Trade Negotiations

Baroness Jones of Whitchurch Excerpts

Wednesday 14th May 2025 Lords Chamber

[Lord Fox (LD)]

My Lords, as a vice-chair of the All-Party Motor Group, I must say that this agreement was good news for the UK car industry or, perhaps more importantly, it was less bad news—coming in where the noble Lord, Lord Sharpe, left off. In truth, manufacturers will still see a rise from pre-Trump tariffs of 2.5% to post-Trump ones of 10%, but that is much more manageable than the 27.5% that was being faced and jobs will be saved, which is good news. As a key shareholder in the industry, I am sure the Government will welcome the moves on steel as well.

But on those and on the wider perspective, there is much detail still to resolve and I think it would be helpful if the Minister could set out a timetable for when businesses will start to know the detail of what this agreement will actually deliver. To date, the Government have not published the documents we need, such as impact assessments on key British industry. That leaves us in the dark at the moment as to what Ministers have really given up in exchange for these lower tariffs.

I was a little intrigued by the ethanol concession. Secretary of State Jonathan Reynolds said in the Commons:

“On ethanol, we … are working closely with our domestic sector to understand its concerns and any potential impacts to businesses, including what more Government can do to support the sector”.—[Official Report, Commons, 12/5/25; col. 35.]


This seems a little late. Some weeks ago, when I met staffers of senior senators and asked them what their number one red line was, the most popular response was “Ethanol”. If I knew six weeks ago, I assume the Government knew a long time before that, which means there was plenty of time to work through the implications on domestic suppliers. Yet it seems only now is that process under way. How can negotiators know the value of what they are conceding without having done the work that seems now to be under way?

The deal also allows more American beef into the UK market. The Secretary of State was at pains to say that imports would not compromise our standards, so can the Minister confirm that this is being achieved by uprating the tariff rate quota for so-called “high-quality” beef? To put this into context, can the Minister share the Government’s analysis of how much high-quality beef the US produces per annum and what is the annual expected level of imports of that beef into the United Kingdom? Finally on this, can she set out in detail what border inspection regime will be planned to make sure that this indeed meets the standard of high-quality beef?

Given the urgent need for phytosanitary agreement between the United Kingdom and the European Union, can the Minister tell your Lordships’ House what conversations the Government have had with their EU counterparts about this decision to allow US beef into the United Kingdom?

Overall, how certain is any of this? For example, Trump 1 signed a full trade deal with Canada and Mexico, the USMCA, in 2018 and then Trump 2 threw this self-same deal out in his first week of this presidency. This UK-US agreement may have been endorsed by President Trump this month, but what confidence do the Government have that new demands will not be made next month, or the month after that—or at Christmas? Does the Minister agree with the Liberal Democrats that the best long-term defence is to build our trading relationships with long-standing partners which do not change their views all the time, including the European Union and dependable allies such as Canada? Can the Minister explain to your Lordships’ House the Government’s analysis of how this US deal impacts the furthering of relationships with those reliable potential partners?

A further unanswered question, touched on by the noble Lord, Lord Sharpe, surrounds our position with China. The deal with the US includes strict security requirements, particularly around the British steel and pharmaceutical industries. These requirements have already caused China to complain that this could be used to squeeze Chinese products out of British supply chains. How will the Government manage their relationship with China when President Xi knows that Trump is leaning on us in every way with our relationships? What is the Government’s message to China as a result of this deal?

The level of uncertainty over the details in this agreement begs many questions, but again, it seems the Government will duck proper scrutiny. If this was a full-blown trade agreement, we would expect it to be put before your Lordships’ International Agreements Committee, of which I am a member. But so far, we have been starved of the involvement of the Grimstone agreement and we have not really been taken in on this. Can the Minister confirm whether the International Agreements Committee will scrutinise this agreement?

Even if we did make a report, the key to a debate in the Commons is still held by the Government. The shortcomings of our scrutiny process of trade deals are laid bare. At the very least, can the Minister confirm that this agreement will have a full Commons debate? If the Government do not follow this course, that will indicate that this agreement is not a treaty that needs to be fully ratified and lodged with the WTO. If it is not a fully ratified treaty, under the WTO most favoured nation rules the UK will have to offer similar tariff-free entry to all other countries, not just the United States. Unless Keir Starmer wants to join Donald Trump in breaking a fundamental international agreement that supports world trade, this should be treated as a trade deal and lodged with the WTO. That requires a full CRaG process in your Lordships’ House.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, I thank noble Lords for their remarks and the questions they have asked today. Of course, we recognise the strong level of interest in this House in this historic trade deal that we have secured with the United States. To ensure that those interested can see for themselves precisely what has been agreed, the general terms of the deal have now been published on GOV.UK and a copy has been placed in the Library.

As the Prime Minister has rightly said, we are living in a new world now, one

“less governed by established rules and more by deals and alliances”.

Our vision is to leverage our relationships with other powerhouse economies to make the UK a global hub for trade and investment. This is why last Thursday we reached an agreement on the basis of an economic prosperity deal with the United States. But I say in answer to noble Lords, particularly the noble Lord, Lord Fox, that this is a deal; it is not a full-blown treaty. We need to be absolutely clear about that.

Our trading relationship with the US, worth £315 billion per year, is now set to grow. We already have £1.2 trillion invested in each other’s economies, and between us we employ about 2.5 million people across both countries. That is why the deal is so important. Saving thousands of well-paid, highly skilled jobs that are vital for our economy is essential, protecting jobs in the automotive, steel, aluminium, pharmaceuticals and aerospace sectors, which employ over 320,000 people across the UK. In addition, an estimated 260,000 jobs are supported across the economy by the auto industry alone.

The noble Lords, Lord Sharpe and Lord Fox, said that the deal on the automotive sector brought welcome relief. I agree with that. For the car industry, we have negotiated a quota of 100,000 vehicles which reduced tariffs from 27.5% to 10%, and secured an arrangement for associated car parts, recognising the vital role the sector plays in our economy. We have already seen Jaguar Land Rover come out in support of the deal. It is very positive news for iconic British manufacturers such as McLaren and Morgan.

The noble Lord, Lord Sharpe, asked about the future of the steel sector. For steel and aluminium, the deal will remove the 25% additional tariffs that were put in place earlier this year, reducing US tariffs to an average of 0.6% for steel, including derivatives, and 2.7% for aluminium, including derivatives. This is a major victory for steelmaking in the UK. It reassures us that steelmaking is alive and well in this country, thanks to the action that this Government are taking, providing a critical lift for the steel industry, which has been brought back from the brink of collapse, allowing UK steelmakers to continue exporting to the US.

The noble Lord, Lord Sharpe, and I think the noble Lord, Lord Fox, asked about agriculture. For UK beef farmers we have delivered unprecedented market access. Our farmers will be able to export their high-quality beef, through an exclusive UK quota, to a market of over 300 million people, providing unparalleled access to the world’s largest consumer market. The NFU has long campaigned for this, and this Government have delivered. I want to be crystal clear: agriculture imports to the UK will still have to meet our high-quality food and animal welfare standards.

The noble Lord, Lord Fox—or maybe it was the noble Lord, Lord Sharpe—asked whether we were engaging with the farming community. I confirm that colleagues in Defra regularly engage with the farming organisations, and indeed with the NFU, on this issue of market access.

The noble Lord, Lord Fox, asked about statistics to do with beef. I have to say that I do not have those to hand, but obviously I am happy to write with the detail of those proposals.

The noble Lord, Lord Sharpe, asked about the digital services tax. I reassure him that there are no changes to that tax in the agreement.

The noble Lord also asked about the impact on the pharmaceutical sector. For pharmaceuticals and life sciences, the deal provides assurances that we will receive significant preferential access in the case of any new US tariffs in future, something that only the UK has so far secured. The pharmaceutical manufacturing sector alone contributes £20 billion to the UK economy a year and employs around 50,000 people, so that is a welcome move.

The noble Lord, Lord Sharpe, asked about Northern Ireland. I confirm that we have closely considered the impact of this agreement on Northern Ireland. First, as Northern Ireland is part of the UK customs territory and internal market, Northern Ireland exports can access the US markets under this deal on the same basis as those from the rest of the UK. Secondly, the deal does not affect how imports in Northern Ireland operate, and Northern Ireland businesses importing eligible US goods under the deal can avoid unnecessary duties within the established Windsor Framework schemes, such as the UK internal market scheme. As we have said all along, we continue to act in the best interests of all UK businesses, including those in Northern Ireland.

The noble Lords asked whether Parliament will have a say. I make it clear that the general terms document is not a treaty and will not be subject to a vote in Parliament. We will implement the terms of the existing deal in accordance with the appropriate domestic processes. To be clear, we are not seeking any change in the process of ratification of any duty. Members of this House will have the chance to scrutinise the treaty when it is agreed and presented to the House.

If I have missed out any of their points, I will of course write to noble Lords. To summarise, the deal shows what can be achieved through pragmatism, diplomacy and acting in the national interest. It shows the UK to be a key and influential player on the world stage, and one that can get deals done. We are sending a message to the world that Britain remains open for business, we will protect jobs and investment, we will boost and defend our industries, and we will drive economic growth in all parts of the UK.

[Lord Anderson of Swansea (Lab)]

My Lords, the noble Lord, Lord Sharpe, for the Conservative Opposition, and the noble Lord, Lord Fox, for the Liberal Democrats, were as one in commending the remarkable change this deal represents from the initial proposals of President Trump. I adopt what the noble Lord, Lord Fox, says about the role of Parliament. Both of us happily serve on the International Agreements Committee, and we know that our Parliament must be very jealous of the way in which such a treaty would be dealt with in the US Congress. What is clear, although unstated by both those earlier speakers, is that any objective observer will surely praise the role that the Prime Minister has played in his relationship with President Trump. He has played it extremely skilfully to change positively the initial deal that was proposed. This is obviously a very limited deal and the best we can get in the circumstances. Is this the end of the story or are there other parts of our trading relationship that are still on the table and from which we expect to see some positive developments? If there are such other elements from which we can optimistically hope for further developments, what are they?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I agree with my noble friend that the Prime Minister has played a brilliant role in all this and got one of the best deals that has been negotiated anywhere around the world, so we absolutely give him all the credit due for that. My noble friend asked whether this is the beginning or the end. This deal marks only the beginning. We are continuing to talk on the wider UK-US economic deal that will look at increasing digital trade, access for our world-leading service industries and improving supply chains. The US has committed to further negotiations, including on the 10% tariffs introduced on 2 April across our economy. The Government will continue to act in Britain’s national interest for workers, businesses and families.

[Lord Mountevans (CB)]

My Lords, following the Minister’s comments about the next phase, financial and professional business services are Britain’s leading industry here in London but with two-thirds of the jobs overseas. On the goods agreement so far, some £59 billion-worth were exported to the USA in 2024, while £119 billion of services were exported to the USA in 2023. This is potentially a moment of great opportunity for the United Kingdom in financial and professional business services. We have a unique position between the USA and Europe, and we can have a great platform here as an independent, neutral and very powerful player in this space. With our shared roots in common law with the United States, this is also a strong opportunity for us, so can Minister assure us that financial and professional business services will be a central part of the agenda as we move forward to the next stage?

[Baroness Jones of Whitchurch (Lab)]

The noble Lord makes a vital point. It is very much an area where we can have shared benefit. The trade strategy is aimed at achieving long-term, sustainable, inclusive and resilient growth throughout trade, supported by a rigorous economic and geopolitical analysis that will set out how we can take some of these issues forward. The noble Lord is right about the contributions that we can make to the US and the contributions that it can make to us. I think that the leaders of both countries understand that we have joint benefits in common, and I am absolutely convinced that we can take these issues forward and make further trade deals on that basis.

[Lord Lamont of Lerwick (Con)]

My Lords, I have two questions for the Minister. First, as my noble friend Lord Sharpe and the noble Lord, Lord Fox, asked, will the new agreement operate with most favoured nation rules, which, as she knows, means that the lowest tariff offered to one country must be offered to all? The reason why I ask whether the agreement is consistent with the MFN rules is because Mr Navarro, the architect of President Trump’s trade policy, as recently as 8 April wrote a very strong article in the Financial Times criticising the MFN rules. The alternative to those rules is, of course, reciprocal tariffs, which Mr Trump has been proselytising, but that would lead to a much more complicated system of international trade, with a huge amount of business bureaucracy, and to commercial chaos throughout the world. I would be very grateful if the Minister could answer that question.

The second question that I would like to ask relates to the 10% basic tariff. The Minister indicated that the Government might want or be able to negotiate further on that. The 10% tariff obviously places businesses in Britain at a disadvantage compared with where they were before, but it is strange that the 10% applies to Britain because the object of American policy is to remove imbalances in the trade system, and Britain had no imbalance in goods, as President Trump acknowledged. The implication seems to be that the 10% is going to apply to all countries throughout the world which, as the Governor of the Bank of England said, is bad news not just for Britain but for the whole world.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I can confirm that we will maintain our status with all the international obligations that we currently have, including with the most favoured status and the WTO. Both of them are very important for our status going forward.

The noble Lord raises the question of the 10% tariff. As we know, the deal removes the 25% tariff on steel, aluminium and autos, but the US has committed to further negotiations, including on the 10% tariffs introduced on 2 April across our economy. We are continuing to negotiate in the interests of key sectors for the UK and, obviously, we will seek the best possible outcomes for those vital parts of the economy and those that are vital to our critical infrastructure. A whole range of negotiations will continue, including on that 10% tariff impact.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I thank the Minister for the repeating the Statement. The Statement says:

“We will continue to work closely with the devolved Governments throughout the negotiations that will follow today’s announcement”. —[Official Report, Commons, 8/5/25; col. 898.]


Could my noble friend outline the detail of those discussions with, for example, the First Ministers in Northern Ireland? I recently had a letter from the Minister for Agriculture in Northern Ireland in which he stated that the detailed elements of guidance had not been provided to them. Will that guidance be provided to the Northern Ireland Executive, who can then provide it to the Department of Agriculture, Environment and Rural Affairs, which will be directly impacted by all this? Will the Windsor Framework be protected?

[Baroness Jones of Whitchurch (Lab)]

I think that all noble Lords will appreciate that discussions with the US have taken place at pace. Throughout this, Ministers and officials have had significant levels of engagement with the devolved Governments on both the US tariffs and progress on talks with the US.

My noble friend asked specifically about Northern Ireland. As it is part of the United Kingdom’s customs territory and internal market, exporters can access the US market under this deal on the same basis as the rest of the UK. Northern Ireland businesses importing US goods under this deal can use the schemes established under the Windsor Framework to avoid any necessary duties. As we have said all along, we will continue to act in the best interests of UK businesses, which of course include those in Northern Ireland.

The noble Baroness asked particularly whether further guidance will be spelled out. These discussions have been taken forward at pace, but of course we will work out that guidance and present it as soon as possible.

[Lord Weir of Ballyholme (DUP)]

My Lords, the deal that has been struck is clearly limited in scope. However, it is clear that the Government see this as part one of a wider package that will develop and will be particularly significant in terms of pharmaceuticals, in which I think we will show a good deal of interest. It is also the case that, while it is limited in scope, those aspects and sectors of the economy which have been dealt with in the deal have been dealt with quite significantly.

To follow up on the questions about Northern Ireland, Northern Ireland has been left in a different customs regime from the rest of the United Kingdom, particularly as regards imports. Although the Minister makes reference to the reimbursement scheme, that has been very cumbersome and lengthy and is a very difficult hurdle for many businesses to overcome. What specific steps will the Government be taking, first, to improve that scheme, to make sure that it delivers; and, secondly, what actions will the Government be initiating with the United States to ensure that all parts of the United Kingdom are able to gain full benefit from this deal?

[Baroness Jones of Whitchurch (Lab)]

Well, my Lords, as I just said, Northern Ireland is part of the United Kingdom, and we will all have those benefits together, including Northern Ireland. The noble Lord asked about the customs duty waiver scheme. There is, as he knows, a comprehensive tariff reimbursement scheme. Of course, we continue to keep such schemes under review. Nevertheless, we are still operating under the Windsor Framework and, as such, the internal market scheme will apply.

[Lord Lilley (Con)]

My Lords, I welcome this agreement —another Brexit dividend. Knowing the Government’s dedication to international law, I am sure they regret that this deal rewards the flagrant violation of WTO rules by Trump’s imposition of discriminatory tariffs. I accept that they had little option but to ignore that violation, but why are they now proposing to reward the EU for its flagrant flouting of rules on SPS checks? The WTO rules are quite clear:

“Sanitary and phytosanitary measures shall not be applied in a manner which would constitute a disguised restriction on international trade”,


which is what is happening at present. They go on to say:

“Members shall accept the sanitary or phytosanitary measures of other Members as equivalent, even if these measures differ from their own”.


Our rules do not differ; they are identical. There is no legal case for checks at the border on our exports of food and goods to Europe. Why are the Government proposing to make concessions which are in any case unnecessary? They claim it would reduce the cost of food imports from Europe, but we can unilaterally not impose checks on those food imports, as we have done for three of the last four years.

[Baroness Jones of Whitchurch (Lab)]

As the noble Lord says, the WTO rules are still a very important part of our international trade system, and we remain a committed member of the WTO and a keen supporter of the multilateral trading system. The WTO has made global trade more predictable and, indeed, it plays a vital role in providing stability and predictability for businesses and consumers around the world. The noble Lord asked about the EU. We are in early discussions with the EU. That is a separate set of discussions. Nothing has been agreed, but we are moving along with those discussions and we look forward to the UK-EU summit on 19 May.

[Baroness Hayter of Kentish Town (Lab)]

Did my noble friend hear, as I did, the leader of the Opposition today calling this a “tiny tariff deal”? Given that she had had agreements only with Colorado, Oklahoma and states such as that, it would perhaps have been more generous of her to welcome it. Our right honourable friend in the other House said that this was a treaty, and my noble friend seems to be saying that it is not. That is really important, because if it is a treaty, as the noble Lord, Lord Fox, says, that will come under the CRaG process. Can she clarify whether this will be a treaty and therefore have to come before both Houses?

[Baroness Jones of Whitchurch (Lab)]

My Lords, my understanding is that this is a trade deal but not a treaty in the normal sense. We are not seeking to change the process of the ratification of any treaty once we receive it. MPs will have the chance to scrutinise the treaty when it is agreed, but we are not at that stage yet. When it is agreed, it will be presented to the House and the implementation will still have to come to Parliament. At the moment, this is not a legally binding document, but there will be a vote on the legal framework and the secondary legislation, and it will be processed through parliamentary scrutiny in the normal way.

[Baroness Hooper (Con)]

My Lords, my noble friend Lord Sharpe pointed to the absence of any reference to the defence industry. That may be another sector that is to be dealt with in future negotiations but I would certainly like to know what proposals there might be in relation to arms sales on a reciprocal basis.

[Baroness Jones of Whitchurch (Lab)]

My Lords, defence does not form part of the deal we have in front of us today but, as I said, there are a number of other areas where negotiations are continuing and we hope to have a much more comprehensive deal with the US as quickly as we can. I am sure that defence will be a consideration in those discussions.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, I am sure that this deal has been warmly welcomed in steel and in the automotive industry, not just JLR. Not everybody realises we export a significant number of Minis to the United States, so it is good news there too.

I have two very quick questions. The first is about labour rights and how they will be protected and advanced as this deal progresses—that would be useful to know. My noble friend the Minister may be aware that under the previous Government and the previous Administration in the United States there was a quad—involving the TUC, our sister trade union centre, the AFL-CIO, the Secretary for Trade, and the US ambassador for trade—which was involved in consulting and developing those labour rights discussions.

Secondly, is it envisaged that there will be an investor-state dispute settlement mechanism? As my noble friend the Minister is very aware, concerns have been expressed that the mechanism models we have to date privilege the interests of big corporations over those of citizens and workers. Her answer will be very important, particularly when we get to the stage of talking about big tech and technology.

[Baroness Jones of Whitchurch (Lab)]

My noble friend makes an important point about the wider consultation that needs to take place and, of course, we take the issue of labour rights and labour representation very seriously. As I said, this deal has been put together very quickly. There is a lot more work and consultation to be done on this. We want to make sure that when we get the detail of the treaty it is absolutely fit for purpose and that everybody in the UK will benefit from it. Wherever possible, we intend to make it in the interests of business but also of the workers and citizens of this country. That will be the essence of a good trade deal.

[Lord Wood of Anfield (Lab)]

My Lords, the noble Lord, Lord Fox, mentioned the much-discussed issue of security requirements—the American requirements that there be security of the supply chain for steel and aluminium. In the document, that requirement applies not just to steel and aluminium but to the pharmaceutical sector. Indeed, it envisages that it will also apply to all other sectors where there will be agreements. This seems to now be a general requirement of the American trade relationship with us. My simple question is: are these security requirements set out in a document anywhere or will they be subject to ongoing discussion with the Government in the future?

[Baroness Jones of Whitchurch (Lab)]

The noble Lord makes a good point. I will need to check what is already set out in writing. There is a good deal more work to do on the background information that will need to be set out. I will write to the noble Lord.

[Lord Fox (LD)]

Can the Minister share that response with Front Benches as well, please?

[Baroness Jones of Whitchurch (Lab)]

Yes.

[Lord Cryer (Lab)]

My Lords, further to the earlier question from the noble Baroness opposite, what my noble friend seemed to be saying was that defence does not form a part of these negotiations, but it will form a part of the next stage in the process. Am I right in thinking that?

[Baroness Jones of Whitchurch (Lab)]

My understanding is that all issues and opportunities are being explored at the current time, so we are not able to rule anything out. I certainly cannot say that defence will not be part of those discussions. We are looking at every opportunity when it is in the UK’s interests, and I am sure we will pursue everything on that basis.