coming up and developing. That is clearly going to be a part of what we are making sure that we follow over.

When it comes to the TRA and the dispute resolution mechanism that we will have, we believe in free trade but we need to make sure that we have the powers to protect our consumers and our businesses. That is why we are working to set up the TRA—Trade Remedies Authority—before we leave the EU to ensure that we can continue to provide a safety net. We have taken a number of steps already, including a ministerial direction on 29 March 2018 to begin critical spend on the establishment of it prior to Royal Assent on the Trade Bill. We have begun recruitment, including of the chair and specialist roles. On 10 May 2018 we announced the location: Reading. Our aim is that the TRA will have a full suite of remedies at its disposal.

A number of noble Lords talked about the relationship with the US. Clearly, the US’s approach to free trade has raised some concerns. We have a commitment from the highest level to enter into preparatory discussions with us. Noble Lords will be aware that we cannot negotiate but we have a trade and investment working group. It has met three times already, focusing on SMEs and science and technology. We also have an official-led financial regulatory working group. We will be proceeding on that and there is active progression of that preparation.

[Lord Purvis of Tweed]

We are grateful for the Minister’s very clear response to the debate. While I was in Washington last week it was apparent that there is some lack of transparency over what issues are discussed and the scope of the working group’s discussions. Will the Government lay in the Library some more information about the meetings, their scope and the meetings that are planned for this trade working group?

[Baroness Fairhead]

I believe we give what we can. We obviously have to agree it with the US, but I will look into it and see what we can do in that context.

Environmental, human and labour standards do not have to come at the expense of future trade agreements, and we will be looking at all options in future trade agreements. The noble Lord, Lord Stevenson, made some very clear points about human rights. It is a very complicated area and I think I would prefer to write to him.

This is a challenging time for the multilateral trading system. However, we will continue to be a strong believer in the multilateral system in championing the needs of developing countries, and a strong voice that wants the lives of citizens all around our country and in the world to be strengthened so that we have a more prosperous, secure and sustainable world.

UK-US Trade: Iran Sanctions

Baroness Fairhead Excerpts

Wednesday 16th May 2018 Lords Chamber

[Lord Dubs]

To ask Her Majesty’s Government what advice they have given to British companies about the possible impact on their trade with the United States of the imposition of United States sanctions on Iran.

[The Minister of State, Department for International Trade (Baroness Fairhead)]

My Lords, the UK continues to encourage UK businesses to take advantage of trade opportunities in Iran and the US. The Government have updated their services for doing business in Iran on GOV.UK. The UK remains party to the JCPOA, and the UN-EU sanctions on Iran continue to be lifted to allow UK businesses to operate in Iran. We are working with our European partners to explore potential options for protecting UK and European interests.

[Lord Dubs (Lab)]

I am grateful to the Minister. Will she confirm that the Government will not allow British companies to be bullied by the American Administration, the more so that, if that bullying were to succeed, it would totally undermine the nuclear deal with Iran?

[Baroness Fairhead]

My Lords, the UK is absolutely committed to the JCPOA, the nuclear deal with Iran. We are trying to work with the US to ensure that links with Iran can continue so that the UK and other international parties to the deal are able to allow Iran to get the benefits of the lifting of economic sanctions, so that it can see the benefits of maintaining the nuclear deal. We are also working with Iran, with the E3 and the European External Action Service, to try to work out how we can ensure that Iran sees continued benefit. We are committed to maintaining the deal because we think it is critical for the safety of the world.

[Lord Lamont of Lerwick (Con)]

My Lords, I draw the House’s attention to my entry in the Register of Members’ Interests, both as the Government’s trade envoy to Iran and also as chairman of the British Iranian Chamber of Commerce. Would my noble friend say what she thinks the effects of the change in American policy are going to be on Airbus and Rolls-Royce, which have extensive pending orders in Iran? Secondly, following on the point made by the noble Lord, Lord Dubs, I am reassured by her answer, but did she notice the widely reported statement by the American ambassador to Germany in Berlin? Within hours of President Trump’s announcement that he was changing policy, he said that German firms should start winding down their operations with Iran. Surely it is completely unacceptable for people to give orders to firms that are acting in accordance with the laws of their own country.

[Baroness Fairhead]

My Lords, it is clear that there is extraterritorial reach to some of these sanctions. I cannot say anything but that. We are working with the US to see what we can do to make sure that those trade ties can exist. We are working on a range of measures to try to make sure that we protect UK and other EU interests, working with the E3 and the other parties. I cannot give a direct answer because at the moment we are still working through the options. However, I can say that we are working hard to make sure that those interests are protected. We are also working hard to ensure that it is in Iran’s continued interest to be part of the deal, to ensure that we maintain the JCPOA, which we think is critical.

[Lord Anderson of Swansea (Lab)]

My Lords, surely the blunt truth is that in international trade, the dollar rules. American banks will comply, and the US Administration have totally failed to listen to the representations from President Macron, Chancellor Merkel and our own Foreign Secretary. In those circumstances, would not any lawyers, in the Government or otherwise, urge British firms to be ultra-cautious?

[Baroness Fairhead]

We are actively providing advice through our team on the ground in Iran and through our sector and other teams in DIT. We are trying to make sure that any business that is non-sanctioned is able to flow. We would say that all businesses have to take into account the commercial, legal and financing risks in any transaction, and clearly these sanctions make that difficult. We are trying to work with the US. The noble Lord is right that there was persistent lobbying but the sanctions were still imposed. That is why we are working with our EU colleagues and directly with both the US and the EU to try to protect our businesses and encourage the US to allow us to maintain our economic ties, because we think that they are important.

[Lord Purvis of Tweed (LD)]

My Lords, the Government have lauded the US-UK Trade and Investment Working Group for the progress that has been made in the relationship. Can the Minister confirm that this issue in particular has been raised at the trade working group, because it would be utterly unacceptable for UK businesses to lose US market access for carrying out perfectly legal trading relationships under an international agreement to which the UK as a sovereign entity has signed up? Can she further confirm that the arrangements being put in place potentially to shield banking transactions, which are critical to the City of London, will carry on post Brexit next March?

[Baroness Fairhead]

The conversations we have had with our US colleagues have been very significant. I would say that we do have a deep and strong relationship with the Americans, but when we disagree with them, we say so. There has not been a meeting of the US-UK Trade and Investment Working Group since the sanctions were imposed, so there has been no opportunity for discussion through that group. However, we are making representations through my right honourable friends the Prime Minister, the Foreign Secretary and the Chancellor and we are ensuring that those points are being heard. On banking, post Brexit, we are clearly trying to ensure that we have as fluid a border as possible, so we are trying to make sure that our financial services industry, which is critical to the economy and the country, is protected as much as possible.

St Petersburg International Economic Forum

Baroness Fairhead Excerpts

Monday 30th April 2018 Lords Chamber

[Lord Balfe]

To ask Her Majesty’s Government what is their assessment of the attendance of United Kingdom executives at the St Petersburg International Economic Forum from 24 to 26 May.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, the attendance and participation of UK companies at the St Petersburg International Economic Forum, or SPIEF, is entirely a matter for them. We have not sought to influence them one way or another. Her Majesty’s Government continue to offer advice to UK businesses operating in Russia and support legitimate sanctions-compliant trade and investment.

[Lord Balfe (Con)]

I thank the Minister for that reply, but the Japanese Prime Minister, the French President and senior members of the European Commission will be there pushing their Governments’ cases. Who will be representing the British Government? Does she accept that some British businesses feel rather bereft of support in view of the way the sanctions debate with Russia has escalated rather out of control?

[Baroness Fairhead]

I thank my noble friend. It appears that Prime Minister Abe and President Macron will be attending and there is a whole series of bilateral ministerial levels in Russia. In line with government guidance, there will be no ministerial representation. However, I can confirm that Her Majesty’s ambassador to Russia will be there. He will be present to meet, greet and support our UK businesses. That is part of a calibrated response to signal that we are unhappy about what has happened, while at the same time making sure that we support our businesses. That sort of engagement is critical to making sure that there is engagement between businesses and people.

[Viscount Waverley (CB)]

My Lords, while recognising the sensitivity of the timing, I declare that last week, St Petersburg International Economic Forum organiser, Roscongress, requested that I assess and advise, at no cost, on trade-only related matters to encourage interaction sector to sector in addition to SME co-operation with the UK. Does the Minister agree that restricting all engagement with Russia is probably self-defeating? As the Government push towards a truly global Britain, in which UK private sector corporates must compete in the international marketplace, fully cognisant of bilateral and multilateral sanctions, would it not be circumspect for the Government’s approach to trade policy to be distinct from other tiers of government policy?

[Baroness Fairhead]

I agree that engagement matters and that we need to continue engagement to make sure that ultimately we get a good outcome. It is true that we have suspended all planned high-level bilateral contact with Russia, but we are not restricting all engagement. Indeed, we encourage engagement in areas of common interest such as culture, education, sanctions-compliant business, environmental protection and climate change. The important message is: engage, but beware. It is a calibrated response, but I agree with the noble Lord that engagement matters in these situations because that is how we will get a positive outcome.

[Lord Wallace of Saltaire (LD)]

My Lords, what advice is the Department for International Trade giving to British business about the peculiar political and legal complications of operating in Russia for either trade or investment? The Bribery Act and various other things clearly come into play. Are special forms of advice being offered to British business in these circumstances?

[Baroness Fairhead]

I thank the noble Lord for his question. I can confirm that specialist advice is available. We have special advice from the DIT in London and the British embassy in Moscow. Indeed, a number of other expert organisations, such as the Russo-British Chamber of Commerce, can also offer advice, as can a number of individuals in this Room. Advice is available: the DIT offers it and it can be accessed on location in Moscow, too.

[Lord Cormack (Con)]

My Lords, if Ministers from other Governments will be present—as they clearly will be—what is deterring British Ministers from standing up for our country, negotiating and taking part in meetings and gatherings of this sort? Absence achieves nothing.

[Baroness Fairhead]

In terms of our stance on Russia, and in response to actions in Syria and Ukraine and the Salisbury attack, we are trying to show that this matter is a real threat to a rules-based international order. We are trying to send a clear message that those actions are unacceptable and illegal and to give a calibrated response that shows how unhappy we are with them, while continuing to engage in other areas and support businesses that take part in sanctions-compliant activity. We think that is the right way to do it.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I want to offer the Minister some help. Perhaps she should just argue that the cost of going will be too high. After all, a place at the St Petersburg International Economic Forum will cost $8,600. I have looked through the 36 pages of the business programme, seven pages of the sporting programme and 78 pages of the cultural programme; it is quite a feast of pleasure, I must say. If she is interested in culture and so on, I would have thought there was a case for doing that.

More seriously, reading deep into the programme, why are we not sending people to the following sessions, which seem very important: “A Recent History of Blockchain”, which has apparently caused a sensation in Russia and for which expert advice is available, and “Exporting Trust: Building Safe Global Digital Infrastructure”, which is about what Russia can offer? Do these really not attract Dr Fox?

[Baroness Fairhead]

I thank the noble Lord for his advice and help. SPIEF is a major event—143 companies attended last year—so he is right: the programme is very full. I am happy to say that almost all major UK companies will be present, as will our DIT staff and ambassador, as I said. It is one of a number of our interactions because engagement has to continue. We have put this guidance in place at a bilateral ministerial level. Our policy is very clear: engage, but beware. That is the right calibrated, nuanced approach. We are supporting companies in their engagement and we absolutely believe in supporting the digital economy, because that is where the heart of our new technology will reach global markets.

Secretary of State for International Trade: Visits

Baroness Fairhead Excerpts

Monday 30th April 2018 Lords Chamber

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government how many countries the Secretary of State for International Trade has visited since the referendum on the United Kingdom’s membership of the European Union.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, my right honourable friend the Secretary of State for International Trade has undertaken 56 visits to 35 different countries since the EU referendum in June 2016.

[Lord Foulkes of Cumnock (Lab)]

Is the Minister aware that I have also visited one of those countries—New Zealand? While, of course, it would be willing to agree a trade deal with the United Kingdom if we leave the European Union, its priority is a trade deal with the European Union and the Trans-Pacific Partnership. In fact, most of the people we met in New Zealand said, “Why on earth are you leaving the European Union?” Why do we not take their advice and let Liam Fox off his wild goose chase?

[Baroness Fairhead]

New Zealand is indeed one of the countries that we hope to have an early free trade agreement with. It is one of the nations with which we have trade and investment working groups. We have 14 of those and 21 countries are participating. It is clear that they are engaging with us. We are working with them very actively and they are looking to work with us on areas and sectors. The noble Lord shakes his head but I know that these trade and investment working groups are having an effect and people are starting to focus on specific areas where we will be able to start negotiating. As the noble Lord knows, we are unable to negotiate any future free trade agreements while we remain a member of the EU.

[Lord Purvis of Tweed (LD)]

My Lords, last month’s official data from the EU showed that UK exports to non-EU countries fell by 8% over the last year; to the EU they grew by 6%. The Government’s position to turn this around is that there will be trade deals with non-EU countries that we are not currently part of in the EU in operation immediately after the Brexit period. However, her predecessor said in an interview with the Guardian on Friday that,

“it will take three to five years. It won’t happen overnight and in the interim companies might think twice about investing and consumers might decide they want to be more cautious”.


Is the noble Lord, Lord Price, right?

[Baroness Fairhead]

Exports grew overall by more than 10% last year so there has been growth. Regarding how long it will take a free trade agreement to come into effect, we will be able to negotiate future free trade agreements from March next year as part of the implementation period. We will be able to negotiate, sign and ratify without implementing. There are a whole range of free trade agreements that can take anything from a year to multiple years. There are also many other types of cooperation that we are looking at, as noble Lords will be aware, such as joint trade reviews, economic partnerships and mutual recognition agreements. There are a whole series of trade arrangements we can have with other countries and we are looking at those. Our drive will be what is in the best interest overall of the UK and UK business.

[Viscount Waverley (CB)]

My Lords, I understand the Minister’s department is rolling out a programme of trade commissioners. What is their role? Are they going to be masters of their strategy? When will this possibly take effect from, and will they be properly financed?

[Baroness Fairhead]

I thank the noble Viscount for his question. We have announced the creation of nine Her Majesty’s trade commissioners. It is a pretty important role. We are trying to coordinate all the opportunities we have from UK companies exporting to overseas markets. They are very high level trade commissioners. Five of them have already been appointed and generally, they have been recognised as people of extreme competence who will have a real impact. Their role is to make sure that other nations are very aware of the capabilities we have in our country. We are very clear that our export strategy needs to be linked to our industrial strategy, so that the world can benefit from what we can provide in the UK and is made aware of the skills and expertise in this nation.

[Lord Rooker (Lab)]

Will the Minister remind the Secretary of State before he next visits the United States—which he been to more than once—that food poisoning cases per head of population in the United States are 10 times the figure in the UK? In 2016, 450 people in the United States died from salmonella and in the last five-year period for which figures are available in the UK, no one died of salmonella. We will not want to be importing American eggs.

[Baroness Fairhead]

My Lords, I hope I have been clear at the Dispatch Box before that food standards will remain paramount. We are very clear that the safety and health of people in this country is paramount, so we have been clear that food safety standards, as well as environmental standards, will be maintained at the highest level.

[Lord Wallace of Tankerness (LD)]

My Lords, when the International Trade Secretary visited the Philippines he talked about shared values with President Duterte. Given the President’s record in office, which values were he referring to?

[Baroness Fairhead]

That rather flummoxed me because I do not know the specific ones he was referring to. We share with a number of countries a real desire to help our businesses make people’s lives better. I hope that was part of it.

Worldwide Free Trade

Baroness Fairhead Excerpts

Monday 16th April 2018 Lords Chamber

[Lord Spicer]

To ask Her Majesty’s Government whether they have prepared an analysis of the benefit to the United Kingdom of participation in worldwide free trade; and if so, whether they will publish that analysis.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

As part of its preparations for future trade negotiations, the Department for International Trade is conducting analysis of potential agreements with other countries. The DIT has provided a qualitative summary of existing literature on the impact of signing FTAs in the impact assessment accompanying the Trade Bill.

[Lord Spicer (Con)]

My Lords, whatever happened to the European Union? In these troubled times, it has almost completely disappeared. Could it be that, when there is a real crisis, the nation state—when it supports democracy, individual rights and, indeed, free trade—counts for everything?

[Baroness Fairhead]

Clearly, in the Department for International Trade we are great believers in the benefits of free trade. We believe that free trade must be fair and conducted within a rules-based environment. When we look to exiting the EU, we are looking for a strong ongoing trading partnership with it, and we are looking for a strong ongoing trading partnership with the Commonwealth and other nations. That is why it is particularly important this week, with the Commonwealth Heads of Government Meeting, that we concentrate on a number of areas, one of which is free trade and the trading relationships we have.

[Lord Kinnock (Lab)]

My Lords, does the Minister recognise that 44% of our exports now go to the rest of the European Union and a further 17% of them go to the 50-odd countries with which the EU currently has free trade agreements, and that this constitutes in excess of 61% of British sales to other parts of the world? There is no substantial evidence to suggest that our departure from the European Union will in any way enhance the possibility of increasing our trade, under free trade terms or otherwise, with the remainder of the world.

[Baroness Fairhead]

Let me take that in two parts. On the relationship with the EU, it will clearly remain a very important trading partner for us. We need to make sure that we have as frictionless an environment with the EU as we possibly can. We believe that the freedom to be able to make free trade agreements with other countries will allow us to have the trading agreements in the future that can boost our trade further. Regarding those qualitative assessments that we made as part of the impact assessment, we looked at one report from Head and Mayer which had looked at 159 academic reports about the benefits of FTAs. All I can say is that from that information, while it depends on the scale, the relationship and the supply side, the median increase is around 32% from a free trade agreement.

[Lord Purvis of Tweed (LD)]

My Lords, the official international trade in goods statistics, which were published on Friday, show that in the year to February there was a growth of 1.7% in the EU’s trade with the rest of the world. Worryingly, those same statistics show a decline of 8% in UK trade with the rest of the world. As we embark on the first trade agreement in history with the EU 27 which will make trade harder rather than easier, if this House votes for the UK to remain part of the customs union with the EU—which, incidentally, saw a growth in our exports of 6% over the same period—we will be acting in the national economic and strategic interests of our country.

[Baroness Fairhead]

If we look at the exports total for the UK last year, it increased by over 11%. We therefore have seen export growth. We believe that the EU has to remain an ongoing and really important trading partner. We are working with trade and investment working groups across a number of countries—14 working groups involving 21 countries—in which we are exploring where we can improve trade further. As I said earlier, the CHOGM this week is particularly important because, in many ways, the Commonwealth is an area where we have underinvested in trading relationships. This is a great opportunity for all members of the Commonwealth to change that.

[Lord Flight (Con)]

My Lords, can the Minister confirm that the figure of 44% of our exports going to the EU includes trans-shipments, mostly via Holland, and that if those are excluded, which they should be, the figure is more like 39%?

[Baroness Fairhead]

I can confirm that. Having come into the department, I have to say that some of our information at the granular level has to be improved, particularly for the exports of services. But my noble friend is correct; I do not know the exact number, but it is probably something of that order.

[Lord Wigley (PC)]

My Lords, does the Minister accept that one area of some concern with regard to increased imports from outside the European Union which may follow is in relation to food stuffs and the safety standards that will be applied in the countries of origin of the food that will be coming here? Can she give an assurance that the UK Government will maintain the current safety standards for food to protect consumers in these islands?

[Baroness Fairhead]

Yes. We are obviously committed to mutually beneficial trading relationships, but we have been very clear that we will maintain our high consumer and food standards. Without exception, any trading partner must meet all the relevant UK rules and regulations. Maintaining safety and public confidence in food is paramount.

[Baroness Royall of Blaisdon (Lab)]

My Lords, the Government set great store by their trade with the Commonwealth and the need to improve it. I would be grateful for the Minister’s comments on the fact that Britain does more trade with Belgium and Luxembourg than with Canada and Australia and that the UK does six times more trade with the EU than with the 10 Commonwealth countries for which data is held? How is the UK going to increase that trade?

[Baroness Fairhead]

Those facts are correct. We will want to continue and strengthen the relationship with the EU. In the more involvement and engagement we have with these working groups we are seeing potential for deepening and widening our relationships with our Commonwealth partners. We will be working on building our share of markets and on our trading relationships right across Europe and with our Commonwealth partners.

United States Tariffs: Steel and Aluminium

Baroness Fairhead Excerpts

Tuesday 13th March 2018 Lords Chamber

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Secretary of State for International Trade in another place. The Statement is as follows:

“Mr Speaker, on Thursday 8 March, President Trump announced that the United States would impose a tariff of 25% on steel imports and a 10% tariff on aluminium imports after a period of 15 days, with the final day being 23 March. Canada and Mexico, with which the United States is renegotiating the North American Free Trade Agreement, have been exempted from the tariffs, subject to the successful conclusion of the NAFTA negotiations.

For the products within the scope of the investigation, in 2017, the US accounted for 7% of UK steel exports and 3% of UK aluminium exports. In addition, the UK accounted for 1% of US steel imports and 0.1% of US aluminium imports, in tonnage, at a value of £360 million and £29 million respectively. The President outlined that there is scope for further countries and certain products to be exempted from the tariffs.

From a UK perspective, as Members of this House know, the UK and the US are strong partners and allies, and the US-UK economic and security relationship is crucial. The US is our largest single-nation trading partner, accounting for a fifth of all exports, worth more than £100 billion a year. It is also the top destination for outward direct investment by the UK and the single biggest source of inward investment into the UK. We have a long-standing and special relationship with the US. However, that does not mean that if we disagree with something, we will not say so, and we do disagree with the US decision to implement tariffs on steel and aluminium imports based on national security considerations.

Such unilateral trade measures have weak foundations in international law and are not consistent with the Department of Defense’s own judgment in an investigation that was conducted on the basis of national security. There is undoubtedly a problem of overcapacity in the global steel market, but our strong view is that a global problem requires a global solution, not unilateral action. The UK has worked hard to address the issue of overcapacity. The Prime Minister called for a forum of G20 members to tackle this issue, which my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy attended in Berlin in November. The forum agreed comprehensive policy solutions. Most recently, the Prime Minister raised it during her visit to China, which is the world’s leading producer of steel and aluminium products. The UK will continue to work within the rules-based international trade system to tackle this problem.

Since the President asked the Department of Commerce to launch the investigation into the national security impact of steel and aluminium imports last April, the Government have made clear to the Administration on repeated occasions the potentially damaging impact of tariffs on the UK and EU steel and aluminium industries. The Prime Minister has raised her concerns directly with President Trump. I have spoken on several occasions to the Commerce Secretary and to the US Trade Representative about the investigation, including this afternoon. I spoke again today to the director-general of the World Trade Organization, Roberto Azevêdo, and I regularly speak to the EU Trade Commissioner, Cecilia Malmström. Several of my Cabinet colleagues have raised this issue with their opposite numbers. The Government have worked closely with the EU as part of our unified response. In addition, I assure right honourable and honourable colleagues that we have been in regular contact with the UK steel and aluminium industry throughout. I spoke to Gareth Stace at the weekend and again this afternoon.

There are two routes to petition the US for exemptions from the tariffs. The first, overseen by the US Trade Representative, will exempt countries with which the US has a strong national security relationship and which agree alternative means to address the threat to US national security from the relevant imports. The second, overseen by the Department of Commerce, will evaluate product exemptions if it is deemed there is no domestic US alternative and there are national security considerations, but only after a request for exclusion is made by a directly affected party located in the United States.

The Department for Business, Energy and Industrial Strategy will be assisting UK industry in working with US customers to build their cases for the exemption of individual products. I will be travelling to Washington this week for face-to-face meetings with the US Trade Representative, Ambassador Lighthizer and Commerce Secretary Wilbur Ross, as well as leading members of Congress. I will be making the case for the UK, as part of the EU. We have a strong defence and security co-operation relationship. As close allies in NATO, permanent members of the UN Security Council and nuclear powers, close co-operation between the UK and the US is vital to international peace and security.

As the House is aware, our current membership of the European Union means that the European Commission will be co-ordinating the EU response, and we have been clear that we will continue to adhere to the duty of sincere co-operation. The EU response is focused on three possible areas. First, the European Commission is preparing to introduce immediate duties on the US, ahead of a WTO dispute. The EU has shared a draft list of proposed items for duties and we expect it to publish this list early next week. Secondly, the EU can apply a safeguard measure of its own to protect the steel and aluminium industries from being damaged by an influx of exports to the EU caused by the displacing effect of US tariffs. Thirdly, the EU can pursue a dispute at the WTO. We are currently evaluating all aspects of these responses together.

We are clear that it is right to seek to defend our domestic industries from the direct and indirect impacts of these US tariffs, protecting both jobs and industrial capacity. We will also press for any response from the EU to be measured and proportionate. It is important that the UK and the EU response works within the boundaries of the rules-based international trading system. Over the coming days, we will be working closely with British industry and the EU to seek swift clarification and mitigation. I commend this Statement to the House”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

My Lords, we too are grateful to the Minister for repeating the Statement. Just at the time that we are loosening our ties with our largest single integrated market in the European Union, we see the next bilateral largest market in the United States moving towards a protectionist tone. Over recent months we have been repeatedly counselled by Ministers that we should look at not just the rhetoric of the United States President but at the actions. Now it is quite clear that there are repeated actions which are contrary to the interests of the British economy. The announcement of the Secretary of State today and of economic advisers last week are clear.

When I was in Buenos Aires as an observer at the ministerial conference of the WTO, the US left without a communiqué being signed. These worrying trends are clear to see. Last year, the Secretary of State, Dr Fox, said, while in the US, referring to the UK/US relationship:

“Firstly, we must lead by example, and work to encourage our trading partners across the world to support, and adhere to, the rules-based global trading system”.


Will the Minister therefore confirm that it is the view of Her Majesty’s Government that this action by the President is clearly contrary not only to how strong allies with a so-called special relationship should act but to international law?

We also know that in the presidential proclamation the President said that there would be a mechanism for reviewing the decision on impairing US national security if the countries concerned showed that their actions would not impair that national security. However, in recent discussions with the US, the EU and Japan could not discern on what basis these issues would be considered. What is Her Majesty’s Government’s view on these blackmail conditions that President Trump would seek to impose on allies for there to be adjustments to, or the removal of, these tariffs?

We have heard reference to the working group, which I have raised in this Chamber before. Did officials on the working group inform us that there was a likelihood of these tariffs being imposed on the United Kingdom? The Secretary of State indicated that he was due to visit the US and had no doubt planned to discuss the progress of the working group. What status does the working group now have given that we are clearly in a trade dispute?

Finally, we and our allies around the world continue to believe in free trade, even if the United States does not. How will we seek redress within the WTO mechanisms? Will the Minister reassure the House that we will be in precisely the same position as the European Union if we appeal for redress under the WTO mechanisms? This trend of protectionism cannot be in the interests of the United Kingdom. Clearly, our interests lie in standing shoulder to shoulder with our European Union allies on this issue.

[Baroness Fairhead]

My Lords, regarding the core of the problem, which is global excess in steel capacity around the world, we have been clear as a Government, and my right honourable friend the Prime Minister has been absolutely clear, that this is the wrong way to approach a global problem. The right way to approach it is the way we have been encouraging: through summits, where we have discussions about the measures countries will take to manage the problem in a balanced, global, multilateral way. We have been clear that we do not think this decision is in line with our approach, and we do not agree with it.

We are trying as a Government to work as part of the EU—as you know, we have a duty of sincere co-operation, which we fully expect and intend to fulfil. The first aim will be to stop this happening at all, through a process of negotiation and engagement. There have been multiple examples of engagement, from the Prime Minister to the President and the Secretary of State for International Trade, all the way through government. We will also work with the EU to look at the protections we can put in place if our aim cannot be achieved. My difficulty in addressing the comments of the noble Lord, Lord Stevenson of Balmacara, about the effect on jobs, is that we do not know what the state of the negotiations and engagement will be, what exemptions can be achieved and therefore what the effects will be on which products. It is too early to say.

However, we will absolutely be supporting UK steel and aluminium companies, through multilateral bodies, trying to ensure a global playing field, and, through various initiatives, ensuring that the EU is working at the global summit on 28 specific recommendations to address capacity. We believe that that will help our steel and aluminium industries.

We are also working with the steel industry. I mentioned that we have met with Gareth Stace, the director of UK Steel, and we are working within BEIS to ensure that UK steel companies which think they will be affected present their cases as actively as possible in the US, so that companies there ask for exemption for their products. We are encouraging trade unions and industry to work with us; we find that in the US there is significant support from both Republicans and Democrats in Congress for open and free trade.

The noble Lord, Lord Stevenson, asked how much of a heads up we had about this. There have been noises in the press about potential statements. It was broadly mooted before a meeting in Sofia, where my right honourable friend the Minister of State for Trade Policy in the DIT was present. It was discussed in broad terms then but, until an executive order was put in place on 8 March, it was speculation.

Before we leave the EU we clearly cannot be in any formal negotiations, so the trade and investment working group is discussing options only. It has been making progress and is due to meet, as planned, next month, so that work is continuing. I believe the noble Lord, Lord Purvis of Tweed, asked specifically about that. We welcome the US in saying that they look forward to a free trade agreement when the UK is in a position to negotiate one.

In terms of the EU and the safeguards, this Government remain absolutely committed to the WTO. We believe in the principles of free trade but in a rules-based, multilateral environment, and we will continue to support the WTO. We believe that our role here is to make sure that the benefits are seen and that we do not raise the temperature of the debate, and to engage with the EU and industry on behalf of the UK but as part of the EU.

[Lord Rooker (Lab)]

I remind the Minister that the Secretary of State, whose Statement she has just repeated, has in the past, when talking about trade deals with the United States, mentioned agricultural products. Last week, President Trump—in one of his tweets; not in an official government statement—also linked agricultural products with the very issue of steel and aluminium. Can the Minister give a categoric assurance that the UK Government will not sell out the UK agricultural industry in order to get a deal over steel and aluminium?

[Baroness Fairhead]

Regarding the idea that this is in the national interest, we have been clear that the EU assessment is a safeguard. We are trying to stop this happening in the first place and trying to get exemptions. We are taking this forward through engagement, and we will need to create a list of measures with the EU that we will take on a proportionate basis if we do not progress. My sense is that the best thing we can do is to work on global steel capacity multilaterally. I think that that was the view of this Government and your Lordships’ House, who believe in that rules-based environment.

[Viscount Hailsham (Con)]

Does my noble friend agree that our response from within the European Union is more effective than it would be from without the European Union?

[Baroness Fairhead]

It is difficult to argue that one way or the other. I know that the UK has specific national security relationships with the US. We have had a long and enduring relationship on defence, strategy and economic growth, and therefore we have a significant position on our own. I cannot calibrate the difference but I know that we are part of the EU, and on this matter we will be working alongside the EU and following the duty of sincere co-operation.

[Lord Hannay of Chiswick (CB)]

Does the Minister accept my view that it is very welcome that the Government are taking such a forthright attitude towards these measures taken by the United States—measures which seem to have no foundation whatever in the rules-based World Trade Organization order under which we have all lived so profitably for the last 70 years? Will she say quite unequivocally that we support all Cecilia Malmström’s efforts to get an exemption both for products and for the European Union as a whole, and that our support for her efforts is unequivocal? When the Secretary of State goes to Washington later this week, will he make it clear that we are supporting Cecilia Malmström’s efforts on our behalf? If the Minister will forgive me for correcting her, it is not only a question of sincere co-operation; we are part of a common commercial policy, and that means working to get an exemption for the whole European Union.

Finally, taking retaliatory measures is obviously extremely unpalatable, and taking a dispute settlement to the World Trade Organization is not something that we would have wished for. We are faced with a President of the United States who seems to think that trade wars are a good thing, but he had better learn some time that they are not.

[Baroness Fairhead]

I thank the noble Lord, Lord Hannay, for his remarks. We are engaging with the Trade Commissioner, Cecilia Malmström, and the Secretary of State will be acting on behalf of the UK but as part of the EU. We are working to stop this happening—job one will be to stop this happening; job 2 will be to get exemptions where we can—and the Secretary of State will be speaking on behalf of the EU and UK industry. I would welcome help from anyone in the industry and the unions who has an interest in this because there is a real issue here. We need to make sure that the benefits of free trade are fully realised, as we have seen in this country. A rules-based international system has lifted 1 billion people out of poverty and we do not want to set our face against that. The Secretary of State will be speaking to Cecilia Malmström later today ahead of his visit and he will feed back after his visit, so we are connected.

[Lord Campbell of Pittenweem (LD)]

My Lords, in the light of the events that we have been discussing, how long can the Government credibly advocate an enhanced trade deal with President Trump after Brexit? President Trump is one of the most volatile and capricious presidents in the history of the United States. He has taken actions which are contrary to the rules-based system and even today has sacked Secretary of State Tillerson for his independence of thought and, in particular, for his expressions of sympathy and support for the United Kingdom in relation to the events in Salisbury. How can we possibly put our trust in President Trump?

--- Later in debate ---

[Baroness Fairhead]

I thank the noble Lord. We have had a long and enduring relationship with the US and, in the past, when protectionist measures were applied—for example, in 2002—they were eventually rowed back and the relationship continued. It is important that we continue to demonstrate the benefits of free trade. The number of jobs expected to grow in the UK steel industry versus the number that might be lost in downstream industries indicate that potentially, this is not a good move in the US. A recent think tank report said that there could be a net loss of around 146,000 jobs in the US if this was put in place. We need to argue for free trade. We have a long and enduring relationship and the UK/US economic, national and defensive co-operation will endure long term into the future.

[Lord Cormack (Con)]

My Lords, I congratulate my noble friend on the way she is handling this delicate and tricky matter. I hope that she will be involved in some of these negotiations and, if she is, that she will reinforce the fact that we are working with friends and neighbours in the European Union and that this ought to be an object lesson to everyone who has the interests of our country at heart.

[Baroness Fairhead]

I thank my noble friend for his supportive words. Although officially I am not in the Trade Policy Unit—I am concentrating on exports—I obviously have interactions with it. It is likely that I will visit the US in a few weeks’ time and I will continue to represent the importance for us of addressing the excess steel capacity in the world, which is the root cause of the problem. We have made good progress along those lines. Where we see other countries behaving improperly, we are able to initiate anti-dumping or anti-subsidy measures. In the UK alone there are 45, which have proved to be effective. We will continue to fight but it is important that we do so within a rules-based system.

[Lord Adonis (Lab)]

My Lords, I congratulate the Minister on her appointment, and we wish her well in her trade export work. We commiserate with her, however, for having to repeat that Statement from the Secretary of State for International Trade, which was a catalogue of name calling and impotence. If he had the influence he claims with his great long list of American friends, whom he will be lobbying over the next week or two, we would not have had these tariffs in the first place.

I have two questions. First, is the Minister in any way optimistic that President Trump will lift the tariff he has announced? Secondly, does the Minister not think that this situation gives the complete lie to the argument for leaving the European Union on the basis that Britain’s global trade will somehow compensate for the loss of trade with the European Union that we will suffer? In addition, does the Minister not agree that the Prime Minister’s choice of words in her Mansion House speech—she said that it is now an object of policy on the part of Her Majesty’s Government that we will have less market access to the European Union—looks ever more unwise with each tweet and utterance from President Trump?

--- Later in debate ---

[Baroness Fairhead]

I thank the noble Lord for his welcome. I do not agree with his sense of impotence regarding the Statement. To begin with, there are a whole range of things we are doing for global steel capacity. We are part of the EU and work within that framework. We are engaging on behalf of UK industry with the US and EU, and our hope is that we can negotiate. We are looking at exemptions—I would not like to give you the probability of which, if any, we will get, but we are certainly pushing very hard for that. We need to continue to engage and represent the UK as part of the EU in this regard.

[Lord King of Bridgwater (Con)]

While the Minister is absolutely right that we must act in full conjunction with the European Union, there is no question but that we have a very special relationship—in whatever way that is described—with the United States. Although the noble Lord, Lord Campbell, has said that we cannot possibly trust the President of the United States, he is the President and it is very important that the Secretary of State makes effective representations to him and his colleagues to ensure that we avoid what could otherwise be an extremely difficult situation.

[Baroness Fairhead]

I absolutely agree with my noble friend Lord King. Very strenuous representations will be made. We think these tariffs have a very weak legal basis, and the EU deems that this will enable some countermeasures and, possibly, safeguards to be put in place. We need to engage with this very important friend and ally to make sure we get above this and move on to the agenda of building wealth right across the world, and make sure that we have a sensible global approach to global problems.

[Viscount Waverley (CB)]

My Lords, when the Government consider which debating points to put before the United States, and to President Trump in particular, they might wish to remind him of his policy of putting America first. Will the Minister put on record, with supporting evidence, why these measures are detrimental to all US businesses?

[Baroness Fairhead]

There are studies available. I mentioned a US trade body which represents downstream industries that think they will be negatively affected and that the net effect on US jobs will also be negative—its study is already a public document. We are trying to avoid protectionist measures that stop the further development of economic trade and of developing countries. The latter could provide a ratchet effect and bring us all up together.

[Lord West of Spithead (Lab)]

My Lords, the Statement explains at length how the Americans have made an assessment of the strategic requirement for a steel industry. That begs the question of why we have not made such an assessment. Do the Government believe that there is a strategic requirement for a viable steel industry in this country?

[Baroness Fairhead]

There is a question around whether it is a strategic national interest element, as the noble Lord mentioned, but we would question the President’s argument for it. I think that a lot of people would also question the figure of 80%. In terms of this country, we believe in open and free trade and that we should be protecting our industry to make sure that the sector is not the victim of bad practice, which is what the rules-based regime does. We are also trying to support our industry by making sure that we adjust for any requirements that we put on it. For example, the Government have compensated the UK steel industry to the tune of more than £200 million for the additional costs linked to the climate change levy and the renewables targets. We believe that we should allow open and free trade and that we should protect robustly our businesses so that they are able to compete on a level playing field, and we will support them in any way we can to do so.

[Lord Lawson of Blaby (Con)]

My Lords, I congratulate my noble friend on her new responsibilities and on the way she has been answering these questions. This action by President Trump should not come as a surprise given that, so far as I recall, it was part of the manifesto, as it were, on which he was elected. Nevertheless, it is wholly deplorable and should be condemned. But is it not the case that we will be able to use the special relationship to which my noble friend Lord King and others have referred only once we leave the European Union? As long as we remain within the European Union, overseas trade is an EU competence and all we can do is support the European Union in the efforts that it is making. After we have left, it will be a different story.

[Baroness Fairhead]

I agree with my noble friend Lord Lawson that when we are an independent trading nation, we will be able very directly to use the relationship we have with a key ally. That said, given that we believe so strongly in global free trade within an international rules-based system, and given that we are part of the EU and have a duty to co-operate, we will use our special and deep relationship with the US to help the EU overall in progressing this with the US by trying to ensure that we have the best possible chance of eliminating the tariff or getting significant exemptions.

[Lord Adonis]

My Lords, does the noble Baroness agree that it is a complete fantasy if the noble Lord, Lord Lawson, thinks that we will be in a stronger position to negotiate with the United States when we do not have the weight of Europe behind us and we are acting entirely independently? Further, does she not think that that is a controlled experiment which can only do enormous harm to the country and that we would be better off not engaging in it in the first place?

[Baroness Fairhead]

We should be happy that we have a long, enduring and strong relationship with a very important partner and all our efforts should be concentrated on addressing where we do disagree, because where that is the case we will say so, and in this case we have done so. Equally, however, the numbers I have seen on our trade with the US show that we have $1 trillion-worth of mutual investment in each other’s economies. We should be taking that forward and using it to make sure that global trade really prospers around the world.

Brexit: Trade Agreements

Baroness Fairhead Excerpts

Thursday 18th January 2018 Lords Chamber

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, after leaving the EU, it will be the UK Government, not the EU, who will decide what trade agreements to pursue and what the contents of those agreements will be. Decisions on all future trade agreements will be made here in the UK, based on what is in the best interests of the UK.

[Lord Wallace of Saltaire (LD)]

My Lords, unless we go for unilateral free trade, I assume that trade agreements will be a bargain between the UK and others, in which we will have to make concessions, which will affect domestic law. Does the Minister recall that the Indian Government, for example, have made it clear that they would expect concessions on freedom of movement, which would affect British migration policy, in return for a trade agreement? Does she recall the US Commerce Secretary saying that he would expect the UK to move towards accepting US regulations, instead of EU regulations, in phytosanitary and other areas, in return for a trade agreement? Does she recall that the NAFTA trade agreement allows US multinationals to sue in foreign courts, and that Eli Lilly is currently suing in Canadian courts, demanding that Canada changes its domestic patent law? Are those not all incursions on sovereignty?

[Baroness Fairhead]

I thank the noble Lord for his question. What I can say is that, for the first time in 40 years, we will have the ability to operate an independent trade policy. We will be negotiating on behalf of the UK, in the interests of the UK. Clearly, any trade agreement is a negotiation between two parties, but we will always ensure that all parts of the UK are taken into account when we negotiate to benefit the UK as a whole. That is why we would undertake those trade agreements.

[Lord Grocott (Lab)]

Will the Minister join me in warmly welcoming the concern of the noble Lord, Lord Wallace, about the importance of parliamentary sovereignty, and does she therefore look forward, as I certainly do, to receiving the noble Lord’s support when we deal with the Act that most significantly diminished British parliamentary sovereignty, namely, the 1972 European Communities Act?

[Baroness Fairhead]

We have made a decision as a country that we will leave the EU, and as part of that we will be leaving the jurisdiction of the European court. Clearly, what is of concern is that its rulings are binding on all national courts, including those of the UK, as we agreed. However, when entering into international agreements, no state has ever submitted to the direct jurisdiction of a court in which it does not have representation—and we have representation. When we have the ability to enter into new international agreements, our aim will be to make sure that we keep all our protections for the environment and human rights. Those protections are important, as we maintain those agreements.

[Lord Garel-Jones (Con)]

On the subject of parliamentary sovereignty, does my noble friend not agree with the Supreme Court that, while Parliament authorised the referendum and the Government are therefore right to pursue the discussions that they are pursuing, it is also the case, as the Supreme Court has ruled, that the outcome of those negotiations must be laid before Parliament for approval?

[Baroness Fairhead]

As my noble friend said, this is a matter that is still under discussion in the other place, and that is what is happening.

[Lord Elystan-Morgan (CB)]

Does the Minister not agree that the question from the noble Lord, Lord Wallace, appears to be misplaced, in that the most onerous trade agreement can never abrogate sovereignty?

[Baroness Fairhead]

I thank the noble Lord for his input. Yes, the ability of a country to regulate on its own behalf in the public interest is well recognised in international law. Therefore, we would expect to be able to continue to regulate in our national interest. In the terms of our agreements, that is what we will be achieving in our agreements—going for the UK’s best interests.

[Baroness Hayter of Kentish Town (Lab)]

The EU trade deals have been underpinned by a commitment to human rights, to public health, to safe food and to fair trade, not just in the national interest but in the interest of fairness across the world. It has been leading on that. Can the Minister guarantee that none of these rights will be in jeopardy as we negotiate new trade deals with third countries?

[Baroness Fairhead]

I thank the noble Baroness for that input. It is true that, within the EU treaties, our trade agreements have been underpinned by really deep and enforceable environmental and human rights protections. There is an absolute commitment by the Government that those will be maintained as we go forward.

[Lord Purvis of Tweed (LD)]

My Lords, medicines, chemicals and aviation are a fundamental part of the British economy and will be key elements of any trade agreements going forward. Can the Minister confirm that it is the Government’s position to propose that those sectors will continue to be under EU regulation, rather than UK regulation? Any future trade agreements will therefore have to comply with EU regulations, over which the UK will not have a say, and those components will be under the ongoing auspices of the European Court of Justice.

[Baroness Fairhead]

I cannot give that assurance to the noble Lord, as it has not been agreed. What I can give an assurance on is that the UK has been at the very forefront of the highest standards for public safety and the environment, not just for the UK but, as the noble Baroness, Lady Hayter, said, for the world. We will continue that commitment because it is an absolutely critical part of the belief of, I think, all parts of this House.

Brexit: Trade Agreements

Baroness Fairhead Excerpts

Wednesday 17th January 2018 Lords Chamber

[Lord Dykes]

To ask Her Majesty’s Government with how many countries with existing trade agreements registered with the European Union they intend to open trade talks from April 2019; and how long they expect the process of concluding those new trade agreements to take.

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

Through membership of the EU, the UK is currently party to around 40 trade agreements with more than 70 countries. Our priority is to secure the continuity of these existing trade arrangements as we leave the EU in order to provide certainty for businesses, consumers and investors. That is the basis of our current discussions. After leaving the EU, we will consider how we might best further develop our existing trading relationships, including with developing countries.

[Lord Dykes (CB)]

I think that Answer is both rash and brave, so I thank the Minister for it. Will she bear in mind that the total absurdity—I use those words deliberately—of the programme that is planned by the Government means that, really, the programme should start on 1 April 2019—in the morning, of course?

[Baroness Fairhead]

We have made it clear in the Trade Bill that, as I said, our focus is on continuity to make sure there is security and no cliff edge. We are actively working towards that. I have to respect confidentiality and do not want to pre-empt the outcome, but the process has been very positive. We have had discussions with more than 70 countries and have already moved to the technical stage with some countries. On future trade agreements, as the noble Lord will know, under the terms of the EU we are not allowed to negotiate new free trade agreements. We are, however, able to start discussions, so we have 14 working groups and high-level dialogues looking at a range of ways in which we can develop our trading relationships for when we are able to start negotiating and agreeing future agreements.

[Lord Forsyth of Drumlean (Con)]

My Lords, can my noble friend explain to the House why the EU has failed to reach trade agreements with our major markets, such as India, China, the United States and Australia?

--- Later in debate ---

[Baroness Fairhead]

I am focused on the continuity of the ones that we have and on building working relationships with the countries that we can have trading relationships with in the future. The EU now has a number of trading relationships through both traditional free trade agreements and EPAs, where the focus is much more on development. We in the UK have long been supporters of a very strong and open pro-trade agenda.

[Lord Tomlinson (Lab)]

My Lords, if the Minister has set her face so clearly on continuity of purpose in this regard, why are the Government so content to rip up so many of the agreements that serve us well at present?

[Baroness Fairhead]

The referendum decision was to leave the EU, and as we leave the EU, we will no longer be party to those agreements. We have to get that continuity so that we have security for our businesses.

[Baroness Smith of Newnham (LD)]

My Lords, can the noble Baroness tell us how many of the 40 free trade agreements she mentioned, with 70 countries, include either most favoured nation clauses or national treatment clauses—that is, non-discrimination clauses? What assessment have the Government made of that for the process of our negotiations, and do they think there will be an impact on our ability to have a Canada triple-plus agreement?

[Baroness Fairhead]

The most favoured nation clauses are in a number of those agreements, although I could not give the noble Baroness the exact number. Clearly that is one of the issues that needs to be resolved as we move forward, because most favoured nation provisions clearly need to apply where they exist. If the noble Baroness would like the number to be assessed, I will ask my officials to write.

[Lord Pearson of Rannoch (UKIP)]

My Lords, are the Government aware of the Civitas research which shows that Brussels has managed to reach free trade agreements with countries whose combined GDP amounts only to some $7 trillion, whereas four small economies—Chile, Korea, Singapore and Switzerland, which have much smaller economies than ours—have averaged FTAs with countries whose combined GDP is $42 trillion, six times that of the EU? Does this not show that the EU’s famous clout in this area is yet another fraud and that we would be far better making free trade agreements on our own?

[Baroness Fairhead]

My Lords, the UK is a very strong believer in free trade, within rules. Trade means trade within rules. As I said, we will be pursuing our free trade policy and will try to take advantage of the opportunities that exist today. In my department, we are focused on building our export sales, which we can do in the current environment and through our free trade agreements.

[Baroness Hooper (Con)]

My Lords, can my noble friend tell us whether it is intended to replace the current trade agreement between the EU and central America with separate trade agreements with each of the central American countries or to continue on the path of the EU agreement?

[Baroness Fairhead]

The initial plan is to make sure that we have as much continuity as possible. We are trying to replicate the effects of that as much as possible. As I said, we now have working groups looking at a variety of options and approaches to free trade agreements. We will progress those when we are able to do so, after we leave the EU.

Trade and Customs Policy

Baroness Fairhead Excerpts

Tuesday 5th December 2017 Lords Chamber

Moved by

[Baroness Fairhead]

That this House takes note of the future of United Kingdom trade and customs policy in the light of Her Majesty’s Government’s white papers Preparing for our future UK trade policy (Cm 9470) and Customs Bill: legislating for the UK’s future customs (Cm 9502).

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I am delighted to stand before you today and open this important debate. Trade is a vital part of the UK and world economy, and is a key driver of growth and prosperity. It helps business by promoting efficiency and innovation and encouraging knowledge sharing; it helps working people by creating jobs; and it helps consumers by ensuring that more people have a wider choice of goods and services at lower costs, making household incomes go further.

Free trade can be a force for good, but that does not mean trade without rules; it needs to be underpinned by global rules, and it has to be fair. There is a balance to be struck between all parts of the UK, and between protecting UK businesses while also taking consumers and the broader economy into account—and that is what we are trying to achieve.

When the UK leaves the EU, it will leave the EU customs union. This clearly has implications for trade and, indeed, that is what we are debating today. So in these Bills we are aiming to provide continuity and a smooth transition, avoiding a cliff edge, so that businesses and people can be confident that these trading relationships will continue. We have to ensure that the UK can operate as a fully functioning independent trading country, whatever the outcome of the Brexit negotiations.

In my opening remarks, I intend to focus on the two Bills that have recently been introduced in the other place: the Trade Bill and the Taxation (Cross-border Trade) Bill. I shall come to the White Papers in due course because, importantly, they provide us with a platform to continue discussion and engagement over the coming months.

We are very fortunate in this House to have Members, among whom are my noble friends Lord King, Lord Lang, and Lord Young of Graffham, and the noble Lords, Lord Hutton, Lord Darling and Lord Mandelson, who hold a vast wealth of experience and expertise in matters of trade—as do a number of noble Lords from all across the House who I know are down to speak today.

I say right from the beginning that, while the Trade Bill is intended to cover transitioning of existing agreements, not future ones, we will consult widely on future trade policy and the appropriate means of ensuring parliamentary scrutiny. I am very keen to work in particular with noble Lords across the House to help the UK get in the best possible position as we leave the EU. That is why this debate today, which is very much part of the early engagement, is particularly important.

The Trade Bill contains the following provisions. It will create powers that enable the UK to transition trade agreements that currently exist between the EU and other countries, and that the UK is part of via our membership of the EU. This will prevent disruption to UK businesses, workers and consumers by enabling the UK to maintain its existing relationships. It will create the powers needed to implement the World Trade Organization’s Agreement on Government Procurement, known as the GPA, as an independent member instead of as part of the EU. As noble Lords will know, the GPA is a plurilateral agreement between some WTO members that opens up public procurement markets. This will maintain UK businesses’ access to public contract opportunities, worth collectively around £1.3 trillion per year, while ensuring that we get the best deal for taxpayers in the UK.

The Bill will also establish a new independent UK Trade Remedies Authority to provide a safety net to protect domestic industries from unfair and harmful trading practices and any unforeseen surges in imports which cause injury. Free and open trade has a positive impact on the UK’s prosperity, but it needs to have the appropriate checks and balances. The Bill will also allow data on trade to be collected and shared with relevant bodies, such as the Department for International Trade and the new Trade Remedies Authority, to help them perform their essential public functions. This will help us build up a rich picture of UK trading patterns and help government identify new opportunities and ways in which we can support British businesses.

The second Bill we have introduced is the Taxation (Cross-border Trade) Bill, previously known as the customs Bill. This Bill deals only with matters of taxation. Whatever the outcome of the negotiations, we will need a functioning customs regime to enable the UK to charge customs duty on goods when we exit the EU, and the powers to apply trade remedies and deal with trade disputes in line with international law by imposing additional customs duties. One of the sensible steps we can take now is to provide the legislation to create this regime.

The Taxation (Cross-border Trade) Bill will therefore: allow the UK to charge customs duty on goods, including those imported from the EU; allow the Government to set out how, and in what form, customs declarations should be made; set out rules relating to the collection, administration and enforcement of import duty; and give the UK the freedom to impose additional rates of import duty, including those resulting from trade remedies investigations. It does this primarily by creating a new UK trade remedies framework to be overseen by the independent Trade Remedies Authority.

Full details of how the trade remedies framework will operate have not been determined. We are thinking very hard about how to strike the right balance between the two important objectives of providing a safety net for UK industries, while ensuring we do not place unnecessary costs on the UK’s downstream industries and consumers. We sought views on this when we published our trade White Paper, and engaged with key stakeholders to hear what they think. We remain keen to receive input to make sure that we get the working in the best interests of the whole of the UK.

The Bill also enables the Government to implement preferential import duty rates pursuant to arrangements with other countries or territories. This will enable us to give effect to duty rates in free trade agreements and to continue our current preferential trading arrangements with the British Overseas Territories. Finally, the Bill will also enable us to create a UK unilateral trade preferences regime for developing countries. That means that the UK will continue to provide preferences that support economic and sustainable development.

The UK, with the support of this House, has been a proud advocate of supporting developing countries to reduce poverty through trade. I think we can all agree that an important way to help end poverty—and aid dependency—is through inclusive economic growth, jobs, investment and trade. Unilateral trade preferences are a key part of that aim. They act by reducing or removing tariffs on imports from developing countries without requiring market access in return. This boosts trade, which is good not only for the exporting country, but for British business and consumers. The Bill will allow us to ensure that countries receiving unilateral trade preferences under the current EU arrangements will continue to do so and will still benefit from the same level of preferential rates on their exports to the UK when we leave the EU. It also allows us to consider, in future, how we can make our unilateral trade preferences regime even more generous and easy to access. That is certainly this Government’s intent.

I turn now to the White Papers, which look to our future. They set out principles designed to guide our approach to establishing an independent trade and stand-alone customs regime outside the EU. As the Government consider the options for our future customs arrangements, they will be guided by what delivers the greatest economic advantage to the UK, and by three strategic objectives: continued trade between the UK and EU member states that is as free and as frictionless as possible; the avoidance of a hard border on the island of Ireland; and the establishment of an independent international trade policy. The Government are clear that cliff-edge changes are in no one’s interests. That is why we want a smooth transition, which is at the heart of the two published White Papers. It is also why we are proposing an implementation period: so that businesses and Governments—in both the UK and the EU—will have time to adapt.

As my right honourable friend the Prime Minister set out, the current evidence points to the need for an implementation period of around two years. However, the form it takes will be a matter for the negotiations; we will need to cover issues beyond customs and trade. While the exact nature of our future relationship with the EU is a matter for the negotiations, there are sensible—indeed responsible—steps that we can take now to prepare for the future.

Therefore, while our immediate priority is to ensure a smooth transition, we recognise the importance of the UK being able to forge ambitious new free trade agreements with countries around the world after we leave. As we set out in our trade White Paper, we want to garner views both on the substance of the future free trade agreements, and on what would be the suitable amount of scrutiny for aspects of such agreements that go beyond the setting of import duty rates. That is why the Taxation (Cross-border Trade) Bill proposes a power to accommodate import duty rates agreed in future trade arrangements, but does not provide for the implementation of any aspects of future free trade agreements with new countries.

The Bills are a vital step towards getting us ready for exit, and the White Papers help us prepare for the future and the future trade agreements that we want to forge outside the EU. The White Papers provide a starting point for our engagement and discussion, both on future trade agreements and on the scrutiny arrangements for such agreements. On these, and on the Bills, we are keen to hear as many views as possible.

--- Later in debate ---

[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, I am very grateful for the insightful contributions that have been made during this evening’s debate from right across the House. I join the noble Lord, Lord Mendelsohn, and the noble Baroness, Lady Kramer, in congratulating the House on the intelligence, insightfulness and specificity of the concerns. We are very fortunate to have, in the Chamber, Members of the House who between them have decades of experience at the helm of trade policy. I am particularly pleased that we heard this evening from my noble friend Lady Verma and her co-chair on one of the EU Committees, the noble Lord, Lord Whitty, as well as from the noble Baroness, Lady Quin, and the noble Lords, Lord Kerr of Kinlochard, Lord Campbell-Savours and Lord Liddle. This considerable experience will be invaluable in helping us to ensure that our trading arrangements after we leave the EU provide the greatest continuity and certainty for businesses, employees and consumers.

The noble Lord, Lord Kerr, mentioned some of the complexities. I think the exact point of these debates is that we can flush them out and make sure that we deal with them. This will be the first of a number of debates to be held on the Floor of this House and I look forward to the continuing contribution that the House will make to helping us ensure that we have our sights on the right priority areas. A number of important and very pertinent points were raised during the debate. I will try to answer as many of these as I can, and am happy to write to noble Lords with a follow-up where I cannot.

A number of noble Lords talked about negotiations with the EU. The UK is committed to securing the most frictionless trading relationship possible and we are very supportive of an implementation period. I am glad that my noble friends Lord Price and Lord Leigh also supported the implementation period. I should have done this at the beginning, but I would like to give my own tribute to my noble friend Lord Price, while he is in the Chamber, for all his achievements in his role of Trade Minister. He did an outstanding job.

Turning back to the EU negotiations, it would be wrong of me to comment on their detail. These are sensitive matters and we do not want to prejudice the negotiations. But it was made clear in the comments of the Prime Minister, President Juncker and President Tusk yesterday that all parties remain confident of reaching a positive conclusion. Noble Lords will recognise that this is not the subject of the White Papers or the Bills. Our aim is to achieve a comprehensive trade agreement with the EU while also building our relations with third parties, so let me turn to that.

A number of noble Lords, including my noble friend Lady Verma and the noble Lord, Lord Whitty, spoke about the importance of a smooth transition. That is why we have placed emphasis on the transitional adoption of trade agreements. Countries potentially in scope of these types of agreement—around 40 of them—account for 13% of the UK’s trade. My noble friend Lord Leigh made some positive comments about the impact of leaving the EU in galvanising industry, but it is important that we maintain the effects of the agreements that we have in place. Our aim is to provide continuity and certainty, to avoid cliff edges for business.

A crucial element of ensuring effective transition is enabling any obligations that are created to be reflected in our laws. The legislation that we have brought forward will ensure that these agreements can be fully implemented and remain operable over time. But, as many of your Lordships pointed out, having the legal power is one thing; we must also have the agreement of our trading partners. This important point was raised by the noble Lord, Lord Kerr, and my noble friend Lady Verma. We are clear that this is a technical exercise to ensure continuity, but our trading partners are equally convinced. Benefits flow both ways and they have reiterated this point to Ministers and officials alike. It is clear that it makes practical sense at first to provide continuity. I am pleased that my noble friend Lord Price confirmed that they were supportive of this fact in his negotiations.

In response to a direct question from my noble friend Lady Verma, we have already had very productive engagements with all the concerned countries that she mentioned, such as Switzerland and Norway. For this reason, we continue to believe that it is a realistic ambition to transition these agreements.

My noble friend Lord Leigh raised the issue of parliamentary scrutiny of trade agreements. Let me assure noble Lords that the trade agreements that we will be transitioning have already been subject to a scrutiny process at EU level. They have also been overseen in the UK by Select Committees. In addition, many of these agreements have been ratified by Parliament through the Constitutional Reform and Governance Act process. To be absolutely clear, the Trade Bill that has been introduced in the other place does not provide for the implementation of trade agreements with countries with which the EU does not have an existing trade agreement. To be clear, it will not be used for the implementation of future free trade agreements with new countries.

In response to a question asked by the noble Lord, Lord Liddle, about which countries are a priority, we are talking to a number of countries about future trading options, including full FTAs—but, as noble Lords know, we cannot negotiate while we are a member of the EU. We are using instruments such as joint trade reviews—collaborative analysis of the mutual trading relationship —and we are exploring what may be possible with partners, but it is too early to say what it will mean in a particular country.

The noble Lord, Lord Kerr, asked about the UK being able to do a better deal with the EU than Canada, which is light on services. Services are an essential element of the economies of the UK and the EU, so we will be seeking an ambitious free trade agreement between the UK and the EU which will be of greater scope and ambition than any preceding agreement, because we realise how important it is.

The noble Baroness, Lady Henig, talked about the scrutiny process for free trade agreements. We have been very clear that we are involved in engagement. One of the elements will be the substance of the free trade agreement and the other will be the exact scrutiny process. We are welcoming views to make sure that we get it right.

As outlined in the trade White Paper, the UK remains committed to a transparent, fair and rules-based approach to international trade and we are inviting views on that. We are committed to developing it in a transparent and inclusive manner, consistent with the need not to damage our negotiating position. We will be involving Parliament, the devolved Administrations and the devolved legislatures, as well as local government, business, trade unions, civil society and the public from every part of the UK, because they must have an opportunity to engage. Since the publication of the White Paper, we have been engaging with a range of stakeholders around these issues and will be looking to benefit from best practice across the world. We understand that we do not hold all the answers and we are committed to taking into account all views.

The noble Baroness, Lady Henig, also asked about the devolved Administrations. Continuity in trade must be for the whole of the UK. The Trade Bill creates powers designed to be held concurrently by the devolved Administrations and the UK Government for existing trade agreements. This will ensure that, where it makes practical sense for regulations to be made once for the whole of the UK, it is possible for this to happen. This gives greater certainty for business, minimises legal risk and reduces the volume of legislation. I assure noble Lords that the UK Government will not normally use these powers to amend legislation in devolved areas without the consent of the relevant devolved Administrations, and not without first consulting them. Under the Bill, every decision that the devolved Administrations can make before exit they will be able to make after exit. Decisions have not been taken on the legislative framework, and we will be working closely with the devolved Administrations on our future policy in this regard. On engagement, the Secretary of State has met his counterparts in Scotland and Wales and is planning to meet them regularly, and our officials are engaging with their counterparts in Northern Ireland.

My noble friend Lady Verma spoke about the Trade Remedies Authority. The UK Trade Remedies Authority is to be a new, non-departmental public body, independent of government. We have carried out an extensive assessment of other countries’ trade remedies systems, structures and case loads, including those of Australia, Canada, the EU and the United States. Our proposed model is designed to ensure that industries and consumers have confidence in an independent and objective investigative process. The Trade Remedies Authority will apply a framework, set out in legislation, which will provide UK industry with a safety net against unfair trade practices and unforeseen surges in imports but which will also ensure that unnecessary costs are not imposed on consumers or downstream.

The strong support of the noble Baroness, Lady Golding, in favour of Staffordshire ceramics was noted. We will aim to provide transparent thresholds for the application of measures, including a market threshold providing a de minimis rule, to avoid costly investigations into cases destined to fail. The economic interest test will provide a balance between regions, primary producers, downstream industries and consumers. The lesser duty rule will ensure that effective remedies are in place without imposing unnecessary costs. The evidence that we have shows, for example, that imports of certain steel products that were subject to EU trade remedy measures with the lesser duty rule in August 2017 were down over 90%. We think that gets the balance right, which is why we are doing it.

The noble Baroness, Lady Golding, also asked how we intend to manage trade remedies with China under the UK system. On leaving, we will operate our own WTO-compliant trade remedy system. There is provision in the Taxation (Cross-border Trade) Bill to define alternative dumping methodologies that will enable the UK system to account for particular market situations. For businesses with existing measures in place, the continuity of those measures is a valid concern. We launched a call for evidence on that on 28 November as a first step to identifying what matters to UK businesses. That is a vital start to the way that the UK responds.

Turning to the customs union, I set out in my opening remarks the strategic objectives that will guide our assessment of the options for the future outside the EU customs union. The noble Baroness, Lady Murphy, asked what the Government’s preferred option is. The customs White Paper, and the future partnership paper before that, set out the two options—the highly streamlined customs arrangement and a new partnership —that most closely meet those objectives. The Government look forward to continuing to discuss these two models with businesses and with our partners in the EU.

We have also been clear that, in order to avoid unnecessary disruption for businesses in both the UK and the EU, there is a strong case for an implementation period, which I think has received quite a lot of support in this House. We are keen to ensure that affected parties will have to adapt only once to any new arrangements.

The noble Lord, Lord Whitty, asked about arrangements for overseas territories, and Gibraltar in particular. As he will know, they are not part of the EU customs union, and set their own tariffs on goods entering the territories. The new legislation will allow the Government to continue to provide tariff-free trade between the UK and the overseas territories. The Government will continue to work with them to ensure that their priorities are taken into account.

A number of noble Lords focused on the state of preparedness. The noble Lord, Lord Whitty, and the noble Baroness, Lady Verma, both committee chairs, and my noble friend Lord Cope talked about the need for certainty. The noble Baroness, Lady Kramer, talked knowledgeably about “just in time”. The noble Viscount, Lord Waverley, asked how the Government will continue to facilitate trade. The White Paper made clear that the Government are committed to exploring the scope for streamlining the movement of goods across the UK’s borders, including through seeking to negotiate mutual recognition of authorised economic operators, greater use of technology at the border and other simplifications for business, including self-assessment and other procedures.

I have spoken with people at HMRC on the systems point that a number of noble Lords raised, in terms of making sure that we can cope with customs. HMRC is replacing its old system, CHIEF, with a new system called CDS—if any noble Lords are aware of that. CDS is on target to meet its planned delivery date of January 2019. This was the conclusion of an NAO report into CDS in July 2017.

I believe that the CEO of HMRC has also talked about the need to staff-up on exit and hiring 3,000 to 5,000 people. We are also very aware of the particular issues about roll-on roll-off, and realise that it is about space and timing. We are trying to do what we can both unilaterally and on a bilateral basis, targeting the areas where there are the most particular issues.

The noble Viscount, Lord Waverley, made a number of suggestions that we might use to help speed the process, and I shall certainly pass them on to my officials, because we need to take any examples and suggestions forward.

On Northern Ireland, the noble Lord, Lord Empey, who has extraordinary expertise in this area, reiterated the importance of not going back. The Government have been clear that we seek to avoid a hard border in Northern Ireland. This is one of our key strategic objectives for any customs arrangements. We know that the movement of goods across the land border is key to the economies of Northern Ireland and Ireland, and both the UK and the EU recognise the unique circumstances on the island, so we welcome the European Commission’s call for flexible and imaginative solutions. We remain committed to the Belfast agreement and the common travel area, and I know that there are ideas on small businesses, when 80% of their trade goes across border.

The noble Lord, Lord Empey, also talked about our approach to trade and the importance of education. Coming from an education background with Pearson, I support that. I hope that he has seen the creation of a new department, DIT, whose role is to support companies to export more, open new markets and promote our business, supported by finance, as an important step. He asked why we do not use the tax system to incentivise trade and investment. The Government are trying to create the right environment. For example, the recent Budget acted on business rates, increased levels of infrastructure investment, boosted R&D spending and laid the foundations for the UK to become a world leader in new technologies.

Continuity is at the heart of our approach, so it follows that the Bills introduced in the other place are designed to provide maximum continuity for UK businesses, workers and consumers. A cliff edge in our trading arrangements is in no one’s interest.

[Lord Campbell-Savours]

Are discussions now taking place with the French, Belgian and Dutch authorities about what will happen with trucks being held in stacks going into Ostend, Dunkirk, Calais and the Hook of Holland?

[Baroness Fairhead]

I thank the noble Lord for his question. The answer is yes. The roll-on roll-off situation has been highlighted as an issue, because when companies have been exporting to the rest of the world, they are used to all the compliance, but we have roll-on roll-off, which is all about space, availability and time to get through and make sure that it is through. We are looking at both unilateral and bilateral aspects, focusing on the ports with the most significant issues. Through that, we are entering into conversations to see what can be done, because we realise that there is real complexity and there are practical issues.

I hope that noble Lords will see that the steps that we are starting to take are practical and that we are trying responsibly to create powers so that we do not have a cliff edge and can cope with any outcome.

It has been abundantly clear in today’s debate that there is huge depth of understanding of the complexities in this House. My colleagues in the Government and I are committed to involving all those in this House with this expertise. My right honourable friend the Minister of State for Trade Policy, Greg Hands, and I have already held one open-door meeting for noble Lords. I assure Members of this House that we want to provide regular forums where we can discuss our future trading arrangements. We need to have those sorts of honest discussions and will take on board some of your Lordships’ suggestions as we work that through. I shall do all that I can to involve noble Lords across all the Benches so that we can work together in what your Lordships have yourselves described as a spirit of honest, intelligent co-operation, with the shared aim of providing UK businesses, workers and consumers with maximum continuity in their trading relationships as we leave the EU.

Motion agreed.